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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(X) Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended October 31, 1996
( ) Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number: 0-19508
STEWART ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
LOUISIANA 72-0693290
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 837-5880
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Class A Common Stock, No Par Value
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K.
The aggregate market value of the voting stock held by nonaffiliates
(affiliates being, for these purposes only, directors, executive
officers and holders of more than 5% of the Company's Class A Common
Stock) of the Registrant as of January 21, 1997 was approximately
$1,109,000,000.
The number of shares of the Registrant's Class A Common Stock, no
par value per share, and Class B Common Stock, no par value per share,
outstanding as of January 21, 1997 was 40,168,965 and 1,777,510,
respectively.
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement in connection with the 1997 annual meeting of
shareholders, incorporated in Part III of this Report.
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PART I
Item 1. Business
The Company
Stewart Enterprises, Inc. (the "Company") is the third largest
provider of products and services in the death care industry in North
America. See "Business-Competition." The Company is a leader in the
industry's movement toward consolidation, the integration of funeral
home and cemetery operations, the establishment of combined facilities,
and complete death care planning and delivery. Through its
subsidiaries, the Company operates 308 funeral homes and 120 cemeteries
in 22 states, Puerto Rico, Mexico, Australia, New Zealand and Canada.
From the Company's initial public offering in October 1991 through
January 10, 1997, the Company has acquired 258 funeral homes and 91
cemeteries for purchase prices aggregating approximately $646 million.
The Company believes that it is distinguishable from its competitors
by the quality of its funeral homes and cemeteries, the depth and
experience of its management team, its decentralized management
structure, and the quality and value of its products and services. The
Company believes that it owns and operates one or more of the premier
death care facilities in each of its principal markets, which serve as a
centerpiece for a group or cluster of other properties in the same
metropolitan area. The Company considers a funeral home or cemetery to
be a "premier" facility if, when measured by such factors as tradition,
heritage, reputation, physical size, volume of business, available
inventory, name recognition, aesthetics and potential for development or
expansion, it is one of the most highly regarded facilities in its
market area.
The Company retains key managers of acquired companies and gives
them significant operational authority in order to assure the
continuation of high quality services and the maintenance of the
acquired firm's reputation and goodwill. Six of the Company's 12
executive officers joined the Company through acquisitions. The
Company's 12 executive officers have an average of more than 23 years of
experience in the death care industry.
Operating Strategy
The Company's operating strategy is to build market share and
increase profit margins by marketing and providing, both prior to and at
the time of need, a complete range of death care products and services
at competitive prices. In order to achieve those objectives, the
Company has acquired or developed in most of its markets one or more
premier facilities to serve as a centerpiece for a cluster of other
properties in the same area. Such clustering provides certain economies
of scale by, for example, enabling the Company's facilities to share
vehicles and employees, to reduce administrative expenses, to centralize
embalming services and to pool inventories of caskets and other
merchandise. Further, where feasible, the Company acquires, or
subsequently develops, combined operations in which a funeral home is
located at and is operated in conjunction with a Company-owned cemetery.
Although profit margins of cemetery operations are traditionally lower
than those of funeral homes, the Company's experience with combined
operations has demonstrated that the combination of a cemetery with a
funeral home can increase significantly the market share of the cemetery
and funeral home and provide cost savings through the sharing of
facilities and other resources, thereby increasing the overall
profitability of both.
The Company's operating strategy also emphasizes a decentralized
management structure under which funeral home and cemetery operations
are managed by five regional division presidents, each of whom is an
experienced death care industry executive, who has responsibility for
all operations in his geographic region. Although certain financial
management and policy matters are centralized, division presidents,
local funeral home directors and cemetery managers have substantial
autonomy in the manner in which their products and services are marketed
and delivered and their funeral homes and cemeteries are managed. The
Company believes that this strategy permits each local firm to maintain
its unique style of operation and to capitalize on its reputation and
goodwill, while maintaining centralized supervisory controls and
providing specialized services at the corporate level.
Effective January 1, 1997, the Company expanded its two North
American operating divisions to four. The new Western Division includes
the Company's operations in Canada and on the West Coast, which were
previously part of the Central Division. The new Southern Division
includes the Company's operations in Florida, Puerto Rico and Mexico,
which were previously part of the Eastern Division. These changes
should enable the Company to more efficiently meet the demands of future
growth and support the Company's philosophy of decentralized management.
The Company is a leader in the industry trend toward prearranged
funeral planning. The Company believes that extensive marketing of
death care prearrangements assures a backlog of future business and
builds current and future market share. The Company markets a complete
range of death care products and services on a prearranged basis through
a staff of approximately 2,900 commission sales counselors. Prearranged
plans are generally funded through trust, escrow or insurance
arrangements.
Acquisition Strategy
The Company's acquisition strategy is to expand in existing and new
markets by acquiring premier funeral homes and cemeteries that have the
potential to serve as a centerpiece for a group or cluster of other
properties that may be acquired subsequently in the same metropolitan
area. From the Company's initial public offering in October 1991
through January 10, 1997, it has acquired 258 funeral homes and 91
cemeteries and has entered 16 states, Puerto Rico and four foreign
countries.
The following table sets forth certain information with respect to
the Company's completed and pending acquisition activity.
Number of Aggregate
Funeral Homes Purchase Price
and Cemeteries (in millions)
________________ ________________
Properties owned at October 31, 1991 72 $ -
Acquisitions<F1>:
Fiscal year 1992 11 30.0
Fiscal year 1993 49 94.6
Fiscal year 1994 60 177.6
Fiscal year 1995 70 154.4
Fiscal year 1996 149 179.0
November 1, 1996 - January 10, 1997 10 10.7
Pending acquisitions, as of
January 10, 1997 24 82.8
_______________
<F1> Excludes funeral homes constructed by the Company.
The Company's acquisition strategy reflects a trend in the United
States death care industry of transition from small, family-owned firms
to large, professionally-managed, integrated, multiple-facility firms.
Opportunities for growth through the construction of new cemeteries and
funeral homes are limited because of a lack in many communities of
available or reasonably priced land with appropriate zoning and the
existence of an adequate number of funeral homes already serving a
mature market. Accordingly, companies in the death care industry can
achieve significant growth only by increasing market share through such
means as acquisitions, extensive marketing of prearranged products and
services and the development of combined operations.
The Company believes that the consolidation trend that began in the
United States a number of years ago has now begun to evolve in other
countries, particularly in Europe, Canada, Australia, New Zealand and
Mexico. The Company has acquired a total of 141 funeral homes and
cemeteries in Mexico, Australia, New Zealand and Canada since it first
entered foreign markets in the fourth quarter of fiscal year 1994, and
it believes that attractive expansion opportunities exist in those and
other foreign countries. During fiscal year 1996, the Company entered
New Zealand and Canada through the acquisition of 99 funeral homes and
cemeteries, and expanded its presence in Australia with the acquisition
of another three funeral homes there. The Company will continue to
explore expansion opportunities in foreign countries, although it
expects most of its expansion to continue to occur domestically, with
its primary focus on the midwestern and western United States.
Because combined operations and individual funeral homes typically
produce higher profit margins and cash flow than individual cemetery
operations, the Company seeks primarily to acquire combined operations,
premier cemeteries on or adjacent to which it can build and operate a
funeral home, or individual funeral homes and cemeteries that form the
basis for or strengthen a cluster of death care facilities. From the
Company's initial public offering in October 1991 through January 10,
1997, the Company has acquired or entered into currently outstanding
letters of intent or agreements in principle to acquire 278 funeral
homes and 95 cemeteries, 31 of which are combined operations. The
Company's fiscal year 1996 acquisitions of 134 funeral homes and 15
cemeteries included eight combined operations. Additionally, from
October 1991 through January 10, 1997, the Company has developed six
combined operations, one of which was developed in fiscal year 1996,
through the construction of funeral homes on existing cemeteries. In
evaluating a potential acquisition, the Company also considers factors
such as the size of the community the property serves, the size and
reputation of the property in the community, the proximity of the
property to other of the Company's funeral homes or cemeteries, the
opportunities for additional acquisitions and growth in the community,
and the potential for increasing the cemetery's profitability through
increasing prearranged marketing efforts. In keeping with the quality
of its existing properties, the Company is particularly careful about
the quality of the properties it seeks to acquire.
Operations
Funeral Operations. The Company's funeral homes offer a complete
range of services to meet families' funeral needs, including
prearrangement, family consultation, the sale of caskets and related
funeral products, the removal and preparation of remains, the use of
funeral home facilities for visitation and worship, and transportation
services. Most of the Company's funeral homes have a non-denominational
chapel on the premises, thereby permitting family visitation and
religious services to take place at one location, which reduces
transportation costs to the Company and inconvenience to the family.
In addition to traditional services, substantially all of the
Company's funeral homes offer cremation, which has become more common in
the United States in recent years. For the year ended October 31, 1996,
cremations accounted for approximately 21% of funeral services performed
by the Company in the United States. In Australia, New Zealand and
Mexico, cremations accounted for 63%, 71% and 46%, respectively, of
funeral services performed by the Company for the year ended October 31,
1996. On September 30, 1996, the Company entered Canadian markets with
the acquisition of the Urgel Bourgie firm. Historically, cremations
have accounted for approximately 50% of the funeral services performed
by Urgel Bourgie. While cremations within the United States often
result in lower average revenue when compared to traditional funeral
services, they generally produce higher gross profit margins than
traditional funeral services. In the Company's foreign markets,
cremations generally produce revenues comparable to those of traditional
funeral services in those markets.
In addition to at-need sales, the Company markets funeral
merchandise and services as well as cemetery property and merchandise on
a prearranged basis through a staff of approximately 2,900 commission
sales counselors. Prearranged funeral plans enable families to
establish in advance the type of service to be performed, the products
to be used and the cost of such products and services in accordance with
prices prevailing at the time the agreement is signed rather than when
the products and services are delivered. Prearranged funeral plans
permit families to eliminate the emotional strain of making death care
plans at the time of need and enable the Company to establish a portion
of its future market share. The Company believes that extensive
marketing of prearranged products and services produces a backlog of
future business and builds current and future market share. The Company
sold 37,545 prearranged funeral services during the fiscal year ended
October 31, 1996. At October 31, 1996, the Company had a backlog of
294,829 prearranged funeral services expected to be delivered some time
in the future.
Prearranged funeral plans generally are financed either through
trust funds or escrow accounts established by the Company, or through
insurance. The Company's selection of trust funds, escrow accounts or
insurance depends primarily on the regulatory requirements of each
jurisdiction in which it operates. In the case of trust- or escrow-
funded plans, local law or contracts with customers often require that
all or a portion of the payments received by the Company for prearranged
funeral plans be placed in trust funds or escrow accounts established by
the Company. In certain jurisdictions where trust or escrow
arrangements are neither statutorily nor contractually required, the
Company typically deposits on a voluntary basis a portion of the
payments received into escrow accounts to fund the future delivery of
prearranged funeral plans.
Prearranged funeral trust funds and escrow accounts, which amounted
to approximately $349 million at October 31, 1996, are designed to
provide funding for the future delivery of prearranged funeral services
sold by the Company. When a prearranged funeral is funded through a
trust fund or escrow account, generally a percentage of the sale price,
which is often paid in installments, can be retained by the Company to
defray costs related to the sale, and the remainder is placed in a trust
fund or escrow account. The percentage of the sale price placed in
trust funds or in escrow accounts varies among the different
jurisdictions in which the Company operates.
The Company does not recognize revenue from the sale of prearranged
funeral services until delivery. The Company does not recognize revenue
from sales of prearranged funeral merchandise until delivery in
jurisdictions where such sales are revocable by the customer; where such
sales are not revocable, revenue is recognized currently. The Company
recognizes as revenue on a current basis all dividends and interest
earned, and net capital gains realized, by all prearranged funeral trust
funds and escrow accounts except in those states where earnings revert
to the customer if a prearranged funeral service contract is cancelled.
Principal and earnings are withdrawn only as funeral services are
delivered or contracts are cancelled, except in jurisdictions that
permit earnings to be withdrawn currently and in unregulated
jurisdictions where escrow accounts are used.
Funeral operations accounted for approximately 52% of the Company's
revenues during the fiscal year ended October 31, 1996.
Cemetery Operations. The Company's cemetery operations involve the
sale of cemetery property and related cemetery merchandise, which
includes lots, lawn crypts, family and community mausoleums, monuments,
memorials and burial vaults, and interment services. Cemetery property
and merchandise sales are made at the time of need or on a prearranged
basis. Prearranged sales generally are financed by the Company through
installment sale contracts, the terms of which generally range from one
to seven years. Prearranged sales represented approximately 61% of
cemetery revenue during the fiscal year ended October 31, 1996.
Prearranged cemetery merchandise trust funds and escrow accounts,
which amounted to approximately $114 million at October 31, 1996, are
designed to provide funding for the future delivery of the prearranged
merchandise sold by the Company and are established in most of the
jurisdictions in which the Company operates. In certain jurisdictions,
local law or contracts with customers generally require that a portion
of the sale price received be placed in trust funds or escrow accounts;
however, in other jurisdictions where trust or escrow arrangements are
neither statutorily nor contractually required, the Company typically
makes deposits on a voluntary basis into escrow accounts. The Company
recognizes as revenue on a current basis all dividends and interest
earned, and net capital gains realized, by prearranged merchandise trust
funds or escrow accounts. At the same time, the liability for the
estimated cost to deliver cemetery merchandise is adjusted through a
charge to earnings to reflect inflationary merchandise cost increases.
The principal and earnings are withdrawn only as the merchandise is
delivered or contracts are cancelled.
The Company also provides maintenance of cemetery grounds pursuant
to perpetual care contracts and laws, or on a voluntary basis where
trust or escrow arrangements are neither contractually nor statutorily
required, by placing a portion, generally 10%, of the proceeds from
cemetery property sales into perpetual care trust funds or escrow
accounts. The income from these funds, which have been established in
most jurisdictions in which the Company operates cemeteries, is used for
maintenance of those cemeteries, but principal, including in some
jurisdictions net realized capital gains, generally must be held in
perpetuity. The Company recognizes and withdraws currently all dividend
and interest income earned and, where permitted, net capital gains
realized by perpetual care funds. Perpetual care trust funds and escrow
accounts amounted to approximately $145 million at October 31, 1996.
Cemetery operations accounted for approximately 48% of the Company's
revenues for the fiscal year ended October 31, 1996.
Combined Funeral and Cemetery Operations. Fifty of the Company's
120 cemeteries are combined operations. Many of these facilities are in
the Company's key markets, including New Orleans, Louisiana; Dallas,
Fort Worth and Houston, Texas; Miami, Orlando, Tampa and St. Petersburg,
Florida; Nashville and Knoxville, Tennessee; Mobile, Alabama; Baltimore,
Maryland; Philadelphia, Pennsylvania; Portland, Oregon; Los Angeles,
California; and Washington, D.C.
The Company began to develop and acquire combined facilities in 1979
because it believed that the operation of such facilities would permit
it to increase market share through the delivery of better and more
convenient services at competitive prices. Although profit margins of
cemetery operations typically are lower than those of funeral homes, the
Company's experience with combined operations has demonstrated that the
combination of a cemetery with a funeral home can increase significantly
the market share of the cemetery and funeral home, thereby increasing
the overall profitability of both. The enhanced purchasing power, more
sophisticated management systems and sharing of facilities, personnel
and equipment made possible by integration and combined facilities
results in lower average operating costs to the Company and allows the
Company to offer families the convenience of complete funeral home and
cemetery planning and services from a single supplier at a competitive
price.
Foreign Operations. Since the Company first entered foreign markets
in the fourth quarter of fiscal year 1994, the Company has acquired a
total of 141 funeral homes and cemeteries in Mexico, Australia, New
Zealand and Canada. These properties generated approximately 10% of
consolidated total revenues for the year ended October 31, 1996, and
management expects these properties to generate slightly more than 10%
of consolidated total revenues for fiscal year 1997. In addition, these
properties accounted for approximately 34% of the Company's funeral home
and cemetery locations and approximately 18% of consolidated total
assets as of October 31, 1996. See Note 13 to the Company's
consolidated financial statements included in Item 8 herein.
In addition to the inherent risks generally associated with foreign
operations, fluctuations in the value of the foreign currency of the
country in which the Company operates relative to the U.S. dollar can
affect the value, in U.S. dollar terms, of the earnings derived from the
foreign operations and can result in foreign currency translation
adjustments that affect the Company's shareholders' equity or, in the
case of operations in highly inflationary economies, net earnings.
Furthermore, based on the three-year cumulative inflation rate in Mexico
as of October 31, 1996, the Company will be required to change its
method of reporting foreign currency translation adjustments for its
Mexican operations to the method prescribed for highly inflationary
economies during the first quarter of fiscal year 1997. As a result,
foreign currency translation adjustments for the Company's Mexican
operations will be reflected in results of operations, instead of in
shareholders' equity. Management does not expect this change to have a
material effect on the Company's results of operations.
There can be no assurance that expansion into foreign markets will
yield results comparable to those realized as a result of the Company's
expansion in the United States. Through fiscal year 1996, however, the
Company's foreign operations have produced results that do not deviate
significantly from management's expectations.
Trust Administration. The prearranged funeral, cemetery
merchandise and perpetual care trust funds and escrow accounts
established by the Company are generally administered by the Company's
wholly-owned subsidiary, Investors Trust, Inc. ("ITI"), a Texas
corporation with trust powers. Commercial banks serve as custodians of
the Texas funds and as trustees or custodians of the non-Texas funds.
ITI acts as trustee of all the Texas trusts and the Stewart Enterprises
Employees' Retirement Trust ("SEERT"), performs investment advisory
services for those trusts and the funeral, cemetery merchandise and
perpetual care funds established by the Company in all other
jurisdictions, and currently manages the Company's investment portfolio.
ITI is registered with the Securities and Exchange Commission under the
Investment Advisers Act of 1940.
At October 31, 1996, ITI had approximately $563 million in assets
under management on behalf of the funds described above, SEERT and the
Company. ITI is headed by Lawrence B. Hawkins, an executive officer of
the Company and a professional investment manager, who joined ITI in
early 1989 after serving for six years as the manager of ITI's accounts
for one of its prior investment advisers. ITI operates pursuant to a
formal investment policy that emphasizes conservation, diversification
and preservation of principal while seeking appropriate levels of
current income and capital appreciation.
Financial Information about Industry and Geographic Segments. For
financial information about the Company's industry and geographic
segments, including the identifiable assets of the Company by segment,
see Note 13 to the consolidated financial statements included in Item 8
herein.
Competition
The Company's funeral home and cemetery operations generally face
intense competition in local markets that typically are served by
numerous funeral home and cemetery firms. The Company also competes
with monument dealers, casket retailers and other non-traditional
providers of limited services or products. Because the market for death
care services is relatively stable, competition usually focuses on
increasing market share and selling prearranged products and services.
Market share is largely a function of goodwill and tradition, although
competitive pricing, professional service and attractive, well-
maintained and conveniently located facilities are also important.
Because of the significant role played by goodwill and tradition, market
share increases are usually gained over a long period of time.
Extensive marketing through media advertising, direct mailings and
personal sales calls has increased in recent years, especially with
respect to the sale of prearranged funeral services.
The Company's traditional burial and funeral service operations
face competition from the increasing number of cremations in the United
States. Industry studies indicate that the percentage of cremations has
increased throughout the 1980s and that cremation will represent
approximately 26% of the U.S. burial market by the year 2000, compared
with 14% in 1986. All of the Company's funeral homes in the United
States offer cremation, and the Company believes that it will be able to
maintain its competitive position by marketing full service cremations
in combination with traditional funeral services and memorialization.
The Company also faces intense competition in its acquisition
program, principally from two publicly-held funeral home and cemetery
management firms, Service Corporation International and The Loewen Group
Inc., both of which are substantially larger than the Company, although
a number of smaller companies also participate in the market. Much
acquisition activity appears to be concentrated on firms in metropolitan
regions, which are the areas of primary interest to the Company.
Furthermore, in the United States, prices for funeral home and cemetery
properties have increased substantially in recent years. Some of the
more attractive properties in some metropolitan markets have already
been acquired by competitors, and certain other markets are unattractive
because of such factors as size, demographics and the local regulatory
environment. Accordingly, no assurance can be given that the Company
will be successful in expanding its operations through acquisitions.
However, only a small portion of this highly fragmented industry has
been consolidated, and the Company believes that opportunities for
significant growth through acquisitions continue to exist.
Regulation
The Company's funeral home operations are regulated by the Federal
Trade Commission (the "FTC") under the FTC's Trade Regulation Rule on
Funeral Industry Practices, 16 CFR Part 453 (the "Funeral Rule"), which
went into effect on April 30, 1984, and was revised effective July 19,
1994.
The Funeral Rule defines certain acts or practices as unfair or
deceptive, and contains certain requirements to prevent these unfair or
deceptive acts or practices. The preventive requirements require a
funeral provider to give consumers accurate, itemized price information
and various other disclosures about funeral goods and services. In
addition, the preventive requirements prohibit a funeral provider from
(i) misrepresenting legal, crematory and cemetery requirements, (ii)
embalming for a fee without permission, (iii) requiring the purchase of
a casket for direct cremation, and (iv) requiring consumers to buy
certain funeral goods or services as a condition for furnishing other
funeral goods or services.
The Company's operations are also subject to extensive regulation,
supervision, and licensing under numerous federal, state and local laws
and regulations. The Company believes that it is in substantial
compliance with the Funeral Rule and all such laws and regulations.
State legislatures and regulatory agencies frequently propose new laws
and regulations, some of which, if enacted as proposed, could have a
material effect on the Company's operations and on the death care
industry in general. The Company cannot predict the outcome of any
proposed legislation or regulation or the effect that any such
legislation or regulation might have on the Company.
Employees
The Company and its subsidiaries employ approximately 7,500 persons,
and management believes that its relationship with its employees is
good. Approximately 275 of its employees who are employed in Maryland,
Pennsylvania, Puerto Rico, Mexico, Australia and Canada are represented
by the Laborers' International Union of North America, AFL-CIO, the
International Association of Machinists and Aerospace Workers, the
International Brotherhood of Teamsters of Puerto Rico, the Sindicato de
Trabajadores y Empleados de Establecimientos Comerciales, Tiendas de
Ropa y Almacenes en General del Distrito Federal, the Miscellaneous
Workers Union and Association des Travailleurs du Syndicat Canadien
(SCEP), respectively. No other employees of the Company or its
subsidiaries are members of a collective bargaining unit.
Item 2. Properties
All but 43 of the Company's 308 funeral home properties are owned by
subsidiaries of the Company. The leases with respect to the 43
properties have terms ranging from three to 20 years. Generally, the
Company has a right of first refusal and an option to purchase the
leased premises. An aggregate of $3.3 million of the Company's term
notes are secured by mortgages on some of the Company's funeral homes;
these notes were either assumed by the Company upon its acquisition of
the property or represent seller financing of the acquired property.
The Company owns 120 cemeteries covering a total of approximately
8,600 acres. Approximately 3,900 acres, or 45% of the total acreage, is
available for future development.
The Company's corporate headquarters occupy approximately 46,200
square feet of office space in a building in suburban New Orleans that
is leased from an affiliate of the Company. See "Certain Transactions,"
which is incorporated by reference herein from the Company's definitive
proxy statement relating to its 1997 annual meeting of shareholders.
Item 3. Legal Proceedings
United States of America v. Restland Funeral Home, Inc., Laurel Land
Funeral Home, Inc., Singing Hills Funeral Home, Inc., Bluebonnet Hills
Funeral Home, Inc., and Laurel Land Funeral Home of Fort Worth, Inc.,
United States District Court for the Northern District of Texas. On
December 3, 1991, the United States Department of Justice (the "Justice
Department"), on behalf of the Federal Trade Commission (the "FTC"),
filed a complaint against five of the Company's Texas funeral home
subsidiaries. The complaint alleged that the funeral home subsidiaries
had violated certain requirements of the Funeral Rule concerning funeral
industry practices, including the disclosure of price information and
the delivery of itemized written statements for funeral goods and
services selected. The FTC originally sought unspecified civil
penalties and injunctive and other relief from each of the funeral home
subsidiaries. In July 1993, the Justice Department filed a motion
requesting civil penalties of $2 million. On September 19, 1996, the
District Court entered a Consent Decree in Settlement which allowed the
Company to settle the case, without admitting liability and expressly
denying the matters alleged in the complaint, by paying a civil penalty
of $122,000 and agreeing to certain administrative requirements on a
prospective basis. Compliance with the administrative requirements will
not have a material adverse effect on the financial position, results of
operations or cash flows of the Company.
Osiris Holding Co., S.A. de C.V. et al. vs. Jaime Arrangoiz Gayosso
et al., Ordinary Mercantile Proceedings in the Superior Court of Justice
of the Federal District of Mexico, United Mexican States, Thirteenth
Civil Court. This suit was brought in September 1994 by The Loewen
Group Inc. and a Mexican affiliate (collectively, "Loewen") against the
Company, the Mexican corporations acquired by the Company in August
1994, and the shareholders of those corporations. The suit alleges that
the sale of those corporations to the Company violated a previous option
granted by the shareholders to Loewen. The suit originally requested a
judicial declaration that Loewen properly exercised its option prior to
the purchase by the Company and that Loewen thereby acquired title to
the corporations. The suit also sought unspecified damages. The
Company believes the suit is without merit and intends to defend it
vigorously. The Company was advised by its Mexican counsel that Loewen
has dismissed the Company from the suit and has relinquished its claim
of ownership to the stock of the corporations, thereby limiting itself
to a claim for damages. Although the corporations, which are now
subsidiaries of the Company, remain defendants, the Company does not
believe that they have any liability for damages and believes that they
are entitled to indemnity from the sellers to the extent that they are
held liable.
Other. The Company and certain of its subsidiaries are parties to a
number of other legal proceedings that have arisen in the ordinary
course of business. While the outcome of these proceedings cannot be
predicted with certainty, management does not expect these matters to
have a material adverse effect on the consolidated financial position,
results of operations or cash flows of the Company.
The Company carries insurance with coverages and coverage limits
that it believes to be adequate in the death care industry. Although
there can be no assurance that such insurance is sufficient to protect
the Company against all contingencies, management believes that its
insurance protection is reasonable in view of the nature and scope of
the Company's operations.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 4(a). Executive Officers of the Registrant
The following table sets forth certain information with respect to
the executive officers of the Company. Executive officers are appointed
by and serve at the pleasure of the Board of Directors, subject in
certain cases to rights under existing employment agreements. Each of
the following has served the Company in the capacity indicated for more
than five years, except as indicated below.
Name Age Position
______ _____ _________
Frank B. Stewart, Jr. 61 Chairman of the Board<F1>
Joseph P. Henican, III 48 Vice Chairman of the Board and
Chief Executive Officer<F2>
William E. Rowe 50 President, Chief Operating Officer
and Director<F3>
Ronald H. Patron 52 Executive Vice President,
President-Corporate Division,
Chief Financial Officer and
Director
Gerard C. Alexander 57 Executive Vice President and
President-Central Division<F4>
Richard O. Baldwin, Jr. 50 Executive Vice President and
President-Corporate Development
Division<F5>
Brian J. Marlowe 50 Executive Vice President and
President-Eastern Division<F6>
Andrew H. McEachern 59 President-Australian Division<F7>
Lawrence B. Hawkins 48 Senior Vice President and
President-Investors Trust, Inc.
Brent F. Heffron 47 Senior Vice President and
President-Southern Division<F8>
Raymond C. Knopke, Jr. 41 Senior Vice President and
President-Western Division<F9>
Kenneth C. Budde 49 Senior Vice President-Finance,
Chief Accounting Officer,
Secretary and Treasurer
_____________________
<F1> Mr. Stewart served as interim Chief Executive Officer from November
1, 1994, upon the resignation of Lawrence M. Berner as President and
Chief Executive Officer, until February 1, 1995, when Joseph P.
Henican, III assumed the office of Chief Executive Officer.
<F2> Mr. Henican has served as Vice Chairman of the Board since May 1991,
and as Chief Executive Officer since February 1, 1995. Prior to
that time, he was a partner in the law firm Henican, James &
Cleveland, where he served as general counsel to the Company for
more than 13 years.
<F3> Mr. Rowe assumed the office of President on November 1, 1994 upon
the resignation of Lawrence M. Berner as President and Chief
Executive Officer. He became Senior Executive Vice President and
Chief Operating Officer in April 1994. Prior to that time, he
served as President of the Company's former Mid-Atlantic Division
since 1987 and as Executive Vice President and President of the
former Mid-Atlantic Division since May 1991. He became a director
of the Company in April 1994.
<F4> Mr. Alexander has served as Executive Vice President and President
of the Company's Central Division since August 1, 1995. Prior to
that time, he served as Executive Vice President and President of
the Company's former South Central Division.
<F5> Mr. Baldwin has served as Executive Vice President and President of
the Company's Corporate Development Division since August 1, 1995.
Prior to that time, he served as Executive Vice President and
President of the Company's former Southeast Division.
<F6> Mr. Marlowe has served as Executive Vice President and President of
the Company's Eastern Division since August 1, 1995. From April
1994 to July 1995, he served as Executive Vice President and
President of the Company's former Mid-Atlantic Division. From
November 1992 to April 1994 he served as Chief Operating Officer of
the Company's former Mid-Atlantic Division's Northern Region. Prior
to that time, he was the President of Richmond Memorial Parks, Inc.
and Executive Vice President of Parklawn Memorial Park, Inc.
<F7> Mr. McEachern has served as President of the Company's Australian
Division since December 1994. Prior to that time, he served as the
Chief Executive Officer and Managing Director of Credit Union
Australia Limited.
<F8> Mr. Heffron was appointed President of the Company's newly formed
Southern Division, effective January 1, 1997. From November 1992 to
December 1996, he served as President and Chief Operating Officer of
the Central Region of the Company's Eastern Division and Vice
President of the Company's former Mid-Atlantic Division. From
February 1992 to October 1992, Mr. Heffron served as President of
Catawba Memorial Park and Funeral Home, which was acquired by the
Company in February 1992. Prior to the acquisition, Mr. Heffron
served as President of Catawba Memorial Park and Funeral Home.
<F9> Mr. Knopke was appointed President of the Company's newly formed
Western Division, effective January 1, 1997. From December 1993 to
December 1996, he served as President and Chief Operating Officer of
the South Atlantic Region of the Company's Eastern Division. Prior
to that time, he served as President of Baldwin Fairchild Cemeteries
and Funeral Homes, which was acquired by the Company in 1983.
<PAGE>
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder
Matters
Market Information
The Company's Class A Common Stock is traded on the Nasdaq National
Market under the symbol STEI. The following table sets forth, for the
periods indicated, the range of high and low bid prices, as reported by
the Nasdaq National Market. Prices for fiscal year 1995 and for the
first three quarters of fiscal year 1996 have been adjusted to reflect a
three-for-two stock split effected in the form of a 50% stock dividend
on June 21, 1996. At January 8, 1997, there were 1,150 record holders
of the Company's Class A Common Stock.
High Low
_______ ______
Fiscal Year 1996
Fourth Quarter 36 26 3/4
Third Quarter 32 11/64 24 1/2
Second Quarter 31 24 43/64
First Quarter 26 11/64 21 11/64
Fiscal Year 1995
Fourth Quarter 24 20 11/64
Third Quarter 22 43/64 18 1/2
Second Quarter 18 21/64 15 53/64
First Quarter 16 1/2 15 1/2
Dividends
The Company declared quarterly dividends of $.007 per share on its
Class A and Class B Common Stock during the first three quarters of
fiscal year 1995, $.013 per share during the fourth quarter of fiscal
year 1995 and the first two quarters of fiscal year 1996, and $.02 per
share during the last two quarters of fiscal year 1996. The Company
intends to continue its current policy of declaring quarterly cash
dividends on the Class A and Class B Common Stock in the amount of $.02
per share. The declaration and payment of dividends is at the
discretion of the Board of Directors and will depend on the Company's
results of operations, financial condition, cash requirements, future
prospects and other factors deemed relevant by the Board. The most
restrictive of the Company's credit agreements restricts the payment of
dividends on, and repurchases of, the capital stock of the Company in
amounts in excess of 20% of the Company's consolidated net earnings for
the previous four fiscal quarters.
Sales of Unregistered Equity Securities
During the fourth quarter of fiscal year 1996, the Company did not
sell any unregistered equity securities.
Item 6. Selected Financial Data
The following selected consolidated financial data for the fiscal
years ended October 31, 1992 through 1996 are derived from the Company's
audited consolidated financial statements. The data set forth below
should be read in conjunction with the consolidated financial statements
of the Company and the notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing
elsewhere herein.
<TABLE>
<CAPTION>
Selected Consolidated Financial Data
(Dollars in thousands, except per share data)
Year Ended October 31,
_________________________________________________________________
1996 1995 1994 1993 1992
_______ _______ ______ _______ ______
<S> <C> <C> <C> <C> <C>
Statement of Earnings Data:
Revenues:
Funeral $ 225,461 $ 188,991 $ 116,266 $ 75,348 $ 61,493
Cemetery<F1> 207,926 179,831 138,092 107,315 83,338
___________ ____________ ___________ ___________ ___________
Total revenues 433,387 368,822 254,358 182,663 144,831
Gross profit:
Funeral 72,239 55,309 31,785 22,398 17,227
Cemetery(1) 45,879 34,434 25,812 19,032 14,446
___________ ____________ ___________ ___________ ___________
Total gross profit 118,118 89,743 57,597 41,430 31,673
Corporate general and
administrative (14,096) (11,113) (8,157) (7,223) (5,030)
___________ ____________ ___________ ___________ ___________
Operating earnings before performance-
based stock options 104,022 78,630 49,440 34,207 26,643
Performance-based stock options - (17,252) - - -
___________ ____________ ___________ ___________ ___________
Operating earnings 104,022 61,378 49,440 34,207 26,643
Interest expense (26,051) (22,815) (8,877) (6,540) (5,414)
Investment and other income 4,104 2,937 1,635 1,902 1,221
Distributions to prior ITI
shareholders<F2> - - - - (1,508)
___________ ____________ ___________ ___________ ___________
Earnings from continuing operations
before income taxes $ 82,075 $ 41,500<F3> $ 42,198 $ 29,569 $ 20,942
=========== ============ =========== =========== ===========
Earnings from continuing
operations $ 51,297 $ 26,145<F3> $ 27,253 $ 18,839 $ 14,195
=========== ============= =========== =========== ===========
Earnings per common share from
continuing operations<F4> $ 1.24 $ .72<F3> $ .85 $ .71 $ .64
========== ============= ========== =========== ===========
Weighted average common shares
outstanding (in thousands)<F4> 41,410 36,386 31,910 26,535 22,239
========== ============= ========== =========== ==========
Dividends declared per common
share<F4> $ .066 $ .033 $ .027 $ .018 $ .005
========== ============ ========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
October 31,
________________________________________________________
1996 1995 1994 1993 1992
______ _______ _______ _______ ________
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Assets $ 1,365,941 $ 1,072,435 $ 759,390 $ 455,942 $ 299,996
Long-term debt, less current
maturities 515,901 317,451 260,913 122,517 82,740
Shareholders' equity 547,447 483,978 325,671 232,006 143,134
</TABLE>
Selected Consolidated Operating Data
<TABLE>
<CAPTION>
Year Ended October 31,
____________________________________________
1996 1995 1994 1993 1992
_______ _______ _______ ________ ______
<S> <C> <C> <C> <C> <C>
Operating Data:
Funeral homes in operation at end
of period 298 161 105 76 48
At-need funerals performed 38,351 37,263 23,539 14,588 12,365
Prearranged funerals performed 15,422 9,225 7,571 6,320 5,449
_______ _______ _______ _________ ________
Total funerals performed 53,773 46,488 31,110 20,908 17,814
Prearranged funerals sold 37,545 33,787 26,637 17,859 15,250
Backlog of prearranged funerals
at end of period 294,829 222,532 183,886 130,610 112,801
Cemeteries in operation at end
of period 120 105 90 57 35
Interments performed 46,007 42,480 33,118 26,557 22,107
</TABLE>
____________________________
<F1> Includes the Company's construction and sales operations, which
previously were classified as a separate industry segment.
<F2> Investors Trust, Inc. ("ITI"), which generally administers the
Company's trust funds and escrow accounts, was acquired by the
Company on November 1, 1992.
<F3> Includes a non-recurring, non-cash charge of $17.3 million ($10.9
million, or $.30 per share, after-tax) recorded during the third
quarter of fiscal year 1995 in connection with the vesting of the
Company's performance-based stock options.
<F4> Fiscal years 1992 and 1993 reflect the Company's three-for-two split
of its Class A and Class B Common Stock effected December 1, 1993 by
means of a 50% stock dividend. Additionally, all periods presented
reflect the Company's three-for-two split effected June 21, 1996 by
means of a 50% stock dividend.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Introduction
The death care industry in the United States is undergoing a
transition in which many family-owned firms are consolidating with
larger organizations such as the Company. In addition, the Company
believes that this trend has now begun to evolve in other countries,
particularly in Europe, Canada, Australia, New Zealand and Mexico.
Although the Company's future participation in this consolidation cannot
be guaranteed, the Company believes that it has been successful in
identifying and acquiring firms that have enhanced shareholder value,
and it will continue to explore expansion opportunities in foreign
countries, although it expects most of its expansion to continue to
occur in the United States.
Two other trends affecting the death care industry are the death
rate and average age of the population. Industry studies indicate that
while the death rate is declining slightly, the average age of the
population is increasing. This is expected to result in a long-term,
small, though stable, increase in the number of deaths, despite short-
term deviations. More importantly, because of the Company's emphasis on
prearranged sales, it anticipates that the aging of the population will
create additional opportunities for the Company to expand its customer
base since the principal market for these prearranged services is the
more mature and fastest growing segment of the population.
The Company's funeral and cemetery business includes prearranged
sales funded through trust and escrow arrangements, as well as
maintenance of cemetery grounds funded through perpetual care funds.
The Company's investment strategy for these funds is partially dependent
on the ability to withdraw net realized capital gains from these funds.
Such withdrawal is not permitted for perpetual care funds in certain
jurisdictions in which the Company operates. Accordingly, funds for
which net capital gains are permitted to be withdrawn typically are
invested in a diversified portfolio consisting principally of U.S.
government securities, other interest-bearing securities and preferred
stocks rated A or better, publicly-traded common stocks, money market
funds and other short-term investments.
The Company recognizes as revenue on a current basis all dividends
and interest earned and realized capital gains (including capital gains
in perpetual care funds from which net realized capital gains may be
withdrawn), from the sale of securities held in trust funds and escrow
accounts. The composition of trust and escrow income from funds,
especially those including common stock, can be materially affected by
prevailing interest rates and the performance of the stock market. In
managing its domestic funds, including those in Puerto Rico, which
include investments in common stock, the Company seeks an overall annual
rate of return within a range of 8.5-9.0%. In the past three years,
such funds have generated overall annual rates of return that
approximate that range. However, no assurance can be given that the
Company will be successful in achieving any particular rate of return.
Certain statements made herein 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. Forward-looking statements are based on assumptions about future
events and therefore are inherently uncertain; actual results may differ
materially from those projected. See "Cautionary Statements."
For purposes of the following discussion, funeral homes and
cemeteries owned and operated for the entirety of both periods being
compared are referred to as "Existing Operations." Correspondingly,
funeral homes and cemeteries acquired or funeral homes opened during
either period being compared are referred to as "Acquired Operations."
Results of Operations
Year Ended October 31, 1996 Compared to Year Ended October 31, 1995
Funeral Segment
Year Ended
October 31,
_____________ Increase
1996 1995 (Decrease)
_______ ______ ____________
(In millions)
Funeral Revenue
_______________
Existing Operations $ 144.6 $ 146.5 $ (1.9)
Acquired Operations 52.2 19.5 32.7
Revenue from prearranged
funeral trust funds and
escrow accounts 28.7 23.0 5.7
________ ________ ________
$ 225.5 $ 189.0 $36.5
======== ======== ========
Funeral Costs
Existing Operations $ 112.7 $ 118.7 $(6.0)
Acquired Operations 40.5 15.0 25.5
________ ________ _________
$ 153.2 $ 133.7 $ 19.5
======== ======== =========
Funeral Segment Profit $ 72.3 $ 55.3 $ 17.0
======== ======== =========
Funeral revenue increased $36.5 million, or 19%, in fiscal year
1996, as compared with the prior fiscal year. The Company experienced a
$1.9 million decrease in revenue from Existing Operations as a result of
a decline in sales of certain prearranged funeral merchandise from
fiscal year 1995 to fiscal year 1996, and a $4.9 million decline in
funeral revenue from the Company's Mexican operations due to a 26%
devaluation of the Mexican peso from fiscal year 1995 to fiscal year
1996. Additionally, there was a 5.5% decrease in the number of domestic
funeral services performed by Existing Operations (6.7% total). The
decline in revenue was offset partially by a 7% increase in average
revenue per funeral service performed due principally to price increases
and improved merchandising. The Company believes that the decline in
the number of funeral services performed is attributable to a decline in
the number of deaths in certain of the Company's markets and increased
competition from low-cost funeral service providers in certain markets.
The $6.0 million, or 5%, decrease in funeral costs from Existing
Operations resulted principally from the implementation of certain cost
control measures, including contract negotiations with certain vendors,
a $3.6 million decrease in costs attributable to the Company's Mexican
operations due to the devaluation of the Mexican peso noted above, and
the decline in funeral services noted above. Existing Operations
achieved improved profit margins resulting primarily from the increased
cost controls and the increased average revenue per funeral service
mentioned above.
The increase in revenue and costs from Acquired Operations resulted
primarily from the Company's acquisition or construction of funeral
homes in fiscal year 1996 which are not reflected in the 1995 period
presented above.
The $5.7 million increase in revenue from prearranged funeral trust
fund and escrow accounts was attributable to a 22% growth in the average
balance in such trust funds and escrow accounts, resulting primarily
from current year customer payments deposited into the funds and funds
added through acquisitions, coupled with an increase in the return on
the Company's domestic funds, which return is still within the Company's
goal of 8.5-9.0%. The return on the peso-denominated investments of the
Mexican subsidiaries, which comprise approximately 10% of the Company's
total funeral trust portfolio, averaged 23% for the fiscal year ended
October 31, 1996. The return on the Mexican funds partially offset the
26% devaluation and associated decline in funeral revenue discussed
above and the approximate 29% inflation experienced during the year.
Cemetery Segment
Year Ended
October 31,
_____________ Increase
1996 1995 (Decrease)
_______ ______ ____________
(In millions)
Cemetery Revenue
Existing Operations $ 179.1 $ 168.8 $ 10.3
Acquired Operations 19.7 5.5 14.2
Revenue from merchandise trust
funds and escrow accounts 9.1 5.5 3.6
________ ________ _________
$ 207.9 $ 179.8 $ 28.1
======== ======== =========
Cemetery Costs
Existing Operations $ 145.4 $ 140.5 $ 4.9
Acquired Operations 16.6 4.9 11.7
________ _______ __________
$ 162.0 $ 145.4 $ 16.6
======== ======= =========
Cemetery Segment Profit $ 45.9 $ 34.4 $ 11.5
======== ======= =========
Cemetery revenue increased $28.1 million, or 16%, in fiscal year
1996, as compared to fiscal year 1995, due principally to a $14.2
million increase in revenue from Acquired Operations and a $10.3 million
increase in revenue from Existing Operations. Costs increased during
this same period by $16.6 million, of which $11.7 million was
attributable to Acquired Operations. The $10.3 million, or 6%, increase
in revenue from Existing Operations, and the $4.9 million, or 3.5%,
increase in costs from Existing Operations were due principally to the
significant decrease in fiscal year 1996, as compared to fiscal year
1995, in the revenue and direct cost deferral required by the accounting
principles prescribed for sales of real estate. These factors and
others, including certain cost control measures implemented by the
Company, contributed to an increase in the profit margin of Existing
Operations. The increase in revenues and costs associated with Acquired
Operations resulted primarily from the acquisition of cemeteries during
fiscal year 1996 which are not reflected in the 1995 period presented
above.
The $3.6 million increase in revenue from merchandise trust funds
and escrow accounts was attributable principally to a 30% growth in the
average balance in the merchandise trust funds and escrow accounts,
resulting primarily from current year payments deposited into the funds,
along with funds added through acquisitions, coupled with an increase in
the return on the funds, which return is still within the Company's goal
of 8.5-9.0%.
Other
Corporate general and administrative expenses increased $3.0
million in fiscal year 1996, to 3.3% of revenue, as compared to 3.0% in
fiscal year 1995. The increase in these expenses is the result of
activities to support the Company's growth, including approximately $2.0
million expensed in an undertaking to centralize and standardize certain
financial and administrative functions. Management expects to incur
additional costs in fiscal year 1997 related to the continuous
improvement process, which costs are not expected to be material.
During the quarter ended July 31, 1995, the Company determined that
achievement of the objectives of its performance-based stock option plan
had become probable. In connection with this determination, the Company
recorded a non-cash charge of $17.3 million, or $10.9 million after tax,
in July 1995. Additionally, the Company accelerated the exercisability
of the options, thereby establishing the total charge to earnings. For
additional information about the Company's performance-based stock
option charge, see "Year Ended October 31, 1995 Compared to Year Ended
October 31, 1994--Other."
Interest expense increased $3.2 million during fiscal year 1996
when compared to fiscal year 1995. The increase resulted from an
increase in average borrowings, which was partially offset by a decrease
in average interest rates from 7.2% to 6.7%. Approximately $378.8
million of the outstanding borrowings at October 31, 1996 was subject to
short-term variable interest rates averaging approximately 6.2%.
Investment and other income increased $1.2 million during fiscal
year 1996 when compared to fiscal year 1995, due principally to a $1.6
million gain on the condemnation sale of land in fiscal year 1996.
The Company experienced an increase in its effective tax rate from
37.0% in fiscal year 1995 to 37.5% in fiscal year 1996. For fiscal year
1997, the Company anticipates that its effective tax rate will decline
slightly as a result of reducing the costs of foreign taxes.
Year Ended October 31, 1995 Compared to Year Ended October 31, 1994
Funeral Segment
Year Ended
October 31,
_____________
1995 1994 Increase
_______ ______ ____________
(In millions)
Funeral Revenue
Existing Operations $ 104.4 $ 84.4 $ 20.0
Acquired Operations 61.6 17.6 44.0
Revenue from prearranged funeral
trust funds and escrow accounts 23.0 14.3 8.7
________ ________ _________
$ 189.0 $ 116.3 $ 72.7
======== ======== ==========
Funeral Costs
Existing Operations $ 82.1 $ 70.2 $ 11.9
Acquired Operations 51.6 14.3 37.3
________ ________ _________
$ 133.7 $ 84.5 $ 49.2
======== ========= =========
Funeral Segment Profit $ 55.3 $ 31.8 $ 23.5
======== ========= =========
Funeral revenue increased $72.7 million, or 63%, in fiscal year
1995, as compared with the prior fiscal year. The increase was due
principally to revenue from Acquired Operations and a $20.0 million
increase in revenue from Existing Operations. The $20.0 million
increase in revenue from Existing Operations resulted principally from a
5.4% increase in the average revenue per funeral service performed, due
principally to price increases and improved merchandising, and the fact
that, in one area, certain merchandise previously sold through cemetery
operations is now being sold through funeral operations with the
associated revenues and costs recorded in the funeral segment. Slightly
offsetting this increase was a .6% decrease in the number of funeral
services performed by Existing Operations as compared to the prior
fiscal year. The increase in revenue from Acquired Operations resulted
primarily from the Company's acquisition or construction of funeral
homes during fiscal year 1995, which are not reflected in the 1994
period presented above.
The $8.7 million increase in revenue from prearranged funeral trust
funds and escrow accounts was attributable primarily to earnings on
funds added through the Company's acquisition of certain funeral homes
in Mexico in August 1994. The return on the Company's funeral trust
funds and escrow accounts, excluding those in Mexico, declined for the
year ended October 31, 1995; however, the return on the peso-denominated
investments of the Mexican subsidiaries, which comprise less than 10% of
the Company's total funeral trust portfolio, averaged approximately 29%
for the twelve-month period. The increased earnings on the Mexican
funeral trust funds partially offset a decline in earnings on the
Mexican operations that resulted from the high level of inflation
experienced in Mexico, which approximated 46% for the year ended October
31, 1995, and the approximate 52% devaluation of the peso since
November 1, 1994.
Funeral segment costs increased $49.2 million, or 58%, due
principally to Acquired Operations and an $11.9 million increase in
costs from Existing Operations. Existing Operations achieved improved
profit margins resulting primarily from the lower marginal cost and the
increased average revenue per funeral service mentioned above.
Cemetery Segment
Year Ended
October 31,
_____________
1995 1994 Increase
_______ ______ ____________
(In millions)
Cemetery Revenue
Existing Operations $ 132.9 $ 127.4 $ 5.5
Acquired Operations 41.4 7.7 33.7
Revenue from merchandise trust funds
and escrow accounts 5.5 3.0 2.5
________ ________ ________
$ 179.8 $ 138.1 $ 41.7
======== ======== =======
Cemetery Costs
Existing Operations $ 109.8 $ 105.1 $ 4.7
Acquired Operations 35.6 7.2 28.4
________ _______ _________
$ 145.4 $ 112.3 $ 33.1
========= ======= =========
Cemetery Segment Profit $ 34.4 $ 25.8 $ 8.6
========= ======= =========
Cemetery revenue increased $41.7 million, or 30%, in fiscal year
1995, as compared with the prior fiscal year. The increase was due
principally to a $33.7 million increase in revenue from Acquired
Operations and a $5.5 million increase in revenue from Existing
Operations. The $5.5 million, or 4%, increase in revenue from Existing
Operations was due principally to an increase in the yield on the
perpetual care trust funds and escrow accounts, coupled with an increase
in the average balance in those funds, increased sales activity and
price increases. Partially offsetting this increase is the fact that,
in one area, certain merchandise previously sold through cemetery
operations is now being sold through funeral operations with the
associated revenue and costs recorded in the funeral segment. Costs
increased during this same period by $33.1 million, or 29%, due to costs
associated with Acquired Operations, as well as normal inflationary
increases. The increase in revenues and costs associated with Acquired
Operations resulted primarily from the acquisition of cemeteries during
fiscal year 1995 which are not reflected in the 1994 period presented
above.
The $2.5 million increase in revenue from merchandise trust funds
and escrow accounts was attributable principally to a 58% growth in the
average balance in the merchandise trust funds and escrow accounts,
resulting primarily from current year payments deposited into the funds
and funds added through acquisitions, coupled with a slight increase in
the return on the funds.
Other
Corporate general and administrative expenses declined to 3.0% of
revenue for the year ended October 31, 1995, compared to 3.2% for the
same period in 1994, despite an aggregate increase of $2.9 million for
the current year. The increase in these expenses is the result of
activities to support the Company's growth.
From November 1, 1992 through October 31, 1995, the Company granted
performance-based options to certain officers and other employees for
the purchase of a total of 1,650,000 shares of Class A Common Stock at
exercise prices equal to the fair market value at the grant date, which
ranged from $9.55 to $16.00 per share. The agreements under which the
options were granted provided that the options were to become
exercisable on December 1, 1996 only if, at any time prior to November
1, 1996, the average of the closing sale price of a share of the
Company's Class A Common Stock over five consecutive trading days
equaled or exceeded $19.78, and the average annual compounded increase
in the Company's earnings per share for the four fiscal years ending
October 31, 1996 was at least 15%. Generally accepted accounting
principles require that a charge to earnings be recorded for
performance-based options for the difference between the exercise price
and the then-current stock price when achievement of the performance
objectives becomes probable.
During May 1995, the stock price objective was achieved, and in
July 1995, management determined that the achievement of the earnings
objective was probable. Accordingly, during the third quarter of fiscal
year 1995, the Company recorded a non-cash charge of $17.3 million
($10.9 million, or $.30 per share, after-tax) for the difference between
the option exercise prices and $21.58, the then-market price of the
Company's Class A Common Stock. Additionally, in July 1995 the
Compensation Committee of the Board of Directors accelerated the
exercisability of the options, thereby establishing the total charge to
earnings.
Interest expense increased $13.9 million during fiscal year 1995
when compared to fiscal year 1994. The increase resulted from an
increase in average borrowings, from $158.4 to $319.4 million, which was
attributable primarily to the Company's acquisition activity, coupled
with an increase in average interest rates from 5.6% to 7.2%.
Approximately $173.3 million of the outstanding borrowings at October
31, 1995 was subject to variable interest rates averaging approximately
7.5%.
Liquidity and Capital Resources
Cash and marketable securities of the Company were $27.1 million at
October 31, 1996, an increase of approximately $7.5 million from October
31, 1995. Net cash provided by operating activities was $11.6 million
for the year ended October 31, 1996, compared to net cash used in
operating activities of $1.8 million for the corresponding period in
1995. The change was due principally to an increase in net earnings and
a reduction in the growth of accounts receivable and deferred charges,
which were partially offset by a reduction in the growth of deferred
revenue and other working capital changes.
In December 1995, the Company entered into an Amended and Restated
Loan Agreement with a group of banks that increased the aggregate amount
available under its uncollateralized revolving credit facility ("Credit
Facility") from $250 million to $350 million. The number of
participating banks increased from six to eight, and the maturity date
was extended to October 31, 2000. Interest is payable at a lending
bank's prime rate, LIBOR plus a specified spread or a certificate of
deposit rate plus a specified spread, at the Company's election.
On October 31, 1996, the Company and the lenders under the $350
million Credit Facility entered into an agreement whereby the $350
million facility was replaced with a $262 million facility between the
lenders and the Company, and an $88 million facility between the lenders
and two of the Company's subsidiaries which is guaranteed by the
Company. The terms and conditions of the new facilities are identical
to those contained in the Credit Facility. As of October 31, 1996,
amounts outstanding under the facilities discussed above amounted to
$215.8 million and $88.0 million, at weighted average interest rates of
6.04% and 6.48%, respectively.
In September 1996, the Company entered into a Bridge Loan Agreement
with the lead bank in the Company's Credit Facility in the amount of $75
million to facilitate the Company's acquisition of a foreign subsidiary.
Borrowings under this facility bear interest at the lending bank's prime
rate, LIBOR plus a specified spread or a certificate of deposit rate
plus a specified spread, at the Company's election, and have other terms
and conditions that are identical to those contained in the Credit
Facility. As of October 31, 1996, $75 million was outstanding under
this agreement and the weighted average interest rate was 6.01%. The
original maturity date of this facility was January 17, 1997, but
subsequent to fiscal year end, the maturity date was extended to
April 16, 1997. Management anticipates that this facility will be
refinanced on a long-term basis.
Long-term debt at October 31, 1996 amounted to $520.1 million,
compared to $322.5 million at October 31, 1995. The Company's long-term
debt consisted of $303.8 million under the Company's Credit Facility, a
$75.0 million Bridge loan, $125.0 million of senior notes and $16.3
million of term notes incurred principally in connection with the
acquisition of funeral home and cemetery properties. All of the
Company's debt is uncollateralized, except for approximately $4.6
million of term notes incurred principally in connection with
acquisitions.
The Company's credit agreements, including agreements with the
holders of the Company's senior notes, require it to maintain a debt-to-
equity ratio no higher than 1.25 to 1.0. The Company has managed its
capitalization within that limit, with a ratio of total debt to equity
of 1.0, .7, and .8 to one at October 31, 1996, 1995 and 1994,
respectively. As of October 31, 1996, the Company had $162.5 million of
additional borrowing capacity within this parameter, of which $54.5
million was available under its bank facilities.
The Company's ratio of earnings to fixed charges was 3.98, 2.72
(which includes the $17.3 million non-recurring, non-cash performance-
based stock option charge), 5.30, 5.15 and 4.57 for the fiscal years
ended October 31, 1996, 1995, 1994, 1993 and 1992, respectively.
Excluding the stock option charge, the Company's ratio of earnings to
fixed charges for fiscal year 1995 would have been 3.43. For purposes
of computing the ratio of earnings to fixed charges, earnings consist of
pretax earnings plus fixed charges (excluding interest capitalized
during the period). Fixed charges consist of interest expense,
capitalized interest, amortization of debt expense and discount or
premium relating to any indebtedness and the portion of rental expense
that management believes to be representative of the interest component
of rental expense.
In October 1996, the Company filed a shelf registration statement
with the Securities and Exchange Commission covering $300 million of
unsecured, unsubordinated debt securities. In December 1996, the
Company issued $100 million of those debt securities in the form of
6.70% Notes due 2003. Net proceeds were approximately $99.4 million, of
which $96.8 million was used to reduce balances outstanding under the
Company's bank facilities, with the remaining $2.6 million used for
acquisitions and general corporate purposes.
During fiscal year 1996, the Company completed the acquisition of
134 funeral homes and 15 cemeteries for purchase prices aggregating
approximately $179 million, including the issuance of approximately
466,000 shares of Class A Common Stock and $6.1 million of seller-
financed acquisition indebtedness.
Subsequent to fiscal year-end, the Company has completed the
acquisition of ten funeral homes for approximately $10.7 million. As of
January 10, 1997, the Company also had agreements in principle or
letters of intent to purchase 20 funeral homes and four cemeteries for
purchase prices aggregating approximately $82.8 million. If these
purchases are consummated, the amounts to be paid will be satisfied by a
combination of amounts available under the Company's Credit Facility,
seller financing and issuance of additional shares of the Company's
Class A Common Stock.
Although the Company has no material commitments for capital
expenditures, the Company contemplates capital expenditures, excluding
acquisitions, of approximately $35 million for the fiscal year ending
October 31, 1997, which includes the construction of new funeral homes
and refurbishing of funeral homes recently acquired.
Management expects that future capital requirements will be
satisfied through a combination of internally generated cash flow and
amounts available under its bank facilities. Additional debt and equity
financing will be required in connection with future acquisitions.
Inflation
Inflation has not had a significant impact on the Company's U.S.
operations over the past three years, nor is it expected to have a
significant impact in the foreseeable future. The Mexican economy,
however, currently is experiencing inflation rates substantially in
excess of those in the United States.
Based on the three-year cumulative inflation rate in Mexico as of
October 31, 1996, the Company will be required to change its method of
reporting foreign currency translation adjustments for its Mexican
operations to the method prescribed for highly inflationary economies
during the first quarter of fiscal year 1997. As a result, foreign
currency translation adjustments for the Company's Mexican operations
will be reflected in results of operations, instead of in shareholders'
equity. Management does not expect this change to have a material
effect on the Company's results of operations.
Other
Statement of Financial Accounting Standards No. 123, "Accounting
for Stock Based Compensation," is required to be implemented during the
Company's fiscal year ending October 31, 1997. The effect of this
pronouncement on the Company's consolidated financial condition is not
expected to be material.
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.
The Company's goals for fiscal year 1997 include: (i) revenue
growth of at least 20%; and (ii) earnings per share growth of 20%. The
Company also expects to complete approximately $150-$200 million in
acquisitions, which is consistent with the $179 million, $154 million
and $178 million achieved in fiscal years 1996, 1995 and 1994,
respectively. For fiscal year 1997, the Company anticipates gross margin
improvement of approximately 20 to 40 basis points over its fiscal year
1996 gross margin.
The Company's strategic plan for the future includes the following
goals: (i) achievement of $1 billion in revenue by fiscal year 2001,
with 80% from domestic operations, including Puerto Rico, and 20% from
foreign operations; and (ii) earnings per share growth of 20% annually.
Forward-looking statements are based on assumptions about future
events and are therefore inherently uncertain; actual results may differ
materially from those projected. See "Cautionary Statements," below.
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 projections made in the forward-looking statements above and in
any other forward-looking statements made by, or on behalf of, the
Company.
(1) Achieving projected revenue growth depends upon sustaining the
level of acquisition activity experienced by the Company in the last
three fiscal years. Higher levels of acquisition activity will increase
anticipated revenues, and lower levels of acquisition activity 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 the Company is willing to pay.
(b) In most of its existing markets and in many new markets,
including foreign markets, that the Company desires to
enter, the Company competes for acquisitions with two other
public companies that are substantially larger than the
Company. 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 to 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) Achieving the Company's projected acquisition activity
depends on the Company's ability to enter new markets,
including foreign markets. Due in part to the Company's
lack of experience operating in new areas and to the
presence of competitors who have been in certain markets
longer than the Company, such entry may be more difficult or
expensive than anticipated by the Company.
(2) The level of revenues also is affected by the volume and prices
of the properties, products and services sold. The annual sales targets
set by the Company are very aggressive, and the inability of the Company
to achieved planned increases in volume or prices could cause the
Company not to meet anticipated levels of revenue. The ability of the
Company to achieve volume or price increases at any location depends on
numerous factors, including the local economy, the local death rate and
competition.
(3) Another important component of revenue is earnings from the
Company's trust funds and escrow accounts, which are determined by the
size of, and returns (which include dividends, interest and realized
capital gains) on, the funds. The performance of the funds is related
primarily to market conditions that are not within the Company's
control. The size of the funds depends on the level of sales, funds
added through acquisitions and the amount of returns that may be
reinvested.
(4) 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.
(5) The Company cannot predict whether or when a non-cash charge to
earnings may be required in connection with its performance-based stock
options. See "1995 Incentive Compensation Plan" in Note 11 to the
Company's consolidated financial statements included in Item 8 herein.
(6) The Company first entered foreign markets in the fourth quarter
of fiscal year 1994 and no assurance can be given that the Company will
continue to be successful in expanding in foreign markets or that any
expansion in foreign markets will yield results comparable to those
realized as a result of the Company's expansion in the United States.
(7) In addition to the factors discussed above, earnings per share
may be affected by other important factors, including the following:
(a) The ability of the Company to achieve projected economies of
scale in markets where it has "clusters" or combined
facilities.
(b) Whether acquired businesses perform at pro forma levels used
by management in the valuation process.
(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 corporate
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
structures.
(i)Unanticipated outcomes of legal proceedings.
(j)Changes in accounting policies and practices adopted
voluntarily or required to be adopted by generally accepted
accounting principles.
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 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Page
Report of Independent Accountants 25
Consolidated Statements of Earnings for the Years Ended October
31, 1996, 1995 and 1994 26
Consolidated Balance Sheets as of October 31, 1996 and 1995 27
Consolidated Statements of Shareholders' Equity for the Years
Ended October 31, 1996, 1995 and 1994 29
Consolidated Statements of Cash Flows for the Years Ended
October 31, 1996, 1995 and 1994 30
Notes to Consolidated Financial Statements 32
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Stewart Enterprises, Inc.:
We have audited the accompanying consolidated balance sheets of
Stewart Enterprises, Inc. and Subsidiaries as of October 31, 1996 and
1995 and the related consolidated statements of earnings, shareholders'
equity and cash flows for each of the three years in the period ended
October 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Stewart Enterprises, Inc. and Subsidiaries as of October 31, 1996 and
1995, and the results of their operations and their cash flows for each
of the three years in the period ended October 31, 1996 in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
December 13, 1996
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
Year Ended October 31,
_________________________________
1996 1995 1994
_______ ________ ________
Revenues:
Funeral $ 225,461 $ 188,991 $ 116,266
Cemetery 207,926 179,831 138,092
___________ ___________ __________
433,387 368,822 254,358
___________ ___________ __________
Costs and expenses:
Funeral 153,222 133,682 84,481
Cemetery 162,047 145,397 112,280
___________ ___________ __________
315,269 279,079 196,761
___________ ___________ __________
118,118 89,743 57,597
Corporate general and administrative
expenses 14,096 11,113 8,157
___________ ___________ __________
Operating earnings before
performance-based stock options 104,022 78,630 49,440
Performance-based stock options - 17,252 -
___________ ___________ __________
Operating earnings 104,022 61,378 49,440
Interest expense (26,051) (22,815) (8,877)
Investment and other income 4,104 2,937 1,635
___________ ___________ __________
Earnings before income taxes 82,075 41,500 42,198
Income taxes 30,778 15,355 14,945
___________ ___________ __________
Net earnings $ 51,297 $ 26,145 $ 27,253
=========== =========== ===========
Earnings per common share $ 1.24 $ .72 $ .85
=========== =========== ===========
Weighted average common shares outstanding
(in thousands) 41,410 36,386 31,910
=========== =========== ===========
See accompanying notes to consolidated financial statements.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
October 31,
_______________________
ASSETS 1996 1995
_________ _________
Current assets:
Cash and cash equivalent investments $ 24,580 $ 18,226
Marketable securities 2,514 1,346
Receivables, net of allowances 109,129 99,156
Inventories 31,044 31,912
Prepaid expenses 4,275 2,980
____________ __________
Total current assets 171,542 153,620
Receivables due beyond one year, net of allowances 159,636 125,421
Intangible assets 312,154 220,108
Deferred charges 101,073 87,793
Cemetery property, at cost 290,848 248,930
Property and equipment, at cost:
Land 69,690 36,654
Buildings 197,553 143,565
Equipment and other 80,626 68,898
____________ __________
347,869 249,117
Less accumulated depreciation 69,088 56,124
____________ __________
Net property and equipment 278,781 192,993
Long-term investments 48,407 40,191
Other assets 3,500 3,379
____________ __________
$ 1,365,941 $1,072,435
============ ==========
(continued)
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
October 31,
_______________________
LIABILITIES AND SHAREHOLDERS' EQUITY 1996 1995
__________ __________
Current liabilities:
Current maturities of long-term debt $ 4,240 $ 5,016
Accounts payable 11,889 16,305
Accrued payroll 12,612 10,618
Accrued insurance 8,341 5,980
Accrued interest 4,621 4,215
Accrued other 14,479 14,996
Estimated costs to complete mausoleums and lawn
crypts, and to deliver merchandise 3,552 6,494
Income taxes payable 10,154 4,015
Deferred income taxes 3,594 4,458
_________ __________
Total current liabilities 73,482 72,097
Long-term debt, less current maturities 515,901 317,451
Deferred income taxes 63,741 51,524
Deferred revenue 149,549 136,641
Other long-term liabilities 15,821 10,744
__________ ___________
Total liabilities 818,494 588,457
Commitments and contingencies (Note 12)
Preferred stock, $1.00 par value, 5,000,000 shares
authorized; no shares issued - -
Shareholders' equity:
Common stock, $1.00 stated value:
Class A authorized 150,000,000 shares; issued
and outstanding 40,022,483 and 39,235,638 shares
at October 31, 1996 and 1995, respectively 40,022 39,236
Class B authorized 5,000,000 shares; issued and
outstanding 1,777,510 shares at October 31, 1996
and 1995; 10 votes per share; convertible into
an equal number of Class A shares 1,778 1,778
Additional paid-in capital 306,706 291,946
Retained earnings 215,314 166,785
Cumulative foreign translation adjustment (19,058) (19,123)
Unrealized appreciation of investments 2,685 3,356
__________ __________
Total shareholders' equity 547,447 483,978
__________ __________
$ 1,365,941 $1,072,435
=========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Common Stock
____________________ Unrealized
Shares Additional Foreign Appreciation Total
Class A Paid-In Retained Translation of Unearned Shareholders'
and B<F1> Amount Capital Earnings Adjustment Investments Compensation Equity
____________ _________ ________ ________ _________ _________ ___________ __________
(in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance October 31, 1993 28,646<F2> $ 28,646 $ 88,386 $ 115,481 $ - $ - $(506) $ 232,007
Net earnings 27,253 27,253
Unearned compensation 253 253
Sales of common stock 4,101 4,101 61,962 66,063
Subsidiaries acquired with
common stock 84 84 1,288 1,372
Stock options exercised 8 8 54 62
Foreign translation
adjustment (490) (490)
Dividends ($.027 per
share)<F1> (849) (849)
_____________ _________ _________ _________ ________ _________ __________ ___________
Balance October 31, 1994 32,839<F2> 32,839 151,690 141,885 (490) - (253) 325,671
Net earnings 26,145 26,145
Unearned compensation 253 253
Sales of common stock 6,081 6,081 97,854 103,935
Subsidiaries acquired
with common stock 1,460 1,460 30,203 31,663
Stock options exercised 1,866 1,866 37,244 39,110
Purchase and retirement
of common stock (1,232) (1,232) (25,045) (26,277)
Foreign translation
adjustment (18,633) (18,633)
Unrealized appreciation
of investments 3,356 3,356
Dividends ($.033 per
share)<F1> (1,245) (1,245)
_____________ _________ _________ _________ ________ _________ __________ ___________
Balance October 31, 1995 41,014<F2> 41,014 291,946 166,785 (19,123) 3,356 - 483,978
Net earnings 51,297 51,297
Sales of common stock 38 38 841 879
Subsidiaries acquired with
common stock 466 466 11,785 12,251
Stock options exercised 526 526 10,061 10,587
Purchase and retirement of
common stock (244) (244) (7,927) (8,171)
Foreign translation
adjustment 65 65
Unrealized depreciation of
investments (671) (671)
Dividends ($.066 per
share)<F1> (2,768) (2,768)
_____________ _________ _________ _________ ________ _________ __________ ___________
Balance October 31, 1996 41,800<F2> $ 41,800 $ 306,706 $ 215,314 $(19,058) $ 2,685 $ - $547,447
============= ========= ========= ========= ========= ========= ========== ===========
___________________
<FN>
<F1> Share and per share information has been adjusted to give effect to the two three-
for-two common stock splits effective December 1, 1993, and June 21, 1996.
<F2> Includes 1,778 shares (in thousands) of Class B Common Stock.
</FN>
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Year Ended October 31,
______________________________
1996 1995 1994
__________ ___________ __________
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 51,297 $ 26,145 $ 27,253
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation and amortization 21,701 16,792 11,027
Performance-based stock options - 17,252 -
Provision for doubtful accounts 23,156 15,698 7,757
Net gains on sales of marketable
securities (2,098) (269) (873)
Provision (benefit) for deferred
income taxes (4,676) 1,761 (2,403)
Changes in assets and liabilities net
of effects from acquisitions:
(Increase) decrease in prearranged
funeral trust receivables (17,265) (15,207) 9,600
Increase in other receivables (35,918) (60,684) (31,580)
Increase in deferred charges (7,385) (19,290) (13,493)
Increase in inventories and cemetery
property (8,812) (4,603) (523)
Increase in accounts payable and accrued
expenses 2,682 7,675 2,390
Decrease in estimated costs to complete
mausoleums and lawn crypts, and
to deliver merchandise (10,256) (7,306) (3,705)
Increase in deferred revenue 250 19,877 14,731
Increase (decrease) in other (1,037) 349 198
____________ ___________ ___________
Net cash provided by (used in)
operating activities 11,639 (1,810) 20,379
____________ ___________ ___________
Cash flows from investing activities:
Proceeds from sale of marketable securities 8,648 7,010 6,055
Purchases of marketable securities and
long-term investments (16,317) (10,276) (25,273)
Purchases of subsidiaries, net of cash,
seller financing and stock issued (158,359) (99,691) (154,594)
Additions to property and equipment (26,332) (20,676) (16,997)
Other 471 2,770 (3,581)
___________ ____________ ____________
Net cash used in investing activities (191,889) (120,863) (194,390)
___________ ____________ ____________
(continued)
</TABLE>
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands, except per share amounts)
Year Ended October 31,
_____________________________
1996 1995 1994
__________ _________ _________
Cash flows from financing activities:
Proceeds from long-term debt 277,259 202,700 263,468
Repayments of long-term debt (90,691) (165,310)(149,538)
Issuance of common stock 11,466 123,122 66,125
Purchase and retirement of common stock (8,171) (26,277) -
Dividends (2,768) (1,245) (849)
__________ __________ _________
Net cash provided by financing activities 187,095 132,990 179,206
__________ __________ _________
Effect of exchange rates on cash and
cash equivalents (491) (1,305) (110)
__________ __________ _________
Net increase in cash 6,354 9,012 5,085
Cash and cash equivalents, beginning of year 18,226 9,214 4,129
__________ __________ _________
Cash and cash equivalents, end of year $ 24,580 $ 18,226 $ 9,214
========== ========== =========
Supplemental cash flow information:
Cash paid during the year for:
Income taxes $ 25,100 $ 16,900 $18,300
Interest $ 26,100 $ 22,800 $ 8,900
Non cash investing and financing activities:
Subsidiaries acquired with common stock $ 12,251 $ 31,663 $ 1,372
Cemetery property acquired with
long-term debt $ - $ - $ 210
See accompanying notes to consolidated financial statements.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(1) Summary of Significant Accounting Policies
(a) The Company
Stewart Enterprises, Inc. (the "Company") is the third largest
provider of products and services in the death care industry in North
America. Through its subsidiaries, the Company offers a complete line
of funeral merchandise and services, along with cemetery property,
merchandise and services. For the year ended October 31, 1996, the
funeral and cemetery segments were approximately equal in size based on
revenue, and contributed approximately 60% and 40% of consolidated gross
profit, respectively.
As of October 31, 1996, the Company owned and operated 298 funeral
homes and 120 cemeteries in 22 states within the United States, and in
Puerto Rico, Mexico, Australia, New Zealand and Canada. The Company
commenced its international operations in Mexico in August 1994, and
entered Australia in December 1994, New Zealand in April 1996 and Canada
in September 1996. For fiscal year 1996, foreign operations contributed
approximately 10% of total revenue and 18% of total assets.
(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) 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.
(d) Fair Value of Financial Instruments
Estimated fair value amounts have been determined using available
market information and the valuation methodologies described below.
However, considerable judgment is required in interpreting market data
to develop estimates of fair value. Accordingly, the estimates
presented herein may not be indicative of the amounts the Company could
realize in a current market. The use of different market assumptions or
valuation methodologies may have a material effect on the estimated fair
value amounts.
The carrying amounts of cash and cash equivalents, marketable
securities and current receivables approximate fair value due to the
short-term nature of these instruments. The carrying amount of
receivables due beyond one year approximates fair value because they
bear interest at rates currently offered by the Company for receivables
with similar terms and maturities. The carrying amount of long-term
investments are stated at fair value as they are classified as available
for sale under the provisions of Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities." The carrying value of the Company's long-term debt,
including current maturities, approximates fair value as it bears
interest at rates currently available to the Company for debt with
similar terms and maturities.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(1) Summary of Significant Accounting Policies--(Continued)
(e) Inventories
Inventories are stated at the lower of cost (specific
identification and first-in, first-out methods) or net realizable value.
(f) Depreciation and Amortization
Property and equipment are depreciated over their estimated useful
lives, ranging from 19 to 40 years and from three to 10 years,
respectively, primarily using the straight-line method.
Goodwill, or costs in excess of net assets of companies acquired,
totalled approximately $307,318 and $216,262 at October 31, 1996 and
1995, respectively, and is amortized principally over 40 years by the
straight-line method. The Company continually evaluates the
recoverability of this intangible asset by assessing whether the
amortization of the goodwill balance over its remaining life can be
recovered through undiscounted expected future cash flows. Other
intangible assets are amortized over five years by the straight-line
method. Accumulated amortization was approximately $19,506 and $11,743
as of October 31, 1996 and 1995, respectively.
(g) Foreign Currency Translation
In accordance with Statement of Financial Accounting Standards No.
52, "Foreign Currency Translation," all assets and liabilities of the
Company's foreign subsidiaries are translated into U.S. dollars at the
exchange rate in effect at the end of the period, and revenues and
expenses are translated at average exchange rates prevailing during the
period. The resulting translation adjustments are reflected in a
separate component of the shareholders' equity, except for translation
adjustments arising from the Company's operations in highly inflationary
economies.
Based on the three-year cumulative inflation rate in Mexico as of
October 31, 1996, the Company will be required to change its method of
reporting foreign currency translation adjustments for its Mexican
operations to the method prescribed for highly inflationary economies
during the first quarter of fiscal year 1997. As a result, foreign
currency translation adjustments for the Company's Mexican operations
will be reflected in results of operations, instead of in shareholders'
equity. Management does not expect this change to have a material
effect on the Company's results of operations.
(h) Funeral Revenue
The Company sells prearranged funeral services and funeral
merchandise under contracts that provide for delivery of the services
and merchandise at the time of death. Prearranged funeral services are
recorded as funeral revenue in the period performed. Prearranged
funeral merchandise is recognized as revenue upon delivery in jurisdictions
where such sales are refundable to the customer; where such sales
are not refundable, revenue is recognized currently. Prearranged
funeral services and merchandise generally are financed either through
trust funds or escrow accounts established by the Company, or through
insurance. Principal amounts deposited in the trust funds or escrow
accounts are available to the Company as funeral services and merchandise
are delivered and are refundable to the customer in those situations
where state law provides for the return of those amounts under the
purchaser's option to cancel the contract. Certain jurisdictions provide
for non-refundable trust funds or escrow accounts where the Company
receives such amounts upon cancellation by the customer.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(1) Summary of Significant Accounting Policies--(Continued)
The Company recognizes as revenue on a current basis all dividends
and interest earned, and net capital gains realized, by all prearranged
funeral trust funds and escrow accounts except in those states where
earnings revert to the customer if a prearranged funeral service or
funeral merchandise contract is cancelled. Principal and earnings are
withdrawn only as funeral services and merchandise are delivered or
contracts are cancelled, except in jurisdictions that permit earnings to
be withdrawn currently and in unregulated jurisdictions where escrow
accounts are used.
Commissions and direct marketing costs relating to prearranged
funeral services and refundable prearranged funeral merchandise sales
are deferred and amortized as the funeral contracts are fulfilled,
whereas costs incurred related to the sale of non-refundable prearranged
funeral merchandise are expensed as incurred. Indirect costs of
marketing prearranged funeral services are expensed in the period in
which incurred.
Funeral services sold at the time of need are recorded as funeral
revenue in the period performed.
(i) Cemetery Revenue
Cemetery revenue is accounted for in accordance with the principles
prescribed for accounting for sales of real estate. Those principles
require, among other things, the receipt of a certain portion of an
installment sale price prior to the recognition of any revenue or cost
on a contract. The Company recognizes income currently from
unconstructed mausoleum crypts sold to the extent it has available
inventory. Costs of mausoleum and lawn crypts sold but not yet
constructed are based upon management's estimated cost to construct
these items.
In certain jurisdictions in which the Company operates, local law
or contracts with customers generally require that a portion of the sale
price of prearranged cemetery merchandise be placed in trust funds or
escrow accounts. In those jurisdictions where trust or escrow
arrangements are neither statutorily nor contractually required, the
Company typically deposits on a voluntary basis approximately 110% of
the cost of the cemetery merchandise into escrow accounts. The Company
recognizes as revenue on a current basis all dividends and interest
earned, and net capital gains realized, by prearranged merchandise trust
funds or escrow accounts. At the same time, the liability for the
estimated cost to deliver merchandise is adjusted through a charge to
earnings to reflect inflationary merchandise cost increases. Principal
and earnings are withdrawn only as the merchandise is delivered or
contracts are cancelled.
Pursuant to perpetual care contracts and laws, a portion, generally
10%, of the proceeds from cemetery property sales is deposited into
perpetual care trust funds or escrow accounts. In addition, in those
jurisdictions where trust or escrow arrangements are neither statutorily
nor contractually required, the Company typically deposits on a
voluntary basis a portion, generally 10%, of the sale price into escrow
accounts. The income from these funds, which have been established in
most jurisdictions in which the Company operates cemeteries, is used for
maintenance of those cemeteries, but principal, including in some
jurisdictions net realized capital gains, must generally be held in
perpetuity. Accordingly, the trust fund corpus is not reflected in the
consolidated financial statements, except for voluntary escrow funds
established by the Company, which are classified as long-term
investments. The Company recognizes and withdraws currently all
dividend and interest income earned and, where permitted, capital gains
realized by perpetual care funds.
A portion of the sales of cemetery property and merchandise is made
under installment contracts bearing interest at prevailing rates.
Finance charges are recognized as cemetery revenue under the effective
interest method over the terms of the related installment receivables.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(1) Summary of Significant Accounting Policies--(Continued)
(j) Income Taxes
The Company recognizes deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between tax
bases and financial reporting bases of assets and liabilities. The
Company has not provided for possible U.S. federal income taxes on the
undistributed earnings of foreign subsidiaries that are considered to be
reinvested indefinitely.
(k) Earnings Per Common Share
Earnings per common share are computed by dividing net earnings by
the weighted average number of common shares outstanding during each
period, which have been adjusted for the Company's three-for-two common
stock split effective on June 21, 1996.
(l) Recent Accounting Standards
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock Based Compensation," is required to be implemented during the
Company's fiscal year ending October 31, 1997. The effect of this
pronouncement on the Company's consolidated financial condition is not
expected to be material.
(m) Reclassifications
Certain reclassifications have been made to the 1995 and 1994
consolidated financial statements to conform to the presentation used in
the 1996 consolidated financial statements. These reclassifications had
no effect on net earnings or shareholders' equity.
(2) Acquisition of Subsidiaries
During the year ended October 31, 1996, the Company purchased 134
funeral homes and 15 cemeteries. The aggregate purchase price was
approximately $179,000, including the issuance of approximately 466,000
shares of Class A Common Stock.
During the year ended October 31, 1995, the Company purchased 55
funeral homes and 15 cemeteries. The aggregate purchase price was
approximately $154,400, including the issuance of approximately
1,460,000 shares of Class A Common Stock.
During the year ended October 31, 1994, the Company purchased 27
funeral homes and 33 cemeteries. The aggregate purchase price was
approximately $177,600, including the issuance of approximately 84,000
shares of Class A Common Stock.
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. The
purchase price allocations for certain of these acquisitions are based
on preliminary information.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(2) Acquisitions of Subsidiaries--(Continued)
The following table reflects, on an unaudited pro forma basis, the
combined operations of the Company and the businesses acquired during
fiscal year 1996 as if such acquisitions had taken place at the
beginning of the respective periods presented. Appropriate adjustments
have been made to reflect the accounting basis used in recording the
acquisitions. 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.
Year Ended October 31,
______________________
1996 1995
__________ ___________
(Unaudited)
Revenues $ 471,146 $ 424,463
============= =============
Net earnings $ 49,448 $ 22,666
============= =============
Earnings per common share $ 1.19 $ .62
============= =============
Weighted average common shares
outstanding (in thousands) 41,590 36,852
============= =============
The effect of acquisitions at dates of purchase on the consolidated
financial statements was as follows:
Year Ended October 31,
___________________________________
1996 1995 1994
___________ __________ __________
Current assets $ 21,380 $ 8,991 $ 13,786
Receivables due beyond one year 1,973 3,832 11,740
Cemetery property 25,260 46,482 94,059
Property and equipment 72,949 52,552 33,245
Deferred charges and other assets 9,889 3,787 4,843
Intangible assets 98,230 92,291 82,573
Current liabilities (10,396) (22,990) (29,820)
Long-term debt (10,388) (10,767) (7,060)
Deferred income taxes (15,640) (11,460) (20,698)
Deferred revenue and other liabilities (22,647) (31,364) (26,702)
____________ ____________ ___________
170,610 131,354 155,966
Common stock used for acquisitions 12,251 31,663 1,372
___________ ____________ ____________
Cash used for acquisitions $ 158,359 $ 99,691 $ 154,594
=========== ============ ============
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(3) Prearranged Funeral Services
The following summary reflects prearranged funeral services sold,
but not yet delivered, which are funded with trusts, escrow accounts and
insurance, and related prearranged funeral trust fund and escrow account
balances. The trust- and insurance-funded balances are not reflected in
the accompanying consolidated financial statements. Amounts which
represent the Company's voluntary deposits into escrow accounts in those
jurisdictions where trust or escrow arrangements are neither statutorily
nor contractually required aggregated $26,003 and $25,034 at October 31,
1996 and 1995, respectively, and are classified as long-term
investments. Amounts deposited in the trust funds and escrow accounts
and funded through insurance are available to the Company when the
services are performed. Funds held in trust or escrow are invested and
the revenue on the funds (including net realized capital gains) of
$28,709, $23,029 and $14,347 is reflected in funeral revenue for 1996,
1995 and 1994, respectively.
In July 1994, pursuant to a Texas statute and the approval of the
Texas Banking Commissioner, the Company withdrew funds ("excess
earnings") in the amount of $18,800 from its Texas prearranged funeral
trust funds. The amount withdrawn was voluntarily transferred into a
funeral escrow account which the Company intends to use to fund future
prearranged funeral services. The funeral escrow fund is classified as
a long-term investment in the accompanying consolidated balance sheets.
<TABLE>
<CAPTION>
October 31,
_______________________
1996 1995
__________ ___________
<S> <C> <C>
Trust or escrow funded:
Prearranged funeral services sold, but not delivered $ 445,301 $ 359,674
=========== ===========
Investments at market value $ 349,415 $ 261,823
Receivables to be collected on prearranged funeral
service contracts 97,053 96,346
__________ ___________
$ 446,468 $ 358,169
=========== ===========
Insurance-funded and other prearranged funeral services $ 141,725 $ 101,950
=========== ===========
Investments consist of:
U.S. Government, U.S. agencies and municipalities $ 67,852 $ 56,096
Corporate bonds 63,720 48,961
Preferred stocks 29,906 30,919
Common stocks 38,511 32,351
Money market funds and other short-term investments 110,540 59,326
Short-term fixed income foreign investments 33,585 24,945
___________ ___________
Total value at cost 344,114 252,598
Net unrealized appreciation 5,301 9,225
___________ ___________
Total value at market $ 349,415 $ 261,823
=========== ===========
</TABLE>
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(4) Cemetery Revenue
The following summary reflects the Company's merchandise trust fund
and escrow account balances, as well as merchandise sold, but
undelivered, at current cost. Merchandise sold, but undelivered, is
reflected at current cost as a liability in the accompanying
consolidated balance sheets net of the related merchandise trust fund
and escrow account balances and accumulated earnings, except for $17,339
and $14,483 classified as long-term investments at October 31, 1996 and
1995, respectively. These amounts represent the Company's voluntary
deposits into escrow accounts in those jurisdictions where trust or
escrow arrangements are neither statutorily nor contractually required.
Amounts deposited in the trust funds and escrow accounts are invested
and the revenue on the funds (including net realized capital gains) of
$9,082, $5,471 and $3,020 is reflected in cemetery revenue for 1996,
1995 and 1994, respectively. Amounts deposited in merchandise trust
funds and escrow accounts that are invested in debt securities as of
October 31, 1996 totalled $42,381 and are scheduled to mature as
follows: $442 in less than one year; $23,508 in one through five years;
$17,059 in five through ten years; and $1,372 in more than ten years.
<TABLE>
<CAPTION>
October 31,
___________________
1996 1995
_______ ______
<S> <C> <C>
Merchandise trust funds and escrow accounts:
Merchandise sold, but not delivered, at current cost $ 101,834 $ 87,480
========== ==========
Investments at market value $ 113,530 $ 89,125
Amounts to be collected on merchandise contracts 37,290 35,401
__________ _________
$ 150,820 $124,526
========== =========
Investments consist of:
U.S. Government, U.S. agencies and municipalities $ 25,194 $ 22,354
Corporate bonds 27,140 16,831
Preferred stocks 7,126 8,870
Common stocks 16,107 10,277
Money market funds and other short-term investments 34,934 27,323
___________ __________
Total value at cost 110,501 85,655
Net unrealized appreciation 3,029 3,470
___________ __________
Total value at market $ 113,530 $ 89,125
=========== ==========
</TABLE>
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(4) Cemetery Revenue--(Continued)
The following summary reflects the Company's perpetual care trust
fund and escrow account balances. Since principal cannot be withdrawn,
these balances are not reflected in the accompanying financial
statements, except for $1,115 and $674, classified as long-term
investments as of October 31, 1996 and 1995, respectively, which
represent the Company's voluntary deposits into escrow accounts in those
jurisdictions where trust or escrow arrangements are neither statutorily
nor contractually required. Funds held in trust or escrow are invested,
and the earnings withdrawn from the trust funds and escrow accounts are
used for the maintenance of cemetery grounds. For the years ended
October 31, 1996, 1995 and 1994, such withdrawals, included in cemetery
revenue, totalled $15,056, $13,265 and $8,875, respectively.
October 31,
____________________
1996 1995
_________ _______
Perpetual care trust funds and escrow accounts:
Investments at market value $ 144,916 $ 134,487
Amounts to be collected under existing agreements 7,341 8,340
__________ _________
$ 152,257 $ 142,827
========== =========
Investments consist of:
U.S. Government, U.S. agencies and municipalities $ 29,400 $ 28,067
Corporate bonds 44,215 42,815
Preferred stocks 2,352 2,983
Common stocks 24,573 18,003
Money market funds and other short-term investments 34,859 26,917
Other long-term investments 129 3,522
__________ _________
Total value at cost 135,528 122,307
Net unrealized appreciation 9,388 12,180
__________ _________
Total value at market $ 144,916 $ 134,487
========== =========
(5) Cash and Cash Equivalent Investments
The following is a summary of cash and cash equivalent investments.
The Company considers all highly liquid investments with an original
maturity of three months or less to be a cash equivalent. The Company
deposits its cash and cash equivalent investments with high quality
credit institutions. Such balances typically exceed applicable FDIC
insurance limits.
October 31,
______________________
1996 1995
___________ ___________
Cash $ 19,790 $ 11,192
Cash equivalent investments 4,790 7,034
__________ ___________
$ 24,580 $ 18,226
========== ===========
(6) Marketable Securities and Long-term Investments
Marketable securities consist of investments in fixed maturities
and equity securities. The market value at October 31, 1996 and 1995
was $2,514 and $1,346, which included gross unrealized gains of $345 and
$301, respectively. The Company realized net gains on the sales of
securities of $2,098, $269 and $873 for the years ended October 31,
1996, 1995 and 1994, respectively. The cost of securities sold was
determined by using the average cost method.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(6) Marketable Securities and Long-term Investments--(Continued)
The market value of long-term investments at October 31, 1996 and
1995 was $48,407 and $40,191, which included gross unrealized gains of
$1,409 and $2,463, and gross unrealized losses of $437 and $396,
respectively. Amounts classified as long-term investments and invested
in debt securities as of October 31, 1996 totalled $17,150 and are
scheduled to mature as follows: $0 in less than one year; $4,723 in one
through five years; $12,334 in five through ten years; and $93 in more
than ten years. See Notes 3 and 4 which include details of the
Company's long-term investments.
(7) Receivables
October 31,
___________________
1996 1995
________ _________
Current receivables are summarized as follows:
Installment contracts due within one year $ 64,937 $ 57,689
Trade accounts, notes and other 10,610 8,845
Federal income tax receivable - 6,417
Allowance for sales cancellations and doubtful
accounts (2,996) (2,847)
Amount to be collected for perpetual care funds (2,401) (2,884)
__________ _________
70,150 67,220
Funeral receivables 36,032 29,483
Prearranged funeral trust receivable 2,947 2,453
__________ ________
Net current receivables $109,129 $ 99,156
========== =========
Long-term receivables are summarized as follows:
Installment contracts due beyond one year $119,357 $101,453
Allowance for sales cancellations (3,236) (3,307)
Amount to be collected for perpetual care funds (4,940) (5,456)
__________ _________
111,181 92,690
Prearranged funeral trust receivable 48,408 32,650
Other 47 81
__________ _________
Net long-term receivables $159,636 $125,421
========== =========
The Company's receivables as of October 31, 1996 are expected to
mature as follows:
Years ending October 31,
1997 $ 109,129
1998 33,955
1999 26,586
2000 20,915
2001 16,020
Later years 62,160
_________
$ 268,765
=========
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(8) Inventories and Cemetery Property
Inventories are comprised of the following:
October 31,
______________________
1996 1995
___________ __________
Developed cemetery property $ 15,837 $ 19,466
Merchandise and supplies 15,207 12,446
___________ ___________
$ 31,044 $ 31,912
=========== ===========
Cemetery property is comprised of the following:
October 31,
______________________
1996 1995
___________ __________
Developed cemetery property $ 61,185 $ 45,641
Undeveloped cemetery property 229,663 203,289
___________ ___________
$ 290,848 $248,930
=========== ===========
The Company evaluates the recoverability of the cost of undeveloped
cemetery property through comparison with undiscounted expected future
cash flows.
(9) Long-term Debt
The following is a summary of long-term debt:
October 31,
______________________
1996 1995
___________ __________
Credit Facility, amended as described below $ 303,811 $ 173,311
Bridge Loan 75,000 -
Senior Notes 125,000 125,000
Other, principally seller financing of
acquired operations or assumption upon
acquisition, bearing interest at rates from
3.0% to 15.0% (weighted average of 6.92% at
October 31, 1996), partially collateralized
by assets of subsidiaries, with maturities
through 2023 16,330 24,156
__________ __________
520,141 322,467
Less current maturities 4,240 5,016
__________ __________
$ 515,901 $ 317,451
========== ==========
In December 1995, the Company entered into an Amended and Restated
Loan Agreement with a group of banks that increased the aggregate amount
available under its uncollateralized revolving credit facility ("Credit
Facility") from $250,000 to $350,000. The number of participating banks
increased from six to eight, and the maturity date was extended to
October 31, 2000. Interest is payable at a lending bank's prime rate,
LIBOR plus a specified spread or a certificate of deposit rate plus a
specified spread, at the Company's election. The Credit Facility
provided for a commitment fee of .20% on the average daily amount of the
unadvanced portion. In February 1996 the commitment fee was reduced to
.18% as a result of the Company's debt rating.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(9) Long-term Debt--(Continued)
On October 31, 1996, the Company and the lenders under the $350,000
Credit Facility entered into an agreement whereby the $350,000 facility
was replaced with a $262,000 facility between the lenders and the
Company, and an $88,000 facility between the lenders and two of the
Company's subsidiaries which is guaranteed by the Company. The terms
and conditions of the new facilities are identical to those contained in
the Credit Facility. At October 31, 1996, $215,811 was outstanding
under the $262,000 facility, with a weighted average interest rate of
6.04%, and $88,000 was outstanding under the $88,000 facility, with a
weighted average rate of 6.48%.
Additionally, the Company has available with a separate financial
institution an uncollateralized revolving line of credit ("Revolving
Line of Credit Note") used to support the interim cash funding for
advances to be made under the Credit Facility in amounts less than
$5,000. Borrowings under the Revolving Line of Credit Note are limited
to $10,000 and interest is payable at the lending bank's prime rate or
certain optional rates at the Company's election. Periodically the
Company will pay down the Revolving Line of Credit Note using funds
drawn on the Credit Facility. There were no amounts outstanding under
the Revolving Line of Credit Note at October 31, 1996 and 1995.
Subsequent to fiscal year-end, the maturity of the Revolving Line of
Credit Note was extended to December 31, 1997.
In September 1996, the Company entered into a Bridge Loan Agreement
("Bridge Loan") with the lead bank in the Company's Credit Facility in
the amount of $75,000 to facilitate the Company's acquisition of a
foreign subsidiary. Borrowings under this facility bear interest at the
lending bank's prime rate, LIBOR plus a specified spread or a
certificate of deposit rate plus a specified spread, at the Company's
election, mature on January 17, 1997 and have other terms and conditions
that are identical to those contained in the Credit Facility. As of
October 31, 1996, $75,000 was outstanding under this agreement and the
weighted average interest rate was 6.01%. The Company has classified
the Bridge Loan as noncurrent in the accompanying consolidated balance
sheet as it has both the intent and ability to refinance this amount on
a long-term basis.
On December 21, 1993, the Company issued $50,000 of uncollateralized
senior notes, bearing interest at a rate of 6.04% and maturing on
November 30, 2003. Principal payments of $7,143 are due each year
commencing November 30, 1997, with the final payment due on November 30,
2003. On November 7, 1994, the Company issued $75,000 of
uncollateralized senior notes with an average maturity of seven years
and a weighted average interest rate of 8.44%. Principal payments are
due as follows: $15,000 on May 1, 1998, $16,667 on each of November 1,
2000, 2001 and 2002, and $10,000 on November 1, 2006.
In October 1996, the Company filed a shelf registration statement
with the Securities and Exchange Commission covering $300 million of
unsecured, unsubordinated debt securities. In December 1996, the
Company issued $100,000 of those debt securities in the form of 6.70%
Notes due 2003. Net proceeds were approximately $99,400, of which
$96,800 was used to reduce balances outstanding under the Company's bank
facilities, with the remaining $2,600 used for acquisitions and general
corporate purposes.
The bank loan agreements and senior note agreements contain various
restrictive covenants that limit consolidated funded indebtedness,
indebtedness of subsidiaries, the sale of assets to entities outside the
consolidated group and the payment of dividends on, and repurchases of,
the capital stock of the Company, and the bank loan agreements contain
change in control provisions. The amount of retained earnings available
for the payment of dividends at October 31, 1996 was approximately
$7,492. The Company also is required to maintain specified financial
ratios related to cash flow, net worth and fixed charges.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(9) Long-term Debt--(Continued)
Principal payments due on the long-term debt, excluding the Credit
Facility and the Bridge Loan, for the fiscal years ending October 31,
1997 through October 31, 2001 are approximately $4,240 in 1997, $24,627
in 1998, $8,443 in 1999, $8,849 in 2000 and $24,913 in 2001.
(10) Income Taxes
Income tax expense (benefit) is comprised of the following
components:
U.S. and
Possessions State Foreign Total
Year Ended October 31, ___________ _______ ________ _______
______________________
1996:
Current tax expense $ 31,128 $ 3,249 $ 1,077 $ 35,454
Deferred tax expense (benefit) (6,720) (307) 2,351 (4,676)
___________ ________ _________ _________
$ 24,408 $ 2,942 $ 3,428 $ 30,778
=========== ======== ========= =========
1995:
Current tax expense $ 10,610 $ 2,106 $ 878 $ 13,594
Deferred tax expense (benefit) (521) (509) 2,791 1,761
__________ _________ ________ __________
$ 10,089 $ 1,597 $ 3,669 $ 15,355
========== ========= ======== ==========
1994:
Current tax expense $ 15,379 $ 1,764 $ 205 $ 17,348
Deferred tax benefit (1,745) (658) - (2,403)
__________ _________ _________ __________
$ 13,634 $ 1,106 $ 205 $ 14,945
========== ========= ========= ==========
The reconciliation of the statutory tax rate to the effective tax
rate is as follows:
Year Ended October 31,
_____________________________
1996 1995 1994
______ _______ _______
Statutory tax rate 35.00% 35.00% 35.00%
Increases (reductions) in tax rate
resulting from:
State and U.S. possessions 6.21 7.45 2.03
Goodwill and other 2.52 1.35 .94
Dividend exclusion (1.03) (2.26) (2.55)
Foreign tax rate differential (2.88) (2.77) -
Foreign tax credit (2.32) (1.77) -
________ _________ _________
Effective tax rate 37.50% 37.00% 35.42%
======== ========= =========
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(10) Income Taxes--(Continued)
Deferred tax assets and liabilities consist of the following:
<TABLE>
<CAPTION>
October 31,
_______________________
1996 1995
_________ _________
<S> <C> <C>
Deferred tax assets:
Deferred revenue on cemetery property and merchandise sales $ 18,466 $ 15,058
Deferred preneed sales and expenses 5,252 5,434
Estimated cost to deliver merchandise 3,293 1,944
Allowance for sales cancellations and doubtful accounts 1,131 1,369
Stock compensation 947 1,583
Other 991 436
___________ __________
30,080 25,824
____________ __________
Deferred tax liabilities:
Purchase accounting adjustments 78,857 64,689
Percentage of completion on long-term contracts 4,480 4,146
Equity method investments 2,005 2,244
Unrealized appreciation of investments 1,597 1,807
Foreign trust earnings 5,142 2,791
Goodwill 2,288 1,735
Depreciation 737 720
Other 2,309 3,674
____________ __________
97,415 81,806
____________ __________
$ 67,335 $55,982
============ ==========
Current net deferred liability $ 3,594 $ 4,458
Long-term net deferred liability 63,741 51,524
____________ __________
$ 67,335 $55,982
============ ==========
</TABLE>
For the years ended October 31, 1996, 1995 and 1994, approximately
12%, 14% and 1%, respectively, of the Company's earnings before income
taxes (excluding the performance-based stock option charge in fiscal
year 1995), were generated from properties in foreign jurisdictions.
(11) Benefit Plans
Stewart Enterprises Employees' Retirement Trust
The Company has a defined contribution retirement plan, the "Stewart
Enterprises Employees' Retirement Trust (A Profit-Sharing Plan)
("SEERT")." This plan covers substantially all employees with more than
one year of service who have attained the age of 21. Contributions are
made to the plan at the discretion of the Company's Board of Directors.
Additionally, employees who participate may contribute up to 15% of
their earnings. The first 5% of such employee contributions are
eligible for Company matching contributions at the rate of $.25 for each
$1.00 contributed. The Company's expense, including the Company's
matching contributions, for the fiscal years ended October 31, 1996,
1995 and 1994 was approximately $2,550, $2,250 and $1,540, respectively.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(11) Benefit Plans--(Continued)
Non-qualified Supplemental Retirement and Deferred Compensation Plan
In January 1994, the Company developed a non-qualified key employee
defined contribution supplemental retirement plan, which provides
certain highly compensated employees the opportunity to accumulate
deferred compensation which cannot be accumulated under SEERT due to
certain limitations. Contributions are made to the plan at the
discretion of the Company's Board of Directors. Additionally, employees
who participate may contribute up to 15% of their earnings. The first
5% of such employee contributions are eligible for Company matching
contributions at the rate of $.25 for each $1.00 contributed. The
Company's expense, including the Company's matching contributions, for
the fiscal years ended October 31, 1996, 1995 and 1994 was approximately
$116, $53 and $0, respectively.
1991 Incentive Compensation Plan
In May 1991, the Company adopted the 1991 Incentive Compensation
Plan, pursuant to which officers and other employees of the Company
could be granted stock options, stock awards, restricted stock,
performance share awards or cash awards by the Compensation Committee of
the Board of Directors. After October 31, 1995, no additional awards
have been or will be granted under this plan. From September 25, 1992
through October 31, 1995, the Company granted options that become
exercisable based upon the passage of time to officers and other
employees for the purchase of a total of 1,452,938 shares of Class A
Common Stock at exercise prices equal to the fair market value at the
grant date, which ranged from $8.89 to $16.00 per share. The options
generally are exercisable in 25% annual increments over the four years
following their grant, except that options granted during fiscal year
1995 are exercisable 50% per year over the next two years. On July 25,
1995, the Compensation Committee accelerated by two months the
exercisability of options scheduled to become exercisable September 25,
1995. As of October 31, 1996, 986,492 options scheduled to become
exercisable based upon the passage of time had been exercised.
From November 1, 1992 through October 31, 1995, the Company granted
performance-based options to certain officers and other employees for
the purchase of a total of 1,650,000 shares of Class A Common Stock at
exercise prices equal to the fair market value at the grant date, which
ranged from $9.55 to $16.00 per share. The agreements under which the
options were granted provided that the options were to become
exercisable on December 1, 1996 only if, at any time prior to November
1, 1996, the average of the closing sale prices of a share of the
Company's Class A Common Stock over five consecutive trading days
equaled or exceeded $19.78, and the average annual compounded increase
in the Company's earnings per share for the four fiscal years ending
October 31, 1996 was at least 15%. Generally accepted accounting
principles require that a charge to earnings be recorded for these
performance-based options for the difference between the exercise price
and the then-current stock price when achievement of the performance
objectives becomes probable.
During May 1995, the stock price objective was achieved, and in July
1995, management determined that the achievement of the earnings
objective was probable. Accordingly, during the third quarter of fiscal
year 1995, the Company recorded a non-cash charge of $17,252 ($10,869,
or $.30 per share, after-tax) for the difference between the option
exercise prices and $21.58, the then-market price of the Company's Class
A Common Stock. Additionally, in July 1995 the Compensation Committee
accelerated the exercisability of the performance-based options, thereby
establishing the total charge to earnings. As of October 31, 1996,
1,425,000 performance-based options had been exercised.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(11) Benefit Plans--(Continued)
Pursuant to the Company's 1991 Incentive Compensation Plan, each
director and certain former directors of the Company who are not
employees of the Company have received options to purchase 5,625 shares
of the Company's Class A Common Stock on each of February 16, 1993, and
November 1, 1993, 1994 and 1995. Persons who are not employees of the
Company who joined the Board between option grant dates and certain
former directors received a reduced number of options based on the
number of months of service on the Board prior to the next grant date.
The options become exercisable on October 31 following the date of
grant, but may be exercised earlier if the director dies, retires from
the Board on or after reaching age 65 or becomes disabled. The options
expire on October 31, 1997. The exercise price of the options was 80%
of the fair market value of the Class A Common Stock on the date of
grant. As of October 31, 1996, 121,875 options had been granted pursuant
to these provisions of the Plan, and 27,837 options had been exercised.
1995 Incentive Compensation Plan
In August 1995 the Board of Directors adopted, and in December 1995
and December 1996 amended, the 1995 Incentive Compensation Plan,
pursuant to which officers and other employees of the Company may be
granted stock options, stock awards, restricted stock, stock
appreciation rights, performance share awards or cash awards by the
Compensation Committee of the Board of Directors. From September 7,
1995 through October 31, 1996, the Company granted options to officers
and other employees for the purchase of a total of 3,028,706 shares of
Class A Common Stock at exercise prices equal to the fair market value
at the grant dates, which ranged from $21.00 to $22.17 per share. Two-
thirds of the options become exercisable in full on the first day
between the date of grant and August 31, 2000 that the average of the
closing sale prices of a share of the Company's Class A Common Stock for
the 20 preceding consecutive trading days equals or exceeds $52.87,
which represents a 20% annual compounded growth in the price of a share
of the Company's Class A Common Stock over five years. Generally
accepted accounting principles require that a charge to earnings be
recorded for the performance-based options for the difference between
the exercise price and the then-current stock price when achievement of
the performance objective becomes probable. The remaining options
generally become exercisable in 20% annual increments beginning on
September 7, 1996. The Compensation Committee may accelerate the
exercisability of any option at any time at its discretion and the
options become immediately exercisable in the event of a change of
control of the Company, as defined in the plan. All of the options
expire on October 31, 2001. As of October 31, 1996, 2,889 options had
been exercised under this plan.
Directors' Stock Option Plan
Effective January 2, 1996, the Board of Directors adopted, and in
December 1996 amended, the Directors' Stock Option Plan, pursuant to
which each director of the Company who is not an employee of the Company
was granted an option on January 2, 1996 to purchase 36,000 shares of
the Company's Class A Common Stock for $24.67 per share. The options
become exercisable in 25% annual increments beginning January 2, 1997.
The Compensation Committee may accelerate the exercisability of any
option at any time at its discretion and the options become immediately
exercisable in the event of a change of control of the Company, as
defined in the plan. All of the options expire on January 2, 2001. As
of October 31, 1996, no options had been exercised under this plan.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(11) Benefit Plans--(Continued)
Employee Stock Purchase Plan
On July 1, 1992, the Company adopted an "Employee Stock Purchase
Plan" and reserved 1,125,000 shares of Class A Common Stock for purchase
by eligible employees, as defined. The plan provides to eligible
employees the opportunity to purchase Company Class A Common Stock semi-
annually on June 30 and December 31. The purchase price is established
at a 15% discount from fair market value, as defined. As of October 31,
1996, 165,577 shares had been acquired under this plan.
(12) Commitments, Contingencies and Related Party Transactions
In December 1991, the United States Department of Justice ("Justice
Department"), on behalf of the Federal Trade Commission ("FTC") filed a
complaint against five of the Company's Texas funeral home subsidiaries.
The FTC originally sought unspecified civil penalties and injunctive and
other relief from each of the five subsidiaries. In July 1993, the
Justice Department filed a motion requesting civil penalties of $2,000.
On September 19, 1996, the District Court entered a Consent Decree in
Settlement which allowed the Company to settle the case, without
admitting liability and expressly denying the matters alleged in the
complaint, by paying a civil penalty of $122 and agreeing to certain
administrative requirements on a prospective basis. Compliance with the
administrative requirements will not have a material adverse effect on
the financial position, results of operations or cash flows of the
Company.
The Company was notified in September 1994 that a suit was brought
by a competitor regarding the Company's acquisition of certain
corporations in Mexico. The suit alleges that this acquisition violated
the competitor's previous option to acquire the same corporations. The
suit seeks unspecified damages. The Company believes that the suit is
without merit and intends to defend it vigorously. The Company believes
it is entitled to indemnification from the previous owners of these
corporations should an unfavorable outcome result.
The Company is a party to certain other legal proceedings in the
ordinary course of its business but does not regard any such proceedings
as material.
As of October 31, 1996, the Company had advanced approximately $677,
including accrued interest, to fund premiums on a split-dollar, "second-
to-die" life insurance policy on behalf of the Company's Chairman, Mr.
Frank B. Stewart, Jr., and Mrs. Stewart. The advances are
collateralized by the assignment of other insurance policies and the
pledge of Class A Common Stock of the Company. In 1992, the Company
agreed to continue to advance such premiums for a twelve-year period and
will be repaid at the earlier of (a) the surrender of the policy, (b)
the deaths of Mr. and Mrs. Stewart, or (c) 60 days following payment in
full of all premiums on the policy.
The Company has noncancellable operating leases, primarily for land
and buildings, that expire over the next three to 20 years, except for
one lease which expires in 2032. Rent expense under these leases was
$3,997, $3,533 and $2,408 for the years ended October 31, 1996, 1995 and
1994, respectively. The Company's future minimum lease payments as of
October 31, 1996 are $4,135, $3,169, $2,421, $1,871, $1,365 and $13,816
for the years ending October 31, 1997, 1998, 1999, 2000, 2001 and later
years, respectively. Additionally, the Company has entered into non-
compete agreements with prior owners of acquired subsidiaries that
expire through 2005. The Company's future non-compete payments as of
October 31, 1996 for the same periods are $5,874, $5,663, $5,032,
$4,356, $4,002 and $10,547, respectively.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(13) Segment Data
The Company conducts funeral and cemetery operations in the United
States, including Puerto Rico, and in Canada. The Company conducts
funeral operations in Mexico, Australia and New Zealand.
Corporate
and
Funeral Cemetery<F1> Eliminations Consolidated
_________ __________ _____________ ____________
Revenue
October 31, 1996 $ 225,461 207,926 - $ 433,387
October 31, 1995 $ 188,991 179,831 - $ 368,822
October 31, 1994 $ 116,266 138,092 - $ 254,358
Operating earnings or loss before
performance-based stock options
October 31, 1996 $ 72,239 45,879 (14,096) $ 104,022
October 31, 1995 $ 55,309 34,434 (11,113) $ 78,630
October 31, 1994 $ 31,785 25,812 (8,157) $ 49,440
Identifiable assets
October 31, 1996 $ 776,214 579,237 10,490 $1,365,941
October 31, 1995 $ 506,994 548,668 16,773 $1,072,435
October 31, 1994 $ 298,412 447,093 13,885 $ 759,390
Depreciation and amortization
October 31, 1996 $ 12,960 7,830 911 $ 21,701
October 31, 1995 $ 10,257 5,765 770 $ 16,792
October 31, 1994 $ 6,348 4,131 548 $ 11,027
Capital expenditures
October 31, 1996 $ 81,450 16,442 1,389 $ 99,281
October 31, 1995 $ 58,758 13,548 922 $ 73,228
October 31, 1994 $ 35,785 13,189 1,268 $ 50,242
___________________
<F1> Includes the Company's construction and sales operations, which
previously were classified as a separate industry segment.
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(13) Segment Data--(Continued)
U.S. and
Possessions<F1> Foreign<F2> Consolidated
_______________ ___________ _____________
Revenue
October 31, 1996 $ 391,437 41,950 $ 433,387
October 31, 1995 $ 333,558 35,264 $ 368,822
October 31, 1994 $ 250,938 3,420 $ 254,358
Operating earnings before performance-
based stock options
October 31, 1996 $ 88,812 15,210 $ 104,022
October 31, 1995 $ 66,213 12,417 $ 78,630
October 31, 1994 $ 48,474 966 $ 49,440
Identifiable assets
October 31, 1996 $ 1,114,452 251,489 $1,365,941
October 31, 1995 $ 980,510 91,925 $1,072,435
October 31, 1994 $ 725,083 34,307 $ 759,390
_________________________
<F1>Includes the Company's operations in the United States and the
Commonwealth of Puerto Rico.
<F2> The Company's foreign operations began in the countries and on the
dates indicated: Mexico - August 1994; Australia - December 1994;
New Zealand - April 1996; and Canada - October 1996.
(14) Quarterly Financial Data (Unaudited)
First Second Third Fourth
_________ ___________ _________ ________
Year Ended October 31, 1996
_____________________________
Revenues $102,757 $108,423 $108,934 $113,273
Gross profit 28,599 29,723 29,723 30,073
Net earnings 12,498 13,403 12,924 12,472
Earnings per common share .30<F1> .32<F1> .31 .30
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
(14) Quarterly Financial Data (Unaudited)--(Continued)
First Second Third Fourth
_________ _______ _________ ________
Year Ended October 31, 1995
___________________________
Revenues $88,772 $93,095 $91,524 $95,431
Gross profit 21,181 22,943 22,705 22,914
Net earnings (loss) 8,732 9,053 (1,383)<F2> 9,743
Earnings (loss) per common share<F1> .26 .27 (.04)<F2> .24
____________________
<F1> Restated to reflect the Company's three-for-two stock split
effective June 21, 1996.
<F2> Excluding the effect of the $17,252 ($10,869, or $.28 per share,
after-tax third quarter effect) non-recurring, non-cash charge
required in connection with the vesting of performance-based stock
options, net earnings and earnings per share were $9,486 and $.24,
respectively.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
The information regarding executive officers required by Item 10 may
be found under Item 4(a) of this report.
The information regarding directors and compliance with Section
16(a) of the Securities Exchange Act of 1934, as amended, required by
Item 10 is incorporated by reference to the Registrant's definitive
proxy statement relating to its 1997 annual meeting of shareholders,
which proxy statement will be filed pursuant to Regulation 14A within
120 days after the end of the last fiscal year.
Item 11. Executive Compensation
The information required by Item 11 is incorporated by reference to
the Registrant's definitive proxy statement relating to its 1997 annual
meeting of shareholders, which proxy statement will be filed pursuant to
Regulation 14A within 120 days after the end of the last fiscal year.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by Item 12 is incorporated by reference to
the Registrant's definitive proxy statement relating to its 1997 annual
meeting of shareholders, which proxy statement will be filed pursuant to
Regulation 14A within 120 days after the end of the last fiscal year.
Item 13. Certain Relationships and Related Transactions
The information required by Item 13 is incorporated by reference to
the Registrant's definitive proxy statement relating to its 1997 annual
meeting of shareholders, which proxy statement will be filed pursuant to
Regulation 14A within 120 days after the end of the last fiscal year.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents filed as part of this report:
(1) Financial Statements
The Company's consolidated financial statements listed below have
been filed as part of this report:
Page
Report of Independent Accountants 25
Consolidated Statements of Earnings for the Years Ended October 31,
1996, 1995 and 1994 26
Consolidated Balance Sheets as of October 31, 1996 and 1995 27
Consolidated Statements of Shareholders' Equity for the Years Ended
October 31, 1996, 1995 and 1994 29
Consolidated Statements of Cash Flows for the Years Ended October
31, 1996, 1995 and 1994 30
Notes to Consolidated Financial Statements 32
(2) Financial Statement Schedule for the years ended October 31,
1996, 1995 and 1994
Report of Independent Accountants on Financial Statement Schedule 53
Schedule II-Valuation and Qualifying Accounts 54
All other schedules are omitted because they are not applicable or
not required, or the information appears in the financial statements or
notes thereto.
REPORT OF INDEPENDENT ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
The Board of Directors
Stewart Enterprises, Inc.:
Our report on the consolidated financial statements of Stewart
Enterprises, Inc. and Subsidiaries is included in Item 8 of this Form
10-K. In connection with our audits of such financial statements, we
have also audited the related financial statement schedule listed in
Item 14(a) of this Form 10-K. This financial statement schedule is the
responsibility of the Company's management.
In our opinion, the financial statement schedule referred to above,
when considered in relation to the basic financial statements taken as a
whole, presents fairly, in all material respects, the information
required to be included therein.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
December 13, 1996
<PAGE>
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
_________ ________ ________ ________ _________
Additions
________________________
Balance at Charged to Charged to
beginning costs and other Deductions Balance at end
Description of period expenses accounts<F1> -write-offs of period
____________ ___________ __________ ____________ ____________ ______________
<S> <C> <C> <C> <C> <C>
Current-Allowance for contract
cancellations and doubtful accounts:
Year ended October 31,
1996 $ 2,847 13,580 445 13,876 $ 2,996
1995 $ 2,800 8,923 1,174 10,050 $ 2,847
1994 $ 2,783 4,748 2,721 7,452 $ 2,800
Due after one year-Allowance for
contract cancellations and doubtful
accounts:
Year ended October 31,
1996 $ 3,307 9,576 797 10,444 $ 3,236
1995 $ 3,803 6,775 1,504 8,775 $ 3,307
1994 $ 3,334 3,009 2,133 4,673 $ 3,803
Accumulated amortization of intangible
assets:
Year ended October 31,
1996 $ 11,743 7,763 - - $ 19,506
1995 $ 6,335 5,408 - - $ 11,743
1994 $ 3,423 2,912 - - $ 6,335
________________
<F1> Amounts charged to other accounts represent principally the opening
balance in the allowance for contract cancellations and doubtful
accounts for acquired companies.
</TABLE>
Item 14(a)(3) Exhibits
3.1 Amended and Restated Articles of Incorporation of the Company, as
amended (incorporated by reference to Exhibit 3.1 to the Company's
Quarterly Report on Form 10-Q for the quarter ended January 31,
1996)
3.2 By-laws of the Company, as amended (incorporated by reference to
Exhibit 3.2 to the Company's Annual Report on Form 10-K for the
fiscal year ended October 31, 1995 (the "1995 10-K"))
4.1 See Exhibits 3.1 and 3.2 for provisions of the Company's Amended
and Restated Articles of Incorporation, as amended and By-laws, as
amended, defining the rights of holders of Class A and Class B
Common Stock
4.2 Specimen of Class A Common Stock certificate (incorporated by
reference to Exhibit 4.2 to Amendment No. 3 to the Company's
Registration Statement on Form S-1 (Registration No. 33-42336)
filed with the Commission on October 7, 1991)
4.3 Indenture dated as of December 1, 1996 by and between the Company
and Citibank, N.A. as Trustee (incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K dated
December 5, 1996)
4.4 Form of 6.70% Note due 2003 (incorporated by reference to Exhibit
4.2 to the Company's Current Report on Form 8-K dated December 5,
1996)
4.5 Fifth Amended and Restated Loan Agreement by and among the
Company, its subsidiaries and NationsBank of Texas, N.A.,
Citicorp, USA, Inc., Hibernia National Bank, First Union National
Bank of North Carolina, SunTrust Bank, Atlanta, Cooperatieve
Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland", New
York Branch, Bank of America National Trust and Savings
Association, and First Interstate Bank of Texas, N.A. dated
December 11, 1995 (incorporated by reference to Exhibit 10.59 to
the 1995 10-K), as amended by the First Amendment thereto, dated
as of October 31, 1996
The Company hereby agrees to furnish to the Commission, upon request, a
copy of the instruments which define the rights of holders of the
Company's long-term debt. None of such instruments (other than those
included as exhibits herein) represents long-term debt in excess of 10%
of the Company's consolidated total assets.
10.1 Lease Agreement dated September 1, 1983 between Stewart Building
Enterprise and Stewart Enterprises, Inc. and amendments thereto
dated June 18, 1990 and May 23, 1991 (incorporated by reference to
Exhibit 10.1 to the Company's Registration Statement on Form S-1
(Registration No. 33-42336) filed with the Commission on
August 21, 1991 (the "1991 Registration Statement"); dated June 1,
1992 (incorporated by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended October 31,
1992); dated June 1, 1993 (incorporated by reference to Exhibit
10.1 to the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1993); dated October 28, 1994 and dated
November 30, 1994 (incorporated by reference to Exhibit 10.1 to
the Company's Annual Report on Form 10-K for the fiscal year ended
October 31, 1994); and dated May 27, 1997
10.2 Split-Dollar Agreement dated January 10, 1992 between the Company,
Roy A. Perrin, Jr., Trustee, on behalf of all Trustees of the
Elisabeth Felder Stewart 1988 Trust and of the Frank B. Stewart,
III 1988 Trust, and Frank B. Stewart, Jr. (incorporated by
reference to Exhibit 10.39 to the 1992 10-K)
10.3 Promissory Note by the Company to Frank B. Stewart, Jr. in the
amount of $2,590,997 dated November 1, 1992, and amendment thereto
dated January 1, 1994 (incorporated by reference to Exhibit 10.1
to the Company's Quarterly Report on Form 10-Q for the quarter
ended January 31, 1995)
10.4 Lease dated June 29, 1990 between Richard O. Baldwin, Jr. and
Baldwin-Fairchild Funeral Homes, Inc. (incorporated by reference
to Exhibit 10.7 to the 1991 Registration Statement)
10.5 Promissory Note by S.E. Mid-Atlantic, Inc. to Brian J. Marlowe in
the amount of $3,797,331 dated January 1, 1994 (incorporated by
reference to Exhibit 10.37 to the Company's Annual Report on Form
10-K for the fiscal year ended October 31, 1994 (the "1994 10-K"))
________________________
Management Contracts and Compensatory Plans or Arrangements
10.6 Form of Indemnity Agreement between the Company and its directors
and executive officers (incorporated by reference to Exhibit 10.25
to the 1991 Registration Statement), and amendment dated September
18, 1996
10.7 Stock Option Agreement between the Company and Frank B. Stewart,
Jr. dated September 25, 1992 (incorporated by reference to Exhibit
10.22 to the 1992 10-K)
10.8 Stock Option Agreements between the Company and Joseph P. Henican,
III dated February 1, 1995 (incorporated by reference to Exhibit
10.2 to the Company's Quarterly Report on Form 10-Q for the
quarter ended July 31, 1995)
10.9 Employment Agreement dated August 1, 1995, and Change of Control
Agreement dated December 5, 1995, between the Company and Joseph
P. Henican, III (incorporated by reference to Exhibits 10.16 and
10.20, respectively, to the 1995 10-K)
10.10 Stock Option Agreement dated September 7, 1995 (time-vest), dated
September 7, 1995 (performance-based), and dated December 5, 1995
(performance-based), between the Company and Joseph P. Henican,
III (incorporated by reference to Exhibits 10.17, 10.18 and 10.19,
respectively, to the 1995 10-K)
10.11 Stock Option Agreement between the Company and William E. Rowe
dated September 25, 1992 (incorporated by reference to Exhibit
10.28 to the 1992 10-K) and addenda thereto dated April 15, 1994
(incorporated by reference to Exhibit 10.24 to the 1994 10-K)
10.12 Stock Option Agreements between the Company and William E. Rowe
dated April 15, 1994 (incorporated by reference to Exhibit 10.25
to the 1994 10-K)
10.13 Stock Option Agreements between the Company and William E. Rowe
dated November 1, 1994 (incorporated by reference to Exhibit 10.3
to the Company's Quarterly Report on Form 10-Q for the quarter
ended July 31, 1995)
10.14 Employment Agreement dated August 1, 1995, and Change of Control
Agreement dated December 5, 1995, between the Company and William
E. Rowe (incorporated by reference to Exhibits 10.25 and 10.29,
respectively, to the 1995 10-K)
10.15 Stock Option Agreement dated September 7, 1995 (time-vest), dated
September 7, 1995 (performance-based), and dated December 5, 1995
(performance-based) between the Company and William E. Rowe
(incorporated by reference to Exhibits 10.26, 10.27 and 10.28,
respectively, to the 1995 10-K)
10.16 Stock Option Agreement between the Company and Ronald H. Patron
dated September 25, 1992 (incorporated by reference to Exhibit
10.24 to the 1992 10-K)
10.17 Employment Agreement dated August 1, 1995, and Change of Control
Agreement dated December 5, 1995, between the Company and Ronald
H. Patron (incorporated by reference to Exhibits 10.32 and 10.36,
respectively, to the 1995 10-K)
10.18 Stock Option Agreement dated September 7, 1995 (time-vest), dated
September 7, 1995 (performance-based) and dated December 5, 1995
(performance-based), between the Company and Ronald H. Patron
(incorporated by reference to Exhibits 10.33, 10.34 and 10.35,
respectively, to the 1995 10-K)
10.19 Stock Option Agreement between the Company and Gerard C. Alexander
dated September 25, 1992 (incorporated by reference to Exhibit
10.25 to the 1992 10-K)
10.20 Employment Agreement dated August 1, 1995, and Change of Control
Agreement dated December 5, 1995, between the Company and Gerard
C. Alexander (incorporated by reference to Exhibits 10.39 and
10.43, respectively, to the 1995 10-K)
10.21 Stock Option Agreement dated September 7, 1995 (time-vest), dated
September 7, 1995 (performance-based), and dated December 5, 1995
(performance-based), between the Company and Gerard C. Alexander
(incorporated by reference to Exhibits 10.40, 10.41 and 10.42,
respectively, to the 1995 10-K)
10.22 Stock Option Agreement between the Company and Richard O. Baldwin,
Jr. dated September 25, 1992
10.23 Employment Agreement between the Company and Richard O. Baldwin
dated August 1, 1995
10.24 Stock Option Agreement between the Company and Richard O. Baldwin
dated September 7, 1995 (time-vest)
10.25 Stock Option Agreement between the Company and Richard O. Baldwin
dated September 7, 1995 (performance-based)
10.26 Stock Option Agreement between the Company and Richard O. Baldwin
dated December 5, 1995 (performance-based)
10.27 Change of Control Agreement between the Company and Richard O.
Baldwin dated December 5, 1995
10.28 Stock Option Agreement between the Company and Brian J. Marlowe
dated April 15, 1994 (incorporated by reference to Exhibit 10.26
to the 1994 10-K)
10.29 Stock Option Agreements between the Company and Brian J. Marlowe
dated November 1, 1994 (incorporated by reference to Exhibit 10.4
to the Company's Quarterly Report on Form 10-Q for the quarter
ended July 31, 1995)
10.30 Employment Agreement dated August 1, 1995, and Change of Control
Agreement dated December 5, 1995, between the Company and Brian J.
Marlowe (incorporated by reference to Exhibits 10.47 and 10.51,
respectively, to the 1995 10-K)
10.31 Stock Option Agreement dated September 7, 1995 (time-vest), dated
September 7, 1995 (performance-based) and dated December 5, 1995
(performance-based), between the Company and Brian J. Marlowe
(incorporated by reference to Exhibits 10.48, 10.49 and 10.50,
respectively, to the 1995 10-K)
10.32 Employment Agreement between the Company and Andrew H. McEachern
dated December 9, 1994 (incorporated by reference to Exhibit 10.17
to the 1994 10-K)
10.33 Stock Option Agreement between the Company and Andrew H. McEachern
dated December 9, 1994 (incorporated by reference to Exhibit 10.27
to the 1994 10-K)
10.34 Stock Option Agreement between the Company and Kenneth C. Budde
dated September 25, 1992
10.35 Employment Agreement between the Company and Kenneth C. Budde
dated August 1, 1995
10.36 Stock Option Agreement between the Company and Kenneth C. Budde
dated September 7, 1995 (time-vest)
10.37 Stock Option Agreement between the Company and Kenneth C. Budde
dated September 7, 1995 (performance-based)
10.38 Stock Option Agreement between the Company and Kenneth C. Budde
dated December 5, 1995 (performance-based)
10.39 Change of Control Agreement between the Company and Kenneth C.
Budde dated December 5, 1995
10.40 Stock Option Agreement between the Company and Lawrence B. Hawkins
dated September 25, 1992
10.41 Employment Agreement between the Company and Lawrence B. Hawkins
dated August 1, 1995
10.42 Stock Option Agreement between the Company and Lawrence B. Hawkins
dated September 7, 1995 (time-vest)
10.43 Stock Option Agreement between the Company and Lawrence B. Hawkins
dated September 7, 1995 (performance-based)
10.44 Stock Option Agreement between the Company and Lawrence B. Hawkins
dated December 5, 1995 (performance-based)
10.45 Change of Control Agreement between the Company and Lawrence B.
Hawkins dated December 5, 1995
10.46 Stock Option Agreement between the Company and Brent F. Heffron
dated September 25, 1992
10.47 Stock Option Agreement between the Company and Brent F. Heffron
dated September 7, 1995 (time-vest)
10.48 Stock Option Agreement between the Company and Brent F. Heffron
dated September 7, 1995 (performance-based)
10.49 Stock Option Agreement between the Company and Brent F. Heffron
dated December 5, 1995 (performance-based)
10.50 Stock Option Agreement between the Company and Raymond C. Knopke,
Jr. dated September 25, 1992
10.51 Stock Option Agreement between the Company and Raymond C. Knopke,
Jr. dated September 7, 1995 (time-vest)
10.52 Stock Option Agreement between the Company and Raymond C. Knopke,
Jr. dated September 7, 1995 (performance-based)
10.53 Stock Option Agreement between the Company and Raymond C. Knopke,
Jr. dated December 5, 1995 (performance-based)
10.54 The Stewart Enterprises Employees' Retirement Trust (incorporated
by reference to Exhibit 10.20 to the 1991 Registration Statement)
and amendment thereto dated January 1, 1994 (incorporated by
reference to Exhibit 10.28 to the 1994 10-K)
10.55 The Stewart Enterprises Supplemental Retirement and Deferred
Compensation Plan (incorporated by reference to Exhibit 10.29 to
the 1994 10-K)
10.56 Amended and Restated Stewart Enterprises, Inc. 1991 Incentive
Compensation Plan
10.57 Amended and Restated Stewart Enterprises, Inc. 1995 Incentive
Compensation Plan
10.58 Amended and Restated Directors' Stock Option Plan
________________________
12 Calculation of Ratio of Earnings to Fixed Charges
21 Subsidiaries of the Company
23 Consent of Coopers & Lybrand L.L.P.
27 Financial data schedule
________________________
(b) Reports on Form 8-K
The Company filed a Form 8-K on September 10, 1996 reporting,
under "Item 5. Other Events," the earnings release for the quarter ended
July 31, 1996.
The Company also filed a Form 8-K on October 9, 1996 reporting,
under "Item 2. Acquisition and Disposition of Assets," the acquisition
of the Urgel Bourgie firm in Canada; under "Item 5. Other Events," the
press release announcing its acquisition of Urgel Bourgie; and under
"Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits," pro forma financial information concerning certain
acquisitions during the period from November 1, 1994 through September
30, 1996, including the Urgel Bourgie acquisition, as well as audited
financial statements for the Urgel Bourgie firm, as required by
Regulation S-X, Rule 3-05(b).
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 on January 22, 1997.
STEWART ENTERPRISES, INC.
By: /s/ JOSEPH P. HENICAN, III
____________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and on the dates indicated.
Signature Title Date
/s/ FRANK B. STEWART, JR. Chairman of the Board January 22, 1997
____________________________
Frank B. Stewart, Jr.
/s/ JOSEPH P. HENICAN, III Vice Chairman of the Board January 22, 1997
_____________________________ and Chief Executive Officer
Joseph P. Henican, III
(Principal Executive Officer)
/s/ WILLIAM E. ROWE President, Chief Operating January 22, 1997
____________________________ Officer and a Director
William E. Rowe
/s/ RONALD H. PATRON Chief Financial Officer, January 22, 1997
___________________________ President-Corporate Division
Ronald H. Patron and a Director
(Principal Financial Officer)
/s/ KENNETH C. BUDDE Senior Vice President- January 22, 1997
____________________________ Corporate Division,
Kenneth C. Budde Treasurer and Secretary
(Principal Accounting Officer)
/s/ DARWIN C. FENNER Director January 22, 1997
______________________________
Darwin C. Fenner
/s/ MICHAEL O. READ Director January 22, 1997
_______________________________
Michael O. Read
/s/ JOHN P. LABORDE Director January 22, 1997
_______________________________
John P. Laborde
/s/ JAMES W. McFARLAND Director January 22, 1997
_______________________________
James W. McFarland
FIRST AMENDMENT TO
FIFTH AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO FIFTH AMENDED AND RESTATED
LOAN AGREEMENT (the "Amendment") is made and entered into as
of the 31st day of October, 1996, by and among STEWART
ENTERPRISES, INC., a Louisiana corporation ("Borrower");
NationsBank of Texas, N.A., a national banking association
("NationsBank"); Citicorp USA, Inc., a Delaware corporation
("Citicorp"); Hibernia National Bank, a national banking
association ("Hibernia"); First Union National Bank of North
Carolina, a national banking association ("First Union");
SunTrust Bank, Atlanta, a banking association chartered
under the laws of the State of Georgia ("SunTrust");
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
"Rabobank Nederland", New York branch, a Netherlands banking
association acting through its New York branch ("Rabobank");
Bank of America National Trust and Savings Association, a
national banking association ("Bank of America") and Wells
Fargo Bank (Texas), National Association (formerly known as
First Interstate Bank of Texas, N.A.), a national banking
association ("Wells Fargo") (NationsBank, Citicorp,
Hibernia, First Union, SunTrust, Rabobank, Bank of America
and Wells Fargo are hereinafter sometimes referred to
individually as a "Bank" and collectively as the "Banks"),
and NationsBank of Texas, N.A., a national banking
association, as agent for the Banks hereunder (hereinafter
referred to in such capacity as the "Agent"), and provides
as follows:
W I T N E S S E T H:
WHEREAS, Borrower, Agent and Banks are parties to that
certain Fifth Amended and Restated Loan Agreement dated as
of December 11, 1995 (the "Loan Agreement") pursuant to
which the Banks extended to Borrower a commitment to advance
up to $350,000,000.00 under a revolving line of credit loan
as more fully set forth in the Loan Agreement (the
"Revolving Line of Credit Loan"); and
WHEREAS, Empresas Stewart-Cementerios, Inc.
("Cementerios") and Empresas Stewart-Funerarias, Inc.
("Funerarias") are wholly-owned subsidiaries of Cemetery
Management, Inc. ("CMI"), which is in turn a wholly owned
subsidiary of Borrower; and
WHEREAS, Cementerios is indebted to CMI in the
aggregate sum of $37,000,000.00 in principal and interest,
for loans and advances made to it by CMI, as evidenced by
that certain promissory note dated October 31, 1996, in the
principal sum (excluding accrued and unpaid interest) of
$34,000,000.00 (the "Cementerios Note"); and
WHEREAS, Funerarias is indebted to CMI in the aggregate
sum of $51,000,000.00 in principal and interest, for loans
and advances made to it by CMI, as evidenced by that certain
promissory note dated October 31, 1996, in the principal sum
(excluding accrued and unpaid interest) of $48,500,000.00
(the "Funerarias Note") (the Cementerios Note and the
Funerarias Note are hereinafter collectively referred to as
the "CMI Notes"); and
WHEREAS, Borrower, CMI, Cementerios and Funerarias have
requested that the Banks purchase the CMI Notes from CMI and
that the Banks thereafter extend, renew and rearrange the
CMI Notes (the CMI Notes as so extended, renewed and
rearranged being herein referred to as the "Puerto Rico
Entity Notes") pursuant to that certain Loan Agreement dated
of even date herewith by and among Borrower, Cementerios,
Funerarias, Agent and Banks (the "Puerto Rico Loan
Agreement"), under which the Banks have extended to
Cementerios and Funerarias a commitment to advance revolving
line of credit loans as more fully set forth therein (the
"Puerto Rico Entity Loans"); and
WHEREAS, in consideration of same, Borrower and the
Banks have agreed to reduce the Banks' commitment under the
Revolving Line of Credit Loan from $350,000,000.00 to
$262,000,000.00, and Borrower has agreed to guarantee the
obligations and indebtedness of Cementerios and Funerarias
due to the Banks in connection with the Puerto Rico Entity
Loans (collectively, the "Puerto Rico Guarantees"); and
WHEREAS, Borrower, Agent and Banks desire to amend the
Loan Agreement in order to provide for such reduction of the
Banks' commitment under the Revolving Line of Credit Loan
and for other purposes more fully set forth herein.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth herein, the parties do
hereby amend the Loan Agreement as hereinafter set forth.
All capitalized terms used herein, unless otherwise defined
herein, shall have the meanings set forth in the Loan
Agreement.
I. AMENDMENTS TO ARTICLE I - DEFINITION OF TERMS.
1. The first, introductory paragraph of Article I
Definitions of Terms is hereby amended and restated in its
entirety as follows:
As used in this Agreement, (a) the
terms "Borrower", "NationsBank",
"Citicorp", "Hibernia", "First Union",
"SunTrust", "Rabobank", "Bank of
America", "First Interstate", "Bank",
"Banks", "Agent", "NCNB", "Fourth
Amended and Restated Loan Agreement",
"Third Amended and Restated Loan
Agreement", "Second Amended and Restated
Loan Agreement", "February 1989
Agreement", "MBank", "1994 Revolving
Loan", "1994 Term Loan", "New Lenders",
and "Assignments" shall have the
meanings assigned to them above, (b) the
terms "Wells Fargo", "Cementerios",
"Funerarias", "Puerto Rico Entity
Notes", "Puerto Rico Loan Agreement",
"Puerto Rico Entity Loans" and "Puerto
Rico Guarantees" shall have the meanings
assigned to them in the recitals set
forth in that certain First Amendment to
Fifth Amended and Restated Loan
Agreement dated as of October 31, 1996,
by and among Borrower, Agent and Banks,
amending this Agreement, and (c) the
terms set forth in this Article I shall
have the meanings assigned to them
below:
2. Section 1.39 "Loan Papers" is hereby amended and
restated in its entirety as follows:
1.39 Loan Papers. Shall mean,
collectively, this Agreement, the
Revolving Line of Credit Notes, the
Subordination Agreement, the Puerto Rico
Loan Agreement, Puerto Rico Entity
Notes, and the Puerto Rico Guarantees,
together with any and all additional
promissory notes, letter of credit
applications and/or agreements, reports,
certificates, corporate and/or
partnership resolutions, notices,
statements, documents and instruments
securing or guaranteeing the Obligation
or heretofore or hereafter delivered to
the Agent or the Banks in connection
with the Obligation or this Agreement,
and any extensions, renewals, amendments
or restatements of any of the foregoing.
3. Section 1.48 "Obligation" is hereby amended and
restated in its entirety as follows:
1.48 Obligation. At any particular time
shall mean, collectively, (a) the
aggregate unpaid principal amount of the
Revolving Line of Credit Notes and any
extensions, renewals or rearrangements
of same, and any other promissory notes
executed in connection with this
Agreement, (b) all interest accrued and
payable thereon, (c) all fees (including
commitment fees) and other charges
payable hereunder (including attorneys
fees incurred in connection with the
enforcement and collection of Borrower's
obligations hereunder or any part
thereof), (d) all reimbursement
obligations, direct or contingent, with
respect to letters of credit issued
pursuant to this Agreement, (e) any and
all obligations of the Borrower in
respect of such sums, (f) all other
amounts from time to time payable by the
Borrower to the Agent or the Banks
pursuant to this Agreement or any other
Loan Papers, and (g) all amounts from
time to time payable by Cementerios
and/or Funerarias and/or Borrower to the
Agent or the Banks pursuant to the
Puerto Rico Loan Agreement, the Puerto
Rico Entity Notes, the Puerto Rico
Guarantees or any other Loan Papers,
including without limitation the
aggregate unpaid principal amount of the
Puerto Rico Entity Notes, and any
extensions, renewals or rearrangements
of same, any other promissory notes
executed in connection with the Puerto
Rico Loan Agreement, and all interest
accrued and payable thereon.
4. Section 1.56 "Revolving Line of Credit Notes" is
hereby amended and restated in its entirety as follows:
1.56 Revolving Line of Credit Notes.
Shall mean the eight promissory notes
executed by the Borrower totaling the
principal sum of TWO HUNDRED SIXTY-TWO
MILLION AND NO/100 ($262,000,000.00)
DOLLARS in the aggregate, payable
respectively to the order of
NationsBank, Citicorp, Hibernia, First
Union, SunTrust, Rabobank, Bank of
America and Wells Fargo and being
substantially in the form of Exhibits
"A-1" through "A-8" annexed hereto, with
appropriate insertions, together with
any extensions, renewals, amendments,
modifications or rearrangements thereof.
II. AMENDMENTS TO ARTICLE II - THE REVOLVING LINE OF CREDIT
LOAN.
1. Section 2.01 "Commitment" is hereby amended and
restated in its entirety as follows:
2.01 Commitment. Subject to the terms
and conditions contained herein, the
Banks agree to extend to the Borrower a
Revolving Line of Credit Loan (as
extended, renewed, modified or
rearranged from time to time, the
"Revolving Line of Credit Loan"), and to
make Advances to the Borrower under the
Revolving Line of Credit Loan from time
to time through the Maturity Date in an
aggregate principal amount of up to TWO
HUNDRED SIXTY-TWO MILLION AND NO/100
($262,000,000.00) DOLLARS. The Advances
under the Revolving Line of Credit Loan
shall be evidenced by the Revolving Line
of Credit Notes executed by the Borrower
and delivered to the Banks, and
evidenced by a credit advice issued in
connection therewith; provided, however,
that the failure to issue such credit
advice shall not affect the Borrower's
obligation hereunder or under the
Revolving Line of Credit Notes with
respect to such Advance or otherwise.
The Revolving Line of Credit Notes
represent a renewal and decrease, but
not a novation or discharge, of the
Indebtedness represented by those
certain eight promissory notes dated
December 11, 1995 in the aggregate
principal amount of $350,000,000.00
payable by Borrower to each of the
Banks, respectively. Notwithstanding
anything contained herein to the
contrary, the maximum obligation of each
Bank with respect to the Revolving Line
of Credit Loan shall be limited to its
Pro Rata Share thereof.
2. The first, introductory paragraph of
Section 2.03 "Letters of Credit" is
hereby amended and restated in its
entirety as follows:
The Revolving Line of Credit Loan may be
used by Borrower as the basis on which
to request issuance of standby letters
of credit by the Agent in an amount,
including the Existing Letters of Credit
(as hereinafter defined), not exceeding
the aggregate principal sum of Forty
Eight Million ($48,000,000.00) Dollars
outstanding at any one time, in
accordance with the terms and provisions
of this Agreement.
3. Section 2.03 "Letters of Credit," subpart (b), is
hereby amended in the following respects:
The first full paragraph appearing on
page 17 of the Loan Agreement, such
paragraph commencing with the phrase
"The aggregate undrawn amounts..." and
ending with the phrase "...the aggregate
principal sum of $350,000,000.00", is
hereby amended by deleting the reference
to "$350,000,000.00" and substituting
therefor "$262,000,000.00".
III. AMENDMENTS TO ARTICLE IV - REPRESENTATIONS AND
WARRANTIES
1. Section 4.04 "Subsidiaries of the Borrower" is
hereby amended and restated in its entirety as follows:
4.04 Subsidiaries of the Borrower. Except
as disclosed in Exhibit "B" attached hereto,
the Borrower owns, directly, or through
another Subsidiary, 100% of the issued and
outstanding stock of the Subsidiaries and has
no other Subsidiaries (except for any
Subsidiaries acquired since October 23,
1996). The name of each of the shareholders
of each Subsidiary acquired as of October 23,
1996 (except the Joint Venture and Kanawha)
and the respective stock ownership of each of
such shareholders is shown on Exhibit "B"
attached hereto. The Joint Venture is
comprised of two general partners, Borrower
and Lake Lawn Metairie Funeral Home, Inc.,
with ownership interests of 51% and 49%
respectively. Kanawha is comprised of four
partners, Legacy One, Inc., Greenhills Memory
Gardens, Inc., Eastlawn Memorial Gardens,
Inc. and Pleasant View Memory Gardens, Inc.
with ownership interests of 60%, 15%, 15% and
10%, respectively.
2. Section 4.08 "Title to Properties; Liens" is
hereby amended and restated in its entirety as follows:
4.08 Title to Properties; Liens.
(a) The Borrower and each of its
Subsidiaries have good and marketable title
to all properties and assets shown to be
owned by them as reflected on the financial
statements referred to in Section 4.06 above.
To the knowledge of Borrower, as of September
30, 1996, there are no unrecorded Liens
(except for Liens such as construction Liens
or lessor's Liens customarily incurred in the
ordinary course of business) against any of
the assets or properties of the Borrower or
any of the Subsidiaries except as described
in Exhibit "E" annexed hereto.
(b) Except for Liens described in
Exhibit "E" annexed hereto, there are no
recorded Liens against any of the assets or
properties of the Borrower or any of its
Subsidiaries as of September 30, 1996.
(c) Since September 30, 1996, there have
been no Liens, recorded or unrecorded,
against any of the assets or properties of
the Borrower or any of its Subsidiaries that
secure Indebtedness that is material to the
financial condition or business operations of
the Borrower and the Subsidiaries, taken as a
whole.
3. Section 4.14 "Employee Benefit Plans" is hereby
amended and restated in its entirety as follows:
4.14 Employee Benefit Plans. To the
knowledge of Borrower, based upon ERISA and
the regulations and published interpretations
thereunder, the Borrower and each of its
Subsidiaries are in compliance in all
material respects with the applicable
provisions of ERISA. No Reportable Event or
Prohibited Transaction has occurred with
respect to any Plan, and no material funding
deficiency exists with respect to any Plan.
Neither the Borrower nor any Subsidiary has
ever maintained or become obligated to
contribute to a Multiemployer Plan other than
(i) the Plan Pensione Union de Tranquesta de
Puerto Rico and the Puerto Rico Teamsters
Union Pension Fund which are contributed to
by Cementerios, and (ii) the Western
Conference of Teamsters Pension Fund which is
contributed to by Chapel of the Roses, Inc.,
and neither the Borrower nor any Subsidiary
has incurred pursuant to Section 4201 or 4204
of ERISA withdrawal liabilities under such
Multiemployer Plans or would incur withdrawal
liabilities thereunder which could reasonably
be expected to result in a material adverse
effect on the business, properties, assets,
results of operations, condition, financial
or otherwise, or prospects of the Borrower
and the Subsidiaries, taken as a whole, if
the Borrower or any Subsidiary were to
withdraw from such Multiemployer Plans on the
date hereof.
4. Section 4.19 "Certain Guaranteed Indebtedness" is
hereby amended and restated in its entirety as follows:
4.19 Certain Guaranteed Indebtedness.
Attached hereto as Exhibit "G" is a
schedule of all Guarantees of Borrower
as of September 30, 1996 pursuant to
which Borrower has guaranteed the Funded
Indebtedness of any other Person. Since
September 30, 1996, Borrower has
incurred no Guaranteed Indebtedness that
is material to the financial condition
or business operations of the Borrower
and the Subsidiaries, taken as a whole.
There are no Guarantees outstanding
pursuant to which any of the
Subsidiaries have guaranteed the
Indebtedness of any other Person, except
for (a) the guaranty agreements by
Cementerios dated October 31, 1996 in
favor of the Private Placement
Noteholders (as hereinafter defined)
guaranteeing a portion of the
Indebtedness of Borrower under the
Private Placement Agreements (as
hereinafter defined) and (b) the
guaranty agreements by Funerarias dated
October 31, 1996 in favor of the Private
Placement Noteholders guaranteeing a
portion of the Indebtedness of Borrower
under the Private Placement Agreements.
As used herein, (i) the term "Private
Placement Noteholders" shall mean the
holders of those certain 6.04% Senior
Notes of Borrower in the original
aggregate principal amount of
$50,000,000.00 issued pursuant to that
certain Note Agreement dated December
21, 1993, as amended to date, by and
among Borrower, Principal Mutual Life
Insurance Company, The Great-West Life
Assurance Company and The Variable
Annuity Life Insurance Company, as well
as the holders of those certain Series A
Senior Notes, Series B Senior Notes and
Series C Senior Notes of Borrower in the
original aggregate principal sum of
$75,000,000.00 issued pursuant to that
certain Note Agreement dated November 7,
1994, as amended to date, by and among
Borrower, The Variable Annuity Life
Insurance Company, American General Life
Insurance Company, American General Life
and Accident Insurance Company, Gulf
Life Insurance Company, Principal Mutual
Life Insurance Company and Great-West
Life & Annuity Insurance Company; and
(ii) the term "Private Placement
Agreements" shall mean the two Note
Agreements described in the foregoing
definition of "Private Placement
Noteholders".
5. Section 4.20 "Indebtedness" is hereby amended and
restated in its entirety as follows:
4.20 Indebtedness. Annexed hereto as
Exhibit "H" is a schedule of all
Indebtedness of Borrower and the
Subsidiaries as of September 30, 1996
other than the following:
(a) Indebtedness due to the Agent and
the Banks under this Agreement;
(b) that portion of the Indebtedness of
the Borrower that constitutes
Guaranteed Indebtedness of the
Borrower;
(c) Indebtedness incurred in the
ordinary course of business other
than Funded Indebtedness; and
(d) Indebtedness represented by loans
or advances on life insurance
policies upon the lives of any
employees of the Borrower or any
Subsidiary.
Since September 30, 1996, Borrower and the Subsidiaries have
incurred no Indebtedness that is material to the financial
condition or business operations of the Borrower and the
Subsidiaries, taken as a whole.
IV. AMENDMENTS TO ARTICLE V - COVENANTS OF THE BORROWER.
1. Section 5.13 "Guaranteed Indebtedness" is hereby
supplemented and amended by the addition of the following
sentence, which shall be added as the last sentence of
Section 5.13:
Notwithstanding the foregoing,
Cementerios and Funerarias may permit to
exist the guaranty agreements in favor
of the Private Placement Noteholders as
more fully described in Section 4.19 of
this Agreement.
2. Section 5.14 "Disposition and Issuance of Stock"
is hereby amended as follows:
(i) Subsection (c) of Section 5.14 is hereby
amended and restated in its entirety as follows:
(c) Except for Cementerios and
Funerarias (who are expressly prohibited
from so doing without the prior written
consent of the Banks), any Subsidiary
may issue additional shares of capital
stock to its parent corporation or to
any other Subsidiary; or
(ii) Section 5.14 is hereby amended and
supplemented by adding thereto, following subsection (d)
thereof, the following new paragraph:
Notwithstanding anything contained in
this Section 5.14 to the contrary, in no
event may any of the capital stock of
either of Cementerios or Funerarias be
sold or transferred during the term of
this Agreement without the prior written
consent of the Banks.
3. Section 5.15 "Merger, Consolidation and/or Sale of
Substantially All Assets" is hereby amended and supplemented
by adding thereto, following subsection (d) thereof, the
following new paragraph:
Notwithstanding anything contained in
this Section 5.15 to the contrary, in no
event may either Cementerios or
Funerarias merge into or consolidate
with any other Person or sell, lease,
transfer or otherwise dispose of all or
substantially all of its assets to any
other Person during the term of this
Agreement without the prior written
consent of the Banks.
4. Subsections (c) and (d) of Section 5.16 "Sale of
Less Than Substantially All Assets" are hereby amended and
restated in their entirety as follows:
(c) Except for Cementerios and
Funerarias (who are specifically
prohibited from so doing without the
prior written consent of the Banks), any
Subsidiary may sell or transfer assets
which constitute less than all or
substantially all of its assets to
Borrower or to any other Subsidiary;
provided, however, that each of
Cementerios and Funerarias may make such
assignments of pre-arranged funeral and
cemetery sales contracts to Simplicity
Plan of Puerto Rico, Inc. (a wholly-
owned subsidiary of CMI) as are
necessary to comply with applicable laws
of the Commonwealth of Puerto Rico
relating to the financing of retail
installment sales contracts; or
(d) Except for Cementerios and
Funerarias (who are specifically
prohibited from so doing without the
prior written consent of the Banks), any
Subsidiary may sell assets which
constitute less than all or
substantially all of its assets to any
Non-Subsidiary provided that (i) the
selling entity receives fair market
value for such assets sold, and (ii) the
fair market value of such assets sold,
when aggregated with the fair market
value of any capital stock sold pursuant
to Section 5.14 (e) hereof and the fair
market value of any assets sold, leased
or transferred pursuant to Section 5.15
(d) hereof, does not exceed the Ten
Percent of New Worth Limitation. For
the purpose of calculating compliance
with the Ten Percent of Net Worth
Limitation, it is understood and agreed
that (A) any such sales of assets that
have occurred since August 10, 1994
shall be included and (B) any such sales
or transfers of assets by Borrower or a
Subsidiary to Borrower or any other
Subsidiary shall be excluded.
5. Section 5.27 "Debt of Subsidiaries" is hereby
amended and supplemented by adding thereto, as the last
sentence thereof, the following:
Notwithstanding anything contained in
this Section 5.27 to the contrary, the
Indebtedness of Cementerios and
Funerarias due to the Banks in
connection with the Puerto Rico Entity
Loans shall not be subject to the 10% of
consolidated Net Worth of Borrower
limitation contained in this Section
5.27.
V. AMENDMENTS TO ARTICLE VI - EVENTS OF DEFAULT.
1. Section 6.01 "Nature of Events" is hereby amended
and supplemented by the addition thereto of the following
new subparts:
(n) Puerto Rico Loan Agreement.
The occurrence of an "Event of Default"
as defined in the Puerto Rico Loan
Agreement, or under any promissory note
or other document executed in connection
therewith.
(o) Bridge Facility Agreement. The
occurrence of an "Event of Default" as
defined in that certain Agreement dated
September 20, 1996 by and among Borrower
and NationsBank pursuant to which
NationsBank extended a $75,000,000.00
bridge loan to Borrower, or under any
promissory note or other document
executed in connection therewith.
(p) Bank of Montreal Agreement.
The occurrence of an "Event of Default"
as defined in that certain Credit
Agreement by and among Borrower, Le
Groupe Stewart Inc. and the Bank of
Montreal dated September 30, 1996, or
under any promissory note or other
document executed in connection
therewith.
VI. AMENDMENTS TO EXHIBITS.
The following exhibits to the Loan Agreement are hereby
amended by replacing them with exhibits to this Amendment as
more fully set forth below:
1. Exhibits "A-1" through "A-8" (Revolving Line of
Credit Notes) are hereby deleted and replaced with Exhibits
"A-1" through "A-8" to this Amendment.
2. Exhibit "B" (Schedule of Subsidiaries) is hereby
deleted and replaced with Exhibit "B" to this Amendment.
3. Exhibit "E" (Schedule of Liens) is hereby deleted
and replaced with Exhibit "E" to this Amendment.
4. Exhibit "F" (Schedule of Litigation) is hereby
deleted and replaced with Exhibit "F" to this Amendment.
5. Exhibit "G" (Schedule of Guaranteed Indebtedness)
is hereby deleted and replaced with Exhibit "G" to this
Amendment.
6. Exhibit "H" (Schedule of Indebtedness) is hereby
deleted and replaced with Exhibit "H" to this Amendment.
VII. MISCELLANEOUS PROVISIONS.
1. Conditions Precedent to Obligation of Banks to
Enter into this Amendment. The obligation of the Banks to
enter into this Amendment is subject to the conditions
precedent that the Banks shall have received each of the
following in form and substance satisfactory to the Banks:
a. this Amendment, duly executed by the
Borrower;
b. the Revolving Line of Credit Notes, duly
executed by the Borrower;
c. a copy of the articles of incorporation and
by-laws of Borrower, certified to be true and
correct by the secretary or an assistant
secretary of Borrower;
d. a certified copy of the resolution or
unanimous consent of the board of directors
of Borrower authorizing the execution,
delivery and performance of this Amendment,
the Revolving Line of Credit Notes and any
other Loan Papers to be executed in
connection therewith;
e. the legal opinions of counsel for the
Borrower in the States of Louisiana and
Texas, each in form and substance
satisfactory to the Banks; and
f. such other documents, certificates,
instruments and opinions as any of the Banks
may reasonably request, in each Bank's sole
discretion.
2. Ratification. Except as specifically amended by
this Amendment and the documents provided for herein, the
Loan Agreement and the other Loan Papers remain in full
force and effect as of the date hereof, Borrower hereby
ratifying and confirming the terms, conditions, covenants
and agreements contained therein as of the date of this
Amendment. Without limiting the generality of the foregoing,
Borrower hereby acknowledges that (i) each of the
representations and warranties contained in the Loan
Agreement and the Loan Papers (as same have been amended to
date including, without limitation, this Amendment) are true
and correct as of the date of this Amendment, (ii) the
Revolving Line of Credit Notes, as renewed, and decreased in
accordance with the provisions of this Amendment, constitute
the legal, valid and binding obligations of Borrower,
enforceable in accordance with their terms, and (iii) as of
the date of this Amendment, there exists no Event of Default
nor any condition, event or act which constitutes, or with
notice or lapse of time or both would constitute, an Event
of Default.
3. Oral Agreements. THIS WRITTEN AMENDMENT, TOGETHER
WITH THE FIFTH AMENDED AND RESTATED LOAN AGREEMENT DATED AS
OF DECEMBER 11, 1995, AND THE OTHER WRITTEN LOAN PAPERS
REPRESENT, COLLECTIVELY, AS OF THE DATE OF THIS AMENDMENT,
THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused
this First Amendment to Fifth Amended and Restated Loan
Agreement to be executed as of the date first above written.
BORROWER:
STEWART ENTERPRISES, INC.
By: ________________________
Name: ________________________
Title:________________________
BANKS:
NATIONSBANK OF TEXAS, N.A.
By: ________________________
Thomas Blake,
Senior Vice President
CITICORP USA, INC.
By: ________________________
Name: ________________________
Title:________________________
HIBERNIA NATIONAL BANK
By: ________________________
Name: ________________________
Title:________________________
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
By: _________________________
Name: _________________________
Title:_________________________
SUNTRUST BANK, ATLANTA
By: __________________________
Name:__________________________
Title:_________________________
By: _________________________
Name: _________________________
Title:_________________________
COOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK
B.A., "RABOBANK NEDERLAND",
NEW YORK BRANCH
By: ________________________
Name: ________________________
Title:________________________
By: ________________________
Name: ________________________
Title:________________________
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: ________________________
Name: ________________________
Title:________________________
WELLS FARGO BANK (TEXAS),
NATIONAL ASSOCIATION
By: ________________________
Name: ________________________
Title:________________________
AGENT:
NATIONSBANK OF TEXAS, N.A.
By: _________________________
Thomas Blake,
Senior Vice President
LEASE AMENDMENT
Consisting of one (1) typewritten page, this Lease
Amendment is attached to and forms a part of and amends that
certain Lease between Stewart Building Enterprise, Landlord,
and Stewart Enterprises, Inc., Tenant, dated September 1,
1983, as previously amended, in the following particulars,
to wit:
1. The Lease is hereby extended through May 31, 1997.
2. The demised Premises as shown on the attached
Exhibit AA and are as follows:
a. Ground floor 4,862 RSF
b. Fourth floor 19,874 RSF
c. Fifth floor 21,485 RSF
3. The new Base Monthly Rental effective June 1, 1996
is $48,262.43.
All other terms and conditions of the Lease, not in
conflict herewith, shall remain in full force and
effect.
THUS DONE AND EXECUTED this 27th day of May, 1996, in
the presence of the undersigned competent witnesses.
WITNESSES: STEWART ENTERPRISES, INC.
_______________________________ By: _______________________
_______________________________ ________________________
TITLE TENANT
STEWART BUILDING ENTERPRISE,
A LOUISIANA PARTNERSHIP
________________________________ By: __________________________
MANAGING PARTNER
________________________________ LANDLORD
AMENDMENT NO. 1
TO
INDEMNITY AGREEMENT
This AMENDMENT NO. 1 TO INDEMNITY AGREEMENT is made as
of the 18th day of September, 1996, by and between Stewart
Enterprises, Inc., a Louisiana corporation (the
"Corporation"), and ____________________ ("Indemnitee").
WITNESSETH:
WHEREAS, the Corporation has entered into Indemnity
Agreements (the "Existing Agreements") with certain
directors and officers, including Indemnitee; and
WHEREAS, the Corporation is currently entering into
Indemnity Agreements (the "1996 Agreements") with directors
and an executive officer who joined the Corporation after
the time of the execution of the Existing Agreements, and
the Corporation desires to provide directors and officers
who are parties to the Existing Agreements with the same
rights with respect to insurance as are being provided to
the directors and the officer who are parties to the 1996
Agreements.
NOW THEREFORE, the Corporation and Indemnitee agree as
follows:
The term "Insurance Policy" in Section 2(e) of the
Existing Agreements is hereby amended so that it reads in
its entirety as follows:
The term "Insurance Policy"
shall mean the Directors and
Officers Liability Policy that
the Corporation has obtained
from CNA, and the Excess
Directors and Officers
Liability Policies that the
Corporation has obtained from
Reliance Insurance Co., Old
Republic and Gulf Insurance
Company, on behalf of its
directors and officers for the
policy period commencing
September 27, 1995 and ending
September 27, 1996.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and signed as of the date
indicated above.
STEWART ENTERPRISES, INC.
By:_________________________
Name:_______________________
Title:______________________
INDEMNITEE:
Name:_______________________
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1991 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1991 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is entered into as of September 25,
1992, by and between Stewart Enterprises, Inc., a Louisiana
corporation ("SEI"), and Richard O. Baldwin, Jr.
("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1991 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on May
30, 1991 and approved by the shareholders of SEI on
September 19, 1991.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 25,
1992 (the "Date of Grant") the right, privilege and option
to purchase 40,000 shares of Common Stock (the "Option") at
an exercise price of $20.00 per share (the "Exercise
Price"). The Option shall be exercisable at the time
specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the
other provisions of this Section II, the Optionee shall be
entitled to exercise his Option as follows:
25% of the total number of shares
covered by the option
beginning on September 25,
1993;
50% of the total number of shares
covered by the option
beginning on September 25,
1994, less any shares
previously issued;
75% of the total number of shares
covered by the option
beginning on September 25,
1995, less any shares
previously issued; and
100% of the total number of shares
covered by the option
beginning on September 25,
1996, less any shares
previously issued.
The Option shall expire and may not be exercised later than
September 25, 1997.
2.2 During Optionee's lifetime, the Option may be
exercised only by him or his curator if he has been
interdicted. If Optionee's employment is terminated, other
than as a result of death or disability, the Option must be
exercised, to the extent exercisable at the time of
termination of employment, within 30 days of the date on
which he ceases to be an employee, except that the Committee
may upon request extend the period after termination of
employment during which the Option may be exercised, but in
no event later than five years after the Date of Grant.
2.3 If an Optionee ceases to be an employee because of
disability within the meaning of Section 22(e)(3) of the
Code, the Option must be exercised, to the extent otherwise
exercisable, within one year from the date on which he
ceases to be an employee, but in no event later than five
years after the Date of Grant.
2.4 In the event of Optionee's death, the Option may
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
otherwise exercisable, within one year from the date of
death, but in no event later than five years after the Date
of Grant.
III.
Method of Exercise of Option
3.1 Optionee may exercise all or a portion of the
Option by delivering to SEI a signed written notice of his
intention to exercise the Option, specifying therein the
number of shares to be purchased. Upon receiving such
notice, and after SEI has received full payment of the
Exercise Price, the appropriate officer of SEI shall cause
the transfer of title of the shares purchased to Optionee on
SEI's stock records and cause to be issued to Optionee a
stock certificate for the number of shares being acquired.
Optionee shall not have any rights as a shareholder until
the stock certificate is issued to him.
3.2 The Option may be exercised by the payment of the
Exercise Price in cash, in shares of Common Stock held for
six months or in a combination of cash and shares of Common
Stock held for six months. The Optionee may also pay the
Exercise Price by delivering a properly executed exercise
notice together with irrevocable instructions to a broker
approved by SEI (with a copy to SEI) to promptly deliver to
SEI the amount of sale or loan proceeds to pay the Exercise
Price.
IV.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time.
V.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VI.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed on the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ___________________________,
Member of the Compensation
Committee
____________________________
Richard O. Baldwin, Jr.
Optionee
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") between Stewart
Enterprises, Inc., a Louisiana corporation (the "Company"),
and Richard O. Baldwin, Jr. (the "Employee") is dated as of
August 1, 1995 (the "Agreement Date").
W I T N E S S E T H:
WHEREAS, Employee currently is employed by the Company;
WHEREAS, the Company desires to retain the services of
Employee pursuant to the terms of this Agreement, subject to
Employee's acceptance of the conditions stated herein;
WHEREAS, during the course of his employment with the
Company, Employee has or will have received extensive and
unique knowledge, training and education in, and access to
resources involving, the Death Care Business (as defined
below) at a substantial cost to the Company, which Employee
acknowledges has enhanced or substantially will enhance
Employee's skills and knowledge in such business;
WHEREAS, during the course of his employment with the
Company, Employee has had and will continue to have access
to certain valuable oral and written information, knowledge
and data relating to the business and operations of the
Company and its subsidiaries that is non-public,
confidential or proprietary in nature and is particularly
useful in the Death Care Business; and
WHEREAS, in view of the training provided by the
Company to Employee, its cost to the Company, the need for
the Company to be protected against disclosures by Employee
of the Company's and its subsidiaries' trade secrets and
other non-public, confidential or proprietary information,
the Company and Employee desire, among other things, to
prohibit Employee from disclosing or utilizing, outside the
scope and term of his employment, any non-public,
confidential or proprietary information, knowledge and data
relating to the business and operations of the Company or
its subsidiaries received by Employee during the course of
his employment, and to restrict the ability of Employee to
compete with the Company or its subsidiaries for a limited
period of time.
NOW, THEREFORE, for and in consideration of the
continued employment of Employee by the Company and the
payment of wages, salary and other compensation to Employee
by the Company, the parties hereto agree as follows:
ARTICLE I
EMPLOYMENT CAPACITY AND TERM
1. Prior Employment Agreement. Effective as of the
Agreement Date, this Agreement supersedes the Employment
Agreement dated November 1, 1992 between the Company and the
Employee (the "Prior Agreement").
2. Capacity and Duties of Employee. The Employee is
employed by the Company to render services on behalf of the
Company as Executive Vice President. As the Executive Vice
President, the Employee shall perform such duties as are
assigned to the individual holding such title by the
Company's Bylaws and such other duties, consistent with the
Employee's job title, as may be prescribed from time to time
by the Board of Directors of the Company (the "Board")
and/or the Company's Chief Executive Officer.
3. Employment Term. The term of this Agreement (the
"Employment Term") shall commence on the Agreement Date and
shall continue through October 31, 2000, subject to any
earlier termination of Employee's status as an employee
pursuant to this Agreement.
4. Devotion to Responsibilities.
During the Employment Term, the Employee shall
devote all of his business time to the business of the
Company, shall use his reasonable best efforts to perform
faithfully and efficiently his duties under this Agreement,
and shall not engage in or be employed by any other
business; provided, however, that nothing contained herein
shall prohibit the Employee from (a) serving as a member of
the board of directors, board of trustees or the like of any
for-profit or non-profit entity that does not compete with
the Company, or performing services of any type for any
civic or community entity, whether or not the Employee
receives compensation therefor, (b) investing his assets in
such form or manner as shall require no more than nominal
services on the part of the Employee in the operation of the
business of the entity in which such investment is made, or
(c) serving in various capacities with, and attending
meetings of, industry or trade groups and associations, as
long as the Employee's engaging in any activities permitted
by virtue of clauses (a), (b) and (c) above does not
materially and unreasonably interfere with the ability of
the Employee to perform the services and discharge the
responsibilities required of him under this Agreement.
Notwithstanding clause (b) above, during the Employment
Term, the Employee may not beneficially own more than 2% of
the equity interests of a business organization required to
file periodic reports with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the
"Exchange Act") and may not beneficially own more than 2% of
the equity interests of a business organization that
competes with the Company. For purposes of this paragraph,
"beneficially own" shall have the same meaning ascribed to
that term in Rule 13d-3 under the Exchange Act.
ARTICLE II
COMPENSATION AND BENEFITS
During the Employment Term, the Company shall provide
the Employee with the compensation and benefits described
below:
1. Salary. A salary ("Base Salary") at the rate of
$300,000 per fiscal year of the Company ("Fiscal Year"),
payable to the Employee at such intervals as other salaried
employees of the Company are paid.
2. Bonus. For the period ending October 31, 1995, the
Employee shall be eligible to receive an incentive bonus,
the amount of which shall be determined pursuant to
Paragraph 5 of the Prior Agreement. This incentive bonus
shall be paid in cash no later than 30 days following the
filing of the Company's annual report on Form 10-K for the
Fiscal Year ending October 31, 1995. For the period
beginning November 1, 1995, the employee shall be eligible
to receive a bonus (the "Bonus") of up to $150,000 per
Fiscal Year. Such Bonus shall be comprised of two elements,
the quantitative element and the qualitative element:
(a) The quantitative element shall be equal to
75% of the maximum Bonus of $150,000 and shall be based on
the attainment of certain goals to be established by the
Company's Compensation Committee and Employee.
(b) The qualitative element shall be 25% of the
maximum Bonus of $150,000 and shall be awarded at the
discretion of the President. The President and Employee
shall establish incentive goals and other criteria for the
award of the qualitative element.
The Bonus shall be paid in cash no later than 30 days
following the filing of the Company's annual report on Form
10-K for the Fiscal Year in which the Bonus has been earned.
3. Benefits. The Company shall provide the Employee
with the following fringe benefits and perquisites:
(a) An automobile allowance of $720 per month.
The Company will reimburse the Employee for all gasoline,
maintenance, repairs and insurance for Employee's personal
car, as if it were a Company-owned vehicle;
(b) Reimbursement for membership dues, including
assessments and similar charges, in one or more clubs deemed
useful for business purposes in an amount not to exceed
$8,000 or such additional amounts as may be approved by the
President;
(c) First class air travel;
(d) Fully-paid insurance benefit package
available to all employees; and
(e) All other benefit programs similar to those
provided other employees of the Company.
4. 1995 Incentive Compensation Plan. The Employee
shall be eligible to receive awards under the Company's 1995
Incentive Compensation Plan (the "1995 Plan").
5. Expenses. The Employee shall be reimbursed for
reasonable out-of-pocket expenses incurred from time to time
on behalf of the Company or any subsidiary in the
performance of his duties under this Agreement, upon the
presentation of such supporting invoices, documents and
forms as the Company reasonably requests.
ARTICLE III
TERMINATION OF EMPLOYMENT
1. Death. The Employee's status as an employee shall
terminate immediately and automatically upon the Employee's
death during the Employment Term.
2. Disability. The Employee's status as an employee
may be terminated for "Disability" as follows:
(a) The Employee's status as an employee shall
terminate if the Employee has a disability that would
entitle him to receive benefits under the Company's long-
term disability insurance policy in effect at the time
either because he is Totally Disabled or Partially Disabled,
as such terms are defined in the Company's policy in effect
as of the Agreement Date or as similar terms are defined in
any successor policy. Any such termination shall become
effective on the first day on which the Employee is eligible
to receive payments under such policy (or on the first day
that he would be so eligible, if he had applied timely for
such payments).
(b) If the Company has no long-term disability
plan in effect, if (i) the Employee is rendered incapable
because of physical or mental illness of satisfactorily
discharging his duties and responsibilities under this
Agreement for a period of 90 consecutive days and (ii) a
duly qualified physician chosen by the Company and
acceptable to the Employee or his legal representatives so
certifies in writing, the Board shall have the power to
determine that the Employee has become disabled. If the
Board makes such a determination, the Company shall have the
continuing right and option, during the period that such
disability continues, and by notice given in the manner
provided in this Agreement, to terminate the status of
Employee as an employee. Any such termination shall become
effective 30 days after such notice of termination is given,
unless within such 30-day period, the Employee becomes
capable of rendering services of the character contemplated
hereby (and a physician chosen by the Company and acceptable
to the Employee or his legal representatives so certifies in
writing) and the Employee in fact resumes such services.
(c) The "Disability Effective Date" shall mean
the date on which termination of employment becomes
effective due to Disability.
3. Cause. The Company may terminate the Employee's
status as an employee for Cause. As used herein,
termination by the Company of the Employee's status as an
employee for "Cause" shall mean termination as a result of
(a) the Employee's breach of this Agreement, or (b) the
willful engaging by the Employee in gross misconduct
injurious to the Company, which in either case is not
remedied within 10 days after the Company provides written
notice to the Employee of such breach or willful misconduct.
4. Good Reason. The Employee may terminate his
status as an employee for Good Reason. As used herein, the
term "Good Reason" shall mean:
(a) The occurrence of any of the following during
the Employment Term:
(i) the assignment by the Board to the
Employee of any duties or responsibilities that are
inconsistent with the Employee's status, title and position
as Executive Vice President;
(ii) any removal of the Employee from, or any
failure to reappoint or reelect the Employee to, the
position of Executive Vice President of the Company, except
in connection with a termination of Employee's status as an
employee as permitted by this Agreement;
(iii) the Company's requiring the Employee to
be based anywhere other than in the New Orleans, Louisiana
metropolitan area, except for required travel in the
ordinary course of the Company's business;
(b) any breach of this Agreement by the Company
that continues for a period of 10 days after written notice
thereof is given by the Employee to the Company;
(c) the failure by the Company to obtain the
assumption of its obligations under this Agreement by any
successor or assign as contemplated in this Agreement; or
(d) any purported termination by the Company of
the Employee's status as an employee for Cause that is not
effected pursuant to a Notice of Termination satisfying the
requirements of this Agreement.
5. Voluntary Termination by the Company. The Company
may terminate the Employee's status as employee for other
than death, Disability or Cause.
6. Voluntary Termination by the Employee. The
Employee may terminate the Employee's status as employee for
other than Good Reason.
7. Notice of Termination. Any termination by the
Company for Disability or Cause, or by the Employee for Good
Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Article VI
Section 2 of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice
that (a) indicates the specific termination provision in
this Agreement relied upon (b) to the extent applicable,
sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's
employment under the provisions so indicated and (c) if the
Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination
date (which date shall be not more than 30 days after the
giving of such notice). The failure by the Employee or the
Company to set forth in the Notice of Termination any fact
or circumstance that contributes to a showing of Good
Reason, Disability or Cause shall not negate the effect of
the notice nor waive any right of the Employee or the
Company, respectively, hereunder or preclude the Employee or
the Company, respectively, from asserting such fact or
circumstance in enforcing the Employee's or the Company's
rights hereunder.
8. Date of Termination. "Date of Termination" means
(a) if Employee's employment is terminated by reason of his
death or Disability, the Date of Termination shall be the
date of death of Employee or the Disability Effective Date,
as the case may be, (b) if Employee's employment is
terminated by the Company for Cause, or by Employee for Good
Reason, the date of delivery of the Notice of Termination or
any later date specified therein, (which date shall not be
more than 30 days after the giving of such notice) as the
case may be, (c) if the Employee's employment is terminated
by the Company for reasons other than death, Disability or
Cause, the Date of Termination shall be the date on which
the Company notifies the Employee of such termination, and
(d) if the Employee's employment is terminated by the
Employee for reasons other than Good Reason, the Date of
Termination shall be the date on which the Employee notifies
the Company of such termination.
ARTICLE IV
OBLIGATIONS UPON TERMINATION
1. Death. If the Employee's status as an employee is
terminated by reason of the Employee's death, this Agreement
shall terminate without further obligations to the
Employee's legal representatives under this Agreement, other
than the obligation to make any payments due pursuant to
employee benefit plans maintained by the Company or its
subsidiaries.
2. Disability. If Employee's status as an employee
is terminated by reason of Employee's Disability, this
Agreement shall terminate without further obligation to the
Employee, other than the obligation to make any payments due
pursuant to employee benefit plans maintained by the Company
or its subsidiaries.
3. Termination by Company for Reasons other than
Death, Disability or Cause; Termination by Employee for Good
Reason. If the Company terminates the Employee's status as
an employee for reasons other than death, Disability or
Cause, or the Employee terminates his employment for Good
Reason, then
(a) the Company shall pay to the Employee an
amount equal to two times the amount of Base Salary in
effect at the Date of Termination, payable in equal
installments over a two-year period at such intervals as
other salaried employees of the Company are paid; and
(b) with respect to all performance-based options
granted to the Employee pursuant to the 1995 Plan,
(i) if the performance goals have been met as
of the Date of Termination, then such options
shall become exercisable as of the Date of
Termination (if not already exercisable) and shall
expire on the date that is the later of:
(A) 30 days after the Date of
Termination or
(B) 30 days after the first date on
which the exercise of the options and sale of
the underlying securities will not (1) be
matched with purchases or sales of the
Company's common stock prior to such Date of
Termination such as to cause the Employee to
incur a liability to the Company under
Section 16 of the Exchange Act and (2)
destroy the Section 16 exemption for the
grant of the options.
(ii) if the performance goals have not been
met as of the Date of Termination, then
(A) if the performance goals are not met
by the close of business on the day that is
180 days after the Date of Termination, then
the options shall expire on such day; and
(B) if the performance goals are met by
the close of business on the day that is 180
days after the Date of Termination, then the
options shall become exercisable as of the
date such performance goals are met (the
"Vesting Date") and shall expire on the date
that is the later of:
(1) 30 days after the Vesting Date
or
(2) 30 days after the first date on
which the exercise of the options and
sale of the underlying securities will
not (I) be matched with purchases or
sales of the Company's common stock
prior to such Date of Termination such
as to cause the Employee to incur a
liability to the Company under Section
16 of the Exchange Act and (II) destroy
the Section 16 exemption for the grant
of the options.
4. Cause. If the Employee's status as an employee is
terminated by the Company for Cause, this Agreement shall
terminate without further obligation to the Employee other
than for obligations imposed by law and obligations imposed
pursuant to any employee benefit plan maintained by the
Company or its subsidiaries.
5. Termination by Employee for Reasons other than
Good Reason. If the Employee's status as an employee is
terminated by the Employee for reasons other than Good
Reason, then the Company shall pay to the Employee an amount
equal to a single year's Base Salary in effect at the Date
of Termination, payable in equal installments over a two-
year period at such intervals as other salaried employees of
the Company are paid.
6. Resignation. If Employee is a director of the
Company and his employment is terminated for any reason
other than death, the Employee shall, if requested by the
Company, immediately resign as a director of the Company.
If such resignation is not received when so requested, the
Employee shall forfeit any right to receive any payments
pursuant to this Agreement.
ARTICLE V
NONDISCLOSURE, NONCOMPETITION AND PROPRIETARY RIGHTS
1. Certain Definitions. For purposes of this
Agreement, the following terms shall have the following
meanings:
(a) "Confidential Information" means any
information, knowledge or data of any nature and in any form
(including information that is electronically transmitted or
stored on any form of magnetic or electronic storage media)
relating to the past, current or prospective business or
operations of the Company and its subsidiaries, that at the
time or times concerned is not generally known to persons
engaged in businesses similar to those conducted or
contemplated by the Company and its subsidiaries (other than
information known by such persons through a violation of an
obligation of confidentiality to the Company), whether
produced by the Company and its subsidiaries or any of their
consultants, agents or independent contractors or by
Employee, and whether or not marked confidential, including
without limitation information relating to the Company's or
its subsidiaries' products and services, business plans,
business acquisitions, processes, product or service
research and development methods or techniques, training
methods and other operational methods or techniques, quality
assurance procedures or standards, operating procedures,
files, plans, specifications, proposals, drawings, charts,
graphs, support data, trade secrets, supplier lists,
supplier information, purchasing methods or practices,
distribution and selling activities, consultants' reports,
marketing and engineering or other technical studies,
maintenance records, employment or personnel data, marketing
data, strategies or techniques, financial reports, budgets,
projections, cost analyses, price lists, formulae and
analyses, employee lists, customer records, customer lists,
customer source lists, proprietary computer software, and
internal notes and memoranda relating to any of the
foregoing.
(b) "Death Care Business" means (i) the owning
and operating of funeral homes and cemeteries, including
combined funeral home and cemetery facilities, (ii) the
offering of a complete range of services and products to
meet families' funeral needs, including prearrangement,
family consultation, the sale of caskets and related funeral
and cemetery products and merchandise, the removal,
preparation and transportation of remains, cremation, the
use of funeral home facilities for visitation and worship,
and related transportation services, (iii) the marketing and
sale of funeral services and cemetery property on an at-need
or prearranged basis, (iv) providing, managing and
administering financing arrangements (including trust funds,
escrow accounts, insurance and installment sales contracts)
for prearranged funeral plans and cemetery property and
merchandise, (v) providing interment services, the sale (on
an at-need or prearranged basis) of cemetery property
including lots, lawn crypts, family and community mausoleums
and related cemetery merchandise such as monuments,
memorials and burial vaults, (vi) the maintenance of
cemetery grounds pursuant to perpetual care contracts and
laws or on a voluntary basis, and (vii) offering mausoleum
design, construction and sales services.
2. Nondisclosure of Confidential Information. During
the Employment Term, Employee shall hold in a fiduciary
capacity for the benefit of the Company all Confidential
Information which shall have been obtained by Employee
during Employee's employment (whether prior to or after the
Agreement Date) and shall use such Confidential Information
solely within the scope of his employment with and for the
exclusive benefit of the Company. For a period of five
years after the Employment Term, commencing with the Date of
Termination, Employee agrees (a) not to communicate, divulge
or make available to any person or entity (other than the
Company) any such Confidential Information, except upon the
prior written authorization of the Company or as may be
required by law or legal process, and (b) to deliver
promptly to the Company any Confidential Information in his
possession, including any duplicates thereof and any notes
or other records Employee has prepared with respect thereto.
In the event that the provisions of any applicable law or
the order of any court would require Employee to disclose or
otherwise make available any Confidential Information,
Employee shall give the Company prompt prior written notice
of such required disclosure and an opportunity to contest
the requirement of such disclosure or apply for a protective
order with respect to such Confidential Information by
appropriate proceedings.
3. Limited Covenant Not to Compete. During the
Employment Term and for a period of two years thereafter,
commencing with the Date of Termination, Employee agrees
that, with respect to each State of the United States or
other jurisdiction, or specified portions thereof, in which
the Employee regularly (a) makes contact with customers of
the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c)
supervises the activities of other employees of the Company
or any of its subsidiaries, as identified in Appendix "A"
attached hereto and forming a part of this Agreement, and in
which the Company or any of its subsidiaries engages in the
Death Care Business on the Date of Termination
(collectively, the "Subject Areas"), Employee will restrict
his activities within the Subject Areas as follows:
(a) Employee will not, directly or indirectly,
for himself or others, own, manage, operate, control, be
employed in an executive, managerial or supervisory capacity
by, or otherwise engage or participate in or allow his
skill, knowledge, experience or reputation to be used in
connection with, the ownership, management, operation or
control of, any company or other business enterprise engaged
in the Death Care Business within any of the Subject Areas;
provided, however, that nothing contained herein shall
prohibit Employee from making passive investments as long as
Employee does not beneficially own more than 2% of the
equity interests of a business enterprise engaged in the
Death Care Business within any of the Subject Areas. For
purposes of this paragraph, "beneficially own" shall have
the same meaning ascribed to that term in Rule 13d-3 under
the Exchange Act.
(b) Employee will not call upon any customer of
the Company or its subsidiaries for the purpose of
soliciting, diverting or enticing away the business of such
person or entity, or otherwise disrupting any previously
established relationship existing between such person or
entity and the Company or its subsidiaries;
(c) Employee will not solicit, induce, influence
or attempt to influence any supplier, lessor, licensor,
potential acquiree or any other person who has a business
relationship with the Company or its subsidiaries, or who on
the Date of Termination is engaged in discussions or
negotiations to enter into a business relationship with the
Company or its subsidiaries, to discontinue or reduce the
extent of such relationship with the Company or its
subsidiaries; and
(d) Employee will not make contact with any of
the employees of the Company or its subsidiaries with whom
he had contact during the course of his employment with the
Company for the purpose of soliciting such employee for
hire, whether as an employee or independent contractor, or
otherwise disrupting such employee's relationship with the
Company or its subsidiaries.
(e) Employee further agrees that, for a period of
one year from and after the Date of Termination, Employee
will not hire, on behalf of himself or any company engaged
in the Death Care Business with which Employee is
associated, any employee of the Company or its subsidiaries
as an employee or independent contractor, whether or not
such engagement is solicited by Employee; provided, however,
that the restriction contained in this subsection (e) shall
not apply to Company employees who reside in, or are hired
by Employee to perform work in, any of the Subject Areas
located within the States of Virginia, Arkansas or Georgia.
Employee agrees that he will from time to time upon the
Company's request promptly execute any supplement,
amendment, restatement or other modification of Appendix "A"
as may be necessary or appropriate to correctly reflect the
jurisdictions which, at the time of such modification,
should be covered by Appendix "A" and this Article V Section
3. Furthermore, Employee agrees that all references to
Appendix "A" in this Agreement shall be deemed to refer to
Appendix "A" as so supplemented, amended, restated or
otherwise modified from time to time.
4. Injunctive Relief; Other Remedies. Employee
acknowledges that a breach by Employee of Section 2 or 3 of
this Article V would cause immediate and irreparable harm to
the Company for which an adequate monetary remedy does not
exist; hence, Employee agrees that, in the event of a breach
or threatened breach by Employee of the provisions of
Section 2 or 3 of this Article V during or after the
Employment Term, the Company shall be entitled to injunctive
relief restraining Employee from such violation without the
necessity of proof of actual damage or the posting of any
bond, except as required by non-waivable, applicable law.
Nothing herein, however, shall be construed as prohibiting
the Company from pursuing any other remedy at law or in
equity to which the Company may be entitled under applicable
law in the event of a breach or threatened breach of this
Agreement by Employee, including without limitation the
recovery of damages and/or costs and expenses, such as
reasonable attorneys' fees, incurred by the Company as a
result of any such breach. In addition to the exercise of
the foregoing remedies, the Company shall have the right
upon the occurrence of any such breach to cancel any unpaid
salary, bonus, commissions or reimbursements otherwise
outstanding at the Date of Termination. In particular,
Employee acknowledges that the payments provided under
Article IV Sections 3 and 5 are conditioned upon Employee
fulfilling any noncompetition and nondisclosure agreements
contained in this Article V. In the event Employee shall at
any time materially breach any noncompetition or
nondisclosure agreements contained in this Article V, the
Company may suspend or eliminate payments under Article IV
during the period of such breach. Employee acknowledges
that any such suspension or elimination of payments would be
an exercise of the Company's right to suspend or terminate
its performance hereunder upon Employee's breach of this
Agreement; such suspension or elimination of payments would
not constitute, and should not be characterized as, the
imposition of liquidated damages.
5. Requests for Waiver in Cases of Undue Hardship.
In the event that Employee should find any of the
limitations of Article V Section 3 (including without
limitation the geographic restrictions of Appendix "A") to
impose a severe hardship on Employee's ability to secure
other employment, Employee may make a request to the Company
for a waiver of the designated limitations before accepting
employment that otherwise would be a breach of Employee's
promises and obligations under this Agreement. Such request
must be in writing and clearly set forth the name and
address of the organization with that employment is sought
and the location, position and duties that Employee will be
performing. The Company will consider the request and, in
its sole discretion, decide whether and on what conditions
to grant such waiver.
6. Governing Law of this Article V; Consent to
Jurisdiction. Any dispute regarding the reasonableness of
the covenants and agreements set forth in this Article V, or
the territorial scope or duration thereof, or the remedies
available to the Company upon any breach of such covenants
and agreements, shall be governed by and interpreted in
accordance with the laws of the State of the United States
or other jurisdiction in which the alleged prohibited
competing activity or disclosure occurs, and, with respect
to each such dispute, the Company and Employee each hereby
irrevocably consent to the exclusive jurisdiction of the
state and federal courts sitting in the relevant State (or,
in the case of any jurisdiction outside the United States,
the relevant courts of such jurisdiction) for resolution of
such dispute, and agree to be irrevocably bound by any
judgment rendered thereby in connection with such dispute,
and further agree that service of process may be made upon
him or it in any legal proceeding relating to this Article V
and/or Appendix "A" by any means allowed under the laws of
such jurisdiction. Each party irrevocably waives any
objection he or it may have as to the venue of any such
suit, action or proceeding brought in such a court or that
such a court is an inconvenient forum.
7. Employee's Understanding of this Article.
Employee hereby represents to the Company that he has read
and understands, and agrees to be bound by, the terms of
this Article. Employee acknowledges that the geographic
scope and duration of the covenants contained in Article V
Section 3 are the result of arm's-length bargaining and are
fair and reasonable in light of (i) the importance of the
functions performed by Employee and the length of time it
would take the Company to find and train a suitable
replacement, (ii) the nature and wide geographic scope of
the operations of the Company and its subsidiaries, (iii)
Employee's level of control over and contact with the
business and operations of the Company and its subsidiaries
in all jurisdictions where same are conducted and (iv) the
fact that all facets of the Death Care Business are
conducted by the Company and its subsidiaries throughout the
geographic area where competition is restricted by this
Agreement. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest
extent permitted under applicable law, whether now or
hereafter in effect and, therefore, to the extent permitted
by applicable law, the parties hereto waive any provision of
applicable law that would render any provision of this
Article V invalid or unenforceable.
ARTICLE VI
MISCELLANEOUS
1. Binding Effect.
(a) This Agreement shall be binding upon and
inure to the benefit of the Company and any of its
successors or assigns.
(b) This Agreement is personal to the Employee
and shall not be assignable by the Employee without the
consent of the Company (there being no obligation to give
such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase,
merger, consolidation or otherwise) all or substantially all
of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to
agree to perform all of the obligations under this Agreement
in the same manner and to the same extent as would have been
required of the Company had no assignment or succession
occurred, such assumption to be set forth in a writing
reasonably satisfactory to the Employee. In the event of
any such assignment or succession, the term "Company" as
used in this Agreement shall refer also to such successor or
assign.
2. Notices. All notices hereunder must be in writing
and shall be deemed to have given upon receipt of delivery
by: (a) hand (against a receipt therefor), (b) certified or
registered mail, postage prepaid, return receipt requested,
(c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) telecopy transmission
with confirmation of receipt. All such notices must be
addressed as follows:
If to the Company, to:
Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
Attn: Joseph P. Henican, III
If to the Employee, to:
Richard O. Baldwin, Jr.
401 Rue St. Peter, #233
Metairie, LA 70005
or such other address as to which any party hereto may have
notified the other in writing.
3. Governing Law. This Agreement shall be construed
and enforced in accordance with and governed by the internal
laws of the State of Louisiana without regard to principles
of conflict of laws, except as expressly provided in Article
V Section 6 above with respect to the resolution of disputes
arising under, or the Company's enforcement of, Article V of
this Agreement.
4. Withholding. The Employee agrees that the Company
has the right to withhold, from the amounts payable pursuant
to this Agreement, all amounts required to be withheld under
applicable income and/or employment tax laws, or as
otherwise stated in documents granting rights that are
affected by this Agreement.
5. Severability. If any term or provision of this
Agreement (including without limitation those contained in
Appendix "A"), or the application thereof to any person or
circumstance, shall at any time or to any extent be invalid,
illegal or unenforceable in any respect as written, Employee
and the Company intend for any court construing this
Agreement to modify or limit such provision temporally,
spatially or otherwise so as to render it valid and
enforceable to the fullest extent allowed by law. Any such
provision that is not susceptible of such reformation shall
be ignored so as to not affect any other term or provision
hereof, and the remainder of this Agreement, or the
application of such term or provision to persons or
circumstances other than those as to which it is held
invalid, illegal or unenforceable, shall not be affected
thereby and each term and provision of this Agreement shall
be valid and enforced to the fullest extent permitted by
law.
6. Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach
thereof.
7. Remedies Not Exclusive. No remedy specified
herein shall be deemed to be such party's exclusive remedy,
and accordingly, in addition to all of the rights and
remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by
applicable law, rule or regulation.
8. Company's Reservation of Rights. Employee
acknowledges and understands that the Employee serves at the
pleasure of the Board and that the Company has the right at
any time to terminate Employee's status as an employee of
the Company, or to change or diminish his status during the
Employment Term, subject to the rights of the Employee to
claim the benefits conferred by this Agreement.
9. JURY TRIAL WAIVER. THE PARIES HEREBY WAIVE TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT.
10. Survival. The rights and obligations of the
Company and Employee contained in Article V of this
Agreement shall survive the termination of the Agreement.
Following the Date of Termination, each party shall have the
right to enforce all rights, and shall be bound by all
obligations, of such party that are continuing rights and
obligations under this Agreement.
11. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to
be an original but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have
caused this Agreement to be executed as of the Agreement
Date.
STEWART ENTERPRISES, INC.
By: _________________________
James W. McFarland
Compensation Committee Chairman
EMPLOYEE:
___________________________
Richard O. Baldwin, Jr.
<PAGE>
Appendix "A"
to Employment Agreement
between Stewart Enterprises, Inc.
and Richard O. Baldwin, Jr.
Revision No. 0 of Appendix "A",
Effective as of August 1, 1995;
Updated to October 2, 1995
Jurisdictions In Which Competition
Is Restricted As Provided
In Article V Section 3
A. States and Territories of the United States:
1. Louisiana-- The following parishes in the State of
Louisiana:
Orleans, St. Bernard, St. Tammany, Plaquemines,
Jefferson.
2. Florida-- The following counties in the State of
Florida:
Seminole, Dade, Hillsborough, Duval, Orange, Pinellas,
Indian River, Palm Beach, Lake, Brevard, Broward,
Monroe, Collier, Pasco, Manatee, Polk, Hardee, Nassau,
Baker, Clay, St. Johns, St. Lucie, Osceola,
Ockeechobee, Martin, Hendry
as well as any other counties in the State of Florida
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination, with the exception of
Volusia county.
3. Texas-- The following counties in the State of Texas:
Kaufman, Dallas, Collin, Tarrant, Lamar, Harris,
Denton, Johnson, Rockwall, Brazoria, Henderson, Van
Zandt, Hunt, Ellis, Fannin, Grayson, Wise, Parker, Red
River, Delta, Galveston, Ft. Bend, Waller, Montgomery,
Liberty, Chambers, Cooke, Hood, Bosque, Hill, Matagorda
Agreed to and Accepted:
Stewart Enterprises, Inc. Employee
By: _____________________ ________________
Its: Compensation Committee Chairman Date: ________________
Date: ___________________
<PAGE>
as well as any other counties in the State of Texas in
which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
4. Maryland-- The following counties in the State of
Maryland:
Baltimore City, Howard, Baltimore County, Prince
George's, Anne Arundel, Montgomery, Carroll, Frederick,
Harford, Calvert, Charles, Kent, Queen Anne's, Talbot,
Washington
as well as any other counties in the State of Maryland
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
5. Virginia-- The following counties in the State of
Virginia:
Chesterfield, Roanoke, Rockingham, Fairfax, Tazewell,
Goochland, Pulaski, Albemarle, Hanover, Henrico,
Dinwiddie, Amelia, Powhatan, Charles City, Prince
George, Bedford, Montgomery, Franklin, Botetourt,
Craig, Floyd, Augusta, Shenandoah, Page, Greene, Prince
William, McDowell, Bland, Smythe, Russell, Cumberland,
Fluvanna, Louisa, Wythe, Giles, Carroll, Orange,
Buckingham, Nelson, King William, New Kent,
Spotsylvania, Caroline, Buchanan, Dickenson, Loudoun,
Arlington, Scott, Washington, Clarke, Frederick
as well as any other counties in the State of Virginia
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
6. West Virginia-- The following counties in the State of
West Virginia:
Raleigh, Kanawha, Fayette, Berkeley, Boone, Summers,
Wyoming, Clay, Lincoln, Jackson, Putnam, Roane,
Greenbriar, Nicholas, Logan, Wayne, McDowell, Morgan,
Jefferson, Mercer, Mingo, Ohio
as well as any other counties in the State of West
Virginia in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
Agreed to and Accepted:
Employee
________________________
Date: __________________
<PAGE>
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
7. Puerto Rico-- The following towns in the Commonwealth
of Puerto Rico:
Bayamon, San Juan, Cayey, Canovanas, Ponce, Caguas,
Carolina, Humacao, Toa Baja, Toa Alta, Nranjito, Aguas
Buenas, Guaynabo, Comereo, Catano, Vega Alta, Patilla,
San Lorenzo, Guayama, Salinas, Aibonito, Loita, Rio
Grande, Las Marias, Juncos, Juana Diaz, Jajuja, Utuado,
Adjuntas Puenulas, Trujillo, Alto, Gurabo, Cidra,
Yagucoa and Naguabo
as well as any other towns in the Commonwealth of
Puerto Rico in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
8. North Carolina-- The following counties in the State
of North Carolina:
Catawba, Wilson, Guilford, Haywood, Johnston, Wake,
Wilkes, Craven, Nash, Iredell, Burke, Caldwell,
Lincoln, Alexander, Cleveland, Greene, Wayne,
Edgecombe, Pitt, Davidson, Randolph, Forsyth, Stokes,
Rockingham, Caswell, Alamance, Jackson, Buncombe,
Henderson, Transylvania, Swain, Madison, Sampson,
Franklin, Durham, Harnett, Granville, Chatham,
Alleghany, Surry, Ashe, Watauga, Yadkin, Pamilco,
Halifax, Warren, Swain, Carteret, Jones, Lenoir,
Beaufort
as well as any other counties in the State of North
Carolina in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
9. South Carolina-- The following counties in the State
of South Carolina:
Greenville, Charleston, Aiken, Pickens, Laurens,
Spartanburg, Anderson, Abbeville, Berkeley, Dorchester,
Colleton, Edgefield, Saluda, Lexington, Orangeburg,
Barnwell
as well as any other counties in the State of South
Carolina in which the Employee regularly (a) makes
Agreed to and Accepted:
Employee
________________________
Date: __________________
<PAGE>
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
10. Tennessee-- The following counties in the State of
Tennessee:
Davidson, Sumner, Robertson, Knox, Sullivan, Sevier,
Wilson, Rutherford, Williamson, Cheatham, Trousadale,
Macon, Montgomery, Jefferson, Grainger, Union,
Anderson, Loudon, Blount, Roane, Greene, Washington,
Carter, Johnson, Hawkins, Cocke, Giles, Lincoln
as well as any other counties in the State of Tennessee
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
11. Arkansas-- The following counties in the State of
Arkansas:
Saline, Pulaski, Hot Spring, Garland, Perry, Grant,
Lonoke, White, Jefferson, Faulkner, Dallas, Clark,
Ouachita, Montgomery, Garland
as well as any other counties in the State of Arkansas
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
12. Georgia-- The following counties in the State of
Georgia:
Cobb, Cherokee, Henry, Dekalb, Fulton, Douglas,
Paulding, Bartow, Pickins, Forsyth, Dawson, Gordon,
Clayton, Rockdale, Newton, Butts, Spalding, Gwinnett,
Fayette, Coweta, Carroll, Richmond
as well as any other counties in the State of Georgia
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
13. Alabama-- The following counties in the State of
Alabama:
Agreed to and Accepted:
Employee
________________________
Date: __________________
<PAGE>
Mobile, Madison, Baldwin, Escambia, Monroe, Washington,
Jackson, Marshall, Morgan, Limestone, Clarke
as well as any other counties in the State of Alabama
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
14. Mississippi-- The following counties in the State of
Mississippi:
Hinds, Madison, Rankin, Simpson, Copiah, Claiborne,
Warren, Yazoo, Jackson, George
as well as any other counties in the State of
Mississippi in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
15. Pennsylvania-- The following counties in the State of
Pennsylvania:
Montgomery, Philadelphia, Bucks, Delaware, Chester,
Berks, Lehigh, York, Northampton
as well as any other counties in the State of
Pennsylvania in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
16. Kentucky-- The following counties in the State of
Kentucky:
Pike, Martin, Floyd, Knoll, Letcher, Allen, Simpson
as well as any other counties in the State of Kentucky
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
17. Ohio-- The following counties in the State of Ohio:
Agreed to and Accepted:
Employee
________________________
Date: __________________
<PAGE>
Belmont, Licking, Jefferson, Monroe, Harrison, Noble,
Guernsey, Muskingum, Knox, Fairfield, Perry, Delaware,
Franklin, Coshocton
as well as any other counties in the State of Ohio in
which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
18. The District of Columbia.
19. Kansas-- The following counties in the State of Kansas:
Douglas, Leavenworth, Johnson, Miami, Franklin, Osage,
Shawnee, Jefferson
as well as any other counties in the State of Kansas in
which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
20. Missouri-- The following counties in the State of
Missouri:
Boone, Audrain, Callaway, Cole, Cooper, Howard,
Moniteau, Osage, Randolph
as well as any other counties in the State of Missouri
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
21. Nebraska-- The following counties in the State of
Nebraska:
Lancaster, Otoe, Sarpy, Gage, Saline, Seward, Saunders,
Cass, Butler
Agreed to and Accepted:
Employee
________________________
Date: __________________
<PAGE>
as well as any other counties in the State of Nebraska
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
Employee and the Company agree that, throughout the
Employment Term, Employee shall comply with all of the
requirements and restrictions set forth in Article V of
the Agreement of which this Appendix "A" forms a part;
however, Employee and the Company agree that,
notwithstanding anything to the contrary contained in
Article V, Section 3 of the Agreement, Employee shall
be required to restrict his post-employment activities
in the State of Nebraska only to: (i) complying with
the restrictions set forth in Article V, Section 2 of
the Agreement and (ii) refraining from calling upon any
customer of the Company or its subsidiaries with whom
Employee has done business and/or had personal contact
for the purpose of soliciting, diverting or enticing
away the business of such person or entity, or
otherwise disrupting any previously established
relationship existing between such person or entity and
the Company or its subsidiaries. The parties hereby
acknowledge and agree that this modification to the
restrictions of Article V, Section 3 as they relate to
post-employment competition in the State of Nebraska is
being entered into solely to comply with the
limitations provided in Nebraska law on the extent to
which noncompetition agreements may be enforced. This
modification does not reflect the parties' agreement as
to the extent of the limitations upon competition
necessary to protect the legitimate interests of the
Company; rather, the provisions of Article V of the
Agreement reflect such agreement.
22. New Jersey-- The following counties in the State of New
Jersey:
Salem, Burlington, Mercer, Hunterdon
as well as any other counties in the State of New
Jersey in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
B. Other Jurisdictions:
1. Mexico-- The following delegation or municipios in the
Country of Mexico:
Cuernavaca, Benito Juarez, Tlalnepantla, Cuauhtemoc,
Temixco, Miacatlan, Jiutepec, Tepoztlan, Huitzilac,
Tenango, Tenancingo, Miguel Hidalgo, Iztacalco,
Iztapalapa, Coyoacan, Alvaro Obregon, Jilotepec,
Cuautitlan, Lerma, Iztlahuaca, Gustavo A. Madero,
Azcapotzalco, Cuajimalpa de Morelos, Venustiano and
Carranza
as well as any other delegation or municipios in the
Country of Mexico in which the Employee regularly (a)
makes contact with customers of the Company or any of
its subsidiaries, (b) conducts the business of the
Company or any of its subsidiaries or (c) supervises
the activities of other employees of the Company or any
of its subsidiaries as of the Date of Termination.
2. Australia-- The following councils in the Country of
Australia:
Willoughby, Newcastle, Ku-Ring-Gai, Pittwater, Mosman,
Port Stephens, Warringah, North Sydney, South Sydney,
Maroochydore, Beaudesert, Caboolture, Redland,
Maroochy, Gatton, Toowoomba, Kilcoy, Brisbane, Gold
Coast, Pine Rivers, Redcliffe, Woodville, Nunawading,
Brunswick, Mornington, Essendon, Brighton,
Broadmeadows, Moorabbin, Lake Mocquarie, Hornsby,
Landsborough, Widgee, Moreton, Caloundra, Noosa,
Kingaroy, Albert, Logan, Hindmarsh, West Torrens,
Oakley, Box Hill, Melbourne, Frankston, Coburg, Bulla
and Sandringham
as well as any other councils in the Country of
Australia in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
Agreed to and Accepted:
Employee
__________________________
Date:_____________________
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of September 7, 1995 by
and between Stewart Enterprises, Inc., a Louisiana
corporation ("SEI"), and Richard O. Baldwin, Jr.
("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995, subject to shareholder approval of the
Plan.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 7,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, the right, privilege
and option to purchase 66,670 shares of Common Stock (the
"Option") at an exercise price of $31.50 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the
other provisions of this Agreement, the Optionee shall be
entitled to exercise his Option as follows:
20% of the total number of shares
covered by the Option
beginning on September 7,
1996;
40% of the total number of shares
covered by the Option
beginning on September 7,
1997, less any shares
previously issued;
60% of the total number of shares
covered by the Option
beginning on September 7,
1998, less any shares
previously issued;
80% of the total number of shares
covered by the Option
beginning on September 7,
1999, less any shares
previously issued;
100% of the total number of shares
covered by the Option
beginning on September 7,
2000, less any shares
previously issued.
Notwithstanding the foregoing, no portion of the Option may
be exercised prior to the approval of the Plan by the
shareholders of the Company. The Option shall expire and
may not be exercised later than October 31, 2001.
2.2 If Optionee's employment is terminated, other than
as a result of death, disability or retirement on or after
reaching age 65 or early retirement with the approval of the
Board of Directors, the Option must be exercised, to the
extent exercisable at the time of termination of employment,
within 30 days of the date on which Optionee ceases to be an
employee, except that the Committee may upon request extend
the period after termination of employment during which the
Option may be exercised, but in no event later than October
31, 2001.
2.3 If an Optionee ceases to be an employee because of
disability within the meaning of Section 22(e)(3) of the
Code or retirement, as described in Section 2.2, the Option
must be exercised, to the extent exercisable at the time of
termination of employment, within one year from the date on
which Optionee ceases to be an employee, but in no event
later than October 31, 2001.
2.4 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and Stewart shall pay, or cause
to be paid, to each such participant an amount of cash
per share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
the "Change of Control Value" shall equal the amount
determined by whichever of the following items is
applicable:
(a) the per share price to be paid to shareholders
of Stewart in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
Stewart in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of Stewart in any transaction described in
this Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any reference herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: _____________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
_____________________________
Richard O. Baldwin, Jr.
Optionee
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of September 7, 1995, by
and between Stewart Enterprises, Inc., a Louisiana corpora-
tion ("SEI"), and Richard O. Baldwin, Jr. ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995, subject to shareholder approval of the
Plan.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 7,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, the right, privilege
and option to purchase 106,330 shares of Common Stock (the
"Option") at an exercise price of $31.50 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II. below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan, the other
provisions of this Agreement and the provisions of any
employment agreement between SEI and Optionee (the
"Employment Agreement") with respect to performance based
options granted under the Plan, the Option shall become
exercisable in full on the first day between September 7,
1995 and August 31, 2000 that the average of the "Closing
Sale Prices" of a share of Common Stock for the 20 preceding
consecutive trading days equals or exceeds $79.31.
Notwithstanding the foregoing, no portion of the Option
may be exercised prior to the approval of the Plan by the
shareholders of the Company. If the conditions described in
this Section 2.1 are not met by August 31, 2000, the Option
may not be exercised and shall terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on
the applicable date for shares of the Common Stock on an
established stock exchange or any automated quotation system
that provides sale quotations.
2.3 The Option shall expire and may not be exercised
later than October 31, 2001.
2.4 Except as otherwise provided in the Employment
Agreement, if Optionee's employment is terminated, other
than as a result of death, disability or retirement on or
after reaching age 65 or early retirement with the approval
of the Board of Directors, the Option must be exercised, to
the extent exercisable at the time of termination of
employment, within the later of (i) 30 days after the date
on which Optionee ceases to be an employee or (ii) 30 days
after the date on which the exercise of the Option and sale
of the underlying securities will not cause the Optionee to
incur a liability to SEI under Section 16 of the Securities
Exchange Act of 1934, except that the Committee may upon
request extend the period after termination of employment
during which the Option may be exercised, but in no event
later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability
within the meaning of Section 22(e)(3) of the Code, the
Option must be exercised, to the extent exercisable at the
time of termination of employment, within one year from the
date on which Optionee ceases to be an employee, but in no
event later than October 31, 2001.
2.6 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and SEI shall pay, or cause to
be paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(a) the per share price to be paid to shareholders
of SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
SEI in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any references herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control. In the event any provision of this
Agreement conflicts with a provision of any Employment
Agreement containing any provision relating to the Option,
the Employment Agreement provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
________________________
Richard O. Baldwin, Jr.
Optionee
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of December 5, 1995, by
and between Stewart Enterprises, Inc., a Louisiana corpora-
tion ("SEI"), and Richard O. Baldwin, Jr. ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995 and amended by the Board of Directors
effective December 5, 1995, subject to shareholder approval
of the Plan, as amended.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective December 5,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, as amended, the right,
privilege and option to purchase 27,000 shares of Common
Stock (the "Option") at an exercise price of $33.25 per
share (the "Exercise Price"). The Option shall be
exercisable at the time specified in Section II. below. The
Option is a non-qualified stock option and shall not be
treated as an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan, the other
provisions of this Agreement and the provisions of any
employment agreement between SEI and Optionee (the
"Employment Agreement") with respect to performance based
options granted under the Plan, the Option shall become
exercisable in full on the first day between December 5,
1995 and August 31, 2000 that the average of the "Closing
Sale Prices" of a share of Common Stock for the 20 preceding
consecutive trading days equals or exceeds $79.31.
Notwithstanding the foregoing, no portion of the Option
may be exercised prior to the approval of the Plan, as
amended, by the shareholders of the Company. If the
conditions described in this Section 2.1 are not met by
August 31, 2000, the Option may not be exercised and shall
terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on
the applicable date for shares of the Common Stock on an
established stock exchange or any automated quotation system
that provides sale quotations.
2.3 The Option shall expire and may not be exercised
later than October 31, 2001.
2.4 Except as otherwise provided in the Employment
Agreement, if Optionee's employment is terminated, other
than as a result of death, disability or retirement on or
after reaching age 65 or early retirement with the approval
of the Board of Directors, the Option must be exercised, to
the extent exercisable at the time of termination of
employment, within the later of (i) 30 days after the date
on which Optionee ceases to be an employee or (ii) 30 days
after the date on which the exercise of the Option and sale
of the underlying securities will not cause the Optionee to
incur a liability to SEI under Section 16 of the Securities
Exchange Act of 1934, except that the Committee may upon
request extend the period after termination of employment
during which the Option may be exercised, but in no event
later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability
within the meaning of Section 22(e)(3) of the Code, the
Option must be exercised, to the extent exercisable at the
time of termination of employment, within one year from the
date on which Optionee ceases to be an employee, but in no
event later than October 31, 2001.
2.6 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and SEI shall pay, or cause to
be paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(a) the per share price to be paid to shareholders
of SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
SEI in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any references herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control. In the event any provision of this
Agreement conflicts with a provision of any Employment
Agreement containing any provision relating to the Option,
the Employment Agreement provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ____________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
____________________________
Richard O. Baldwin, Jr.
Optionee
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement ("Agreement") between
Stewart Enterprises, Inc., a Louisiana corporation (the
"Company"), and Richard O. Baldwin, Jr. (the "Employee") is
dated as of December 5, 1995 (the "Change of Control
Agreement Date").
ARTICLE I
DEFINITIONS
1.1 Employment Agreement. After a Change of Control
(defined below), this Agreement supersedes the Employment
Agreement dated as of August 1, 1995 between Employee and
the Company (the "Employment Agreement") except to the
extent that certain provisions of the Employment Agreement
are expressly incorporated by reference herein. After a
Change of Control (defined below), the definitions in this
Agreement supersede definitions in the Employment Agreement,
but capitalized terms not defined in this Agreement have the
meanings given to them in the Employment Agreement.
1.2 Definition of "Company". As used in this
Agreement, "Company" shall mean the Company as defined above
and any successor to or assignee of (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
all or substantially all of the assets or business of the
Company.
1.3 Change of Control Defined. "Change of Control"
shall mean:
(a) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 30% of the outstanding
shares of the Company's Class A Common Stock, no par
value per share (the "Common Stock"); provided,
however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of
Control:
(i) any acquisition of Common Stock directly
from the Company,
(ii) any acquisition of Common Stock by the
Company,
(iii) any acquisition of Common Stock by any
employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation
controlled by the Company, or
(iv) any acquisition of Common Stock by any
corporation pursuant to a transaction that
complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 1.3; or
(b) individuals who, as of the Change of Control
Agreement Date, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any
individual becoming a director subsequent to the Change
of Control Agreement Date whose election, or nomination
for election by the Company's shareholders, was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered a member of the Incumbent Board, unless such
individual's initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or
other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the
Incumbent Board; or
(c) consummation of a reorganization, merger or
consolidation, or sale or other disposition of all of
substantially all of the assets of the Company (a
"Business Combination"), in each case, unless,
following such Business Combination,
(i) all or substantially all of the
individuals and entities who were the beneficial
owners of the Company's outstanding common stock
and the Company's voting securities entitled to
vote generally in the election of directors
immediately prior to such Business Combination
have direct or indirect beneficial ownership,
respectively, of more than 50% of the then
outstanding shares of common stock, and more than
50% of the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors, of the
corporation resulting from such Business
Combination (which, for purposes of this paragraph
(i) and paragraphs (ii) and (iii), shall include a
corporation which as a result of such transaction
controls the Company or all or substantially all
of the Company's assets either directly or through
one or more subsidiaries), and
(ii) except to the extent that such ownership
existed prior to the Business Combination, no
person (excluding any corporation resulting from
such Business Combination or any employee benefit
plan or related trust of the Company or such
corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 20% or more of the then outstanding
shares of common stock of the corporation
resulting from such Business Combination or 20% or
more of the combined voting power of the then
outstanding voting securities of such corporation,
and
(iii) at least a majority of the members of
the board of directors of the corporation
resulting from such Business Combination were
members of the Incumbent Board at the time of the
execution of the initial agreement, or of the
action of the Board, providing for such Business
Combination; or
(d) approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.
1.4 Affiliate. "Affiliate" or "affiliated companies"
shall mean any company controlled by, controlling, or under
common control with, the Company.
1.5 Cause. "Cause" shall mean:
(a) the willful and continued failure of the
Employee to perform substantially the Employee's
duties with the Company or its affiliates (other
than any such failure resulting from incapacity
due to physical or mental illness), after a
written demand for substantial performance is
delivered to the Employee by the Board of the
Company which specifically identifies the manner
in which the Board believes that the Employee has
not substantially performed the Employee's duties,
or
(b) the willful engaging by the Employee in
illegal conduct or gross misconduct which is
materially and demonstrably injurious to the
Company or its affiliates.
For purposes of this provision, no act or failure to act, on
the part of the Employee, shall be considered "willful"
unless it is done, or omitted to be done, by the Employee in
bad faith or without reasonable belief that the Employee's
action or omission was in the best interests of the Company
or its affiliates. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of a senior officer of the
Company or based upon the advice of counsel for the Company
or its affiliates shall be conclusively presumed to be done,
or omitted to be done, by the Employee in good faith and in
the best interests of the Company or its affiliates. The
cessation of employment of the Employee shall not be deemed
to be for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution duly
adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after
reasonable notice is provided to the Employee and the
Employee is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith
opinion of the Board, the Employee is guilty of the conduct
described in subparagraph (a) or (b) above, and specifying
the particulars thereof in detail.
1.6 Good Reason. "Good Reason" shall mean:
(a) Any failure of the Company or its affiliates
to provide the Employee with the position, authority,
duties and responsibilities at least commensurate in
all material respects with the most significant of
those held, exercised and assigned at any time during
the 120-day period immediately preceding the Change of
Control. Employee's position, authority, duties and
responsibilities after a Change of Control shall not be
considered commensurate in all material respects with
Employee's position, authority, duties and
responsibilities prior to a Change of Control unless
after the Change of Control Employee holds (i) an
equivalent position in the Company or, (ii) if the
Company is controlled or will after the transaction be
controlled by another company (directly or indirectly),
an equivalent position in the ultimate parent company.
(b) The assignment to the Employee of any duties
inconsistent in any material respect with Employee's
position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities as contemplated by Section 2.1(b) of
this Agreement, or any other action that results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not
taken in bad faith that is remedied within 10 days
after receipt of written notice thereof from the
Employee to the Company;
(c) Any failure by the Company or its affiliates
to comply with any of the provisions of this Agreement,
other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith that is remedied
within 10 days after receipt of written notice thereof
from the Employee to the Company;
(d) The Company or its affiliates requiring the
Employee to be based at any office or location other
than as provided in Section 2.1(b)(ii) hereof or
requiring the Employee to travel on business to a
substantially greater extent than required immediately
prior to the Change of Control;
(e) Any purported termination of the Employee's
employment otherwise than as expressly permitted by
this Agreement; or
(f) Any failure by the Company to comply with and
satisfy Sections 3.1(c) and (d) of this Agreement.
For purposes of this Section 1.6, any good faith
determination of "Good Reason" made by the Employee shall be
conclusive. Anything in this Agreement to the contrary
notwithstanding, a termination by the Employee for any
reason during the 30-day period immediately following the
first anniversary of the Change of Control shall be deemed
to be a termination for Good Reason.
ARTICLE II
CHANGE OF CONTROL BENEFIT
2.1 Employment Term and Capacity after Change of
Control. (a) If a Change of Control occurs on or before
October 31, 2000, then the Employee's employment term (the
"Employment Term") shall continue through the later of (a)
the second anniversary of the Change of Control or (b)
October 31, 2000, subject to any earlier termination of
Employee's status as an employee pursuant to this Agreement.
(b) After a Change of Control and during the
Employment Term, (i) the Employee's position (including
status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most
significant of those held, exercised and assigned at any
time during the 120-day period immediately preceding the
Change of Control and (ii) the Employee's service shall be
performed at the location where the Employee was employed
immediately preceding the Change of Control or any office or
location less than 35 miles from such location. Employee's
position, authority, duties and responsibilities after a
Change of Control shall not be considered commensurate in
all material respects with Employee's position, authority,
duties and responsibilities prior to a Change of Control
unless after the Change of Control Employee holds (x) an
equivalent position in the Company or, (y) if the Company is
controlled or will after the transaction be controlled by
another company (directly or indirectly), an equivalent
position in the ultimate parent company. Employee shall
devote himself to his employment responsibilities with the
Company (or, if applicable, the ultimate parent entity) as
provided in Article I Section 3 of the Employment Agreement.
2.2 Compensation and Benefits. During the Employment
Term, Employee shall be entitled to the following
compensation and benefits:
(a) Salary. A salary ("Base Salary") at the rate
of $300,000 per year, payable to the Employee at such
intervals no less frequent than the most frequent
intervals in effect at any time during the 120-day
period immediately preceding the Change of Control or,
if more favorable to the Employee, the intervals in
effect at any time after the Change of Control for
other peer employees of the Company and its affiliated
companies.
(b) Bonus. Employee's incentive bonus with
respect to the period ending October 31, 1995, to the
extent not already paid, shall be paid upon a Change of
Control. For the period beginning November 1, 1995,
the Employee shall be eligible to receive a bonus (the
"Bonus") of up to $150,000 for each 12-month period
thereafter. Such Bonus shall be comprised of two
elements, the quantitative element and the qualitative
element:
(i) The quantitative element shall be equal
to 75% of the maximum Bonus of $150,000 and shall
be based on the attainment of certain goals to be
established by the Company's compensation
committee, or any similar body, and Employee.
(ii) The qualitative element shall be 25% of
the maximum Bonus of $150,000 and shall be awarded
at the discretion of the Company's Chairman of the
Board. The Chairman of the Board and Employee
shall establish incentive goals and other criteria
for the award of the qualitative element.
The Bonus shall be paid in cash no later than 30 days
following the date on which the information needed to
calculate the Bonus becomes available.
(c) Fringe Benefits. The Employee shall be
entitled to fringe benefits (including, but not limited
to, automobile allowance, reimbursement for membership
dues, and first class air travel) in accordance with
the most favorable agreements, plans, practices,
programs and policies of the Company and its affiliated
companies in effect for the Employee at any time during
the 120-day period immediately preceding the Change of
Control or, if more favorable to the Employee, as in
effect generally at any time thereafter with respect to
other peer employees of the Company and its affiliated
companies.
(d) Expenses. The Employee shall be entitled to
receive prompt reimbursement for all reasonable
expenses incurred by the Employee in accordance with
the most favorable agreements, policies, practices and
procedures of the Company and its affiliated companies
in effect for the Employee at any time during the 120-
day period immediately preceding the Change of Control
or, if more favorable to the Employee, as in effect
generally at any time thereafter with respect to other
peer employees of the Company and its affiliated
companies.
(e) Incentive, Savings and Retirement Plans. The
Employee shall be entitled to participate in all
incentive, savings and retirement plans, practices,
policies and programs applicable generally to other
peer employees of the Company and its affiliated
companies, but in no event shall such plans, practices,
policies and programs provide the Employee with
incentive opportunities (measured with respect to both
regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit
opportunities, in each case, less favorable than the
most favorable of those provided by the Company and its
affiliated companies for the Employee under any
agreements, plans, practices, policies and programs as
in effect at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, those provided generally at
any time after the Change of Control to other peer
employees of the Company and its affiliated companies.
(f) Welfare Benefit Plans. The Employee and/or
the Employee's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its
affiliated companies (including, without limitation,
medical, prescription, dental, disability, employee
life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable
generally to other peer employees of the Company and
its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the
Employee with benefits, in each case, less favorable
than the most favorable of any agreements, plans,
practices, policies and programs in effect for the
Employee at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, those provided generally at
any time after the Change of Control to other peer
employees of the Company and its affiliated companies.
(g) Office and Support Staff. The Employee shall
be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided
to the Employee by the Company and its affiliated
companies at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, as provided generally at any
time thereafter with respect to other peer employees of
the Company and its affiliated companies.
(h) Vacation. The Employee shall be entitled to
paid vacation in accordance with the most favorable
agreements, plans, policies, programs and practices of
the Company and its affiliated companies as in effect
for the Employee at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, as in effect generally at
any time thereafter with respect to other peer
employees of the Company and its affiliated companies.
2.3 Termination of Employment after a Change of
Control. After a Change of Control and during the
Employment Term, the Employee's status as an employee shall
terminate or may be terminated by the Employee, the Company
(or, if applicable, the ultimate parent company), as
provided in Article III of the Employment Agreement
(provided, however, that the definitions of "Cause" and
"Good Reason" in this Agreement shall supersede those
definitions in the Employment Agreement).
2.4 Obligations upon Termination after a Change of
Control.
(a) Termination by Company for Reasons other than
Death, Disability or Cause; by Employee for Good
Reason. If, after a Change of Control and during the
Employment Term, the Company (or, if applicable the
ultimate parent company), terminates the Employee's
employment other than for Cause, death or Disability,
or the Employee terminates employment for Good Reason,
the Company shall pay to the Employee in a lump sum in
cash within 30 days of the Date of Termination an
amount equal to three times the sum of (i) the amount
of Base Salary in effect at the Date of Termination,
plus (ii) the maximum Bonus for which the Employee is
eligible for the 12-month period in which the Date of
Termination occurs.
(b) Death. If, after a Change of Control and
during the Employment Term, the Employee's status as an
employee is terminated by reason of the Employee's
death, this Agreement shall terminate without further
obligation to the Employee's legal representatives
(other than those already accrued to the Employee),
other than the obligation to make any payments due
pursuant to employee benefit plans maintained by the
Company or its affiliated companies.
(c) Disability. If, after a Change of Control and
during the Employment Term, Employee's status as an
employee is terminated by reason of Employee's
Disability (as defined in the Employment Agreement),
this Agreement shall terminate without further
obligation to the Employee (other than those already
accrued to the Employee), other than the obligation to
make any payments due pursuant to employee benefit
plans maintained by the Company or its affiliated
companies.
(d) Cause. If, after a Change of Control and
during the Employment Term, the Employee's status as an
employee is terminated by the Company (or, if
applicable, the ultimate parent entity) for Cause, this
Agreement shall terminate without further obligation to
the Employee other than for obligations imposed by law
and obligations imposed pursuant to any employee
benefit plan maintained by the Company or its
affiliated companies.
(e) Termination by Employee for Reasons other than
Good Reason. If, after a Change of Control and during
the Employment Term, the Employee's status as an
employee is terminated by the Employee for reasons
other than Good Reason, then the Company shall pay to
the Employee an amount equal to a single year's Base
Salary in effect at the Date of Termination, payable in
equal installments over a two-year period at such
intervals as other salaried employees of the Company
are paid.
(f) Nondisclosure, Noncompetition and Proprietary
Rights. The rights and obligations of the Company and
Employee contained in Article V ("Nondisclosure,
Noncompetition and Proprietary Rights") of the
Employment Agreement shall continue to apply after a
Change of Control, except as provided in Section 2.10
of this Agreement.
2.5 Accrued Obligations and Other Benefits. It is the
intent of the Employment Agreement and this Agreement that
upon termination of employment for any reason the Employee
be entitled to receive promptly, and in addition to any
other benefits specifically provided, (a) the Employee's
Base Salary through the Date of Termination to the extent
not theretofore paid, (b) any accrued vacation pay, to the
extent not theretofore paid, and (c) any other amounts or
benefits required to be paid or provided or which the
Employee is entitled to receive under any plan, program,
policy practice or agreement of the Company.
2.6 Stock Options. The foregoing benefits are
intended to be in addition to the value of any options to
acquire Common Stock of the Company the exercisability of
which is accelerated pursuant to the terms of any stock
option, incentive or other similar plan heretofore or
hereafter adopted by the Company.
2.7 Protection of Benefits. To the extent permitted
by applicable law, the Company shall take all reasonable
steps to ensure that the Employee is not, by reason of a
Change of Control, deprived of the economic value (including
any value attributable to the Change of Control transaction)
of (a) any options to acquire Common Stock of the Company or
(b) any Common Stock of the Company beneficially owned by
the Employee.
2.8 Certain Additional Payments. If after a Change of
Control Employee is subjected to an excise tax as a result
of the "excess parachute payment" provisions of section 4999
of the Internal Revenue Code of 1986, as amended, whether by
virtue of the benefits of this Agreement or by virtue of any
other benefits provided to Employee in connection with a
Change of Control pursuant to Company plans, policies or
agreements (including the value of any options to acquire
Common Stock of the Company the exercisability of which is
accelerated pursuant to the terms of any stock option,
incentive or similar plan heretofore or hereafter adopted by
the Company), the Company shall pay to Employee (whether or
not his employment has terminated) such amounts as are
necessary to place Employee in the same position after
payment of federal income and excise taxes as he would have
been if such provisions had not been applicable to him.
2.9 Legal Fees. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal
fees and expenses which the Employee may reasonably incur as
a result of any contest (regardless of the outcome thereof)
by the Company, the Employee or others of the validity or
enforceability of, or liability under, any provision of this
Agreement (including as a result of any contest by the
Employee about the amount or timing of any payment pursuant
to this Agreement.)
2.10 Set-Off; Mitigation. After a Change of Control,
the Company's and its affiliates' obligations to make the
payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or its affiliates
may have against the Employee or others. After a Change of
Control, an asserted violation of the provisions of Article
V ("Nondisclosure, Noncompetition and Proprietary Rights")
of the Employment Agreement shall not constitute a basis for
deferring or withholding any amounts otherwise payable to
the Employee; specifically, the third through sixth
sentences of Article V Section 4 shall not apply after a
Change of Control. It is the intent of the Employment
Agreement and this Agreement that in no event shall the
Employee be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to
the Employee under any of the provisions of this Agreement
or the Employment Agreement.
ARTICLE III
MISCELLANEOUS
3.1 Binding Effect; Successors.
(a) This Agreement shall be binding upon and
inure to the benefit of the Company and any of its
successors or assigns.
(b) This Agreement is personal to the Employee
and shall not be assignable by the Employee without the
consent of the Company (there being no obligation to give
such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase,
merger, consolidation or otherwise) all or substantially all
of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to
agree to perform or to cause to be performed all of the
obligations under this Agreement in the same manner and to
the same extent as would have been required of the Company
had no assignment or succession occurred, such assumption to
be set forth in a writing reasonably satisfactory to the
Employee.
(d) The Company shall also require all entities
that control or that after the transaction will control
(directly or indirectly) the Company or any such successor
or assignee to agree to cause to be performed all of the
obligations under this Agreement, such agreement to be set
forth in a writing reasonably satisfactory to the Employee.
3.2 Notices. All notices hereunder must be in writing
and shall be deemed to have given upon receipt of delivery
by: (a) hand (against a receipt therefor), (b) certified or
registered mail, postage prepaid, return receipt requested,
(c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) telecopy transmission
with confirmation of receipt. All such notices must be
addressed as follows:
If to the Company, to:
Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
Attn: Joseph P. Henican, III
If to the Employee, to:
Richard O. Baldwin, Jr.
401 Rue St. Peter, #233
Metairie, LA 70005
or such other address as to which any party hereto may have
notified the other in writing.
3.3 Governing Law. This Agreement shall be construed
and enforced in accordance with and governed by the internal
laws of the State of Louisiana without regard to principles
of conflict of laws, except as expressly provided in Article
V Section 6 of the Employment Agreement with respect to the
resolution of disputes arising under, or the Company's
enforcement of, such Article V.
3.4 Withholding. The Employee agrees that the Company
has the right to withhold, from the amounts payable pursuant
to this Agreement, all amounts required to be withheld under
applicable income and/or employment tax laws, or as
otherwise stated in documents granting rights that are
affected by this Agreement.
3.5 Amendment, Waiver. No provision of this Agreement
may be modified, amended or waived except by an instrument
in writing signed by both parties.
3.6 Severability. If any term or provision of this
Agreement, or the application thereof to any person or
circumstance, shall at any time or to any extent be invalid,
illegal or unenforceable in any respect as written, Employee
and the Company intend for any court construing this
Agreement to modify or limit such provision so as to render
it valid and enforceable to the fullest extent allowed by
law. Any such provision that is not susceptible of such
reformation shall be ignored so as to not affect any other
term or provision hereof, and the remainder of this
Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is
held invalid, illegal or unenforceable, shall not be
affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent
permitted by law.
3.7 Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach
thereof.
3.8 Remedies Not Exclusive. No remedy specified
herein shall be deemed to be such party's exclusive remedy,
and accordingly, in addition to all of the rights and
remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by
applicable law, rule or regulation.
3.9 Company's Reservation of Rights. Employee
acknowledges and understands that the Employee serves at the
pleasure of the Board and that the Company has the right at
any time to terminate Employee's status as an employee of
the Company, or to change or diminish his status during the
Employment Term, subject to the rights of the Employee to
claim the benefits conferred by this Agreement.
3.10 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to
be an original but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have
caused this Agreement to be executed as of the Change of
Control Agreement Date.
STEWART ENTERPRISES, INC.
By:___________________________
James W. McFarland
Compensation Committee Chairman
EMPLOYEE:
______________________________
Richard O. Baldwin, Jr.
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1991 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1991 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is entered into as of September 25,
1992, by and between Stewart Enterprises, Inc., a Louisiana
corporation ("SEI"), and Kenneth C. Budde ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1991 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on May
30, 1991 and approved by the shareholders of SEI on
September 19, 1991.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 25,
1992 (the "Date of Grant") the right, privilege and option
to purchase 25,000 shares of Common Stock (the "Option")
at an exercise price of $20.00 per share (the "Exercise
Price"). The Option shall be exercisable at the time
specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the
other provisions of this Section II, the Optionee shall be
entitled to exercise his Option as follows:
25% of the total number of shares
covered by the option
beginning on September 25,
1993;
50% of the total number of shares
covered by the option
beginning on September 25,
1994, less any shares
previously issued;
75% of the total number of shares
covered by the option
beginning on September 25,
1995, less any shares
previously issued; and
100% of the total number of shares
covered by the option
beginning on September 25,
1996, less any shares
previously issued.
The Option shall expire and may not be exercised later than
September 25, 1997.
2.2 During Optionee's lifetime, the Option may be
exercised only by him or his curator if he has been
interdicted. If Optionee's employment is terminated, other
than as a result of death or disability, the Option must be
exercised, to the extent exercisable at the time of
termination of employment, within 30 days of the date on
which he ceases to be an employee, except that the Committee
may upon request extend the period after termination of
employment during which the Option may be exercised, but in
no event later than five years after the Date of Grant.
2.3 If an Optionee ceases to be an employee because of
disability within the meaning of Section 22(e)(3) of the
Code, the Option must be exercised, to the extent otherwise
exercisable, within one year from the date on which he
ceases to be an employee, but in no event later than five
years after the Date of Grant.
2.4 In the event of Optionee's death, the Option may
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
otherwise exercisable, within one year from the date of
death, but in no event later than five years after the Date
of Grant.
III.
Method of Exercise of Option
3.1 Optionee may exercise all or a portion of the
Option by delivering to SEI a signed written notice of his
intention to exercise the Option, specifying therein the
number of shares to be purchased. Upon receiving such
notice, and after SEI has received full payment of the
Exercise Price, the appropriate officer of SEI shall cause
the transfer of title of the shares purchased to Optionee on
SEI's stock records and cause to be issued to Optionee a
stock certificate for the number of shares being acquired.
Optionee shall not have any rights as a shareholder until
the stock certificate is issued to him.
3.2 The Option may be exercised by the payment of the
Exercise Price in cash, in shares of Common Stock held for
six months or in a combination of cash and shares of Common
Stock held for six months. The Optionee may also pay the
Exercise Price by delivering a properly executed exercise
notice together with irrevocable instructions to a broker
approved by SEI (with a copy to SEI) to promptly deliver to
SEI the amount of sale or loan proceeds to pay the Exercise
Price.
IV.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time.
V.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VI.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed on the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ____________________________, Member
of the Compensation Committee
____________________________
Kenneth C. Budde
Optionee
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") between Stewart
Enterprises, Inc., a Louisiana corporation (the "Company"),
and Kenneth C. Budde (the "Employee") is dated as of August
1, 1995 (the "Agreement Date").
W I T N E S S E T H:
WHEREAS, Employee currently is employed by the Company;
WHEREAS, the Company desires to retain the services of
Employee pursuant to the terms of this Agreement, subject to
Employee's acceptance of the conditions stated herein;
WHEREAS, during the course of his employment with the
Company, Employee has or will have received extensive and
unique knowledge, training and education in, and access to
resources involving, the Death Care Business (as defined
below) at a substantial cost to the Company, which Employee
acknowledges has enhanced or substantially will enhance
Employee's skills and knowledge in such business;
WHEREAS, during the course of his employment with the
Company, Employee has had and will continue to have access
to certain valuable oral and written information, knowledge
and data relating to the business and operations of the
Company and its subsidiaries that is non-public,
confidential or proprietary in nature and is particularly
useful in the Death Care Business; and
WHEREAS, in view of the training provided by the
Company to Employee, its cost to the Company, the need for
the Company to be protected against disclosures by Employee
of the Company's and its subsidiaries' trade secrets and
other non-public, confidential or proprietary information,
the Company and Employee desire, among other things, to
prohibit Employee from disclosing or utilizing, outside the
scope and term of his employment, any non-public,
confidential or proprietary information, knowledge and data
relating to the business and operations of the Company or
its subsidiaries received by Employee during the course of
his employment, and to restrict the ability of Employee to
compete with the Company or its subsidiaries for a limited
period of time.
NOW, THEREFORE, for and in consideration of the
continued employment of Employee by the Company and the
payment of wages, salary and other compensation to Employee
by the Company, the parties hereto agree as follows:
ARTICLE I
EMPLOYMENT CAPACITY AND TERM
1. Prior Employment Agreement. Effective as of the
Agreement Date, this Agreement supersedes the Employment
Agreement dated November 1, 1992 between the Company and the
Employee (the "Prior Agreement").
Capacity and Duties of Employee. The Employee is
employed by the Company to render services on behalf of the
Company as Senior Vice President-Finance, Chief Accounting
Officer, Secretary and Treasurer. As the Senior Vice
President-Finance, Chief Accounting Officer, Secretary and
Treasurer, the Employee shall perform such duties as are
assigned to the individual holding such title by the
Company's Bylaws and such other duties, consistent with the
Employee's job title, as may be prescribed from time to time
by the Board of Directors of the Company (the "Board")
and/or the Company's Chief Executive Officer and/or the
Company's Chief Financial Officer.
2. Employment Term. The term of this Agreement (the
"Employment Term") shall commence on the Agreement Date and
shall continue through October 31, 2000, subject to any
earlier termination of Employee's status as an employee
pursuant to this Agreement.
3. Devotion to Responsibilities.
During the Employment Term, the Employee shall
devote all of his business time to the business of the
Company, shall use his reasonable best efforts to perform
faithfully and efficiently his duties under this Agreement,
and shall not engage in or be employed by any other
business; provided, however, that nothing contained herein
shall prohibit the Employee from (a) serving as a member of
the board of directors, board of trustees or the like of any
for-profit or non-profit entity that does not compete with
the Company, or performing services of any type for any
civic or community entity, whether or not the Employee
receives compensation therefor, (b) investing his assets in
such form or manner as shall require no more than nominal
services on the part of the Employee in the operation of the
business of the entity in which such investment is made, or
(c) serving in various capacities with, and attending
meetings of, industry or trade groups and associations, as
long as the Employee's engaging in any activities permitted
by virtue of clauses (a), (b) and (c) above does not
materially and unreasonably interfere with the ability of
the Employee to perform the services and discharge the
responsibilities required of him under this Agreement.
Notwithstanding clause (b) above, during the Employment
Term, the Employee may not beneficially own more than 2% of
the equity interests of a business organization required to
file periodic reports with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the
"Exchange Act") and may not beneficially own more than 2% of
the equity interests of a business organization that
competes with the Company. For purposes of this paragraph,
"beneficially own" shall have the same meaning ascribed to
that term in Rule 13d-3 under the Exchange Act.
ARTICLE II
COMPENSATION AND BENEFITS
During the Employment Term, the Company shall provide
the Employee with the compensation and benefits described
below:
1. Salary. A salary ("Base Salary") at the rate of
$155,000 per fiscal year of the Company ("Fiscal Year"),
payable to the Employee at such intervals as other salaried
employees of the Company are paid.
2. Bonus. For the period ending October 31, 1995, the
Employee shall be eligible to receive an incentive bonus,
the amount of which shall be determined pursuant to
Paragraph 4 of the Prior Agreement. This incentive bonus
shall be paid in cash no later than 30 days following the
filing of the Company's annual report on Form 10-K for the
Fiscal Year ending October 31, 1995. For the period
beginning November 1, 1995, the employee shall be eligible
to receive a bonus (the "Bonus") of up to $75,000 per Fiscal
Year. Such Bonus shall be comprised of two elements, the
quantitative element and the qualitative element:
(a) The quantitative element shall be equal to
75% of the maximum Bonus of $75,000 and shall be based on
the attainment of certain goals to be established by the
Company's Compensation Committee and Employee.
(b) The qualitative element shall be 25% of the
maximum Bonus of $75,000 and shall be awarded at the
discretion of the Chief Financial Officer. The Chief
Financial Officer and Employee shall establish incentive
goals and other criteria for the award of the qualitative
element.
The Bonus shall be paid in cash no later than 30 days
following the filing of the Company's annual report on Form
10-K for the Fiscal Year in which the Bonus has been earned.
3. Benefits. The Company shall provide the Employee
with the following fringe benefits and perquisites:
(a) At Employee's election, either a Company
furnished automobile or an automobile allowance of $600 per
month (in which case the Company will reimburse the Employee
for all gasoline, maintenance, repairs and insurance for
Employee's personal car as if it were a Company-owned
vehicle);
(b) Reimbursement for membership dues, including
assessments and similar charges, in one or more clubs deemed
useful for business purposes in an amount not to exceed
$8,000 or such additional amounts as may be approved by the
Chief Financial Officer;
(c) First class air travel;
(d) Fully-paid insurance benefit package
available to all employees; and
(e) All other benefit programs similar to those
provided other employees of the Company.
4. 1995 Incentive Compensation Plan. The Employee
shall be eligible to receive awards under the Company's 1995
Incentive Compensation Plan (the "1995 Plan").
5. Expenses. The Employee shall be reimbursed for
reasonable out-of-pocket expenses incurred from time to time
on behalf of the Company or any subsidiary in the
performance of his duties under this Agreement, upon the
presentation of such supporting invoices, documents and
forms as the Company reasonably requests.
ARTICLE III
TERMINATION OF EMPLOYMENT
1. Death. The Employee's status as an employee shall
terminate immediately and automatically upon the Employee's
death during the Employment Term.
2. Disability. The Employee's status as an employee
may be terminated for "Disability" as follows:
(a) The Employee's status as an employee shall
terminate if the Employee has a disability that would
entitle him to receive benefits under the Company's long-
term disability insurance policy in effect at the time
either because he is Totally Disabled or Partially Disabled,
as such terms are defined in the Company's policy in effect
as of the Agreement Date or as similar terms are defined in
any successor policy. Any such termination shall become
effective on the first day on which the Employee is eligible
to receive payments under such policy (or on the first day
that he would be so eligible, if he had applied timely for
such payments).
(b) If the Company has no long-term disability
plan in effect, if (i) the Employee is rendered incapable
because of physical or mental illness of satisfactorily
discharging his duties and responsibilities under this
Agreement for a period of 90 consecutive days and (ii) a
duly qualified physician chosen by the Company and
acceptable to the Employee or his legal representatives so
certifies in writing, the Board shall have the power to
determine that the Employee has become disabled. If the
Board makes such a determination, the Company shall have the
continuing right and option, during the period that such
disability continues, and by notice given in the manner
provided in this Agreement, to terminate the status of
Employee as an employee. Any such termination shall become
effective 30 days after such notice of termination is given,
unless within such 30-day period, the Employee becomes
capable of rendering services of the character contemplated
hereby (and a physician chosen by the Company and acceptable
to the Employee or his legal representatives so certifies in
writing) and the Employee in fact resumes such services.
(c) The "Disability Effective Date" shall mean
the date on which termination of employment becomes
effective due to Disability.
3. Cause. The Company may terminate the Employee's
status as an employee for Cause. As used herein,
termination by the Company of the Employee's status as an
employee for "Cause" shall mean termination as a result of
(a) the Employee's breach of this Agreement, or (b) the
willful engaging by the Employee in gross misconduct
injurious to the Company, which in either case is not
remedied within 10 days after the Company provides written
notice to the Employee of such breach or willful misconduct.
4. Good Reason. The Employee may terminate his
status as an employee for Good Reason. As used herein, the
term "Good Reason" shall mean:
(a) The occurrence of any of the following during
the Employment Term:
(i) the assignment to the Employee of any
duties or responsibilities that are inconsistent with the
Employee's status, title and position as Senior Vice
President-Finance, Chief Accounting Officer, Secretary and
Treasurer;
(ii) any removal of the Employee from, or any
failure to reappoint or reelect the Employee to, the
position of Senior Vice President-Finance, Chief Accounting
Officer, Secretary and Treasurer of the Company, except in
connection with a termination of Employee's status as an
employee as permitted by this Agreement;
(iii) the Company's requiring the Employee to
be based anywhere other than in the New Orleans, Louisiana
metropolitan area, except for required travel in the
ordinary course of the Company's business;
(b) any breach of this Agreement by the Company
that continues for a period of 10 days after written notice
thereof is given by the Employee to the Company;
(c) the failure by the Company to obtain the
assumption of its obligations under this Agreement by any
successor or assign as contemplated in this Agreement; or
(d) any purported termination by the Company of
the Employee's status as an employee for Cause that is not
effected pursuant to a Notice of Termination satisfying the
requirements of this Agreement.
5. Voluntary Termination by the Company. The Company
may terminate the Employee's status as employee for other
than death, Disability or Cause.
6. Voluntary Termination by the Employee. The
Employee may terminate the Employee's status as employee for
other than Good Reason.
7. Notice of Termination. Any termination by the
Company for Disability or Cause, or by the Employee for Good
Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Article VI
Section 2 of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice
that (a) indicates the specific termination provision in
this Agreement relied upon (b) to the extent applicable,
sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's
employment under the provisions so indicated and (c) if the
Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination
date (which date shall be not more than 30 days after the
giving of such notice). The failure by the Employee or the
Company to set forth in the Notice of Termination any fact
or circumstance that contributes to a showing of Good
Reason, Disability or Cause shall not negate the effect of
the notice nor waive any right of the Employee or the
Company, respectively, hereunder or preclude the Employee or
the Company, respectively, from asserting such fact or
circumstance in enforcing the Employee's or the Company's
rights hereunder.
8. Date of Termination. "Date of Termination" means
(a) if Employee's employment is terminated by reason of his
death or Disability, the Date of Termination shall be the
date of death of Employee or the Disability Effective Date,
as the case may be, (b) if Employee's employment is
terminated by the Company for Cause, or by Employee for Good
Reason, the date of delivery of the Notice of Termination or
any later date specified therein, (which date shall not be
more than 30 days after the giving of such notice) as the
case may be, (c) if the Employee's employment is terminated
by the Company for reasons other than death, Disability or
Cause, the Date of Termination shall be the date on which
the Company notifies the Employee of such termination, and
(d) if the Employee's employment is terminated by the
Employee for reasons other than Good Reason, the Date of
Termination shall be the date on which the Employee notifies
the Company of such termination.
ARTICLE IV
OBLIGATIONS UPON TERMINATION
1. Death. If the Employee's status as an employee is
terminated by reason of the Employee's death, this Agreement
shall terminate without further obligations to the
Employee's legal representatives under this Agreement, other
than the obligation to make any payments due pursuant to
employee benefit plans maintained by the Company or its
subsidiaries.
2. Disability. If Employee's status as an employee
is terminated by reason of Employee's Disability, this
Agreement shall terminate without further obligation to the
Employee, other than the obligation to make any payments due
pursuant to employee benefit plans maintained by the Company
or its subsidiaries.
3. Termination by Company for Reasons other than
Death, Disability or Cause; Termination by Employee for Good
Reason. If the Company terminates the Employee's status as
an employee for reasons other than death, Disability or
Cause, or the Employee terminates his employment for Good
Reason, then
(a) the Company shall pay to the Employee an
amount equal to a single year's Base Salary in effect at the
Date of Termination, payable in equal installments over a
two-year period at such intervals as other salaried
employees of the Company are paid; and
(b) with respect to all performance-based options
granted to the Employee pursuant to the 1995 Plan,
(i) if the performance goals have been met as
of the Date of Termination, then such options
shall become exercisable as of the Date of
Termination (if not already exercisable) and shall
expire on the date that is the later of:
(A) 30 days after the Date of
Termination or
(B) 30 days after the first date on
which the exercise of the options and sale of
the underlying securities will not (1) be
matched with purchases or sales of the
Company's common stock prior to such Date of
Termination such as to cause the Employee to
incur a liability to the Company under
Section 16 of the Exchange Act and (2)
destroy the Section 16 exemption for the
grant of the options.
(ii) if the performance goals have not been
met as of the Date of Termination, then
(A) if the performance goals are not met
by the close of business on the day that is
180 days after the Date of Termination, then
the options shall expire on such day; and
(B) if the performance goals are met by
the close of business on the day that is 180
days after the Date of Termination, then the
options shall become exercisable as of the
date such performance goals are met (the
"Vesting Date") and shall expire on the date
that is the later of:
(1) 30 days after the Vesting Date
or
(2) 30 days after the first date on
which the exercise of the options and
sale of the underlying securities will
not (I) be matched with purchases or
sales of the Company's common stock
prior to such Date of Termination such
as to cause the Employee to incur a
liability to the Company under Section
16 of the Exchange Act and (II) destroy
the Section 16 exemption for the grant
of the options.
4. Cause. If the Employee's status as an employee is
terminated by the Company for Cause, this Agreement shall
terminate without further obligation to the Employee other
than for obligations imposed by law and obligations imposed
pursuant to any employee benefit plan maintained by the
Company or its subsidiaries.
5. Termination by Employee for Reasons other than
Good Reason. If the Employee's status as an employee is
terminated by the Employee for reasons other than Good
Reason, then the Company shall pay to the Employee an amount
equal to one-half of a single year's Base Salary in effect
at the Date of Termination, payable in equal installments
over a two-year period at such intervals as other salaried
employees of the Company are paid.
6. Resignation. If Employee is a director of the
Company and his employment is terminated for any reason
other than death, the Employee shall, if requested by the
Company, immediately resign as a director of the Company.
If such resignation is not received when so requested, the
Employee shall forfeit any right to receive any payments
pursuant to this Agreement.
ARTICLE V
NONDISCLOSURE, NONCOMPETITION AND PROPRIETARY RIGHTS
1. Certain Definitions. For purposes of this
Agreement, the following terms shall have the following
meanings:
(a) "Confidential Information" means any
information, knowledge or data of any nature and in any form
(including information that is electronically transmitted or
stored on any form of magnetic or electronic storage media)
relating to the past, current or prospective business or
operations of the Company and its subsidiaries, that at the
time or times concerned is not generally known to persons
engaged in businesses similar to those conducted or
contemplated by the Company and its subsidiaries (other than
information known by such persons through a violation of an
obligation of confidentiality to the Company), whether
produced by the Company and its subsidiaries or any of their
consultants, agents or independent contractors or by
Employee, and whether or not marked confidential, including
without limitation information relating to the Company's or
its subsidiaries' products and services, business plans,
business acquisitions, processes, product or service
research and development methods or techniques, training
methods and other operational methods or techniques, quality
assurance procedures or standards, operating procedures,
files, plans, specifications, proposals, drawings, charts,
graphs, support data, trade secrets, supplier lists,
supplier information, purchasing methods or practices,
distribution and selling activities, consultants' reports,
marketing and engineering or other technical studies,
maintenance records, employment or personnel data, marketing
data, strategies or techniques, financial reports, budgets,
projections, cost analyses, price lists, formulae and
analyses, employee lists, customer records, customer lists,
customer source lists, proprietary computer software, and
internal notes and memoranda relating to any of the
foregoing.
(b) "Death Care Business" means (i) the owning
and operating of funeral homes and cemeteries, including
combined funeral home and cemetery facilities, (ii) the
offering of a complete range of services and products to
meet families' funeral needs, including prearrangement,
family consultation, the sale of caskets and related funeral
and cemetery products and merchandise, the removal,
preparation and transportation of remains, cremation, the
use of funeral home facilities for visitation and worship,
and related transportation services, (iii) the marketing and
sale of funeral services and cemetery property on an at-need
or prearranged basis, (iv) providing, managing and
administering financing arrangements (including trust funds,
escrow accounts, insurance and installment sales contracts)
for prearranged funeral plans and cemetery property and
merchandise, (v) providing interment services, the sale (on
an at-need or prearranged basis) of cemetery property
including lots, lawn crypts, family and community mausoleums
and related cemetery merchandise such as monuments,
memorials and burial vaults, (vi) the maintenance of
cemetery grounds pursuant to perpetual care contracts and
laws or on a voluntary basis, and (vii) offering mausoleum
design, construction and sales services.
2. Nondisclosure of Confidential Information. During
the Employment Term, Employee shall hold in a fiduciary
capacity for the benefit of the Company all Confidential
Information which shall have been obtained by Employee
during Employee's employment (whether prior to or after the
Agreement Date) and shall use such Confidential Information
solely within the scope of his employment with and for the
exclusive benefit of the Company. For a period of five
years after the Employment Term, commencing with the Date of
Termination, Employee agrees (a) not to communicate, divulge
or make available to any person or entity (other than the
Company) any such Confidential Information, except upon the
prior written authorization of the Company or as may be
required by law or legal process, and (b) to deliver
promptly to the Company any Confidential Information in his
possession, including any duplicates thereof and any notes
or other records Employee has prepared with respect thereto.
In the event that the provisions of any applicable law or
the order of any court would require Employee to disclose or
otherwise make available any Confidential Information,
Employee shall give the Company prompt prior written notice
of such required disclosure and an opportunity to contest
the requirement of such disclosure or apply for a protective
order with respect to such Confidential Information by
appropriate proceedings.
3. Limited Covenant Not to Compete. During the
Employment Term and for a period of two years thereafter,
commencing with the Date of Termination, Employee agrees
that, with respect to each State of the United States or
other jurisdiction, or specified portions thereof, in which
the Employee regularly (a) makes contact with customers of
the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c)
supervises the activities of other employees of the Company
or any of its subsidiaries, as identified in Appendix "A"
attached hereto and forming a part of this Agreement, and in
which the Company or any of its subsidiaries engages in the
Death Care Business on the Date of Termination
(collectively, the "Subject Areas"), Employee will restrict
his activities within the Subject Areas as follows:
(a) Employee will not, directly or indirectly,
for himself or others, own, manage, operate, control, be
employed in an executive, managerial or supervisory capacity
by, or otherwise engage or participate in or allow his
skill, knowledge, experience or reputation to be used in
connection with, the ownership, management, operation or
control of, any company or other business enterprise engaged
in the Death Care Business within any of the Subject Areas;
provided, however, that nothing contained herein shall
prohibit Employee from making passive investments as long as
Employee does not beneficially own more than 2% of the
equity interests of a business enterprise engaged in the
Death Care Business within any of the Subject Areas. For
purposes of this paragraph, "beneficially own" shall have
the same meaning ascribed to that term in Rule 13d-3 under
the Exchange Act.
(b) Employee will not call upon any customer of
the Company or its subsidiaries for the purpose of
soliciting, diverting or enticing away the business of such
person or entity, or otherwise disrupting any previously
established relationship existing between such person or
entity and the Company or its subsidiaries;
(c) Employee will not solicit, induce, influence
or attempt to influence any supplier, lessor, licensor,
potential acquiree or any other person who has a business
relationship with the Company or its subsidiaries, or who on
the Date of Termination is engaged in discussions or
negotiations to enter into a business relationship with the
Company or its subsidiaries, to discontinue or reduce the
extent of such relationship with the Company or its
subsidiaries; and
(d) Employee will not make contact with any of
the employees of the Company or its subsidiaries with whom
he had contact during the course of his employment with the
Company for the purpose of soliciting such employee for
hire, whether as an employee or independent contractor, or
otherwise disrupting such employee's relationship with the
Company or its subsidiaries.
(e) Employee further agrees that, for a period of
one year from and after the Date of Termination, Employee
will not hire, on behalf of himself or any company engaged
in the Death Care Business with which Employee is
associated, any employee of the Company or its subsidiaries
as an employee or independent contractor, whether or not
such engagement is solicited by Employee; provided, however,
that the restriction contained in this subsection (e) shall
not apply to Company employees who reside in, or are hired
by Employee to perform work in, any of the Subject Areas
located within the States of Virginia, Arkansas or Georgia.
Employee agrees that he will from time to time upon the
Company's request promptly execute any supplement,
amendment, restatement or other modification of Appendix "A"
as may be necessary or appropriate to correctly reflect the
jurisdictions which, at the time of such modification,
should be covered by Appendix "A" and this Article V Section
3. Furthermore, Employee agrees that all references to
Appendix "A" in this Agreement shall be deemed to refer to
Appendix "A" as so supplemented, amended, restated or
otherwise modified from time to time.
4. Injunctive Relief; Other Remedies. Employee
acknowledges that a breach by Employee of Section 2 or 3 of
this Article V would cause immediate and irreparable harm to
the Company for which an adequate monetary remedy does not
exist; hence, Employee agrees that, in the event of a breach
or threatened breach by Employee of the provisions of
Section 2 or 3 of this Article V during or after the
Employment Term, the Company shall be entitled to injunctive
relief restraining Employee from such violation without the
necessity of proof of actual damage or the posting of any
bond, except as required by non-waivable, applicable law.
Nothing herein, however, shall be construed as prohibiting
the Company from pursuing any other remedy at law or in
equity to which the Company may be entitled under applicable
law in the event of a breach or threatened breach of this
Agreement by Employee, including without limitation the
recovery of damages and/or costs and expenses, such as
reasonable attorneys' fees, incurred by the Company as a
result of any such breach. In addition to the exercise of
the foregoing remedies, the Company shall have the right
upon the occurrence of any such breach to cancel any unpaid
salary, bonus, commissions or reimbursements otherwise
outstanding at the Date of Termination. In particular,
Employee acknowledges that the payments provided under
Article IV Sections 3 and 5 are conditioned upon Employee
fulfilling any noncompetition and nondisclosure agreements
contained in this Article V. In the event Employee shall at
any time materially breach any noncompetition or
nondisclosure agreements contained in this Article V, the
Company may suspend or eliminate payments under Article IV
during the period of such breach. Employee acknowledges
that any such suspension or elimination of payments would be
an exercise of the Company's right to suspend or terminate
its performance hereunder upon Employee's breach of this
Agreement; such suspension or elimination of payments would
not constitute, and should not be characterized as, the
imposition of liquidated damages.
5. Requests for Waiver in Cases of Undue Hardship.
In the event that Employee should find any of the
limitations of Article V Section 3 (including without
limitation the geographic restrictions of Appendix "A") to
impose a severe hardship on Employee's ability to secure
other employment, Employee may make a request to the Company
for a waiver of the designated limitations before accepting
employment that otherwise would be a breach of Employee's
promises and obligations under this Agreement. Such request
must be in writing and clearly set forth the name and
address of the organization with that employment is sought
and the location, position and duties that Employee will be
performing. The Company will consider the request and, in
its sole discretion, decide whether and on what conditions
to grant such waiver.
6. Governing Law of this Article V; Consent to
Jurisdiction. Any dispute regarding the reasonableness of
the covenants and agreements set forth in this Article V, or
the territorial scope or duration thereof, or the remedies
available to the Company upon any breach of such covenants
and agreements, shall be governed by and interpreted in
accordance with the laws of the State of the United States
or other jurisdiction in which the alleged prohibited
competing activity or disclosure occurs, and, with respect
to each such dispute, the Company and Employee each hereby
irrevocably consent to the exclusive jurisdiction of the
state and federal courts sitting in the relevant State (or,
in the case of any jurisdiction outside the United States,
the relevant courts of such jurisdiction) for resolution of
such dispute, and agree to be irrevocably bound by any
judgment rendered thereby in connection with such dispute,
and further agree that service of process may be made upon
him or it in any legal proceeding relating to this Article V
and/or Appendix "A" by any means allowed under the laws of
such jurisdiction. Each party irrevocably waives any
objection he or it may have as to the venue of any such
suit, action or proceeding brought in such a court or that
such a court is an inconvenient forum.
7. Employee's Understanding of this Article.
Employee hereby represents to the Company that he has read
and understands, and agrees to be bound by, the terms of
this Article. Employee acknowledges that the geographic
scope and duration of the covenants contained in Article V
Section 3 are the result of arm's-length bargaining and are
fair and reasonable in light of (i) the importance of the
functions performed by Employee and the length of time it
would take the Company to find and train a suitable
replacement, (ii) the nature and wide geographic scope of
the operations of the Company and its subsidiaries, (iii)
Employee's level of control over and contact with the
business and operations of the Company and its subsidiaries
in all jurisdictions where same are conducted and (iv) the
fact that all facets of the Death Care Business are
conducted by the Company and its subsidiaries throughout the
geographic area where competition is restricted by this
Agreement. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest
extent permitted under applicable law, whether now or
hereafter in effect and, therefore, to the extent permitted
by applicable law, the parties hereto waive any provision of
applicable law that would render any provision of this
Article V invalid or unenforceable.
ARTICLE VI
MISCELLANEOUS
1. Binding Effect.
(a) This Agreement shall be binding upon and
inure to the benefit of the Company and any of its
successors or assigns.
(b) This Agreement is personal to the Employee
and shall not be assignable by the Employee without the
consent of the Company (there being no obligation to give
such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase,
merger, consolidation or otherwise) all or substantially all
of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to
agree to perform all of the obligations under this Agreement
in the same manner and to the same extent as would have been
required of the Company had no assignment or succession
occurred, such assumption to be set forth in a writing
reasonably satisfactory to the Employee. In the event of
any such assignment or succession, the term "Company" as
used in this Agreement shall refer also to such successor or
assign.
2. Notices. All notices hereunder must be in writing
and shall be deemed to have given upon receipt of delivery
by: (a) hand (against a receipt therefor), (b) certified or
registered mail, postage prepaid, return receipt requested,
(c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) telecopy transmission
with confirmation of receipt. All such notices must be
addressed as follows:
If to the Company, to:
Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
Attn: Joseph P. Henican, III
If to the Employee, to:
Kenneth C. Budde
2103 Ormond Blvd.
Destrehan, Louisiana 70047
or such other address as to which any party hereto may have
notified the other in writing.
3. Governing Law. This Agreement shall be construed
and enforced in accordance with and governed by the internal
laws of the State of Louisiana without regard to principles
of conflict of laws, except as expressly provided in Article
V Section 6 above with respect to the resolution of disputes
arising under, or the Company's enforcement of, Article V of
this Agreement.
4. Withholding. The Employee agrees that the Company
has the right to withhold, from the amounts payable pursuant
to this Agreement, all amounts required to be withheld under
applicable income and/or employment tax laws, or as
otherwise stated in documents granting rights that are
affected by this Agreement.
5. Severability. If any term or provision of this
Agreement (including without limitation those contained in
Appendix "A"), or the application thereof to any person or
circumstance, shall at any time or to any extent be invalid,
illegal or unenforceable in any respect as written, Employee
and the Company intend for any court construing this
Agreement to modify or limit such provision temporally,
spatially or otherwise so as to render it valid and
enforceable to the fullest extent allowed by law. Any such
provision that is not susceptible of such reformation shall
be ignored so as to not affect any other term or provision
hereof, and the remainder of this Agreement, or the
application of such term or provision to persons or
circumstances other than those as to which it is held
invalid, illegal or unenforceable, shall not be affected
thereby and each term and provision of this Agreement shall
be valid and enforced to the fullest extent permitted by
law.
6. Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach
thereof.
7. Remedies Not Exclusive. No remedy specified
herein shall be deemed to be such party's exclusive remedy,
and accordingly, in addition to all of the rights and
remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by
applicable law, rule or regulation.
8. Company's Reservation of Rights. Employee
acknowledges and understands that the Employee serves at the
pleasure of the Board and that the Company has the right at
any time to terminate Employee's status as an employee of
the Company, or to change or diminish his status during the
Employment Term, subject to the rights of the Employee to
claim the benefits conferred by this Agreement.
9. JURY TRIAL WAIVER. THE PARIES HEREBY WAIVE TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT.
10. Survival. The rights and obligations of the
Company and Employee contained in Article V of this
Agreement shall survive the termination of the Agreement.
Following the Date of Termination, each party shall have the
right to enforce all rights, and shall be bound by all
obligations, of such party that are continuing rights and
obligations under this Agreement.
11. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to
be an original but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have
caused this Agreement to be executed as of the Agreement
Date.
STEWART ENTERPRISES, INC.
By: ______________________________
James W. McFarland
Compensation Committee Chairman
EMPLOYEE:
______________________________
Kenneth C. Budde
<PAGE>
Appendix "A" to Employment Agreement
between Stewart Enterprises, Inc.
and
Kenneth C. Budde
Revision No. 0 of Appendix "A",
Effective as of August 1, 1995;
Updated to October 2, 1995
Jurisdictions In Which Competition
Is Restricted As Provided
In Article V Section 3
A. States and Territories of the United States:
1. Louisiana-- The following parishes in the State of
Louisiana:
Orleans, St. Bernard, St. Tammany, Plaquemines,
Jefferson.
2. Florida-- The following counties in the State of
Florida:
Seminole, Dade, Hillsborough, Duval, Orange, Pinellas,
Indian River, Palm Beach, Volusia, Lake, Brevard,
Broward, Monroe, Collier, Pasco, Manatee, Polk, Hardee,
Nassau, Baker, Clay, St. Johns, St. Lucie, Osceola,
Ockeechobee, Martin, Hendry
as well as any other counties in the State of Florida
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
3. Texas-- The following counties in the State of Texas:
Kaufman, Dallas, Collin, Tarrant, Lamar, Harris,
Denton, Johnson, Rockwall, Brazoria, Henderson, Van
Zandt, Hunt, Ellis, Fannin, Grayson, Wise, Parker, Red
River, Delta, Galveston, Ft. Bend, Waller, Montgomery,
Liberty, Chambers, Cooke, Hood, Bosque, Hill, Matagorda
as well as any other counties in the State of Texas in
which the Employee regularly (a) makes contact with
Agreed to and Accepted:
Stewart Enterprises, Inc. Employee
By: ___________________________ ___________________
Its: Compensation Committee Chairman Date:___________________
Date: _________________________
<PAGE>
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
4. Maryland-- The following counties in the State of
Maryland:
Baltimore City, Howard, Baltimore County, Prince
George's, Anne Arundel, Montgomery, Carroll, Frederick,
Harford, Calvert, Charles, Kent, Queen Anne's, Talbot,
Washington
as well as any other counties in the State of Maryland
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
5. Virginia-- The following counties in the State of
Virginia:
Chesterfield, Roanoke, Rockingham, Fairfax, Tazewell,
Goochland, Pulaski, Albemarle, Hanover, Henrico,
Dinwiddie, Amelia, Powhatan, Charles City, Prince
George, Bedford, Montgomery, Franklin, Botetourt,
Craig, Floyd, Augusta, Shenandoah, Page, Greene, Prince
William, McDowell, Bland, Smythe, Russell, Cumberland,
Fluvanna, Louisa, Wythe, Giles, Carroll, Orange,
Buckingham, Nelson, King William, New Kent,
Spotsylvania, Caroline, Buchanan, Dickenson, Loudoun,
Arlington, Scott, Washington, Clarke, Frederick
as well as any other counties in the State of Virginia
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
6. West Virginia-- The following counties in the State of
West Virginia:
Raleigh, Kanawha, Fayette, Berkeley, Boone, Summers,
Wyoming, Clay, Lincoln, Jackson, Putnam, Roane,
Greenbriar, Nicholas, Logan, Wayne, McDowell, Morgan,
Jefferson, Mercer, Mingo, Ohio
as well as any other counties in the State of West
Virginia in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
7. Puerto Rico-- The following towns in the Commonwealth
of Puerto Rico:
Agreed to and Accepted:
Employee
______________________
Date: ________________
<PAGE>
Bayamon, San Juan, Cayey, Canovanas, Ponce, Caguas,
Carolina, Humacao, Toa Baja, Toa Alta, Nranjito, Aguas
Buenas, Guaynabo, Comereo, Catano, Vega Alta, Patilla,
San Lorenzo, Guayama, Salinas, Aibonito, Loita, Rio
Grande, Las Marias, Juncos, Juana Diaz, Jajuja, Utuado,
Adjuntas Puenulas, Trujillo, Alto, Gurabo, Cidra,
Yagucoa and Naguabo
as well as any other towns in the Commonwealth of
Puerto Rico in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
8. North Carolina-- The following counties in the State
of North Carolina:
Catawba, Wilson, Guilford, Haywood, Johnston, Wake,
Wilkes, Craven, Nash, Iredell, Burke, Caldwell,
Lincoln, Alexander, Cleveland, Greene, Wayne,
Edgecombe, Pitt, Davidson, Randolph, Forsyth, Stokes,
Rockingham, Caswell, Alamance, Jackson, Buncombe,
Henderson, Transylvania, Swain, Madison, Sampson,
Franklin, Durham, Harnett, Granville, Chatham,
Alleghany, Surry, Ashe, Watauga, Yadkin, Pamilco,
Halifax, Warren, Swain, Carteret, Jones, Lenoir,
Beaufort
as well as any other counties in the State of North
Carolina in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
9. South Carolina-- The following counties in the State
of South Carolina:
Greenville, Charleston, Aiken, Pickens, Laurens,
Spartanburg, Anderson, Abbeville, Berkeley, Dorchester,
Colleton, Edgefield, Saluda, Lexington, Orangeburg,
Barnwell
as well as any other counties in the State of South
Carolina in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
10. Tennessee-- The following counties in the State of
Tennessee:
Davidson, Sumner, Robertson, Knox, Sullivan, Sevier,
Wilson, Rutherford, Williamson, Cheatham, Trousadale,
Macon, Montgomery, Jefferson, Grainger, Union,
Anderson, Loudon, Blount, Roane, Greene, Washington,
Carter, Johnson, Hawkins, Cocke, Giles, Lincoln
Agreed to and Accepted:
Employee
______________________
Date: ________________
<PAGE>
as well as any other counties in the State of Tennessee
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
11. Arkansas-- The following counties in the State of
Arkansas:
Saline, Pulaski, Hot Spring, Garland, Perry, Grant,
Lonoke, White, Jefferson, Faulkner, Dallas, Clark,
Ouachita, Montgomery, Garland
as well as any other counties in the State of Arkansas
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
12. Georgia-- The following counties in the State of
Georgia:
Cobb, Cherokee, Henry, Dekalb, Fulton, Douglas,
Paulding, Bartow, Pickins, Forsyth, Dawson, Gordon,
Clayton, Rockdale, Newton, Butts, Spalding, Gwinnett,
Fayette, Coweta, Carroll, Richmond
as well as any other counties in the State of Georgia
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
13. Alabama-- The following counties in the State of
Alabama:
Mobile, Madison, Baldwin, Escambia, Monroe, Washington,
Jackson, Marshall, Morgan, Limestone, Clarke
as well as any other counties in the State of Alabama
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
14. Mississippi-- The following counties in the State of
Mississippi:
Hinds, Madison, Rankin, Simpson, Copiah, Claiborne,
Agreed to and Accepted:
Employee
______________________
Date: ________________
<PAGE>
Warren, Yazoo, Jackson, George
as well as any other counties in the State of
Mississippi in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
15. Pennsylvania-- The following counties in the State of
Pennsylvania:
Montgomery, Philadelphia, Bucks, Delaware, Chester,
Berks, Lehigh, York, Northampton
as well as any other counties in the State of
Pennsylvania in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
16. Kentucky-- The following counties in the State of
Kentucky:
Pike, Martin, Floyd, Knoll, Letcher, Allen, Simpson
as well as any other counties in the State of Kentucky
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
17. Ohio-- The following counties in the State of Ohio:
Belmont, Licking, Jefferson, Monroe, Harrison, Noble,
Guernsey, Muskingum, Knox, Fairfield, Perry, Delaware,
Franklin, Coshocton
as well as any other counties in the State of Ohio in
which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
18. The District of Columbia.
19. Kansas-- The following counties in the State of Kansas:
Douglas, Leavenworth, Johnson, Miami, Franklin, Osage,
Shawnee, Jefferson
Agreed to and Accepted:
Employee
______________________
Date: ________________
<PAGE>
as well as any other counties in the State of Kansas in
which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
20. Missouri-- The following counties in the State of
Missouri:
Boone, Audrain, Callaway, Cole, Cooper, Howard,
Moniteau, Osage, Randolph
as well as any other counties in the State of Missouri
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
21. Nebraska-- The following counties in the State of
Nebraska:
Lancaster, Otoe, Sarpy, Gage, Saline, Seward, Saunders,
Cass, Butler
as well as any other counties in the State of Nebraska
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
Employee and the Company agree that, throughout the
Employment Term, Employee shall comply with all of the
requirements and restrictions set forth in Article V of
the Agreement of which this Appendix "A" forms a part;
however, Employee and the Company agree that,
notwithstanding anything to the contrary contained in
Article V, Section 3 of the Agreement, Employee shall
be required to restrict his post-employment activities
in the State of Nebraska only to: (i) complying with
the restrictions set forth in Article V, Section 2 of
the Agreement and (ii) refraining from calling upon any
customer of the Company or its subsidiaries with whom
Employee has done business and/or had personal contact
for the purpose of soliciting, diverting or enticing
away the business of such person or entity, or
otherwise disrupting any previously established
relationship existing between such person or entity and
the Company or its subsidiaries. The parties hereby
acknowledge and agree that this modification to the
restrictions of Article V, Section 3 as they relate to
post-employment competition in the State of Nebraska is
being entered into solely to comply with the
limitations provided in Nebraska law on the extent to
which noncompetition agreements may be enforced. This
modification does not reflect the parties' agreement as
to the extent of the limitations upon competition
necessary to protect the legitimate interests of the
Company; rather, the provisions of Article V of the
Agreement reflect such agreement.
Agreed to and Accepted:
Employee
______________________
Date: ________________
<PAGE>
22. New Jersey-- The following counties in the State of New
Jersey:
Salem, Burlington, Mercer, Hunterdon
as well as any other counties in the State of New
Jersey in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
B. Other Jurisdictions:
1. Mexico-- The following delegation or municipios in the
Country of Mexico:
Cuernavaca, Benito Juarez, Tlalnepantla, Cuauhtemoc,
Temixco, Miacatlan, Jiutepec, Tepoztlan, Huitzilac,
Tenango, Tenancingo, Miguel Hidalgo, Iztacalco,
Iztapalapa, Coyoacan, Alvaro Obregon, Jilotepec,
Cuautitlan, Lerma, Iztlahuaca, Gustavo A. Madero,
Azcapotzalco, Cuajimalpa de Morelos, Venustiano and
Carranza
as well as any other delegation or municipios in the
Country of Mexico in which the Employee regularly (a)
makes contact with customers of the Company or any of
its subsidiaries, (b) conducts the business of the
Company or any of its subsidiaries or (c) supervises
the activities of other employees of the Company or any
of its subsidiaries as of the Date of Termination.
2. Australia-- The following councils in the Country of
Australia:
Willoughby, Newcastle, Ku-Ring-Gai, Pittwater, Mosman,
Port Stephens, Warringah, North Sydney, South Sydney,
Maroochydore, Beaudesert, Caboolture, Redland,
Maroochy, Gatton, Toowoomba, Kilcoy, Brisbane, Gold
Coast, Pine Rivers, Redcliffe, Woodville, Nunawading,
Brunswick, Mornington, Essendon, Brighton,
Broadmeadows, Moorabbin, Lake Mocquarie, Hornsby,
Landsborough, Widgee, Moreton, Caloundra, Noosa,
Kingaroy, Albert, Logan, Hindmarsh, West Torrens,
Oakley, Box Hill, Melbourne, Frankston, Coburg, Bulla
and Sandringham
as well as any other councils in the Country of
Australia in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
Agreed to and Accepted:
Employee
______________________
Date: ________________
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of September 7, 1995 by
and between Stewart Enterprises, Inc., a Louisiana
corporation ("SEI"), and Kenneth C. Budde ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995, subject to shareholder approval of the
Plan.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 7,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, the right, privilege
and option to purchase 30,000 shares of Common Stock (the
"Option") at an exercise price of $31.50 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the
other provisions of this Agreement, the Optionee shall be
entitled to exercise his Option as follows:
20% of the total number of shares
covered by the Option
beginning on September 7,
1996;
40% of the total number of shares
covered by the Option
beginning on September 7,
1997, less any shares
previously issued;
60% of the total number of shares
covered by the Option
beginning on September 7,
1998, less any shares
previously issued;
80% of the total number of shares
covered by the Option
beginning on September 7,
1999, less any shares
previously issued;
100% of the total number of shares
covered by the Option
beginning on September 7,
2000, less any shares
previously issued.
Notwithstanding the foregoing, no portion of the Option may
be exercised prior to the approval of the Plan by the
shareholders of the Company. The Option shall expire and
may not be exercised later than October 31, 2001.
2.2 If Optionee's employment is terminated, other than
as a result of death, disability or retirement on or after
reaching age 65 or early retirement with the approval of the
Board of Directors, the Option must be exercised, to the
extent exercisable at the time of termination of employment,
within 30 days of the date on which Optionee ceases to be an
employee, except that the Committee may upon request extend
the period after termination of employment during which the
Option may be exercised, but in no event later than October
31, 2001.
2.3 If an Optionee ceases to be an employee because of
disability within the meaning of Section 22(e)(3) of the
Code or retirement, as described in Section 2.2, the Option
must be exercised, to the extent exercisable at the time of
termination of employment, within one year from the date on
which Optionee ceases to be an employee, but in no event
later than October 31, 2001.
2.4 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and Stewart shall pay, or cause
to be paid, to each such participant an amount of cash
per share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
the "Change of Control Value" shall equal the amount
determined by whichever of the following items is
applicable:
(a) the per share price to be paid to shareholders
of Stewart in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
Stewart in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of Stewart in any transaction described in
this Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any reference herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: __________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
___________________________
Kenneth C. Budde
Optionee
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of September 7, 1995, by
and between Stewart Enterprises, Inc., a Louisiana corpora-
tion ("SEI"), and Kenneth C. Budde ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995, subject to shareholder approval of the
Plan.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 7,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, the right, privilege
and option to purchase47,850 shares of Common Stock (the
"Option") at an exercise price of $31.50 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II. below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan, the other
provisions of this Agreement and the provisions of any
employment agreement between SEI and Optionee (the
"Employment Agreement") with respect to performance based
options granted under the Plan, the Option shall become
exercisable in full on the first day between September 7,
1995 and August 31, 2000 that the average of the "Closing
Sale Prices" of a share of Common Stock for the 20 preceding
consecutive trading days equals or exceeds $79.31.
Notwithstanding the foregoing, no portion of the Option
may be exercised prior to the approval of the Plan by the
shareholders of the Company. If the conditions described in
this Section 2.1 are not met by August 31, 2000, the Option
may not be exercised and shall terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on
the applicable date for shares of the Common Stock on an
established stock exchange or any automated quotation system
that provides sale quotations.
2.3 The Option shall expire and may not be exercised
later than October 31, 2001.
2.4 Except as otherwise provided in the Employment
Agreement, if Optionee's employment is terminated, other
than as a result of death, disability or retirement on or
after reaching age 65 or early retirement with the approval
of the Board of Directors, the Option must be exercised, to
the extent exercisable at the time of termination of
employment, within the later of (i) 30 days after the date
on which Optionee ceases to be an employee or (ii) 30 days
after the date on which the exercise of the Option and sale
of the underlying securities will not cause the Optionee to
incur a liability to SEI under Section 16 of the Securities
Exchange Act of 1934, except that the Committee may upon
request extend the period after termination of employment
during which the Option may be exercised, but in no event
later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability
within the meaning of Section 22(e)(3) of the Code, the
Option must be exercised, to the extent exercisable at the
time of termination of employment, within one year from the
date on which Optionee ceases to be an employee, but in no
event later than October 31, 2001.
2.6 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and SEI shall pay, or cause to
be paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(a) the per share price to be paid to shareholders
of SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
SEI in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any references herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control. In the event any provision of this
Agreement conflicts with a provision of any Employment
Agreement containing any provision relating to the Option,
the Employment Agreement provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ___________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
___________________________
Kenneth C. Budde
Optionee
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of December 5, 1995, by
and between Stewart Enterprises, Inc., a Louisiana corpora-
tion ("SEI"), and Kenneth C. Budde ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995 and amended by the Board of Directors
effective December 5, 1995, subject to shareholder approval
of the Plan, as amended.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective December 5,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, as amended, the right,
privilege and option to purchase 12,150 shares of Common
Stock (the "Option") at an exercise price of $33.25 per
share (the "Exercise Price"). The Option shall be
exercisable at the time specified in Section II. below. The
Option is a non-qualified stock option and shall not be
treated as an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan, the other
provisions of this Agreement and the provisions of any
employment agreement between SEI and Optionee (the
"Employment Agreement") with respect to performance based
options granted under the Plan, the Option shall become
exercisable in full on the first day between December 5,
1995 and August 31, 2000 that the average of the "Closing
Sale Prices" of a share of Common Stock for the 20 preceding
consecutive trading days equals or exceeds $79.31.
Notwithstanding the foregoing, no portion of the Option
may be exercised prior to the approval of the Plan, as
amended, by the shareholders of the Company. If the
conditions described in this Section 2.1 are not met by
August 31, 2000, the Option may not be exercised and shall
terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on
the applicable date for shares of the Common Stock on an
established stock exchange or any automated quotation system
that provides sale quotations.
2.3 The Option shall expire and may not be exercised
later than October 31, 2001.
2.4 Except as otherwise provided in the Employment
Agreement, if Optionee's employment is terminated, other
than as a result of death, disability or retirement on or
after reaching age 65 or early retirement with the approval
of the Board of Directors, the Option must be exercised, to
the extent exercisable at the time of termination of
employment, within the later of (i) 30 days after the date
on which Optionee ceases to be an employee or (ii) 30 days
after the date on which the exercise of the Option and sale
of the underlying securities will not cause the Optionee to
incur a liability to SEI under Section 16 of the Securities
Exchange Act of 1934, except that the Committee may upon
request extend the period after termination of employment
during which the Option may be exercised, but in no event
later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability
within the meaning of Section 22(e)(3) of the Code, the
Option must be exercised, to the extent exercisable at the
time of termination of employment, within one year from the
date on which Optionee ceases to be an employee, but in no
event later than October 31, 2001.
2.6 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and SEI shall pay, or cause to
be paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(a) the per share price to be paid to shareholders
of SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
SEI in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any references herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control. In the event any provision of this
Agreement conflicts with a provision of any Employment
Agreement containing any provision relating to the Option,
the Employment Agreement provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ____________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
_____________________________
Kenneth C. Budde
Optionee
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement ("Agreement") between
Stewart Enterprises, Inc., a Louisiana corporation (the
"Company"), and Kenneth C. Budde (the "Employee") is dated
as of December 5, 1995 (the "Change of Control Agreement
Date").
ARTICLE I
DEFINITIONS
1.1 Employment Agreement. After a Change of Control
(defined below), this Agreement supersedes the Employment
Agreement dated as of August 1, 1995 between Employee and
the Company (the "Employment Agreement") except to the
extent that certain provisions of the Employment Agreement
are expressly incorporated by reference herein. After a
Change of Control (defined below), the definitions in this
Agreement supersede definitions in the Employment Agreement,
but capitalized terms not defined in this Agreement have the
meanings given to them in the Employment Agreement.
1.2 Definition of "Company". As used in this
Agreement, "Company" shall mean the Company as defined above
and any successor to or assignee of (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
all or substantially all of the assets or business of the
Company.
1.3 Change of Control Defined. "Change of Control"
shall mean:
(a) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 30% of the outstanding
shares of the Company's Class A Common Stock, no par
value per share (the "Common Stock"); provided,
however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of
Control:
(i) any acquisition of Common Stock directly
from the Company,
(ii) any acquisition of Common Stock by the
Company,
(iii) any acquisition of Common Stock by any
employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation
controlled by the Company, or
(iv) any acquisition of Common Stock by any
corporation pursuant to a transaction that
complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 1.3; or
(b) individuals who, as of the Change of Control
Agreement Date, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any
individual becoming a director subsequent to the Change
of Control Agreement Date whose election, or nomination
for election by the Company's shareholders, was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered a member of the Incumbent Board, unless such
individual's initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or
other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the
Incumbent Board; or
(c) consummation of a reorganization, merger or
consolidation, or sale or other disposition of all of
substantially all of the assets of the Company (a
"Business Combination"), in each case, unless,
following such Business Combination,
(i) all or substantially all of the
individuals and entities who were the beneficial
owners of the Company's outstanding common stock
and the Company's voting securities entitled to
vote generally in the election of directors
immediately prior to such Business Combination
have direct or indirect beneficial ownership,
respectively, of more than 50% of the then
outstanding shares of common stock, and more than
50% of the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors, of the
corporation resulting from such Business
Combination (which, for purposes of this paragraph
(i) and paragraphs (ii) and (iii), shall include a
corporation which as a result of such transaction
controls the Company or all or substantially all
of the Company's assets either directly or through
one or more subsidiaries), and
(ii) except to the extent that such ownership
existed prior to the Business Combination, no
person (excluding any corporation resulting from
such Business Combination or any employee benefit
plan or related trust of the Company or such
corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 20% or more of the then outstanding
shares of common stock of the corporation
resulting from such Business Combination or 20% or
more of the combined voting power of the then
outstanding voting securities of such corporation,
and
(iii) at least a majority of the members of
the board of directors of the corporation
resulting from such Business Combination were
members of the Incumbent Board at the time of the
execution of the initial agreement, or of the
action of the Board, providing for such Business
Combination; or
(d) approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.
1.4 Affiliate. "Affiliate" or "affiliated companies"
shall mean any company controlled by, controlling, or under
common control with, the Company.
1.5 Cause. "Cause" shall mean:
(a) the willful and continued failure of the
Employee to perform substantially the Employee's
duties with the Company or its affiliates (other
than any such failure resulting from incapacity
due to physical or mental illness), after a
written demand for substantial performance is
delivered to the Employee by the Board of the
Company which specifically identifies the manner
in which the Board believes that the Employee has
not substantially performed the Employee's duties,
or
(b) the willful engaging by the Employee in
illegal conduct or gross misconduct which is
materially and demonstrably injurious to the
Company or its affiliates.
For purposes of this provision, no act or failure to act, on
the part of the Employee, shall be considered "willful"
unless it is done, or omitted to be done, by the Employee in
bad faith or without reasonable belief that the Employee's
action or omission was in the best interests of the Company
or its affiliates. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of a senior officer of the
Company or based upon the advice of counsel for the Company
or its affiliates shall be conclusively presumed to be done,
or omitted to be done, by the Employee in good faith and in
the best interests of the Company or its affiliates. The
cessation of employment of the Employee shall not be deemed
to be for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution duly
adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after
reasonable notice is provided to the Employee and the
Employee is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith
opinion of the Board, the Employee is guilty of the conduct
described in subparagraph (a) or (b) above, and specifying
the particulars thereof in detail.
1.6 Good Reason. "Good Reason" shall mean:
(a) Any failure of the Company or its affiliates
to provide the Employee with the position, authority,
duties and responsibilities at least commensurate in
all material respects with the most significant of
those held, exercised and assigned at any time during
the 120-day period immediately preceding the Change of
Control. Employee's position, authority, duties and
responsibilities after a Change of Control shall not be
considered commensurate in all material respects with
Employee's position, authority, duties and
responsibilities prior to a Change of Control unless
after the Change of Control Employee holds (i) an
equivalent position in the Company or, (ii) if the
Company is controlled or will after the transaction be
controlled by another company (directly or indirectly),
an equivalent position in the ultimate parent company.
(b) The assignment to the Employee of any duties
inconsistent in any material respect with Employee's
position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities as contemplated by Section 2.1(b) of
this Agreement, or any other action that results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not
taken in bad faith that is remedied within 10 days
after receipt of written notice thereof from the
Employee to the Company;
(c) Any failure by the Company or its affiliates
to comply with any of the provisions of this Agreement,
other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith that is remedied
within 10 days after receipt of written notice thereof
from the Employee to the Company;
(d) The Company or its affiliates requiring the
Employee to be based at any office or location other
than as provided in Section 2.1(b)(ii) hereof or
requiring the Employee to travel on business to a
substantially greater extent than required immediately
prior to the Change of Control;
(e) Any purported termination of the Employee's
employment otherwise than as expressly permitted by
this Agreement; or
(f) Any failure by the Company to comply with and
satisfy Sections 3.1(c) and (d) of this Agreement.
For purposes of this Section 1.6, any good faith
determination of "Good Reason" made by the Employee shall be
conclusive. Anything in this Agreement to the contrary
notwithstanding, a termination by the Employee for any
reason during the 30-day period immediately following the
first anniversary of the Change of Control shall be deemed
to be a termination for Good Reason.
ARTICLE II
CHANGE OF CONTROL BENEFIT
2.1 Employment Term and Capacity after Change of
Control. (a) If a Change of Control occurs on or before
October 31, 2000, then the Employee's employment term (the
"Employment Term") shall continue through the later of (a)
the second anniversary of the Change of Control or (b)
October 31, 2000, subject to any earlier termination of
Employee's status as an employee pursuant to this Agreement.
(b) After a Change of Control and during the
Employment Term, (i) the Employee's position (including
status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most
significant of those held, exercised and assigned at any
time during the 120-day period immediately preceding the
Change of Control and (ii) the Employee's service shall be
performed at the location where the Employee was employed
immediately preceding the Change of Control or any office or
location less than 35 miles from such location. Employee's
position, authority, duties and responsibilities after a
Change of Control shall not be considered commensurate in
all material respects with Employee's position, authority,
duties and responsibilities prior to a Change of Control
unless after the Change of Control Employee holds (x) an
equivalent position in the Company or, (y) if the Company is
controlled or will after the transaction be controlled by
another company (directly or indirectly), an equivalent
position in the ultimate parent company. Employee shall
devote himself to his employment responsibilities with the
Company (or, if applicable, the ultimate parent entity) as
provided in Article I Section 3 of the Employment Agreement.
2.2 Compensation and Benefits. During the Employment
Term, Employee shall be entitled to the following
compensation and benefits:
(a) Salary. A salary ("Base Salary") at the rate
of $155,000 per year, payable to the Employee at such
intervals no less frequent than the most frequent
intervals in effect at any time during the 120-day
period immediately preceding the Change of Control or,
if more favorable to the Employee, the intervals in
effect at any time after the Change of Control for
other peer employees of the Company and its affiliated
companies.
(b) Bonus. Employee's incentive bonus with
respect to the period ending October 31, 1995, to the
extent not already paid, shall be paid upon a Change of
Control. For the period beginning November 1, 1995,
the Employee shall be eligible to receive a bonus (the
"Bonus") of up to $75,000 for each 12-month period
thereafter. Such Bonus shall be comprised of two
elements, the quantitative element and the qualitative
element:
(i) The quantitative element shall be equal
to 75% of the maximum Bonus of $75,000 and shall
be based on the attainment of certain goals to be
established by the Company's compensation
committee, or any similar body, and Employee.
(ii) The qualitative element shall be 25% of
the maximum Bonus of $75,000 and shall be awarded
at the discretion of the Company's Chairman of the
Board. The Chairman of the Board and Employee
shall establish incentive goals and other criteria
for the award of the qualitative element.
The Bonus shall be paid in cash no later than 30 days
following the date on which the information needed to
calculate the Bonus becomes available.
(c) Fringe Benefits. The Employee shall be
entitled to fringe benefits (including, but not limited
to, automobile allowance, reimbursement for membership
dues, and first class air travel) in accordance with
the most favorable agreements, plans, practices,
programs and policies of the Company and its affiliated
companies in effect for the Employee at any time during
the 120-day period immediately preceding the Change of
Control or, if more favorable to the Employee, as in
effect generally at any time thereafter with respect to
other peer employees of the Company and its affiliated
companies.
(d) Expenses. The Employee shall be entitled to
receive prompt reimbursement for all reasonable
expenses incurred by the Employee in accordance with
the most favorable agreements, policies, practices and
procedures of the Company and its affiliated companies
in effect for the Employee at any time during the 120-
day period immediately preceding the Change of Control
or, if more favorable to the Employee, as in effect
generally at any time thereafter with respect to other
peer employees of the Company and its affiliated
companies.
(e) Incentive, Savings and Retirement Plans. The
Employee shall be entitled to participate in all
incentive, savings and retirement plans, practices,
policies and programs applicable generally to other
peer employees of the Company and its affiliated
companies, but in no event shall such plans, practices,
policies and programs provide the Employee with
incentive opportunities (measured with respect to both
regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit
opportunities, in each case, less favorable than the
most favorable of those provided by the Company and its
affiliated companies for the Employee under any
agreements, plans, practices, policies and programs as
in effect at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, those provided generally at
any time after the Change of Control to other peer
employees of the Company and its affiliated companies.
(f) Welfare Benefit Plans. The Employee and/or
the Employee's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its
affiliated companies (including, without limitation,
medical, prescription, dental, disability, employee
life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable
generally to other peer employees of the Company and
its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the
Employee with benefits, in each case, less favorable
than the most favorable of any agreements, plans,
practices, policies and programs in effect for the
Employee at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, those provided generally at
any time after the Change of Control to other peer
employees of the Company and its affiliated companies.
(g) Office and Support Staff. The Employee shall
be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided
to the Employee by the Company and its affiliated
companies at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, as provided generally at any
time thereafter with respect to other peer employees of
the Company and its affiliated companies.
(h) Vacation. The Employee shall be entitled to
paid vacation in accordance with the most favorable
agreements, plans, policies, programs and practices of
the Company and its affiliated companies as in effect
for the Employee at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, as in effect generally at
any time thereafter with respect to other peer
employees of the Company and its affiliated companies.
2.3 Termination of Employment after a Change of
Control. After a Change of Control and during the
Employment Term, the Employee's status as an employee shall
terminate or may be terminated by the Employee, the Company
(or, if applicable, the ultimate parent company), as
provided in Article III of the Employment Agreement
(provided, however, that the definitions of "Cause" and
"Good Reason" in this Agreement shall supersede those
definitions in the Employment Agreement).
2.4 Obligations upon Termination after a Change of
Control.
(a) Termination by Company for Reasons other than
Death, Disability or Cause; by Employee for Good
Reason. If, after a Change of Control and during the
Employment Term, the Company (or, if applicable the
ultimate parent company), terminates the Employee's
employment other than for Cause, death or Disability,
or the Employee terminates employment for Good Reason,
the Company shall pay to the Employee in a lump sum in
cash within 30 days of the Date of Termination an
amount equal to one and one-half (1.5) times the sum of
(i) the amount of Base Salary in effect at the Date of
Termination, plus (ii) the maximum Bonus for which the
Employee is eligible for the 12-month period in which
the Date of Termination occurs.
(b) Death. If, after a Change of Control and
during the Employment Term, the Employee's status as an
employee is terminated by reason of the Employee's
death, this Agreement shall terminate without further
obligation to the Employee's legal representatives
(other than those already accrued to the Employee),
other than the obligation to make any payments due
pursuant to employee benefit plans maintained by the
Company or its affiliated companies.
(c) Disability. If, after a Change of Control and
during the Employment Term, Employee's status as an
employee is terminated by reason of Employee's
Disability (as defined in the Employment Agreement),
this Agreement shall terminate without further
obligation to the Employee (other than those already
accrued to the Employee), other than the obligation to
make any payments due pursuant to employee benefit
plans maintained by the Company or its affiliated
companies.
(d) Cause. If, after a Change of Control and
during the Employment Term, the Employee's status as an
employee is terminated by the Company (or, if
applicable, the ultimate parent entity) for Cause, this
Agreement shall terminate without further obligation to
the Employee other than for obligations imposed by law
and obligations imposed pursuant to any employee
benefit plan maintained by the Company or its
affiliated companies.
(e) Termination by Employee for Reasons other than
Good Reason. If, after a Change of Control and during
the Employment Term, the Employee's status as an
employee is terminated by the Employee for reasons
other than Good Reason, then the Company shall pay to
the Employee an amount equal to one-half of a single
year's Base Salary in effect at the Date of
Termination, payable in equal installments over a two-
year period at such intervals as other salaried
employees of the Company are paid.
(f) Nondisclosure, Noncompetition and Proprietary
Rights. The rights and obligations of the Company and
Employee contained in Article V ("Nondisclosure,
Noncompetition and Proprietary Rights") of the
Employment Agreement shall continue to apply after a
Change of Control, except as provided in Section 2.10
of this Agreement.
2.5 Accrued Obligations and Other Benefits. It is the
intent of the Employment Agreement and this Agreement that
upon termination of employment for any reason the Employee
be entitled to receive promptly, and in addition to any
other benefits specifically provided, (a) the Employee's
Base Salary through the Date of Termination to the extent
not theretofore paid, (b) any accrued vacation pay, to the
extent not theretofore paid, and (c) any other amounts or
benefits required to be paid or provided or which the
Employee is entitled to receive under any plan, program,
policy practice or agreement of the Company.
2.6 Stock Options. The foregoing benefits are
intended to be in addition to the value of any options to
acquire Common Stock of the Company the exercisability of
which is accelerated pursuant to the terms of any stock
option, incentive or other similar plan heretofore or
hereafter adopted by the Company.
2.7 Protection of Benefits. To the extent permitted
by applicable law, the Company shall take all reasonable
steps to ensure that the Employee is not, by reason of a
Change of Control, deprived of the economic value (including
any value attributable to the Change of Control transaction)
of (a) any options to acquire Common Stock of the Company or
(b) any Common Stock of the Company beneficially owned by
the Employee.
2.8 Certain Additional Payments. If after a Change of
Control Employee is subjected to an excise tax as a result
of the "excess parachute payment" provisions of section 4999
of the Internal Revenue Code of 1986, as amended, whether by
virtue of the benefits of this Agreement or by virtue of any
other benefits provided to Employee in connection with a
Change of Control pursuant to Company plans, policies or
agreements (including the value of any options to acquire
Common Stock of the Company the exercisability of which is
accelerated pursuant to the terms of any stock option,
incentive or similar plan heretofore or hereafter adopted by
the Company), the Company shall pay to Employee (whether or
not his employment has terminated) such amounts as are
necessary to place Employee in the same position after
payment of federal income and excise taxes as he would have
been if such provisions had not been applicable to him.
2.9 Legal Fees. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal
fees and expenses which the Employee may reasonably incur as
a result of any contest (regardless of the outcome thereof)
by the Company, the Employee or others of the validity or
enforceability of, or liability under, any provision of this
Agreement (including as a result of any contest by the
Employee about the amount or timing of any payment pursuant
to this Agreement.)
2.10 Set-Off; Mitigation. After a Change of Control,
the Company's and its affiliates' obligations to make the
payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or its affiliates
may have against the Employee or others. After a Change of
Control, an asserted violation of the provisions of Article
V ("Nondisclosure, Noncompetition and Proprietary Rights")
of the Employment Agreement shall not constitute a basis for
deferring or withholding any amounts otherwise payable to
the Employee; specifically, the third through sixth
sentences of Article V Section 4 shall not apply after a
Change of Control. It is the intent of the Employment
Agreement and this Agreement that in no event shall the
Employee be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to
the Employee under any of the provisions of this Agreement
or the Employment Agreement.
ARTICLE III
MISCELLANEOUS
3.1 Binding Effect; Successors.
(a) This Agreement shall be binding upon and
inure to the benefit of the Company and any of its
successors or assigns.
(b) This Agreement is personal to the Employee
and shall not be assignable by the Employee without the
consent of the Company (there being no obligation to give
such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase,
merger, consolidation or otherwise) all or substantially all
of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to
agree to perform or to cause to be performed all of the
obligations under this Agreement in the same manner and to
the same extent as would have been required of the Company
had no assignment or succession occurred, such assumption to
be set forth in a writing reasonably satisfactory to the
Employee.
(d) The Company shall also require all entities
that control or that after the transaction will control
(directly or indirectly) the Company or any such successor
or assignee to agree to cause to be performed all of the
obligations under this Agreement, such agreement to be set
forth in a writing reasonably satisfactory to the Employee.
3.2 Notices. All notices hereunder must be in writing
and shall be deemed to have given upon receipt of delivery
by: (a) hand (against a receipt therefor), (b) certified or
registered mail, postage prepaid, return receipt requested,
(c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) telecopy transmission
with confirmation of receipt. All such notices must be
addressed as follows:
If to the Company, to:
Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
Attn: Joseph P. Henican, III
If to the Employee, to:
Kenneth C. Budde
2103 Ormond Blvd.
Destrehan, LA 70047
or such other address as to which any party hereto may have
notified the other in writing.
3.3 Governing Law. This Agreement shall be construed
and enforced in accordance with and governed by the internal
laws of the State of Louisiana without regard to principles
of conflict of laws, except as expressly provided in Article
V Section 6 of the Employment Agreement with respect to the
resolution of disputes arising under, or the Company's
enforcement of, such Article V.
3.4 Withholding. The Employee agrees that the Company
has the right to withhold, from the amounts payable pursuant
to this Agreement, all amounts required to be withheld under
applicable income and/or employment tax laws, or as
otherwise stated in documents granting rights that are
affected by this Agreement.
3.5 Amendment, Waiver. No provision of this Agreement
may be modified, amended or waived except by an instrument
in writing signed by both parties.
3.6 Severability. If any term or provision of this
Agreement, or the application thereof to any person or
circumstance, shall at any time or to any extent be invalid,
illegal or unenforceable in any respect as written, Employee
and the Company intend for any court construing this
Agreement to modify or limit such provision so as to render
it valid and enforceable to the fullest extent allowed by
law. Any such provision that is not susceptible of such
reformation shall be ignored so as to not affect any other
term or provision hereof, and the remainder of this
Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is
held invalid, illegal or unenforceable, shall not be
affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent
permitted by law.
3.7 Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach
thereof.
3.8 Remedies Not Exclusive. No remedy specified
herein shall be deemed to be such party's exclusive remedy,
and accordingly, in addition to all of the rights and
remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by
applicable law, rule or regulation.
3.9 Company's Reservation of Rights. Employee
acknowledges and understands that the Employee serves at the
pleasure of the Board and that the Company has the right at
any time to terminate Employee's status as an employee of
the Company, or to change or diminish his status during the
Employment Term, subject to the rights of the Employee to
claim the benefits conferred by this Agreement.
3.10 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to
be an original but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have
caused this Agreement to be executed as of the Change of
Control Agreement Date.
STEWART ENTERPRISES, INC.
By: ___________________________
James W. McFarland
Compensation Committee Chairman
EMPLOYEE:
_____________________________
Kenneth C. Budde
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1991 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1991 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is entered into as of September 25,
1992, by and between Stewart Enterprises, Inc., a Louisiana
corporation ("SEI"), and Lawrence B. Hawkins ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1991 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on May
30, 1991 and approved by the shareholders of SEI on
September 19, 1991.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 25,
1992 (the "Date of Grant") the right, privilege and option
to purchase 10,000 shares of Common Stock (the
"Option") at an exercise price of $20.00 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the
other provisions of this Section II, the Optionee shall be
entitled to exercise his Option as follows:
25% of the total number of shares
covered by the option
beginning on September 25,
1993;
50% of the total number of shares
covered by the option
beginning on September 25,
1994, less any shares
previously issued;
75% of the total number of shares
covered by the option
beginning on September 25,
1995, less any shares
previously issued; and
100% of the total number of shares
covered by the option
beginning on September 25,
1996, less any shares
previously issued.
The Option shall expire and may not be exercised later than
September 25, 1997.
2.2 During Optionee's lifetime, the Option may be
exercised only by him or his curator if he has been
interdicted. If Optionee's employment is terminated, other
than as a result of death or disability, the Option must be
exercised, to the extent exercisable at the time of
termination of employment, within 30 days of the date on
which he ceases to be an employee, except that the Committee
may upon request extend the period after termination of
employment during which the Option may be exercised, but in
no event later than five years after the Date of Grant.
2.3 If an Optionee ceases to be an employee because of
disability within the meaning of Section 22(e)(3) of the
Code, the Option must be exercised, to the extent otherwise
exercisable, within one year from the date on which he
ceases to be an employee, but in no event later than five
years after the Date of Grant.
2.4 In the event of Optionee's death, the Option may
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
otherwise exercisable, within one year from the date of
death, but in no event later than five years after the Date
of Grant.
III.
Method of Exercise of Option
3.1 Optionee may exercise all or a portion of the
Option by delivering to SEI a signed written notice of his
intention to exercise the Option, specifying therein the
number of shares to be purchased. Upon receiving such
notice, and after SEI has received full payment of the
Exercise Price, the appropriate officer of SEI shall cause
the transfer of title of the shares purchased to Optionee on
SEI's stock records and cause to be issued to Optionee a
stock certificate for the number of shares being acquired.
Optionee shall not have any rights as a shareholder until
the stock certificate is issued to him.
3.2 The Option may be exercised by the payment of the
Exercise Price in cash, in shares of Common Stock held for
six months or in a combination of cash and shares of Common
Stock held for six months. The Optionee may also pay the
Exercise Price by delivering a properly executed exercise
notice together with irrevocable instructions to a broker
approved by SEI (with a copy to SEI) to promptly deliver to
SEI the amount of sale or loan proceeds to pay the Exercise
Price.
IV.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time.
V.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VI.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed on the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ____________________________, Member
of the Compensation Committee
____________________________
Lawrence B. Hawkins
Optionee
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") between Stewart
Enterprises, Inc., a Louisiana corporation (the "Company"),
and Lawrence B. Hawkins (the "Employee") is dated as of
August 1, 1995 (the "Agreement Date").
W I T N E S S E T H:
WHEREAS, Employee currently is employed by the Company;
WHEREAS, the Company desires to retain the services of
Employee pursuant to the terms of this Agreement, subject to
Employee's acceptance of the conditions stated herein;
WHEREAS, during the course of his employment with the
Company, Employee has or will have received extensive and
unique knowledge, training and education in, and access to
resources involving, the Death Care Business (as defined
below) at a substantial cost to the Company, which Employee
acknowledges has enhanced or substantially will enhance
Employee's skills and knowledge in such business;
WHEREAS, during the course of his employment with the
Company, Employee has had and will continue to have access
to certain valuable oral and written information, knowledge
and data relating to the business and operations of the
Company and its subsidiaries that is non-public,
confidential or proprietary in nature and is particularly
useful in the Death Care Business; and
WHEREAS, in view of the training provided by the
Company to Employee, its cost to the Company, the need for
the Company to be protected against disclosures by Employee
of the Company's and its subsidiaries' trade secrets and
other non-public, confidential or proprietary information,
the Company and Employee desire, among other things, to
prohibit Employee from disclosing or utilizing, outside the
scope and term of his employment, any non-public,
confidential or proprietary information, knowledge and data
relating to the business and operations of the Company or
its subsidiaries received by Employee during the course of
his employment, and to restrict the ability of Employee to
compete with the Company or its subsidiaries for a limited
period of time.
NOW, THEREFORE, for and in consideration of the
continued employment of Employee by the Company and the
payment of wages, salary and other compensation to Employee
by the Company, the parties hereto agree as follows:
ARTICLE I
EMPLOYMENT CAPACITY AND TERM
1. Prior Employment Agreement. Effective as of the
Agreement Date, this Agreement supersedes the Employment
Agreement dated November 1, 1994 between the Company and the
Employee (the "Prior Agreement").
Capacity and Duties of Employee. The Employee is
employed by the Company to render services on behalf of the
Company as Senior Vice President-Investments. As the Senior
Vice President-Investments, the Employee shall perform such
duties as are assigned to the individual holding such title
by the Company's Bylaws and such other duties, consistent
with the Employee's job title, as may be prescribed from
time to time by the Board of Directors of the Company (the
"Board") and/or the Company's President.
2. Employment Term. The term of this Agreement (the
"Employment Term") shall commence on the Agreement Date and
shall continue through October 31, 2000, subject to any
earlier termination of Employee's status as an employee
pursuant to this Agreement.
3. Devotion to Responsibilities.
During the Employment Term, the Employee shall
devote all of his business time to the business of the
Company, shall use his reasonable best efforts to perform
faithfully and efficiently his duties under this Agreement,
and shall not engage in or be employed by any other
business; provided, however, that nothing contained herein
shall prohibit the Employee from (a) serving as a member of
the board of directors, board of trustees or the like of any
for-profit or non-profit entity that does not compete with
the Company, or performing services of any type for any
civic or community entity, whether or not the Employee
receives compensation therefor, (b) investing his assets in
such form or manner as shall require no more than nominal
services on the part of the Employee in the operation of the
business of the entity in which such investment is made, or
(c) serving in various capacities with, and attending
meetings of, industry or trade groups and associations, as
long as the Employee's engaging in any activities permitted
by virtue of clauses (a), (b) and (c) above does not
materially and unreasonably interfere with the ability of
the Employee to perform the services and discharge the
responsibilities required of him under this Agreement.
Notwithstanding clause (b) above, during the Employment
Term, the Employee may not beneficially own more than 2% of
the equity interests of a business organization required to
file periodic reports with the Securities and Exchange
Commission under the Securities Exchange Act of 1934 (the
"Exchange Act") and may not beneficially own more than 2% of
the equity interests of a business organization that
competes with the Company. For purposes of this paragraph,
"beneficially own" shall have the same meaning ascribed to
that term in Rule 13d-3 under the Exchange Act.
ARTICLE II
COMPENSATION AND BENEFITS
During the Employment Term, the Company shall provide
the Employee with the compensation and benefits described
below:
1. Salary. A salary ("Base Salary") at the rate of
$225,000 per fiscal year of the Company ("Fiscal Year"),
payable to the Employee at such intervals as other salaried
employees of the Company are paid.
2. Bonus. For the period ending October 31, 1995, the
Employee shall be eligible to receive an incentive bonus,
the amount of which shall be determined pursuant to
Paragraph 4 of the Prior Agreement. This incentive bonus
shall be paid in cash no later than 30 days following the
filing of the Company's annual report on Form 10-K for the
Fiscal Year ending October 31, 1995. For the period
beginning November 1, 1995, the employee shall be eligible
to receive a bonus (the "Bonus") of up to $75,000 per Fiscal
Year. Such Bonus shall be comprised of two elements, the
quantitative element and the qualitative element:
(a) The quantitative element shall be equal to
75% of the maximum Bonus of $75,000 and shall be based on
the attainment of certain goals to be established by the
Company's Compensation Committee and Employee.
(b) The qualitative element shall be 25% of the
maximum Bonus of $75,000 and shall be awarded at the
discretion of the President. The President and Employee
shall establish incentive goals and other criteria for the
award of the qualitative element.
The Bonus shall be paid in cash no later than 30 days
following the filing of the Company's annual report on Form
10-K for the Fiscal Year in which the Bonus has been earned.
3. Benefits. The Company shall provide the Employee
with the following fringe benefits and perquisites:
(a) An automobile allowance of $600 per month.
The Company will reimburse the Employee for all gasoline,
maintenance, repairs and insurance for Employee's personal
car, as if it were a Company-owned vehicle;
(b) Reimbursement for membership dues, including
assessments and similar charges, in one or more clubs deemed
useful for business purposes in an amount not to exceed
$8,000 or such additional amounts as may be approved by the
President;
(c) First class air travel;
(d) Fully-paid insurance benefit package
available to all employees; and
(e) All other benefit programs similar to those
provided other employees of the Company.
4. 1995 Incentive Compensation Plan. The Employee
shall be eligible to receive awards under the Company's 1995
Incentive Compensation Plan (the "1995 Plan").
5. Expenses. The Employee shall be reimbursed for
reasonable out-of-pocket expenses incurred from time to time
on behalf of the Company or any subsidiary in the
performance of his duties under this Agreement, upon the
presentation of such supporting invoices, documents and
forms as the Company reasonably requests.
ARTICLE III
TERMINATION OF EMPLOYMENT
1. Death. The Employee's status as an employee shall
terminate immediately and automatically upon the Employee's
death during the Employment Term.
2. Disability. The Employee's status as an employee
may be terminated for "Disability" as follows:
(a) The Employee's status as an employee shall
terminate if the Employee has a disability that would
entitle him to receive benefits under the Company's long-
term disability insurance policy in effect at the time
either because he is Totally Disabled or Partially Disabled,
as such terms are defined in the Company's policy in effect
as of the Agreement Date or as similar terms are defined in
any successor policy. Any such termination shall become
effective on the first day on which the Employee is eligible
to receive payments under such policy (or on the first day
that he would be so eligible, if he had applied timely for
such payments).
(b) If the Company has no long-term disability
plan in effect, if (i) the Employee is rendered incapable
because of physical or mental illness of satisfactorily
discharging his duties and responsibilities under this
Agreement for a period of 90 consecutive days and (ii) a
duly qualified physician chosen by the Company and
acceptable to the Employee or his legal representatives so
certifies in writing, the Board shall have the power to
determine that the Employee has become disabled. If the
Board makes such a determination, the Company shall have the
continuing right and option, during the period that such
disability continues, and by notice given in the manner
provided in this Agreement, to terminate the status of
Employee as an employee. Any such termination shall become
effective 30 days after such notice of termination is given,
unless within such 30-day period, the Employee becomes
capable of rendering services of the character contemplated
hereby (and a physician chosen by the Company and acceptable
to the Employee or his legal representatives so certifies in
writing) and the Employee in fact resumes such services.
(c) The "Disability Effective Date" shall mean
the date on which termination of employment becomes
effective due to Disability.
3. Cause. The Company may terminate the Employee's
status as an employee for Cause. As used herein,
termination by the Company of the Employee's status as an
employee for "Cause" shall mean termination as a result of
(a) the Employee's breach of this Agreement, or (b) the
willful engaging by the Employee in gross misconduct
injurious to the Company, which in either case is not
remedied within 10 days after the Company provides written
notice to the Employee of such breach or willful misconduct.
4. Good Reason. The Employee may terminate his
status as an employee for Good Reason. As used herein, the
term "Good Reason" shall mean:
(a) The occurrence of any of the following during
the Employment Term:
(i) the assignment by the Board to the
Employee of any duties or responsibilities that are
inconsistent with the Employee's status, title and position
as Senior Vice President-Investments;
(ii) any removal of the Employee from, or any
failure to reappoint or reelect the Employee to, the
position of Senior Vice President-Investments of the
Company, except in connection with a termination of
Employee's status as an employee as permitted by this
Agreement;
(iii) the Company's requiring the Employee to
be based anywhere other than in the Dallas, Texas
metropolitan area, except for required travel in the
ordinary course of the Company's business;
(b) any breach of this Agreement by the Company
that continues for a period of 10 days after written notice
thereof is given by the Employee to the Company;
(c) the failure by the Company to obtain the
assumption of its obligations under this Agreement by any
successor or assign as contemplated in this Agreement; or
(d) any purported termination by the Company of
the Employee's status as an employee for Cause that is not
effected pursuant to a Notice of Termination satisfying the
requirements of this Agreement.
5. Voluntary Termination by the Company. The Company
may terminate the Employee's status as employee for other
than death, Disability or Cause.
6. Voluntary Termination by the Employee. The
Employee may terminate the Employee's status as employee for
other than Good Reason.
7. Notice of Termination. Any termination by the
Company for Disability or Cause, or by the Employee for Good
Reason, shall be communicated by Notice of Termination to
the other party hereto given in accordance with Article VI
Section 2 of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice
that (a) indicates the specific termination provision in
this Agreement relied upon (b) to the extent applicable,
sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Employee's
employment under the provisions so indicated and (c) if the
Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination
date (which date shall be not more than 30 days after the
giving of such notice). The failure by the Employee or the
Company to set forth in the Notice of Termination any fact
or circumstance that contributes to a showing of Good
Reason, Disability or Cause shall not negate the effect of
the notice nor waive any right of the Employee or the
Company, respectively, hereunder or preclude the Employee or
the Company, respectively, from asserting such fact or
circumstance in enforcing the Employee's or the Company's
rights hereunder.
8. Date of Termination. "Date of Termination" means
(a) if Employee's employment is terminated by reason of his
death or Disability, the Date of Termination shall be the
date of death of Employee or the Disability Effective Date,
as the case may be, (b) if Employee's employment is
terminated by the Company for Cause, or by Employee for Good
Reason, the date of delivery of the Notice of Termination or
any later date specified therein, (which date shall not be
more than 30 days after the giving of such notice) as the
case may be, (c) if the Employee's employment is terminated
by the Company for reasons other than death, Disability or
Cause, the Date of Termination shall be the date on which
the Company notifies the Employee of such termination, and
(d) if the Employee's employment is terminated by the
Employee for reasons other than Good Reason, the Date of
Termination shall be the date on which the Employee notifies
the Company of such termination.
ARTICLE IV
OBLIGATIONS UPON TERMINATION
1. Death. If the Employee's status as an employee is
terminated by reason of the Employee's death, this Agreement
shall terminate without further obligations to the
Employee's legal representatives under this Agreement, other
than the obligation to make any payments due pursuant to
employee benefit plans maintained by the Company or its
subsidiaries.
2. Disability. If Employee's status as an employee
is terminated by reason of Employee's Disability, this
Agreement shall terminate without further obligation to the
Employee, other than the obligation to make any payments due
pursuant to employee benefit plans maintained by the Company
or its subsidiaries.
3. Termination by Company for Reasons other than
Death, Disability or Cause; Termination by Employee for Good
Reason. If the Company terminates the Employee's status as
an employee for reasons other than death, Disability or
Cause, or the Employee terminates his employment for Good
Reason, then
(a) the Company shall pay to the Employee an
amount equal to a single year's Base Salary in effect at the
Date of Termination, payable in equal installments over a
two-year period at such intervals as other salaried
employees of the Company are paid; and
(b) with respect to all performance-based options
granted to the Employee pursuant to the 1995 Plan,
(i) if the performance goals have been met as
of the Date of Termination, then such options
shall become exercisable as of the Date of
Termination (if not already exercisable) and shall
expire on the date that is the later of:
(A) 30 days after the Date of
Termination or
(B) 30 days after the first date on
which the exercise of the options and sale of
the underlying securities will not (1) be
matched with purchases or sales of the
Company's common stock prior to such Date of
Termination such as to cause the Employee to
incur a liability to the Company under
Section 16 of the Exchange Act and (2)
destroy the Section 16 exemption for the
grant of the options.
(ii) if the performance goals have not been
met as of the Date of Termination, then
(A) if the performance goals are not met
by the close of business on the day that is
180 days after the Date of Termination, then
the options shall expire on such day; and
(B) if the performance goals are met by
the close of business on the day that is 180
days after the Date of Termination, then the
options shall become exercisable as of the
date such performance goals are met (the
"Vesting Date") and shall expire on the date
that is the later of:
(1) 30 days after the Vesting Date
or
(2) 30 days after the first date on
which the exercise of the options and
sale of the underlying securities will
not (I) be matched with purchases or
sales of the Company's common stock
prior to such Date of Termination such
as to cause the Employee to incur a
liability to the Company under Section
16 of the Exchange Act and (II) destroy
the Section 16 exemption for the grant
of the options.
4. Cause. If the Employee's status as an employee is
terminated by the Company for Cause, this Agreement shall
terminate without further obligation to the Employee other
than for obligations imposed by law and obligations imposed
pursuant to any employee benefit plan maintained by the
Company or its subsidiaries.
5. Termination by Employee for Reasons other than
Good Reason. If the Employee's status as an employee is
terminated by the Employee for reasons other than Good
Reason, then the Company shall pay to the Employee an amount
equal to one-half of a single year's Base Salary in effect
at the Date of Termination, payable in equal installments
over a two-year period at such intervals as other salaried
employees of the Company are paid.
6. Resignation. If Employee is a director of the
Company and his employment is terminated for any reason
other than death, the Employee shall, if requested by the
Company, immediately resign as a director of the Company.
If such resignation is not received when so requested, the
Employee shall forfeit any right to receive any payments
pursuant to this Agreement.
ARTICLE V
NONDISCLOSURE, NONCOMPETITION AND PROPRIETARY RIGHTS
1. Certain Definitions. For purposes of this
Agreement, the following terms shall have the following
meanings:
(a) "Confidential Information" means any
information, knowledge or data of any nature and in any form
(including information that is electronically transmitted or
stored on any form of magnetic or electronic storage media)
relating to the past, current or prospective business or
operations of the Company and its subsidiaries, that at the
time or times concerned is not generally known to persons
engaged in businesses similar to those conducted or
contemplated by the Company and its subsidiaries (other than
information known by such persons through a violation of an
obligation of confidentiality to the Company), whether
produced by the Company and its subsidiaries or any of their
consultants, agents or independent contractors or by
Employee, and whether or not marked confidential, including
without limitation information relating to the Company's or
its subsidiaries' products and services, business plans,
business acquisitions, processes, product or service
research and development methods or techniques, training
methods and other operational methods or techniques, quality
assurance procedures or standards, operating procedures,
files, plans, specifications, proposals, drawings, charts,
graphs, support data, trade secrets, supplier lists,
supplier information, purchasing methods or practices,
distribution and selling activities, consultants' reports,
marketing and engineering or other technical studies,
maintenance records, employment or personnel data, marketing
data, strategies or techniques, financial reports, budgets,
projections, cost analyses, price lists, formulae and
analyses, employee lists, customer records, customer lists,
customer source lists, proprietary computer software, and
internal notes and memoranda relating to any of the
foregoing.
(b) "Death Care Business" means (i) the owning
and operating of funeral homes and cemeteries, including
combined funeral home and cemetery facilities, (ii) the
offering of a complete range of services and products to
meet families' funeral needs, including prearrangement,
family consultation, the sale of caskets and related funeral
and cemetery products and merchandise, the removal,
preparation and transportation of remains, cremation, the
use of funeral home facilities for visitation and worship,
and related transportation services, (iii) the marketing and
sale of funeral services and cemetery property on an at-need
or prearranged basis, (iv) providing, managing and
administering financing arrangements (including trust funds,
escrow accounts, insurance and installment sales contracts)
for prearranged funeral plans and cemetery property and
merchandise, (v) providing interment services, the sale (on
an at-need or prearranged basis) of cemetery property
including lots, lawn crypts, family and community mausoleums
and related cemetery merchandise such as monuments,
memorials and burial vaults, (vi) the maintenance of
cemetery grounds pursuant to perpetual care contracts and
laws or on a voluntary basis, and (vii) offering mausoleum
design, construction and sales services.
2. Nondisclosure of Confidential Information. During
the Employment Term, Employee shall hold in a fiduciary
capacity for the benefit of the Company all Confidential
Information which shall have been obtained by Employee
during Employee's employment (whether prior to or after the
Agreement Date) and shall use such Confidential Information
solely within the scope of his employment with and for the
exclusive benefit of the Company. For a period of five
years after the Employment Term, commencing with the Date of
Termination, Employee agrees (a) not to communicate, divulge
or make available to any person or entity (other than the
Company) any such Confidential Information, except upon the
prior written authorization of the Company or as may be
required by law or legal process, and (b) to deliver
promptly to the Company any Confidential Information in his
possession, including any duplicates thereof and any notes
or other records Employee has prepared with respect thereto.
In the event that the provisions of any applicable law or
the order of any court would require Employee to disclose or
otherwise make available any Confidential Information,
Employee shall give the Company prompt prior written notice
of such required disclosure and an opportunity to contest
the requirement of such disclosure or apply for a protective
order with respect to such Confidential Information by
appropriate proceedings.
3. Limited Covenant Not to Compete. During the
Employment Term and for a period of two years thereafter,
commencing with the Date of Termination, Employee agrees
that, with respect to each State of the United States or
other jurisdiction, or specified portions thereof, in which
the Employee regularly (a) makes contact with customers of
the Company or any of its subsidiaries, (b) conducts the
business of the Company or any of its subsidiaries or (c)
supervises the activities of other employees of the Company
or any of its subsidiaries, as identified in Appendix "A"
attached hereto and forming a part of this Agreement, and in
which the Company or any of its subsidiaries engages in the
Death Care Business on the Date of Termination
(collectively, the "Subject Areas"), Employee will restrict
his activities within the Subject Areas as follows:
(a) Employee will not, directly or indirectly,
for himself or others, own, manage, operate, control, be
employed in an executive, managerial or supervisory capacity
by, or otherwise engage or participate in or allow his
skill, knowledge, experience or reputation to be used in
connection with, the ownership, management, operation or
control of, any company or other business enterprise engaged
in the Death Care Business within any of the Subject Areas;
provided, however, that nothing contained herein shall
prohibit Employee from making passive investments as long as
Employee does not beneficially own more than 2% of the
equity interests of a business enterprise engaged in the
Death Care Business within any of the Subject Areas. For
purposes of this paragraph, "beneficially own" shall have
the same meaning ascribed to that term in Rule 13d-3 under
the Exchange Act.
(b) Employee will not call upon any customer of
the Company or its subsidiaries for the purpose of
soliciting, diverting or enticing away the business of such
person or entity, or otherwise disrupting any previously
established relationship existing between such person or
entity and the Company or its subsidiaries;
(c) Employee will not solicit, induce, influence
or attempt to influence any supplier, lessor, licensor,
potential acquiree or any other person who has a business
relationship with the Company or its subsidiaries, or who on
the Date of Termination is engaged in discussions or
negotiations to enter into a business relationship with the
Company or its subsidiaries, to discontinue or reduce the
extent of such relationship with the Company or its
subsidiaries; and
(d) Employee will not make contact with any of
the employees of the Company or its subsidiaries with whom
he had contact during the course of his employment with the
Company for the purpose of soliciting such employee for
hire, whether as an employee or independent contractor, or
otherwise disrupting such employee's relationship with the
Company or its subsidiaries.
(e) Employee further agrees that, for a period of
one year from and after the Date of Termination, Employee
will not hire, on behalf of himself or any company engaged
in the Death Care Business with which Employee is
associated, any employee of the Company or its subsidiaries
as an employee or independent contractor, whether or not
such engagement is solicited by Employee; provided, however,
that the restriction contained in this subsection (e) shall
not apply to Company employees who reside in, or are hired
by Employee to perform work in, any of the Subject Areas
located within the States of Virginia, Arkansas or Georgia.
Employee agrees that he will from time to time upon the
Company's request promptly execute any supplement,
amendment, restatement or other modification of Appendix "A"
as may be necessary or appropriate to correctly reflect the
jurisdictions which, at the time of such modification,
should be covered by Appendix "A" and this Article V Section
3. Furthermore, Employee agrees that all references to
Appendix "A" in this Agreement shall be deemed to refer to
Appendix "A" as so supplemented, amended, restated or
otherwise modified from time to time.
4. Injunctive Relief; Other Remedies. Employee
acknowledges that a breach by Employee of Section 2 or 3 of
this Article V would cause immediate and irreparable harm to
the Company for which an adequate monetary remedy does not
exist; hence, Employee agrees that, in the event of a breach
or threatened breach by Employee of the provisions of
Section 2 or 3 of this Article V during or after the
Employment Term, the Company shall be entitled to injunctive
relief restraining Employee from such violation without the
necessity of proof of actual damage or the posting of any
bond, except as required by non-waivable, applicable law.
Nothing herein, however, shall be construed as prohibiting
the Company from pursuing any other remedy at law or in
equity to which the Company may be entitled under applicable
law in the event of a breach or threatened breach of this
Agreement by Employee, including without limitation the
recovery of damages and/or costs and expenses, such as
reasonable attorneys' fees, incurred by the Company as a
result of any such breach. In addition to the exercise of
the foregoing remedies, the Company shall have the right
upon the occurrence of any such breach to cancel any unpaid
salary, bonus, commissions or reimbursements otherwise
outstanding at the Date of Termination. In particular,
Employee acknowledges that the payments provided under
Article IV Sections 3 and 5 are conditioned upon Employee
fulfilling any noncompetition and nondisclosure agreements
contained in this Article V. In the event Employee shall at
any time materially breach any noncompetition or
nondisclosure agreements contained in this Article V, the
Company may suspend or eliminate payments under Article IV
during the period of such breach. Employee acknowledges
that any such suspension or elimination of payments would be
an exercise of the Company's right to suspend or terminate
its performance hereunder upon Employee's breach of this
Agreement; such suspension or elimination of payments would
not constitute, and should not be characterized as, the
imposition of liquidated damages.
5. Requests for Waiver in Cases of Undue Hardship.
In the event that Employee should find any of the
limitations of Article V Section 3 (including without
limitation the geographic restrictions of Appendix "A") to
impose a severe hardship on Employee's ability to secure
other employment, Employee may make a request to the Company
for a waiver of the designated limitations before accepting
employment that otherwise would be a breach of Employee's
promises and obligations under this Agreement. Such request
must be in writing and clearly set forth the name and
address of the organization with that employment is sought
and the location, position and duties that Employee will be
performing. The Company will consider the request and, in
its sole discretion, decide whether and on what conditions
to grant such waiver.
6. Governing Law of this Article V; Consent to
Jurisdiction. Any dispute regarding the reasonableness of
the covenants and agreements set forth in this Article V, or
the territorial scope or duration thereof, or the remedies
available to the Company upon any breach of such covenants
and agreements, shall be governed by and interpreted in
accordance with the laws of the State of the United States
or other jurisdiction in which the alleged prohibited
competing activity or disclosure occurs, and, with respect
to each such dispute, the Company and Employee each hereby
irrevocably consent to the exclusive jurisdiction of the
state and federal courts sitting in the relevant State (or,
in the case of any jurisdiction outside the United States,
the relevant courts of such jurisdiction) for resolution of
such dispute, and agree to be irrevocably bound by any
judgment rendered thereby in connection with such dispute,
and further agree that service of process may be made upon
him or it in any legal proceeding relating to this Article V
and/or Appendix "A" by any means allowed under the laws of
such jurisdiction. Each party irrevocably waives any
objection he or it may have as to the venue of any such
suit, action or proceeding brought in such a court or that
such a court is an inconvenient forum.
7. Employee's Understanding of this Article.
Employee hereby represents to the Company that he has read
and understands, and agrees to be bound by, the terms of
this Article. Employee acknowledges that the geographic
scope and duration of the covenants contained in Article V
Section 3 are the result of arm's-length bargaining and are
fair and reasonable in light of (i) the importance of the
functions performed by Employee and the length of time it
would take the Company to find and train a suitable
replacement, (ii) the nature and wide geographic scope of
the operations of the Company and its subsidiaries, (iii)
Employee's level of control over and contact with the
business and operations of the Company and its subsidiaries
in all jurisdictions where same are conducted and (iv) the
fact that all facets of the Death Care Business are
conducted by the Company and its subsidiaries throughout the
geographic area where competition is restricted by this
Agreement. It is the desire and intent of the parties that
the provisions of this Agreement be enforced to the fullest
extent permitted under applicable law, whether now or
hereafter in effect and, therefore, to the extent permitted
by applicable law, the parties hereto waive any provision of
applicable law that would render any provision of this
Article V invalid or unenforceable.
ARTICLE VI
MISCELLANEOUS
1. Binding Effect.
(a) This Agreement shall be binding upon and
inure to the benefit of the Company and any of its
successors or assigns.
(b) This Agreement is personal to the Employee
and shall not be assignable by the Employee without the
consent of the Company (there being no obligation to give
such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase,
merger, consolidation or otherwise) all or substantially all
of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to
agree to perform all of the obligations under this Agreement
in the same manner and to the same extent as would have been
required of the Company had no assignment or succession
occurred, such assumption to be set forth in a writing
reasonably satisfactory to the Employee. In the event of
any such assignment or succession, the term "Company" as
used in this Agreement shall refer also to such successor or
assign.
2. Notices. All notices hereunder must be in writing
and shall be deemed to have given upon receipt of delivery
by: (a) hand (against a receipt therefor), (b) certified or
registered mail, postage prepaid, return receipt requested,
(c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) telecopy transmission
with confirmation of receipt. All such notices must be
addressed as follows:
If to the Company, to:
Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
Attn: Joseph P. Henican, III
If to the Employee, to:
Lawrence B. Hawkins
4414 Wildwood
Dallas, Texas 75209
or such other address as to which any party hereto may have
notified the other in writing.
3. Governing Law. This Agreement shall be construed
and enforced in accordance with and governed by the internal
laws of the State of Louisiana without regard to principles
of conflict of laws, except as expressly provided in Article
V Section 6 above with respect to the resolution of disputes
arising under, or the Company's enforcement of, Article V of
this Agreement.
4. Withholding. The Employee agrees that the Company
has the right to withhold, from the amounts payable pursuant
to this Agreement, all amounts required to be withheld under
applicable income and/or employment tax laws, or as
otherwise stated in documents granting rights that are
affected by this Agreement.
5. Severability. If any term or provision of this
Agreement (including without limitation those contained in
Appendix "A"), or the application thereof to any person or
circumstance, shall at any time or to any extent be invalid,
illegal or unenforceable in any respect as written, Employee
and the Company intend for any court construing this
Agreement to modify or limit such provision temporally,
spatially or otherwise so as to render it valid and
enforceable to the fullest extent allowed by law. Any such
provision that is not susceptible of such reformation shall
be ignored so as to not affect any other term or provision
hereof, and the remainder of this Agreement, or the
application of such term or provision to persons or
circumstances other than those as to which it is held
invalid, illegal or unenforceable, shall not be affected
thereby and each term and provision of this Agreement shall
be valid and enforced to the fullest extent permitted by
law.
6. Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach
thereof.
7. Remedies Not Exclusive. No remedy specified
herein shall be deemed to be such party's exclusive remedy,
and accordingly, in addition to all of the rights and
remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by
applicable law, rule or regulation.
8. Company's Reservation of Rights. Employee
acknowledges and understands that the Employee serves at the
pleasure of the Board and that the Company has the right at
any time to terminate Employee's status as an employee of
the Company, or to change or diminish his status during the
Employment Term, subject to the rights of the Employee to
claim the benefits conferred by this Agreement.
9. JURY TRIAL WAIVER. THE PARIES HEREBY WAIVE TRIAL
BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY
ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS
AGREEMENT.
10. Survival. The rights and obligations of the
Company and Employee contained in Article V of this
Agreement shall survive the termination of the Agreement.
Following the Date of Termination, each party shall have the
right to enforce all rights, and shall be bound by all
obligations, of such party that are continuing rights and
obligations under this Agreement.
11. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to
be an original but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have
caused this Agreement to be executed as of the Agreement
Date.
STEWART ENTERPRISES, INC.
By: _____________________________
James W. McFarland
Compensation Committee Chairman
EMPLOYEE:
____________________________
Lawrence B. Hawkins
<PAGE>
Appendix "A" to Employment Agreement
between Stewart Enterprises, Inc.
and
Lawrence B. Hawkins
Revision No. 0 of Appendix "A",
Effective as of August 1, 1995;
Updated to October 2, 1995
Jurisdictions In Which Competition
Is Restricted As Provided
In Article V Section 3
A. States and Territories of the United States:
1. Louisiana-- The following parishes in the State of
Louisiana:
Orleans, St. Bernard, St. Tammany, Plaquemines,
Jefferson.
2. Florida-- The following counties in the State of
Florida:
Seminole, Dade, Hillsborough, Duval, Orange, Pinellas,
Indian River, Palm Beach, Volusia, Lake, Brevard,
Broward, Monroe, Collier, Pasco, Manatee, Polk, Hardee,
Nassau, Baker, Clay, St. Johns, St. Lucie, Osceola,
Ockeechobee, Martin, Hendry
as well as any other counties in the State of Florida
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
3. Texas-- The following counties in the State of Texas:
Kaufman, Dallas, Collin, Tarrant, Lamar, Harris,
Denton, Johnson, Rockwall, Brazoria, Henderson, Van
Zandt, Hunt, Ellis, Fannin, Grayson, Wise, Parker, Red
River, Delta, Galveston, Ft. Bend, Waller, Montgomery,
Liberty, Chambers, Cooke, Hood, Bosque, Hill, Matagorda
as well as any other counties in the State of Texas in
which the Employee regularly (a) makes contact with
Agreed to and Accepted:
Stewart Enterprises, Inc. Employee
By: ________________________ _____________________
Its: Compensation Committee Chairman Date: _____________________
Date: ______________________
<PAGE>
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
4. Maryland-- The following counties in the State of
Maryland:
Baltimore City, Howard, Baltimore County, Prince
George's, Anne Arundel, Montgomery, Carroll, Frederick,
Harford, Calvert, Charles, Kent, Queen Anne's, Talbot,
Washington
as well as any other counties in the State of Maryland
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
5. Virginia-- The following counties in the State of
Virginia:
Chesterfield, Roanoke, Rockingham, Fairfax, Tazewell,
Goochland, Pulaski, Albemarle, Hanover, Henrico,
Dinwiddie, Amelia, Powhatan, Charles City, Prince
George, Bedford, Montgomery, Franklin, Botetourt,
Craig, Floyd, Augusta, Shenandoah, Page, Greene, Prince
William, McDowell, Bland, Smythe, Russell, Cumberland,
Fluvanna, Louisa, Wythe, Giles, Carroll, Orange,
Buckingham, Nelson, King William, New Kent,
Spotsylvania, Caroline, Buchanan, Dickenson, Loudoun,
Arlington, Scott, Washington, Clarke, Frederick
as well as any other counties in the State of Virginia
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
6. West Virginia-- The following counties in the State of
West Virginia:
Raleigh, Kanawha, Fayette, Berkeley, Boone, Summers,
Wyoming, Clay, Lincoln, Jackson, Putnam, Roane,
Greenbriar, Nicholas, Logan, Wayne, McDowell, Morgan,
Jefferson, Mercer, Mingo, Ohio
as well as any other counties in the State of West
Virginia in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
7. Puerto Rico-- The following towns in the Commonwealth
of Puerto Rico:
Agreed to and Accepted:
Employee
_______________________
Date: _________________
<PAGE>
Bayamon, San Juan, Cayey, Canovanas, Ponce, Caguas,
Carolina, Humacao, Toa Baja, Toa Alta, Nranjito, Aguas
Buenas, Guaynabo, Comereo, Catano, Vega Alta, Patilla,
San Lorenzo, Guayama, Salinas, Aibonito, Loita, Rio
Grande, Las Marias, Juncos, Juana Diaz, Jajuja, Utuado,
Adjuntas Puenulas, Trujillo, Alto, Gurabo, Cidra,
Yagucoa and Naguabo
as well as any other towns in the Commonwealth of
Puerto Rico in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
8. North Carolina-- The following counties in the State
of North Carolina:
Catawba, Wilson, Guilford, Haywood, Johnston, Wake,
Wilkes, Craven, Nash, Iredell, Burke, Caldwell,
Lincoln, Alexander, Cleveland, Greene, Wayne,
Edgecombe, Pitt, Davidson, Randolph, Forsyth, Stokes,
Rockingham, Caswell, Alamance, Jackson, Buncombe,
Henderson, Transylvania, Swain, Madison, Sampson,
Franklin, Durham, Harnett, Granville, Chatham,
Alleghany, Surry, Ashe, Watauga, Yadkin, Pamilco,
Halifax, Warren, Swain, Carteret, Jones, Lenoir,
Beaufort
as well as any other counties in the State of North
Carolina in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
9. South Carolina-- The following counties in the State
of South Carolina:
Greenville, Charleston, Aiken, Pickens, Laurens,
Spartanburg, Anderson, Abbeville, Berkeley, Dorchester,
Colleton, Edgefield, Saluda, Lexington, Orangeburg,
Barnwell
as well as any other counties in the State of South
Carolina in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
10. Tennessee-- The following counties in the State of
Tennessee:
Davidson, Sumner, Robertson, Knox, Sullivan, Sevier,
Wilson, Rutherford, Williamson, Cheatham, Trousadale,
Macon, Montgomery, Jefferson, Grainger, Union,
Anderson, Loudon, Blount, Roane, Greene, Washington,
Carter, Johnson, Hawkins, Cocke, Giles, Lincoln
Agreed to and Accepted:
Employee
_______________________
Date: _________________
<PAGE>
as well as any other counties in the State of Tennessee
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
11. Arkansas-- The following counties in the State of
Arkansas:
Saline, Pulaski, Hot Spring, Garland, Perry, Grant,
Lonoke, White, Jefferson, Faulkner, Dallas, Clark,
Ouachita, Montgomery, Garland
as well as any other counties in the State of Arkansas
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
12. Georgia-- The following counties in the State of
Georgia:
Cobb, Cherokee, Henry, Dekalb, Fulton, Douglas,
Paulding, Bartow, Pickins, Forsyth, Dawson, Gordon,
Clayton, Rockdale, Newton, Butts, Spalding, Gwinnett,
Fayette, Coweta, Carroll, Richmond
as well as any other counties in the State of Georgia
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
13. Alabama-- The following counties in the State of
Alabama:
Mobile, Madison, Baldwin, Escambia, Monroe, Washington,
Jackson, Marshall, Morgan, Limestone, Clarke
as well as any other counties in the State of Alabama
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
14. Mississippi-- The following counties in the State of
Mississippi:
Agreed to and Accepted:
Employee
_______________________
Date: _________________
<PAGE>
Hinds, Madison, Rankin, Simpson, Copiah, Claiborne,
Warren, Yazoo, Jackson, George
as well as any other counties in the State of
Mississippi in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
15. Pennsylvania-- The following counties in the State of
Pennsylvania:
Montgomery, Philadelphia, Bucks, Delaware, Chester,
Berks, Lehigh, York, Northampton
as well as any other counties in the State of
Pennsylvania in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
16. Kentucky-- The following counties in the State of
Kentucky:
Pike, Martin, Floyd, Knoll, Letcher, Allen, Simpson
as well as any other counties in the State of Kentucky
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
17. Ohio-- The following counties in the State of Ohio:
Belmont, Licking, Jefferson, Monroe, Harrison, Noble,
Guernsey, Muskingum, Knox, Fairfield, Perry, Delaware,
Franklin, Coshocton
as well as any other counties in the State of Ohio in
which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
18. The District of Columbia.
19. Kansas-- The following counties in the State of Kansas:
Douglas, Leavenworth, Johnson, Miami, Franklin, Osage,
Shawnee, Jefferson
Agreed to and Accepted:
Employee
_______________________
Date: _________________
<PAGE>
as well as any other counties in the State of Kansas in
which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
20. Missouri-- The following counties in the State of
Missouri:
Boone, Audrain, Callaway, Cole, Cooper, Howard,
Moniteau, Osage, Randolph
as well as any other counties in the State of Missouri
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
21. Nebraska-- The following counties in the State of
Nebraska:
Lancaster, Otoe, Sarpy, Gage, Saline, Seward, Saunders,
Cass, Butler
as well as any other counties in the State of Nebraska
in which the Employee regularly (a) makes contact with
customers of the Company or any of its subsidiaries,
(b) conducts the business of the Company or any of its
subsidiaries or (c) supervises the activities of other
employees of the Company or any of its subsidiaries as
of the Date of Termination.
Employee and the Company agree that, throughout the
Employment Term, Employee shall comply with all of the
requirements and restrictions set forth in Article V of
the Agreement of which this Appendix "A" forms a part;
however, Employee and the Company agree that,
notwithstanding anything to the contrary contained in
Article V, Section 3 of the Agreement, Employee shall
be required to restrict his post-employment activities
in the State of Nebraska only to: (i) complying with
the restrictions set forth in Article V, Section 2 of
the Agreement and (ii) refraining from calling upon any
customer of the Company or its subsidiaries with whom
Employee has done business and/or had personal contact
for the purpose of soliciting, diverting or enticing
away the business of such person or entity, or
otherwise disrupting any previously established
relationship existing between such person or entity and
the Company or its subsidiaries. The parties hereby
acknowledge and agree that this modification to the
restrictions of Article V, Section 3 as they relate to
post-employment competition in the State of Nebraska is
being entered into solely to comply with the
limitations provided in Nebraska law on the extent to
which noncompetition agreements may be enforced. This
modification does not reflect the parties' agreement as
to the extent of the limitations upon competition
necessary to protect the legitimate interests of the
Company; rather, the provisions of Article V of the
Agreement reflect such agreement.
Agreed to and Accepted:
Employee
_______________________
Date: _________________
<PAGE>
22. New Jersey-- The following counties in the State of New
Jersey:
Salem, Burlington, Mercer, Hunterdon
as well as any other counties in the State of New
Jersey in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
B. Other Jurisdictions:
1. Mexico-- The following delegation or municipios in the
Country of Mexico:
Cuernavaca, Benito Juarez, Tlalnepantla, Cuauhtemoc,
Temixco, Miacatlan, Jiutepec, Tepoztlan, Huitzilac,
Tenango, Tenancingo, Miguel Hidalgo, Iztacalco,
Iztapalapa, Coyoacan, Alvaro Obregon, Jilotepec,
Cuautitlan, Lerma, Iztlahuaca, Gustavo A. Madero,
Azcapotzalco, Cuajimalpa de Morelos, Venustiano and
Carranza
as well as any other delegation or municipios in the
Country of Mexico in which the Employee regularly (a)
makes contact with customers of the Company or any of
its subsidiaries, (b) conducts the business of the
Company or any of its subsidiaries or (c) supervises
the activities of other employees of the Company or any
of its subsidiaries as of the Date of Termination.
2. Australia-- The following councils in the Country of
Australia:
Willoughby, Newcastle, Ku-Ring-Gai, Pittwater, Mosman,
Port Stephens, Warringah, North Sydney, South Sydney,
Maroochydore, Beaudesert, Caboolture, Redland,
Maroochy, Gatton, Toowoomba, Kilcoy, Brisbane, Gold
Coast, Pine Rivers, Redcliffe, Woodville, Nunawading,
Brunswick, Mornington, Essendon, Brighton,
Broadmeadows, Moorabbin, Lake Mocquarie, Hornsby,
Landsborough, Widgee, Moreton, Caloundra, Noosa,
Kingaroy, Albert, Logan, Hindmarsh, West Torrens,
Oakley, Box Hill, Melbourne, Frankston, Coburg, Bulla
and Sandringham
as well as any other councils in the Country of
Australia in which the Employee regularly (a) makes
contact with customers of the Company or any of its
subsidiaries, (b) conducts the business of the Company
or any of its subsidiaries or (c) supervises the
activities of other employees of the Company or any of
its subsidiaries as of the Date of Termination.
Agreed to and Accepted:
Employee
_______________________
Date: _________________
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of September 7, 1995 by
and between Stewart Enterprises, Inc., a Louisiana
corporation ("SEI"), and Lawrence B. Hawkins ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995, subject to shareholder approval of the
Plan.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 7,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, the right, privilege
and option to purchase 13,340 shares of Common Stock (the
"Option") at an exercise price of $31.50 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the
other provisions of this Agreement, the Optionee shall be
entitled to exercise his Option as follows:
20% of the total number of shares
covered by the Option
beginning on September 7,
1996;
40% of the total number of shares
covered by the Option
beginning on September 7,
1997, less any shares
previously issued;
60% of the total number of shares
covered by the Option
beginning on September 7,
1998, less any shares
previously issued;
80% of the total number of shares
covered by the Option
beginning on September 7,
1999, less any shares
previously issued;
100% of the total number of shares
covered by the Option
beginning on September 7,
2000, less any shares
previously issued.
Notwithstanding the foregoing, no portion of the Option may
be exercised prior to the approval of the Plan by the
shareholders of the Company. The Option shall expire and
may not be exercised later than October 31, 2001.
2.2 If Optionee's employment is terminated, other than
as a result of death, disability or retirement on or after
reaching age 65 or early retirement with the approval of the
Board of Directors, the Option must be exercised, to the
extent exercisable at the time of termination of employment,
within 30 days of the date on which Optionee ceases to be an
employee, except that the Committee may upon request extend
the period after termination of employment during which the
Option may be exercised, but in no event later than October
31, 2001.
2.3 If an Optionee ceases to be an employee because of
disability within the meaning of Section 22(e)(3) of the
Code or retirement, as described in Section 2.2, the Option
must be exercised, to the extent exercisable at the time of
termination of employment, within one year from the date on
which Optionee ceases to be an employee, but in no event
later than October 31, 2001.
2.4 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and Stewart shall pay, or cause
to be paid, to each such participant an amount of cash
per share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
the "Change of Control Value" shall equal the amount
determined by whichever of the following items is
applicable:
(a) the per share price to be paid to shareholders
of Stewart in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
Stewart in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of Stewart in any transaction described in
this Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any reference herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By:_________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
____________________________
Lawrence B. Hawkins
Optionee
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of September 7, 1995, by
and between Stewart Enterprises, Inc., a Louisiana corpora-
tion ("SEI"), and Lawrence B. Hawkins ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995, subject to shareholder approval of the
Plan.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 7,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, the right, privilege
and option to purchase21,260 shares of Common Stock (the
"Option") at an exercise price of $31.50 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II. below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan, the other
provisions of this Agreement and the provisions of any
employment agreement between SEI and Optionee (the
"Employment Agreement") with respect to performance based
options granted under the Plan, the Option shall become
exercisable in full on the first day between September 7,
1995 and August 31, 2000 that the average of the "Closing
Sale Prices" of a share of Common Stock for the 20 preceding
consecutive trading days equals or exceeds $79.31.
Notwithstanding the foregoing, no portion of the Option
may be exercised prior to the approval of the Plan by the
shareholders of the Company. If the conditions described in
this Section 2.1 are not met by August 31, 2000, the Option
may not be exercised and shall terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on
the applicable date for shares of the Common Stock on an
established stock exchange or any automated quotation system
that provides sale quotations.
2.3 The Option shall expire and may not be exercised
later than October 31, 2001.
2.4 Except as otherwise provided in the Employment
Agreement, if Optionee's employment is terminated, other
than as a result of death, disability or retirement on or
after reaching age 65 or early retirement with the approval
of the Board of Directors, the Option must be exercised, to
the extent exercisable at the time of termination of
employment, within the later of (i) 30 days after the date
on which Optionee ceases to be an employee or (ii) 30 days
after the date on which the exercise of the Option and sale
of the underlying securities will not cause the Optionee to
incur a liability to SEI under Section 16 of the Securities
Exchange Act of 1934, except that the Committee may upon
request extend the period after termination of employment
during which the Option may be exercised, but in no event
later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability
within the meaning of Section 22(e)(3) of the Code, the
Option must be exercised, to the extent exercisable at the
time of termination of employment, within one year from the
date on which Optionee ceases to be an employee, but in no
event later than October 31, 2001.
2.6 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and SEI shall pay, or cause to
be paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(a) the per share price to be paid to shareholders
of SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
SEI in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any references herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control. In the event any provision of this
Agreement conflicts with a provision of any Employment
Agreement containing any provision relating to the Option,
the Employment Agreement provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ____________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
______________________________
Lawrence B. Hawkins
Optionee
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of December 5, 1995, by
and between Stewart Enterprises, Inc., a Louisiana corpora-
tion ("SEI"), and Lawrence B. Hawkins ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995 and amended by the Board of Directors
effective December 5, 1995, subject to shareholder approval
of the Plan, as amended.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective December 5,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, as amended, the right,
privilege and option to purchase 5,400 shares of Common
Stock (the "Option") at an exercise price of $33.25 per
share (the "Exercise Price"). The Option shall be
exercisable at the time specified in Section II. below. The
Option is a non-qualified stock option and shall not be
treated as an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan, the other
provisions of this Agreement and the provisions of any
employment agreement between SEI and Optionee (the
"Employment Agreement") with respect to performance based
options granted under the Plan, the Option shall become
exercisable in full on the first day between December 5,
1995 and August 31, 2000 that the average of the "Closing
Sale Prices" of a share of Common Stock for the 20 preceding
consecutive trading days equals or exceeds $79.31.
Notwithstanding the foregoing, no portion of the Option
may be exercised prior to the approval of the Plan, as
amended, by the shareholders of the Company. If the
conditions described in this Section 2.1 are not met by
August 31, 2000, the Option may not be exercised and shall
terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on
the applicable date for shares of the Common Stock on an
established stock exchange or any automated quotation system
that provides sale quotations.
2.3 The Option shall expire and may not be exercised
later than October 31, 2001.
2.4 Except as otherwise provided in the Employment
Agreement, if Optionee's employment is terminated, other
than as a result of death, disability or retirement on or
after reaching age 65 or early retirement with the approval
of the Board of Directors, the Option must be exercised, to
the extent exercisable at the time of termination of
employment, within the later of (i) 30 days after the date
on which Optionee ceases to be an employee or (ii) 30 days
after the date on which the exercise of the Option and sale
of the underlying securities will not cause the Optionee to
incur a liability to SEI under Section 16 of the Securities
Exchange Act of 1934, except that the Committee may upon
request extend the period after termination of employment
during which the Option may be exercised, but in no event
later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability
within the meaning of Section 22(e)(3) of the Code, the
Option must be exercised, to the extent exercisable at the
time of termination of employment, within one year from the
date on which Optionee ceases to be an employee, but in no
event later than October 31, 2001.
2.6 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and SEI shall pay, or cause to
be paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(a) the per share price to be paid to shareholders
of SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
SEI in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any references herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control. In the event any provision of this
Agreement conflicts with a provision of any Employment
Agreement containing any provision relating to the Option,
the Employment Agreement provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By:____________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
________________________________
Lawrence B. Hawkins
Optionee
CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement ("Agreement") between
Stewart Enterprises, Inc., a Louisiana corporation (the
"Company"), and Lawrence B. Hawkins (the "Employee") is
dated as of December 5, 1995 (the "Change of Control
Agreement Date").
ARTICLE I
DEFINITIONS
1.1 Employment Agreement. After a Change of Control
(defined below), this Agreement supersedes the Employment
Agreement dated as of August 1, 1995 between Employee and
the Company (the "Employment Agreement") except to the
extent that certain provisions of the Employment Agreement
are expressly incorporated by reference herein. After a
Change of Control (defined below), the definitions in this
Agreement supersede definitions in the Employment Agreement,
but capitalized terms not defined in this Agreement have the
meanings given to them in the Employment Agreement.
1.2 Definition of "Company". As used in this
Agreement, "Company" shall mean the Company as defined above
and any successor to or assignee of (whether direct or
indirect, by purchase, merger, consolidation or otherwise)
all or substantially all of the assets or business of the
Company.
1.3 Change of Control Defined. "Change of Control"
shall mean:
(a) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
14(d)(2) of the Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of more than 30% of the outstanding
shares of the Company's Class A Common Stock, no par
value per share (the "Common Stock"); provided,
however, that for purposes of this subsection (a), the
following acquisitions shall not constitute a Change of
Control:
(i) any acquisition of Common Stock directly
from the Company,
(ii) any acquisition of Common Stock by the
Company,
(iii) any acquisition of Common Stock by any
employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation
controlled by the Company, or
(iv) any acquisition of Common Stock by any
corporation pursuant to a transaction that
complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 1.3; or
(b) individuals who, as of the Change of Control
Agreement Date, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any
individual becoming a director subsequent to the Change
of Control Agreement Date whose election, or nomination
for election by the Company's shareholders, was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered a member of the Incumbent Board, unless such
individual's initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or
other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the
Incumbent Board; or
(c) consummation of a reorganization, merger or
consolidation, or sale or other disposition of all of
substantially all of the assets of the Company (a
"Business Combination"), in each case, unless,
following such Business Combination,
(i) all or substantially all of the
individuals and entities who were the beneficial
owners of the Company's outstanding common stock
and the Company's voting securities entitled to
vote generally in the election of directors
immediately prior to such Business Combination
have direct or indirect beneficial ownership,
respectively, of more than 50% of the then
outstanding shares of common stock, and more than
50% of the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors, of the
corporation resulting from such Business
Combination (which, for purposes of this paragraph
(i) and paragraphs (ii) and (iii), shall include a
corporation which as a result of such transaction
controls the Company or all or substantially all
of the Company's assets either directly or through
one or more subsidiaries), and
(ii) except to the extent that such ownership
existed prior to the Business Combination, no
person (excluding any corporation resulting from
such Business Combination or any employee benefit
plan or related trust of the Company or such
corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 20% or more of the then outstanding
shares of common stock of the corporation
resulting from such Business Combination or 20% or
more of the combined voting power of the then
outstanding voting securities of such corporation,
and
(iii) at least a majority of the members of
the board of directors of the corporation
resulting from such Business Combination were
members of the Incumbent Board at the time of the
execution of the initial agreement, or of the
action of the Board, providing for such Business
Combination; or
(d) approval by the shareholders of the Company of
a complete liquidation or dissolution of the Company.
1.4 Affiliate. "Affiliate" or "affiliated companies"
shall mean any company controlled by, controlling, or under
common control with, the Company.
1.5 Cause. "Cause" shall mean:
(a) the willful and continued failure of the
Employee to perform substantially the Employee's
duties with the Company or its affiliates (other
than any such failure resulting from incapacity
due to physical or mental illness), after a
written demand for substantial performance is
delivered to the Employee by the Board of the
Company which specifically identifies the manner
in which the Board believes that the Employee has
not substantially performed the Employee's duties,
or
(b) the willful engaging by the Employee in
illegal conduct or gross misconduct which is
materially and demonstrably injurious to the
Company or its affiliates.
For purposes of this provision, no act or failure to act, on
the part of the Employee, shall be considered "willful"
unless it is done, or omitted to be done, by the Employee in
bad faith or without reasonable belief that the Employee's
action or omission was in the best interests of the Company
or its affiliates. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the
Board or upon the instructions of a senior officer of the
Company or based upon the advice of counsel for the Company
or its affiliates shall be conclusively presumed to be done,
or omitted to be done, by the Employee in good faith and in
the best interests of the Company or its affiliates. The
cessation of employment of the Employee shall not be deemed
to be for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution duly
adopted by the affirmative vote of not less than three-
quarters of the entire membership of the Board at a meeting
of the Board called and held for such purpose (after
reasonable notice is provided to the Employee and the
Employee is given an opportunity, together with counsel, to
be heard before the Board), finding that, in the good faith
opinion of the Board, the Employee is guilty of the conduct
described in subparagraph (a) or (b) above, and specifying
the particulars thereof in detail.
1.6 Good Reason. "Good Reason" shall mean:
(a) Any failure of the Company or its affiliates
to provide the Employee with the position, authority,
duties and responsibilities at least commensurate in
all material respects with the most significant of
those held, exercised and assigned at any time during
the 120-day period immediately preceding the Change of
Control. Employee's position, authority, duties and
responsibilities after a Change of Control shall not be
considered commensurate in all material respects with
Employee's position, authority, duties and
responsibilities prior to a Change of Control unless
after the Change of Control Employee holds (i) an
equivalent position in the Company or, (ii) if the
Company is controlled or will after the transaction be
controlled by another company (directly or indirectly),
an equivalent position in the ultimate parent company.
(b) The assignment to the Employee of any duties
inconsistent in any material respect with Employee's
position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities as contemplated by Section 2.1(b) of
this Agreement, or any other action that results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not
taken in bad faith that is remedied within 10 days
after receipt of written notice thereof from the
Employee to the Company;
(c) Any failure by the Company or its affiliates
to comply with any of the provisions of this Agreement,
other than an isolated, insubstantial and inadvertent
failure not occurring in bad faith that is remedied
within 10 days after receipt of written notice thereof
from the Employee to the Company;
(d) The Company or its affiliates requiring the
Employee to be based at any office or location other
than as provided in Section 2.1(b)(ii) hereof or
requiring the Employee to travel on business to a
substantially greater extent than required immediately
prior to the Change of Control;
(e) Any purported termination of the Employee's
employment otherwise than as expressly permitted by
this Agreement; or
(f) Any failure by the Company to comply with and
satisfy Sections 3.1(c) and (d) of this Agreement.
For purposes of this Section 1.6, any good faith
determination of "Good Reason" made by the Employee shall be
conclusive. Anything in this Agreement to the contrary
notwithstanding, a termination by the Employee for any
reason during the 30-day period immediately following the
first anniversary of the Change of Control shall be deemed
to be a termination for Good Reason.
ARTICLE II
CHANGE OF CONTROL BENEFIT
2.1 Employment Term and Capacity after Change of
Control. (a) If a Change of Control occurs on or before
October 31, 2000, then the Employee's employment term (the
"Employment Term") shall continue through the later of (a)
the second anniversary of the Change of Control or (b)
October 31, 2000, subject to any earlier termination of
Employee's status as an employee pursuant to this Agreement.
(b) After a Change of Control and during the
Employment Term, (i) the Employee's position (including
status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least
commensurate in all material respects with the most
significant of those held, exercised and assigned at any
time during the 120-day period immediately preceding the
Change of Control and (ii) the Employee's service shall be
performed at the location where the Employee was employed
immediately preceding the Change of Control or any office or
location less than 35 miles from such location. Employee's
position, authority, duties and responsibilities after a
Change of Control shall not be considered commensurate in
all material respects with Employee's position, authority,
duties and responsibilities prior to a Change of Control
unless after the Change of Control Employee holds (x) an
equivalent position in the Company or, (y) if the Company is
controlled or will after the transaction be controlled by
another company (directly or indirectly), an equivalent
position in the ultimate parent company. Employee shall
devote himself to his employment responsibilities with the
Company (or, if applicable, the ultimate parent entity) as
provided in Article I Section 3 of the Employment Agreement.
2.2 Compensation and Benefits. During the Employment
Term, Employee shall be entitled to the following
compensation and benefits:
(a) Salary. A salary ("Base Salary") at the rate
of $225,000 per year, payable to the Employee at such
intervals no less frequent than the most frequent
intervals in effect at any time during the 120-day
period immediately preceding the Change of Control or,
if more favorable to the Employee, the intervals in
effect at any time after the Change of Control for
other peer employees of the Company and its affiliated
companies.
(b) Bonus. Employee's incentive bonus with
respect to the period ending October 31, 1995, to the
extent not already paid, shall be paid upon a Change of
Control. For the period beginning November 1, 1995,
the Employee shall be eligible to receive a bonus (the
"Bonus") of up to $75,000 for each 12-month period
thereafter. Such Bonus shall be comprised of two
elements, the quantitative element and the qualitative
element:
(i) The quantitative element shall be equal
to 75% of the maximum Bonus of $75,000 and shall
be based on the attainment of certain goals to be
established by the Company's compensation
committee, or any similar body, and Employee.
(ii) The qualitative element shall be 25% of
the maximum Bonus of $75,000 and shall be awarded
at the discretion of the Company's Chairman of the
Board. The Chairman of the Board and Employee
shall establish incentive goals and other criteria
for the award of the qualitative element.
The Bonus shall be paid in cash no later than 30 days
following the date on which the information needed to
calculate the Bonus becomes available.
(c) Fringe Benefits. The Employee shall be
entitled to fringe benefits (including, but not limited
to, automobile allowance, reimbursement for membership
dues, and first class air travel) in accordance with
the most favorable agreements, plans, practices,
programs and policies of the Company and its affiliated
companies in effect for the Employee at any time during
the 120-day period immediately preceding the Change of
Control or, if more favorable to the Employee, as in
effect generally at any time thereafter with respect to
other peer employees of the Company and its affiliated
companies.
(d) Expenses. The Employee shall be entitled to
receive prompt reimbursement for all reasonable
expenses incurred by the Employee in accordance with
the most favorable agreements, policies, practices and
procedures of the Company and its affiliated companies
in effect for the Employee at any time during the 120-
day period immediately preceding the Change of Control
or, if more favorable to the Employee, as in effect
generally at any time thereafter with respect to other
peer employees of the Company and its affiliated
companies.
(e) Incentive, Savings and Retirement Plans. The
Employee shall be entitled to participate in all
incentive, savings and retirement plans, practices,
policies and programs applicable generally to other
peer employees of the Company and its affiliated
companies, but in no event shall such plans, practices,
policies and programs provide the Employee with
incentive opportunities (measured with respect to both
regular and special incentive opportunities, to the
extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit
opportunities, in each case, less favorable than the
most favorable of those provided by the Company and its
affiliated companies for the Employee under any
agreements, plans, practices, policies and programs as
in effect at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, those provided generally at
any time after the Change of Control to other peer
employees of the Company and its affiliated companies.
(f) Welfare Benefit Plans. The Employee and/or
the Employee's family, as the case may be, shall be
eligible for participation in and shall receive all
benefits under welfare benefit plans, practices,
policies and programs provided by the Company and its
affiliated companies (including, without limitation,
medical, prescription, dental, disability, employee
life, group life, accidental death and travel accident
insurance plans and programs) to the extent applicable
generally to other peer employees of the Company and
its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the
Employee with benefits, in each case, less favorable
than the most favorable of any agreements, plans,
practices, policies and programs in effect for the
Employee at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, those provided generally at
any time after the Change of Control to other peer
employees of the Company and its affiliated companies.
(g) Office and Support Staff. The Employee shall
be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least
equal to the most favorable of the foregoing provided
to the Employee by the Company and its affiliated
companies at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, as provided generally at any
time thereafter with respect to other peer employees of
the Company and its affiliated companies.
(h) Vacation. The Employee shall be entitled to
paid vacation in accordance with the most favorable
agreements, plans, policies, programs and practices of
the Company and its affiliated companies as in effect
for the Employee at any time during the 120-day period
immediately preceding the Change of Control or, if more
favorable to the Employee, as in effect generally at
any time thereafter with respect to other peer
employees of the Company and its affiliated companies.
2.3 Termination of Employment after a Change of
Control. After a Change of Control and during the
Employment Term, the Employee's status as an employee shall
terminate or may be terminated by the Employee, the Company
(or, if applicable, the ultimate parent company), as
provided in Article III of the Employment Agreement
(provided, however, that the definitions of "Cause" and
"Good Reason" in this Agreement shall supersede those
definitions in the Employment Agreement).
2.4 Obligations upon Termination after a Change of
Control.
(a) Termination by Company for Reasons other than
Death, Disability or Cause; by Employee for Good
Reason. If, after a Change of Control and during the
Employment Term, the Company (or, if applicable the
ultimate parent company), terminates the Employee's
employment other than for Cause, death or Disability,
or the Employee terminates employment for Good Reason,
the Company shall pay to the Employee in a lump sum in
cash within 30 days of the Date of Termination an
amount equal to one and one-half (1.5) times the sum of
(i) the amount of Base Salary in effect at the Date of
Termination, plus (ii) the maximum Bonus for which the
Employee is eligible for the 12-month period in which
the Date of Termination occurs.
(b) Death. If, after a Change of Control and
during the Employment Term, the Employee's status as an
employee is terminated by reason of the Employee's
death, this Agreement shall terminate without further
obligation to the Employee's legal representatives
(other than those already accrued to the Employee),
other than the obligation to make any payments due
pursuant to employee benefit plans maintained by the
Company or its affiliated companies.
(c) Disability. If, after a Change of Control and
during the Employment Term, Employee's status as an
employee is terminated by reason of Employee's
Disability (as defined in the Employment Agreement),
this Agreement shall terminate without further
obligation to the Employee (other than those already
accrued to the Employee), other than the obligation to
make any payments due pursuant to employee benefit
plans maintained by the Company or its affiliated
companies.
(d) Cause. If, after a Change of Control and
during the Employment Term, the Employee's status as an
employee is terminated by the Company (or, if
applicable, the ultimate parent entity) for Cause, this
Agreement shall terminate without further obligation to
the Employee other than for obligations imposed by law
and obligations imposed pursuant to any employee
benefit plan maintained by the Company or its
affiliated companies.
(e) Termination by Employee for Reasons other than
Good Reason. If, after a Change of Control and during
the Employment Term, the Employee's status as an
employee is terminated by the Employee for reasons
other than Good Reason, then the Company shall pay to
the Employee an amount equal to one-half of a single
year's Base Salary in effect at the Date of
Termination, payable in equal installments over a two-
year period at such intervals as other salaried
employees of the Company are paid.
(f) Nondisclosure, Noncompetition and Proprietary
Rights. The rights and obligations of the Company and
Employee contained in Article V ("Nondisclosure,
Noncompetition and Proprietary Rights") of the
Employment Agreement shall continue to apply after a
Change of Control, except as provided in Section 2.10
of this Agreement.
2.5 Accrued Obligations and Other Benefits. It is the
intent of the Employment Agreement and this Agreement that
upon termination of employment for any reason the Employee
be entitled to receive promptly, and in addition to any
other benefits specifically provided, (a) the Employee's
Base Salary through the Date of Termination to the extent
not theretofore paid, (b) any accrued vacation pay, to the
extent not theretofore paid, and (c) any other amounts or
benefits required to be paid or provided or which the
Employee is entitled to receive under any plan, program,
policy practice or agreement of the Company.
2.6 Stock Options. The foregoing benefits are
intended to be in addition to the value of any options to
acquire Common Stock of the Company the exercisability of
which is accelerated pursuant to the terms of any stock
option, incentive or other similar plan heretofore or
hereafter adopted by the Company.
2.7 Protection of Benefits. To the extent permitted
by applicable law, the Company shall take all reasonable
steps to ensure that the Employee is not, by reason of a
Change of Control, deprived of the economic value (including
any value attributable to the Change of Control transaction)
of (a) any options to acquire Common Stock of the Company or
(b) any Common Stock of the Company beneficially owned by
the Employee.
2.8 Certain Additional Payments. If after a Change of
Control Employee is subjected to an excise tax as a result
of the "excess parachute payment" provisions of section 4999
of the Internal Revenue Code of 1986, as amended, whether by
virtue of the benefits of this Agreement or by virtue of any
other benefits provided to Employee in connection with a
Change of Control pursuant to Company plans, policies or
agreements (including the value of any options to acquire
Common Stock of the Company the exercisability of which is
accelerated pursuant to the terms of any stock option,
incentive or similar plan heretofore or hereafter adopted by
the Company), the Company shall pay to Employee (whether or
not his employment has terminated) such amounts as are
necessary to place Employee in the same position after
payment of federal income and excise taxes as he would have
been if such provisions had not been applicable to him.
2.9 Legal Fees. The Company agrees to pay as
incurred, to the full extent permitted by law, all legal
fees and expenses which the Employee may reasonably incur as
a result of any contest (regardless of the outcome thereof)
by the Company, the Employee or others of the validity or
enforceability of, or liability under, any provision of this
Agreement (including as a result of any contest by the
Employee about the amount or timing of any payment pursuant
to this Agreement.)
2.10 Set-Off; Mitigation. After a Change of Control,
the Company's and its affiliates' obligations to make the
payments provided for in this Agreement and otherwise to
perform its obligations hereunder shall not be affected by
any set-off, counterclaim, recoupment, defense or other
claim, right or action which the Company or its affiliates
may have against the Employee or others. After a Change of
Control, an asserted violation of the provisions of Article
V ("Nondisclosure, Noncompetition and Proprietary Rights")
of the Employment Agreement shall not constitute a basis for
deferring or withholding any amounts otherwise payable to
the Employee; specifically, the third through sixth
sentences of Article V Section 4 shall not apply after a
Change of Control. It is the intent of the Employment
Agreement and this Agreement that in no event shall the
Employee be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to
the Employee under any of the provisions of this Agreement
or the Employment Agreement.
ARTICLE III
MISCELLANEOUS
3.1 Binding Effect; Successors.
(a) This Agreement shall be binding upon and
inure to the benefit of the Company and any of its
successors or assigns.
(b) This Agreement is personal to the Employee
and shall not be assignable by the Employee without the
consent of the Company (there being no obligation to give
such consent) other than such rights or benefits as are
transferred by will or the laws of descent and distribution.
(c) The Company shall require any successor to or
assignee of (whether direct or indirect, by purchase,
merger, consolidation or otherwise) all or substantially all
of the assets or businesses of the Company (i) to assume
unconditionally and expressly this Agreement and (ii) to
agree to perform or to cause to be performed all of the
obligations under this Agreement in the same manner and to
the same extent as would have been required of the Company
had no assignment or succession occurred, such assumption to
be set forth in a writing reasonably satisfactory to the
Employee.
(d) The Company shall also require all entities
that control or that after the transaction will control
(directly or indirectly) the Company or any such successor
or assignee to agree to cause to be performed all of the
obligations under this Agreement, such agreement to be set
forth in a writing reasonably satisfactory to the Employee.
3.2 Notices. All notices hereunder must be in writing
and shall be deemed to have given upon receipt of delivery
by: (a) hand (against a receipt therefor), (b) certified or
registered mail, postage prepaid, return receipt requested,
(c) a nationally recognized overnight courier service
(against a receipt therefor) or (d) telecopy transmission
with confirmation of receipt. All such notices must be
addressed as follows:
If to the Company, to:
Stewart Enterprises, Inc.
110 Veterans Memorial Boulevard
Metairie, Louisiana 70005
Attn: Joseph P. Henican, III
If to the Employee, to:
Lawrence B. Hawkins
4414 Wildwood
Dallas, TX 75209
or such other address as to which any party hereto may have
notified the other in writing.
3.3 Governing Law. This Agreement shall be construed
and enforced in accordance with and governed by the internal
laws of the State of Louisiana without regard to principles
of conflict of laws, except as expressly provided in Article
V Section 6 of the Employment Agreement with respect to the
resolution of disputes arising under, or the Company's
enforcement of, such Article V.
3.4 Withholding. The Employee agrees that the Company
has the right to withhold, from the amounts payable pursuant
to this Agreement, all amounts required to be withheld under
applicable income and/or employment tax laws, or as
otherwise stated in documents granting rights that are
affected by this Agreement.
3.5 Amendment, Waiver. No provision of this Agreement
may be modified, amended or waived except by an instrument
in writing signed by both parties.
3.6 Severability. If any term or provision of this
Agreement, or the application thereof to any person or
circumstance, shall at any time or to any extent be invalid,
illegal or unenforceable in any respect as written, Employee
and the Company intend for any court construing this
Agreement to modify or limit such provision so as to render
it valid and enforceable to the fullest extent allowed by
law. Any such provision that is not susceptible of such
reformation shall be ignored so as to not affect any other
term or provision hereof, and the remainder of this
Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is
held invalid, illegal or unenforceable, shall not be
affected thereby and each term and provision of this
Agreement shall be valid and enforced to the fullest extent
permitted by law.
3.7 Waiver of Breach. The waiver by either party of a
breach of any provision of this Agreement shall not operate
or be construed as a waiver of any subsequent breach
thereof.
3.8 Remedies Not Exclusive. No remedy specified
herein shall be deemed to be such party's exclusive remedy,
and accordingly, in addition to all of the rights and
remedies provided for in this Agreement, the parties shall
have all other rights and remedies provided to them by
applicable law, rule or regulation.
3.9 Company's Reservation of Rights. Employee
acknowledges and understands that the Employee serves at the
pleasure of the Board and that the Company has the right at
any time to terminate Employee's status as an employee of
the Company, or to change or diminish his status during the
Employment Term, subject to the rights of the Employee to
claim the benefits conferred by this Agreement.
3.10 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to
be an original but all of which together shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the Company and the Employee have
caused this Agreement to be executed as of the Change of
Control Agreement Date.
STEWART ENTERPRISES, INC.
By: ___________________________
James W. McFarland
Compensation Committee Chairman
EMPLOYEE:
____________________________
Lawrence B. Hawkins
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1991 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1991 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is entered into as of September 25,
1992, by and between Stewart Enterprises, Inc., a Louisiana
corporation ("SEI"), and Brent F. Heffron ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1991 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on May
30, 1991 and approved by the shareholders of SEI on
September 19, 1991.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 25,
1992 (the "Date of Grant") the right, privilege and option
to purchase 4,500 shares of Common Stock (the "Option") at
an exercise price of $20.00 per share (the "Exercise
Price"). The Option shall be exercisable at the time
specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the
other provisions of this Section II, the Optionee shall be
entitled to exercise his Option as follows:
25% of the total number of shares
covered by the option
beginning on September 25,
1993;
50% of the total number of shares
covered by the option
beginning on September 25,
1994, less any shares
previously issued;
75% of the total number of shares
covered by the option
beginning on September 25,
1995, less any shares
previously issued; and
100% of the total number of shares
covered by the option
beginning on September 25,
1996, less any shares
previously issued.
The Option shall expire and may not be exercised later than
September 25, 1997.
2.2 During Optionee's lifetime, the Option may be
exercised only by him or his curator if he has been
interdicted. If Optionee's employment is terminated, other
than as a result of death or disability, the Option must be
exercised, to the extent exercisable at the time of
termination of employment, within 30 days of the date on
which he ceases to be an employee, except that the Committee
may upon request extend the period after termination of
employment during which the Option may be exercised, but in
no event later than five years after the Date of Grant.
2.3 If an Optionee ceases to be an employee because of
disability within the meaning of Section 22(e)(3) of the
Code, the Option must be exercised, to the extent otherwise
exercisable, within one year from the date on which he
ceases to be an employee, but in no event later than five
years after the Date of Grant.
2.4 In the event of Optionee's death, the Option may
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
otherwise exercisable, within one year from the date of
death, but in no event later than five years after the Date
of Grant.
III.
Method of Exercise of Option
3.1 Optionee may exercise all or a portion of the
Option by delivering to SEI a signed written notice of his
intention to exercise the Option, specifying therein the
number of shares to be purchased. Upon receiving such
notice, and after SEI has received full payment of the
Exercise Price, the appropriate officer of SEI shall cause
the transfer of title of the shares purchased to Optionee on
SEI's stock records and cause to be issued to Optionee a
stock certificate for the number of shares being acquired.
Optionee shall not have any rights as a shareholder until
the stock certificate is issued to him.
3.2 The Option may be exercised by the payment of the
Exercise Price in cash, in shares of Common Stock held for
six months or in a combination of cash and shares of Common
Stock held for six months. The Optionee may also pay the
Exercise Price by delivering a properly executed exercise
notice together with irrevocable instructions to a broker
approved by SEI (with a copy to SEI) to promptly deliver to
SEI the amount of sale or loan proceeds to pay the Exercise
Price.
IV.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time.
V.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VI.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed on the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ____________________________, Member
of the Compensation Committee
_________________________________
Brent F. Heffron
Optionee
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of September 7, 1995 by
and between Stewart Enterprises, Inc., a Louisiana
corporation ("SEI"), and Brent F. Heffron ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995, subject to shareholder approval of the
Plan.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 7,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, the right, privilege
and option to purchase 5,000 shares of Common Stock (the
"Option") at an exercise price of $31.50 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the
other provisions of this Agreement, the Optionee shall be
entitled to exercise his Option as follows:
20% of the total number of shares
covered by the Option
beginning on September 7,
1996;
40% of the total number of shares
covered by the Option
beginning on September 7,
1997, less any shares
previously issued;
60% of the total number of shares
covered by the Option
beginning on September 7,
1998, less any shares
previously issued;
80% of the total number of shares
covered by the Option
beginning on September 7,
1999, less any shares
previously issued;
100% of the total number of shares
covered by the Option
beginning on September 7,
2000, less any shares
previously issued.
Notwithstanding the foregoing, no portion of the Option may
be exercised prior to the approval of the Plan by the
shareholders of the Company. The Option shall expire and
may not be exercised later than October 31, 2001.
2.2 If Optionee's employment is terminated, other than
as a result of death, disability or retirement on or after
reaching age 65 or early retirement with the approval of the
Board of Directors, the Option must be exercised, to the
extent exercisable at the time of termination of employment,
within 30 days of the date on which Optionee ceases to be an
employee, except that the Committee may upon request extend
the period after termination of employment during which the
Option may be exercised, but in no event later than October
31, 2001.
2.3 If an Optionee ceases to be an employee because of
disability within the meaning of Section 22(e)(3) of the
Code or retirement, as described in Section 2.2, the Option
must be exercised, to the extent exercisable at the time of
termination of employment, within one year from the date on
which Optionee ceases to be an employee, but in no event
later than October 31, 2001.
2.4 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and Stewart shall pay, or cause
to be paid, to each such participant an amount of cash
per share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
the "Change of Control Value" shall equal the amount
determined by whichever of the following items is
applicable:
(a) the per share price to be paid to shareholders
of Stewart in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
Stewart in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of Stewart in any transaction described in
this Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any reference herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ___________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
________________________________
Brent F. Heffron
Optionee
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of September 7, 1995, by
and between Stewart Enterprises, Inc., a Louisiana corpora-
tion ("SEI"), and Brent F. Heffron ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995, subject to shareholder approval of the
Plan.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 7,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, the right, privilege
and option to purchase 7,975 shares of Common Stock (the
"Option") at an exercise price of $31.50 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II. below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan, the other
provisions of this Agreement and the provisions of any
employment agreement between SEI and Optionee (the
"Employment Agreement") with respect to performance based
options granted under the Plan, the Option shall become
exercisable in full on the first day between September 7,
1995 and August 31, 2000 that the average of the "Closing
Sale Prices" of a share of Common Stock for the 20 preceding
consecutive trading days equals or exceeds $79.31.
Notwithstanding the foregoing, no portion of the Option
may be exercised prior to the approval of the Plan by the
shareholders of the Company. If the conditions described in
this Section 2.1 are not met by August 31, 2000, the Option
may not be exercised and shall terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on
the applicable date for shares of the Common Stock on an
established stock exchange or any automated quotation system
that provides sale quotations.
2.3 The Option shall expire and may not be exercised
later than October 31, 2001.
2.4 Except as otherwise provided in the Employment
Agreement, if Optionee's employment is terminated, other
than as a result of death, disability or retirement on or
after reaching age 65 or early retirement with the approval
of the Board of Directors, the Option must be exercised, to
the extent exercisable at the time of termination of
employment, within the later of (i) 30 days after the date
on which Optionee ceases to be an employee or (ii) 30 days
after the date on which the exercise of the Option and sale
of the underlying securities will not cause the Optionee to
incur a liability to SEI under Section 16 of the Securities
Exchange Act of 1934, except that the Committee may upon
request extend the period after termination of employment
during which the Option may be exercised, but in no event
later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability
within the meaning of Section 22(e)(3) of the Code, the
Option must be exercised, to the extent exercisable at the
time of termination of employment, within one year from the
date on which Optionee ceases to be an employee, but in no
event later than October 31, 2001.
2.6 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and SEI shall pay, or cause to
be paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(a) the per share price to be paid to shareholders
of SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
SEI in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any references herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control. In the event any provision of this
Agreement conflicts with a provision of any Employment
Agreement containing any provision relating to the Option,
the Employment Agreement provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ___________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
________________________________
Brent F. Heffron
Optionee
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of December 5, 1995, by
and between Stewart Enterprises, Inc., a Louisiana corpora-
tion ("SEI"), and Brent F. Heffron ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995 and amended by the Board of Directors
effective December 5, 1995, subject to shareholder approval
of the Plan, as amended.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective December 5,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, as amended, the right,
privilege and option to purchase 2,025 shares of Common
Stock (the "Option") at an exercise price of $33.25 per
share (the "Exercise Price"). The Option shall be
exercisable at the time specified in Section II. below. The
Option is a non-qualified stock option and shall not be
treated as an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan, the other
provisions of this Agreement and the provisions of any
employment agreement between SEI and Optionee (the
"Employment Agreement") with respect to performance based
options granted under the Plan, the Option shall become
exercisable in full on the first day between December 5,
1995 and August 31, 2000 that the average of the "Closing
Sale Prices" of a share of Common Stock for the 20 preceding
consecutive trading days equals or exceeds $79.31.
Notwithstanding the foregoing, no portion of the Option
may be exercised prior to the approval of the Plan, as
amended, by the shareholders of the Company. If the
conditions described in this Section 2.1 are not met by
August 31, 2000, the Option may not be exercised and shall
terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on
the applicable date for shares of the Common Stock on an
established stock exchange or any automated quotation system
that provides sale quotations.
2.3 The Option shall expire and may not be exercised
later than October 31, 2001.
2.4 Except as otherwise provided in the Employment
Agreement, if Optionee's employment is terminated, other
than as a result of death, disability or retirement on or
after reaching age 65 or early retirement with the approval
of the Board of Directors, the Option must be exercised, to
the extent exercisable at the time of termination of
employment, within the later of (i) 30 days after the date
on which Optionee ceases to be an employee or (ii) 30 days
after the date on which the exercise of the Option and sale
of the underlying securities will not cause the Optionee to
incur a liability to SEI under Section 16 of the Securities
Exchange Act of 1934, except that the Committee may upon
request extend the period after termination of employment
during which the Option may be exercised, but in no event
later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability
within the meaning of Section 22(e)(3) of the Code, the
Option must be exercised, to the extent exercisable at the
time of termination of employment, within one year from the
date on which Optionee ceases to be an employee, but in no
event later than October 31, 2001.
2.6 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and SEI shall pay, or cause to
be paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(a) the per share price to be paid to shareholders
of SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
SEI in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any references herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control. In the event any provision of this
Agreement conflicts with a provision of any Employment
Agreement containing any provision relating to the Option,
the Employment Agreement provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ____________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
_________________________________
Brent F. Heffron
Optionee
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1991 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1991 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is entered into as of September 25,
1992, by and between Stewart Enterprises, Inc., a Louisiana
corporation ("SEI"), and Raymond C. Knopke, Jr.
("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1991 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on May
30, 1991 and approved by the shareholders of SEI on
September 19, 1991.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 25,
1992 (the "Date of Grant") the right, privilege and option
to purchase 10,000 shares of Common Stock (the "Option") at
an exercise price of $20.00 per share (the "Exercise
Price"). The Option shall be exercisable at the time
specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the
other provisions of this Section II, the Optionee shall be
entitled to exercise his Option as follows:
25% of the total number of shares
covered by the option
beginning on September 25,
1993;
50% of the total number of shares
covered by the option
beginning on September 25,
1994, less any shares
previously issued;
75% of the total number of shares
covered by the option
beginning on September 25,
1995, less any shares
previously issued; and
100% of the total number of shares
covered by the option
beginning on September 25,
1996, less any shares
previously issued.
The Option shall expire and may not be exercised later than
September 25, 1997.
2.2 During Optionee's lifetime, the Option may be
exercised only by him or his curator if he has been
interdicted. If Optionee's employment is terminated, other
than as a result of death or disability, the Option must be
exercised, to the extent exercisable at the time of
termination of employment, within 30 days of the date on
which he ceases to be an employee, except that the Committee
may upon request extend the period after termination of
employment during which the Option may be exercised, but in
no event later than five years after the Date of Grant.
2.3 If an Optionee ceases to be an employee because of
disability within the meaning of Section 22(e)(3) of the
Code, the Option must be exercised, to the extent otherwise
exercisable, within one year from the date on which he
ceases to be an employee, but in no event later than five
years after the Date of Grant.
2.4 In the event of Optionee's death, the Option may
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
otherwise exercisable, within one year from the date of
death, but in no event later than five years after the Date
of Grant.
III.
Method of Exercise of Option
3.1 Optionee may exercise all or a portion of the
Option by delivering to SEI a signed written notice of his
intention to exercise the Option, specifying therein the
number of shares to be purchased. Upon receiving such
notice, and after SEI has received full payment of the
Exercise Price, the appropriate officer of SEI shall cause
the transfer of title of the shares purchased to Optionee on
SEI's stock records and cause to be issued to Optionee a
stock certificate for the number of shares being acquired.
Optionee shall not have any rights as a shareholder until
the stock certificate is issued to him.
3.2 The Option may be exercised by the payment of the
Exercise Price in cash, in shares of Common Stock held for
six months or in a combination of cash and shares of Common
Stock held for six months. The Optionee may also pay the
Exercise Price by delivering a properly executed exercise
notice together with irrevocable instructions to a broker
approved by SEI (with a copy to SEI) to promptly deliver to
SEI the amount of sale or loan proceeds to pay the Exercise
Price.
IV.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time.
V.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VI.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed on the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ____________________________, Member
of the Compensation Committee
_________________________________
Raymond C. Knopke, Jr.
Optionee
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of September 7, 1995 by
and between Stewart Enterprises, Inc., a Louisiana
corporation ("SEI"), and Raymond C. Knopke, Jr.
("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995, subject to shareholder approval of the
Plan.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 7,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, the right, privilege
and option to purchase 5,000 shares of Common Stock (the
"Option") at an exercise price of $31.50 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the
other provisions of this Agreement, the Optionee shall be
entitled to exercise his Option as follows:
20% of the total number of shares
covered by the Option
beginning on September 7,
1996;
40% of the total number of shares
covered by the Option
beginning on September 7,
1997, less any shares
previously issued;
60% of the total number of shares
covered by the Option
beginning on September 7,
1998, less any shares
previously issued;
80% of the total number of shares
covered by the Option
beginning on September 7,
1999, less any shares
previously issued;
100% of the total number of shares
covered by the Option
beginning on September 7,
2000, less any shares
previously issued.
Notwithstanding the foregoing, no portion of the Option may
be exercised prior to the approval of the Plan by the
shareholders of the Company. The Option shall expire and
may not be exercised later than October 31, 2001.
2.2 If Optionee's employment is terminated, other than
as a result of death, disability or retirement on or after
reaching age 65 or early retirement with the approval of the
Board of Directors, the Option must be exercised, to the
extent exercisable at the time of termination of employment,
within 30 days of the date on which Optionee ceases to be an
employee, except that the Committee may upon request extend
the period after termination of employment during which the
Option may be exercised, but in no event later than October
31, 2001.
2.3 If an Optionee ceases to be an employee because of
disability within the meaning of Section 22(e)(3) of the
Code or retirement, as described in Section 2.2, the Option
must be exercised, to the extent exercisable at the time of
termination of employment, within one year from the date on
which Optionee ceases to be an employee, but in no event
later than October 31, 2001.
2.4 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and Stewart shall pay, or cause
to be paid, to each such participant an amount of cash
per share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
the "Change of Control Value" shall equal the amount
determined by whichever of the following items is
applicable:
(a) the per share price to be paid to shareholders
of Stewart in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
Stewart in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of Stewart in any transaction described in
this Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any reference herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ____________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
_________________________________
Raymond C. Knopke, Jr.
Optionee
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
ISSUED PURSUANT TO THE STEWART ENTERPRISES, INC. 1995 INCENTIVE COMPENSATION
PLAN THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of September 7, 1995, by
and between Stewart Enterprises, Inc., a Louisiana corpora-
tion ("SEI"), and Raymond C. Knopke, Jr. ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995, subject to shareholder approval of the
Plan.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective September 7,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, the right, privilege
and option to purchase 7,975 shares of Common Stock (the
"Option") at an exercise price of $31.50 per share (the
"Exercise Price"). The Option shall be exercisable at the
time specified in Section II. below. The Option is a non-
qualified stock option and shall not be treated as an
incentive stock option under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan, the other
provisions of this Agreement and the provisions of any
employment agreement between SEI and Optionee (the
"Employment Agreement") with respect to performance based
options granted under the Plan, the Option shall become
exercisable in full on the first day between September 7,
1995 and August 31, 2000 that the average of the "Closing
Sale Prices" of a share of Common Stock for the 20 preceding
consecutive trading days equals or exceeds $79.31.
Notwithstanding the foregoing, no portion of the Option
may be exercised prior to the approval of the Plan by the
shareholders of the Company. If the conditions described in
this Section 2.1 are not met by August 31, 2000, the Option
may not be exercised and shall terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on
the applicable date for shares of the Common Stock on an
established stock exchange or any automated quotation system
that provides sale quotations.
2.3 The Option shall expire and may not be exercised
later than October 31, 2001.
2.4 Except as otherwise provided in the Employment
Agreement, if Optionee's employment is terminated, other
than as a result of death, disability or retirement on or
after reaching age 65 or early retirement with the approval
of the Board of Directors, the Option must be exercised, to
the extent exercisable at the time of termination of
employment, within the later of (i) 30 days after the date
on which Optionee ceases to be an employee or (ii) 30 days
after the date on which the exercise of the Option and sale
of the underlying securities will not cause the Optionee to
incur a liability to SEI under Section 16 of the Securities
Exchange Act of 1934, except that the Committee may upon
request extend the period after termination of employment
during which the Option may be exercised, but in no event
later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability
within the meaning of Section 22(e)(3) of the Code, the
Option must be exercised, to the extent exercisable at the
time of termination of employment, within one year from the
date on which Optionee ceases to be an employee, but in no
event later than October 31, 2001.
2.6 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and SEI shall pay, or cause to
be paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(a) the per share price to be paid to shareholders
of SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
SEI in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any references herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control. In the event any provision of this
Agreement conflicts with a provision of any Employment
Agreement containing any provision relating to the Option,
the Employment Agreement provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ___________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
________________________________
Raymond C. Knopke, Jr.
Optionee
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
THIS AGREEMENT is effective as of December 5, 1995, by
and between Stewart Enterprises, Inc., a Louisiana corpora-
tion ("SEI"), and Raymond C. Knopke, Jr. ("Optionee").
WHEREAS Optionee is a key employee of SEI and SEI
considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary
interest in SEI and an added incentive to advance the
interests of SEI by possessing an option to purchase shares
of the Class A common stock of SEI, no par value per share
(the "Common Stock") in accordance with the Stewart
Enterprises, Inc. 1995 Incentive Compensation Plan (the
"Plan"), which was adopted by the Board of Directors on
August 24, 1995 and amended by the Board of Directors
effective December 5, 1995, subject to shareholder approval
of the Plan, as amended.
NOW, THEREFORE, in consideration of the premises, it is
agreed by and between the parties as follows:
I.
Grant of Option
SEI hereby grants to Optionee effective December 5,
1995 (the "Date of Grant"), but subject to the approval by
the shareholders of SEI of the Plan, as amended, the right,
privilege and option to purchase 2,025 shares of Common
Stock (the "Option") at an exercise price of $33.25 per
share (the "Exercise Price"). The Option shall be
exercisable at the time specified in Section II. below. The
Option is a non-qualified stock option and shall not be
treated as an incentive stock option under Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan, the other
provisions of this Agreement and the provisions of any
employment agreement between SEI and Optionee (the
"Employment Agreement") with respect to performance based
options granted under the Plan, the Option shall become
exercisable in full on the first day between December 5,
1995 and August 31, 2000 that the average of the "Closing
Sale Prices" of a share of Common Stock for the 20 preceding
consecutive trading days equals or exceeds $79.31.
Notwithstanding the foregoing, no portion of the Option
may be exercised prior to the approval of the Plan, as
amended, by the shareholders of the Company. If the
conditions described in this Section 2.1 are not met by
August 31, 2000, the Option may not be exercised and shall
terminate immediately.
2.2 "Closing Sale Price" is the closing sale price on
the applicable date for shares of the Common Stock on an
established stock exchange or any automated quotation system
that provides sale quotations.
2.3 The Option shall expire and may not be exercised
later than October 31, 2001.
2.4 Except as otherwise provided in the Employment
Agreement, if Optionee's employment is terminated, other
than as a result of death, disability or retirement on or
after reaching age 65 or early retirement with the approval
of the Board of Directors, the Option must be exercised, to
the extent exercisable at the time of termination of
employment, within the later of (i) 30 days after the date
on which Optionee ceases to be an employee or (ii) 30 days
after the date on which the exercise of the Option and sale
of the underlying securities will not cause the Optionee to
incur a liability to SEI under Section 16 of the Securities
Exchange Act of 1934, except that the Committee may upon
request extend the period after termination of employment
during which the Option may be exercised, but in no event
later than October 31, 2001.
2.5 If an Optionee ceases to be an employee because of
retirement, as described in Section 2.4, or disability
within the meaning of Section 22(e)(3) of the Code, the
Option must be exercised, to the extent exercisable at the
time of termination of employment, within one year from the
date on which Optionee ceases to be an employee, but in no
event later than October 31, 2001.
2.6 In the event of Optionee's death, the Option must
be exercised by his estate, or by the person to whom such
right evolves from him by reason of his death, to the extent
exercisable at the time of death, within one year from the
date of death, but in no event later than October 31, 2001.
III.
Method of Exercise of Option
Optionee may exercise all or a portion of the Option by
delivering to SEI a signed written notice of his intention
to exercise the Option, specifying therein the number of
shares to be purchased. Upon receiving such notice, and
after SEI has received payment of the Exercise Price as
provided in the Plan, the appropriate officer of SEI shall
cause the transfer of title of the shares purchased to
Optionee on SEI's stock records and cause to be issued to
Optionee a stock certificate for the number of shares being
acquired. Optionee shall not have any rights as a
shareholder until the stock certificate is issued to him.
IV.
Change of Control
4.1 No later than 30 days after the approval by the Board
of a Change of Control of the types described in Sections
12.12(a)(iii) and (iv) of the Plan, and no later than 30
days after a Change of Control of the type described in
Sections 12.12(a)(i) and (ii) of the Plan, the Committee (as
the Committee was composed immediately prior to such Change
of Control and notwithstanding any removal or attempted
removal of some or all of the members thereof as directors
or Committee members), acting in its sole discretion without
the consent or approval of any participant, may act to
effect one or more of the alternatives listed below and such
act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to
the Change of Control:
(a) require that all outstanding options and/or
SARs be exercised on or before a specified date (before
or after such Change of Control) fixed by the
Committee, after which specified date all unexercised
options and SARs shall terminate,
(b) provide for mandatory conversion of some or
all of the outstanding options and SARs held by some or
all participants as of a date, before or after such
Change of Control, specified by the Committee, in which
event such options and SARs shall be deemed
automatically cancelled and SEI shall pay, or cause to
be paid, to each such participant an amount of cash per
share equal to the excess, if any, of the Change of
Control Value of the shares subject to such option or
SAR, as defined and calculated below, over the exercise
price(s) of such options or SARs, or, in lieu of such
cash payment, the issuance of Common Stock or
securities of an acquiring entity having a Fair Market
Value equal to such excess,
(c) make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
(d) provide that thereafter upon any exercise of
an option or SAR the participant shall be entitled to
purchase under such option or SAR, in lieu of the
number of shares of Common Stock then covered by such
option, the number and class of shares of stock or
other securities or property (including, without
limitation, cash) to which the participant would have
been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale,
dissolution or other Change of Control of the type
described in Sections 12.12(a)(iii) and (iv) of the
Plan, if, immediately prior to such Change of Control,
the participant had been the holder of record of the
number of shares of Common Stock then covered by such
options or SARs.
4.2 For the purposes of paragraph (b) of Section 4.1
"Change of Control Value" shall equal the amount determined
by whichever of the following items is applicable:
(a) the per share price to be paid to shareholders
of SEI in any such merger, consolidation or other
reorganization,
(b) the price per share offered to shareholders of
SEI in any tender offer or exchange offer whereby a
Change of Control takes place, or
(c) in all other events, the Fair Market Value per
share of Common Stock into which such options or SARs
being converted are exercisable, as determined by the
Committee as of the date determined by the Committee to
be the date of conversion of such options or SARs.
(d) In the event that the consideration offered
to shareholders of SEI in any transaction described in this
Section 4.2 consists of anything other than cash, the
Committee shall determine the fair cash equivalent of the
portion of the consideration offered that is other than
cash.
V.
No Contract of Employment Intended
Subject to the terms of any Employment Agreement that
may be in effect from time to time, nothing in this
Agreement shall confer upon Optionee any right to continue
in the employment of SEI or any of its subsidiaries, or to
interfere in any way with the right of SEI or any of its
subsidiaries to terminate Optionee's employment relationship
with SEI or any of its subsidiaries at any time, nor shall
any references herein to any employment agreement imply that
any such agreement is in effect or that the Optionee is
entitled to enter into any such agreement with SEI.
VI.
Binding Effect
This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs,
executors, administrators and successors.
VII.
Non-Transferability
The Option granted hereby may not be transferred,
assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the
laws of descent and distribution and shall not be subject to
execution, attachment or similar process.
VIII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions
of the Plan as in effect on the date hereof and as it may be
amended. In the event any provision of this Agreement
conflicts with such a provision of the Plan, the Plan
provision shall control. In the event any provision of this
Agreement conflicts with a provision of any Employment
Agreement containing any provision relating to the Option,
the Employment Agreement provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
STEWART ENTERPRISES, INC.
By: ___________________________
Joseph P. Henican, III
Vice Chairman of the Board and
Chief Executive Officer
_______________________________
Raymond C. Knopke, Jr.
Optionee
As Amended through December 20, 1996
AMENDED AND RESTATED
STEWART ENTERPRISES, INC.
1991 INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of the 1991 Incentive
Compensation Plan (the "Plan") of Stewart Enterprises, Inc.
("Stewart") is to increase shareholder value and to advance
the interests of Stewart and its subsidiaries (collectively,
the "Company") by furnishing a variety of economic
incentives ("Incentives") designed to attract, retain and
motivate employees, officers and directors and to strengthen
the mutuality of interests between such employees, officers
and directors and Stewart's shareholders. Incentives may
consist of opportunities to purchase or receive shares of
Class A common stock, no par value per share, of Stewart
(the "Common Stock"), monetary payments or both, on terms
determined under the Plan. As used in the Plan, the term
"subsidiary" means any corporation of which Stewart owns
(directly or indirectly) within the meaning of Section
425(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), 50% or more of the total combined voting power of
all classes of stock.
2. Administration.
2.1 Composition. The Plan shall be administered
by the compensation committee of the Board of Directors
of Stewart, or by a subcommittee of the compensation
committee. The committee or subcommittee that
administers the Plan shall hereinafter be referred to
as the "Committee". The Committee shall consist of not
fewer than two members of the Board of Directors, each
of whom shall (a) qualify as a "non-employee director"
under Rule 16b-3 under the Securities Exchange Act of
1934 (the "1934 Act"), as currently in effect or any
successor rule, and (b) qualify as an "outside
director" under Section 162(m) of the Code and the
regulations thereunder.
2.2 Authority. The Committee shall have plenary
authority to award Incentives under the Plan, to
interpret the Plan, to establish any rules or
regulations relating to the Plan that it determines to
be appropriate, to enter into agreements with
participants as to the terms of the Incentives (the
"Incentive Agreements") and to make any other
determination that it believes necessary or advisable
for the proper administration of the Plan. Its
decisions in matters relating to the Plan shall be
final and conclusive on the Company and participants.
The Committee may delegate its authority hereunder to
the extent provided elsewhere herein. The Committee
shall not have authority to award Incentives under the
Plan to directors of Stewart who are not also full-time
employees of the Company ("Outside Directors").
Outside Directors may receive awards under the Plan
only as specifically provided in Section 11 hereof.
3. Eligible Employees. Key employees of the Company
(including officers and directors who are full-time
employees of the Company, but excluding Outside Directors)
shall become eligible to receive Incentives under the Plan
when designated by the Committee. Employees may be
designated individually or by groups or categories, as the
Committee deems appropriate. With respect to participants
not subject to Section 16 of the 1934 Act, the Committee may
delegate its authority to designate participants, to
determine the size and type of Incentive to be received by
those participants and to determine or modify performance
objectives for those participants. Outside Directors may
participate in the Plan only as specifically provided in
Section 11 hereof.
4. Types of Incentives. Incentives may be granted
under the Plan to employees and officers in any of the
following forms, either individually or in combination, (a)
incentive stock options and non-qualified stock options; (b)
stock awards; (c) restricted stock; (d) performance shares
and (e) cash awards.
5. Shares Subject to the Plan.
5.1. Number of Shares. Subject to adjustment as
provided in Section 10.5, a total of 1,250,000 shares
of Common Stock are authorized to be issued under the
Plan. In the event that a stock option granted
hereunder expires or is terminated or cancelled prior
to exercise, any shares of Common Stock that were
issuable under such options may again be issued under
the Plan. In the event that shares of Common Stock are
issued as restricted stock or pursuant to a stock award
and thereafter are forfeited or reacquired by the
Company pursuant to rights reserved upon issuance
thereof, such forfeited and reacquired shares may again
be issued under the Plan, if such reissuance is in
compliance with the terms of the exemption provided by
Rule 16b-3 under the 1934 Act.
5.2 Cancellation. The Committee may also
determine to cancel, and agree to the cancellation of,
stock options in order to make a participant eligible
for the grant of a stock option at a lower price or the
grant of another Incentive.
5.3. Type of Common Stock. Common Stock issued
under the Plan may be authorized and unissued shares or
issued shares held as treasury shares.
6. Stock Options. A stock option is a right to
purchase shares of Common Stock from the Company. Stock
options granted under this Plan may be incentive stock
options or non-qualified stock options. Any option that is
designated as a non-qualified stock option shall not be
treated as an incentive stock option. Each stock option
granted by the Committee under this Plan shall be subject to
the following terms and conditions:
6.1. Price. The exercise price per share shall
be determined by the Committee, subject to adjustment
under Section 10.5; provided that in no event shall the
option price be less than 50% of the Fair Market Value
of a share of Common Stock on the date of grant.
6.2. Number. The number of shares of Common
Stock subject to the option shall be determined by the
Committee, subject to adjustment as provided in Section
10.5.
6.3. Duration and Time for Exercise. Subject to
earlier termination as provided in Section 10.3, the
term of each stock option shall be determined by the
Committee. Each stock option shall become exercisable
at such time or times during its term as shall be
determined by the Committee at the time of grant,
provided, however, that no stock option granted to an
officer or director of Stewart who is subject to
Section 16 of the 1934 Act (an "Insider") shall be
exercisable within the six-month period immediately
following the date of grant. The Committee may
accelerate the exercisability of any stock option,
except as prohibited in the foregoing sentence.
6.4. Repurchase. Upon approval of the Committee,
the Company may repurchase a previously granted stock
option from a participant by mutual agreement before
such option has been exercised by payment to the
participant of the amount per share by which: (i) the
Fair Market Value (as defined in Section 10.12) of the
Common Stock subject to the option on the date of
purchase exceeds (ii) the exercise price.
6.5. Manner of Exercise. A stock option may be
exercised, in whole or in part, by giving written
notice to the Company, specifying the number of shares
of Common Stock to be purchased. The exercise notice
shall be accompanied by the full purchase price for
such shares. The option price shall be payable in
United States dollars and may be paid by cash;
uncertified or certified check; bank draft; by delivery
of shares of Common Stock held by the optionee for at
least six months, which shares shall be valued for this
purpose at the Fair Market Value on the date such
option is exercised, or in such other manner as may be
authorized from time to time by the Committee. The
Committee may also permit participants, either on a
selective or aggregate basis, simultaneously to
exercise options and sell the shares of Common Stock
acquired pursuant to a brokerage or similar
arrangement, approved in advance by the Committee, and
use the proceeds from such sale as payment of the
exercise price. In the case of delivery of an
uncertified check or bank draft upon exercise of a
stock option, no shares shall be issued until the check
or draft has been paid in full. Prior to the issuance
of shares of Common Stock upon the exercise of a stock
option, a participant shall have no rights as a
shareholder.
6.6. Incentive Stock Options. Notwithstanding
anything in the Plan to the contrary, the following
additional provisions shall apply to the grant of stock
options that are intended to qualify as Incentive Stock
Options (as such term is defined in Section 422A of the
Code):
(a) Any Incentive Stock Option agreement
authorized under the Plan shall contain such other
provisions as the Committee shall deem advisable,
but shall in all events be consistent with and
contain or be deemed to contain all provisions
required in order to qualify the options as
Incentive Stock Options.
(b) All Incentive Stock Options must be
granted within ten years from the date on which
this Plan is adopted by the Board of Directors.
(c) Unless sooner exercised, all Incentive
Stock Options shall expire no later than ten years
after the date of grant.
(d) The option price for Incentive Stock
Options shall be not less than the Fair Market
Value of the Common Stock subject to the option on
the date of grant.
(e) No Incentive Stock Options shall be
granted to any participant who, at the time such
option is granted, would own (within the meaning
of Section 422A of the Code) stock possessing more
than 10% of the total combined voting power of all
classes of stock of the employer corporation or of
its parent or subsidiary corporation.
(f) The aggregate Fair Market Value
(determined with respect to each Incentive Stock
Option as of the time such Incentive Stock Option
is granted) of the Common Stock with respect to
which Incentive Stock Options are exercisable for
the first time by a participant during any
calendar year (under the Plan or any other plan of
Stewart or any of its subsidiaries) shall not
exceed $100,000.
6.7 Equity Maintenance. If a participant
exercises an option during the term of his employment
with the Company, and subject to Committee approval
pays the exercise price (or any portion thereof) of the
shares of Common Stock as to which such option applies
through the surrender of shares of outstanding Common
Stock previously held in the participant's name, the
Committee may, in its discretion, grant to such
participant an additional option to purchase the number
of shares of Common Stock equal to the shares of Common
Stock so surrendered by such participant. Any such
additional options granted by the Committee shall be
exercisable at the Fair Market Value of the Common
Stock determined as of the respective dates such
additional options may be granted. As stated above,
such additional options may be granted only in
connection with the exercise of options by the
participant during the term of his active employment
with the Company. The grant of such additional options
under this Section 6.7 shall be made upon such other
terms and conditions as the Committee may from time to
time determine.
7. Stock Awards and Restricted Stock. A stock award
consists of the transfer by the Company to a participant of
shares of Common Stock, without other payment therefor, as
additional compensation for services previously provided to
the Company. Restricted stock consists of shares of Common
Stock that are transferred to a participant by the Company
for services previously provided to the Company or sold by
the Company to a participant for the price provided in
Section 7.2 below, but subject to restrictions on sale or
other transfer by the participant. The transfer of Common
Stock pursuant to stock awards and the transfer and sale of
restricted stock shall be subject to the following terms and
conditions.
7.1. Number of Shares. The number of shares to
be transferred by the Company to a participant pursuant
to a stock award or as restricted stock shall be
determined by the Committee.
7.2. Sale Price. The Committee shall determine
the price, if any, at which shares of restricted stock
shall be sold to a participant, which may vary from
time to time and among participants and which will be
less than or equal to 10% of the Fair Market Value of
the shares on the date of payment. A participant must
pay the sale price not more than 60 days after the date
of grant of the restricted stock.
7.3. Restrictions. All shares of restricted
stock transferred or sold hereunder shall be subject to
such restrictions as the Committee may determine,
including, without limitation, any or all of the
following:
(a) a prohibition against the sale,
transfer, pledge or other encumbrance of the
shares of restricted stock, such prohibition to
lapse at such time or times as the Committee shall
determine (whether in annual or more frequent
installments, at the time of the death, disability
or retirement of the holder of such shares, or
otherwise); and
(b) a requirement that the holder of shares
of restricted stock forfeit, or (in the case of
shares sold to a participant) resell to the
Company at his cost, all or any part of such
shares in the event of termination of his
employment during any period in which such shares
are subject to restrictions.
7.4. Escrow. In order to enforce the
restrictions imposed by the Committee pursuant to
Section 7.3, the participant receiving restricted stock
shall enter into an agreement with the Company setting
forth the conditions of the grant. Shares of
restricted stock shall be registered in the name of the
participant and the certificates representing such
shares shall be deposited, together with a stock power
endorsed in blank, with the Company. Each such
certificate shall bear a legend in substantially the
following form:
The transferability of this
certificate and the shares of
Common Stock represented by it are
subject to the terms and conditions
(including conditions of
forfeiture) contained in the
Stewart Enterprises, Inc. 1991
Incentive Compensation Plan, and an
agreement entered into between the
registered owner and Stewart
Enterprises, Inc. A copy of the
Plan and agreement is on file in
the office of the secretary of
Stewart Enterprises, Inc.
7.5. End of Restrictions. Subject to Section
10.3, at the end of any time period during which the
shares of restricted stock are subject to forfeiture
and restrictions on transfer, the certificates
representing such shares will be delivered free of such
restrictions to the participant or to the participant's
legal representative, beneficiary or heir.
7.6. Shareholder. Subject to the terms and
conditions of the Plan and the Incentive Agreement,
each participant receiving restricted stock shall have
all the rights of a shareholder with respect to shares
of stock during any period in which such shares are
subject to forfeiture and restrictions on transfer,
including without limitation, the right to vote such
shares. Unless otherwise provided in the Incentive
Agreement, dividends paid in cash or property other
than Common Stock with respect to shares of restricted
stock shall be paid to the participant currently.
8. Performance Shares. A performance share consists
of an award that shall be paid in shares of Common Stock, as
described below, without any payment by the participant.
The award of performance shares shall be subject to such
terms and conditions as the Committee deems appropriate,
including the following:
8.1. Performance Objectives. Each performance
share will be subject to performance objectives for the
Company or one of its operating divisions to be
achieved by the end of a specified period. The number
of performance shares awarded shall be determined by
the Committee and may be subject to such terms and
conditions, as the Committee shall determine. If the
performance objectives are achieved, each participant
will be paid in shares of Common Stock equal to the
number of performance shares initially granted to that
participant. If such objectives are not met, each award
of performance shares may provide for lesser payments
in accordance with formulae established in the award.
8.2. Not a Shareholder. The award of performance
shares to a participant shall not create any rights in
such participant as a shareholder of the Company, until
the payment of shares of Common Stock with respect to
an award.
8.3. Dividend Equivalent Payments. Unless a
performance share award is granted by the Committee in
conjunction with dividend equivalent payment rights or
other such rights, no adjustment shall be made in
performance shares awarded on account of cash dividends
that may be paid or other rights that may be issued to
the holders of Common Stock prior to the end of any
period for which performance objectives were
established.
9. Cash Awards. A cash award consists of a monetary
payment made by the Company to a participant as additional
compensation for his services to the Company. Payment of a
cash award will normally depend on achievement of
performance objectives by the Company or by individuals.
The amount of any monetary payment constituting a cash award
shall be determined by the Committee in its sole discretion.
Cash awards may be subject to other terms and conditions,
which may vary from time to time and among participants, as
the Committee determines to be appropriate.
10. General.
10.1. Duration. The Plan shall remain in effect
until all Incentives granted under the Plan have either
been satisfied by the issuance of shares of Common
Stock or the payment of cash or been terminated under
the terms of the Plan and all restrictions imposed on
shares of Common Stock in connection with their
issuance under the Plan have lapsed.
10.2. Transferability of Incentives. No stock
option or performance share granted hereunder may be
transferred, pledged, assigned or otherwise encumbered
by the holder thereof except:
(a) by will;
(b) by the laws of descent and distribution;
(c) pursuant to a domestic relations order, as
defined in the Code, or
(d) in the case of non-qualified stock
options only,
(i) to family members,
(ii) to a family partnership,
(iii) to a family limited liability company,
or
(iv) to a trust for the benefit of family
members,
in all such cases, if permitted by the
Committee and so provided in the Incentive
Agreement or an amendment thereto.
Any attempted assignment, transfer, pledge,
hypothecation or other disposition of a stock option or
performance share or levy of attachment, or similar
process upon a stock option or performance share not
specifically permitted herein, shall be null and void
and without effect.
10.3. Effect of Termination of Employment or
Death. In the event that a participant ceases to be an
employee of the Company for any reason, including
death, any Incentives may be exercised or shall expire
at such times as may be determined by the Committee in
the Incentive Agreement.
10.4. Additional Condition. Anything in this
Plan to the contrary notwithstanding: (a) the Company
may, if it shall determine it necessary or desirable
for any reason, at the time of award of any Incentive
or the issuance of any shares of Common Stock pursuant
to any Incentive, require the recipient of the
Incentive, as a condition to the receipt thereof or to
the receipt of shares of Common Stock issued pursuant
thereto, to deliver to the Company a written
representation of present intention to acquire the
Incentive or the shares of Common Stock issued pursuant
thereto for his own account for investment and not for
distribution; and (b) if at any time the Company
further determines, in its sole discretion, that the
listing, registration or qualification (or any updating
of any such document) of any Incentive or the shares of
Common Stock issuable pursuant thereto is necessary on
any securities exchange or under any federal or state
securities or blue sky law, or that the consent or
approval of any governmental regulatory body is
necessary or desirable as a condition of, or in
connection with the award of any Incentive, the
issuance of shares of Common Stock pursuant thereto, or
the removal of any restrictions imposed on such shares,
such Incentive shall not be awarded or such shares of
Common Stock shall not be issued or such restrictions
shall not be removed, as the case may be, in whole or
in part, unless such listing, registration,
qualification, consent or approval shall have been
effected or obtained free of any conditions not
acceptable to the Company.
10.5. Adjustment. In the event of any merger,
consolidation or reorganization of the Company with any
other corporation or corporations, there shall be
substituted for each of the shares of Common Stock then
subject to the Plan, including shares subject to
restrictions, options, or achievement of performance
share objectives, the number and kind of shares of
stock or other securities to which the holders of the
shares of Common Stock will be entitled pursuant to the
transaction. In the event of any recapitalization,
stock dividend, stock split, combination of shares or
other change in the Common Stock, the number of shares
of Common Stock then subject to the Plan, including
shares subject to restrictions, options or achievement
of performance share objectives, shall be adjusted in
proportion to the change in outstanding shares of
Common Stock. In the event of any such adjustments,
the purchase price of any option, the performance
objectives of any Incentive, and the shares of Common
Stock issuable pursuant to any Incentive shall be
adjusted as and to the extent appropriate, in the
reasonable discretion of the Committee, to provide
participants with the same relative rights before and
after such adjustment.
10.6. Incentive Agreements. Except in the case
of stock awards or cash awards, the terms of each
Incentive shall be stated in an agreement approved by
the Committee. The Committee may also determine to
enter into agreements with holders of options to
reclassify or convert certain outstanding options,
within the terms of the Plan, as Incentive Stock
Options or as non-qualified stock options.
10.7. Withholding.
(a) The Company shall have the right to
withhold from any payments or stock issuances
under the Plan, or to collect as a condition of
payment, any taxes required by law to be withheld.
(b) Any participant may, but is not required
to, satisfy his or her withholding tax obligation
in whole or in part by electing (the "Election")
to have the Company withhold from the shares the
participant otherwise would receive shares of
Common Stock having a value equal to the amount
required to be withheld. The value of the shares
to be withheld shall be based on the Fair Market
Value of the Common Stock on the date that the
amount of tax to be withheld shall be determined
(the "Tax Date"). Each Election must be made
prior to the Tax Date. The Committee may
disapprove of any Election, may suspend or
terminate the right to make Elections, or may
provide with respect to any Incentive that the
right to make Elections shall not apply to such
Incentive.
10.8. No Continued Employment. No participant
under the Plan shall have any right, because of his or
her participation, to continue in the employ of the
Company for any period of time or to any right to
continue his or her present or any other rate of
compensation.
10.9. Deferral Permitted. Payment of cash or
distribution of any shares of Common Stock to which a
participant is entitled under any Incentive shall be
made as provided in the Incentive Agreement. Payment
may be deferred at the option of the participant if
provided in the Incentive Agreement.
10.10. Amendment of the Plan. The Board may
amend or discontinue the Plan at any time. In
addition, no amendment or discontinuance shall, subject
to adjustments permitted under Section 10.5, change or
impair, without the consent of the recipient, an
Incentive previously granted, except that the Company
retains the right to (a) convert any outstanding
Incentive Stock Option to a non-qualified stock option,
or (b) require the forfeiture of an Incentive if a
participant's employment is terminated for cause.
10.11. Acceleration of Incentives.
Notwithstanding any provision in this Plan or in any
Incentive Agreement to the contrary, the Committee, in
its sole discretion, shall have the power to cause at
any time (a) the restrictions on all shares of
restricted stock awarded to lapse immediately, (b) all
outstanding options to become exercisable immediately,
and (c) all performance objectives to be deemed to be
met and payment made immediately.
10.12. Definition of Fair Market Value. Whenever
"Fair Market Value" of Common Stock shall be determined
for purposes of this Plan, it shall be determined as
follows: (i) if the Common Stock is listed on an
established stock exchange or any automated quotation
system that provides sale quotations, the closing sale
price for a share of the Common Stock on such exchange
or quotation system on the applicable date, or if no
sale of the Common Stock shall have been made on that
day, on the next preceding day on which there was a
sale of the Common Stock; (ii) if the Common Stock is
not listed on any exchange or quotation system, but bid
and asked prices are quoted and published, the mean
between the quoted bid and asked prices on the
applicable date, and if bid and asked prices are not
available on such day, on the next preceding day on
which such prices were available; and (iii) if the
Common Stock is not regularly quoted, the fair market
value of a share of Common Stock on the applicable date
as established by the Committee in good faith.
11. Stock Options for Outside Directors.
11.1 Eligibility. Each Outside Director shall be
automatically granted a non-qualified stock option to
acquire 2,500 shares of Common Stock at 2:00 p.m.,
Central Standard Time, on the dates provided below, if
such person continues to serve as an Outside Director
on the specified date of grant:
Date of Grant
February 16, 1993
November 1, 1993
November 1, 1994
November 1, 1995
Each person who becomes an Outside Director
between February 16, 1993 and October 31,
1995 will be entitled to receive the pro rata
portion of stock options to acquire 2,500
shares of Common Stock based on the number of
full calendar months between the date that
the person becomes an Outside Director and
the next date of grant, as provided herein,
and to receive the stock options to which he
may subsequently become entitled as provided
herein.
11.2 Exercisability of Stock Options. The stock
options granted to Outside Directors under this Section
11 shall become exercisable on the October 31 following
the date of grant; provided, however, that such stock
options shall become immediately exercisable in the
event of retirement from the Board on or after reaching
age 65, death or disability No stock option granted to
an Outside Director under the terms of this Section 11
may be exercised after October 31, 1997.
11.3 Exercise Price. The exercise price of the
stock options granted to Outside Directors shall be
equal to 80% of the Fair Market Value, as defined in
the Plan, of a share of Common Stock on the date of
grant. The exercise price may be paid as provided in
Section 6.5 hereof, including pursuant to a brokerage
arrangement approved in advance by the Committee.
11.4 Exercise after Death, Disability or
Retirement. In the event of the death, disability or
retirement of an Outside Director on or after reaching
age 65, the stock options granted hereunder must be
exercised, to the extent otherwise exercisable, within
one year from the date of death, disability or
retirement but no later than October 31, 1997.
11.5 Grant to Former Outside Directors.
Notwithstanding any of the foregoing, each Former
Outside Director shall receive on November 1, 1995 the
automatic grant provided in Section 11.1 hereof to be
made to all Outside Directors on the same terms as if
such person were an Outside Director on that date.
Such options shall become exercisable October 31, 1996
and shall expire October 31, 1997.
12. Loans. In order to assist a participant in
acquiring shares of Common Stock pursuant to an Incentive
granted under the Plan, the Committee may authorize, subject
to the provisions of Regulation G of the Board of Governors
of the Federal Reserve System, at either the time of the
grant of the Incentive, at the time of the acquisition of
Common Stock pursuant to the Incentive, or at the time of
the lapse of restrictions on shares of restricted stock
granted under the Plan, the extension of a loan to the
participant by the Company. The terms of any loans,
including the interest rate, collateral and terms of
repayment, will be subject to the discretion of the
Committee. The maximum credit available hereunder shall be
equal to the aggregate purchase price of the shares of
Common Stock to be acquired pursuant to the Incentive plus
the maximum tax liability that may be incurred in connection
with the Incentive.
13. Change of Control. (a) A Change of Control
shall mean:
(i) the acquisition by any individual, entity
or group (within the meaning of Section 13(d)(3) or
14(d)(2) of the 1934 Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
1934 Act) of more than 30% of the outstanding shares of
Stewart's Class A Common Stock, no par value per share
(the "Common Stock"); provided, however, that for
purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control:
(A) any acquisition of Common Stock
directly from Stewart,
(B) any acquisition of Common Stock by
Stewart,
(C) any acquisition of Common Stock by
any employee benefit plan (or related trust)
sponsored or maintained by Stewart or any
corporation controlled by Stewart, or
(D) any acquisition of Common Stock by
any corporation pursuant to a transaction
that complies with clauses (A), (B) and (C)
of subsection (iii) of this Section 13; or
(ii) individuals who, as of the date this
Section 13 was added to the Plan by the Board of
Directors (the "Approval Date"), constitute the Board
(the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided,
however, that any individual becoming a director
subsequent to the Approval Date whose election, or
nomination for election by Stewart's shareholders, was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be
considered a member of the Incumbent Board, unless such
individual's initial assumption of office occurs as a
result of an actual or threatened election contest with
respect to the election or removal of directors or
other actual or threatened solicitation of proxies or
consents by or on behalf of a person other than the
Incumbent Board; or
(iii) consummation of a reorganization,
merger or consolidation, or sale or other disposition
of all or substantially all of the assets of Stewart (a
"Business Combination"), in each case, unless,
following such Business Combination,
(A) all or substantially all of the
individuals and entities who were the
beneficial owners of Stewart's outstanding
common stock and Stewart's voting securities
entitled to vote generally in the election of
directors immediately prior to such Business
Combination have direct or indirect
beneficial ownership, respectively, of more
than 50% of the then outstanding shares of
common stock, and more than 50% of the
combined voting power of the then outstanding
voting securities entitled to vote generally
in the election of directors, of the
corporation resulting from such Business
Combination (which, for purposes of this
paragraph (A) and paragraphs (B) and (C),
shall include a corporation which as a result
of such transaction owns Stewart or all or
substantially all of Stewart's assets either
directly or through one or more
subsidiaries), and
(B) except to the extent that such
ownership existed prior to the Business
Combination, no person (excluding any
corporation resulting from such Business
Combination or any employee benefit plan or
related trust of Stewart or such corporation
resulting from such Business Combination)
beneficially owns, directly or indirectly,
20% or more of the then outstanding shares of
common stock of the corporation resulting
from such Business Combination or 20% or more
of the combined voting power of the then
outstanding voting securities of such
corporation, and
(C) at least a majority of the members
of the board of directors of the corporation
resulting from such Business Combination were
members of the Incumbent Board at the time of
the execution of the initial agreement, or of
the action of the Board, providing for such
Business Combination; or
(iv) approval by the shareholders of Stewart
of a plan of complete liquidation or dissolution of
Stewart.
(b) Upon a Change of Control, or immediately prior
to the closing of a transaction that will result in a
Change of Control if consummated, all outstanding
options granted pursuant to the Plan shall
automatically become fully exercisable, all
restrictions or limitations on any Incentives shall
lapse, all performance criteria and other conditions
relating to the payment of Incentives shall be deemed
to be achieved or waived by Stewart without the
necessity of action by any person.
As Amended through December 20, 1996
AMENDED AND RESTATED
STEWART ENTERPRISES, INC.
1995 INCENTIVE COMPENSATION PLAN
1. Purpose. The purpose of the 1995 Incentive
Compensation Plan (the "Plan") of Stewart Enterprises, Inc.
("Stewart") is to increase shareholder value and to advance
the interests of Stewart and its subsidiaries (collectively,
the "Company") by furnishing a variety of economic
incentives (the "Incentives") designed to attract, retain
and motivate employees and officers and to strengthen the
mutuality of interests between such employees and officers
and Stewart's shareholders. Incentives may consist of
opportunities to purchase or receive shares of Stewart's
Class A common stock, no par value per share (the "Common
Stock"), on terms determined under the Plan. As used in the
Plan, the term "subsidiary" means any corporation of which
Stewart owns (directly or indirectly) within the meaning of
Section 425(f) of the Internal Revenue Code of 1986, as
amended (the "Code"), 50% or more of the total combined
voting power of all classes of stock. Any Incentives
granted hereunder prior to approval of the Plan by the
shareholders of Stewart, shall be granted subject to such
approval.
2. Administration.
2.1 Composition. The Plan shall be
administered by the compensation committee of the Board
of Directors of Stewart, or by a subcommittee of the
compensation committee. The committee or subcommittee
that administers the Plan shall hereinafter be referred
to as the "Committee". The Committee shall consist of
not fewer than two members of the Board of Directors,
each of whom shall (a) qualify as a "non-employee
director" under Rule 16b-3 under the Securities
Exchange Act of 1934 (the "1934 Act"), as currently in
effect or any successor rule, and (b) qualify as an
"outside director" under Section 162(m) of the Code and
the regulations thereunder.
2.2 Authority. The Committee shall have
plenary authority to award Incentives under the Plan,
to interpret the Plan, to establish any rules or
regulations relating to the Plan that it determines to
be appropriate, to enter into agreements with
participants as to the terms of the Incentives (the
"Incentive Agreements") and to make any other
determination that it believes necessary or advisable
for the proper administration of the Plan. Its
decisions in matters relating to the Plan shall be
final and conclusive on the Company and participants.
The Committee may delegate its authority hereunder to
the extent provided in Section 3 hereof.
3. Eligible Participants. Key employees of the
Company (including officers who also serve as directors of
the Company) shall become eligible to receive Incentives
under the Plan when designated by the Committee. Employees
may be designated individually or by groups or categories,
as the Committee deems appropriate. With respect to
participants not subject to Section 16 of the 1934 Act, the
Committee may delegate to appropriate personnel of the
Company its authority to designate participants, to
determine the size and type of Incentives to be received by
those participants and to determine or modify performance
objectives for those participants.
4. Types of Incentives. Incentives may be granted
under the Plan to eligible participants in any of the
following forms, either individually or in combination, (a)
non-qualified and incentive stock options; (b) stock
appreciation rights ("SARs") (c) restricted stock; (d)
performance shares; (e) stock awards; and (f) cash awards.
5. Shares Subject to the Plan.
5.1 Number of Shares. Subject to adjustment
as provided in Section 12.5, the total number of shares
of Common Stock with respect to which Incentives may be
granted under the Plan shall not exceed 3,200,000
shares during the effectiveness of the Plan, less any
shares issuable (a) pursuant to options outstanding
from time to time under the Company's 1991 Incentive
Compensation Plan and (b) to non-employee directors of
the Company under a non-employee directors stock plan.
Incentives with respect to no more than 500,000 shares
of Common Stock may be granted through the Plan to a
single participant in one calendar year. In the event
that a stock option, SAR or performance share granted
hereunder expires or is terminated or cancelled prior
to exercise or payment, any shares of Common Stock that
were issuable thereunder may be issued again under the
Plan. In the event that shares of Common Stock are
issued as Incentives under the Plan and thereafter are
forfeited or reacquired by the Company pursuant to
rights reserved upon issuance thereof, such forfeited
and reacquired shares may be issued again under the
Plan. If an Incentive is to be paid in cash by its
terms, the Committee need not make a deduction from the
shares of Common Stock issuable under the Plan with
respect thereto. If and to the extent that an
Incentive may be paid in cash or shares of Common
Stock, the total number of shares available for
issuance hereunder shall be decreased by the number of
shares payable under such Incentive, provided that upon
any payment of all or part of such Incentive in cash,
the total number of shares available for issuance
hereunder shall be increased by the appropriate number
of shares represented by the cash payment, as
determined in the sole discretion of the Committee.
Additional rules for determining the number of shares
granted under the Plan may be made by the Committee, as
it deems necessary or appropriate.
5.2 Type of Common Stock. Common Stock issued
under the Plan may be authorized and unissued shares or
issued shares held as treasury shares.
6. Stock Options. A stock option is a right to
purchase shares of Common Stock from Stewart. Each stock
option granted by the Committee under this Plan shall be
subject to the following terms and conditions:
6.1 Price. The exercise price per share shall
be determined by the Committee, subject to adjustment
under Section 12.5; provided that in no event shall the
exercise price be less than the Fair Market Value of a
share of Common Stock on the date of grant.
6.2 Number. The number of shares of Common
Stock subject to the option shall be determined by the
Committee, subject to Section 5.1 and subject to
adjustment as provided in Section 12.5.
6.3 Duration and Time for Exercise. Subject
to earlier termination as provided in Section 12.4, the
term of each stock option shall be determined by the
Committee. Each stock option shall become exercisable
at such time or times during its term as shall be
determined by the Committee. The Committee may
accelerate the exercisability of any stock option at
any time.
6.4 Repurchase. Upon approval of the
Committee, the Company may repurchase all or a portion
of a previously granted stock option from a participant
by mutual agreement before such option has been
exercised by payment to the participant of cash or
Common Stock or a combination thereof with a value
equal to the amount per share by which: (a) the Fair
Market Value (as defined in Section 12.12) of the
Common Stock subject to the option on the business day
immediately preceding the date of purchase exceeds (b)
the exercise price.
6.5 Manner of Exercise. A stock option may be
exercised, in whole or in part, by giving written
notice to the Company, specifying the number of shares
of Common Stock to be purchased. The exercise notice
shall be accompanied by the full purchase price for
such shares. The option price shall be payable in
United States dollars and may be paid by (a) cash; (b)
uncertified or certified check; (c) delivery of shares
of Common Stock, which shares shall be valued for this
purpose at the Fair Market Value on the business day
immediately preceding the date such option is exercised
and, unless otherwise determined by the Committee,
shall have been held by the optionee for at least six
months; (d) if permitted by the Committee, delivery of
a properly executed exercise notice together with
irrevocable instructions to a broker approved by the
Company (with a copy to the Company) to deliver
promptly to the Company the amount of sale or loan
proceeds to pay the exercise price; or (e) in such
other manner as may be authorized from time to time by
the Committee. In the case of delivery of an
uncertified check upon exercise of a stock option, no
shares shall be issued until the check has been paid in
full. Prior to the issuance of shares of Common Stock
upon the exercise of a stock option, a participant
shall have no rights as a shareholder.
6.6 Incentive Stock Options. Notwithstanding
anything in the Plan to the contrary, the following
additional provisions shall apply to the grant of stock
options that are intended to qualify as incentive stock
options (as such term is defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"):
(a) Any incentive stock option authorized
under the Plan shall contain such other provisions
as the Committee shall deem advisable, but shall
in all events be consistent with and contain or be
deemed to contain all provisions required in order
to qualify the options as incentive stock options;
(b) All incentive stock options must be
granted within ten years from the date on which
this Plan was adopted by the Board of Directors;
(c) Unless sooner exercised, all incentive
stock options shall expire no later than ten years
after the date of grant;
(d) No incentive stock option shall be
granted to any participant who, at the time such
option is granted, would own (within the meaning
of Section 422 of the Code) stock possessing more
than 10% of the total combined voting power of all
classes of stock of the employer corporation or of
its parent or subsidiary corporation; and
(e) The aggregate Fair Market Value
(determined with respect to each incentive stock
option as of the time such incentive stock option
is granted) of the Common Stock with respect to
which incentive stock options are exercisable for
the first time by a participant during any
calendar year (under the Plan or any other plan of
the Company) shall not exceed $100,000. To the
extent that such limitation is exceeded, such
options shall not be treated, for federal income
tax purposes, as incentive stock options.
7. Restricted Stock.
7.1 Grant of Restricted Stock. The Committee may
award shares of restricted stock to such key employees
as the Committee determines to be eligible pursuant to
the terms of Section 3. An award of restricted stock
may be subject to the attainment of specified
performance goals or targets, restrictions on transfer,
forfeitability provisions and such other terms and
conditions as the Committee may determine, subject to
the provisions of the Plan. To the extent restricted
stock is intended to qualify as performance based
compensation under Section 162(m) of the Code, it must
meet the additional requirements imposed thereby.
7.2 The Restricted Period. At the time an award
of restricted stock is made, the Committee shall
establish a period of time during which the transfer of
the shares of restricted stock shall be restricted (the
"Restricted Period"). Each award of restricted stock
may have a different Restricted Period. A Restricted
Period of at least three years is required, except that
if vesting of the shares is subject to the attainment
of specified performance goals, a Restricted Period of
one year or more is permitted. Unless otherwise
provided in the Incentive Agreement, the Committee may
in its discretion declare the Restricted Period
terminated and permit the sale or transfer of the
restricted stock. The expiration of the Restricted
Period shall also occur as provided under Section 12.3.
7.3 Escrow. The participant receiving restricted
stock shall enter into an Incentive Agreement with the
Company setting forth the conditions of the grant.
Certificates representing shares of restricted stock
shall be registered in the name of the participant and
deposited with the Company, together with a stock power
endorsed in blank by the participant. Each such
certificate shall bear a legend in substantially the
following form:
The transferability of this certificate and
the shares of Common Stock represented by it
is subject to the terms and conditions
(including conditions of forfeiture)
contained in the Stewart Enterprises, Inc.
1995 Incentive Compensation Plan (the "Plan")
and an agreement entered into between the
registered owner and Stewart Enterprises,
Inc. thereunder. Copies of the Plan and the
agreement are on file and available for
inspection at the principal office of the
Company.
7.4 Dividends on Restricted Stock. Any and all
cash and stock dividends paid with respect to the
shares of restricted stock shall be subject to any
restrictions on transfer, forfeitability provisions or
reinvestment requirements as the Committee may, in its
discretion, prescribe in the Incentive Agreement.
7.5 Forfeiture. In the event of the forfeiture of
any shares of restricted stock under the terms provided
in the Incentive Agreement (including any additional
shares of restricted stock that may result from the
reinvestment of cash and stock dividends, if so
provided in the Incentive Agreement), such forfeited
shares shall be surrendered and the certificates
cancelled. The participants shall have the same rights
and privileges, and be subject to the same forfeiture
provisions, with respect to any additional shares
received pursuant to Section 12.6 due to a
recapitalization, merger or other change in
capitalization.
7.6 Expiration of Restricted Period. Upon the
expiration or termination of the Restricted Period and
the satisfaction of any other conditions prescribed by
the Committee or at such earlier time as provided for
in Section 7.2 and in the Incentive Agreement or an
amendment thereto, the restrictions applicable to the
restricted stock shall lapse and a stock certificate
for the number of shares of restricted stock with
respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions and legends
other than those required by law, to the participant or
the participant's estate, as the case may be.
7.7 Rights as a Shareholder. Subject to the terms
and conditions of the Plan and subject to any
restrictions on the receipt of dividends that may be
imposed in the Incentive Agreement, each participant
receiving restricted stock shall have all the rights of
a shareholder with respect to shares of stock during
any period in which such shares are subject to
forfeiture and restrictions on transfer, including
without limitation, the right to vote such shares.
8. Stock Appreciation Rights. A SAR is a right to
receive, without payment to the Company, a number of shares
of Common Stock, cash or any combination thereof, the amount
of which is determined pursuant to the formula set forth in
Section 8.4. A SAR may be granted (a) with respect to any
stock option granted under the Plan, either concurrently
with the grant of such stock option or at such later time as
determined by the Committee (as to all or any portion of the
shares of Common Stock subject to the stock option), or (b)
alone, without reference to any related stock option. Each
SAR granted by the Committee under the Plan shall be subject
to the following terms and conditions:
8.1 Number. Each SAR granted to any participant
shall relate to such number of shares of Common Stock
as shall be determined by the Committee, subject to
Section 5.1 and subject to adjustment as provided in
Section 12.5. In the case of a SAR granted with
respect to a stock option, the number of shares of
Common Stock to which the SAR pertains shall be reduced
in the same proportion that the holder of the option
exercises the related stock option.
8.2 Duration and Time for Exercise. The term and
exercisability of each SAR shall be determined by the
Committee. Unless otherwise provided by the Committee
in the Incentive Agreement, each SAR issued in
connection with a stock option shall become exercisable
at the same time or times, to the same extent and upon
the same conditions as the related stock option. The
Committee may in its discretion accelerate the
exercisability of any SAR at any time.
8.3 Exercise. A SAR may be exercised, in whole or
in part, by giving written notice to the Company,
specifying the number of SARs that the holder wishes to
exercise. The Company shall, within 30 days of receipt
of notice of exercise, deliver to the exercising holder
certificates for the shares of Common Stock or cash or
both, as determined by the Committee, to which the
holder is entitled pursuant to Section 8.4.
8.4 Payment. Subject to the right of the
Committee to deliver cash in lieu of shares of Common
Stock, the number of shares of Common Stock that shall
be issuable upon the exercise of an SAR shall be
determined by dividing:
(a) the number of shares of Common Stock as
to which the SAR is exercised multiplied by the
dollar amount of the appreciation in such shares
(for this purpose, the "appreciation" shall be the
amount by which the Fair Market Value of the
shares of Common Stock subject to the SAR on the
Exercise Date exceeds (1) in the case of a SAR
related to a stock option, the purchase price of
the shares of Common Stock under the stock option
or (2) in the case of a SAR granted alone, without
reference to a related stock option, an amount
equal to the Fair Market Value of a share of
Common Stock on the date of grant, which shall be
determined by the Committee at the time of grant,
subject to adjustment under Section 12.5); by
(b) the Fair Market Value of a share of
Common Stock on the Exercise Date.
In lieu of issuing shares of Common Stock upon the
exercise of a SAR, the Committee may elect to pay the
holder of the SAR cash equal to the Fair Market Value
on the Exercise Date of any or all of the shares that
otherwise would be issuable. No fractional shares of
Common Stock shall be issued upon the exercise of a
SAR; instead, the holder of a SAR shall be entitled to
receive a cash adjustment equal to the same fraction of
the Fair Market Value of a share of Common Stock on the
Exercise Date or to purchase the portion necessary to
make a whole share at its Fair Market Value on the
Exercise Date.
9. Performance Shares. A performance share consists
of an award that may be paid in shares of Common Stock or in
cash, as described below. The award of performance shares
shall be subject to such terms and conditions as the
Committee deems appropriate.
9.1 Performance Objectives. Each performance
share will be subject to performance objectives for
Stewart or one of its subsidiaries, divisions or
departments to be achieved by the end of a specified
period. The number of performance shares awarded shall
be determined by the Committee and may be subject to
such terms and conditions as the Committee shall
determine. If the performance objectives are achieved,
each participant will be paid (a) a number of shares of
Common Stock equal to the number of performance shares
initially granted to that participant; (b) a cash
payment equal to the Fair Market Value of such number
of shares of Common Stock on the date the performance
objectives are met or such other date as may be
provided by the Committee or (c) a combination of
shares of Common Stock and cash, as may be provided by
the Committee. If such objectives are not met, each
award of performance shares may provide for lesser
payments in accordance with a pre-established formula
set forth in the Incentive Agreement. Notwithstanding
the foregoing, unless otherwise provided in the
Incentive Agreement, the Committee may in its
discretion declare the performance objectives achieved
or waived. To the extent a performance share is
intended to qualify as performance based compensation
under Section 162(m) of the Code, it must meet the
additional requirements imposed thereby.
9.2 Not a Shareholder. The award of performance
shares to a participant shall not create any rights in
such participant as a shareholder of the Company, until
the payment of shares of Common Stock with respect to
an award, at which time such stock shall be considered
issued and outstanding.
9.3 Dividend Equivalent Payments. A performance
share award may be granted by the Committee in
conjunction with dividend equivalent payment rights or
other such rights. Dividend equivalent payments may be
made to the participant at the time of the payment of
the dividend or issuance of the other right or at the
end of the specified performance period or may be
deemed to be invested in additional performance shares
at the Fair Market Value of a share of Common Stock on
the date of payment of the dividend or issuance of the
right.
10. Stock Awards. A stock award consists of the
transfer by the Company to a participant of shares of Common
Stock, without other payment therefor, as additional
compensation for services previously provided to the
Company. The number of shares to be transferred by the
Company to a participant pursuant to a stock award shall be
determined by the Committee.
11. Cash Awards. A cash award consists of a monetary
payment made by the Company to a participant as additional
compensation for his services to the Company. Payment of a
cash award may relate to the tax liability of a participant
in connection with the grant, exercise, or payment of an
Incentive or may depend on achievement of performance
objectives by the Company or by individuals. The amount of
any monetary payment constituting a cash award shall be
determined by the Committee in its sole discretion. Cash
awards may be subject to other terms and conditions, which
may vary from time to time among participants, as the
Committee determines to be appropriate.
12. General.
12.1 Duration. Subject to Section 12.10, the Plan
shall remain in effect until all Incentives granted
under the Plan have either been satisfied by the
issuance of shares of Common Stock or the payment of
cash or been terminated under the terms of the Plan and
all restrictions imposed on shares of Common Stock in
connection with their issuance under the Plan have
lapsed.
12.2 Transferability of Incentives. No stock
option, SAR or performance share granted hereunder may
be transferred, pledged, assigned or otherwise
encumbered by the holder thereof except:
(a) by will;
(b) by the laws of descent and distribution;
(c) pursuant to a domestic relations order, as
defined in the Code, or
(d) in the case of non-qualified stock
options only,
(i) to family members,
(ii) to a family partnership,
(iii) to a family limited liability company,
or
(iv) to a trust for the benefit of family
members,
in all such cases, if permitted by the
Committee and so provided in the Incentive
Agreement or an amendment thereto.
Any attempted assignment, transfer, pledge,
hypothecation or other disposition of a stock
option, SAR or performance share or levy of
attachment, or similar process upon a stock
option, SAR or performance share not specifically
permitted herein, shall be null and void and
without effect.
12.3 Effect of Termination of Employment or Death.
In the event that a participant ceases to be an
employee of the Company for any reason, including
death, disability, early retirement or normal
retirement, any Incentives may be exercised, shall vest
or shall expire at such times as may be determined by
the Committee in the Incentive Agreement.
12.4 Additional Condition. Anything in this Plan
to the contrary notwithstanding: (a) the Company may,
if it shall determine it necessary or desirable for any
reason, at the time of award of any Incentive or the
issuance of any shares of Common Stock pursuant to any
Incentive, require the recipient of the Incentive, as a
condition to the receipt thereof or to the receipt of
shares of Common Stock issued pursuant thereto, to
deliver to the Company a written representation of
present intention to acquire the Incentive or the
shares of Common Stock issued pursuant thereto for his
own account for investment and not for distribution;
and (b) if at any time the Company further determines,
in its sole discretion, that the listing, registration
or qualification (or any updating of any such document)
of any Incentive or the shares of Common Stock issuable
pursuant thereto is necessary on any securities
exchange or under any federal or state securities or
blue sky law, or that the consent or approval of any
governmental regulatory body is necessary or desirable
as a condition of, or in connection with the award of
any Incentive, the issuance of shares of Common Stock
pursuant thereto, or the removal of any restrictions
imposed on such shares, such Incentive shall not be
awarded or such shares of Common Stock shall not be
issued or such restrictions shall not be removed, as
the case may be, in whole or in part, unless such
listing, registration, qualification, consent or
approval shall have been effected or obtained free of
any conditions not acceptable to the Company.
12.5 Adjustment. In the event of any
recapitalization, stock dividend, stock split,
combination of shares or other change in the Common
Stock, the number of shares of Common Stock then
subject to the Plan, including shares subject to
outstanding Incentives, shall be adjusted in proportion
to the change in outstanding shares of Common Stock.
In the event of any such adjustments, the purchase
price of any option, the performance objectives of any
Incentive, and the shares of Common Stock issuable
pursuant to any Incentive shall be adjusted as and to
the extent appropriate, in the reasonable discretion of
the Committee, to provide participants with the same
relative rights before and after such adjustment.
12.6 Incentive Agreements. The terms of each
Incentive shall be stated in an agreement approved by
the Committee.
12.7 Withholding.
(a) The Company shall have the right to
withhold from any payments or stock issuances
under the Plan, or to collect as a condition of
payment, any taxes required by law to be withheld.
(b) Any participant may, but is not required
to, satisfy his or her withholding tax obligation
in whole or in part by electing (the "Election")
to have the Company withhold from the shares the
participant otherwise would receive shares of
Common Stock having a value equal to the amount
required to be withheld. The value of the shares
to be withheld shall be based on the Fair Market
Value of the Common Stock on the date that the
amount of tax to be withheld shall be determined
(the "Tax Date"). Each Election must be made
prior to the Tax Date. The Committee may
disapprove of any Election, may suspend or
terminate the right to make Elections, or may
provide with respect to any Incentive that the
right to make Elections shall not apply to such
Incentive.
12.8 No Continued Employment. No participant under
the Plan shall have any right, because of his or her
participation, to continue in the employ of the Company
for any period of time or to any right to continue his
or her present or any other rate of compensation.
12.9 Deferral Permitted. Payment of cash or
distribution of any shares of Common Stock to which a
participant is entitled under any Incentive shall be
made as provided in the Incentive Agreement. Payment
may be deferred at the option of the participant if
provided in the Incentive Agreement.
12.10 Amendment of the Plan. The Board may amend
or discontinue the Plan at any time; provided, however,
that no such amendment or discontinuance shall change
or impair, without the consent of the recipient, an
Incentive previously granted.
12.11 Change of Control. (a) A Change of Control shall
mean:
(i) the acquisition by any individual,
entity or group (within the meaning of Section 13(d)(3)
or 14(d)(2) of the 1934 Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
1934 Act) of more than 30% of the outstanding shares of
Stewart's Class A Common Stock, no par value per share
(the "Common Stock"); provided, however, that for
purposes of this subsection (i), the following
acquisitions shall not constitute a Change of Control:
(A) any acquisition of Common Stock
directly from Stewart,
(B) any acquisition of Common Stock by
Stewart,
(C) any acquisition of Common Stock by
any employee benefit plan (or related trust)
sponsored or maintained by Stewart or any
corporation controlled by Stewart, or
(D) any acquisition of Common Stock by
any corporation pursuant to a transaction
that complies with clauses (A), (B) and (C)
of subsection (iii) of this Section 12.11(a);
or
(ii) individuals who, as of the date
this Section 12.11 was amended by the Board of
Directors to read in its current form (the "Approval
Date"), constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual
becoming a director subsequent to the Approval Date
whose election, or nomination for election by Stewart's
shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent
Board shall be considered a member of the Incumbent
Board, unless such individual's initial assumption of
office occurs as a result of an actual or threatened
election contest with respect to the election or
removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of
a person other than the Incumbent Board; or
(iii) consummation of a reorganization,
merger or consolidation, or sale or other disposition
of all or substantially all of the assets of Stewart (a
"Business Combination"), in each case, unless,
following such Business Combination,
(A) all or substantially all of the
individuals and entities who were the
beneficial owners of Stewart's outstanding
common stock and Stewart's voting securities
entitled to vote generally in the election of
directors immediately prior to such Business
Combination have direct or indirect
beneficial ownership, respectively, of more
than 50% of the then outstanding shares of
common stock, and more than 50% of the
combined voting power of the then outstanding
voting securities entitled to vote generally
in the election of directors, of the
corporation resulting from such Business
Combination (which, for purposes of this
paragraph (A) and paragraphs (B) and (C),
shall include a corporation which as a result
of such transaction owns Stewart or all or
substantially all of Stewart's assets either
directly or through one or more
subsidiaries), and
(B) except to the extent that such
ownership existed prior to the Business
Combination, no person (excluding any
corporation resulting from such Business
Combination or any employee benefit plan or
related trust of Stewart or such corporation
resulting from such Business Combination)
beneficially owns, directly or indirectly,
20% or more of the then outstanding shares of
common stock of the corporation resulting
from such Business Combination or 20% or more
of the combined voting power of the then
outstanding voting securities of such
corporation, and
(C) at least a majority of the members
of the board of directors of the corporation
resulting from such Business Combination were
members of the Incumbent Board at the time of
the execution of the initial agreement, or of
the action of the Board, providing for such
Business Combination; or
(iv) approval by the shareholders of
Stewart of a plan of complete liquidation or
dissolution of Stewart.
(b) Upon a Change of Control, or immediately
prior to the closing of a transaction that will result
in a Change of Control if consummated, all outstanding
options and SARs granted pursuant to the Plan shall
automatically become fully exercisable, all
restrictions or limitations on any Incentives shall
lapse, all performance criteria and other conditions
relating to the payment of Incentives shall be deemed
to be achieved or waived by Stewart without the
necessity of action by any person.
(c) The Committee may take such other action
with respect to an Incentive as shall be provided in an
agreement with the participant.
12.12 Definition of Fair Market Value. Whenever
"Fair Market Value" of Common Stock shall be determined
for purposes of this Plan, it shall be determined as
follows: (i) if the Common Stock is listed on an
established stock exchange or any automated quotation
system that provides sale quotations, the closing sale
price for a share of the Common Stock on such exchange
or quotation system on the applicable date; (ii) if the
Common Stock is not listed on any exchange or quotation
system, but bid and asked prices are quoted and
published, the mean between the quoted bid and asked
prices on the applicable date, and if bid and asked
prices are not available on such day, on the next
preceding day on which such prices were available; and
(iii) if the Common Stock is not regularly quoted, the
fair market value of a share of Common Stock on the
applicable date as established by the Committee in good
faith.
12.13 Loans. In order to assist a participant in
acquiring shares of Common Stock pursuant to an
Incentive granted under the Plan, the Committee may
authorize, subject to the provisions of Regulation G of
the Board of Governors of the Federal Reserve System,
at either the time of the grant of the Incentive, at
the time of the acquisition of Common Stock pursuant to
the Incentive, or at the time of the lapse of
restrictions on shares of restricted stock granted
under the Plan, the extension of a loan to the
participant by the Company. The terms of any loans,
including the interest rate, collateral and terms of
repayment, will be subject to the discretion of the
Committee. The maximum credit available hereunder
shall be equal to the aggregate purchase price of the
shares of Common Stock to be acquired pursuant to the
Incentive plus the maximum tax liability that may be
incurred in connection with the Incentive.
As Amended through December 20, 1996
AMENDED AND RESTATED
DIRECTORS' STOCK OPTION PLAN
1. Purpose of the Plan.
The purpose of the Directors' Stock Option Plan of
Stewart Enterprises, Inc. is to promote the interests of the
Company and its shareholders by strengthening the Company's
ability to attract, motivate and retain Directors of
experience and ability, and to encourage the highest level
of Directors' performance by providing Directors with a
proprietary interest in the Company's financial success and
growth.
2. Definitions.
2.1 "Board" means the Board of Directors of the
Company.
2.2 "Committee" means the Compensation Committee of
the Board or a subcommittee thereof as shall be appointed by
the Board from time to time. The Committee shall consist of
two or more members of the Board none of whom shall be
Employees of the Company.
2.3 "Common Stock" means the Class A Common Stock
of the Company.
2.4 "Company" means Stewart Enterprises, Inc., a
Louisiana corporation.
2.5 "Director" means a member of the Board who is
not an Employee.
2.6 "Employee" means any full-time employee of the
Company, or any of its present or future parent or
subsidiary corporations
2.7 "Fair Market Value" means (i) if the Common
Stock is listed on an established stock exchange or any
automated quotation system that provides sale quotations,
the closing sale price for a share of the Common Stock on
such exchange or quotation system on the applicable date, or
if no sale of the Common Stock shall have been made on that
day, on the next preceding day on which there was a sale of
the Common Stock; (ii) if the Common Stock is not listed on
any exchange or quotation system, but bid and asked prices
are quoted and published, the mean between the quoted bid
and asked prices on the applicable date, and if bid and
asked prices are not available on such day, on the next
preceding day on which such prices were available; and (iii)
if the Common Stock is not regularly quoted, the fair market
value of a share of Common Stock on the applicable date as
established by the Committee in good faith.
2.8 "Participant" means each Director.
2.9 "Option" means a stock option that does not
satisfy the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended.
2.10 "Plan" means the Stewart Enterprises, Inc.
Directors' Stock Option Plan as set forth herein and as
amended from time to time.
3. Shares of Common Stock Subject to the Plan.
Subject to the provisions of Section 7, the aggregate
number of shares of Common Stock that may be issued or
transferred pursuant to exercise of Options under the Plan
is 144,000 shares of Common Stock. Such shares may be
either authorized but unissued shares or shares issued and
thereafter acquired by the Company.
4. Administration of the Plan.
4.1 The Plan shall be administered by the
Committee, which shall have the power to interpret the Plan
and, subject to its provisions, to prescribe, amend and
rescind rules and to make all other determinations necessary
for the Plan's administration.
4.2 All action taken by the Committee in the
administration and interpretation of the Plan shall be final
and binding upon all parties. No member of the Committee
will be liable for any action or determination made in good
faith by the Committee with respect to the Plan or any
Option.
5. Eligibility.
5.1 Each Director shall be automatically granted an
Option to acquire 24,000 shares of Common Stock on January
2, 1996, subject to approval of the Plan by the shareholders
of the Company at the next annual meeting.
5.2 Each person who becomes a Director from January
3, 1996 to January 2, 2000 will also receive an Option to
acquire 24,000 shares of Common Stock on the date such
person becomes a Director.
6. Terms and Conditions of Options.
6.1 Except in the event of acceleration of
exercisability as provided in Sections 6.5 and 8.2 hereof,
the Options granted to Directors on January 2, 1996 under
the Plan shall become exercisable as follows:
25% of the total number of shares covered by the
Option beginning January 2, 1997;
50% of the total number of Shares covered by the
Option beginning January 2, 1998,
less any shares previously issued;
75% of the total number of Shares covered by the
Option beginning January 2, 1999,
less any shares previously issued;
100% of the total number of Shares covered by the
Option beginning January 2, 2000,
less any shares previously issued.
6.2 Except in the event of acceleration of
exercisability as provided in Sections 6.5 and 8.2 hereof,
an Option granted to a person who becomes a Director from
January 3, 1996 to January 2, 2000 shall become exercisable
in equal portions on January 2 of each year following the
date such person joins the Board such that the Option shall
be fully exercisable on January 2, 2000.
6.3 No Option granted to a Director under the terms
of the Plan may be exercised after January 2, 2001.
6.4 The exercise price of the Options granted to
Directors shall be equal the Fair Market Value, as defined
in the Plan, of a share of Common Stock on the date of
grant.
6.5 The Committee may accelerate the exercisability
of any Option at any time in its discretion.
6.6 In the event a Director ceases to serve on the
Board of Directors of the Company for any reason, the
Options granted hereunder must be exercised, to the extent
otherwise exercisable at the time of termination of Board
service, within one year from the date of termination of
Board service.
6.7 An Option may be exercised, in whole or in
part, by giving written notice to the Company, specifying
the number of shares of Common Stock to be purchased. The
exercise notice shall be accompanied by the full purchase
price for such shares. The option price shall be payable in
United States dollars and may be paid (a) in cash; (b) by
uncertified or certified check; (c) by delivery of shares of
Common Stock, which shares shall be valued for this purpose
at their Fair Market Value on the date such option is
exercised, and, unless otherwise determined by the
Committee, shall have been held by the Participant for at
least six months; or (d) in such other manner as may be
authorized from time to time by the Committee. The
Committee may also permit Participants, either on a
selective or aggregate basis, simultaneously to exercise
options and sell the shares of Common Stock acquired
pursuant to a brokerage or similar arrangement, approved in
advance by the Committee, and use the proceeds from such
sale as payment of the exercise price. In the case of
delivery of an uncertified check upon exercise of a stock
option, no shares shall be issued until the check has been
paid in full. Prior to the issuance of shares of Common
Stock upon the exercise of an Option, a Participant shall
have no rights as a shareholder.
7. Adjustment Provisions.
In the event of any recapitalization, stock dividend,
stock split, combination of shares or other change in the
Common Stock, the number of shares of Common Stock then
subject to the Plan, including shares subject to Options,
shall be adjusted in proportion to the change in outstanding
shares of Common Stock. In the event of any such
adjustments, the purchase price of any Option shall be
adjusted as and to the extent appropriate, in the reasonable
discretion of the Committee, to provide Participants with
the same relative rights before and after such adjustment.
8. Change of Control.
8.1 A Change of Control shall mean:
(a) the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of
the Securities Exchange Act of 1934 (the "1934 Act") of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of more than 30% of the
outstanding shares of the Common Stock; provided, however,
that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control:
(i) any acquisition of Common Stock directly
from the Company,
(ii) any acquisition of Common Stock by the
Company,
(iii) any acquisition of Common Stock by any
employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation
controlled by the Company, or
(iv) any acquisition of Common Stock by any
corporation pursuant to a transaction that
complies with clauses (i), (ii) and (iii) of
subsection (c) of this Section 8.1; or
(b) individuals who, as of the date the Plan was
adopted by the Board of Directors (the "Approval Date"),
constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board;
provided, however, that any individual becoming a director
subsequent to the Approval Date whose election, or
nomination for election by the Company's shareholders, was
approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered a
member of the Incumbent Board, unless such individual's
initial assumption of office occurs as a result of an actual
or threatened election contest with respect to the election
or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a
person other than the Incumbent Board; or
(c) consummation of a reorganization, merger or
consolidation, or sale or other disposition of all or
substantially all of the assets of the Company (a "Business
Combination"), in each case, unless, following such Business
Combination,
(i) all or substantially all of the
individuals and entities who were the beneficial
owners of the Company's outstanding common stock
and the Company's voting securities entitled to
vote generally in the election of directors
immediately prior to such Business Combination
have direct or indirect beneficial ownership,
respectively, of more than 50% of the then
outstanding shares of common stock, and more than
50% of the combined voting power of the then
outstanding voting securities entitled to vote
generally in the election of directors, of the
corporation resulting from such Business
Combination (which, for purposes of this paragraph
(i) and paragraphs (ii) and (iii), shall include a
corporation which as a result of such transaction
owns the Company or all or substantially all of
the Company's assets either directly or through
one or more subsidiaries), and
(ii) except to the extent that such ownership
existed prior to the Business Combination, no
person (excluding any corporation resulting from
such Business Combination or any employee benefit
plan or related trust of the Company or such
corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 20% or more of the then outstanding
shares of common stock of the corporation
resulting from such Business Combination or 20% or
more of the combined voting power of the then
outstanding voting securities of such corporation,
and
(iii) at least a majority of the members of
the board of directors of the corporation
resulting from such Business Combination were
members of the Incumbent Board at the time of the
execution of the initial agreement, or of the
action of the Board, providing for such Business
Combination; or
(d) approval by the shareholders of the Company
of a plan of complete liquidation or dissolution of the
Company.
8.2 Upon a Change of Control, or immediately prior to
the closing of a transaction that will result in a Change of
Control if consummated, all outstanding Options granted
pursuant to the Plan shall automatically become fully
exercisable.
9. General Provisions.
9.1 Nothing in the Plan or in any instrument
executed pursuant to the Plan will confer upon any
Participant any right to continue as a Director or affect
the right of the Company to terminate the services of any
Participant.
9.2 No shares of Common Stock will be issued or
transferred pursuant to an Option unless and until all then-
applicable requirements imposed by federal and state
securities and other laws, rules and regulations and by any
regulatory agencies having jurisdiction, and by any stock
exchanges upon which the Common Stock may be listed, have
been fully met. As a condition precedent to the issuance of
shares pursuant to the exercise of an Option, the Company
may require the Participant to take any reasonable action to
meet such requirements.
9.3 No Participant and no beneficiary or other
person claiming under or through such Participant will have
any right, title or interest in or to any shares of Common
Stock allocated or reserved under the Plan or subject to any
Option except as to such shares of Common Stock, if any,
that have been issued or transferred to such Participant.
9.4 No Option granted hereunder may be transferred,
pledged, assigned or otherwise encumbered by the holder
thereof except:
(a) by will;
(b) by the laws of descent and distribution;
(c) pursuant to a domestic relations order, as
defined in the Code, or
(d) (i) to family members,
(ii) to a family partnership,
(iii) to a family limited liability company,
or
(iv) to a trust for the benefit of family
members,
in all such cases, if permitted by the
Committee and so provided in the Option
Agreement or an amendment thereto.
Any attempted assignment, transfer, pledge,
hypothecation or other disposition of an option or
levy of attachment, or similar process upon an
option not specifically permitted herein, shall be
null and void and without effect.
9.5 Each Option shall be evidenced by a written
instrument, including terms and conditions consistent with
the Plan, as the Committee may determine.
10. Amendment and Termination.
10.1 The Board will have the power, in its
discretion, to amend, suspend or terminate the Plan at any
time.
10.2 No amendment, suspension or termination of the
Plan will, without the consent of the holder, alter,
terminate, impair or adversely affect any right or
obligation under any Option previously granted under the
Plan.
11. Effective Date of Plan and Duration of Plan.
This Plan shall become effective upon adoption by the
Board, subject to approval by the holders of a majority of
the shares of Common Stock represented in person or by proxy
and entitled to vote on the subject at the 1996 Annual
Meeting of Shareholders of the Company.
Exhibit 12
STEWART ENTERPRISES, INC.
AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Years Ended October 31,
______________________________________________
1996 1995 1994 1993 1992
_________ ________ _________ _________ _________
<S> <C> <C> <C> <C> <C>
Net earnings from continuing
operations before income taxes $ 82,075 $ 41,500 $ 42,198 $ 29,569 $ 20,942
Fixed charges:
Interest expense 26,051 22,815 8,877 6,540 5,414
Interest portion of lease expense 1,522 1,343 935 585 456
__________ _________ _________ _________ ________
Total fixed charges 27,573 24,158 9,812 7,125 5,870
Net earnings from continuing operations
before income taxes and fixed charges$109,648 $ 65,658 $ 52,010 $36,694 $26,812
========= ========== ========= ========= ========
Ratio of earnings to fixed charges 3.98 2.72 5.30 5.15 4.57
========= ========== ========= ========== ========
</TABLE>
Exhibit 21
SUBSIDIARIES
The following is a list of all direct and indirect subsidiaries of
the Company and their jurisdictions of incorporation as of January 20,
1997. The name of each indirect subsidiary is indented under the name
of its parent company. Except as noted, all subsidiaries are wholly-
owned.
Jurisdiction of
Stewart Enterprises, Inc. Incorporation
Acme Mausoleum Corporation LA
Cemetery Management, Inc. FL
Arlington Memorial Park Cemetery and Funeral Home, Inc. FL
Baldwin-Fairchild Funeral Homes, Inc. FL
All Faiths Memorial Park, Inc. FL
Orlando Funeral Home, Inc. FL
The Simplicity Plan, Inc. FL
Bay Area Crematory, Inc. FL
Chapel Hill Cemetery, Inc. FL
Glen Haven Memorial Park, Inc. FL
Highland Memory Gardens, Inc. FL
Semoran Funeral Home, Inc. FL
Cheatham Hill Memorial Park, Inc. GA
Empresas Stewart-Cementerios, Inc. LA
Empresas Stewart-Funerarias, Inc. LA
Garden of Memories, Inc. FL
A.P. Boza Funeral Home, Inc. FL
Curry and Son Funeral Home, Inc. FL
Woodlawn Memory Gardens, Inc. FL
Hubbell Funeral Home and Crematory, Inc. FL
Memorial Park Cemetery, Inc. FL
Oaklawn Park Cemetery and Funeral Home, Inc. FL
Royal Palm Memorial Gardens, Inc. FL
The Simplicity Plan of Puerto Rico, Inc. LA
Sylvan Abbey Memorial Park, Inc. FL
Woodlawn Park Cemetery Company FL
Memorial Sunset Park, Inc. FL
National Monument Company, Inc. FL
South Dade-Palms Memorial Park, Inc. FL
Cole & Garrett Funeral Homes, Inc. TX
Cunningham Memorial Park, Inc. WV
Eastlawn Corporation GA
Griffin Leggett, Inc. AR
Forest Hills Cemetery, Inc. AR
Griffin Leggett Healey & Roth, Inc. AR
Gross Funeral Home, Inc. AR
Rest Hills Memorial Park, Inc.* AR
Griffin Leggett-Conway, Inc. AR
Grupo Stewart de Mexico, S.A. de C.V. MX
Grupo Osiris, S.A. de C.V.* MX
Agencia Eusebio Gayosso, S.A. de C.V.* MX
Inmobiliaria Versatil, S.A. de C.V.* MX
Funeraria Los Angeles, S.A. de C.V.* MX
Grupo Gara, S.A. de C.V.* MX
Arga, S.A. de C.V.* MX
Inmobiliaria Mictlan, S.A. de C.V.* MX
Inmobiliaria Rio Valparaiso, S.A. de C.V.* MX
Laundry and Cleaner, S.A. de C.V.* MX
Prevision Gayosso Empresarial, S.A. de C.V.* MX
Prevision Los Angeles, S.A. de C.V.* MX
Publicidad Promocional, S.A. de C.V.* MX
Prevision Y Vida, S.A. de C.V.* MX
Prevision Gayosso, S.A. de C.V.* MX
Tiempo y Vida, S.A. de C.V.* MX
Highland Memorial Cemetery, Inc. TN
Holly Hill Memorial Park, Inc. GA
Holly Hills, Inc. TN
Hopson Mortuary, Inc. CA
International Stone & Erectors, Inc. LA
Investors Trust, Inc. TX
Kingsport Cemetery Corp. TN
Lake Lawn Metairie Funeral Home, Inc. LA
Lake Lawn Metairie Funeral Home (Joint Venture) LA
Lake Lawn Park, Inc.* LA
Lakewood Memorial Park, Inc. MS
Lassila Funeral Chapels, Inc. CA
Legacy One, Inc.* WV
Blue Ridge Funeral Home, Inc. WV
Blue Ridge Memorial Gardens, Inc. WV
C.G.R., Inc. WV
Eastern Cemetery Associates, Inc. WV
Eastlawn Memorial Gardens, Inc. VA
Eternal Light Funerals, Inc. WV
Findlay Cemetery, Inc. OH
Grandview Memory Gardens, Inc. VA
Greenhills Memory Gardens, Inc. VA
Highland Memory Gardens, Inc. VA
Holly Memorial Gardens, Inc. VA
Kanawha Plaza Partnership* WV
Legacy One Service Corporation WV
Legacy One Tennessee, Inc. TN
LOI Charleston, Inc. WV
Monticello Memory Gardens, Inc. VA
Mountain View Memory Gardens, Inc. WV
National Exchange Trust, LTD. WV
National Funeral Services, Inc. WV
Pleasant View Memory Gardens, Inc. WV
Sunset Memory Gardens, Inc. VA
Williams-Blue Ridge Funeral Home, Inc. WV
Les Enterprises Stewart (Canada) Inc. -
Stewart Enterprises (Canada) Inc. Quebec
Le Groupe Stewart Inc. - Stewart Group Inc. Canada
La Societe Cooperative de Frais Funeraires Inc.* Quebec
Lepine-Cloutier Ltee Quebec
Gestion La Souvenance Inc. Quebec
Les Jardins Commemoratifs Laurentide Inc./ Laurentide
Memorial Gardens Inc. Quebec
Les Jardins Quebec Quebec
Parc Commemoratif La Souvenance Inc. Quebec
Parc du Souvenir (1976) Inc./Remembrance Park
(1976) Inc. Quebec
Parc Commemoratif de Montreal Inc./Montreal
Memorial Park Inc. Quebec
2756-5746 Quebec Inc. Quebec
Residences Funeraires Associees du Quebec Inc. Quebec
Stewart Immobilier (Canada) Inc. - Stewart Real Estate
(Canada) Inc. Quebec
Les Investissements Stewart (Canada) Inc. - Stewart Investments
(Canada) Inc. Quebec
Memorial Services of Columbia, Inc MO
Lincoln Memorial Mortuary, Inc. NE
The Lincoln Memorial Park Cemetery Association, Inc. NE
Memorial Funeral Home, Inc. MO
Memorial Park Cemetery Corporation of Lawrence, Inc. KS
Metairie Cemetery Association LA
All Faiths Funeral Home, Inc. LA
Pine Crest Cemetery, Inc. AL
Montlawn Memorial Park, Inc. NC
Mount Olivet Cemetery, Inc. LA
The Nashville Historic Cemetery Association, Inc. TN
Pasadena Funeral Home, Inc. TX
Restland Funeral Home, Inc. TX
Anderson-Clayton Bros. Funeral Homes, Inc. TX
Little Bethel Memorial Park, Inc. TX
Roselawn Memorial Gardens, Inc. TX
Belew Funeral Home, Inc. TX
Bluebonnet Hills Memorial Park, Inc. TX
Bluebonnet Hills Funeral Home, Inc. TX
Bright-Holland Funeral Home, Inc. TX
Crespo & Sons, Inc. TX
Dalton & Son Funeral Home TX
Emerald Hills Funeral Corporation TX
Hilltop Memorial Park TX
J.E. Foust & Son Funeral Directors, Inc. TX
Laurel Land Memorial Park, Inc. TX
Laurel Land Funeral Home, Inc. TX
Singing Hills Funeral Home, Inc. TX
Laurel Land of Fort Worth, Inc. TX
Laurel Land Funeral Home of Fort Worth, Inc. TX
Lyons Funeral Home, Inc. TX
Metrocrest Funeral Home, Inc. TX
Restland of Dallas, Inc. TX
Highland Memorial Gardens, Inc. TX
Simplicity Plan of Texas, Inc. TX
Southpark Funeral Home, Inc. TX
South Memorial Park, Inc. TX
Rocky Mount Memorial Park, Inc. NC
Rose Haven Funeral Home & Cemetery, Inc. GA
Royal Arms Apartments, Inc. LA
St. Bernard Memorial Gardens, Inc. LA
St. Bernard Memorial Funeral Home, Inc. LA
St. Vincent de Paul Cemetery Association LA
S.E. Acquisition of California, Inc. CA
Barstow Funeral Homes, Inc. CA
Buchheim Family, Inc. CA
Scovern Mortuary, A California Corporation CA
S.E. Acquisition of Glendale, California, Inc. CA
S.E. Acquisition of Lancaster, California, Inc. CA
S.E. Acquisition of Los Osos Mortuary and Memorial Park, Inc. CA
S.E. Acquisition of Oroville, Inc. CA
S.E. Acquisition of San Diego, California, Inc. CA
S.E. Acquisition of Oregon, Inc. OR
Chapel of the Roses, Inc. OR
Chapel of the Valley Funeral Home, Inc. OR
Dutton, Inc. OR
Greenwood Cemetery, Inc. OR
J. P. Finley & Son, Inc. OR
Sunset Hills Memorial Park OR
Niswonger & Reynolds, Inc. OR
S.E. Acquisition of Myrtle Creek, Oregon, Inc. OR
S.E. Acquisition of Sacramento, California, Inc. CA
S.E. Australia, Inc. LA
Nationwide Care Services PTY LTD Queensland
South-East Asia and Australasian Services PTY LTD Queensland
Stewart Enterprises Australia PTY LTD Queensland
Cemetery and Crematorium Management Services PTY LTD Queensland
Funeral Services of Australasia PTY LTD Queensland
Australian Funerals PTY LTD Queensland
Metropolitan Funeral Services PTY LTD Queensland
Dylhost PTY LTD New South Wales
Gregory & Carr Holdings PTY LTD New South Wales
Australian Pre-Arranged Funeral Plan PTY LTD New South Wales
Crematorium Chapel Funerals of
Australasia PTY LTD New South Wales
F. Tighe & Co. PTY LTD New South Wales
Gregory & Carr PTY LTD New South Wales
Gregory & Carr of Sydney PTY LTD New South Wales
William Lee & Sons PTY LTD New South Wales
Funeral Services of New Zealand LTD New Zealand
C H Barker LTD New Zealand
Gee & Hickton LTD New Zealand
Lambert R. Fountain LTD New Zealand
Montagues Funeral Services LTD New Zealand
National Care Services LTD New Zealand
New Zealand Pre-Arranged Funeral Plan LTD New Zealand
Watney Sibun's LTD New Zealand
Yearbury Funeral Services LTD New Zealand
S.E. Mid-Atlantic, Inc. MD
Bartlett-Burdette-Cox Funeral Home, Inc. WV
Benjamin Franklin P.M., Inc. PA
Blue Ridge Memorial Gardens, Inc. VA
Brown Memorials, Inc. NC
Casdorph & Curry Funeral Home, Inc. WV
Catawba Memorial Park, Inc. NC
Cedar Hill Cemetery Company, Inc. MD
Central Stone Works, Incorporated NC
Clinch Valley Memorial Cemetery, Inc. VA
Crest Lawn Memorial Gardens, Inc. MD
Dodd-Payne-Hess Funeral Home, Inc. WV
Evans Funeral Home, Inc. NC
Evergreen Memorial Gardens, Inc. NC
Everly Funeral Homes, Incorporated VA
Everly PFP, Inc. VA
Fairfax Funeral Home, Inc. VA
Fine Finishes, Inc. NC
Fort Lincoln Cemetery, Inc. MD
Fort Lincoln Funeral Home, Inc. MD
Garrett-Hillcrest, Inc. NC
George Washington Memorial Park, Inc. PA
Graceland Mausoleum, Inc. WV
Harold C. Davis, Inc. NC
Highland Memory Gardens of Franklin County, Inc. NC
Hillcrest Memorial Cemetery, Inc. MD
Hines-Rinaldi Funeral Home, Inc. MD
John M. Taylor Funeral Home, Inc. MD
Johnson Funeral Home, Inc. NC
Joseph W. Teague Funeral Home, Inc. VA
Kimes Funeral Home, Inc. WV
Kirk & Nice, Inc. PA
Kirk & Nice Suburban Chapel, Inc. PA
Lancaster Funeral Homes, Inc. NC
Loudon Park Cemetery Company MD
Druid Ridge Cemetery Company MD
Loudon Park Funeral Home, Inc. MD
The Mackey Mortuary, Inc. SC
Cannon Funeral Home, Inc. SC
McLaurin's Funeral Home, Inc. NC
Nalley's Funeral Home, Inc. MD
Parklawn, Inc. MD
Parklawn Memorial Chapel, Inc. MD
The Parkwood Cemetery Co. MD
Parkwood Management Co. MD
Pollock Wells Funeral Service, Inc. NC
Richmond Memorial Parks, Inc. VA
S.E. Acquisition of Charleston, Inc. SC
S.E. Acquisition of Pennsylvania, Inc. PA
S.E. Acquisition of South Carolina, Inc. SC
Stephen D. Posey Funeral Home, Inc. SC
Stephens Services, Inc. NC
Sunset Memorial Park Company PA
Pet Haven, Inc. PA
Thomas-Yelverton Co. NC
Washington Memorial Park, Inc. VA
William W. Chambers, Inc. MD
Wilson Funeral Home, Inc. WV
Wise Corporation VA
1730 Investment Co., Inc. NC
Memorial Parks, Incorporated NC
Taylor M. Simpson Co. NC
S.E. South-Central, Inc. LA
Pine Crest Funeral Home, Inc. AL
Faith Memorial Park & Mausoleum Company, Inc. AL
Valhalla Memory Gardens and Funeral Home, Inc. AL
S.E. Acquisition of Albuquerque, New Mexico, Inc. NM
S.E. Acquisition of Lithonia, Georgia, Inc. GA
S.E. Acquisition of Muskogee, Oklahoma, Inc. OK
Memorial Park Association of Muskogee, A Trust Estate OK
West Lawn Cemetery NE
Stewart Resource Center, Inc. LA
Stewart Services, Inc. LA
Victor V. Desrosier, Inc. CA
_________________
* The Company's ownership in these subsidiaries ranges from 94-99%.
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statements of Stewart Enterprises, Inc. on Forms S-3 (File Nos. 33-
96832, 333-646, 333-648, 333-13963, 333-13965 and 333-14467), S-4 (File
No. 333-360) and S-8 (File Nos. 33-49726, 33-64106 and 33-02374) of our
reports dated December 13, 1996 on our audits of the consolidated
financial statements and financial statement schedule of Stewart
Enterprises, Inc. and Subsidiaries, as of October 31, 1996 and 1995 and
for each of the three years in the period ended October 31, 1996, which
reports are included in this Annual Report on Form 10-K.
COOPERS & LYBRAND L.L.P.
New Orleans, Louisiana
January 22, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED OCTOBER 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<CASH> 24,580
<SECURITIES> 2,514
<RECEIVABLES> 109,129
<ALLOWANCES> 0
<INVENTORY> 31,044
<CURRENT-ASSETS> 171,542
<PP&E> 347,869
<DEPRECIATION> (69,088)
<TOTAL-ASSETS> 1,365,941
<CURRENT-LIABILITIES> 73,482
<BONDS> 515,901
0
0
<COMMON> 41,800
<OTHER-SE> 505,647
<TOTAL-LIABILITY-AND-EQUITY> 1,365,941
<SALES> 433,387
<TOTAL-REVENUES> 433,387
<CGS> 315,269
<TOTAL-COSTS> 315,269
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,051
<INCOME-PRETAX> 82,075
<INCOME-TAX> 30,778
<INCOME-CONTINUING> 51,297
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