EXHIBIT 4.12
------------------------------------------------------------------------------
PREFERRED SECURITIES GUARANTEE AGREEMENT
BETWEEN
CARRIAGE SERVICES, INC.
AND
WILMINGTON TRUST COMPANY
------------------------------------------------------------------------------
CROSS-REFERENCE TABLE(1)
SECTION OF SECTION OF
TRUST INDENTURE ACT GUARANTEE
of 1939, as amended AGREEMENT
- ------------------------------------------------------------------------------
310(a).......................................................... 4.01(a)
310(b).......................................................... 4.01(c), 2.08
310(c).......................................................... Inapplicable
311(a).......................................................... 2.02(b)
311(b).......................................................... 2.02(b)
311(c).......................................................... Inapplicable
312(a).......................................................... 2.02(a)
312(b).......................................................... 2.02(b)
313............................................................. 2.03
314(a).......................................................... 2.04
314(b).......................................................... Inapplicable
314(c).......................................................... 2.05
314(d).......................................................... Inapplicable
314(e)..........................................................1.01, 2.05, 3.02
314(f).......................................................... 2.01, 3.02
315(a).......................................................... 3.01(d)
315(b).......................................................... 2.07
315(c).......................................................... 3.01
315(d).......................................................... 3.01(d)
316(a)..........................................................1.01, 2.06, 5.04
316(b).......................................................... 5.03
316(c).......................................................... 8.02
317(a).......................................................... Inapplicable
317(b).......................................................... Inapplicable
318(a).......................................................... 2.01(b)
318(b).......................................................... 2.01
318(c).......................................................... 2.01(a)
____________
(1)This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 DEFINITIONS AND INTERPRETATION.................................1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 TRUST INDENTURE ACT; APPLICATION...............................4
SECTION 2.02 LISTS OF HOLDERS OF SECURITIES.................................5
SECTION 2.03 REPORTS BY THE GUARANTEE TRUSTEE...............................5
SECTION 2.04 PERIODIC REPORTS TO GUARANTEE TRUSTEE..........................5
SECTION 2.05 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT...............5
SECTION 2.06 EVENTS OF DEFAULT; WAIVER......................................6
SECTION 2.07 EVENT OF DEFAULT; NOTICE.......................................6
SECTION 2.08 CONFLICTING INTERESTS..........................................6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.....................6
SECTION 3.02 CERTAIN RIGHTS OF GUARANTEE TRUSTEE............................8
SECTION 3.03 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.........10
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01 GUARANTEE TRUSTEE; ELIGIBILITY................................10
SECTION 4.02 APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE TRUSTEE.....10
ARTICLE V
GUARANTEE
SECTION 5.01 GUARANTEE.....................................................11
SECTION 5.02 SUBORDINATION.................................................12
SECTION 5.03 WAIVER OF NOTICE AND DEMAND...................................12
ii
SECTION 5.04 OBLIGATIONS NOT AFFECTED......................................12
SECTION 5.05 RIGHTS OF HOLDERS.............................................13
SECTION 5.06 GUARANTEE OF PAYMENT..........................................13
SECTION 5.07 SUBROGATION...................................................13
SECTION 5.08 INDEPENDENT OBLIGATIONS.......................................14
SECTION 5.09 CONVERSION....................................................14
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01 LIMITATION OF TRANSACTIONS....................................14
SECTION 6.02 RANKING.......................................................15
ARTICLE VII
TERMINATION
SECTION 7.01 TERMINATION...................................................15
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 EXCULPATION...................................................15
SECTION 8.02 INDEMNIFICATION...............................................16
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 SUCCESSORS AND ASSIGNS........................................16
SECTION 9.02 AMENDMENTS....................................................16
SECTION 9.03 NOTICES.......................................................17
SECTION 9.04 BENEFIT.......................................................18
SECTION 9.05 GOVERNING LAW.................................................18
iii
THIS PREFERRED SECURITIES GUARANTEE AGREEMENT ("Guarantee"), dated as of
June 3, 1999, is executed and delivered by CARRIAGE SERVICES, INC., a Delaware
corporation (the "Guarantor"), and WILMINGTON TRUST COMPANY, a Delaware banking
corporation, as trustee (the "Guarantee Trustee"), for the benefit of the
HOLDERS (as defined herein) from time to time of the Preferred Securities (as
defined herein) of CARRIAGE SERVICES CAPITAL TRUST, a Delaware statutory
business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of June 3, 1999, among the trustees of the Issuer named
therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof 1,875,000 TIDES, having an aggregate stated
liquidation amount of $93,750,000, designated the 7% Convertible Preferred
Securities Term Income Deferrable Equity Securities (TIDES) (liquidation amount
$50 per Preferred Security) (the "Preferred Securities");
WHEREAS as incentive for the Holders to purchase the TIDES, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in
this Guarantee, to pay on a subordinated basis to the Holders the Guarantee
Payments (as defined herein) and to make certain other payments on the terms and
conditions set forth herein; and
WHEREAS the Guarantor is also executing and delivering a guarantee
agreement (the "Common Securities Guarantee") in substantially identical terms
to this Guarantee for the benefit of the holders of the Common Securities (as
defined herein) except that if a Debenture Event of Default or a Declaration
Event of Default (each as defined herein) (or an event that, with passage of
time, would become such a Debenture Event of Default) shall have occurred and be
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under the Common Securities Guarantee are subordinated to the rights of
Holders to receive Guarantee Payments under this Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Guarantee for the
benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01 DEFINITIONS AND INTERPRETATION.
In this Guarantee, unless the context otherwise requires:
(a) capitalized terms used in this Guarantee but not defined in the
preamble above have the respective meanings assigned to them in this Section
1.01; terms defined in the Declaration
1
as at the date of execution of this Guarantee have the same meaning when used in
this Guarantee unless otherwise defined in this Guarantee;
(b) a term defined anywhere in this Guarantee has the same meaning
throughout;
(c) all references to "the Guarantee" or "this Guarantee" are to
this Guarantee as modified, supplemented or amended from time to time;
(d) all references in this Guarantee to Articles and Sections are to
Articles and Sections of this Guarantee unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee unless otherwise defined in this Guarantee or unless
the context otherwise requires; and
(f) a reference to the singular includes the plural and vice versa.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"COMMON SECURITIES" means the convertible common securities (liquidation
amount $50 per common security) representing common undivided beneficial
interests in the assets of the Issuer.
"COVERED PERSON" means any Holder or beneficial owner of Preferred
Securities.
"DEBENTURE EVENT OF DEFAULT" means an Event of Default as defined in
the Indenture.
"DEBENTURES" means the series of convertible junior subordinated debt
securities of the Guarantor designated the Convertible Junior Subordinated
Debentures Due 2029 held by the Property Trustee (as defined in the Indenture)
of the Issuer.
"DECLARATION EVENT OF DEFAULT" means an Event of Default as defined in
the Declaration.
"EVENT OF DEFAULT" means a default by the Guarantor on any of its payment
or other obligations under this Guarantee; provided, however, that except with
respect to a default in payment of any Guarantee Payment, the Guarantor shall
have received notice of default and shall not have cured such default within 60
days after receipt of such notice.
2
"GUARANTEE PAYMENTS" means the following payments or distributions,
without duplication, with respect to the Preferred Securities, to the extent not
paid or made by or on behalf of the Issuer: (i) any accrued and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
the Preferred Securities, to the extent that the Issuer shall have funds on hand
available therefor at such time, (ii) the applicable Redemption Price (as
defined in the Indenture) with respect to Preferred Securities called for
redemption by the Issuer, to the extent that the Issuer has funds on hand
available therefor at such time, and (iii) upon a voluntary or involuntary
dissolution, winding up or liquidation of the Issuer (other than in connection
with the distribution of Debentures to the Holders or the redemption of all the
Preferred Securities), the lesser of (a) the aggregate liquidation amount
thereof plus accrued and unpaid Distributions thereon to the date of payment
(such amount being the "Liquidation Distribution") to the extent the Issuer has
funds available therefor and (b) the amount of assets of the Issuer remaining
available for distribution to Holders upon liquidation of the Issuer after
satisfaction of liabilities to creditors of the Issuer as required by applicable
law.
"GUARANTEE TRUSTEE" means Wilmington Trust Company until a Successor
Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.
"HOLDER" means any holder, as registered on the books and records of the
Issuer of any outstanding Preferred Securities; provided, however, that, in
determining whether the holders of the requisite percentage in liquidation
amount of the Preferred Securities have given any request, notice, consent or
waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of
the Guarantor.
"INDEMNIFIED PERSON" means the Guarantee Trustee, any Affiliate of the
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of the Guarantee Trustee.
"INDENTURE" means the Indenture dated as of June 3, 1999, among the
Guarantor and Wilmington Trust Company, as trustee, and any indenture
supplemental thereto, pursuant to which the Debentures are to be issued to the
Property Trustee of the Issuer.
"MAJORITY IN LIQUIDATION AMOUNT OF THE PREFERRED SECURITIES" means, except
as provided by the Trust Indenture Act, Holder(s), voting separately as a class,
representing more than 50% of the stated aggregate liquidation amount (including
the stated amount that would be paid on redemption, liquidation or otherwise) of
all Preferred Securities then outstanding.
"OFFICERS' CERTIFICATE" means, with respect to any Person, a certificate
signed by the Chairman of the Board, President or a Vice President, and by the
Treasurer, an Assistant Treasurer, the Controller, the Secretary or an Assistant
Secretary of such Person, and delivered to the Guarantee Trustee. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee shall include:
3
(g) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(h) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers' Certificate;
(i) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such officer
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(j) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
"RESPONSIBLE OFFICER" means, with respect to the Guarantee Trustee, the
chairman of the board of directors, the president, any vice-president, any
assistant vice-president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust officer or any
other officer of the Guarantee Trustee customarily performing functions similar
to those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"SENIOR DEBT" shall have the meaning set forth in the Indenture.
"SUCCESSOR GUARANTEE TRUSTEE" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.01.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, as amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee, which are
incorporated by reference hereto, and shall, to the extent applicable, be
governed by such provisions; and
4
(b) If and to the extent that any provision of this Guarantee
limits, qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such
imposed duties shall control.
SECTION 2.02 LISTS OF HOLDERS OF SECURITIES.
(a) The Guarantor shall provide the Guarantee Trustee (i) within 14
days after May 15 and November 15 of each year, commencing November 15, 1999, a
list, in such form as the Guarantee Trustee may reasonably require, of the names
and addresses of the Holders ("List of Holders") as of such date; provided that
the Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Guarantee Trustee by the Guarantor, and (ii) at any other time, within 30
days of receipt by the Guarantor of a written request for a List of Holders as
of a date no more than 14 days before such List of Holders is given to the
Guarantee Trustee. The Guarantee Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.03 REPORTS BY THE GUARANTEE TRUSTEE.
Within 60 days after May 15 of each year, commencing May 15, 2000, the
Guarantee Trustee shall provide to the Holders of the Securities such reports as
are required by Section 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by Section 313 of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.04 PERIODIC REPORTS TO GUARANTEE TRUSTEE.
The Guarantor shall provide to the Guarantee Trustee, the Securities and
Exchange Commission and the Holders such documents, reports and information as
required by Section 314 (if any) and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act.
SECTION 2.05 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Guarantor shall provide to the Guarantee Trustee such evidence of
compliance with any conditions precedent, if any, provided for in this Guarantee
which relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
5
SECTION 2.06 EVENTS OF DEFAULT; WAIVER.
The Holders of a Majority in liquidation amount of the Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee, but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent therefrom.
SECTION 2.07 EVENT OF DEFAULT; NOTICE.
(a) The Guarantee Trustee shall, within 30 days after the occurrence
of an Event of Default actually known to the Guarantee Trustee, transmit by
mail, first-class postage prepaid, to the Holders, notices of all Events of
Default known to the Guarantee Trustee, unless such defaults have been cured
before the giving of such notice; provided that, except in the case of a default
in the payment of a Guarantee Payment, the Guarantee Trustee shall be protected
in withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default except any Event of Default as to which the Guarantee
Trustee shall have received written notice or a Responsible Officer charged with
the administration of the Declaration shall have obtained written notice.
SECTION 2.08 CONFLICTING INTERESTS.
The Declaration shall be deemed to be specifically described in this
Guarantee for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) This Guarantee shall be held by the Guarantee Trustee for the
benefit of the Holders, and the Guarantee Trustee shall not transfer this
Guarantee to any Person except a Holder exercising his or her rights pursuant to
Section 5.05(d) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, and such vesting and
cessation of title shall be effective whether or
6
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee, and no implied covenants shall be read into this Guarantee
against the Guarantee Trustee. In case an Event of Default has occurred (that
has not been cured or waived pursuant to Section 2.06), the Guarantee Trustee
shall exercise such of the rights and powers vested in it by this Guarantee, and
use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(d) No provision of this Guarantee shall be construed to relieve the
Guarantee Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful
misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee, and the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are specifically
set forth in this Guarantee, and no implied covenants or obligations
shall be read into this Guarantee against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Guarantee Trustee and conforming to the requirements of this
Guarantee; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Guarantee Trustee, the Guarantee Trustee shall be under a duty
to examine the same to determine whether or not they conform to the
requirements of this Guarantee;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was
made;
7
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a Majority
in liquidation amount of the Preferred Securities, relating to the time,
method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee, or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee; and
(iv) no provision of this Guarantee shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers.
SECTION 3.02 CERTAIN RIGHTS OF GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.01:
(i) the Guarantee Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
(ii) any direction or act of the Guarantor contemplated by
this Guarantee shall be sufficiently evidenced by an Officers'
Certificate;
(iii) whenever, in the administration of this Guarantee, the
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and rely
upon an Officers' Certificate which, upon receipt of such request, shall
be promptly delivered by the Guarantor;
(iv) the Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or reregistration thereof);
(v) the Guarantee Trustee may consult with legal counsel of
its selection, and the written advice or opinion of such legal counsel
with respect to legal matters shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken
by it hereunder in good faith and in accordance with such advice or
opinion. Such legal counsel may be legal counsel to the Guarantor or any
of its Affiliates and may include any of the Guarantor's employees. The
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee from any court of
competent jurisdiction;
8
(vi) the Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee at the
request or direction of any Holder, unless such Holder shall have provided
to the Guarantee Trustee security and indemnity satisfactory to the
Guarantee Trustee against the costs, expenses (including attorneys' fees
and expenses) and liabilities that might be incurred by it in complying
with such request or direction, including such reasonable advances as may
be requested by the Guarantee Trustee; provided that nothing contained in
this Section 3.02(a)(vi) shall be taken to relieve the Guarantee Trustee,
upon the occurrence of an Event of Default, of its obligation to exercise
the rights and powers vested in it by this Guarantee;
(vii) the Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit;
(viii) the Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder;
(ix) any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders, and the signature of the Guarantee
Trustee or its agents alone shall be sufficient and effective to perform
any such action; it being understood that no third party shall be required
to inquire as to the authority of the Guarantee Trustee to so act or as to
its compliance with any of the terms and provisions of this Guarantee,
both of which shall be conclusively evidenced by the Guarantee Trustee's
or its agent's taking such action; and
(x) whenever in the administration of this Guarantee the
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (i) may request written instructions from
the Holders or, other than with respect to enforcing any remedy or right
or taking any action related thereto, the Guarantor, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
written instructions are received, and (iii) shall be protected in acting
in accordance with such written instructions.
(b) No provision of this Guarantee shall be deemed to impose any
duty or obligation on the Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it, in any
jurisdiction in which it shall be illegal, or in which the Guarantee Trustee
shall be unqualified or incompetent in accordance with applicable law, to
perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
9
SECTION 3.03 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE.
The recitals contained in this Guarantee shall be taken as the statements
of the Guarantor, and the Guarantee Trustee does not assume any responsibility
for their correctness. The Guarantee Trustee makes no representations as to the
validity or sufficiency of this
Guarantee.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01 GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia
authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the supervising or
examining authority referred to above, then, for the purposes of this
Section 4.01(a)(ii), the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.01(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.02(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 3.10(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 3.10(b) of the Trust Indenture Act.
SECTION 4.02 APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE TRUSTEE.
(a) Subject to Section 4.02(b), the Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
10
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.02(a) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of an instrument of removal or resignation, the
Guarantee Trustee resigning or being removed may petition any court of competent
jurisdiction for appointment of a Successor Guarantee Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper, appoint
a Successor Guarantee Trustee.
(e) No Guarantee Trustee shall be liable for the acts or omissions
to act of any Successor Guarantee Trustee.
(f) Upon termination of this Guarantee or removal or resignation of
the Guarantee Trustee pursuant to this Section 4.02, the Guarantor shall pay to
the Guarantee Trustee all amounts accrued to the date of such termination,
removal or resignation.
ARTICLE V
GUARANTEE
SECTION 5.01 GUARANTEE.
The Guarantor irrevocably and unconditionally agrees to pay in full on a
subordinated basis to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by or on behalf of the Issuer), as and when due, in
coin or currency of the United States of America which at the time of payment is
legal tender for payment of public and private debt regardless of any defense,
right of setoff or counterclaim that the Issuer may have or assert other than
the defense of payment. The Guarantor's obligation to make a Guarantee Payment
may be satisfied by direct payment of the required amounts by the Guarantor to
the Holders or by causing the Issuer to pay such amounts to the Holders.
11
SECTION 5.02 SUBORDINATION.
If a Debenture Event of Default or a Declaration Event of Default (or an
event that, with passage of time, would become a Debenture Event of Default)
shall have occurred and be continuing, the rights of holders of the Common
Securities to receive Guarantee Payments under the Common Securities Guarantee
are subordinated to the rights of Holders to receive Guarantee Payments under
this Guarantee.
SECTION 5.03 WAIVER OF NOTICE AND DEMAND.
The Guarantor hereby waives notice of acceptance of this Guarantee and of
any liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 5.04 OBLIGATIONS NOT AFFECTED.
The obligations, covenants, agreements and duties of the Guarantor under
this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions, the amount payable upon redemption or the
amount payable upon liquidation of the Issuer or any other sums payable under
the terms of the Preferred Securities or the extension of time for the
performance of any other obligation under, arising out of, or in connection
with, the Preferred Securities (other than an extension of time for payment of
Distributions that results from the extension of any interest payment period on
the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the TIDES, or any action on
the part of the Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, the Issuer or any of the assets of
the Issuer;
(e) any invalidity of, or defect or deficiency in the Preferred
Securities;
12
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.04 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or any other Person to give
notice to, or obtain consent of, the Guarantor with respect to the happening of
any of the foregoing.
SECTION 5.05 RIGHTS OF HOLDERS.
The Guarantor expressly acknowledges that:
(a) This Guarantee will be deposited with the Guarantee Trustee to
be held for the benefit of the Holders.
(b) The Guarantee Trustee has the right to enforce this Guarantee on
behalf of the Holders.
(c) The Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee or exercising any trust or power conferred upon the Guarantee Trustee
under this Guarantee.
(d) Any Holder may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Guarantee, without first instituting
a legal proceeding against the Issuer, the Guarantee Trustee or any other
Person.
SECTION 5.06 GUARANTEE OF PAYMENT.
This Guarantee creates a guarantee of payment and not of collection. This
Guarantee will not be discharged except by payment of the Guarantee Payments in
full (without duplication of amounts theretofore paid by the Issuer) or upon
distribution of Debentures to Holders as provided in the Declaration.
SECTION 5.07 SUBROGATION.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Guarantee and shall have the right to waive payment by the
Issuer pursuant to Section 5.01; provided, however, that the Guarantor shall not
(except to the extent required by mandatory provisions of law) be entitled to
13
enforce or exercise any right that it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of payment
under this Guarantee, if, at the time of any such payment, any amounts are due
and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 5.08 INDEPENDENT OBLIGATIONS.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Issuer with respect to the Preferred Securities, and
that the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 5.04 hereof.
SECTION 5.09 CONVERSION.
The Guarantor acknowledges its obligation to issue and deliver common
stock upon the conversion of the Preferred Securities.
ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.01 LIMITATION OF TRANSACTIONS.
So long as any Preferred Securities remain outstanding, if there shall
have occurred and be continuing a Debenture Event of Default, a Declaration
Event of Default or an event that, with the giving of notice or the lapse of
time or both, would constitute a Debenture Event of Default or a Declaration
Event of Default, or a selection by the Guarantor of a Deferral Period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then (a) the Guarantor shall not declare or pay any dividend on, or
make any distribution with respect to, or redeem, purchase, acquire or make a
liquidation payment with respect to, any of its capital stock (other than stock
dividends paid by the Guarantor which stock dividends consist of the stock of
the same class as that on which the dividend is being paid), (b) the Guarantor
shall not make any payment of interest, principal or premium, if any, on or
repay, repurchase or redeem any debt securities issued by the Guarantor which
rank pari passu with or junior in interest to the Debentures and (c) the
Guarantor shall not make any guarantee payments with respect to any guarantee by
the Guarantor of the debt securities of any subsidiary of the Guarantor if such
guarantee ranks pari passu with or junior in interest to the Debentures (in each
case, other than (A) dividends or distributions in Common Stock, (B) any
declaration of a dividend in connection with the implementation of a
stockholders' rights plan, or the issuance of stock under any such plan in the
future, or the redemption or repurchase of any such rights pursuant thereto, (C)
payments under this Guarantee, (D) purchases or acquisitions of shares of the
Class A Common Stock in connection with the satisfaction by the Guarantor of its
14
obligations under any employee benefit plan or any other contractual obligation
of the Guarantor (other than a contractual obligation ranking pari passu with or
junior in interest to the Debentures), (E) as a result of a reclassification of
the Guarantor's capital stock or the exchange or conversion of one class or
series of the Guarantor's capital stock for another class or series of the
Guarantor's capital stock or (F) the purchase of fractional interests in shares
of the Guarantor's capital stock pursuant to the conversion or exchange
provisions of such capital stock or the security being converted or exchanged).
SECTION 6.02 RANKING.
This Guarantee will constitute an unsecured obligation of the Guarantor
and will rank subordinate to all Senior Debt of the Guarantor to the same extent
that the Debentures are subordinated pursuant to the Indenture.
ARTICLE VII
TERMINATION
SECTION 7.01 TERMINATION.
This Guarantee shall terminate upon (i) full payment of the amount payable
upon redemption of all Preferred Securities, (ii) the distribution of the
Guarantor's common stock to the Holders in respect of the conversion of the
Preferred Securities into the Guarantor's common stock, (iii) the distribution
of the Debentures to the Holders of all of the Preferred Securities or (iv) full
payment of the amounts payable in accordance with the Declaration upon
liquidation of the Issuer. Notwithstanding the foregoing, this Guarantee will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid under the Preferred
Securities or under this Guarantee.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01 EXCULPATION.
(a) No Indemnified Person shall be liable, responsible or
accountable in damages or otherwise to the Guarantor or any Covered Person for
any loss, damage or claim incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith in accordance with this
Guarantee and in a manner that such Indemnified Person reasonably believed to be
within the scope of the authority conferred on such Indemnified Person by this
Guarantee or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
15
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as to
matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence and who has been selected with
reasonable care by or on behalf of the Guarantor, including information,
opinions, reports or statements as to the value and amount of the assets,
liabilities, profits, losses, or any other facts pertinent to the existence and
amount of assets from which Distributions to Holders might properly be paid.
SECTION 8.02 INDEMNIFICATION.
(a) The Guarantor agrees to indemnify each Indemnified Person for,
and to hold each Indemnified Person harmless against, any and all loss,
liability or expense including taxes (other than taxes based on the income of
such Indemnified Person) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against or investigating
any claim or liability in connection with the exercise or performance of any of
its powers or duties hereunder. The obligation to indemnify as set forth in this
Section 8.02 shall survive the termination of this Guarantee.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees and expenses) incurred by an Indemnified Person in
defending any claim, demand, action, suit or proceeding shall, from time to
time, be advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.02(a).
(c) No Indemnified Person shall claim or exact any lien or charge on
any Guarantee Payments as a result of any amount due to it under this Guarantee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 SUCCESSORS AND ASSIGNS.
All guarantees and agreements contained in this Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Guarantor
and shall inure to the benefit of the Holders.
SECTION 9.02 AMENDMENTS.
Except with respect to any changes that do not materially adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Guarantee may only be amended with the prior approval of the Holders of a
majority in liquidation amount of the Preferred Securities
16
then outstanding. The provisions of Section 12.02 of the Declaration with
respect to meetings of holders of the Securities (as defined in the Declaration)
apply to the giving of such approval.
SECTION 9.03 NOTICES.
All notices provided for in this Guarantee shall be in writing, duly
signed by the party giving such notice, and shall be delivered, telecopied or
mailed by first-class mail, as follows:
(a) if given to the Issuer, in care of the Regular Trustees at the
Issuer's mailing address set forth below (or such other address as the Issuer
may give notice):
Mark W. Duffey
Thomas C. Livengood
Terry E. Sanford
Carriage Services Capital Trust
c/o Carriage Services, Inc.
1717 Main Street, Suite 5900
Dallas, Texas 75201
Attention: Corporate Controller
(b) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Holders):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attn: Corporate Trust Administration
(c) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders):
Carriage Services, Inc.
1300 Post Oak Blvd., Suite 1500
Houston, Texas 77056-3012
Attention: Corporate Controller
17
(d) If given to any Holder, at the address set forth on the books
and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.04 BENEFIT.
This Guarantee is solely for the benefit of the Holders and, subject to
Section 3.01(a), is not separately transferable from the Preferred Securities.
SECTION 9.05 GOVERNING LAW.
THIS GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES
OF CONFLICT OF LAWS.
THIS GUARANTEE is executed as of the day and year first above written.
CARRIAGE SERVICES, INC.
as Guarantor
by/s/ THOMAS C. LIVENGOOD
Name: Thomas C. Livengood
Title: Executive Vice President
and Chief Financial
Officer
WILMINGTON TRUST COMPANY
as Guarantee Trustee
by /s/ JAMES P. LAWLER
Name: James P. Lawler
Title: Vice President
18