-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Tm4qM0EbtSWWHOnU0ZDN9QHiLQYd0qaJsq8oTAZdl56WSsURF/T5Kp5U0owfV3UX 1o1LmwY26P/FbHGYtw2q+g== 0000906280-97-000011.txt : 19970127 0000906280-97-000011.hdr.sgml : 19970127 ACCESSION NUMBER: 0000906280-97-000011 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 37 CONFORMED PERIOD OF REPORT: 19961031 FILED AS OF DATE: 19970124 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: STEWART ENTERPRISES INC CENTRAL INDEX KEY: 0000878522 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE [6500] IRS NUMBER: 720693290 STATE OF INCORPORATION: LA FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19508 FILM NUMBER: 97510716 BUSINESS ADDRESS: STREET 1: 110 VETERANS MEMORIAL BLVD CITY: METAIRIE STATE: LA ZIP: 70005 BUSINESS PHONE: 5048375880 MAIL ADDRESS: STREET 1: 110 VETERANS MEMORIAL BLVD CITY: METARIE STATE: LA ZIP: 70005 10-K 1 FORM 10-K ============================================================================= 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. ============================================================================= 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: 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 _______________ 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 Joseph P. Henican, III 48 Vice Chairman of the Board and Chief Executive Officer William E. Rowe 50 President, Chief Operating Officer and Director 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 Richard O. Baldwin, Jr. 50 Executive Vice President and President-Corporate Development Division Brian J. Marlowe 50 Executive Vice President and President-Eastern Division Andrew H. McEachern 59 President-Australian Division Lawrence B. Hawkins 48 Senior Vice President and President-Investors Trust, Inc. Brent F. Heffron 47 Senior Vice President and President-Southern Division Raymond C. Knopke, Jr. 41 Senior Vice President and President-Western Division Kenneth C. Budde 49 Senior Vice President-Finance, Chief Accounting Officer, Secretary and Treasurer _____________________ 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.
Selected Consolidated Financial Data (Dollars in thousands, except per share data) Year Ended October 31, _________________________________________________________________ 1996 1995 1994 1993 1992 _______ _______ ______ _______ ______ Statement of Earnings Data: Revenues: Funeral $ 225,461 $ 188,991 $ 116,266 $ 75,348 $ 61,493 Cemetery 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 - - - - (1,508) ___________ ____________ ___________ ___________ ___________ Earnings from continuing operations before income taxes $ 82,075 $ 41,500 $ 42,198 $ 29,569 $ 20,942 =========== ============ =========== =========== =========== Earnings from continuing operations $ 51,297 $ 26,145 $ 27,253 $ 18,839 $ 14,195 =========== ============= =========== =========== =========== Earnings per common share from continuing operations $ 1.24 $ .72 $ .85 $ .71 $ .64 ========== ============= ========== =========== =========== Weighted average common shares outstanding (in thousands) 41,410 36,386 31,910 26,535 22,239 ========== ============= ========== =========== ========== Dividends declared per common share $ .066 $ .033 $ .027 $ .018 $ .005 ========== ============ ========== =========== ===========
October 31, ________________________________________________________ 1996 1995 1994 1993 1992 ______ _______ _______ _______ ________ 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
Selected Consolidated Operating Data
Year Ended October 31, ____________________________________________ 1996 1995 1994 1993 1992 _______ _______ _______ ________ ______ 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
____________________________ Includes the Company's construction and sales operations, which previously were classified as a separate industry segment. Investors Trust, Inc. ("ITI"), which generally administers the Company's trust funds and escrow accounts, was acquired by the Company on November 1, 1992. 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. 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 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 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. 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) 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. STEWART ENTERPRISES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Dollars in thousands, except per share amounts)
Common Stock ____________________ Unrealized Shares Additional Foreign Appreciation Total Class A Paid-In Retained Translation of Unearned Shareholders' and B Amount Capital Earnings Adjustment Investments Compensation Equity ____________ _________ ________ ________ _________ _________ ___________ __________ (in thousands) Balance October 31, 1993 28,646 $ 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 ($.027 per share) (849) (849) _____________ _________ _________ _________ ________ _________ __________ ___________ Balance October 31, 1994 32,839 32,839 151,690 141,885 (490) - (253) 325,671 Net earnings 26,145 26,145 Unearned compensation 253 253 Sales of common stock 6,081 6,081 97,854 103,935 Subsidiaries acquired with common stock 1,460 1,460 30,203 31,663 Stock options exercised 1,866 1,866 37,244 39,110 Purchase and retirement of common stock (1,232) (1,232) (25,045) (26,277) Foreign translation adjustment (18,633) (18,633) Unrealized appreciation of investments 3,356 3,356 Dividends ($.033 per share) (1,245) (1,245) _____________ _________ _________ _________ ________ _________ __________ ___________ Balance October 31, 1995 41,014 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) (2,768) (2,768) _____________ _________ _________ _________ ________ _________ __________ ___________ Balance October 31, 1996 41,800 $ 41,800 $ 306,706 $ 215,314 $(19,058) $ 2,685 $ - $547,447 ============= ========= ========= ========= ========= ========= ========== =========== ___________________ 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. Includes 1,778 shares (in thousands) of Class B Common Stock.
See accompanying notes to consolidated financial statements. 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 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)
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. 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. 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. 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. 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. 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 =========== ============ ============ 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.
October 31, _______________________ 1996 1995 __________ ___________ 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 =========== ===========
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.
October 31, ___________________ 1996 1995 _______ ______ 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 =========== ==========
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. 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 ========= 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. 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. 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% ======== ========= ========= 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:
October 31, _______________________ 1996 1995 _________ _________ 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 ============ ==========
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. 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. 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. 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. 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 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 ___________________ Includes the Company's construction and sales operations, which previously were classified as a separate industry segment. 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 Foreign 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 _________________________ Includes the Company's operations in the United States and the Commonwealth of Puerto Rico. 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 .32 .31 .30 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) 9,743 Earnings (loss) per common share .26 .27 (.04) .24 ____________________ Restated to reflect the Company's three-for-two stock split effective June 21, 1996. 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 STEWART ENTERPRISES, INC. AND SUBSIDIARIES SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS (Dollars in thousands)
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 -write-offs of period ____________ ___________ __________ ____________ ____________ ______________ 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 ________________ Amounts charged to other accounts represent principally the opening balance in the allowance for contract cancellations and doubtful accounts for acquired companies.
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 EX-4 2 EXHIBIT 4.5 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 EX-10 3 EXHIBIT 10.1 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 EX-10 4 EXHIBIT 10.6 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:_______________________ EX-10 5 EXHIBIT 10.22 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 EX-10 6 EXHIBIT 10.23 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. 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: ___________________ 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: __________________ 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: __________________ 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: __________________ 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: __________________ 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: __________________ 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:_____________________ EX-10 7 EXHIBIT 10.24 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 EX-10 8 EXHIBIT 10.25 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 EX-10 9 EXHIBIT 10.26 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 EX-10 10 EXHIBIT 10.27 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. EX-10 11 EXHIBIT 10.34 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 EX-10 12 EXHIBIT 10.35 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 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: _________________________ 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: ________________ 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: ________________ 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: ________________ 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: ________________ 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: ________________ 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: ________________ EX-10 13 EXHIBIT 10.36 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 EX-10 14 EXHIBIT 10.37 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 EX-10 15 EXHIBIT 10.38 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 EX-10 16 EXHIBIT 10.39 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 EX-10 17 EXHIBIT 10.40 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 EX-10 18 EXHIBIT 10.41 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 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: ______________________ 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: _________________ 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: _________________ 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: _________________ 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: _________________ 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: _________________ 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: _________________ EX-10 19 EXHIBIT 10.42 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 EX-10 20 EXHIBIT 10.43 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 EX-10 21 EXHIBIT 10.44 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 EX-10 22 EXHIBIT 10.45 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 EX-10 23 EXHIBIT 10.46 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 EX-10 24 EXHIBIT 10.47 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 EX-10 25 EXHIBIT 10.48 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 EX-10 26 EXHIBIT 10.49 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 EX-10 27 EXHIBIT 10.50 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 EX-10 28 EXHIBIT 10.51 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 EX-10 29 EXHIBIT 10.52 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 EX-10 30 EXHIBIT 10.53 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 EX-10 31 EXHIBIT 10.56 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. EX-10 32 EXHIBIT 10.57 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. EX-10 33 EXHIBIT 10.58 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. EX-12 34 EXHIBIT 12 Exhibit 12 STEWART ENTERPRISES, INC. AND SUBSIDIARIES Computation of Ratio of Earnings to Fixed Charges (dollars in thousands) (unaudited)
Years Ended October 31, ______________________________________________ 1996 1995 1994 1993 1992 _________ ________ _________ _________ _________ 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 ========= ========== ========= ========== ========
EX-21 35 EXHIBIT 21 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%. EX-23 36 EXHIBIT 23 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 EX-27 37 EXHIBIT 27
5 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. 1,000 YEAR OCT-31-1996 OCT-31-1996 24,580 2,514 109,129 0 31,044 171,542 347,869 (69,088) 1,365,941 73,482 515,901 0 0 41,800 505,647 1,365,941 433,387 433,387 315,269 315,269 0 0 26,051 82,075 30,778 51,297 0 0 0 51,297 1.24 0
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