EXHIBIT 10.1
AMENDMENT NO. 3
This Amendment No. 3 dated as of September 15, 2000 ("Agreement"), is
among Carriage Services, Inc., a Delaware corporation (the "Borrower"), the
lenders signatory to the Credit Agreement described below (the "Lenders"),
and Bank of America, N.A., as administrative agent (the "Administrative
Agent") for the Lenders.
INTRODUCTION
Reference is made to the Credit Agreement dated as of June 14, 1999 (as
modified, the "Credit Agreement"), among the Borrower, the Lenders, and
NationsBank, N.A. d/b/a Bank of America, N.A., predecessor in interest to the
Administrative Agent. The Borrower, the Lenders, and the Administrative Agent
have agreed to modify certain financial covenants, decrease the amount of the
Commitments under the Credit Agreement to $100,000,000 by ratably decreasing the
Commitment of each Lender, and to make other amendments to the Credit Agreement
as set forth herein in connection therewith.
THEREFORE, in connection with the foregoing and for other good and
valuable consideration, the Borrower, the Administrative Agent, and the Lenders
hereby agree as follows:
Section 1. AMENDMENT.
(a) The following definition of "Amendment No. 3" is added to Section
1.01 of the Credit Agreement in the appropriate alphabetical order:
"AMENDMENT NO. 3" means the Amendment No. 3 dated as of
September 15, 2000, among the Borrower, the Administrative Agent, and the
Lenders amending the terms of this Agreement.
(b) The definition of "APPLICABLE MARGIN" is modified by replacing
the paragraph immediately following the pricing grid in its entirety with the
following:
The foregoing ratio shall be deemed to be equal to or greater than 50%,
but less than 55% from the effective date of Amendment No. 3 until
redetermination by the Administrative Agent. The Administrative Agent
shall thereafter calculate the foregoing ratio and the resulting
Applicable Margin based upon the most recent financial statements dated as
of the end of a fiscal quarter delivered to the Administrative Agent
pursuant to Section 5.06(c); PROVIDED that the foregoing ratio shall be
deemed to be the greater of (y) the actual ratio so calculated and (z)
50%. Any adjustments to the Applicable Margin shall become effective on
the first day of the month following the month during which such financial
statements are required to be delivered to the Administrative Agent, but
not before, provided, however, that if such financial statements are not
delivered when required
hereunder, the foregoing ratio shall be deemed to be greater than 55% and
the Applicable Margin shall increase to the maximum percentage amount set
forth in the table above from the date when such financial statements are
due until three days after the date such financial statements are actually
delivered, when the Administrative Agent shall recalculate the foregoing
ratio, based upon such delivered financial statements, and the resulting
Applicable Margin and the same shall become effective.
(c) The definition of "EBITDA" is modified by replacing such definition in
its entirety with the following:
"EBITDA" means, with respect to the Borrower and for any period of
determination, (a) Net Income for such period PLUS (b) to the extent
deducted in determining Net Income, without duplication, Interest Expense,
income taxes and other taxes measured by Net Income, depreciation and
amortization and payments by the Borrower in respect of Deferred Purchase
Price, in each case, for such period, PLUS (c) Restructuring Charges for
such period, in an aggregate amount not to exceed $161,000,000 on a
pre-tax basis.
(d) The definition of "ELIGIBLE ASSIGNEE" is modified by replacing
subsection (c) of such definition in its entirety with the following:
(c) Service Corporation International (or its Affiliates)
or Southwest Bank of Texas, N.A.,
(e) The definition of "FIXED CHARGE COVERAGE RATIO" is modified by
replacing such definition in its entirety with the following:
"FIXED CHARGE COVERAGE RATIO" means, with respect to the Borrower
and for any period of determination, the ratio of (i) EBITDA for such
period MINUS the Borrower's cash taxes paid during such period and PLUS
any cash tax refunds received by the Borrower during such period to (ii)
the sum of (A) Interest Expense during such period, PLUS (B) scheduled and
required principal payments during such period in respect of Total Funded
Debt PLUS, (C) to the extent not included in clause (A) or (B) above in
this definition, scheduled and required payments made by the Borrower in
respect of Deferred Purchase Price for such period.
(f) The following definition of "RESTRUCTURING CHARGES" is inserted into
Section 1.01 of the Credit Agreement in the appropriate alphabetical order:
"RESTRUCTURING CHARGES" means, with respect to the Borrower,
non-recurring restructuring charges related to the cumulative effect of
changes in accounting in connection with the implementation of Securities
and Exchange Commission Staff Accounting Bulletin No. 101-Revenue
Recognition in Financial Statements, organizational changes, sales of
assets, and write-down of
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assets, in each case, to the extent the same are recognized for financial
reporting purposes for periods through June 30, 2001 (or, as to up to
$5,000,000 of such charges, through June 30, 2002).
(g) The definition of "SUBSIDIARY" is modified by replacing such
definition in its entirety with the following:
"SUBSIDIARY" means, with respect to any Person, any other Person
(other than an Unrestricted Subsidiary), a majority of whose outstanding
Voting Securities (other than director's qualifying shares) shall at any
time be owned by such Person or one or more Subsidiaries of such Person.
(h) The following definition of "UNRESTRICTED SUBSIDIARY" is inserted into
Section 1.01 of the Credit Agreement in the appropriate alphabetical order:
"UNRESTRICTED SUBSIDIARY" means any Person so designated by the
Borrower in writing to the Administrative Agent, PROVIDED that a majority
of such Person's outstanding Voting Securities, but less than 100% of such
outstanding Voting Securities, are owned by the Borrower or one or more of
its Subsidiaries.
(i) Section 2.01 is replaced in its entirety with the following:
Section 2.01. COMMITMENT TO MAKE ADVANCES. Each Lender severally agrees,
on the terms and conditions set forth in this Agreement, to make Advances
to the Borrower from time-to-time on any Business Day during the period
from the date of this Agreement until the Maturity Date in an aggregate
amount not to exceed at any time outstanding (a) the amount set opposite
such Lender's name on the signature pages of Amendment No. 3 as its
Commitment, or if such Lender has entered into any Assignment and
Acceptance, the amount set forth for such Lender as its Commitment in the
Register maintained by the Administrative Agent pursuant to Section
9.06(c), as such amount may be reduced pursuant to Section 2.05 (such
Lender's "Commitment") LESS (b) such Lender's Pro Rata Share of the Letter
of Credit Exposure at such time LESS (c) such Lender's Pro Rata Share of
the Swing Line Loan at such time. Up to two Borrowings outstanding at any
given time may, in the case of Borrowings consisting of Base Rate Advances
or of Eurodollar Rate Advances, be in an aggregate amount of not less than
$1,000,000 each and in integral multiples of $1,000,000 in excess thereof
(including additions thereto by a continuation or Conversion pursuant to
Section 2.02(b)). Each other Borrowing shall, in the case of Borrowings
consisting of Base Rate Advances or of Eurodollar Rate Advances, be in an
aggregate amount not less than $5,000,000 and in integral multiples of
$1,000,000 in excess thereof (including additions thereto by a
continuation or Conversion pursuant to Section 2.02(b)). In each case,
Borrowings shall consist of Advances of the same Type made (or continued
or Converted pursuant to Section 2.02(b), as applicable) on the same day
by the Lenders ratably according to their respective Commitments. Within
the limits of each Lender's Commitment and subject to the other terms and
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conditions of this Agreement, the Borrower may from time to time borrow,
prepay pursuant to Section 2.08 and reborrow under this Section 2.01.
(j) Section 2.14 (a)(i)(A)(1) of the Credit Agreement is amended by
replacing the reference therein to $10,000,000 with a reference to $20,000,000.
(k) Sections 5.01, 5.06(p), and 7.01 (d), (e), and (f) of the Credit
Agreement are amended by (i) deleting therefrom each reference to "Subsidiary"
and replacing each with a reference to "Subsidiary or Unrestricted Subsidiary"
or "Subsidiary and Unrestricted Subsidiary," as appropriate, and (ii) deleting
therefrom each reference to "Subsidiaries" and replacing each with a reference
to "Subsidiaries or Unrestricted Subsidiaries" or "Subsidiary and Unrestricted
Subsidiaries," as appropriate.
(l) Section 5.04 of the Credit Agreement is amended by replacing such
Section in its entirety with the following:
5.04 PAYMENT OF TAXES, ETC. The Borrower will pay and discharge, and
cause each of its Subsidiaries and Unrestricted Subsidiaries to pay and
discharge, before the same shall become delinquent, (a) all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or Property that are material in amount prior to the
date on which penalties attach thereto and (b) all lawful claims that are
material in amount which, if unpaid, might by law become a Lien upon any
Property of the Borrower or any Subsidiary; PROVIDED, HOWEVER, that
neither the Borrower nor any such Subsidiary or Unrestricted Subsidiary
shall be required to pay or discharge any such tax, assessment, charge,
levy, or claim which is being contested in good faith and by appropriate
proceedings, and with respect to which reserves in conformity with GAAP
have been provided.
(m) Section 5.08 of the Credit Agreement is amended by renumbering the
existing Section 5.08 as subsection 5.08(a) and adding the following subsection
5.08(b):
(b) Upon the occurrence of any Event of Default, the Borrower shall
cause all Unrestricted Subsidiaries to promptly execute and deliver to the
Administrative Agent a Joinder Agreement with such modifications thereto
as the Administrative Agent may reasonably request for the purpose of
joining such Persons as parties to the Guaranty. In connection therewith,
the Borrower shall provide, contemporaneously with the execution and
delivery of each such Joinder Agreement, corporate documentation (to the
extent not previously provided to the Administrative Agent) and, if
requested by the Administrative Agent, opinion letters reasonably
satisfactory to the Administrative Agent reflecting the corporate status
of each such Unrestricted Subsidiary and the enforceability of such
Joinder Agreement.
(n) Section 6.06(a) of the Credit Agreement is amended by adding, in
appropriate numerical order, the following subsection (viii):
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(viii) investments in Unrestricted Subsidiaries, provided that (A)
the business and activities thereof are directly or indirectly reasonably
related in whole or in material part to the death care industry, and (B)
the total amount of investments by Borrower and its Subsidiaries in
Unrestricted Subsidiaries shall not exceed $5,000,000.
(o) Section 6.07(c) of the Credit Agreement is amended by replacing such
Section in its entirety with the following:
(c) (i) the amount of the consideration paid or contributed for such
Acquisition (including all cash paid and Property contributed for such
Acquisition, the amount of any liabilities (including unfunded Pre-need
Obligations) assumed, and Deferred Purchase Price, but excluding the value
of any Common Stock or any preferred stock (including, but not limited to,
Redeemable Preferred Stock) that is not prohibited by Section 6.05 of this
Agreement, of the Borrower or its Subsidiaries transferred or issued as
consideration for such Acquisition), does not, at the time of the making
of such Acquisition, exceed 5% of the Borrower's Net Worth as reflected on
(A) the most recent financial statements of the Borrower delivered to the
Lenders pursuant to Section 5.06(c) or (B) any certificate delivered by
the Borrower to the Administrative Agent setting forth, in reasonable
detail, a calculation of the Borrower's Net Worth as of time of making
such Acquisition, and (ii) the aggregate of all such consideration paid or
contributed in connection with all Acquisitions (determined as set forth
above) during the preceding four fiscal quarters does not, at the time of
the making of such Acquisition, exceed 10% of the Borrower's Net Worth as
reflected on such financial statements or certificate; and
(p) Clause (a) of Section 6.09 of the Credit Agreement is amended by
replacing such clause in its entirety with the following:
(a) any investment in any Affiliate (other than a Subsidiary of the
Borrower, and except as permitted in Section 6.06(a)(viii));
(q) Section 6.15 of the Credit Agreement is amended by replacing such
Section in its entirety with the following:
Section 6.15 [Intentionally Deleted]
(r) Section 6.16 of the Credit Agreement is amended by replacing such
Section in its entirety with the following:
Section 6.16 NET WORTH The Borrower will not permit at any time its
Net Worth to be less than an amount equal to the difference of (y) the sum
of (a) $275,000,000, PLUS (b) 50% of the Borrower's Net Income for each
fiscal quarter
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ending on or after June 30, 1999, during which Borrower had positive Net
Income PLUS (c) 100% of the increases in Net Worth from any sale or
issuance of any equity securities, including Qualified Preferred Stock
(other than the Trust Preferred Stock), of, or any other additions to
capital by, the Borrower or its Subsidiaries during each fiscal quarter
ending on or after March 31, 1999, MINUS (z) for each fiscal quarter
ending after June 30, 2000, the sum of (a) Restructuring Charges, in an
aggregate amount not to exceed $137,000,000 on an after-tax basis PLUS (b)
payments made to sellers in connection with Acquisitions pursuant to
guaranties by the Borrower that the stock component of the purchase price
would achieve certain agreed-upon minimum levels of market price, in an
aggregate amount not to exceed $11,700,000. The foregoing calculation
shall be made without giving effect to any unrealized holding gain or loss
related to the xxxx-to-market of the Borrower's "available for sale"
securities pursuant to Financial Accounting Standards Board Bulletin
No.115 or any change in the fair value of any interest rate swap that
qualifies as a cash flow hedge pursuant to Financial Accounting Standards
Board Bulletin No 133.
(s) The Credit Agreement is amended by adding, in appropriate numerical
order, the following Section 6.17:
6.17 TOTAL FUNDED DEBT TO EBITDA. As of the last day of each fiscal
quarter set forth below, the Borrower will not permit the ratio of its
Total Funded Debt (excluding the Trust Notes) to its EBITDA (plus, without
duplication, the EBITDA for such period of any Person or assets acquired
by the Borrower by Acquisition during such period, if so requested by the
Borrower, as provided below) for the preceding four fiscal quarters then
ended to be greater than the applicable ratio set forth below:
FISCAL QUARTER(S) ENDED: MAXIMUM RATIO:
----------------------- --------------
9/30/00 -- 12/31/00 4.75 to 1.00
3/31/01 4.60 to 1.00
6/30/01 4.45 to 1.00
9/30/01 - 9/30/02 4.35 to 1.00
12/31/02 - 9/30/03 4.00 to 1.00
12/31/03 and thereafter 3.75 to 1.00
For purposes of this Section 6.17, whether or not the Acquisition is not
treated as a pooling transaction, the financial results of the acquired
Person or assets shall, if requested in writing by the Borrower to the
Administrative Agent, be added to the applicable financial results of the
Borrower in the same manner as if such transaction were a pooling
transaction with such adjustments thereto as are required to reflect
nonrecurring items (both positive and negative) that are permitted to be
adjusted in accordance with the pro forma financial statement guidelines
established by the Securities and Exchange Commission for acquisition
accounting for reported acquisitions by public companies or as approved by
the Administrative Agent, including addbacks to reflect contractual salary
and other compensation adjustments related to the applicable sellers and
related parties, contractual lease payment adjustments, and other
non-recurring expenses approved by the
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Administrative Agent which are related to the Acquisition, such as broker
commissions and advisory fees. With respect to any such Acquisition in
which the Borrower so requests adjustments to reflect such nonrecurring
items, the Borrower shall deliver to the Agent (promptly, but in any event
together with the Compliance Certificate calculating the inclusion of the
financial results of such Person or assets with the financial results of
the Borrower) the financial reports of the acquired Person or assets,
which reports must be (A) audited or reviewed financial reports prepared
by an independent certified public accounting firm, or (B) otherwise
approved by the Administrative Agent.
(t) Section 9.02 of the Credit Agreement is amended by replacing the
notice information for the Borrower and its counsel set forth therein in its
entirety with the following:
if to the Borrower, at its address at 0000 Xx. Xxxxx Xxxxx, 0xx Xxxxx,
Xxxxxxx, Xxxxx 00000, Attention: Chief Financial Officer (telecopy: (713)
000-0000; telephone: (000) 000-0000), with a copy to Mr. W. Xxxxxxxxxxx
Xxxxxxxx, Xxxxxxxx Xxxxxx Xxxxx Xxxxxx & Xxxxx L.L.P., Two Xxxxx Center,
0000 Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx, 00000 (telecopy: (000) 000-0000;
telephone: (000) 000-0000);
(u) EXHIBIT H to the Credit Agreement is hereby replaced with the EXHIBIT
H attached hereto.
Section 2. CONSENT. Pursuant to Section 7.01(k)(iii)(B) of the Credit
Agreement it is an Event of Default if, without the prior written consent of the
Majority Lenders, any modification shall be made to any Debt Document which
renders the economic terms of the Senior Notes materially more favorable to the
holders of the Senior Notes or materially less favorable to the Borrower. In
connection with the modifications proposed to be made to the Debt Documents in
connection with this Agreement, the Lenders hereby consent (to the extent such
consent is required) to such modifications PROVIDED that the agreement effecting
the same is reasonably acceptable, in form and substance, to the Administrative
Agent.
Section 3. AMENDMENT FEE. The Borrower shall pay to the Administrative
Agent for the ratable benefit of each Lender that executes and delivers this
Agreement on or before September 15, 2000, an amendment fee in an amount equal
to 0.375% of such Lender's Commitment (as modified pursuant to this Agreement).
Section 4. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants that (a) the execution, delivery and performance of this Agreement are
within the corporate power and authority of the Borrower and that by the
effective date specified in Section 6 will have been duly authorized by
appropriate proceedings, (b) this Agreement constitutes legal, valid, and
binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, reorganization,
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moratorium, or similar laws affecting the rights of creditors generally and
general principles of equity, and (c) upon the effectiveness of this Agreement
and the amendment of the Credit Documents as provided for herein, no Event of
Default shall exist under the Credit Documents and there shall have occurred no
event which with notice or lapse of time would become an Event of Default under
the Credit Documents, as amended.
Section 5. EFFECT ON CREDIT DOCUMENTS. Except as amended herein, the
Credit Agreement and all other Credit Documents remain in full force and effect
as originally executed. Nothing herein shall act as a waiver of the
Administrative Agent's or any Lender's rights under the Credit Documents as
amended, including the waiver of any default or event of default, however
denominated. The Borrower must continue to comply with the terms of the Credit
Documents, as amended. This Agreement is a Credit Document for the purposes of
the provisions of the other Credit Documents. Without limiting the foregoing,
any breach of representations, warranties, and covenants under this Agreement
may be a default or event of default under the other Credit Documents.
Section 6. EFFECTIVENESS. This Agreement shall become binding on Borrower,
the Administrative Agent and each Lender upon its execution of a counterpart
hereof, subject to the condition that the Administrative Agent shall have
received the following on or before November 7, 2000: (a) duly and validly
executed counterparts hereof signed by the Borrower, the Administrative Agent,
and the Majority Lenders, (b) the Reaffirmation of Guaranty dated as of even
date herewith, duly and validly executed by the Guarantors, (c) the amendment
fee described above, (d) evidence reasonably acceptable to the Administrative
Agent that Borrower's execution, delivery and performance of this Agreement have
been duly authorized by appropriate proceedings, and (e) such evidence as the
Administrative Agent may reasonably require as to the modifications to the Debt
Documents described in Section 2, which modifications shall be approved by the
Administrative Agent, such approval not to be unreasonably withheld. No such
party may revoke its execution of this Agreement prior to such date, but this
Agreement shall not be deemed effective until all of the foregoing conditions
have been satisfied.
Section 7. MISCELLANEOUS. The miscellaneous provisions of the Credit
Agreement apply to this Agreement. This Agreement may be signed in any number of
counterparts, each of which shall be an original, and may be executed and
delivered by telecopier.
THIS WRITTEN AGREEMENT AND THE CREDIT DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
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EXECUTED as of the date first above written.
BORROWER:
CARRIAGE SERVICES, INC.
By:___________________________________________
Xxxxxx X. Xxxxxxxxx, Executive Vice
President and Chief Financial Officer
ADMINISTRATIVE AGENT:
BANK OF AMERICA, N.A.
By:___________________________________________
Xxxxx X. Xxxx
Senior Vice President
LENDERS:
BANK OF AMERICA, N.A.
COMMITMENT: By:_________________________________________
----------- Xxxxx X. Xxxx
$15,385,000 Senior Vice President
SCI LOAN SERVICES, LLC, successor in
interest to PROVIDENT SERVICES, INC. as a
result of a conversion dated 7-20-00
COMMITMENT: By:_________________________________________
----------- Name:_______________________________________
$19,231,000 Title:______________________________________
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XXXX XXX, XXXXX, NA
COMMITMENT: By:_________________________________________
----------- Name:_______________________________________
$15,385,000 Title:______________________________________
FIRST UNION NATIONAL BANK
COMMITMENT: By:_________________________________________
----------- Name:_______________________________________
$7,692,000 Title:______________________________________
CHASE BANK TEXAS, N.A.
COMMITMENT: By:_________________________________________
----------- Name:_______________________________________
$13,462,000 Title:______________________________________
XXXXX FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
COMMITMENT: By:_________________________________________
----------- Name:_______________________________________
$9,615,000 Title:______________________________________
UNION BANK OF CALIFORNIA, N.A.
COMMITMENT: By:_________________________________________
----------- Name:_______________________________________
$5,769,000 Title:______________________________________
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XXXXXXXX XXXX, XXXXXXX
COMMITMENT: By:_________________________________________
----------- Name:_______________________________________
$9,615,000 Title:______________________________________
SOUTHWEST BANK OF TEXAS, N.A.
COMMITMENT: By:_________________________________________
----------- Name:_______________________________________
$3,846,000 Title:______________________________________
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