Filed Pursuant to Rule 424(b)(3)
Registration No. 333-235638

$349,595,841

 

 

STONEMOR PARTNERS L.P.

CORNERSTONE FAMILY SERVICES OF WEST

VIRGINIA SUBSIDIARY, INC.

Offer to Exchange Up

To $349,595,841 Of

9.875%/11.500% Senior Secured PIK Toggle Notes due 2024

That Have Not Been Registered Under

The Securities Act of 1933

For

Up To $349,595,841 Of

9.875%/11.500% Senior Secured PIK Toggle Notes due 2024

That Have Been Registered Under

The Securities Act of 1933

 

 

This is an offer to exchange up to $349,595,841 of 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024 (the “New Notes”) that have been registered under the Securities Act of 1933, as amended (the “Securities Act”) for a like principal amount of 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024 (the “Old Notes”) that you now hold.

The exchange offer (“exchange offer”) will expire at 5:00 p.m., New York City time, on July 8, 2020 (the “expiration date”), unless we extend the exchange offer in our sole and absolute discretion.

The exchange of outstanding Old Notes for New Notes in the exchange offer will not constitute a taxable event for United States (“U.S.”) federal income tax purposes. The terms of the New Notes to be issued in the exchange offer are substantially identical to the Old Notes, except that the New Notes will be freely tradable and will not need (or benefit from) the registration and related rights pursuant to which we are conducting this exchange offer, including an increase in the interest rate related to defaults in our agreement to carry out this exchange offer. We will issue the New Notes under the same indenture as the Old Notes.

 

 

Please read “Risk Factors” beginning on page 19 of this prospectus for a discussion of factors you should consider before participating in the exchange offer.

We will exchange for an equal principal amount of New Notes all Old Notes that you validly tender and do not validly withdraw before the exchange offer expires. You may withdraw tenders of Old Notes at any time prior to the expiration of the exchange offer. The exchange procedure is more fully described in “The Exchange Offer—Procedures for Tendering.” All untendered Old Notes will continue to be subject to the restrictions on transfer set forth in the Old Notes and in the indenture.

Please read “Description of the New Notes” for more details on the terms of the New Notes. We will not receive any cash proceeds from the issuance of the New Notes in the exchange offer.

There is no existing public market for your Old Notes, and there is currently no public market for the New Notes to be issued to you in the exchange offer.

Each broker-dealer that receives New Notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes in exchange for Old Notes where such Old Notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed to make this prospectus available for a period of 90 days from the effective date of the registration statement for the exchange offer (or such shorter period during which broker-dealers are required by law to deliver this prospectus) to any broker-dealer for use in connection with any such resale. See “Plan of Distribution.”

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

 

The date of this prospectus is June 4, 2020.

This prospectus is part of a registration statement we filed with the Securities and Exchange Commission (the “SEC”). You should read this prospectus and any accompanying prospectus supplement, as well as any post-effective amendments to the registration statement of which this prospectus is a part, together with the additional information described under “Where You Can Find More Information,” before you make any investment decision.

We have not authorized anyone to give any information or to make any representations concerning the securities offered hereunder except those which are in this prospectus or any prospectus supplement that is delivered with this prospectus. If anyone gives any other information or representation, you should not rely on it. You should not assume that the information in this prospectus is accurate as of any date other than the date on its front cover. You should not interpret the delivery of this prospectus, or any offer or sale of these securities, as an indication that there has been no change in our affairs since the date of this prospectus. This prospectus is not an offer to sell or a solicitation of an offer to buy these securities in any circumstances in which the offer or solicitation is unlawful.

 

 

TABLE OF CONTENTS

 

		Page
Cautionary Statement Regarding Forward-Looking Statements			ii
Where You Can Find More Information			iii
Prospectus Summary			1
Risk Factors			19
The Exchange Offer			21
Use Of Proceeds			30
Description Of The New Notes			31
Book-Entry; Delivery And Form			93
Certain U.S. Federal Income Tax Consequences			96
Plan Of Distribution			98
Legal Matters			100
Experts			101
Annex A-1—Form of Letter of Transmittal for Holders of Global Notes			A-1
Annex A-2—Form of Letter of Transmittal for Holders of Definitive Notes			A-5
Annex B—Annual Report on Form 10-K of StoneMor Inc. for the year ended December 31, 2019			B-1
Annex C—Quarterly Report on Form 10-Q of StoneMor Inc. for the quarterly period ended March 31, 2020			C-1

 

 

StoneMor Inc., of which StoneMor Partners L.P. is a wholly-owned subsidiary, is subject to the informational requirements of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), and in accordance therewith it files annual, quarterly and current reports and other information with the SEC. Those SEC filings are available on our website at www.stonemor.com. The information on our website is not, and you should not consider such information to be, a part of this prospectus. Those SEC filings are also available to the public from commercial document retrieval services and at the website maintained by the SEC at www.sec.gov. You may also inspect those reports, proxy statements and other information concerning us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005, on which the common stock of StoneMor Inc. is currently listed.

This prospectus is a part of the registration statement and does not contain all the information in the registration statement. Whenever a reference is made in this prospectus to a contract or other document of ours or one of our subsidiaries, the reference is only a summary and you should refer to the exhibits that are a part of the registration statement for a copy of the contract or other document. You may review a copy of the registration statement and all of its exhibits through the SEC’s website.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus, including the documents incorporated herein by reference, contains statements that do not directly or exclusively relate to historical facts. Such statements are “forward-looking statements.” You can typically identify forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act by the use of forward-looking statements, such as “may,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “potential,” “plan,” “forecast” and other similar words.

All statements that are not statements of historical facts, including statements regarding future financial position, business strategy, budgets, projected costs and plans and objectives of management for our future operations, are forward-looking statements.

These forward-looking statements reflect our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside our control.

Important factors that could cause actual results to differ materially from the expectations expressed or implied in the forward-looking statements include known and unknown risks. Risks and uncertainties that may cause actual results to differ materially from our forward-looking statements include:

 

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current business and economic disruptions resulting from the recent coronavirus pandemic, including the effect of government regulations issued in connection therewith;

 

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our ability to maintain adequate cash flow and liquidity necessary to fund our capital expenditures, meet working capital needs and improve our operations;

 

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our ability to successfully implement our turnaround strategy;

 

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our level of indebtedness and compliance with debt covenants;

 

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our ability to successfully effect asset sales and improve operating performance to reduce our level of indebtedness;

 

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the level of creditworthiness of our counterparties to various transactions;

 

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changes in laws and regulations, particularly with regard to taxes, safety and protection of the environment;

 

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weather and other natural phenomena;

 

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industry changes, including the impact of consolidations and changes in competition;

 

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the ability to maintain necessary licenses, permits and other approvals;

 

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the ability to attract, train, motivate and retain a high caliber sales force;

 

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uncertainties associated with the volume and timing of pre-need sales of cemetery services and products;

 

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increased use of cremation;

 

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changes in religious beliefs;

 

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changes in the death rate;

 

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changes in the political or regulatory environments, including potential changes in tax accounting and trusting policies;

 

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the ability to successfully compete in the cemetery and funeral home industry;

 

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litigation or legal proceedings that could expose us to significant liabilities and damage its reputation;

 

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the effects of cyber security attacks due to our significant reliance on information technology;

 

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uncertainties relating to the financial condition of third-party insurance companies that fund our pre-need funeral contracts;

 

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general economic, market and business conditions; and

 

•

other factors and uncertainties discussed in this prospectus and the filings with the SEC by StoneMor Inc., including its Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on April 7, 2020 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, filed with the SEC on May 15, 2020, as such risks may be updated or supplemented in StoneMor Inc.’s subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K.

You should not put undue reliance on forward-looking statements. When considering forward-looking statements, please review carefully the risk factors described under “Risk Factors” in this prospectus. The forward-looking statements speak only as of the date made, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

WHERE YOU CAN FIND MORE INFORMATION

StoneMor Inc. (“Parent”), of which we are a wholly-owned subsidiary, is subject to the informational requirements of the Exchange Act and, in accordance therewith, Parent files annual, quarterly and current reports and other information with SEC. Parent’s SEC filings are available on our website at www.stonemor.com. The information on our website is not, and you should not consider such information to be, a part of this prospectus. Parent’s SEC filings are also available to the public from commercial document retrieval services and at the website maintained by the SEC at www.sec.gov. You may also inspect those reports, proxy statements and other information concerning us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005, on which Parent’s common stock is currently listed.

This prospectus is a part of the registration statement and does not contain all the information in the registration statement. Whenever a reference is made in this prospectus to a contract or other document of ours or one of our subsidiaries, the reference is only a summary and you should refer to the exhibits that are a part of the registration statement for a copy of the contract or other document. You may review a copy of the registration statement and all of its exhibits through the SEC’s website.

 

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RISK FACTORS

An investment in the Notes involves a high degree of risk. You should carefully consider the risks described below and the risks set forth in Parent’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, including, without limitation, the risks described therein related to our growth strategy, our business and the death care industry, together with the other information included in this prospectus, before making a decision to participate in the exchange offer. If any of these risks actually occur, our business, results of operations and financial condition could suffer. In that case, you may lose all or part of your investment.

In addition to the risk factors below related to the exchange offer, we hereby incorporate by reference all of our risk factors included in Parent’s Annual Report on Form 10-K for the year ended December 31, 2019 and Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, attached hereto as Annex B and Annex C, respectively.

Capitalized terms that are used herein when referring to the Indenture but not defined herein shall have the meaning assigned to such terms in the Indenture.

Risks Related to the Exchange Offer

If you do not properly tender your Old Notes, you will continue to hold unregistered Notes and your ability to transfer Old Notes may be adversely affected.

We will only issue New Notes in exchange for Old Notes that you timely and properly tender. Therefore, you should allow sufficient time to ensure timely delivery of the Old Notes, and you should carefully follow the instructions on how to tender your Old Notes. Neither we nor the exchange agent is required to tell you of any defects or irregularities with respect to your tender of Old Notes.

If you do not exchange your Old Notes for New Notes pursuant to the exchange offer, the Old Notes you hold will continue to be unregistered. We do not plan to register Old Notes under the Securities Act. Further, if you continue to hold any Old Notes after the exchange offer is consummated, you may have trouble selling them because there will be fewer of the Old Notes outstanding.

Any guarantees of the Notes could be deemed fraudulent conveyances under certain circumstances, and a court may subordinate or void the guarantees.

The Notes are guaranteed on a senior basis by StoneMor Inc. and are also guaranteed on a senior secured basis by each Issuer (as to the other Issuer’s obligations), LP Sub, StoneMor Operating LLC and substantially all of StoneMor Inc.’s other existing subsidiaries. In certain circumstances, any of StoneMor Inc.’s future subsidiaries may be required to guarantee the Notes. A court could subordinate or void the guarantees or the security interests relating thereto under various fraudulent conveyance or fraudulent transfer laws. Generally, to the extent that a U.S. court were to find that at the time one of the Guarantors entered into a guarantee and either:

 

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the Guarantor incurred the guarantee with the intent to hinder, delay, or defraud any present or future creditor, or contemplated insolvency with a design to favor one or more creditors to the exclusion of others; or

 

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the Guarantor did not receive fair consideration or reasonably equivalent value for issuing the guarantee and, at the time it issued the subsidiary guarantee, the Guarantor:

 

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was insolvent or became insolvent as a result of issuing the guarantee,

 

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was engaged or about to engage in a business or transaction for which the remaining assets of the Guarantor constituted unreasonably small capital, or

 

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intended to incur, or believed that it would incur, debts beyond its ability to pay those debts as they matured,

then the court could void or subordinate the guarantee in favor of the Guarantor’s other obligations.

A legal challenge of a guarantee on fraudulent conveyance grounds may focus, among other things, on the benefits, if any, the Guarantor realized as a result of our issuing the Notes. To the extent a guarantee is voided as a fraudulent conveyance or held unenforceable for any other reason, the holders of the Notes would not have any claim against that Guarantor and would be creditors solely of us and any other Guarantors whose guarantees are not held unenforceable.

Your ability to transfer the New Notes may be limited by the absence of a trading market.

The New Notes will constitute a new issuance of securities for which currently there is no trading market. Although the New Notes will be registered under the Securities Act, they will not be listed on a securities exchange. We do not currently intend to apply for listing of the New Notes on any securities exchange or stock market. The liquidity of any market for the New Notes will depend on the number of holders of the New Notes, the interest of securities dealers in making a market in the New Notes and other factors. Accordingly, we cannot assure you as to the development or liquidity of any market for the New Notes. Historically, the market for noninvestment grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the New Notes. We cannot assure you that the market, if any, for the New Notes will be free from similar disruptions. Any such disruption may adversely affect the holders’ ability to transfer the New Notes.

 

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THE EXCHANGE OFFER

Purpose and Effect of the Exchange Offer

We sold the Old Notes to the initial purchasers in a private offering on June 27, 2019, pursuant to the Original Indenture. As a condition to the sale of the Old Notes to the initial purchasers, we entered into the Registration Rights Agreement.

The Registration Rights Agreement requires us to file a registration statement under the Securities Act offering to exchange your Old Notes for New Notes. Accordingly, we are offering you the opportunity to exchange your Old Notes for the same principal amount of New Notes. The New Notes will be registered and issued without a restrictive legend. The Registration Rights Agreement also requires us to use commercially reasonable efforts to cause the registration statement to be declared effective by the SEC and to complete the exchange offer by July 14, 2020 (the “Exchange Date”). Under some circumstances set forth in the Registration Rights Agreement, holders of Old Notes, including holders who are not permitted to participate in the exchange offer or who may not freely sell New Notes received in the exchange offer, may require us to file and cause to become effective a shelf registration statement covering resales of such Old Notes by these holders.

If (1) the exchange offer with respect to the Old Notes has not been consummated on or prior to the Exchange Date, (2) any shelf registration statement required to be filed to cover resales of the Old Notes has not been declared or otherwise become effective on or prior to the later of the 105th day after the obligation to file such shelf registration statement arose or June 1, 2020 or (3) any registration statement (including any shelf registration statement) required by the Registration Rights Agreement has been declared or automatically become effective but ceases to remain effective at any time at which it is required to be effective under the Registration Rights Agreement (each, a “registration default”), then additional interest will accrue on the aggregate principal amount of the Old Notes from and including the date on which such registration default has occurred but excluding the date on which such registration default has been cured. Additional interest will accrue at a rate of 0.25% for the first 90-day period after such date, and thereafter it will be increased by an additional 0.25% for each subsequent 90-day period that elapses, provided that the aggregate increase in such annual interest rate may in no event exceed 1.00% per annum over the applicable rate shown on the cover page of this prospectus and provided, further, that no such increase will be payable with respect to Old Notes from and after the date on which such Old Notes are freely transferable under Rule 144 promulgated under the Securities Act.

A copy of the Registration Rights Agreement is incorporated by reference into the registration statement of which this prospectus is a part. You are strongly encouraged to read the entire text of the agreement, as it, and not this description, defines your rights. Except as discussed below, we will have no further obligation to register your Old Notes upon the completion of the exchange offer.

We believe that the New Notes issued to you in this exchange offer may be offered for resale, sold and otherwise transferred by you, without compliance with the registration and prospectus delivery provisions of the Securities Act, only if you are able to make these four representations:

 

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you are acquiring the New Notes issued in the exchange offer in the ordinary course of your business;

 

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you have no arrangement or understanding with anyone to participate in the distribution of the Old Notes or the New Notes within the meaning of the Securities Act;

 

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you are not an affiliate of us within the meaning of Rule 405 under the Securities Act; and

 

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you are not engaged in, and do not intend to engage in, the distribution of the New Notes.

Our belief is based upon existing interpretations by the SEC’s staff contained in several “no-action” letters to third parties unrelated to us. If you tender your Old Notes in the exchange offer for the purpose of participating in a distribution of New Notes, you cannot rely on these interpretations by the SEC’s staff and you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction.

 

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The SEC considers broker-dealers that acquired Old Notes directly from us, but not as a result of market- making activities or other trading activities, to be making a distribution of the New Notes if they participate in the exchange offer. Consequently, these broker-dealers cannot use this prospectus for the exchange offer in connection with a resale of the New Notes and, absent an exemption, must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a resale of the New Notes. These broker-dealers cannot rely on the position of the SEC’s staff set forth in its no-action letters.

A broker-dealer that has acquired Old Notes as a result of market-making or other trading activities must deliver a prospectus in order to resell any New Notes it receives for its own account in the exchange offer. The SEC has taken the position that such broker-dealers may fulfill their prospectus delivery requirements with respect to the New Notes by delivering the prospectus contained in the registration statement for the exchange offer. Accordingly, this prospectus may be used by such a broker-dealer to resell any of its New Notes. We have agreed in the Registration Rights Agreement to send a prospectus to any broker-dealer that requests copies for a period of up to 90 days after the effective date of the registration statement for the exchange offer (or such shorter period during which broker-dealers are required by law to deliver this prospectus). Unless you are required to do so because you are such a broker-dealer, you may not use this prospectus for an offer to resell, resale or other retransfer of New Notes.

We are not making this exchange offer to, nor will we accept tenders for exchange from, holders of Old Notes in any jurisdiction in which the exchange offer or the acceptance of it would not be in compliance with the securities or blue sky laws of that jurisdiction.

We make no recommendation to holders of Old Notes as to whether to tender or refrain from tendering all or any portion of their Old Notes pursuant to the exchange offer. In addition, no one has been authorized to make any such recommendation. Holders of Old Notes must make their own decision whether to tender pursuant to the exchange offer and, if so, the aggregate amount of Old Notes to tender after reading this prospectus and the letter of transmittal and consulting with their advisers, if any, based on their own financial position and requirements.

Because the Issuers are obligated to pay a portion of the interest payable on June 30, 2020 as PIK Interest, you should consider deferring any tender of Old Notes until after such payment is made. If you tender Old Notes before the June 30, 2020 PIK Interest is paid, you will need to tender any Old Notes evidencing PIK Interest paid on June 30, 2020 (after such payment is made in accordance with the Indenture) in accordance with the procedures described in this prospectus in order for such Old Notes to be exchanged for New Notes.

You may suffer adverse consequences if you fail to exchange your Old Notes. Following the completion of the exchange offer, except as set forth below and in the Registration Rights Agreement, you will not have any further registration rights and your Old Notes will continue to be subject to certain restrictions on transfer. Accordingly, if you do not participate in the exchange offer, your ability to sell your Old Notes could be adversely affected.

Under the Registration Rights Agreement, we are required to file a shelf registration statement with the SEC to cover resales of the Old Notes or the New Notes by holders if (a) it is not permitted to consummate the exchange offer because it determines that the exchange offer is not permitted by applicable law or SEC policy, (b) the exchange offer is not for any reason consummated by the Exchange Date and the Old Notes are not then freely transferable pursuant to Rule 144 under the Securities Act or (c) prior to the Exchange Date, a holder notifies us that (i) the Old Notes it holds are not eligible to be exchanged for New Notes, (ii) following consummation of the exchange offer, the New Notes it receives in the exchange offer may not be sold to the public without delivering a prospectus and this prospectus is not available or appropriate for such purpose or (iii) such holder is a broker-dealer and acquired its Old Notes directly from us or one of our affiliates.

If we are obligated to file a shelf registration statement, we will be required to keep such shelf registration statement effective until the expiration of the one-year period referred to in Rule 144 applicable to securities held

 

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by non-affiliates under the Securities Act (or such shorter period that will terminate when all Old Notes covered by the shelf registration statement have been sold pursuant to such shelf registration statement or are freely transferable under Rule 144).

Representations We Need From You Before You May Participate in the Exchange Offer

We need representations from you before you can participate in the exchange offer. These representations (the “Required Representations”) are that:

 

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any New Notes received by you will be acquired in the ordinary course of your business;

 

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you have no arrangement or understanding with anyone to participate in the distribution of the New Notes within the meaning of the Securities Act;

 

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you are not an affiliate of either Issuer within the meaning of Rule 405 under the Securities Act; and

 

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you are not engaged in, and do not intend to engage in, the distribution of the New Notes.

Terms of the Exchange Offer

Subject to the terms and conditions described in this prospectus and in the letter of transmittal, we will accept for exchange any Old Notes properly tendered and not withdrawn prior to 5:00 p.m., New York City time, on the expiration date. We will issue New Notes in a principal amount equal to the principal amount of Old Notes surrendered in the exchange offer. Old Notes may be tendered only for New Notes and only in minimum denominations of $1.00 and integral multiples of $1.00 in excess thereof.

The exchange offer is not conditioned upon any minimum aggregate principal amount of Old Notes being tendered for exchange.

As of the date of this prospectus, $346,134,496 in aggregate principal amount of the Old Notes is outstanding. The Issuers are obligated to further increase the outstanding principal amount of Old Notes by approximately $3.5 million in payment of additional PIK Interest on June 30, 2020. This prospectus and the letter of transmittal are being sent to, among others, all registered holders of Old Notes. There will be no fixed record date for determining registered holders of Old Notes entitled to participate in the exchange offer.

We intend to conduct the exchange offer in accordance with the provisions of the Registration Rights Agreement, the applicable requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC. Old Notes that the holders thereof do not tender for exchange in the exchange offer will remain outstanding and continue to accrue interest. These Old Notes will continue to be entitled to the rights and benefits such holders have under the Indenture relating to the Notes.

We will be deemed to have accepted for exchange properly tendered Old Notes when we have given oral (promptly confirmed in writing) or written notice of the acceptance to the exchange agent and complied with the applicable provisions of the Registration Rights Agreement. The exchange agent will act as agent for the tendering holders for the purposes of receiving the New Notes from us.

If you tender Old Notes in the exchange offer, you will not be required to pay brokerage commissions or fees or, subject to the letter of transmittal, transfer taxes with respect to the exchange of Old Notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offer. It is important that you read the section “—Fees and Expenses” for more details regarding fees and expenses incurred in connection with the exchange offer.

We will return any Old Notes that we do not accept for exchange for any reason without expense to their tendering holder promptly after the expiration or termination of the exchange offer.

 

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Expiration Date

The exchange offer will expire at 5:00 p.m., New York City time, on July 8, 2020, unless, in our sole discretion, we extend it.

Extensions, Delays in Acceptance, Termination or Amendment

We expressly reserve the right, at any time or various times, to extend the period of time during which the exchange offer is open. We may delay acceptance of any Old Notes by giving oral or written notice of such extension to their holders at any time until the exchange offer expires or terminates. During any such extensions, all Old Notes previously tendered will remain subject to the exchange offer, and we may accept them for exchange.

In order to extend the exchange offer, we will notify the exchange agent orally (promptly confirmed in writing) or in writing of any extension. We will notify the registered holders of Old Notes of the extension by a press release issued no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date.

If any of the conditions listed under “—Conditions to the Exchange Offer” are not satisfied or waived by us, we expressly reserve the right, at our sole discretion, by giving oral (promptly confirmed in writing) or written notice to the exchange agent:

 

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to delay accepting the Old Notes;

 

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to extend the exchange offer;

 

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to terminate the exchange offer and not accept Old Notes not previously accepted; or

 

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subject to the terms of the Registration Rights Agreement, to amend the terms of the exchange offer in any manner.

Any such delay in acceptance, extension, termination or amendment will be followed as promptly as practicable by written notice thereof to the registered holders of Old Notes. If we amend the exchange offer in a manner that we determine to constitute a material change, we will promptly disclose such amendment by means of a prospectus supplement. The prospectus supplement will be distributed to the registered holders of the Old Notes. Depending upon the significance of the amendment and the manner of disclosure to the registered holders, we may extend the exchange offer. In the event of a material change in the exchange offer, including the waiver by us of a material condition, we will extend the exchange offer period, if necessary, so that at least five business days remain in the exchange offer period following notice of the material change.

Conditions to the Exchange Offer

We will not accept for exchange, or exchange any New Notes for, any Old Notes if the exchange offer, or the making of any exchange by a holder of Old Notes, would violate applicable law or any applicable interpretation of the staff of the SEC. Similarly, we may terminate the exchange offer as provided in this prospectus before accepting Old Notes for exchange in the event of such a potential violation.

We will not be obligated to accept for exchange the Old Notes of any holder that has not made to us the representations described under “—Purpose and Effect of the Exchange Offer,” “—Procedures for Tendering” and “Plan of Distribution” and such other representations as may be reasonably necessary under applicable SEC rules, regulations or interpretations to allow us to use an appropriate form to register the issuance of the New Notes under the Securities Act.

In addition, we will not accept for exchange any Old Notes tendered, and will not issue New Notes in exchange for any such Old Notes, if at such time any stop order has been threatened or is in effect with respect to the registration statement of which this prospectus constitutes a part or the qualification of the Indenture relating to the Notes under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”).

 

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We expressly reserve the right to amend or terminate the exchange offer, and to reject for exchange any Old Notes not previously accepted for exchange, upon the occurrence of any of the conditions to the exchange offer specified above. We will give prompt written notice of any extension, amendment, non-acceptance or termination to the holders of the Old Notes as promptly as practicable.

These conditions are for our sole benefit, and we may assert them or waive them in whole or in part at any time or at various times in our sole discretion prior to the expiration of the exchange offer. If we fail at any time to exercise any of these rights, this failure will not mean that we have waived our rights. Each such right will be deemed an ongoing right that we may assert at any time or at various times prior to the expiration of the exchange offer.

Procedures for Tendering

To participate in the exchange offer, you must properly tender your Old Notes to the exchange agent as described below. We will only issue New Notes in exchange for Old Notes that you timely and properly tender. Therefore, you should allow sufficient time to ensure timely delivery of the Old Notes, and you should follow carefully the instructions on how to tender your Old Notes. It is your responsibility to properly tender your Old Notes. We have the right to waive any defects. However, we are not required to waive defects, and neither we nor the exchange agent is required to notify you of defects in your tender.

If you have any questions or need help in exchanging your Old Notes, please call the exchange agent, whose address and telephone number are set forth in “Prospectus Summary—The Exchange Offer—Exchange Agent.”

There is no procedure for guaranteed late delivery of the Old Notes.

If you beneficially own Old Notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee and you wish to tender those Old Notes, you should contact the registered holder as soon as possible and instruct the registered holder to tender on your behalf.

Notes Represented by Global Notes Held in Book-Entry Form

All of the Old Notes were issued in book-entry form, and, with the exception of one $71,896,460 note that was transferred into definitive form, all of the Old Notes are currently represented by one or more global notes held for the account of DTC. We have confirmed with DTC that the Old Notes represented by global notes may be tendered using ATOP. The exchange agent will establish an account with DTC for purposes of the exchange offer promptly after the commencement of the exchange offer, and DTC participants may electronically transmit their acceptance of the exchange offer by causing DTC to transfer their Old Notes to the exchange agent using the ATOP procedures. In connection with the transfer, DTC will send an “agent’s message” to the exchange agent. The agent’s message will state that DTC has received instructions from the participant to tender Old Notes and that the participant agrees to be bound by the terms of the letter of transmittal.

By using the ATOP procedures to exchange Old Notes, you will not be required to deliver a letter of transmittal to the exchange agent. However, you will be bound by its terms just as if you had signed it.

The form of letter of transmittal for holders of Notes represented by global notes is included as Annex A-1 to this prospectus.

Notes Held in Definitive Form

If you hold your Old Notes in definitive form, you are required to physically deliver your Old Notes to the exchange agent at its address set forth in “Prospectus Summary—The Exchange Offer—Exchange Agent,” together with a properly completed and duly executed letter of transmittal for holders of definitive notes prior to 5:00 p.m., New Your City Time, on the expiration date.

 

25

The form of letter of transmittal for holders of Notes in definitive form is included as Annex A-2 to this prospectus.

The method of delivery of the tendered Old Notes, the Letter of Transmittal and all other required documents to the exchange agent is at the election and risk of the holder. If such delivery is by mail, we recommend that registered mail, properly insured, with return receipt requested, be used. Instead of delivery by mail, we recommend that the holder use an overnight or hand delivery service.

Determinations under the Exchange Offer

We will determine, in our sole discretion, all questions as to the validity, form, eligibility, time of receipt, acceptance of tendered Old Notes and withdrawal of tendered Old Notes. Our determination will be final and binding. We reserve the absolute right to reject any Old Notes not properly tendered or any Old Notes our acceptance of which would, in the opinion of our counsel, be unlawful. We also reserve the right to waive any defect, irregularities or conditions of tender as to particular Old Notes. Our interpretation of the terms and conditions of the exchange offer, including the instructions in the letter of transmittal, will be final and binding on all parties. Unless waived, all defects or irregularities in connection with tenders of Old Notes must be cured within such time as we shall determine. Although we intend to notify holders of defects or irregularities with respect to tenders of Old Notes, neither we, the exchange agent nor any other person will incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed made until such defects or irregularities have been cured or waived. Any Old Notes received by the exchange agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned to the tendering holder promptly following the expiration date of the exchange.

When We Will Issue New Notes

In all cases, we will issue New Notes for Old Notes that we have accepted for exchange under the exchange offer only after the exchange agent timely receives:

 

•

in the case of Old Notes issued in book-entry form and represented by global notes held for the account of DTC, a book-entry confirmation of such Old Notes into the exchange agent’s account at DTC and a properly transmitted agent’s message; or

 

•

in the case of Old Notes held in definitive form, the certificate representing such Old Notes and a properly completed and duly executed letter of transmittal relating to such definitive notes.

Such New Notes will be issued promptly following the expiration of the exchange offer.

Return of Old Notes Not Accepted or Exchanged

If we do not accept any tendered Old Notes for exchange or if Old Notes are submitted for a greater principal amount than the holder desires to exchange, the unaccepted or non-exchanged Old Notes will be returned without expense to their tendering holder. Such non-exchanged Old Notes issued in book-entry form and represented by global notes will be credited to an account maintained with DTC. The holders of any such non-exchanged Old Notes held in definitive form will receive the tendered Old Notes or a replacement Old Note in definitive form in the principal amount of such non-exchanged Old Notes. These actions will occur promptly after the expiration or termination of the exchange offer.

Your Representations to Us

By agreeing to be bound by the letter of transmittal, you will represent to us that, among other things:

 

•

any New Notes that you receive will be acquired in the ordinary course of your business;

 

26

•

you have no arrangement or understanding with any person or entity to participate in the distribution of the New Notes;

 

•

you are not our “affiliate” of either Issuer within the meaning of Rule 405 under the Securities Act; and

 

•

you are not engaged in, and do not intend to engage in, the distribution of the New Notes.

Further, you will acknowledge and agree that that any broker-dealer or holder using the exchange offer to participate in a distribution of New Notes to be acquired in the exchange offer (i) could not under SEC policy as in effect on the date of this prospectus rely on the position of the SEC enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling LLC dated July 2, 1993 and similar no-action letters and (ii) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K under the Securities Act if the resales are of New Notes obtained by such holder in exchange for Old Notes acquired by such holder directly from us.

Withdrawal of Tenders

Except as otherwise provided in this prospectus, you may withdraw your tender at any time prior to 5:00 p.m., New York City time, on the expiration date. For a withdrawal to be effective with respect to Old Notes held in book-entry form and represented by global notes, you must comply with the appropriate ATOP procedures. Any notice of withdrawal must specify the name and number of the account at DTC to be credited with withdrawn Old Notes and otherwise comply with the ATOP procedures. For a withdrawal to be effective with respect to Old Notes held in definitive form, you must submit a written or facsimile notice of withdrawal to the exchange agent before 5:00 p.m., New York City Time, on the expiration date.

We will determine all questions as to the validity, form, eligibility and time of receipt of notice of withdrawal. Our determination shall be final and binding on all parties. We will deem any Old Notes so withdrawn not to have been validly tendered for exchange for purposes of the exchange offer.

Any Old Notes held in book-entry form and represented by global notes that have been tendered for exchange but are not exchanged for any reason will be credited to an account maintained with DTC for the Old Notes. This crediting will take place promptly after withdrawal, rejection of tender or termination of the exchange offer. Any Old Notes held in definitive form that have been tendered for exchange but are not exchanged for any reason will be returned without expense to their tendering holder. You may retender properly withdrawn Old Notes by following the procedures described under “—Procedures for Tendering” above at any time prior to 5:00 p.m., New York City time, on the expiration date of the exchange offer.

Wilmington Trust, National Association has been appointed as the exchange agent for the exchange offer. All executed letters of transmittal and any other required documents should be directed to the exchange agent at the address or facsimile number set forth below. Questions and requests for assistance and requests for additional copies of this prospectus or of the letter of transmittal should be directed to the exchange agent addressed as follows:

Wilmington Trust, National Association

c/o Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-1626

Attention: Workflow Management – 5th Floor

or by facsimile at (302) 636-4139 (Attention: Workflow Management – 5th Floor)

to confirm by email or for information at DTC@wilmingtontrust.com

 

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Delivery of a letter of transmittal to an address other than as set forth above or transmission of a letter of transmittal via a facsimile transmission to a number other than as set forth above will not constitute a valid delivery of the letter of transmittal. Delivery of documents to DTC does not constitute delivery to the exchange agent.

Fees and Expenses

We will bear the expenses of soliciting tenders. The principal solicitation is being made by electronic mail; however, we may make additional solicitation by facsimile, telephone, mail or in person by our officers and regular employees and those of our affiliates.

We have not retained any dealer-manager in connection with the exchange offer and will not make any payments to broker-dealers or others soliciting acceptances of the exchange offer. We will, however, pay the exchange agent reasonable and customary fees for its services and reimburse it for its related reasonable out-of-pocket expenses.

We will pay the cash expenses to be incurred in connection with the exchange offer. They include:

 

•

SEC registration fees;

 

•

fees and expenses of the exchange agent and the Trustee;

 

•

accounting and legal fees and printing costs; and

 

•

related fees and expenses.

Transfer Taxes

We will pay all transfer taxes, if any, applicable to the exchange of Old Notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if a transfer tax is imposed for any reason other than the exchange of Old Notes under the exchange offer.

Consequences of Failure to Exchange

If you do not exchange your Old Notes for New Notes under the exchange offer, the Old Notes you hold will continue to be subject to the existing restrictions on transfer, will continue to accrue interest but will not retain any rights under the Registration Rights Agreement, except as otherwise provided therein. In general, you may not offer or sell the Old Notes except under an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. We do not intend to register Old Notes under the Securities Act unless the Registration Rights Agreement requires us to do so.

Accounting Treatment

We will record the New Notes in our accounting records at the same carrying value as the Old Notes.

Accordingly, we will not recognize any gain or loss for accounting purposes in connection with the exchange offer, other than the recognition of the fees and expenses of the offering as stated under “—Fees and Expenses.”

Other

Participation in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take.

 

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We may in the future seek to acquire untendered Old Notes in open market or privately-negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any Old Notes that are not tendered in the exchange offer or to file a registration statement to register any untendered Old Notes.

 

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USE OF PROCEEDS

We will not receive any proceeds from the issuance of the New Notes in the exchange offer. In consideration for issuing the New Notes as contemplated by this prospectus, we will receive Old Notes in a like principal amount. The form and terms of the New Notes are identical in all respects to the form and terms of the Old Notes, except the New Notes will be registered under the Securities Act. Old Notes surrendered in exchange for the New Notes will be retired and cancelled and will not be reissued. Accordingly, the issuance of the New Notes will not result in any change in outstanding indebtedness.

 

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DESCRIPTION OF THE NEW NOTES

General

The definitions of certain terms used in this description are set forth under the subheading “—Certain Definitions.” In this “Description of the New Notes,” (i) the terms “we,” “our” and “us” each refer to Parent and its Subsidiaries taken together, (ii) except as described below, the term “Partnership” refers only to StoneMor Partners L.P. and not to any of its Subsidiaries, (ii) the term “Co-Issuer” refers only to Cornerstone Family Services of West Virginia Subsidiary, Inc. and not to any of its Subsidiaries and (iv) the term “Issuers” refers to the Partnership and the Co-Issuer, but not to any of their Subsidiaries. As a result of the consummation of the C-Corporation Conversion, references herein and in the Indenture to the Partnership shall refer, mutatis mutandi, to the C-Corporation other than for purposes of the definition of “Issuers” and unless otherwise provided in the Indenture or the context otherwise requires, subject to Section 8.05(k) of the Original Indenture.

The Issuers will issue new senior secured partial payment-in-kind toggle notes denominated in U.S. dollars (the “New Notes”) under the indenture, dated as of June 27, 2019, by and among the Issuers, the Guarantors party thereto, Wilmington Trust, National Association, as trustee (in such capacity, the “Trustee”) and as collateral agent (in such capacity, the “Collateral Agent”), as supplemented by the First Supplemental Indenture, the Second Supplemental Indenture and the Third Supplemental Indenture (as so supplemented, the “Indenture”). Except as set forth herein, the terms of the New Notes will include those set forth in the Indenture and those made part of the Indenture pursuant to the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”). The New Notes will be secured by the Collateral as described under “—Collateral and Security.”

The terms of the New Notes are identical in all material respects to the terms of the 9.875% / 11.500% Senior Secured PIK Toggle Notes due 2024 (the “Old Notes”) that were issued on June 27, 2019, except the New Notes will not contain transfer restrictions, Holders of New Notes will no longer have any registration rights and the Issuers will not be obligated to pay additional interest under the circumstances described in the registration rights agreement, dated as of June 27, 2019 (the “Registration Rights Agreement”), by and among the Issuers, the Guarantors party thereto and the initial purchasers of the Old Notes. The New Notes will evidence the same debt as the Old Notes exchanged therefor. The initial interest payment on the New Notes will include all accrued and unpaid interest on the Old Notes exchanged therefor, and no separate payment of accrued and unpaid interest will be made with respect to any Old Notes that are exchanged in the exchange offer. The New Notes will be issued under and entitled to the benefits of the same Indenture that authorized the issuance of the Old Notes. In addition, the New Notes will bear a different CUSIP number than the Old Notes.

The exchange offer is being made to satisfy the Issuers’ obligations under the Registration Rights Agreement. The Trustee will authenticate and deliver New Notes for original issue only in exchange for a like principal amount of Old Notes. Any Old Notes that remain outstanding after the consummation of the exchange offer, together with the New Notes, will be treated as a single class of securities under the Indenture. Accordingly, all references in this section to specified percentages in aggregate principal amount of Old Notes shall be deemed to mean, at any time after the exchange offer is consummated, such percentage in aggregate principal amount of the Old Notes and the New Notes outstanding and all references to the New Notes shall be deemed to include the Old Notes unless the context requires otherwise. In this “Description of the New Notes,” the Old Notes and the New Notes are referred to together as the “Notes.”

The following description is only a summary of the material provisions of the Indenture, the Security Documents, the New Notes and the Note Guarantees. These descriptions are not complete and are subject to, and are qualified in their entirety by reference to, the Indenture, the Security Documents, the New Notes and the Note Guarantees, including the definitions of certain terms used therein. You should read these documents carefully to fully understand the terms of the New Notes because they, and not this description, will define your rights as Holders of New Notes. You may request copies of these documents at our address set forth under the heading “Where You Can Find More Information.”

 

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Brief Description of the New Notes

Like the Old Notes, the New Notes will be:

 

•

general senior secured debt obligations of the Issuers;

 

•

secured on a first-priority basis by Liens on the Collateral described below under “—Collateral and Security”, subject to certain Liens permitted under the Indenture and as described in “—Certain Covenants—Limitation on Liens;”

 

•

senior in right of payment to all existing and any future Indebtedness of the Issuers that is by its terms subordinated in right of payment to the New Notes;

 

•

effectively senior to all existing and future unsecured Indebtedness of the Issuers to the extent of the value of the Collateral;

 

•

effectively subordinated to all existing and future Indebtedness of the Issuers that is secured by assets or properties not constituting Collateral, to the extent of the value of such assets and properties;

 

•

structurally subordinated to all existing and future Indebtedness of any of the Partnership’s existing and future subsidiaries that do not guarantee the New Notes; and

 

•

guaranteed on a senior basis by StoneMor Inc. and on a senior secured basis by substantially all of the direct and indirect subsidiaries of StoneMor Inc., subject to certain exceptions set forth in the indenture and as described below in “—Guarantees” and “—Certain Definitions.”

Guarantees

Except for certain Excluded Subsidiaries (as described in “—Certain Definitions”), StoneMor Inc. (collectively with the Subsidiary Guarantors, the “Guarantors”) and all of its Subsidiaries, including LP Sub will guarantee the New Notes. Each Issuer will also be a Guarantor with respect to the other Issuer’s obligations with respect to the New Notes.

The Guarantors will jointly and severally guarantee (the “Note Guarantees”), fully and unconditionally, on a senior basis as to StoneMor Inc. and on a senior secured basis as to the Guarantors other than StoneMor Inc., that the principal of, premium, if any, and interest on, the New Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the New Notes, if any, if lawful, and all other obligations of the Issuers to the Holders of New Notes, the Trustee or the Collateral Agent under the Indenture or the New Notes will be promptly paid in full or performed, all in accordance with the terms thereof.

The Note Guarantee of each Guarantor other than StoneMor Inc. will be:

 

•

a general senior secured obligation of such Guarantor; and

 

•

effectively senior to all existing and future unsecured Indebtedness of such Guarantor to the extent of the value of the Collateral.

The Note Guarantee of each Guarantor will be:

 

•

senior in right of payment to all existing and any future Indebtedness of such Guarantor that is by its terms subordinated in right of payment to such Guarantor’s Note Guarantee;

 

•

effectively subordinated to all existing and future Indebtedness of such Guarantor that is secured by assets or properties not constituting Collateral, to the extent of the value of such assets and properties; and

 

•

structurally subordinated to all existing and future Indebtedness of such Guarantor’s existing and future subsidiaries that do not guarantee the New Notes.

 

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The obligations of each Guarantor under its Note Guarantee will be limited as necessary to prevent its Note Guarantee from constituting a fraudulent transfer or conveyance under applicable law. This provision may not, however, be effective to protect a Note Guarantee from being voided under fraudulent transfer law or may reduce the applicable Guarantor’s obligation to an amount that effectively makes its Note Guarantee worthless. If a Note Guarantee was rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the Guarantor and, depending on the amount of such indebtedness, a Guarantor’s liability on its Note Guarantee could be reduced to zero. See “Risk Factors —Risks Related to the Exchange Offer— Any guarantees of the Notes could be deemed fraudulent conveyances under certain circumstances, and a court may subordinate or void the guarantees.”

No Guarantor will be entitled to any right of subrogation in relation to the Holders of New Notes in respect of any obligations guaranteed under the Indenture until payment in full of all guaranteed obligations under the Indenture. Each Guarantor will also have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders of New Notes under the Note Guarantees.

Except for any (i) consolidation, amalgamation or merger of a Subsidiary Guarantor with or into either of the Issuers or another Subsidiary Guarantor or (ii) any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Issuers or another Guarantor, no Subsidiary Guarantor will be permitted to sell or otherwise dispose of all or substantially all of its assets to, or consolidate with, amalgamate with or merge with or into (whether or not such Subsidiary Guarantor is the surviving person) another person, other than the Issuers or another Subsidiary Guarantor, unless:

 

(a)

immediately after giving effect to such transaction, no Default or Event of Default exists; and

 

(b)

either:

 

(1)

the person acquiring the property in any such sale or disposition or the person formed by or surviving any such consolidation, amalgamation or merger unconditionally assumes all the obligations of that Subsidiary Guarantor under the Indenture and its Note Guarantee on the terms set forth therein, pursuant to a supplemental indenture in form reasonably satisfactory to the Trustee and appropriate documents relating to the Collateral pursuant to agreements in form reasonably satisfactory to the Collateral Agent; or

 

(2)

the Net Proceeds of such sale or other disposition are applied in accordance with the provisions described in the first paragraph under “—Mandatory Redemption.”

The Note Guarantee of a Subsidiary Guarantor will automatically and unconditionally be released and discharged:

 

(i)

in connection with any sale or other disposition of all or substantially all of the assets of that Subsidiary Guarantor (including by way of merger, consolidation or amalgamation) to a person that is not (either before or after giving effect to such transaction) either of the Issuers or a Subsidiary that is not an Excluded Subsidiary if the sale or other disposition is expressly permitted under “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions;”

 

(ii)

in connection with any sale or other disposition of all of the Equity Interests of that Subsidiary Guarantor to a person that is not (either before or after giving effect to such transaction) either of the Issuers or a Subsidiary that is not an Excluded Subsidiary, if the sale or other disposition is expressly permitted under “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions;”

 

(iii)

if the Issuers designate that Subsidiary Guarantor to be an Excluded Subsidiary in accordance with the applicable provisions of the Indenture;

 

(iv)

upon the liquidation or dissolution of that Subsidiary Guarantor; provided that no Default or Event of Default shall occur as a result thereof or has occurred and is continuing; or

 

(v)

upon legal or covenant defeasance or satisfaction and discharge of the Indenture as described in “—Legal Defeasance and Covenant Defeasance.”

 

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Principal, Maturity and Interest

The Issuers have outstanding $346,634,496 in aggregate principal amount of Old Notes, including an aggregate of approximately $11.5 million in connection with the payment of PIK Interest (as defined below) on September 30, 2019, December 30, 2019 and March 30, 2020 and $1.5 million in payment of a portion of the consent fee in PIK Interest paid to the holders of Old Notes in connection with the execution of the Third Supplemental Indenture. The Issuers are obligated to further increase the outstanding principal amount of Old Notes by approximately $3.5 million in payment of additional PIK Interest on June 30, 2020. On each Interest Payment Date after June 30, 2020 until January 30, 2022, the Issuers may, without the consent of the Holders, increase the outstanding aggregate principal amount of the Notes or issue additional notes (the “PIK Notes”) under the Indenture having the same terms as the Notes (in each case, a “PIK Payment”). Unless the context requires otherwise, references to “Notes” for all purposes of the Indenture and this “Description of the New Notes” include any PIK Notes that are actually issued, and references to “principal amount” or “aggregate principal amount” of the Notes includes any increase in the principal amount or aggregate principal amount of the Notes as a result of a PIK Payment.

The Issuers shall issue the New Notes in minimum denominations of $1.00 and integral multiples of $1.00 in excess thereof. The New Notes will be issued under the Indenture and will mature on June 30, 2024.

Interest on the New Notes will accrue and be payable in cash at a fixed rate of 9.875% per annum (such interest payable, “Cash Interest”); provided that, at the Issuers’ option upon notice to the Trustee no later than 30 days prior to the relevant Interest Payment Date until January 30, 2022, interest on the New Notes for the relevant Interest Period may accrue and be payable at (i) a fixed rate of 7.50% in cash per annum plus (ii) a fixed rate of 4.00% per annum in the form of PIK Interest (the “PIK Interest Portion”); provided, further, that during the continuance of an Event of Default (to the extent not waived by the Required Noteholder Parties), at the option of the Required Noteholder Parties as evidenced to the Trustee in writing (and automatically upon an Event of Default specified under clauses (ii), (iii) or (viii) of the first paragraph set forth under “—Events of Default and Remedies”), the principal amount of all New Notes outstanding and, to the extent permitted by applicable law, any interest payments on the New Notes or any fees or other amounts owed under the Indenture, shall thereafter bear interest (including post-petition interest in any proceeding under applicable Bankruptcy Laws) entirely in cash and payable on demand, at a rate per annum equal to 13.50%.

Notwithstanding anything in this “Description of the New Notes” or the Indenture to the contrary, if at any time the applicable interest rate, together with all fees and charges that are treated as interest under applicable law (collectively, the “Charges”), as provided for in the Indenture or in any other document executed in connection therewith, or otherwise contracted for, charged, received, taken or reserved by any Noteholder Party, shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by such Noteholder Party in accordance with applicable law, the rate of interest payable under the Indenture, together with all Charges payable to such Noteholder Party, shall be limited to the Maximum Rate; provided that such excess amount shall be paid to such Noteholder Party on subsequent payment dates to the extent not exceeding the legal limitation.

Interest on the New Notes will be computed on the basis of a 360-day year comprised of twelve 30-day months. Subject to certain exceptions set forth in the Indenture, interest on the New Notes will be payable quarterly in arrears on the 30th day of March, June, September and December of each year, commencing on September 30, 2020 (each, an “Interest Payment Date”), and interest payments will be made to the Paying Agent for the account of the Holders of record on the 15th day of March, June, September and December of each year (each, a “Record Date”).

Notwithstanding anything to the contrary herein, we will pay accrued and unpaid interest in connection with any redemption of the Notes as described below under the captions “—Optional Redemption” and “—Mandatory Redemption” in cash.

 

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Optional Redemption

The Issuers shall have the right at any time and from time to time to redeem the Notes in whole or in part, without premium or penalty, in an aggregate principal amount that is an integral multiple of the Notes Multiple and not less than the Notes Minimum or, if less, the amount outstanding, subject to prior notice in accordance with the second paragraph of “—Selection and Notice”; provided that:

 

(i)

in the event of any optional redemption of the Notes made pursuant to this “—Optional Redemption” prior to June 27, 2021, the Issuers shall pay to the Paying Agent for the account of the applicable Holders with respect to such Notes, the principal amount of Notes to be redeemed, plus the Yield Maintenance Premium (as defined below) as of the applicable redemption date, plus accrued and unpaid interest up to, but excluding, the redemption date;

 

(ii)

in the event of any optional redemption of the Notes made pursuant to this “—Optional Redemption” on or after June 27, 2021 and prior to June 27, 2022, the Issuers shall pay to the Paying Agent for the account of the applicable Holders with respect to such Notes the principal amount of Notes to be redeemed, plus a premium equal to 5.00% of the aggregate principal amount of the Notes so redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date;

 

(iii)

in the event of any optional redemption of the Notes made pursuant to this “—Optional Redemption” on or after June 27, 2022 and prior to June 27, 2023, the Issuers shall pay to the Paying Agent for the account of the applicable Holders with respect to such Notes the principal amount of Notes to be redeemed, plus a premium equal to 3.00% of the aggregate principal amount of the Notes so redeemed, plus accrued and unpaid interest up to, but excluding, the redemption date; and

 

(iv)

on or after June 27, 2023, no premium shall be due in respect of the redemption of any such Notes and the redemption price shall be the principal amount of the Notes to be redeemed, plus accrued and unpaid interest up to, but excluding the redemption date.

Any optional redemptions of the Notes pursuant to this “—Optional Redemption” shall be applied to the remaining installments of the Notes as the Issuers may in each case direct.

“Yield Maintenance Premium” means the sum of (i) 4.0% of the aggregate principal amount of Notes redeemed, repaid or repurchased by the Issuers on or before June 27, 2021 and (ii) (a) the aggregate amount of interest, in cash, that would have accrued on such aggregate principal amount of Notes redeemed, repaid or repurchased from the date of redemption or repurchase through June 27, 2021, assuming an interest rate of 11.500% per annum, minus (b) the aggregate amount of interest, in cash, that would have accrued on the principal amount of the Notes so redeemed, repaid or repurchased, if such principal amount of Notes were reinvested for the period from the date of such redemption or repurchase until June 27, 2021 at the Treasury Rate (as defined below) plus 50 basis points. The Issuers shall calculate or cause the calculation of the Yield Maintenance Premium and the Trustee shall have no duty to calculate or verify the Issuers’ calculations thereof.

“Treasury Rate” means, as of the applicable redemption date, a rate per annum (computed on the basis of actual days elapsed over a year of 360 days) equal to the rate determined by the Board of Directors of the Partnership (with communication of such rate to be delivered by the Issuers to the Trustee in writing), such determination to be conclusive absent manifest error, that on the date three Business Days prior to the date of redemption, is the yield expressed as a rate listed in The Wall Street Journal for United States Treasury securities having a term most nearly equal to the period from such redemption date to June 27, 2021. If the redemption is in connection with a satisfaction and discharge or defeasance of the Indenture, the applicable Treasury Rate shall be computed as of the date that funds are irrevocably deposited with the Trustee to pay the amounts related thereto, as set forth in the Indenture.

Mandatory Redemption

The Issuers shall apply all Net Proceeds (as defined below) and Extraordinary Receipts (as defined below) on or prior to the date which is five Business Days after the date of the realization or receipt thereof by the

 

35

Partnership or any Subsidiaries, to redeem Notes at 100% of the principal amount, plus accrued and unpaid interest up to, but excluding, the date of redemption in accordance with the third paragraph of this “—Mandatory Redemption” plus the applicable prepayment premiums specified in “—Optional Redemption” (it being understood that (i) such prepayment premiums shall not be payable in the case of the first $55.0 million of Excluded Net Proceeds (as defined below) and (ii) any redemption of the Notes using the remaining Excluded Net Proceeds shall be at a redemption price of 102.00% of the aggregate principal amount of the Notes to be redeemed, plus accrued and unpaid interest up to, but excluding, the date of redemption).

Not later than five Business Days after the date on which the annual financial statements are, or are required to be, delivered pursuant to clause (i) of “—Certain Covenants—Financial Statements, Reports, etc.” with respect to each Excess Cash Flow Period (as defined below), the Issuers shall calculate Excess Cash Flow (as defined below) for such Excess Cash Flow Period and such calculation will be set forth in an Officer’s Certificate delivered to the Trustee and the Holders setting forth the amount, if any, of Excess Cash Flow for such fiscal year, the amount of any required redemption in respect thereof and the calculation thereof in reasonable detail, along with a notice of mandatory redemption calling the Notes for partial redemption as provided in the next sentence. The Issuers will effect a mandatory redemption of the Notes on at least five days, or in the case of Global Notes, as required by the procedures of the Depository, but not more than 30 days’ notice to Holders of the Notes and the Trustee in an amount equal to (i) 75% of such Excess Cash Flow, with respect to any Excess Cash Flow Period, minus (ii) the amount of any optional redemptions of Notes during such Excess Cash Flow Period (plus, without duplication of any amounts previously deducted under this clause (ii), the amount of any optional redemptions of Notes after the end of such Excess Cash Flow Period but before the date of redemption under this paragraph) to redeem Notes at 100% of the principal amount thereof plus accrued and unpaid interest up to, but excluding, the redemption date in accordance with “—Selection and Notice”, “—Optional Redemption” and the other redemption provisions set forth herein and in the Indenture (it being understood that the prepayment premiums specified in “—Optional Redemption” shall not be payable with respect to any Excess Cash Flow Period).

Redemptions of the Notes from all Net Proceeds or Extraordinary Receipts pursuant to the first paragraph of this “—Mandatory Redemption” and Excess Cash Flow pursuant to the second paragraph of this “—Mandatory Redemption” shall be applied so that the aggregate amount of such redemption is allocated among the Notes by lot in accordance with the Depository’s procedures based on the aggregate principal amount of outstanding Notes, with the application thereof to reduce in direct order amounts due on the succeeding Interest Payment Dates under such Notes.

In the event of any mandatory redemption required to be made pursuant to clause (ii) of the definition of “Net Proceeds” set forth below, or if the Notes are accelerated or otherwise become due prior to their stated maturity pursuant to the provisions described in “—Events of Default and Remedies” following the occurrence of any Event of Default, prior to June 27, 2021, the Issuers shall pay to the Paying Agent for the account of the applicable Holders with respect to such Notes the applicable prepayment premium specified in “—Optional Redemption” applicable to such Notes on such date.

“Excess Cash Flow” means, with respect to the Partnership and the Subsidiaries on a consolidated basis for any Excess Cash Flow Period, the Operating Cash Flow Amount of the Partnership on a consolidated basis as of the last day of the Excess Cash Flow Period, minus, without duplication:

 

(i)

to the extent not already included in the Operating Cash Flow Amount, Debt Service for such Excess Cash Flow Period and the amount of any Net Proceeds or Extraordinary Receipts which have been used to redeem the Notes pursuant to the first paragraph of “—Mandatory Redemption”; provided that, with respect to any such amounts to be paid after the close of such Excess Cash Flow Period that are deducted in such Excess Cash Flow Period, any amount so deducted shall not be deducted again in a subsequent Excess Cash Flow Period;

 

(ii)

the amount of any voluntary redemption or repayment permitted under the Indenture of term Indebtedness during such Excess Cash Flow Period (other than any voluntary redemption of the Notes,

 

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which shall be the subject of clause (ii) of the second paragraph under “—Mandatory Redemption”) and the amount of any voluntary payments of revolving Indebtedness to the extent accompanied by permanent reductions of any revolving facility commitments during such Excess Cash Flow Period to the extent an equal amount of loans thereunder was simultaneously repaid, so long as the amount of such redemption or repayment is not already reflected in Debt Service;

 

(iii)

Capital Expenditures by the Partnership and the Subsidiaries on a consolidated basis during such Excess Cash Flow Period that are paid in cash in an amount not to exceed $20.0 million; provided that, for the avoidance of doubt, any amount so deducted in such Excess Cash Flow Period shall not be deducted again in a subsequent Excess Cash Flow Period;

 

(iv)

to the extent not already included in the Operating Cash Flow Amount, amounts paid in cash during such Excess Cash Flow Period on account of reserves or accruals established in purchase accounting; and

 

(v)

to the extent not deducted in the computation of Net Proceeds in respect of any asset disposition or condemnation giving rise thereto, the amount of any mandatory prepayment of Indebtedness (other than Indebtedness created under any Note Document), together with any interest, premium or penalties required to be paid (and actually paid) in connection therewith.

“Excess Cash Flow Period” means each fiscal year of the Partnership, commencing with the fiscal year of the Partnership that commenced on January 1, 2019.

“Excluded Net Proceeds” means Net Proceeds from all Dispositions completed after the Indenture Closing Date in an amount not to exceed $155.0 million in the aggregate.

“Extraordinary Receipts” means 100% of the cash proceeds received by or paid to the Partnership or any Subsidiary not in the ordinary course of business consisting of federal, state or local Tax refunds (other than resulting from overpayment), judgments, proceeds of settlements, condemnation awards, insurance or other proceeds from losses, damage or destruction of any asset or assets and indemnity payments, in each case, net of (i) such amounts that are required to be remitted to a third person or are insurance or condemnation proceeds that are required to be reinvested in the business or to be used to restore any asset subject to a casualty event, in each case as a result of applicable law or regulation, (ii) documented attorneys’ fees, accountants’ fees and other reasonable fees and expenses incurred or payable in connection therewith, (iii) Taxes paid or payable (in the good faith determination of the Issuers) as a result thereof and (iv) the amount of any reasonable reserve established in accordance with GAAP against any adjustment to any liabilities related thereto (other than any taxes deducted pursuant to clause (ii) or (iii) above).

“Net Proceeds” means:

 

(i)

100% of the cash proceeds actually received by the Partnership or any Subsidiary (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise and including casualty insurance settlements and condemnation awards, but only as and when received) from any Disposition (other than under clauses (i), (ii), (iii), (v), (ix), (x) or (xi) under “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions”) or Casualty Event, net of (a) attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, required debt payments and required payments of other obligations that are secured by the applicable asset or property (including without limitation principal amount, premium or penalty, if any, interest and other amounts) (other than pursuant to the Note Documents), other expenses and brokerage, consultant and other fees actually incurred in connection therewith, (b) Taxes paid or reasonably estimated to be payable as a result thereof (provided that, if the amount of any such estimated Taxes exceeds the amount of Taxes actually required to be paid in respect of such Disposition or Casualty Event, the aggregate amount of such excess shall constitute Net

 

37

Proceeds at the time such Taxes are actually paid) and (c) the amount of any reasonable reserve established in accordance with GAAP against any adjustment to the sale price or any liabilities (other than any taxes deducted pursuant to clause (a) above) (1) related to any of the applicable assets and (2) retained by the Partnership or any of the Subsidiaries including, without limitation, pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations (however, the amount of any subsequent reduction of such reserve (other than in connection with a payment in respect of any such liability) shall be deemed to be Net Proceeds of such Disposition or Casualty Event occurring on the date of such reduction); provided that 20% of any Excluded Net Proceeds in excess of $55.0 million after the Indenture Closing Date shall not constitute “Net Proceeds” unless and until the Partnership or any Subsidiary has failed to reinvest such proceeds in assets of the general type used or useful in the business of the Partnership and its Subsidiaries (including in connection with an acquisition), on or before the date that is 360 days following receipt of such proceeds by the Partnership or any of its Subsidiaries; provided, further, that the Partnership may elect, in its sole discretion, to treat such cash proceeds as “Net Proceeds” prior to the expiration of such 360-day period; and

 

(ii)

100% of the cash proceeds from the incurrence, issuance or sale by the Partnership or any Subsidiary of any Indebtedness (other than Excluded Indebtedness), net of all taxes paid or reasonably estimated to be payable as a result thereof and fees (including investment banking fees and discounts), commissions, costs and other expenses, in each case incurred in connection with such incurrence, issuance or sale.

Selection and Notice

In the event that fewer than all of the Notes are to be redeemed at any time, selection of the Notes to be redeemed will be made by the Trustee in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed (if such listing is known to the Trustee) or, if such Notes are not then listed on a national security exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate and in accordance with the applicable procedures of DTC; provided that no Notes of a principal amount of $1.00 or less will be redeemed in part (for the avoidance of doubt any redemption for all and less than all Notes shall be subject to the applicable procedures of DTC unless such method is otherwise prohibited). A new Note in a principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon delivery of the original Note to the Paying Agent and cancellation of the original Note. On and after the redemption date, interest will cease to accrue on Notes or portions thereof called for redemption as long as the Issuers have deposited with the Paying Agent funds in U.S. legal tender in satisfaction of the applicable redemption price pursuant to the Indenture.

Prior to any mandatory redemption of the Notes pursuant to the provisions described in the first two paragraphs under “—Mandatory Redemption” or any optional redemption of the Notes pursuant to “—Optional Redemption”, the Issuers shall notify the Trustee and the Holders in writing no less than 10 days or more than 60 days before the scheduled date of such redemption, (i) specifying such redemption date, (ii) specifying the outstanding principal amount of such Notes to be redeemed on such date, (iii) specifying the accrued interest and redemption price applicable to the redemption and (iv) stating the applicable provision of the Indenture pursuant to which such redemption is to be made; provided that a notice of redemption may state that such notice is conditioned upon the effectiveness of other credit facilities, indentures or similar agreements or transactions, in which case such notice may be revoked or the redemption date delayed by the Issuers if such condition is not satisfied. Upon written request of the Issuers delivered at least two Business Days in the case of Global Notes and five Business Days in the case of Definitive Notes prior to the date on which notice is to be sent to Holders (or such shorter period as is acceptable to the Trustee) and at the Issuers’ sole expense, the Trustee shall send to each Holder of Notes to be so redeemed, by first-class mail at his or her last address, or deliver such notice through the applicable procedures of DTC in the case of Global Notes, as the same appears on the registry books maintained by the Registrar pursuant to the relevant provisions of the Indenture, a copy of the notice of redemption required to be delivered to the Trustee pursuant to this paragraph.

 

38

Paying Agent and Registrar

The Trustee will initially act as the paying agent (the “Paying Agent”) and the registrar (the “Registrar”) with respect to the New Notes. The Issuers may change the Paying Agent or Registrar without prior notice to the Holders of New Notes. The Partnership or any of its domestically organized Subsidiaries may act as the Paying Agent or the Registrar.

Transfer and Exchange

A Holder may transfer or exchange the New Notes in accordance with the provisions of the Indenture. The Registrar may require a Holder of New Notes to furnish appropriate endorsements and a transferee letter in connection with a registration of transfer or exchange of New Notes. No service charge shall be made for any registration of transfer or exchange of New Notes, but we may require payment of a sum sufficient to cover any transfer tax, assessment or similar governmental charge payable in connection therewith. We shall not be required to make, and the Registrar will not need to register, transfers or exchanges of New Notes selected for redemption (except, in the case of New Notes to be redeemed in part, the portion thereof not to be redeemed) or of any New Notes for a period of 15 days before a selection of New Notes to be redeemed. The New Notes will be issued in registered form.

Collateral and Security

Collateral Generally

The obligations of the Issuers under the Indenture and the New Notes and the Guarantors’ Note Guarantees with respect to the New Notes will be secured by a first priority Lien on and security interest (subject to certain Permitted Liens as described in “—Certain Covenants—Limitation on Liens”) in the Collateral granted to the Collateral Agent for the benefit of the Holders of the New Notes. The Collateral will include substantially all of the Issuers’ and the Guarantors’ assets, whether now owned or hereafter acquired, excluding certain assets as described below in “—Collateral and Security—Limitations on Collateral.”

Certain Limitations on the Collateral

The Collateral securing the New Notes will not include any of the following (the “Excluded Property”):

 

(i)

all Trust Accounts, together with any proceeds of an Issuer’s or a Subsidiary Guarantor’s (each, a “Grantor”) Receivables that are required by law to be placed into a Trust Account for the benefit of the applicable account debtors and all such funds held in Trust Accounts from time to time (but excluding, in any case, such funds that any Grantor has a right to demand payment of, or is otherwise entitled to a distribution of, or any rights of any Grantor in respect thereof, whether the corpus, income or proceeds of a Trust Account, in each case, in accordance with applicable law, and such right shall not be deemed to be Excluded Property, but shall instead be treated for all purposes under the Collateral Agreement as a General Intangible or Account (each as defined in the UCC), as applicable);

 

(ii)

Excluded Securities;

 

(iii)

assets (including rights) that may not be pledged as a matter of law or without prior approval of any Governmental Authorities (unless such approval has been obtained and except to the extent such law would be rendered ineffective with respect to the creation of the security interest under the Collateral Agreement pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions)); provided, however, that the Collateral shall include (and such security interest shall attach) immediately at such time as the legal prohibitions described in this clause (iii) shall no longer be applicable;

 

(iv)

motor vehicles and similar assets subject to a certificate of title in the United States;

 

(v)

Excluded Real Property;

 

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(vi)

United States intent-to-use trademark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use trademark application under applicable federal law;

 

(vii)

any lease, license, contract, permit, authorization or agreement to which any Grantor is a party or any of its rights or interests thereunder if and to the extent and for so long as the grant of a security interest therein, or in any assets or rights which are the subject thereof, shall constitute or result in (a) the abandonment, invalidation or unenforceability of any right, title or interest of any Grantor therein or (b) a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract, permit, authorization or agreement (unless such law, rule, regulation, term, provision or condition would be rendered ineffective with respect to the creation of the security interest under the Collateral Agreement pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC (or any successor provision or provisions) of any relevant jurisdiction or any other applicable law); provided, however, that the Collateral shall include (and such security interest shall attach) immediately at such time as the contractual or legal prohibitions described in this clause (vii) shall no longer be applicable and to the extent severable, shall attach immediately to any portion of such lease, license, contract, permit, authorization or agreement not subject to the prohibitions specified above without further action of any party;

 

(vii)

margin stock; and

 

(ix)

those assets (including owned or leased real property that is not included in the definition of “Excluded Real Property”) as to which the Required Noteholder Parties determine (with communication of such determination, if any, to be delivered to the Issuers by the Trustee at the direction of the Required Noteholder Parties) that the cost or other consequences of obtaining such security interest are likely to be excessive in relation to the value to be afforded thereby.

After-Acquired Collateral

Subject to certain limitations and exceptions, if any asset is acquired by the Issuers or any Subsidiary Guarantor or owned by an entity at the time it becomes a Subsidiary Guarantor, in each case, it will be required to execute and deliver such documentation and to take such actions to cause such asset to be subject to a Lien securing the Note Obligations and to add such after-acquired collateral to the Collateral, and thereupon all provisions of the Indenture and the Security Documents relating to the Collateral shall be deemed to relate to such after-acquired collateral to the same extent and with the same force and effect.

Further Assurances

The Issuers and the Subsidiary Guarantors shall execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, Mortgages (or Mortgage Amendments) and other documents), that the Trustee or Collateral Agent (in each case, acting at the direction of the Required Noteholder Parties) may reasonably request (including, without limitation, those required by applicable law), to satisfy the Collateral Requirement and to cause the Collateral Requirement to be and remain satisfied (subject to applicable Cemetery Laws), all at the expense of the Note Parties and provide to the Collateral Agent, from time to time upon reasonable request, evidence reasonably satisfactory to the Collateral Agent as to the perfection and priority of the Liens created or intended to be created by the Security Documents.

Cash Management Systems

Within 60 days after any person becomes a Subsidiary Guarantor after the Indenture Closing Date (or such longer period as the Required Noteholder Parties may agree in their reasonable discretion (with communication of such agreement, if any, to be delivered to the Issuers, the Trustee and the Collateral Agent in writing)), such

 

40

Subsidiary Guarantor shall enter into a Control Agreement with respect to all cash and Permitted Investments maintained in Deposit Accounts and Securities Accounts of such Subsidiary Guarantor, other than cash and Permitted Investments maintained in Excluded Accounts. It is understood and agreed that the proceeds of the Notes shall be held in a Deposit Account subject to a Control Agreement pending application for any purpose permitted under the Indenture.

At any time after the occurrence and during the continuance of a Control Triggering Event, the Collateral Agent (acting at the written request of the Trustee, which will act at the written direction of the Required Noteholder Parties delivered in accordance with the Indenture) shall have the right to deliver an Activation Notice (or similar term, as defined in each Control Agreement) with respect to each Controlled Account. After delivery of an Activation Notice (or similar term, as defined in each Control Agreement), the Collateral Agent shall comply with the written instructions of the Trustee (acting at the direction of the Required Noteholder Parties delivered in accordance with the Indenture) with respect to credits and transfers from the applicable Controlled Accounts.

The Issuers and Subsidiary Guarantors may close and/or open any account (including any Controlled Account) maintained at any bank or other financial institution subject to the applicable requirements described in the first paragraph of this “—Collateral and Security—Cash Management Systems.”

So long as no Control Triggering Event has occurred and is continuing, the Issuers and the Subsidiary Guarantors may direct the manner of disposition of funds in all Controlled Accounts.

The Collateral Agent (acting at the written request of the Trustee, which will act at the written direction of the Required Noteholder Parties delivered in accordance with the Indenture) shall promptly (but in any event within one Business Day of obtaining knowledge thereof) (a) furnish written notice to each person with whom a Controlled Account is maintained of any termination of a Control Triggering Event or (b) take such other action and execute such other documents as may be reasonably requested by the Issuers or the applicable Subsidiary Guarantor in connection with any termination of a Control Triggering Event.

Release of Collateral

The Indenture provides that the Liens granted to the Collateral Agent by the Note Parties on any Collateral (including any Controlled Accounts) shall be automatically released:

 

(i)

in full upon the occurrence of the Termination Date or discharge, legal defeasance or covenant defeasance of the Indenture as described in “—Legal Defeasance and Covenant Defeasance;”

 

(ii)

upon the Disposition of such Collateral by any Note Party to a person that is not (and is not required to become) a Note Party in a transaction expressly permitted by the Indenture;

 

(iii)

to the extent that such Collateral comprises property leased to a Note Party, upon termination or expiration of such lease;

 

(iv)

if the release of such Lien is approved, authorized or ratified in writing by the Required Noteholder Parties (or such other percentage of the Noteholder Parties whose consent may be required in accordance with the provisions set forth under “—Amendments and Waivers”);

 

(v)

to the extent that the property constituting such Collateral is owned by any Guarantor, upon the release of such Guarantor from its obligations under its Note Guarantees in accordance with the provisions set forth in the final paragraph under “—Guarantees” or the succeeding paragraph below; and

 

(vi)

as required by the Trustee to effect any Disposition of Collateral in connection with any exercise of remedies of the Collateral Agent or the Trustee pursuant to the Security Documents. Any such release shall not in any manner discharge, affect or impair the Note Obligations or any Liens (other than those being released) upon (or obligations (other than those being released) of the Note Parties in respect of)

 

41

all interests retained by the Note Parties, including the proceeds of any Disposition, all of which shall continue to constitute part of the Collateral except to the extent otherwise released in accordance with the provisions of the Note Documents.

In addition, a Guarantor shall be automatically released from its Note Guarantees upon consummation of any transaction resulting in such Subsidiary ceasing to exist or constitute a Subsidiary or otherwise becoming an Excluded Subsidiary in a transaction expressly permitted by the Indenture.

Sufficiency of Collateral

The fair market value of the Collateral is subject to fluctuations based on factors that include, among others, the ability to sell the Collateral in an orderly sale, general economic conditions, the availability of buyers and similar factors. The amount to be received upon a sale of the Collateral would also be dependent on numerous factors, including, but not limited to, the actual fair market value of the Collateral at such time and the timing and the manner of the sale. By their nature, portions of the Collateral may be illiquid and may have no readily ascertainable market value. Accordingly, there can be no assurance that the Collateral can be sold in a short period of time or in an orderly manner. In addition, as discussed further below, the Holders of the Notes will not be entitled to receive post-petition interest or applicable fees, costs, expenses, or charges to the extent the amount of the obligations due under the Notes exceeds the value of the Collateral (after taking into account all other first- priority debt that is also secured by the Collateral), or any “adequate protection” on account of any undersecured portion of the Notes.

Certain Bankruptcy Limitations

The right of the Collateral Agent to foreclose upon, repossess and dispose of the Collateral upon the occurrence of an Event of Default would be significantly impaired by any Bankruptcy Law in the event that any bankruptcy case or other insolvency or liquidation proceeding were to be commenced by or against the Issuers or any Guarantor prior to the Collateral Agent’s having repossessed and disposed of the Collateral (and in some cases, even after). Upon the commencement of a case for relief under the Bankruptcy Code, a secured creditor such as the Collateral Agent is prohibited from foreclosing upon or repossessing its security from a debtor in a bankruptcy case or from disposing of previously repossessed security without prior bankruptcy court approval (which may not be given under the circumstances).

In view of the broad equitable powers of a U.S. bankruptcy court and the lack of a precise definition of the meaning of “adequate protection,” it is impossible to predict whether or when payments under the Notes could be made following the commencement of a bankruptcy case (or the length of the delay in making any such payments), whether or when the Collateral Agent could or would repossess or dispose of the Collateral, the value of the Collateral at any time during a bankruptcy case or whether or to what extent Holders of the Notes would be compensated for any delay in payment or loss of value of the Collateral. The Bankruptcy Code permits the payment and/or accrual of post-petition interest, expenses, costs and attorneys’ fees to a secured creditor during a debtor’s bankruptcy case only to the extent the value of such creditor’s interest in the Collateral is determined by the bankruptcy court to exceed the outstanding aggregate principal amount of the obligations secured by the Collateral.

Furthermore, in the event a domestic or foreign bankruptcy court determines that the value of the Collateral is not sufficient to repay all amounts due on the Notes, the Holders of the Notes would hold secured claims only to the extent of the value of the Collateral to which the Holders of the Notes are entitled, and unsecured “deficiency” claims with respect to such shortfall, which deficiency claims would not need to be adequately protected during a bankruptcy case.

 

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Certain Covenants

The Indenture contains certain covenants including, among others, the following:

Payment of Notes

The Issuers shall pay or cause to be paid the principal of, premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Trustee or Paying Agent (if other than the Trustee), if other than the Issuers or a Subsidiary, holds as of 11:00 a.m., New York City time, on the due date money deposited by the Issuers in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due. PIK Interest shall be considered paid on the date due if on such date the Trustee has received (i) a written order, pursuant to the provisions described below in “—Certain Covenants—Maintenance of Office or Agency,” from the Issuers signed by a Responsible Officer to increase the balance of any Global Note to reflect such PIK Interest or (ii) a PIK Note duly executed by the Issuers together with a written order, pursuant to the provisions described below in “—Certain Covenants—Maintenance of Office or Agency,” of the Issuers signed by a Responsible Officer requesting the authentication of such PIK Note by the Trustee.

The Issuers shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at the rate equal to the then applicable interest rate on the Notes to the extent lawful and shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful.

Maintenance of Office or Agency

The Issuers shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuers in respect of the Notes and the Indenture may be served. The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided that no such designation or rescission shall in any manner relieve the Issuers of their obligation to maintain an office or agency for such purposes. The Issuers shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

The Issuers hereby designate the Corporate Trust Office of the Trustee as one such office or agency of the Issuers in accordance with the provisions described in “—Certain Covenants—Existence, Business and Properties;” provided that no office of the Trustee shall be an office or agency of the Issuers or Guarantors for the purpose of service of legal process on the Issuers or any Guarantor.

Existence, Business and Properties

Each of the Issuers will, and will cause each Subsidiary Guarantor to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, and all rights and franchises, licenses and permits, except, in the case of a Subsidiary of the Partnership, where the failure to do so would not reasonably be expected to have a Material Adverse Effect, and except as otherwise permitted under “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions,” and except for the liquidation or

 

43

dissolution of Subsidiaries if the assets of such Subsidiaries to the extent they exceed estimated liabilities are acquired by the Partnership or a Wholly Owned Subsidiary of the Partnership in such liquidation or dissolution; provided that Subsidiary Guarantors may not be liquidated into Subsidiaries that are not Note Parties (except as permitted under “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions”).

Except where the failure to do so would not reasonably be expected to have a Material Adverse Effect, each of the Issuers will, and will cause each Subsidiary Guarantor to, do or cause to be done all things necessary to (i) lawfully obtain, preserve, renew, extend and keep in full force and effect the permits, franchises, authorizations, Intellectual Property, licenses and rights with respect thereto necessary to the normal conduct of its business, and (ii) at all times maintain, protect and preserve all property necessary to the normal conduct of its business and keep such property in good repair, working order and condition (ordinary wear and tear excepted), from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith, if any, may be properly conducted at all times (in each case except as permitted by the Indenture).

Insurance

The Issuers will, and will cause each of the Subsidiary Guarantors to, (i) maintain, with financially sound and reputable insurance companies, insurance (subject to customary deductibles and retentions) in such amounts and against such risks as are customarily maintained by similarly situated companies engaged in the same or similar businesses operating in the same or similar locations and consistent with past practice or industry practices and (ii) cause the Collateral Agent to be listed as a co-loss payee on property and casualty policies and as an additional insured on liability policies. Notwithstanding the foregoing, the Partnership and the Subsidiaries may self-insure with respect to such risks with respect to which companies of established reputation engaged in the same general line of business in the same general area usually self-insure.

In connection with the covenants set forth in this “—Certain Covenants—Insurance,” it is understood and agreed that:

 

(i)

the Trustee, the Collateral Agent, the Noteholder Parties and their respective agents or employees shall not be liable for any loss or damage insured by the insurance policies required to be maintained under this “—Certain Covenants—Insurance,” it being understood that (a) the Note Parties shall look solely to their insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (b) such insurance companies shall have no rights of subrogation against the Trustee, the Collateral Agent, the Noteholder Parties or their agents or employees. If, however, the insurance policies, as a matter of the internal policy of such insurer, do not provide waiver of subrogation rights against such parties, as required above, then the Partnership, on behalf of itself and behalf of each of its Subsidiaries, hereby agrees, to the extent permitted by law, to waive, and further agrees to cause each of their Subsidiaries to waive, its right of recovery, if any, against the Trustee, the Collateral Agent, the Noteholder Parties and their agents and employees;

 

(ii)

the designation of any form, type or amount of insurance coverage by the Collateral Agent (including acting in the capacity as the Collateral Agent) under this “—Certain Covenants—Insurance” shall in no event be deemed a representation, warranty or advice by the Collateral Agent, the Trustee or the Noteholder Parties that such insurance is adequate for the purposes of the business of the Partnership and the Subsidiaries or the protection of their properties; and

 

(iii)

the amount and type of insurance that the Partnership and the Subsidiaries had in effect as of the Indenture Closing Date satisfied for all purposes the requirements of this “—Certain Covenants— Insurance.”

Taxes

Each of the Issuers will, and will cause each Subsidiary Guarantor to, pay its obligations in respect of all Taxes before the same shall become delinquent or in default, except where (i) the amount or validity thereof is

 

44

being contested in good faith by appropriate proceedings and the Partnership or a Subsidiary thereof has set aside on its books adequate reserves therefor in accordance with GAAP or (ii) the failure to make payment could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

Financial Statements, Reports, etc.

Until the Termination Date (unless the Required Noteholder Parties otherwise consent in writing), the Issuers will furnish to the Trustee:

 

(i)

within 95 days after the end of each fiscal year, a consolidated balance sheet and related statements of comprehensive income, cash flows and stockholders’ equity showing the financial position of the C-Corporation and the Subsidiaries as of the close of such fiscal year and the consolidated results of their operations during such year and setting forth in comparative form the corresponding figures for the prior fiscal year, which consolidated balance sheet and related statements of comprehensive income, cash flows and stockholders’ equity will be accompanied by customary management’s discussion and analysis and audited by independent public accountants of recognized national standing and accompanied by an opinion of such accountants (which opinion will not be qualified as to scope of audit or as to the status of the C-Corporation or any Subsidiary as a going concern, other than solely with respect to, or resulting solely from, an upcoming maturity date under any series of Indebtedness occurring within one year from the time such opinion is delivered or any potential inability to satisfy a financial maintenance covenant on a future date or in a future period) to the effect that such consolidated financial statements fairly present, in all material respects, the financial position and results of operations of the C-Corporation and the Subsidiaries on a consolidated basis in accordance with GAAP (it being understood that the delivery of annual reports on Form 10-K of the C-Corporation and the consolidated Subsidiaries will satisfy the requirements of this clause (i) to the extent such annual reports include the information specified herein);

 

(ii)

within 45 days after the end of each of the first three fiscal quarters of each fiscal year, a consolidated balance sheet and related statements of comprehensive income, cash flows and stockholders’ equity showing the financial position of the C-Corporation and the Subsidiaries as of the close of such fiscal quarter and the consolidated results of their operations during such fiscal quarter and the then-elapsed portion of the fiscal year and setting forth in comparative form the corresponding figures for the corresponding periods of the prior fiscal year, all of which will be in reasonable detail, which consolidated balance sheet and related statements of operations, cash flows and stockholders’ equity will be accompanied by customary management’s discussion and analysis and which consolidated balance sheet and related statements of comprehensive income, cash flows and stockholders’ equity will be certified by a Financial Officer on behalf of the C-Corporation as fairly presenting, in all material respects, the financial position and results of operations of the C-Corporation and the Subsidiaries on a consolidated basis in accordance with GAAP (subject to normal year-end audit adjustments and the absence of footnotes) (it being understood that the delivery of quarterly reports on Form 10-Q of the C-Corporation and the consolidated Subsidiaries will satisfy the requirements of this clause (ii) to the extent such quarterly reports include the information specified herein);

 

(iii)

all information that would be required to be contained in filings with the SEC on Form 8-K under Items 1.01, 1.02, 1 .03, 2.01, 2.03, 2.04, 2.05, 2.06, 3.03, 4.01, 4.02, 5.01 and 5.02(b) and (c)(l) (other than with respect to information otherwise required or contemplated by Item 402 of Regulation S-K) (but excluding, for the avoidance of doubt, financial statements and exhibits that would be required pursuant to Item 9.01 of Form 8-K, other than financial statements and pro forma financial information required pursuant to clauses (a) and (b) of Item 9.01 of Form 8-K (in each case relating to transactions required to be reported pursuant to Item 2.01 of Form 8-K) to the extent available (as determined by the Partnership in good faith, which determination will be conclusive)) promptly from time to time after the occurrence of an event required to be therein reported (and in any event within the time period specified in the SEC’s rules and regulations);

 

45

(iv)

concurrently with any delivery of financial statements under clause (i) or (ii) above, an Officer’s Certificate of a Financial Officer of the C-Corporation (a) certifying that no Event of Default or Default has occurred since the date of the last certificate delivered pursuant to this clause (iv) or, if such an Event of Default or Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto and (b) setting forth computations in reasonable detail demonstrating compliance with the Financial Covenants;

 

(v)

within 35 days after the end of each fiscal month, the consolidated balance sheet and related statements of income or operations, shareholders’ equity or partners’ capital and cash flows of the C-Corporation and the Subsidiaries as of the end of and for such month and the then elapsed portion of the fiscal year, presenting fairly in all material respects the financial condition and results of operations of the C-Corporation and the Subsidiaries on a consolidated basis prepared in a manner consistent with the most recent monthly internal financial statements and reporting plan provided to the initial purchasers of the Old Notes prior to the Indenture Closing Date, subject to normal quarterly and/or year-end audit adjustments and the absence of footnotes, and monthly cash flow forecasts for the next 12 months following the end of such month with a qualitative and quantitative variance analysis (with respect to both the actual cash flows of the prior month and the forecast delivered with respect to the prior month) and weekly cash flow forecasts for the next 13 weeks, in each case, using reasonable assumptions and in form and scope substantially consistent with the information provided prior to the Indenture Closing Date to the initial purchasers of the Old Notes;

 

(vi)

promptly after the same become publicly available, copies of all periodic and other publicly available reports, proxy statements and, to the extent requested by the Required Noteholder Parties, other materials filed by the C-Corporation or any of the Subsidiaries with the SEC or distributed to its stockholders generally, as applicable; provided, however, that such reports, proxy statements, filings and other materials required to be delivered pursuant to this clause (vi) will be deemed delivered for purposes of the Indenture when posted to the website of the C-Corporation (or any Parent Entity) or the website of the SEC;

 

(vii)

within 60 days (or such later date as the Required Noteholder Parties (with communication of such extension, if any, to be delivered to the Issuers, the Trustee and the Collateral Agent in writing) may agree in their discretion) after the beginning of each fiscal year (commencing with the fiscal year commencing on January 1, 2020), a consolidated annual budget for such fiscal year consisting of a projected consolidated balance sheet of the C-Corporation and the Subsidiaries as of the end of the following fiscal year and the related consolidated statements of projected cash flow and projected income of the C-Corporation and the Subsidiaries for the following fiscal year (collectively, the “Budget”), which Budget will in each case be accompanied by the statement of a Financial Officer to the effect that the Budget is based on assumptions believed by the C-Corporation to be reasonable as of the date of delivery thereof;

 

(viii)

promptly, from time to time, such other information regarding the operations, business affairs and financial condition of the C-Corporation or any of the Subsidiaries, or compliance with the terms of any Note Document as in each case the Required Noteholder Parties may reasonably request (for itself or on behalf of any Noteholder Party);

 

(ix)

at a time determined by the Issuers after delivery of the financial statements required pursuant to clauses (i) or (ii) above (but not later than ten Business Days after such delivery), the C-Corporation will cause appropriate Financial Officers or other officers with reasonably equivalent duties of the Issuers to participate in one conference call for the Noteholder Parties to discuss the financial condition and results of operations of the C-Corporation and the Subsidiaries for the most recently ended fiscal period and, prior to the date of each such conference call, will announce the time and date of such conference call and either include all information necessary to access the call or inform Noteholder Parties how they can obtain such information, including, without limitation, the applicable password or login information (if applicable); provided that to the extent the C-Corporation hosts a

 

46

quarterly conference call for the holders of its equity securities, the Issuers’ participation in such conference call will satisfy the requirements of this clause (ix) so long as the Noteholder Parties are provided notice of such conference call;

 

(x)

in the event that any Parent Entity reports on a consolidated basis, such consolidated reporting at such Parent Entity’s level in a manner consistent with that described in clauses (i), (ii) and (iii) above for the C-Corporation (together with a reconciliation showing the adjustments necessary to determine compliance by the C-Corporation and the Subsidiaries with the Financial Covenants, if applicable) will satisfy the requirements of such clauses; and

 

(xi)

within 95 days after the end of each fiscal year, a current list of all cemeteries, crematories and funeral homes owned or leased by the Note Parties, in form substantially consistent with the information provided prior to the Indenture Closing Date to the initial purchasers of the Old Notes and containing such detail as may be reasonably requested by the Required Noteholder Parties.

In addition to providing such information and reports to the Trustee, the Issuers will make available to the Noteholder Parties the information required to be provided pursuant to the foregoing clauses (i) through (xi) of this covenant, the covenant set forth under “—Certain Covenants—Litigation and other Notices” and clause (x) under “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions”, by posting such information to its website (or the website of any Parent Entity) or on IntraLinks or any comparable password protected online data system or website (the “Platform”). Delivery of reports, information and documents to the Trustee pursuant to this covenant, certain other affirmative covenants set forth in the Indenture and the covenants described in “Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions” is for informational purposes only, and the Trustee’s receipt thereof will not constitute actual or constructive notice of any information contained therein or determinable from information contained therein, including the Issuers’ compliance with any of its covenants under the Indenture (as to which the Trustee is entitled to rely conclusively on an Officer’s Certificate). The Trustee is under no duty to examine such reports, information or documents to ensure compliance with the provisions of the Indenture or to ascertain the correctness or otherwise of the information or the statements contained therein.

All financial statements furnished to Noteholders pursuant to clauses (i), (ii) and (vi) of the first paragraph above (the “Public Noteholder Party Information”) will be made available through a portion of the Platform designated “Public Noteholder Party” as contemplated by the Indenture.

In addition, the requirements of this covenant will be deemed to have been satisfied by (i) the filing with the SEC of the information required by this covenant that otherwise satisfy the requirements set forth above and/or the posting of reports that would be required to be provided to the Trustee and the Holders on the Issuers’ website at times that otherwise satisfy the time requirements set forth above; provided that, in the case of delivery to the Trustee, such website is a publicly available, non-password protected site.

Litigation and Other Notices

The Issuers will furnish to the Trustee written notice of the following promptly after any Responsible Officer of the Issuers obtains actual knowledge thereof:

 

(i)

any condition or event that constitutes any Event of Default or Default, specifying the nature and extent thereof and the corrective action (if any) proposed to be taken with respect thereto;

 

(ii)

the filing or commencement of, or any written threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority or in arbitration, against the Partnership or any of the Subsidiaries which if adversely determined would reasonably be expected to have a Material Adverse Effect;

 

(iii)

any other event, development or change specific to the Partnership or any of the Subsidiaries that has, or would reasonably be expected to have, a Material Adverse Effect;

 

47

(iv)

the occurrence of any change in the board of directors (or similar governing body) of the Partnership;

 

(v)

promptly after the occurrence thereof, written notice of any Casualty Event to any material portion of the Collateral that could reasonably be expected to result in a Material Adverse Effect; and

 

(vi)

any noncompliance by Partnership or any of the Subsidiaries with any Environmental Law or Environmental Permit that could reasonably be expected to (a) have a Material Adverse Effect or (b) cause any Mortgaged Property to be subject to any restrictions on ownership, occupancy, use or transferability under any Environmental Law.

Maintenance of Trust Funds and Trust Accounts

The Issuers will, and will cause each of the Subsidiary Guarantors to, (i) deposit in the appropriate Trust Account all applicable Trust Funds in compliance in all material respects with applicable law and in accordance with a conservative investment strategy focused on generating current income, (ii) establish and maintain all of the funding obligations of each of the Trust Accounts in compliance in all material respects with applicable law, (iii) establish and maintain diversification and concentration guidelines for making such investments, provided that (a) no such investments shall be made in options or derivatives (or in mutual funds or exchange traded funds that employ leverage, options or derivatives as part of their primary investment strategy), (b) no more than 20% of the total investments in the Trust Funds shall be invested in equity securities (based on the allocation at the time of purchase of any such equity securities and excluding the securities of mutual funds that invest in debt securities), (c) no investments shall be made in any Affiliate of the Partnership or C-Corporation or in any fund or asset controlled or managed by any Affiliate of the Partnership or the C-Corporation and (d) no more than 15% of the total investments of the Trust Funds shall be invested in private credit funds (based on the net asset value of such private credit funds at the time of commitment of funding of such private credit funds and other than prior funded and unfunded commitments to private credit funds existing as of the Indenture Closing Date), (iv) maintain a committee of the Board to approve all investments and trust policies (“Trust Committee”) that either (a) shall include Andrew Axelrod, Joe Redling and an independent director not designated by Axar Capital Management, L.P. or (b) if there has been any change to the initial Trust Committee after the Indenture Closing Date, shall be composed of a majority of independent directors not designated by Axar Capital Management, L.P. and (v) not engage in any extraordinary withdrawals of amounts contained in the Trust Accounts.

Compliance with Terms of Leaseholds

The Issuers will, and will cause each of the Subsidiary Guarantors to, (i) make all payments and otherwise perform all material obligations in respect of the Archdiocese Lease, keep the Archdiocese Lease in full force and effect, not allow the Archdiocese Lease to be terminated as a result of its actions and notify the Trustee of any default by any party to the Archdiocese Lease, (ii) make all payments and otherwise perform all obligations in respect of all other leases of real property to which any Note Party or any of its Subsidiaries is a party, keep all such other leases in full force and effect, not allow such leases to lapse or be terminated or any rights to renew such leases to be forfeited or cancelled and notify the Trustee of any default by any party with respect to such leases, except, in any case under this “—Certain Covenants—Compliance with Terms of Leaseholds,” where the failure to do any of the foregoing in this clause (ii), either individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect and (iii) cooperate with the Trustee and/or the Required Noteholder Parties in all respects to cure any default under (a) the Archdiocese Lease or (b) such other leases that could reasonably be expected to result in a Material Adverse Effect.

Maintenance of Ratings

The Issuers will, and will cause each of the Subsidiary Guarantors to, use commercially reasonable efforts to maintain a public corporate family rating of the Partnership and maintain the rating of the Notes originally obtained in connection with the offering of the Old Notes (but not maintain a specific rating), in each case from each of Moody’s and S&P (it being understood and agreed that “commercially reasonable efforts” shall in any

 

48

event include the payment by the Issuers of customary rating agency fees and cooperation with information and data requests by Moody’s and S&P in connection with their ratings process).

Amendment of Commitment Letter

The Issuers will, and will cause each of the Subsidiary Guarantors to, not amend or waive any provision of the Equity Commitment Letter in any manner adverse to the interests of the Noteholder Parties, as determined in good faith by a majority of the members of the Board of Directors of the C-Corporation who are “independent” within the meaning of the listing standards of the New York Stock Exchange, without the prior written consent of the Required Noteholder Parties.

Rights Offering

The Issuers will, and will cause each of the Subsidiary Guarantors to, use its best efforts to effectuate the Rights Offering (as such term is defined in the Equity Commitment Letter) as promptly as practicable with an Expiration Time (as such term is defined in the Equity Commitment Letter) no later than July 24, 2020, subject to the terms and conditions set forth in the Equity Commitment Letter.

Proceeds of Sale of Equity Interests

The Issuers will, and will cause each of the Subsidiary Guarantors to, receive proceeds of the sale of Equity Interests in the C-Corporation of not less than $8.2 million on or prior to July 31, 2020.

Limitation on Indebtedness

The Issuers will not, and will not permit any of the Subsidiaries to, incur, create, assume or permit to exist any Indebtedness, except:

 

(i)

Indebtedness existing on the Indenture Closing Date (and set forth on a schedule to the Indenture to the extent consisting of non-intercompany Indebtedness) and any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness (other than intercompany indebtedness Refinanced with Indebtedness owed to a person not affiliated with the Partnership or any Subsidiary);

 

(ii)

Indebtedness created under the Note Documents or any PIK Notes issued from time to time in respect of any PIK Payment in accordance with the terms of the Indenture (including any Guarantee thereof) as well as the New Notes;

 

(iii)

Indebtedness owed to (including obligations in respect of letters of credit or bank guarantees or similar instruments for the benefit of) any person providing workers’ compensation, health, disability or other employee benefits or property, casualty or liability insurance to the Partnership or any Subsidiary, pursuant to reimbursement or indemnification obligations to such person, in each case in the ordinary course of business and consistent with past practice or industry practices;

 

(iv)

Indebtedness of the Issuers to any Subsidiary Guarantor and of any Subsidiary Guarantor to the Issuers or any other Subsidiary Guarantor; provided that such Indebtedness under this clause (iv) shall be unsecured and subordinated in right of repayment to the Notes on terms reasonably satisfactory to the Required Noteholder Parties;

 

(v)

Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations, in each case provided in the ordinary course of business and consistent with past practice or industry practices, including those incurred to secure health, safety and environmental obligations in the ordinary course of business and consistent with past practice or industry practices;

 

49

(vi)

Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds or other cash management services, in each case incurred in the ordinary course of business and consistent with past practice or industry practices;

 

(vii)

Capital Lease Obligations and any other Indebtedness incurred by the Partnership or any Subsidiary arising from any Sale and Lease-Back Transaction that is permitted under “—Certain Covenants— Limitation on Sale and Lease-Back Transactions” and any Permitted Refinancing Indebtedness in respect thereof;

 

(viii)

Guarantees (a) by either of the Issuers or any Subsidiary Guarantor of any Indebtedness of the Issuers or any Subsidiary Guarantor permitted to be incurred under the Indenture and (b) by either of the Issuers or any Subsidiary Guarantor of Indebtedness otherwise permitted under the Indenture of any Subsidiary that is not a Subsidiary Guarantor to the extent such Guarantees are permitted under “—Certain Covenants—Limitation on Investments, Loans and Advances” (other than clause (14) thereof); provided that Guarantees by the Issuers or any Subsidiary Guarantor under this clause (viii) of any other Indebtedness of a person that is subordinated to other Indebtedness of such person will be expressly subordinated to the Note Obligations to at least the same extent as such underlying Indebtedness is subordinated;

 

(ix)

Indebtedness arising from agreements of the Partnership or any Subsidiary providing for indemnification, adjustment of purchase or acquisition price or similar obligations (including earn- outs), in each case, incurred or assumed in connection with the Transactions, other Investments or the disposition of any business, assets or a Subsidiary expressly permitted by the Indenture;

 

(x)

Indebtedness in respect of letters of credit, bank guarantees, warehouse receipts or similar instruments issued to support performance obligations and trade letters of credit (other than obligations in respect of other Indebtedness) in the ordinary course of business;

 

(xi)

Indebtedness in respect of cash collateralized letters of credit and obligations owed to credit card companies in an aggregate face amount not to exceed $35.0 million, including any cash collateralized letters of credit outstanding on the date hereof;

 

(xii)

Indebtedness incurred in the ordinary course of business in respect of obligations of the Partnership or any Subsidiary to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services; provided that such obligations are incurred in connection with open accounts extended by suppliers on customary trade terms in the ordinary course of business and consistent with past practice or industry practices and not in connection with the borrowing of money or any hedging agreement;

 

(xiii)

Indebtedness consisting of (a) the financing of insurance premiums or (b) take-or-pay obligations contained in supply arrangements, in each case in the ordinary course of business and consistent with past practice or industry practices; and

 

(xiv)

all premium (if any, including tender premiums) expenses, defeasance costs, interest (including post- petition interest), fees, expenses, charges and additional or contingent interest on obligations described in clauses (i) through (xiii) above or refinancings thereof.

Limitation on Liens

Each of the Issuers will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any property or assets (including stock or other securities of any person) of the Partnership or any Subsidiary at the time owned by it, except the following (collectively, “Permitted Liens”):

 

(i)

Liens on property or assets of the Partnership and the Subsidiaries existing on the Indenture Closing Date, and to the extent securing Indebtedness set forth on a schedule to the Indenture, and any modifications, replacements, renewals or extensions thereof; provided that such Liens shall secure

 

50

only those obligations that they secure on the Indenture Closing Date (and any Permitted Refinancing Indebtedness in respect of such obligations permitted under “—Certain Covenants— Limitation on Indebtedness”) and shall not subsequently apply to any other property or assets of the Partnership or any Subsidiary other than (a) after-acquired property that is affixed or incorporated into the property covered by such Lien and (b) proceeds and products thereof;

 

(ii)

any Lien created under the Note Documents or permitted in respect of any Mortgaged Property by the terms of the applicable Mortgage;

 

(iii)

Liens for Taxes, assessments or other governmental charges or levies not yet delinquent by more than 30 days or that are being contested in compliance with the covenants described under “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions;”

 

(iv)

Liens imposed by law, such as landlord’s, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, supplier’s, construction or other like Liens, securing obligations that are not overdue by more than 30 days or that are being contested in good faith by appropriate proceedings and in respect of which, if applicable, the Partnership or any Subsidiary shall have set aside on its books reserves in accordance with GAAP;

 

(v)

(a) pledges and deposits and other Liens made in the ordinary course of business in compliance with the Federal Employers Liability Act or any other workers’ compensation, unemployment insurance and other social security laws or regulations and deposits securing liability to insurance carriers under insurance or self-insurance arrangements in respect of such obligations and (b) pledges and deposits and other Liens securing liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to the Partnership or any Subsidiary;

 

(vi)

deposits and other Liens to secure the performance of bids, trade contracts (other than for Indebtedness), leases (other than Capital Lease Obligations), statutory obligations, surety and appeal bonds, performance and return of money bonds, bids, leases, government contracts, trade contracts, agreements with utilities, and other obligations of a like nature (including letters of credit in lieu of any such bonds or to support the issuance thereof) incurred in the ordinary course of business, including those incurred to secure health, safety and environmental obligations in the ordinary course of business;

 

(vii)

zoning restrictions, easements, survey exceptions, trackage rights, leases (other than Capital Lease Obligations), licenses, special assessments, rights-of-way, covenants, conditions, restrictions and declarations on or with respect to the use of Real Property, servicing agreements, development agreements, site plan agreements and other similar encumbrances incurred in the ordinary course of business and title defects or irregularities that are of a minor nature and that, in the aggregate, do not interfere in any material respect with the ordinary conduct of the business of the Partnership or any Subsidiary;

 

(viii)

Liens arising out of Sale and Lease-Back Transactions permitted under “—Certain Covenants— Limitation on Sale and Lease-Back Transactions” or other transactions permitted by clause (vii) under “—Certain Covenants—Limitation on Indebtedness”, so long as such Liens attach only to the property sold and being leased or being subject to such Capital Lease Obligations in such transaction and any accessions and additions thereto or proceeds and products thereof and related property;

 

(ix)

Liens securing judgments that do not constitute an Event of Default under clause (x) under “—Events of Default and Remedies;”

 

(x)

with respect to any Mortgaged Property, Liens disclosed by the applicable title insurance policy delivered prior to, on or subsequent to the Indenture Closing Date pursuant to the post-closing and further assurances and additional security affirmative covenants of the Indenture and any replacement, extension or renewal of any such Lien; provided that such replacement, extension or

 

51

renewal Lien shall not cover any property other than the property that was subject to such Lien prior to such replacement, extension or renewal; provided, further, that the Indebtedness and other obligations secured by such replacement, extension or renewal Lien are permitted by the Indenture;

 

(xi)

any interest or title of a lessor or sublessor under any leases or subleases entered into by the Partnership or any Subsidiary in the ordinary course of business;

 

(xii)

Liens in the ordinary course of business and consistent with past practice that are contractual rights of set-off (and related pledges) (a) relating to the establishment of depository relations with banks and other financial institutions not given in connection with the issuance of Indebtedness, (b) relating to pooled deposits, sweep accounts, reserve accounts or similar accounts of the Partnership or any Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business and consistent with past practice, including with respect to credit card charge-backs and similar obligations or (c) relating to purchase orders and other agreements entered into with customers, suppliers or service providers of the Partnership or any Subsidiary;

 

(xiii)

Liens incurred in the ordinary course of business and consistent with past practice or industry practices (a) arising solely by virtue of any statutory or common law provision relating to banker’s liens, rights of set-off or similar rights, (b) attaching to commodity trading accounts or other commodity brokerage accounts, (c) encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to brokerage accounts incurred and not for speculative purposes, (d) in respect of Third Party Funds or (e) in favor of credit card companies pursuant to agreements therewith;

 

(xiv)

Liens securing obligations in respect of trade-related letters of credit, bankers’ acceptances or similar obligations permitted under clauses (v), (x) or (xi) under “—Certain Covenants—Limitation on Indebtedness” and covering the property (or the documents of title in respect of such property) financed by such letters of credit, bankers’ acceptances or similar obligations and the proceeds and products thereof;

 

(xv)

Leases, subleases, non-exclusive licenses or non-exclusive sublicenses (including with respect to Intellectual Property) granted to others in the ordinary course of business and not interfering in any material respect with the business of the Partnership or any of the Subsidiaries, which may include leases of billboards, leases for “solar farms,” non-surface leases for oil and gas, land leases for cell tower use and farming leases over excess land;

 

(xvi)

Liens in favor of customs and revenue authorities arising as a matter of applicable law to secure payment of customs duties in connection with the importation of goods in the ordinary course of business and consistent with past practice or industry practices;

 

(xvii)

Liens solely on any cash earnest money deposits made by the Partnership or any of the Subsidiaries in connection with any letter of intent or purchase agreement in respect of any Investment permitted to be made under “—Certain Covenants—Limitation on Investments, Loans and Advances;”

 

(xviii)

Liens with respect to property or assets of any Subsidiary that is not a Note Party securing obligations of a Subsidiary that is not a Note Party permitted under “—Certain Covenants— Limitation on Indebtedness;”

 

(xix)

Liens on any amounts held by a trustee or agent under any indenture or other debt agreement issued in escrow pursuant to customary escrow arrangements pending the release thereof, or under any indenture or other debt agreement pursuant to customary discharge, redemption or defeasance provisions to the extent the relevant Indebtedness is permitted to be incurred under “—Certain Covenants—Limitation on Indebtedness;”

 

(xx)

the prior rights of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;

 

52

(xxi)

agreements to subordinate any interest of the Partnership or any Subsidiary in any accounts receivable or other proceeds arising from inventory consigned by the Partnership or any of its Subsidiaries pursuant to an agreement entered into in the ordinary course of business and consistent with past practice;

 

(xxii)

Liens arising from precautionary Uniform Commercial Code financing statements regarding operating leases or other obligations not constituting Indebtedness;

 

(xxiii)

Liens on securities that are the subject of repurchase agreements constituting Permitted Investments under clause (iii) of the definition thereof;

 

(xxiv)

Liens on cash or Permitted Investments securing letters of credit and obligations owed to credit card companies permitted by clauses (x) or (xi) under “—Certain Covenants—Limitation on Indebtedness;” provided that such cash and Permitted Investments do not exceed 110% of the stated face amount of such letters of credit secured thereby;

 

(xxv)

Liens securing insurance premiums financing arrangements; provided that such Liens are limited to the applicable unearned insurance premiums;

 

(xxvi)

in the case of Real Property that constitutes a leasehold interest, any Lien to which the fee simple interest (or any superior leasehold interest) is subject;

 

(xxvii)

Liens securing Indebtedness or other obligation (a) of either of the Issuers or a Subsidiary Guarantor in favor of the Issuers or any Subsidiary Guarantor and (b) of any Subsidiary that is not a Note Party in favor of any Subsidiary that is not a Note Party; provided that, in the case of this clause (b), such Liens are on property that does not constitute Collateral;

 

(xxviii)

Liens on goods or inventory the purchase, shipment or storage price of which is financed by a documentary letter of credit, bank guarantee or bankers’ acceptance issued or created for the account of the Partnership or any Subsidiary in the ordinary course of business and consistent with past practice or industry practices; provided that such Lien secures only the obligations of the Partnership or such Subsidiaries in respect of such letter of credit, bank guarantee or banker’s acceptance to the extent permitted under “—Certain Covenants—Limitation on Indebtedness;”

 

(xxix)

Liens arising out of conditional sale, title retention or similar arrangements for the sale or purchase of goods by the Partnership or any of the Subsidiaries in the ordinary course of business;

 

(xxx)

any Lien or other restriction on the use of property (including cash) deposited in any Trust Fund, to the extent imposed by law or by the terms of the agreement governing such Trust Fund; and

 

(xxxi)

Liens on property of, or on Equity Interests or Indebtedness of, any person existing at the time (a) such person becomes a Subsidiary of the Partnership or (b) such person or such property is acquired by the Partnership or any Subsidiary; provided that (1) such Liens do not extend to any other assets of the Partnership or any Subsidiary (other than accessions and additions thereto and proceeds or products thereof and other than after-acquired property), (2) such Liens secure only those obligations which they secure on the date such person becomes a Subsidiary or the date of such acquisition (and any extensions, renewals, replacements or refinancings thereof), (3) such Liens were not incurred in contemplation of such person becoming a Subsidiary and (4) such Liens secure Indebtedness otherwise permitted to be incurred under “—Certain Covenants—Limitation on Indebtedness.”

Limitation on Sale and Lease-Back Transactions

Each of the Issuers will not, and will not permit any of the Subsidiaries to, enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter, as part of such transaction, rent or lease such property or other property that it intends to use for substantially the same purpose or purposes as the

 

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property being sold or transferred (a “Sale and Lease-Back Transaction”); provided that certain Sale and Lease- Back Transactions listed on a schedule to the Indenture are permitted; provided, further, that with respect to any Sale and Lease-Back Transaction, the Net Proceeds therefrom shall be used to redeem the Notes to the extent required under the first paragraph in “—Mandatory Redemption.”

Limitation on Investments, Loans and Advances

The Issuers will not, and will not permit any of the Subsidiaries to, (i) Purchase or acquire (including pursuant to any merger with a person that is not a Wholly Owned Subsidiary immediately prior to such merger) any Equity Interests, evidences of Indebtedness or other securities of any other person, (ii) make any loans or advances to or Guarantees of the Indebtedness of any other person (other than in respect of intercompany liabilities incurred in connection with the cash management, tax and accounting operations of the Partnership and the Subsidiaries) or (iii) purchase or otherwise acquire, in one transaction or a series of related transactions, (a) all or substantially all of the property and assets or business of another person or (b) assets constituting a business unit, line of business or division of such person (each of the foregoing, an “Investment”), except:

 

(1)

the Transactions;

 

(2)

(a) Investments by either of the Issuers or any Subsidiary Guarantor in the Equity Interests of either of the Issuers or any Subsidiary Guarantor; (b) intercompany loans from either of the Issuers or any Subsidiary Guarantor to either of the Issuers or any Subsidiary Guarantor and (c) Guarantees by either of the Issuers or any Subsidiary Guarantor of Indebtedness otherwise permitted under “—Certain Covenants—Limitation on Indebtedness” of either of the Issuers or any Subsidiary Guarantor;

 

(3)

Permitted Investments;

 

(4)

Investments arising out of the receipt by the Partnership or any Subsidiary of non-cash consideration for the Disposition of assets permitted under “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions;”

 

(5)

accounts receivable, security deposits and prepayments arising and trade credit granted in the ordinary course of business and consistent with past practice or industry practices and any assets or securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss and any prepayments and other credits to suppliers made in the ordinary course of business;

 

(6)

Investments existing on, or contractually committed as of, the Indenture Closing Date and set forth on a schedule to the Indenture and any extensions, renewals, replacements or reinvestments thereof, so long as the aggregate amount of all Investments pursuant to this clause (6) is not increased at any time above the amount of such Investment existing on, or committed as of, the Indenture Closing Date;

 

(7)

Investments resulting from pledges and deposits under clauses (v), (vi), (xiii), (xvi), (xvii), (xxiv), and (xxxi) under “—Certain Covenants—Limitation on Liens;”

 

(8)

Investments received in connection with the bankruptcy or reorganization of, or settlement of delinquent accounts and disputes with or judgments against, customers and suppliers, in each case in the ordinary course of business and consistent with past practice or industry practices or Investments acquired by the Partnership or a Subsidiary as a result of a foreclosure by the Partnership or any of the Subsidiaries with respect to any secured Investments or other transfer of title with respect to any secured Investment in default;

 

(9)

Investments of a Subsidiary acquired after the Indenture Closing Date or of a person merged into the Partnership or merged into or consolidated with a Subsidiary after the Indenture Closing Date, in each case, (a) to the extent such acquisition, merger or consolidation is permitted under this covenant, (b) in the case of any acquisition, merger or consolidation, in accordance with the covenants described in “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions” and (c) to the

 

54

extent that such Investments were not made in contemplation of or in connection with such acquisition, merger or consolidation and were in existence on the date of such acquisition, merger or consolidation;

 

(10)

Guarantees by the Partnership or any Subsidiary of operating leases (other than Capital Lease Obligations) or of other obligations that do not constitute Indebtedness, in each case entered into by the Partnership or any Subsidiary in the ordinary course of business and consistent with past practice or industry practices;

 

(11)

Investments to the extent that payment for such Investments is made with Equity Interests of the Issuers or any Parent Entity;

 

(12)

Investments consisting of Restricted Payments permitted under “—Certain Covenants—Limitation on Dividends and Distributions” (and without duplication of any baskets thereunder);

 

(13)

Investments in the ordinary course of business and consistent with past practice or industry practices consisting of Uniform Commercial Code Article 3 endorsements for collection or deposit and Uniform Commercial Code Article 4 customary trade arrangements with customers;

 

(14)

Guarantees permitted under “—Certain Covenants—Limitation on Indebtedness” (except to the extent such Guarantee is expressly subject to this covenant);

 

(15)

advances in the form of a prepayment of expenses, so long as such expenses are being paid in accordance with customary trade terms of the Partnership or such Subsidiary;

 

(16)

Investments by the Partnership and its Subsidiaries, including loans to any direct or indirect parent of the Partnership, if the Partnership or any other Subsidiary would otherwise be permitted to make a Restricted Payment in such amount (provided that the amount of any such Investment will also be deemed to be a Restricted Payment under the appropriate clause under “—Certain Covenants— Limitation on Dividends and Distributions” and counted against the amount permitted under such clause for all purposes of the Indenture);

 

(17)

Investments made substantially contemporaneously in exchange for, or out of the proceeds of a sale (other than to a Subsidiary) of, Equity Interests of the Issuers or any Parent Entity; provided that, at the time of such Investment pursuant to this clause (17):

(a) no such Equity Interests will constitute a Specified Equity Contribution for purposes of the provisions set forth under “—Events of Default and Remedies;”

(b) in the case of a sale of Equity Interests, such sale is made substantially concurrently with, or within 90 days prior to, the date of consummation or such Investment or the date on which the Partnership enters into a binding agreement for such Investment;

(c) any assets acquired as part of any such Investments will be pledged as Collateral to the extent required by the Note Documents and in the manner set forth in the Indenture;

(d) the Issuers will be in compliance, on a pro forma basis, with all of the requirements of the Indenture, including, without limitation, the covenants described in “—Certain Covenants—Financial Covenants;” and

 

(A)

no Default or Event of Default will occur as a result of such Investment;

 

(18)

non-economic Equity Interest in the Archdiocese Holdco, on the terms set forth in the operating agreement, in the form of Exhibit F to the Archdiocese Lease, between the Archdiocese and one or more of the Subsidiary Guarantors (as amended, restated, modified or supplemented from time to time, in each case in a manner which could not reasonably be expected to be adverse in any material respect to the interests of the Holders);

 

(19)

Investments of Trust Funds, and interest and other earnings thereon, in accordance with the terms set forth under “—Certain Covenants—Trust Funds;”

 

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(20)

the C-Corporation Conversion; and

 

(21)

other Investments by the Issuers or any Subsidiary in an aggregate outstanding amount not to exceed $10.0 million; provided that (a) any such Investments are made in accordance with the terms of the Indenture, (b) any assets acquired as part of any such Investments will be pledged as Collateral to the extent required by the Note Documents and (c) upon the making of any such Investments, the Issuers will be in compliance, on a pro forma basis, with all of the requirements of the Indenture, including, without limitation, the covenants described in “—Certain Covenants—Financial Covenants.”

Mergers, Consolidations, Sales of Assets and Acquisitions

Each of the Issuers will not, and will not permit any Subsidiary to, merge into or consolidate with any other person, or permit any other person to merge into or consolidate with it, or Dispose of (in one transaction or in a series of related transactions) all or any part of its assets (whether now owned or hereafter acquired), or Dispose of any Equity Interests of any Subsidiary, or purchase, lease or otherwise acquire (in one transaction or a series of related transactions) all of the assets of any other person or division or line of business of a person, except that this covenant will not prohibit:

 

(i)

(a) the purchase and Disposition of inventory in the ordinary course of business by the Partnership or any Subsidiary, (b) the acquisition or lease (pursuant to an operating lease) of any other asset in the ordinary course of business by the Partnership or any Subsidiary or, with respect to operating leases, otherwise for fair market value on market terms (as determined in good faith by the Issuers), (c) the Disposition of surplus, obsolete, damaged or worn out equipment or other property in the ordinary course of business by the Partnership or any Subsidiary or (d) the Disposition of Permitted Investments in the ordinary course of business;

 

(ii)

if at the time thereof and immediately after giving effect thereto no Event of Default will have occurred and be continuing or would result therefrom, (a) the merger or consolidation of any Subsidiary with or into the Partnership in a transaction in which the Partnership is the survivor, (b) the merger or consolidation of any Subsidiary with or into any Subsidiary Guarantor in a transaction in which the surviving or resulting entity is or becomes a Subsidiary Guarantor and, in the case of each of clauses (a) and (b), no person other than the Issuers or a Subsidiary Guarantor receives any consideration (unless otherwise permitted under “—Certain Covenants—Limitation on Investments, Loans and Advances”), (c) the merger or consolidation of any Subsidiary that is not a Subsidiary Guarantor with or into any other Subsidiary that is not a Subsidiary Guarantor, (d) the liquidation or dissolution or change in form of entity of any Subsidiary if the Issuers determine in good faith that such liquidation, dissolution or change in form is in the best interests of the Issuers and is not materially disadvantageous to the Noteholder Parties, (e) any Subsidiary from merging or consolidating with any other person in order to effect an Investment permitted pursuant to the covenants described in “—Certain Covenants—Limitation on Investments, Loans and Advances” so long as the continuing or surviving person will be a Subsidiary Guarantor (unless otherwise permitted under “—Certain Covenants—Limitation on Investments, Loans and Advances”), which will be a Note Party if the merging or consolidating Subsidiary was a Note Party (unless otherwise permitted under “—Certain Covenants—Limitation on Investments, Loans and Advances”) and which together with each of its Subsidiaries will have complied with any applicable requirements of the Indenture or (f) any Subsidiary may merge or consolidate with any other person in order to effect a Disposition otherwise permitted pursuant to this covenant;

 

(iii)

Dispositions from (a) Note Parties to other Note Parties and (b) Subsidiaries that are not Note Parties to other Subsidiaries that are not Note Parties (in each case upon voluntary liquidation or otherwise);

 

(iv)

so long as no Event of Default exists or would result therefrom, Sale and Lease-Back Transactions permitted under “—Certain Covenants—Limitation on Sale and Lease-Back Transactions;” provided that, if such Sale and Lease-Back Transaction results in a Capital Lease Obligation, such Capital Lease

 

56

Obligation is permitted under “—Certain Covenants—Limitation on Indebtedness” and any Lien made the subject of such Capital Lease Obligation is permitted under “—Certain Covenants— Limitation on Liens;”

 

(v)

Investments permitted under “—Certain Covenants—Limitation on Investments, Loans and Advances,” Permitted Liens, and Restricted Payments permitted under “—Certain Covenants— Limitation on Transactions with Affiliates;”

 

(vi)

Dispositions of defaulted receivables in the ordinary course of business and not as part of an accounts receivables financing transaction;

 

(vii)

other Dispositions of assets to a person that is not an Affiliate of any Note Party; provided that (a) at the time of such Disposition, no Event of Default will exist or would result from such Disposition, (b) at least 75% of the consideration for such Disposition consists of cash and cash equivalents and the Partnership or relevant Subsidiary receives fair market value for such assets, (c) the Net Proceeds thereof, are applied in accordance with the first paragraph under “—Mandatory Redemption” and (d) the Net Proceeds and the fair market value of any other non-cash consideration received do not exceed $155.0 million in the aggregate for all such Dispositions on or after the Indenture Closing Date;

 

(viii)

Dispositions of inventory and Cemetery Property of the Partnership and its Subsidiaries determined in good faith by the management of the Partnership to be no longer useful in the operation of the business of the Partnership or any of the Subsidiaries;

 

(ix)

acquisitions and purchases made with the proceeds of any Disposition pursuant to the last proviso of clause (a) of the definition of “Net Proceeds;”

 

(x)

if at the time thereof and immediately after giving effect thereto no Event of Default will have occurred and be continuing or would result therefrom, any Subsidiary or any other person from being merged, amalgamated or consolidated with or into the Partnership, provided that (a) the Partnership will be the surviving entity or (b) if the surviving entity is not the Partnership (such other person, the “Successor Issuer”), (1) the Successor Issuer will be an entity organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof, (2) the Successor Issuer will expressly assume all the obligations of the Partnership under the Indenture and the other Note Documents pursuant to a supplement thereto in form reasonably satisfactory to the Trustee (acting at the direction of the Required Noteholder Parties), (3) each Guarantor, unless it is the other party to such merger or consolidation, will have by a supplement to the Indenture as applicable, confirmed that its guarantee thereunder will apply to any Successor Issuer’s obligations under the Indenture, (4) each Subsidiary Guarantor, unless it is the other party to such merger or consolidation, will have by a supplement to any applicable Security Document affirmed that its obligations thereunder will apply to its guarantee as reaffirmed pursuant to clause (3), (5) each mortgagor of a Mortgaged Property, unless it is the other party to such merger or consolidation, will have affirmed that its obligations under the applicable Mortgage will apply to its guarantee as reaffirmed pursuant to clause (3) and (6) the Successor Issuer will have delivered to the Trustee (A) an Officer’s Certificate stating that such merger or consolidation does not violate the Indenture or any other Note Document and (B) an Opinion of Counsel to the effect that such merger or consolidation does not violate the Indenture or any other Note Document and covering such other matters as are contemplated by the Collateral Requirement to be covered in opinions of counsel (it being understood that if the foregoing are satisfied, such Successor Issuer will succeed to, and be substituted for, either Issuer under the Indenture); and

 

(xi)

the Partnership and the Subsidiaries from consummating the C-Corporation Conversion; provided that, in connection with the consummation of the C-Corporation Conversion, the Partnership, the C-Corporation and the Subsidiary Guarantors entered into the First Supplemental Indenture.

 

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Limitation on Dividends and Distributions

Each of the Issuers may not, and will not permit any Subsidiary to, declare or pay any dividend or make any other distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, with respect to any of its Equity Interests (other than dividends and distributions on Equity Interests payable solely by the issuance of additional Equity Interests of the person paying such dividends or distributions (other than any Specified Equity Contribution)) or directly or indirectly redeem, purchase, retire or otherwise acquire for value (or permit any Subsidiary to purchase or acquire) any of either Issuer’s Equity Interests or set aside any amount for any such purpose (other than through the issuance of additional Equity Interests of the person redeeming, purchasing, retiring or acquiring such shares (other than any Specified Equity Contribution)) (all of the foregoing, “Restricted Payments”); provided, however, that:

 

(i)

Restricted Payments may be made to the Partnership or any Wholly Owned Subsidiary of either Issuer;

 

(ii)

Restricted Payments may be made in respect of (a) overhead, legal, accounting and other professional fees and expenses of any Parent Entity, (b) franchise and similar taxes and other fees and expenses in connection with the maintenance of its (or any Parent Entity’s) existence and its (or any Parent Entity’s indirect) ownership of the Partnership, (c) payments permitted by the first paragraph under “—Certain Covenants—Limitation on Transactions with Affiliates” (other than clause (e) of the second paragraph thereof), (d) customary salary, bonus and other benefits payable to, and indemnities provided on behalf of, officers, directors and employees of any Parent Entity, in each case in order to permit any Parent Entity to make such payments and (e) (1) with respect to any taxable period for which the Partnership and/or any of its Subsidiaries are members of a consolidated, unitary, combined or similar income tax group for U.S. federal and/or applicable state or local income tax purposes of which any Parent Entity is the common parent (a “Tax Group”) (or is a partnership or disregarded entity that is wholly owned by a corporate parent), distributions to pay the consolidated, combined, unitary or similar income Tax liabilities of such Tax Group (or such corporate parent) for such taxable period that are attributable to income of the Issuers and/or any of their Subsidiaries, in an amount not to exceed the amount that the Issuers and their applicable Subsidiaries would have been required to pay in respect of such federal, state and/or local income Taxes, as the case may be, in respect of such taxable period if the Issuers and/ or their applicable Subsidiaries had paid such Taxes directly as a stand-alone corporate taxpayer or stand-alone corporate group for all relevant taxable periods and (2) with respect to any taxable period (other than a taxable period described in clause (1)) for which the Partnership is treated as a partnership or a disregarded entity for U.S. federal income tax purposes, distributions in an amount equal to the product of (A) the taxable income of the Partnership in respect of such taxable period multiplied by (B) the highest combined U.S. federal, state, and local income tax rate applicable to any direct or indirect owner of the Partnership for such taxable period (taking into account Section 1411 of the Code) as determined in good faith by the Partnership; provided that, in the case of subclause (a) above, the amount of such Restricted Payments will not exceed the portion of any amounts referred to in such subclause (a) that are allocable to the Partnership and its Subsidiaries (which (i) will be 100% at any time that any Parent Entity owns directly or indirectly no material assets other than Equity Interests in any other Parent Entity and assets incidental to such equity ownership and (ii) in all other cases will be as determined in good faith by the Issuers);

 

(iii)

any person may make non-cash repurchases of Equity Interests deemed to occur upon exercise of stock options if such Equity Interests represent a portion of the exercise price of such options;

 

(iv)

the repurchase of all or a portion of the Convertible Preferred Units with the cash proceeds of any issuance of additional Equity Interests after the Indenture Closing Date (the “Rights Offering”); and

 

(v)

cash payments in lieu of issuing fractional shares in connection with the exercise of warrants, options or other securities convertible into or exchangeable for Equity Interests of the Partnership or any Parent Entity.

 

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Limitation on Transactions with Affiliates

Each of the Issuers will not, and will not permit any Subsidiary to, sell or transfer any property or assets to, or purchase or acquire any property or assets from, or otherwise engage in any other transaction with, any of its Affiliates (other than the Partnership and the Subsidiaries or any person that becomes a Subsidiary as a result of such transaction), unless such transaction is otherwise permitted by the Indenture.

The foregoing paragraph will not prohibit, to the extent otherwise permitted under the Indenture,

 

(i)

any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, equity purchase agreements, stock options and stock ownership plans approved by the Board of Directors of any Parent Entity or of the General Partner;

 

(ii)

transactions among the Partnership or any Subsidiary or any entity that becomes a Subsidiary as a result of such transaction in the ordinary course of business (including via merger, consolidation or amalgamation in which the Partnership or a Subsidiary is the surviving entity) and (a) a Cemetery Non-Profit pursuant to the Cemetery Non-Profit Management Agreement for such Cemetery Non-Profit or (b) a Person pursuant to the Exclusive Management Agreement for such person;

 

(iii)

the Transactions and permitted transactions, agreements and arrangements in existence on the Indenture Closing Date and set forth on a schedule to the Indenture or any amendment thereto or replacement thereof or similar arrangement to the extent such amendment, replacement or arrangement is not adverse to the Noteholder Parties when taken as a whole in any material respect (as determined by the Issuers in good faith);

 

(iv)

(a) any employment agreements entered into by the Partnership or any of the Subsidiaries in the ordinary course of business, (b) any subscription agreement or similar agreement pertaining to the repurchase of Equity Interests pursuant to put/call rights or similar rights with employees, officers or directors and (c) any employee compensation, benefit plan or arrangement, any health, disability or similar insurance plan which covers employees, and any reasonable employment contract and transactions pursuant thereto;

 

(v)

Restricted Payments permitted under “—Certain Covenants—Limitation on Dividends and Distributions,” including payments to any Parent Entity, and Investments permitted under “—Certain Covenants—Limitation on Investments, Loans and Advances;”

 

(vi)

the issuance, sale or transfer of Equity Interests of the Partnership or any Subsidiary to any Parent Entity or Permitted Holder and capital contributions by any Parent Entity or Permitted Holder to the Partnership or any Subsidiary; provided that any such issuance, sale or transfer will be determined on an arm’s length basis and approved by the independent directors of the board of directors of the Partnership or the relevant Subsidiary, as applicable;

 

(vii)

transactions with customers, clients or suppliers, or purchasers or sellers of goods and services or the entry into of shared services agreements or similar agreements involving operational efficiencies (including with entities owned or controlled by Affiliates), in each case, in the ordinary course of business or otherwise in compliance with the terms of the Indenture on terms substantially as favorable to the Partnership or such Subsidiary as would be obtainable by the Partnership or such Subsidiary at the time in a comparable arm’s-length transaction with a person other than an Affiliate;

 

(viii)

transactions between the Partnership or any of the Subsidiaries and any person, a director of which is also a director of the Partnership or any direct or indirect parent company of the Issuers; provided, however, that (a) such director abstains from voting as a director of the Partnership or such direct or indirect parent company, as the case may be, on any matter involving such other person and (b) such person is not an Affiliate of the Partnership for any reason other than such director’s acting in such capacity;

 

(ix)

transactions permitted by, and complying with, the provisions set forth under “—Certain Covenants— Mergers, Consolidations, Sales of Assets and Acquisitions;”

 

59

(x)

intercompany transactions undertaken in good faith (as certified by a Responsible Officer of the Issuer) for the purpose of improving the consolidated tax efficiency of the Partnership and the Subsidiaries which do not circumvent any covenant set forth in the Indenture;

 

(xi)

the C-Corporation Conversion; and

 

(xii)

any tax sharing agreements or arrangements; provided that any payments under such tax sharing agreements or arrangements by the Issuers or any of their Subsidiaries are permitted under clause (ii)(e) of the first paragraph of the covenants described in “—Certain Covenants—Limitation on Dividends and Distributions.”

Business of the Partnership and the Subsidiaries

Notwithstanding any provisions set forth in the Indenture or described in this “Description of the New Notes,” the Issuers will not, and will not permit any of the Subsidiaries to, engage at any time in any material business or business activity materially different from any business or business activity conducted by any of them on the Indenture Closing Date.

Limitation on Payments and Modifications of Indebtedness and Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements, etc.

The Issuers will not, and will not permit any of the Subsidiaries to, amend or modify in any manner materially adverse to the Noteholder Parties (as determined in the good faith judgment of the Board of Directors of the Partnership), or grant any waiver or release under or terminate in any manner (if such granting or termination will be materially adverse to the Noteholder Parties (as determined in the good faith judgment of the Board of Directors of the Partnership), the articles or certificate of incorporation, by-laws, limited liability company operating agreement, partnership agreement or other organizational documents of the Partnership or any Subsidiary.

The Issuers will not, and will not permit any of the Subsidiaries to, permit any Subsidiary to enter into any agreement or instrument that by its terms restricts (i) the payment of dividends or distributions or the making of cash advances to the Partnership or any Subsidiary that is a direct or indirect parent of such Subsidiary or (ii) the granting of Liens by the Partnership or such Subsidiary that is a Note Party pursuant to the Security Documents, in each case other than those arising under any Note Document, except, in each case, restrictions existing by reason of:

 

(a)

restrictions imposed by applicable law;

 

(b)

contractual encumbrances or restrictions in effect on the Indenture Closing Date, including under Indebtedness existing on the Indenture Closing Date and set forth on a schedule to the Indenture, in each case, any similar contractual encumbrances or restrictions and any amendment, modification, supplement, replacement or refinancing of such agreements or instruments that does not materially expand the scope of any such encumbrance or restriction (as determined in good faith by the Issuers);

 

(c)

any restriction on a Subsidiary imposed pursuant to an agreement entered into for the sale or disposition of the Equity Interests or assets of a Subsidiary pending the closing of such sale or disposition;

 

(d)

any restrictions imposed by any agreement relating to secured Indebtedness permitted by the Indenture to the extent that such restrictions apply only to the property or assets securing such Indebtedness;

 

(e)

any restrictions imposed by any agreement relating to Indebtedness incurred pursuant to the covenants described in “—Certain Covenants—Limitation on Indebtedness” or Permitted Refinancing Indebtedness in respect thereof, to the extent such restrictions are not materially more restrictive than the restrictions contained in the Indenture or are market terms at the time of issuance (as determined in the good faith judgment of the Board of Directors of the Partnership (or any successor thereto));

 

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(f)

customary provisions contained in leases or non-exclusive licenses of Intellectual Property and other similar agreements entered into in the ordinary course of business and consistent with past practice or industry practices;

 

(g)

customary provisions restricting subletting or assignment of any lease governing a leasehold interest;

 

(h)

customary provisions restricting assignment of any agreement entered into in the ordinary course of business and consistent with past practice or industry practices;

 

(i)

customary restrictions and conditions contained in any agreement relating to the sale, transfer, lease or other disposition of any asset permitted under “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions” pending the consummation of such sale, transfer, lease or other disposition;

 

(j)

customary restrictions and conditions contained in the document relating to any Lien, so long as (1) such Lien is a Permitted Lien and such restrictions or conditions relate only to the specific asset subject to such Lien and (2) such restrictions and conditions are not created for the purpose of avoiding the restrictions imposed by this covenant;

 

(k)

customary net worth provisions contained in Real Property leases entered into by Subsidiaries, so long as the Issuers have determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Partnership and its Subsidiaries to meet their ongoing obligations;

 

(l)

any agreement in effect at the time such subsidiary becomes a Subsidiary, so long as such agreement was not entered into in contemplation of such person becoming a Subsidiary;

 

(m)

customary restrictions contained in leases, subleases, licenses or Equity Interests or asset sale agreements otherwise permitted hereby as long as such restrictions relate to the Equity Interests and assets subject thereto;

 

(n)

restrictions on cash or other deposits imposed by customers under contracts entered into in the ordinary course of business; and

 

(o)

any encumbrances or restrictions of the type referred to in clauses (i) and (ii) of the second paragraph of this covenant imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of or similar arrangements to the contracts, instruments or obligations referred to in clauses (a) through (n) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements, refinancings or similar arrangements are, in the good faith judgment of the Issuers, not materially more restrictive with respect to such dividend and other payment restrictions than those contained in the dividend or other payment restrictions as contemplated by such provisions prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement, refinancing or similar arrangement.

Fiscal Year

In the case of the Partnership or any Subsidiary, each of the Issuers will not, and will not permit any Subsidiary to, permit any change to its fiscal year without the prior written consent of the Required Noteholder Parties (with communication of such consent to be delivered to the Partnership and the Trustee in writing), in which case, the Issuers and the Required Noteholder Parties will make any adjustments to the Indenture that are necessary to reflect such change in fiscal year (with communication of such authorization to be delivered to the Issuers and the Trustee in writing), all in accordance with the amendment provisions of the Indenture and those described in “—Amendments and Waivers.”

 

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Financial Covenants

The Issuers will not, and will not permit any of the Subsidiaries to:

(i) permit the Consolidated Interest Coverage Ratio, as of the last day of any fiscal quarter, for (a) the six month period ended December 31, 2019, (b) the nine-month period ended March 31, 2020 and (c) each twelve month period beginning with the twelve month period ending June 30, 2020, to be less than the corresponding amount for such fiscal period end set forth in the table below:

 

Fiscal Quarter Ending		LTM Minimum Consolidated Interest Coverage Ratio (except where noted)
December 31, 2019 (6 Month Test)		Minimum Operating Cash Flow Amount: $(20,000,000)
March 31, 2020 (9 Month Test)		Minimum Operating Cash Flow Amount: $(25,000,000)
June 30, 2020		Minimum Operating Cash Flow Amount: $(35,000,000)
September 30, 2020		Minimum Operating Cash Flow Amount: $(35,000,000)
December 31, 2020		0.00x
March 31, 2021		0.75x
June 30, 2021		1.10x
September 30, 2021		1.35x
December 31, 2021		1.45x
March 31, 2022 and each quarter-end thereafter		1.50x

 

(ii)

permit the aggregate amount of Capital Expenditures in the trailing four quarters ending as of the last day of any fiscal quarter (beginning with the end of the fiscal quarter of the Partnership ended September 30, 2019) to exceed $20.0 million.

 

(iii)

permit the average daily balance of Unrestricted Cash and unrestricted Permitted Investments of the Partnership and its Subsidiaries as of the end of any day for any period of ten consecutive Business Days to be less than the relevant amount set forth in the table below in the aggregate:

 

Fiscal Quarter Ending		Minimum Liquidity Amount
September 30, 2019		$	20,000,000
December 31, 2019		$	15,000,000
March 31, 2020 through Maturity		$	12,500,000

 

(iv)

permit the Asset Coverage Test as of the last day of any fiscal quarter beginning with the end of the fiscal quarter of the Partnership ended March 31, 2020 through the fiscal quarter of the Partnership ending December 31, 2020 to be less than 1.40 to 1.00, and as of last day of the fiscal quarters of the Partnership ended September 30, 2019 and December 31, 2019 and as of the last day of any Partnership fiscal quarter ending March 31, 2021 and thereafter to be less than 1.60 to 1.00.

Trust Funds

The Issuers will not, and will not permit any of the Subsidiaries to, except in accordance with reasonable business practices and in accordance in all material respects with applicable law, (i) withdraw or otherwise remove any monies or other assets (whether principal, interest or other earnings) from any Trust Account or (ii) make any investments of Trust Funds or interest or earnings thereon.

 

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Limitation on Amendment of Partnership Units and Organizational Documents

The Partnership will not:

 

(i)

amend or modify, or permit the amendment or modification of, any provision of any Partnership Common Unit or Partnership Subordinated Unit (including, without limitation, any certificate of designation relating thereto) except to facilitate the C-Corporation Conversion; or

 

(ii)

amend, modify or change the Partnership Agreement, the GP Agreement or any other Note Party’s organizational documents, or enter into any new organizational document except to facilitate the C-Corporation Conversion; provided that the foregoing clause shall not restrict (a) the ability of Partnership or the General Partner to amend the Partnership Agreement or the GP Agreement, respectively, to authorize the issuance of Equity Interests otherwise permitted pursuant to the terms of the Indenture or (b) the ability of the Partnership to amend its organizational documents to adopt customary takeover defenses for a public company, such as classification of its board of directors, requirements for notice of acquisition of shares and other similar measures.

Limitation on Holding Company

The Partnership will not (i) engage in any business or activity, other than those of a holding company and activities incidental thereto, (ii) own any significant assets (other than (a) the Equity Interests in the Operating Company, (b) any intercompany loan permitted to be made by it pursuant to the covenants described in “—Certain Covenants—Limitation on Investments, Loans and Advances,” (c) cash to be loaned, dividended, contributed and/or otherwise promptly applied for purposes not otherwise prohibited by the Indenture and (d) other assets used or held in connection with the performance of activities permitted to be conducted by the Partnership) or (iii) have any material liabilities (other than (a) those liabilities for which it is responsible under the Note Documents, the Partnership Agreement, any intercompany loan permitted to be incurred by it under “—Certain Covenants—Limitation on Indebtedness” and any other Indebtedness permitted to be incurred by the Partnership under “—Certain Covenants—Limitation on Indebtedness” and (b) liabilities in respect of the Guarantee of the Note Parties’ trusting obligations described in the Indenture (including Guarantees in favor of the applicable regulatory authorities to maintain the financial condition of the applicable Note Parties)); provided, however, that the restrictions contained above shall not prohibit (or be construed to prohibit) the Partnership from (1) conducting administrative and other ordinary course “holding company” activities necessary or desirable in connection with the operation of the business and activities of the Note Parties through the Note Parties or (2) consummating the C-Corporation Conversion.

Events of Default and Remedies

Each of the following events is an “Event of Default:”

 

(i)

any representation or warranty made or deemed made by the Partnership or any Subsidiary in any Note Document or any certificate or document delivered pursuant thereto shall prove to have been false or misleading in any material respect (without duplication of any materiality qualifier therein) when so made or deemed made;

 

(ii)

default shall be made in the payment of any principal of any Note when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for redemption thereof or by acceleration thereof or otherwise;

 

(iii)

default shall be made in the payment of any interest on any Note or in the payment of any other amount (other than an amount referred to in clause (ii) above) due under any Note Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of five Business Days (it being understood that any failure to pay that portion of any interest payment required to be paid in cash is a default in the payment of interest for purposes of this clause (iii) irrespective of whether all or a part of any such portion is paid in the form of PIK Interest));

 

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(iv)

default shall be made in the due observance or performance by the Issuers of any covenant, condition or agreement contained in (a) (1) the affirmative covenant described in the first paragraph under “—Certain Covenants—Existence, Business and Properties,” (2) the affirmative covenant described in clause (i) under “—Certain Covenants—Litigation and Other Notices,” (3) the use of proceeds affirmative covenant set forth in the Indenture or (4) the affirmative covenants described in “—Certain Covenants—Amendment of Commitment Letter,” “—Certain Covenants—Rights Offering” and “—Certain Covenants—Proceeds of Sale of Equity Interests” or (b) the negative covenants set forth in the Indenture (including the negative covenants described in “—Certain Covenants—Limitation on Indebtedness,” “—Certain Covenants—Limitation on Liens,” “—Certain Covenants—Limitation on Sale and Lease-Back Transactions,” “—Certain Covenants—Limitation on Investments, Loans and Advances,” “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions,” “—Certain Covenants—Limitation on Dividends and Distributions,” “—Certain Covenants— Limitation on Transactions with Affiliates,” “—Certain Covenants—Business of the Partnership and the Subsidiaries,” “—Certain Covenants—Limitation on Payments and Modifications of Indebtedness and Modifications of Certificate of Incorporation, By-Laws and Certain Other Agreements, etc.,” “—Certain Covenants—Fiscal Year,” “—Certain Covenants—Financial Covenants,” “—Certain Covenants—Trust Funds,” “—Certain Covenants—Limitation on Amendment of Partnership Units and Organizational Documents” or “—Certain Covenants—Limitation on Holding Company”), or if the Equity Commitment Letter is terminated for any reason or no reason by any of the parties thereto prior to the receipt of at least $8.2 million of proceeds from the sale of Equity Interests in the C-Corporation on or prior to July 31, 2020 in compliance with the affirmative covenant described in “—Certain Covenants—Proceeds of Sale of Equity Interests;”

 

(v)

default shall be made in the due observance or performance by either of the Issuers or any of the Guarantors of any covenant, condition or agreement contained in any Note Document (other than those specified in clauses (i), (ii) and (iv) above) and such default shall continue unremedied for a period of 15 days after the earlier of written notice and request for cure from the Trustee or Holders of at least 25% aggregate principal amount of Notes;

 

(vi)

(a) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or (b) the Partnership or any Subsidiary fails to pay the principal of any Material Indebtedness at the stated final maturity thereof; provided that this clause (vi) shall not apply to any secured Indebtedness that becomes due as a result of the voluntary sale or transfer of the property or assets securing such Indebtedness if such sale or transfer is permitted under the Indenture and under the documents providing for such Indebtedness;

 

(vii)

there shall have occurred a Change in Control;

 

(viii)

certain events of bankruptcy or insolvency shall be commenced with respect to the Partnership or any Subsidiary;

 

(ix)

the failure by the Partnership or any Subsidiary to pay one or more final judgments aggregating in excess of $5.0 million (to the extent not covered by insurance), which judgments are not discharged or effectively waived or stayed for a period of 45 consecutive days, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of the Partnership or any Subsidiary to enforce any such judgment;

 

(x)

(a) one or more ERISA Events shall have occurred or (b) the Partnership, any Subsidiary or any ERISA Affiliate fails to pay when due, after the expiration of any applicable grace period, any installment payment under Section 4219 of ERISA with respect to its Withdrawal Liability; provided that, in each case, either individually or in the aggregate, such occurrence has had, or would be reasonably expected to have, a Material Adverse Effect;

 

(xi)

(a) any Note Document shall for any reason be asserted in writing by either of the Issuers or any Subsidiary not to be a legal, valid and binding obligation of any party thereto (other than in accordance with its terms), (b) any security interest purported to be created by any Security Document and to extend to assets that constitute a material portion of the Collateral shall cease to be, or shall be asserted

 

64

in writing by the Issuers or any other Note Party not to be (other than, in each case, in accordance with its terms), a valid and perfected security interest (perfected as or having the priority required by the Indenture or the relevant Security Document and subject to such limitations and restrictions as are set forth therein) in the securities, assets or properties covered thereby, except from the failure of the Collateral Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Collateral Agreement or (c) a material portion of the Note Guarantees pursuant to the Security Documents by the Subsidiary Guarantors guaranteeing the Note Obligations shall cease to be in full force and effect (other than in accordance with the terms thereof), or shall be asserted in writing by any Subsidiary Guarantor not to be in effect or not to be legal, valid and binding obligations (other than in accordance with the terms thereof); provided that no Event of Default shall occur under this clause (xi) if the Note Parties cooperate with the Collateral Agent to replace or perfect such security interest and Lien, such security interest and Lien is replaced and the rights, powers and privileges of the Secured Parties are not materially adversely affected by such replacement;

 

(xii)

any provisions of any Intercreditor Agreement or any agreement or instrument governing any Indebtedness thereunder shall for any reason be revoked or invalidated, or otherwise cease to be in full force and effect, or the Note Obligations or the Liens securing the Note Obligations, for any reason, shall not have the priority contemplated by the Indenture; or

 

(xiii)

the Partnership or any Subsidiary (a) shall fail to maintain one or more licenses, permits or similar approvals to conduct its business or (b) shall be required by law to take action to cure a breach of applicable law in any given state with respect to Trust Accounts where, in the case of clauses (a) and (b), the sum of the revenue of the Partnership or such Subsidiary associated with such licenses, permits or similar approvals referred to in clause (a) and the balances of such Trust Accounts referred to in clause (b) exceeds the lesser of (1) 15% of the Partnership’s and its Subsidiaries’ revenue, as measured by the Partnership’s consolidated financial statements for the fiscal year ending on the immediately preceding December 31 and (2) $30.0 million, and the Partnership or the relevant Subsidiary fails to cure such breach within 30 days; provided that this clause (xiii) shall not apply to the failure to maintain any licenses, permits or similar approvals to conduct its business as a result of the issuance of the Convertible Preferred Units on the Indenture Closing Date if the Partnership or the relevant Subsidiary fails to use commercially reasonable efforts to cure such breach in due course where such failure has not had and would not reasonably be expected to have a Material Adverse Effect.

Upon the occurrence of any Event of Default, then, and in every such event (other than an event with respect to the Issuers described in clause (viii) above), and at any time thereafter during the continuance of such event, the Trustee or the Holders of at least 25% aggregate principal amount of Notes may, by written notice to the Issuers (with a copy to the Trustee if given by the Holders), declare the Notes then outstanding to be forthwith due and payable in whole, whereupon the principal of the Notes so declared to be due and payable, together with accrued interest thereon and all other liabilities of the Issuers accrued under any Note Document (including any amounts required under the captions “—Optional Redemption” and “—Mandatory Redemption,” shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Issuers, anything contained in any Note Document to the contrary notwithstanding; and in any event with respect to the Issuers described in clause (viii) above, all liabilities of the Issuers accrued under any Note Document shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by the Issuers, anything contained in any Note Document to the contrary notwithstanding.

Notwithstanding any other provision described in this “Description of the New Notes” or set forth in the Indenture, the right of any Holder of a Note to receive payment of principal of, or premium, if any, and interest of such Note (including liquidated damages) on or after the respective due dates expressed in such Note, or to bring suit for the enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder.

 

65

If an Event of Default in payment of principal, premium or interest specified in clause (ii) or (iii) of the first paragraph above occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against any Issuer or Guarantor (or any other obligor on the Notes) for the whole amount of unpaid principal and accrued interest remaining unpaid, together with interest on overdue principal and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate set forth in the Notes, and such further amounts as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

At any time after any action is taken by the Trustee following the occurrence and continuation of an Event of Default pursuant to the first paragraph above and before a judgment or decree for payment of the money due has been obtained by the Trustee as set forth in the Indenture, the Required Noteholder Parties, by written notice to the Issuers and the Trustee, may rescind and annul such declaration and its consequences if (i) the Issuers have paid or deposited with the Trustee a sum sufficient to pay: (a) all of the installments of interest and premium on and, if the Maturity Date with respect to the Notes has occurred, the then unpaid principal balance of all such Notes which were overdue prior to the date of such acceleration; (b) to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the rate of interest applicable to the Notes; (c) all sums paid or advanced by the Trustee and the Collateral Agent pursuant to the terms of the Note Documents and the reasonable compensation, out-of-pocket expenses, disbursements and advances of the Trustee and the Collateral Agent and their agents and counsel incurred in connection with the enforcement of the Indenture and (d) all scheduled payments, early termination amounts, taxes, indemnities and interest on overdue interest or (ii) all Events of Default, other than the nonpayment of the principal of or interest on Notes which have become due solely by such declaration of acceleration, have been cured or waived as provided for in this “—Events of Default and Remedies” and in the Indenture.

Notwithstanding anything to the contrary described in this “—Events of Default and Remedies,” in the event the Issuers fail to comply with the Financial Covenants set forth in (i) the covenants described in “—Certain Covenants—Financial Covenants” as of the last day of any fiscal quarter, in the case of clauses (i), (ii) and (iv) under “—Certain Covenants—Financial Covenants” or (ii) as of the end of the first Business Day on which the requirements of clause (iii) under “—Certain Covenants—Financial Covenants” are not satisfied (such date, the “Minimum Liquidity Cure Trigger Date”), any cash equity contribution to either the Partnership or any Parent Entity that is then immediately contributed to the Partnership (in each case funded with proceeds of Equity Interests other than any Disqualified Stock) after (a) the last day of such fiscal quarter and on or prior to the day that is ten days after the day on which financial statements are required to be delivered for that fiscal quarter, in the case of clauses (a), (b) and (d) under “—Certain Covenants—Financial Covenants” or (b) on or prior to the day that is ten Business Days after the Minimum Liquidity Cure Trigger Date, in the case of clause (ii) under “—Certain Covenants—Financial Covenants,” will, at the irrevocable election of Issuers, be included in the calculation of Operating Cash Flow Amount and/or Unrestricted Cash, in each case for the purposes of determining compliance with such covenants under “—Certain Covenants—Financial Covenants” during and at the end of such fiscal quarter (each, a “Cure Quarter”) and any subsequent period that includes such Cure Quarter (any such equity contribution so included in the calculation of Operating Cash Flow Amount and/or Unrestricted Cash, a “Specified Equity Contribution”); provided that (1) notice of any Issuer’s intent to accept a Specified Equity Contribution shall be delivered by such Issuer no later than the day on which financial statements are required to be delivered for the applicable fiscal quarter, in the case of clauses (i), (ii) and (iv) under “—Certain Covenants—Financial Covenants,” or the Business Day after the Minimum Liquidity Cure Trigger Date, in the case of clause (c) under “—Certain Covenants—Financial Covenants,” (2) no Specified Equity Contribution shall be made in consecutive fiscal quarters, (3) the amount of any Specified Equity Contribution will be no less than $15.0 million or, if greater, the amount required to cause the Note Parties to be in compliance with such financial covenants (the “Cure Amount”), (4) no such Specified Equity Contribution shall increase the availability of any basket set forth in this “Description of the New Notes” or in the Indenture, (5) there shall be no more than two Specified Equity Contributions made in the aggregate after the Indenture Closing Date, with the receipt by the Issuers of proceeds from the sale of Equity Interests in the C-Corporation of $8.8 million on April 3, 2020 plus the receipt of proceeds pursuant to the affirmative covenant described under “—Certain

 

66

Covenants—Proceeds of Sale of Equity Interests” collectively constituting one such Specified Equity Contribution, (6) there shall be no reduction in Consolidated Funded Indebtedness (through either netting of cash or prepayment of indebtedness) in connection with any Specified Equity Contribution (or the application of the proceeds thereof) for determining compliance with clause (iv) under “—Certain Covenants—Financial Covenants” for the period ending on the last day of the applicable Cure Quarter, (7) no Investment made by the Issuers or any Subsidiary shall constitute a Specified Equity Contribution, (8) the Specified Equity Contribution for any Cure Quarter shall be deemed to increase the Operating Cash Flow Amount for purposes of clause (d) under “—Certain Covenants—Financial Covenants” only up to the Cure Amount, but shall constitute Unrestricted Cash for purposes of clauses (iii) and (iv) under “—Certain Covenants—Financial Covenants” up to the amount of the Specified Equity Contribution and (9) excluding the Rights Offering, any cash equity contribution to either the Partnership or any Parent Entity during a fiscal quarter shall be deemed to constitute a Specified Equity Contribution within the meaning of this paragraph, whether or not the notice described in clause (1) of this proviso is delivered, unless and until the Partnership delivers a written certification at the same time as it delivers the financial statements for such fiscal quarter as required by the covenants described in “—Certain Covenant—Financial Statements, Reports, etc.” to the effect that it would not have breached any of the financial covenants described in “—Certain Covenant—Financial Covenants” had it not received such cash equity contribution during such fiscal quarter (it being understood that if the Partnership does not make such certification and any such cash equity contribution is not in an amount equal at least $15.0 million, then the Partnership shall be deemed to have breached the relevant financial covenants described in “—Certain Covenant—Financial Covenants”); provided, further, that to the extent any Equity Cure is used to prepay the Notes, there shall be a reduction in Consolidated Funded Indebtedness for determining compliance with clause (ii) under “—Certain Covenants—Financial Covenants” in future quarters where such Cure Quarter is included in the applicable test period (but, for the avoidance of doubt, there shall be no de-leveraging credit for the period ending on the last day of the Cure Quarter in respect of which the equity cure is exercised). Upon the Trustee’s receipt of written notice from an Issuer of its intent to exercise its cure right pursuant to this “—Events of Default and Remedies” no later than the day on which financial statements are required to be delivered for the applicable fiscal quarter, in the case of clauses (i), (ii) and (iv) under “—Certain Covenants—Financial Covenants,” or the Business Day after the Minimum Liquidity Cure Trigger Date, in the case of clause (iii) under “—Certain Covenants—Financial Covenants”, then, until the day that is ten days after such date, none of the Trustee, the Collateral Agent or any Noteholder Party shall exercise the right to accelerate the Notes and none of the Trustee, the Collateral Agent or any Noteholder Party shall exercise any right to foreclose on or take possession of the Collateral solely on the basis of an Event of Default having occurred and being continuing under “—Certain Covenants—Financial Covenants” in respect of the period ending on the last day of such fiscal quarter.

Legal Defeasance and Covenant Defeasance

The Issuers at any time may terminate all of their obligations under the Notes and the Indenture with respect to the applicable Noteholder Parties (“legal defeasance”), except for certain obligations set forth in the Indenture, including obligations to register the transfer and exchange of Notes, to replace destroyed, lost or stolen Notes, to maintain an office for payment and money for payments held in trust.

In addition, the Issuers at any time may terminate their obligations with respect to certain covenants (including those described under “—Certain Covenants”) and default provisions (specified in clauses (i), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii) and (xiii) of the first paragraph in “—Events of Default and Remedies”) that are set forth in the Indenture (“covenant defeasance”).

In the event legal defeasance occurs, the payment of Notes so defeased may not be accelerated because of an Event of Default. In the event covenant defeasance occurs, the payment of Notes so defeased may not be accelerated because of the Event of Defaults specified in clauses (i), (iv), (v), (vi), (vii), (viii), (ix), (x), (xi), (xii) and (xiii) of the first paragraph in “—Events of Default and Remedies.”

 

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If we exercise either legal defeasance or covenant defeasance, (i) the Note Guarantees of the Guarantors will automatically and unconditionally be released and discharged and (ii) the obligations of each Guarantor with respect to the Security Documents shall be terminated simultaneously with the termination of such obligations.

The Issuers may exercise legal defeasance or covenant defeasance only if:

 

(i)

the Issuers irrevocably deposit in trust with the Trustee cash in Dollars sufficient to pay the principal of and premium (if any) and interest on the Notes when due at maturity or redemption, as the case may be;

 

(ii)

the Issuers deliver to the Trustee a certificate from a nationally recognized firm of independent accountants, investment bank or financial advisory firm expressing their opinion that the payments of principal and interest when due and without reinvestment of any deposited money will provide cash at such times and in such amounts as will be sufficient to pay principal, premium, if any, and interest when due on all the Notes to maturity or redemption, as the case may be;

 

(iii)

no Default specified in clause (viii) of the first paragraph in “—Events of Default and Remedies” with respect to the Issuers shall have occurred or is continuing on the date of such deposit;

 

(iv)

the deposit does not constitute a default under any other material agreement or instrument binding on the Issuers;

 

(v)

in the case of legal defeasance, the Issuers shall have delivered to the Trustee an Opinion of Counsel stating that (a) the Issuers have received from, or there has been published by, the Internal Revenue Service a ruling or (b) since the Indenture Closing Date there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the beneficial owners of the Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and will be subject to U.S. federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; provided that, upon any redemption that requires the payment of the Yield Maintenance Premium, the amount deposited shall be sufficient for purposes of the Indenture to the extent that an amount is deposited with the Trustee equal to the Yield Maintenance Premium calculated as of the date of the notice of redemption, with any deficit as of the date of the redemption only required to be deposited with the Trustee on or prior to the date of the redemption. Notwithstanding the foregoing, the Opinion of Counsel required by the immediately preceding sentence with respect to a legal defeasance need not be delivered if all of the Notes not theretofore delivered to the Trustee for cancellation (1) have become due and payable or (2) will become due and payable at their Maturity Date within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuers;

 

(vi)

such exercise does not impair the right of any Holder to receive payment of principal of, premium, if any, and interest on such Holder’s Notes on or after the due dates therefore or to institute suit for the enforcement of any payment on or with respect to such Holder’s Notes;

 

(vii)

in the case of covenant defeasance, the Issuers shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred; and

 

(viii)

the Issuers deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes to be so defeased and discharged as described in this “Legal Defeasance and Covenant Defeasance” and in “—Satisfaction and Discharge” have been complied with.

 

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Amendments and Waivers

Except as provided in the next succeeding paragraph, neither the Indenture nor any other Note Document nor any provision thereof may be waived, amended or modified without the consent of the Required Noteholder Parties; provided, however, that no such agreement shall:

 

(i)

reduce the principal amount of, or extend the Maturity Date of, or decrease the rate of interest on, any Note, without the prior written consent of each Holder of a Note affected thereby (which, notwithstanding the foregoing, such consent of such Holder of a Note affected thereby shall be the only consent required to make such modification); provided that any amendment to the financial definitions in the Indenture (and as described in “—Certain Definitions”) shall not constitute a reduction in the rate of interest for purposes of this clause (i);

 

(ii)

extend any date on which payment of interest on any Note is due, without the prior written consent of each Holder of a Note affected thereby (which, notwithstanding the foregoing, such consent of such Holder of a Note affected thereby shall be the only consent required to make such modification);

 

(iii)

amend the pro rata and waterfall provisions of the Indenture with respect to the pro rata application or sharing of payments required thereby in a manner that by its terms modifies the application or sharing of such payments required thereby to be on a less than pro rata basis, without the prior written consent of each Noteholder Party, the Trustee, Collateral Agent or any Agent affected thereby (which, notwithstanding the foregoing, such consent of such Noteholder Party, the Trustee, Collateral Agent or any Agent affected thereby shall be the only consent required to make such modification);

 

(iv)

amend or modify the provisions of this “—Amendments and Waivers” and any other amendment provisions of the Indenture or the definition of the term “Required Noteholder Parties” or any other provision of the Indenture specifying the number or percentage of Noteholder Parties or the initial purchasers of the Old Notes required to waive, amend or modify any rights under the Indenture or make any determination or grant any consent thereunder, without the prior written consent of each Noteholder Party affected thereby, in each case except, for the avoidance of doubt, as otherwise provided in the second succeeding paragraph below; or

 

(v)

release, or subordinate the Collateral Agent’s Lien on, all or substantially all of the Collateral or all or substantially all of the Guarantors from their respective Note Guarantees under the Indenture, unless, in the case of a Subsidiary Guarantor, all or substantially all of the Equity Interests of such Subsidiary Guarantor is sold or otherwise disposed of in a transaction permitted by the Indenture, without the prior written consent of each Holder of Notes;

provided, further, that no such agreement shall amend, modify or otherwise affect the rights or duties of the Trustee or the Collateral Agent without the prior written consent of the Trustee or the Collateral Agent acting as such at the effective date of such agreement, as applicable.

From time to time, the Issuers, the Trustee and/or the Collateral Agent may (or shall, to the extent required by any Note Document) without the consent of any Noteholder Party enter into any amendment, modification or waiver of any Note Document, or enter into any new agreement or instrument, to:

 

(i)

effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or additional property to become Collateral for the benefit of the Secured Parties, or as required by local law to give effect to, or protect any security interest for the benefit of the Secured Parties, in any property or so that the security interests therein comply with applicable law or the Indenture;

 

(ii)

add more restrictive terms in respect of the Notes as contemplated by clause (e) of the definition of “Permitted Refinancing Indebtedness;”

 

(iii)

otherwise enhance the rights or benefits of any Noteholder Party under any Note Document;

 

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(iv)

provide for the issuance of PIK Notes in accordance with the terms of the Indenture;

 

(v)

provide for uncertificated Notes in addition to or in place of certificated Notes;

 

(vi)

make any change in the Indenture necessary to qualify the Indenture under the Trust Indenture Act; or

 

(vii)

cure any ambiguity, defect or inconsistency (provided that any amendment, modification of any Note Document pursuant to this clause (vii) shall not be materially adverse to the interests of the Noteholder Parties (as reasonably determined by the Board of Directors of the Partnership)).

With respect to the incurrence of any secured or unsecured Indebtedness (including any intercreditor agreement relating thereto), the Issuers may elect (in their discretion, but shall not be obligated) to deliver to the Trustee an Officer’s Certificate at least three Business Days (in the case of unsecured Indebtedness) and 15 Business Days (in the case of secured Indebtedness) prior to the incurrence thereof (or such shorter time as the Trustee may agree in its reasonable discretion), together with either drafts of the material documentation relating to such Indebtedness or a description of such Indebtedness (including a description of the Liens intended to secure the same or the subordination provisions thereof, as applicable) in reasonably sufficient detail to be able to make the determinations referred to in this paragraph, which certificate shall either, at the Issuers’ election, state that the Issuers have determined in good faith that such Indebtedness satisfies the requirements of the applicable provisions described in “—Certain Covenants—Limitation on Indebtedness” and in “—Certain Covenants—Limitation on Liens” (taking into account any other applicable provisions of this “—Amendments, Supplements and Waivers”), in which case such certificate shall be conclusive evidence thereof.

Satisfaction and Discharge

The Indenture will be discharged and will cease to be of further effect as to all Old Notes (except as to surviving rights, protections and immunities of the Trustee and rights of registration or transfer or exchange of such Notes, as expressly provided for in the Indenture) when:

 

(i)

either (a) all the Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuers and thereafter repaid to the Issuers or discharged from such trust) have been delivered to the Trustee for cancellation or (b) all of the Notes (1) have become due and payable, (2) will become due and payable at their stated maturity within one year or (3) if redeemable at the option of the Issuers, are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuers, and the Issuers have irrevocably deposited or caused to be deposited with the Trustee funds in an amount sufficient to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation, for principal of, premium, if any, and interest on the Notes to the date of deposit together with irrevocable instructions from the Issuers directing the Trustee to apply such funds to the payment thereof at maturity or redemption, as the case may be; provided that, upon any redemption that requires the payment of the Yield Maintenance Premium, the amount deposited shall be sufficient for purposes of the Indenture to the extent that an amount is deposited with the Trustee equal to the Yield Maintenance Premium calculated as of the date of the notice of redemption, with any deficit as of the date of the redemption only required to be deposited with the Trustee on or prior to the date of the redemption;

 

(ii)

the Issuers and/or the Guarantors have paid all other sums payable under the Indenture; and

 

(iii)

the Issuers have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel stating that all conditions precedent under the Indenture relating to the satisfaction and discharge of the Indenture have been complied with.

 

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Concerning the Trustee

Wilmington Trust, National Association is currently the Trustee and the Collateral Agent under the Indenture. We have appointed Wilmington Trust, National Association as Registrar and Paying Agent with regard to the New Notes.

The Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are specifically set forth in the Indenture and no implied covenants or obligations shall be read into the Indenture against the Trustee. The permissive right of the Trustee to do things enumerated in the Indenture shall not be construed as a duty.

The Required Noteholder Parties will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee, subject to certain exceptions. If an Event of Default has occurred and is continuing and is actually known to the Trustee (and has not been cured), the Trustee shall exercise the rights and powers vested in it by the Indenture and use the same degree of care and skill as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. The Trustee will be under no obligation to exercise any of the rights or powers vested in it by the Indenture or the Security Documents at the request or direction of any of the Holders of New Notes pursuant to the Indenture, unless such Holders shall have offered, and if requested, provided to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses, losses and liabilities which might be incurred by it in compliance with such request or direction.

No Personal Liability of Directors, Employees, Managers and Stockholders

No director, officer, employee, manager, incorporator or holder of any Equity Interests in either of the Issuers or any direct or indirect parent companies, as such, shall have any liability for any obligations of the Issuers or any Guarantor under the Notes, the Collateral Agreement, the Indenture or any other Note Document, as applicable, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of New Notes, by accepting a New Note, waives and releases all such liability. The waiver and release are part of the consideration for issuance of the New Notes. Such waiver and release may not be effective to waive liabilities under the U.S. federal securities laws and it is the view of the SEC that such a waiver is against public policy.

Governing Law

The Indenture, the Note Guarantees and the Security Documents are, and the New Notes will be, governed by, and construed and interpreted in accordance with, the law of the State of New York.

Certain Definitions

“Affiliate” means, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified; provided that (i) each Permitted Holder, (ii) StoneMor GP LLC and the persons Controlling StoneMor GP LLC prior to the C-Corporation Conversion and (iii) each other person possessing the contractual right to nominate or appoint directors to the Board of Directors of the Partnership or, after consummation of the C-Corporation Conversion, the C-Corporation shall be deemed to be an Affiliate for purposes of the Indenture.

“Agents” shall mean the Trustee (in each of its capacities under the Indenture) and the Collateral Agent.

“Approved Installment Agreement” means a pre-need installment agreement, in a form approved for use by all applicable Governmental Authorities, and complying with all applicable laws, between an Issuer or any Subsidiary Guarantor and another Person pursuant to which such Issuer or Subsidiary Guarantor has agreed to provide for and sell to such person cemetery services and/or Cemetery Property.

 

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“Archdiocese” means the Archdiocese of Philadelphia, an archdiocese organized and existing under and governed by Canon Law of the Roman Catholic Church and recognized by the Commonwealth of Pennsylvania as a nonprofit religious organization.

“Archdiocese Holdco” means Philadelphia Catholic Cemeteries, LLC, a Delaware limited liability company.

“Archdiocese Lease” means that certain Lease Agreement, dated as of September 26, 2013, among the Archdiocese and the Operating Company, StoneMor Pennsylvania LLC, StoneMor Pennsylvania Subsidiary LLC and the Partnership (as amended by Amendment No. 1 to Lease Agreement, dated as of March 20, 2014, and Amendment No. 2 to Lease Agreement dated as of May 28, 2014, and as further amended, restated, modified or supplemented from time to time).

“Asset Coverage Test” means, on any date, the ratio of (A) the sum of (i) Unrestricted Cash of the Issuers and their Subsidiaries, (ii) the aggregate amount of “accounts receivable, net of allowance” (or successor line item) set forth in the financial statements that have been (or were required to be) delivered for the relevant Test Period and (iii) the aggregate amount of assets under “Merchandise trusts, restricted, at fair value” (or successor line item) set forth in the financial statements that have been (or were required to be) delivered for the relevant Test Period, in each case as of the last day of the Test Period most recently ended as of such date, to (B) the aggregate principal or face amount of Consolidated Funded Indebtedness outstanding as of the last day of the Test Period most recently ended as of such date.

“Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as codified as 11 U.S.C. Section 101 et seq., as amended, and any successor statute of similar import, in each case as in effect from time to time.

“Bankruptcy Law” means the Bankruptcy Code and any similar Federal, state or foreign law for the relief of debtors, as amended from time to time.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America.

“Board of Directors” means, as to any person, the board of directors or other governing body of such person, or if such person is owned or managed by a single entity, the board of directors or other governing body of such entity.

“Budget” has the meaning assigned to such term in clause (vii) of “—Certain Covenants—Financial Statements, Reports, etc.”

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or in the place of payment are authorized or required by law to remain, or are in fact, closed.

“Capital Expenditures” means, for any person in respect of any period, the aggregate of all expenditures incurred by such person during such period that, in accordance with GAAP, are or should be included in “cash paid for capital expenditures” or similar items reflected in the statement of cash flows of such person; provided that the term “Capital Expenditures” shall not include (i) expenditures made in connection with the replacement, substitution, restoration or repair of assets to the extent financed with (a) insurance proceeds paid on account of the loss of or damage to the assets being replaced, substituted, restored or repaired or (b) condemnation awards arising from the taking by eminent domain or condemnation of the assets being replaced, (ii) the purchase price of equipment that is purchased substantially concurrently with the trade-in of existing equipment to the extent that the gross amount of such purchase price is reduced by the credit granted by the seller of such equipment for the equipment being traded in at such time, (iii) the purchase of plant, property or equipment to the extent financed with the proceeds of Dispositions that are not required to be applied to prepay Notes pursuant to the provisions set forth in “—Optional Redemption” and “—Mandatory Redemption,” (iv) expenditures that are

 

72

accounted for as capital expenditures by the Partnership or any Subsidiary and that actually are paid for by a person other than the Partnership or any Subsidiary and for which none of Partnership or any Subsidiary has provided or is required to provide or incur, directly or indirectly, any consideration or obligation to such person or any other person (whether before, during or after such period) other than rent and similar or related obligations or (v) expenditures that constitute Investments permitted under the Indenture (but the term “Capital Expenditures” shall include all expenditures made with the proceeds of such Investments by the recipient thereof that would otherwise constitute Capital Expenditures).

“Capital Lease Obligations” of any person means the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital lease obligations on a balance sheet of such person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP; provided that any lease that was treated as an operating lease for purposes of GAAP before the effectiveness of FASB ASC 842 shall not be treated as a “Capital Lease Obligation” and shall continue to receive the same treatment as such lease would have received before the effectiveness of FASB ASC 842.

“Cash Interest” has the meaning assigned to such term in “—Principal, Maturity and Interest.”

“Cash Interest Expense” means, with respect to the Partnership and the Subsidiaries on a consolidated basis for any period, Consolidated Interest Expense for such period to the extent such amounts are payable in cash for such period, excluding, without duplication, in any event (i) pay-in-kind Consolidated Interest Expense (including any PIK Interest) or other non-cash Interest Expense (including as a result of the effects of purchase accounting) and (ii) to the extent included in Consolidated Interest Expense, the amortization of any financing fees paid by, or on behalf of, the Partnership or any Subsidiary; provided that Cash Interest Expense shall exclude any one time financing fees, including those paid in connection with the Transactions or any amendment of the Indenture.

“Casualty Event” means any event that gives rise to the receipt by the Partnership or any Subsidiary of any insurance proceeds or condemnation awards in respect of any equipment, fixed assets or Real Property (including any improvements thereon) to replace or repair such equipment, fixed assets or Real Property or as compensation for such condemnation event.

“C-Corporation” means a corporation, which immediately following the C-Corporation Conversion, was the direct or indirect holder of 100% of the partnership interests in the Partnership.

“C-Corporation Conversion” means the consummation of the transactions described in the C-Corporation conversion steps memorandum delivered by the Partnership to the initial purchasers of the Old Notes prior to the Indenture Closing Date, as such transactions may have been modified in any manner not materially adverse to the interests of the Holders and with the Required Noteholder Parties’ consent (it being understood that modifications to the proposed structure to provide for the C-Corporation to be formed below StoneMor GP LLC (the “GP”) instead of merging with the GP in accordance with the structure diagram dated June 15, 2019 shall not be deemed materially adverse to the interests of the Holders and (ii) references to the Partnership in this “Description of the New Notes” and in the Indenture shall refer, mutatis mutandis, to the C-Corporation from and after the C-Corporation Conversion other than for purposes of the definition of “Issuers” and unless otherwise provided in this “Description of the New Notes” or in the Indenture or the context otherwise requires, subject to clause (xi) of “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions.” In addition, one or more of the purchasers of Convertible Preferred Units on the Indenture Closing Date was permitted to make such investment through one or more newly-formed US “blocker corporations” (i) whose only asset was its direct or indirect ownership of Equity Interests in the Partnership (each, a “Blocker Corp”) and cash or other consideration received as a result of ownership of such Convertible Preferred Units and (ii) whose only liabilities were incurred in connection with the ownership of such Equity Interests (e.g., taxes payable). In connection with

 

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the C-Corporation Conversion, any such Blocker Corp (or, as applicable, any such purchaser) was permitted to be merged with, or contributed to (or, as applicable, to cause such Blocker Corp to be merged with or contributed to) the C-Corporation in a transaction intended to be tax-free under Code Section 368 or Code Section 351, in exchange for the shares of the C-Corporation such purchaser would have received in consideration for direct ownership of Convertible Preferred Units in the C-Corporation without any discount (any such transaction, a “Blocker Corp Merger”). Any Blocker Corp Merger was deemed to be part of the C-Corporation Conversion permitted by, and subject to, clause (xi) of “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions.”

“Cemetery Laws” means all applicable laws governing the operation of the Issuers’ and the Subsidiary Guarantors’ cemeteries, crematories and funeral homes, the providing of cemetery and funeral services (including cremation services), and the sale of Cemetery Property and other cemetery and funeral merchandise.

“Cemetery Non-Profit” means a person which (i) is organized as a non-profit entity, whether pursuant to Section 501 of the Code or otherwise and (ii) has contracted with any of the Issuers or any Subsidiary Guarantor for the provision of services under a Cemetery Non-Profit Management Agreement. For the sake of clarity, no Cemetery Non-Profit is, or shall be required to become, a Subsidiary Guarantor.

“Cemetery Non-Profit Management Agreement” means an agreement (including a lease) pursuant to which an Issuer or a Subsidiary Guarantor agrees to manage the operations of any Cemetery Non-Profit in the business of providing cemetery services and/or cemetery property or to operate such cemetery property.

“Cemetery Property” means, at any time as to any Issuer or Subsidiary Guarantor, such Issuer or Subsidiary Guarantor’s interest in its real or personal property of the type sold or transferred pursuant to Approved Installment Agreements which property (i) has not, at such time, been sold or transferred to, and (ii) is not under contract to be sold or transferred to, any other person.

“CFC” means any controlled foreign corporation within the meaning of Section 957 of the Code.

A “Change in Control” shall mean:

 

(i)

any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act, but excluding any employee benefit plan of such person or its Subsidiaries, and any person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than the Permitted Holders, becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Equity Interests representing more than 50% of the Equity Interests in the Partnership or the General Partner entitled to vote for members of the board of directors or equivalent governing body of the Partnership or the General Partner on a fully-diluted basis (and taking into account all such securities that such “person” or “group” has the right to acquire, whether such right is exercisable immediately or only after the passage of time);

 

(ii)

the Permitted Holders cease to have a contractual right under the Nomination and Director Voting Agreement to appoint or nominate (a) three of the directors on the board of directors of the C-Corporation in the case of a 7 member board of directors or (b) at least 3/7ths of such directors in the event that the board of directors of the C-Corporation does not contain 7 members;

 

(iii)

any holder of Equity Interests other than the Permitted Holders has the contractual or other right to appoint or nominate a majority of the directors on the board of directors of the C-Corporation;

 

(iv)

the Partnership ceases to own 100% of the Equity Interests in the Operating Company; or

 

(v)

the C-Corporation ceases to own 100% of the partnership interests in the Partnership;

 

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provided that, notwithstanding anything in this definition to the contrary, the consummation of the transactions to effectuate the C-Corporation Conversion was not, itself, deemed to constitute or result in a Change in Control.

“Charges” has the meaning assigned to such term in “—Principal, Maturity and Interest.”

“Code” means the Internal Revenue Code of 1986, as amended.

“Collateral” means all the “Collateral” as defined in any Security Document and shall also include the Mortgaged Properties and all other property that is subject to any Lien in favor of the Trustee, the Collateral Agent or any Subagent for the benefit of the Noteholder Parties pursuant to any Security Document.

“Collateral Agent” has the meaning assigned to such term in “—General” until a successor replaces it and, thereafter, means the successor.

“Collateral Agreement” means the Collateral Agreement, dated as of the Indenture Closing Date, and as may be amended, restated, supplemented or otherwise modified from time to time, among the Issuers, each Subsidiary Guarantor and the Collateral Agent.

“Collateral Requirement” means the requirement that, in each case, subject to certain affirmative covenants of the Indenture relating to post-closing obligations and excluding certain requirements that were satisfied on the Indenture Closing Date:

 

(i)

in the case of any person that becomes a Subsidiary Guarantor after the Indenture Closing Date, the Collateral Agent or the Trustee, as applicable, shall have received, within the time periods set forth in the Indenture, (a) a supplement to the Collateral Agreement, (b) a supplemental indenture executed by such Subsidiary Guarantor in the form of the applicable exhibit attached to the Indenture and (c) supplements to the other Security Documents, if applicable, substantially in the form specified therefor or otherwise in a form sufficient to join such Subsidiary Guarantor to the terms of the Indenture and the Security Documents, in each case, duly executed and delivered on behalf of such Subsidiary Guarantor;

 

(ii)

after the Indenture Closing Date, within the time periods set forth in the Indenture, (a)(1) all outstanding Equity Interests of any person that becomes a Subsidiary Guarantor after the Indenture Closing Date, (2) all Equity Interests directly acquired by either of the Issuers or any Subsidiary Guarantor after the Indenture Closing Date and (3) all Indebtedness owing to either of the Issuers or any Subsidiary Guarantor, other than, in each case, Excluded Securities, shall have been pledged pursuant to the Collateral Agreement and (b) the Collateral Agent shall have received certificates or other instruments (if any) representing such Equity Interests and any notes or other instruments required to be delivered pursuant to the applicable Security Documents, together with stock powers, note powers or other instruments of transfer with respect thereto endorsed in blank;

 

(iii)

within the time periods set forth in the Indenture, except as otherwise contemplated by the Indenture or any Security Document, all documents and instruments, including Uniform Commercial Code financing statements, filings with the United States Copyright Office and the United States Patent and Trademark Office and comparable offices in foreign jurisdictions, Control Agreements and all other actions reasonably required (including those required by applicable Requirements of Law), or as reasonably requested by the Collateral Agent, to be delivered, filed, registered or recorded to create the Liens intended to be created by the Security Documents (in each case, including any supplements thereto) and perfect such Liens to the extent required by, and with the priority required by, the Security Documents, shall have been delivered, filed, registered or recorded concurrently with, or promptly following, the execution and delivery of each such Security Document;

 

(iv)

within the time periods set forth in the Indenture with respect to each of the Mortgaged Properties encumbered pursuant to the post-closing and further assurances and additional security affirmative covenants in the Indenture, the Collateral Agent shall have received, with respect to such Mortgaged

 

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Property (a) counterparts of a Mortgage duly executed and delivered by the record owner of such Mortgaged Property (or an assignment of the applicable Existing Mortgage duly executed and delivered by the Refinanced Credit Agreement Agent) and suitable for recording or filing in all filing or recording offices that may be necessary or reasonably desirable to create (or, if an Existing Mortgage is assigned, continue) a valid and enforceable Lien subject to no other Liens except Permitted Liens, at the time of recordation thereof, (b) an opinion of counsel regarding the due authorization, execution and delivery of each Mortgage or Mortgage Amendment delivered pursuant to the post-closing affirmative covenant in the Indenture and each Mortgage delivered pursuant to the further assurances and additional security affirmative covenant in the Indenture, the enforceability of each Mortgage, or of each Existing Mortgage, as amended by the applicable Mortgage Amendment, as applicable, and such other matters customarily covered in real estate counsel opinions, or as the Collateral Agent may reasonably request (provided that local counsel opinions shall be required only with respect to any Mortgaged Property delivered pursuant to the further assurances and additional security affirmative covenant in the Indenture with respect to certain specified jurisdictions set forth on a schedule to the Indenture); it being agreed, however, that if counsel is unwilling to issue such an opinion in connection with any Mortgage Amendment, then the applicable Existing Mortgage may be amended and restated in full or be released by the Collateral Agent and the record owner of such Mortgaged Property shall deliver to the Collateral Agent a Mortgage with respect to such Mortgaged Property in compliance with clause (a); (c) with respect to the Mortgage of a Mortgaged Property demised pursuant to the Archdiocese Lease, a consent and estoppel certificate from the landlord thereunder in a form consistent with the terms of the Archdiocese Lease and (d) such other documents as the Collateral Agent may reasonably request that are available to the Issuers (it being understood that the Collateral Agent has no duty to make such request);

 

(v)

within the time periods set forth in the Indenture with respect to each of the Mortgaged Properties encumbered pursuant to the post-closing and further assurance and additional security affirmative covenants in the Indenture , the Collateral Agent shall have received (a) a policy or policies or marked up unconditional binder of title insurance, or a date-down and modification endorsement, if available, paid for by the Issuers, issued by a nationally recognized title insurance company insuring the Lien of each Mortgage (or, if an Existing Mortgage is assigned, such Existing Mortgage continues) as a valid Lien on such Mortgaged Property described therein, free of any other Liens except Permitted Liens, together with such customary endorsements, coinsurance and reinsurance as may be necessary and as the Collateral Agent (acting at the direction of the Trustee (acting at the direction of the Required Noteholder Parties)) may reasonably request and which are available at commercially reasonable rates in the jurisdiction where such applicable Mortgaged Property is located and (b) a survey (including all improvements, easements and other customary matters thereon), as applicable, for which all necessary fees (where applicable) have been paid which (1) complies in all material respects with the minimum detail requirements of the American Land Title Association and National Society of Professional Surveyors as such requirements are in effect on the date of preparation of such survey (or such other standards as such title company will accept as long as the condition is clause (2) of this paragraph (vii) is met) and (2) is sufficient (together with any survey affidavits of no-change) for such title insurance company to remove all standard survey exceptions from the title insurance policy relating to such Mortgaged Property and to issue all affirmative coverage and endorsements thereto that are customary for a transaction of this type, or that the Collateral Agent may reasonably request (it being understood that the Collateral Agent has no duty to make such request), the issuance of which depend on a survey;

 

(vi)

evidence of the insurance required by the terms of the Indenture; and

 

(vii)

after the Indenture Closing Date, the Collateral Agent or the Trustee, as applicable, shall have received (a) such other Security Documents as may be required to be delivered pursuant to the further assurances and additional security affirmative covenant in the Indenture or the Collateral Agreement and (b) upon reasonable request by the Collateral Agent (acting at the direction of the Trustee), or any

 

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initial purchaser of the Old Notes, evidence of compliance with any other requirements of the further assurances and additional security affirmative covenant in the Indenture.

Notwithstanding anything in the Notes Documents to the contrary, the Note Parties shall not be required to take any actions to create or perfect any liens in any foreign jurisdiction (other than Puerto Rico) or to perfect any Liens by any means other than the filing of financing statements, entry into control agreements, entry into landlord agreements or bailee letters, filings with the United States Patent and Trademark Office and United States Copyright Office, delivery of stock certificates and instruments (to the extent expressly required by the Security Documents) and recordation of Mortgages to the extent expressly required in the Indenture or under any Security Document.

“Consolidated Debt” at any date means the sum of (without duplication) all Indebtedness (other than letters of credit or bank guarantees, to the extent undrawn) consisting of Indebtedness for borrowed money of the Partnership and the Subsidiaries determined on a consolidated basis on such date in accordance with GAAP.

“Consolidated Funded Indebtedness” means, as of any date of determination, for the Partnership and the Subsidiaries on a consolidated basis, without duplication, the sum of (i) the outstanding principal amount of all obligations, whether current or long-term, for borrowed money (including, without limitation, (a) all Note Obligations and (b) all obligations evidenced by bonds, debentures, notes, loan agreements or other similar instruments), (ii) the outstanding principal amount of all purchase money Indebtedness, (iii) all direct obligations arising under letters of credit, bankers’ acceptances, bank guaranties, and similar instruments, in each case only to the extent drawn upon (but, excluding, for the avoidance of doubt, surety bonds), (iv) Capital Lease Obligations, (v) all Guarantees with respect to outstanding Indebtedness of the types specified in clauses (i) through (iv) above of persons other than the Partnership or any of its Subsidiaries and (vi) all Indebtedness of the types referred to in clauses (i) through (v) above of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which the Partnership or any of its Subsidiaries is a general partner or joint venturer, unless such Indebtedness is expressly made non-recourse to the Partnership or such Subsidiary, provided that Consolidated Funded Indebtedness shall not include any letter of credit issued on account of the self-insurance program of the Operating Company to the extent any such letter of credit is undrawn.

“Consolidated Interest Coverage Ratio” means the ratio, as of the last day of any fiscal quarter, of (i) the Operating Cash Flow Amount for the relevant fiscal period being tested and ending on such last day plus Cash Interest Expense for such fiscal period to (ii) Cash Interest Expense for the relevant fiscal period being tested and ending on such last day.

“Consolidated Interest Expense” means, for any period, (i) the total consolidated interest expense of the Partnership and its Subsidiaries for such period (calculated without regard to any limitations on payment thereof) payable in respect of any Indebtedness plus (ii) without duplication, that portion of Capital Lease Obligations of the Partnership and its Subsidiaries on a consolidated basis representing the interest factor for such period. All calculations of Consolidated Interest Expense shall additionally be adjusted on a pro forma basis to account for any Equivalent Dispositions then being consummated, if applicable, as well as any other Equivalent Dispositions consummated, on or after the first day of any related Test Period (as if consummated on the first day of such Test Period).

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and “Controlling” and “Controlled” shall have meanings correlative thereto.

“Control Agreement” means, with respect to any Deposit Account or any Securities Account, an agreement among the Collateral Agent, the financial institution or other person at which such account is maintained and the Grantor maintaining such account, as applicable, effective to grant Control over such account to the Collateral Agent.

 

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“Control Triggering Event” shall occur at any time that (i) an Event of Default arising under clause (ii) (principal payments), clause (iii) (interest payments), clause (iv) (existence, notice of event of default, use of proceeds and negative covenants), clause (vi) (cross-acceleration) and clause (viii) (involuntary and voluntary bankruptcy) under “—Events of Default and Remedies” shall have occurred and be continuing, (ii) the failure of the Issuers or any Subsidiary Guarantor to comply with the provisions described in “—Collateral and Security— Cash Management Systems” or (iii) the Trustee or the Holders of at least 25% aggregate principal amount of the Notes declare the Notes due and payable in whole in accordance with the provisions described in “—Events of Default and Remedies.” Once occurred, a Control Triggering Event shall be deemed to be continuing until no Default or Event of Default shall be continuing.

“Controlled Account” means (i) any Deposit Account (including all funds on deposit therein) that is the subject of an effective Control Agreement and that is maintained by any Grantor and (ii) any Securities Account (including all Financial Assets (as defined in the UCC) held therein and all certificates and instruments, if any, representing or evidencing such Financial Assets) that is the subject of an effective Control Agreement and that is maintained by any Grantor with a securities intermediary.

“Convertible Preferred Units” means the convertible preferred units issued by the Partnership on the Indenture Closing Date for gross proceeds of no less than $57,500,000.

“Copyrights” means (i) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, and copyright applications; (ii) all renewals of any of the foregoing; (iii) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing; (iv) the right to sue for past, present, and future infringements of any of the foregoing and (v) all rights corresponding to any of the foregoing throughout the world.

“Cure Amount” has the meaning assigned to such term in “—Events of Default and Remedies.” “Cure Quarter” has the meaning assigned to such term in “—Events of Default and Remedies.”

“Debt Service” means, with respect to the Partnership and the Subsidiaries on a consolidated basis for any period, Cash Interest Expense for such period, plus scheduled principal amortization of Consolidated Debt for such period.

“Default” means any event or condition that upon notice, lapse of time or both would constitute an Event of Default.

“Definitive Note” means a certificated Note in definitive registered form and in substantially the form of the relevant exhibits to the Indenture with respect to the Old Notes and the New Notes.

“Deposit Account” means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit.

“Dispose” or “Disposed of” means to convey, sell, lease, sub-lease, license, sublicense, sell and leaseback, assign, transfer or otherwise dispose of any property, business or asset, in one transaction or a series of transactions, including any Sale and Lease-Back Transaction and any sale or issuance of Equity Interests of a Subsidiary, and including any sale, assignment, transfer or other disposal, with or without recourse, of any notes or accounts receivable or any rights and claims associated therewith. The term “Disposition” shall have a correlative meaning to the foregoing.

“Disqualified Stock” means, with respect to any Person, any Equity Interests of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or

 

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upon the happening of any event, matures or is mandatorily redeemable (other than solely for Qualified Stock), other than as a result of a change of control, asset sale, or similar event, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than solely for Qualified Stock), other than as a result of a change of control, asset sale, or similar event, in whole or in part, in each case, prior to the date that is 91 days after the earlier of the Maturity Date of the Notes or the date the Notes are no longer outstanding.

“Dollars” or “$” means lawful money of the United States of America.

“DTC” means The Depository Trust Company.

“Environment” means ambient and indoor air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources such as flora and fauna, the workplace or as otherwise defined in any Environmental Law.

“Environmental Laws” means all applicable laws (including common law), rules, regulations, codes, ordinances, orders, binding agreements, decrees or judgments, promulgated or entered into by or with any Governmental Authority, relating in any way to the Environment, preservation or reclamation of natural resources, the generation, use, transport, management, Release or threatened Release of, or exposure to, any Hazardous Material or to public or employee health and safety matters (to the extent relating to the environment or Hazardous Materials).

“Equity Interests” of any person means any and all shares, interests, rights to purchase or otherwise acquire, warrants, options, participations or other equivalents of or interests in (however designated) equity or ownership of such person, including any Preferred Stock, any limited or general partnership interest and any limited liability company membership interest, and any securities or other rights or interests convertible into or exchangeable for any of the foregoing.

“Equity Commitment Letter” means that certain equity commitment letter by and between Axar Capital Management, LP and the C-Corporation dated as of April 1, 2020 relating to the commitment by Axar Capital Management, LP to purchase Equity Interests in the C-Corporation in an aggregate amount up to $17,000,000 subject to the terms and conditions stated therein.

“Equivalent Disposition” means the Disposition by any Issuer or Subsidiary Guarantor to any person (other than to an Issuer or a Subsidiary Guarantor) of (i) assets constituting a business unit, (ii) all or a substantial part of the business of any Issuer or Subsidiary Guarantor or (iii) sufficient Equity Interests of any Issuer or Subsidiary Guarantor so that, after giving effect to such Disposition, such person is no longer a Subsidiary.

“ERISA” means the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time and any final regulations promulgated and the rulings issued thereunder.

“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Partnership or a Subsidiary, is treated as a single employer under Section 4001 of ERISA or Section 414(b) or of the Code (or for purposes of Section 412 of the Code or Section 302 of ERISA, Section 412(m) or (o) of the Code).

“ERISA Event” means (i) any Reportable Event; (ii) the failure to make a required contribution to any Plan that would result in the imposition of a lien or other encumbrance or the provision of security under Section 430(k) of the Code or Section 303(k) or 4068 of ERISA, or the arising of such a lien or encumbrance, there being or arising any “unpaid minimum required contribution” or “accumulated funding deficiency” (as defined or otherwise set forth in Section 4971 of the Code or Part 3 of Subtitle B of Title 1 of ERISA), whether or not waived, or, with respect to any Plan or Multiemployer Plan, the failure to satisfy the minimum funding standard under Section 412 of the Code or Section 302 of ERISA, whether or not waived; (iii) a determination

 

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that any Plan is, or is expected to be, in “at-risk” status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code); (iv) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan, the failure to make by its due date a required installment under Section 430(j) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (v) the filing of a notice of intent to terminate any Plan, if such termination would require material additional contributions in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA, the filing under Section 4041(c) of ERISA of a notice of intent to terminate any Plan, the termination of any Plan under Section 4041(c) of ERISA; (vi) the institution of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan or the receipt by the Partnership, a Subsidiary or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan under Section 4042 of ERISA; (vii) the receipt by the Partnership, a Subsidiary or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Partnership, a Subsidiary or any ERISA Affiliate of any notice, concerning the impending imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent, within the meaning of Title IV of ERISA, or in “endangered” or “critical” status, within the meaning of Section 432 of the Code or Section 305 of ERISA; (viii) the withdrawal of any of the Partnership, a Subsidiary or any ERISA Affiliate from a Plan subject to Section 4063 of ERISA during a plan year in which such entity was a “substantial employer” as defined in Section 4001(a)(2) of ERISA or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (ix) the Partnership, a Subsidiary or any ERISA Affiliate engaging in a non-exempt prohibited transaction within the meaning of Section 4975 of the Code or Section 406 of ERISA with respect to any Plan; (x) the Partnership, a Subsidiary or any ERISA Affiliate incurring any liability under Title IV of ERISA with respect to any Plan or Multiemployer Plan (other than premiums due and not delinquent under Section 4007 of ERISA) or (xi) any event that could result in the imposition of a Lien on any asset of the Partnership or any Subsidiary with respect to any Plan or Multiemployer Plan under Title IV of ERISA or Section 430 of the Code.

“Event of Default” has the meaning assigned to such term in “—Events of Default and Remedies.”

“Excess Cash Flow” has the meaning assigned to such term in “—Mandatory Redemption.”

“Excess Cash Flow Period” has the meaning assigned to such term in “—Mandatory Redemption.”

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Excluded Account” means (i) Trust Accounts, (ii) zero-balance accounts for the purpose of managing local disbursements, (iii) payroll, employee benefits, withholding tax and other fiduciary accounts, (iv) Deposit Accounts and Securities Accounts with a balance or value of less than or equal to $1.0 million (based on the closing account balances of the end of each Business Day) in the aggregate for all Grantors and (v) cash collateral accounts supporting letters of credit or cash management services permitted by the Indenture for so long as such accounts are supporting obligations under outstanding letters of credit or cash management services.

“Excluded Indebtedness” means all Indebtedness not incurred in violation of the covenants set forth in “—Certain Covenants—Limitation on Indebtedness.”

“Excluded Net Proceeds” has the meaning assigned to such term in “—Mandatory Redemption.”

“Excluded Property” has the meaning assigned to such term in “—Collateral and Security—Certain Limitations on the Collateral.”

“Excluded Real Property” means, unless encumbered by an existing mortgage, (i) owned and leased real property (including real property operated, or to be operated, as a cemetery, crematory or funeral home) that may not be pledged as a matter of law or without prior approval of any Governmental Authorities or third person

 

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(unless such approval has been obtained), (ii) all owned and leased real property that is not operated, and is not intended to be operated, as a cemetery, crematory or funeral home (including corporate and sales offices that are not located at a cemetery, crematory or funeral home property) and (iii) Immaterial Leases under which any Grantor is the tenant.

“Excluded Securities” means any of the following:

 

(i)

any Equity Interests or Indebtedness with respect to which the Partnership’s Board of Directors reasonably determines in good faith (with communication of such determination, if any, to be delivered to the Trustee in writing) that the cost or other consequence of pledging such Equity Interests or Indebtedness (including any adverse tax consequences to the Issuers or their direct or indirect owners) is likely to be excessive in relation to the value to be afforded thereby;

 

(ii)

any Equity Interests or Indebtedness to the extent the pledge thereof would be prohibited by any Requirement of Law;

 

(iii)

any Equity Interests of any Foreign Subsidiary that is a CFC (other than Equity Interests of Subsidiaries formed under the laws of or domiciled in Puerto Rico) or any FSHCO in excess of 65% of the outstanding Equity Interests of such Foreign Subsidiary or FSHCO;

 

(iv)

any Margin Stock; and

 

(v)

any Equity Interests of any person that is not a Wholly Owned Subsidiary to the extent any organizational documents, constitutional documents, joint venture agreement, shareholder agreement, or similar agreement prohibits such a pledge without the consent of any other party or would give any other party (other than a Note Party or a Wholly Owned Subsidiary) to any organizational documents, constitutional documents, joint venture agreement, shareholder agreement or similar agreement governing such Equity Interests the right to terminate its obligations thereunder; provided that this clause (v) shall not apply if (a) such other party is a Note Party or a Wholly Owned Subsidiary, (b) consent has been obtained to consummate such pledge (it being understood that the foregoing shall not be deemed to obligate the Partnership or any Subsidiary to obtain any such consent) and for so long as such organizational documents, constitutional documents, joint venture agreement, shareholder agreement or similar agreement or replacement or renewal thereof is in effect or (c) such prohibition would be rendered ineffective pursuant to the UCC of any applicable jurisdiction or any other applicable law or principles of equity and shall not apply to any proceeds or receivables thereof, the assignment of which is expressly deemed effective under the UCC of any applicable jurisdiction notwithstanding such prohibition.

“Excluded Subsidiary” means any of the following:

 

(i)

any Foreign Subsidiary (other than Subsidiaries formed under the laws of or domiciled in Puerto Rico);

 

(ii)

any Subsidiary of a Foreign Subsidiary that is a CFC (other than a Foreign Subsidiary formed under the laws of or domiciled in Puerto Rico);

 

(iii)

any FSHCO;

 

(iv)

each Subsidiary that is prohibited from Guaranteeing or granting Liens to secure the Note Obligations by any Requirement of Law or that would require consent, approval, license or authorization of a Governmental Authority to Guarantee or grant Liens to secure the Note Obligations (unless such consent, approval, license or authorization has been received);

 

(v)

any Subsidiary formed in connection with the C-Corporation Conversion that ceased to exist or be a Subsidiary upon completion of the C-Corporation Conversion, so long as such Subsidiary did not hold material assets (other than Equity Interests that are not pledged as Collateral as of the Indenture Closing Date);

 

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(vi)

any other Subsidiary with respect to which, the Board of Directors of the Partnership reasonably determines in good faith (with communication of such determination, if any, to be delivered to the Trustee in writing) that the cost or other consequences (including any adverse tax consequences to the Issuers or their direct or indirect owners) of providing a Guarantee of or granting Liens to secure the Note Obligations are likely to be excessive in relation to the value to be afforded thereby; and

 

(vii)

any Cemetery Non-Profit.

“Exclusive Management Agreement” means an agreement (including a lease) pursuant to which a Subsidiary Guarantor obtains the exclusive right to manage the operations of any person in the business of providing cemetery services and/or cemetery property or to operate such cemetery property or (ii) providing funeral home services or to operate such funeral home, in each case, for a term of not less than one year at the time of execution of such agreement, including any Cemetery Non-Profit Management Agreement that satisfies the foregoing criteria.

“Existing Mortgage” means each Mortgage delivered pursuant to the Refinanced Credit Agreement.

“Extraordinary Receipts” has the meaning assigned to such term in “—Mandatory Redemption.”

“Financial Covenants” means the covenants of the Issuers set forth in “—Certain Covenants—Financial Covenants.”

“Financial Officer” of any person means the Chief Executive Officer, Chief Financial Officer, principal accounting officer, Treasurer, Assistant Treasurer or Controller of such person.

“Foreign Subsidiary” means any Subsidiary that is not organized in the United States, any state thereof or the District of Columbia.

“FSHCO” means any Subsidiary that has no material assets other than stock or debt of one or more Foreign Subsidiaries (other than a Foreign Subsidiary formed under the laws of or domiciled in Puerto Rico) that are CFCs.

“GAAP” means generally accepted accounting principles in effect in the United States of America from time to time, applied on a consistent basis, subject to certain provisions of the Indenture.

“General Partner” means the C-Corporation or such other person as the Required Noteholder Parties shall approve.

“Global Notes” means the permanent global notes in registered form and in substantially the form of the relevant exhibits to the Indenture with respect to the Old Notes and the New Notes.

“Governmental Authority” means any federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory or legislative body.

“GP Agreement” means that certain Second Amended and Restated Limited Liability Agreement of the General Partner, dated as of May 21, 2014, as may be amended, restated, modified, replaced or supplemented from time to time (including, for the avoidance doubt, any replacement in connection with any successor entity becoming the General Partner) as permitted under the Indenture.

“Grantor” has the meaning assigned to such term in “—Collateral and Security—Certain Limitations on the Collateral.”

“Guarantee” of or by any person (the “guarantor”) means (i) any obligation, contingent or otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any Indebtedness or other monetary obligation payable or performable by another person (the “primary obligor”) in any manner, whether directly or

 

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indirectly, and including any obligation of the guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (b) to purchase or lease property, securities or services for the purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof, (c) to maintain working capital, equity capital or any other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation or (d) entered into for the purpose of assuring in any other manner the holders of such Indebtedness or other obligation of the payment thereof or to protect such holders against loss in respect thereof (in whole or in part) or any Lien on any assets of the guarantor securing any Indebtedness or other obligation (or any existing right, contingent or otherwise, of the holder of Indebtedness or other obligation to be secured by such a Lien) of any other person, whether or not such Indebtedness or other obligation is assumed by the guarantor; provided, however, that the term “Guarantee” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Indenture Closing Date or entered into in connection with any acquisition or Disposition of assets permitted by the Indenture (other than such obligations with respect to Indebtedness). The amount of any Guarantee shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such person in good faith.

“guarantor” has the meaning assigned to such term in the definition of the term “Guarantee.”

“Guarantors” means the Subsidiary Guarantors and the C-Corporation.

“Hazardous Materials” means all pollutants, contaminants, wastes, chemicals, materials, substances and constituents, including, without limitation, explosive or radioactive substances or petroleum by products or petroleum distillates, asbestos or asbestos-containing materials, polychlorinated biphenyls, radon gas or pesticides, fungicides, fertilizers or other agricultural chemicals, of any nature subject to regulation or which can give rise to liability under any Requirement of Law pertaining to the environment.

“Holder” or “Noteholder” means the Person in whose name the Notes are registered.

“Immaterial Leases” means, with respect to any Note Party or any Subsidiary of a Note Party, (i) oral, month-to-month, season-to-season or otherwise terminable farm leases of excess cemetery land, (ii) oral, month-to-month or “term of employment” residential leases with employees, (iii) month-to-month leases for office or storage use, (iv) cell site, cell tower, communication, billboard and sign leases on excess cemetery land, (v) oil and gas leases not effecting cemetery use, (vi) leases of modular office buildings, (vii) residential leases with a term of not more than three years and (viii) other leases having no material adverse effect on the cemetery or funeral home use of the real property involved (or the value of such real property).

“Indebtedness” of any person means, if and to the extent (other than with respect to clause (i)) the same would constitute indebtedness or a liability on a balance sheet prepared in accordance with GAAP, without duplication, (i) all obligations of such person for borrowed money, (ii) all obligations of such person evidenced by bonds, debentures, notes or similar instruments, (iii) all obligations of such person under conditional sale or other title retention agreements relating to property or assets purchased by such person, (iv) all obligations of such person issued or assumed as the deferred purchase price of property or services (other than such obligations accrued in the ordinary course), (v) the principal component of all obligations, contingent or otherwise, of such person as an account party in respect of letters of credit, (vi) all Capital Lease Obligations of such person, (vii) the principal component of all obligations of such person in respect of bankers’ acceptances and (viii) all Guarantees by such person of Indebtedness described in clauses (i) to (vi) above; provided that Indebtedness shall not include (a) trade and other ordinary-course payables, accrued expenses, and intercompany liabilities arising in the ordinary course of business, (b) prepaid or deferred revenue, (c) purchase price holdbacks arising in the ordinary course of business in respect of a portion of the purchase prices of an asset to satisfy unperformed obligations of the seller of such asset, (d) earn-out obligations (to the extent permitted under the Indenture) until such obligations become a liability on the balance sheet of such person in accordance with GAAP, (e) obligations

 

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in respect of Third Party Funds incurred in the ordinary course of business, (f) in the case of the Partnership and the Subsidiaries, intercompany liabilities in connection with the cash management, tax and accounting operations of the Partnership and the Subsidiaries and (g) any Trust Funds. The Indebtedness of any person shall include the Indebtedness of any partnership in which such person is a general partner, other than to the extent that the instrument or agreement evidencing such Indebtedness limits the liability of such person in respect thereof. The obligations of the applicable Subsidiary Guarantors under the Archdiocese Lease, as in effect on the Indenture Closing Date, shall not constitute Indebtedness.

“Indenture” has the meaning assigned to such term in “—General.”

“Indenture Closing Date” means June 27, 2019.

“Intellectual Property” means all Patents, Trademarks, Copyrights and any other intellectual property, including any licenses thereto.

“Intercreditor Agreement” means any intercreditor agreement entered into with the Trustee, the Collateral Agent and the collateral agent or other representatives of the holders of Indebtedness that is to be secured by a Lien on the Collateral that is expressly permitted (including with respect to priority) under the Indenture.

“Interest Payment Date” has the meaning assigned to such term in “—Principal, Maturity and Interest.”

“Interest Period” means, with respect to any New Note, the period commencing on and including an Interest Payment Date and ending on and including the day immediately preceding the next succeeding Interest Payment Date, with the exception that the first Interest Period with respect to any New Note shall commence on and include the Issue Date of the New Notes and end on and exclude the first Interest Payment Date to occur after the Issue Date (the Interest Payment Date for any Interest Period shall be the Interest Payment Date occurring on the date immediately following the last day of such Interest Period).

“Investment” has the meaning assigned to such term in “—Certain Covenants—Limitation on Investments, Loans and Advances.”

“Issuers” has the meaning assigned to such term in “—General.”

“Issue Date” means the date the New Notes are issued.

“Lien” means, with respect to any asset, (a) any mortgage, deed of trust, lien, hypothecation, pledge, charge, security interest or similar monetary encumbrance in or on such asset and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such asset; provided that in no event shall an operating lease or an agreement to sell be deemed to constitute a Lien.

“Margin Stock” has the meaning assigned to such term in Regulation U.

“Material Adverse Effect” means (i) a material adverse effect on the business, property, operations, assets, liabilities (actual or contingent), operating results, prospects or financial condition of the Partnership and the Subsidiaries, taken as a whole, (ii) a material adverse effect on the ability of the Issuers and the Subsidiary Guarantors (taken as a whole) to fully and timely perform any of their payment obligations under any Note Document to which either of the Issuers or any of the Subsidiary Guarantors is a party or (iii) the validity or enforceability of any of the Note Documents or the material rights and remedies of the Trustee and the Noteholder Parties thereunder.

“Material Indebtedness” means Indebtedness (other than Notes) of any one or more of the Issuers or any Subsidiary in an aggregate principal amount exceeding $5.0 million.

“Material Real Property” means any parcel or parcels of Real Property now or hereafter owned or leased by any Issuer or any Guarantor; provided that “Material Real Property” shall not include any Excluded Property.

 

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“Maturity Date” means June 30, 2024.

“Maximum Rate” has the meaning assigned to such term in “—Principal, Maturity and Interest.”

“Merchandise Trust” means a trust fund, pre-need trust, pre-construction trust or other reserve, trust, escrow or any similar arrangement established and administered by a Note Party as required in accordance with applicable law to receive and administer the aggregate of all amounts required by applicable law derived from the sale of services and personal property, such as foundations, markers, memorials, memorial bases, monuments, urns, vases, vaults and caskets, used in connection with the final disposition, memorialization, interment, entombment or inurnment of human remains.

“Minimum Liquidity Cure Trigger Date” has the meaning assigned to such term in “—Events of Default and Remedies.”

“Moody’s” means Moody’s Investors Service, Inc., and its successors.

“Mortgaged Properties” means each Material Real Property encumbered by a Mortgage pursuant to the post-closing and the further assurance and additional security affirmative covenants set forth in the Indenture.

“Mortgage Amendment” means, with respect to each Existing Mortgage, an amendment of such Existing Mortgage between the applicable Subsidiary Guarantor and the Collateral Agent in form and substance reasonably satisfactory to the Required Noteholder Parties.

“Mortgages” means, collectively, the mortgages, trust deeds, deeds of trust, deeds to secure debt and other security documents (including amendments to any of the foregoing, and including an Existing Mortgage, as assigned by the Refinanced Credit Agreement Agent to the Collateral Agent, and as amended by the applicable Subsidiary Guarantor and Collateral Agent) delivered with respect to Mortgaged Properties, unless an Existing Mortgage is amended, each substantially in the form set forth as an exhibit to the Indenture (with such changes as may be necessary to account for local law matters) or in such other form as is reasonably satisfactory to the Required Noteholder Parties and the Issuers, in each case, as amended, supplemented or otherwise modified from time to time.

“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Partnership or any Subsidiary or any ERISA Affiliate (other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414) is making or accruing an obligation to make contributions, or has within any of the preceding six plan years made or accrued an obligation to make contributions.

“Net Proceeds” has the meaning assigned to such term in “—Mandatory Redemption.”

“New Notes” has the meaning assigned to such term in “—General.”

“Nomination and Director Voting Agreement” means the Second Amendment to the Nomination and Director Voting Agreement dated the Indenture Closing Date by and among the Partnership, Axar Capital Management L.P., American Infrastructure Funds L.P. and certain affiliates of the purchasers party thereto, as such Nomination and Director Voting Agreement may be amended, restated, modified or otherwise replaced from time to time.

“Note Documents” means (i) the Indenture, (ii) the Security Documents, (iii) any Intercreditor Agreement, (iii) the Registration Rights Agreement (except with respect to the New Notes) and (v) all other documents, certificates, instruments or agreements executed and delivered by or on behalf of a Note Party for the benefit of any Agent or Secured Parties in connection therewith on or after the Indenture Closing Date.

 

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“Note Obligations” means (i) the due and punctual payment by the Issuers of (a) the unpaid principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Notes issued by the Issuers under the Indenture, when and as due, whether at maturity, by acceleration, upon one or more dates set for redemption or otherwise and (b) all other monetary obligations of the Issuers owed under or pursuant to the Indenture and each other Note Document, including obligations to pay fees, expense reimbursement obligations and indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) and (ii) the due and punctual payment of all obligations of each other Note Party under or pursuant to each of the Note Documents.

“Note Parties” means the Issuers and the Subsidiary Guarantors.

“Noteholder Party” means the initial purchasers of the Old Notes and the Holders.

“Notes” has the meaning assigned to such term in “—General.” For all purposes of this “Description of the New Notes” and the Indenture, the term “Notes” shall also include any PIK Notes that may be issued.

“Notes Minimum” means $2,000 (or if a PIK Payment has been made $1.00).

“Notes Multiple” means $1,000 (or if a PIK Payment has been made $1.00).

“Officer’s Certificate” means a certificate signed on behalf of each of the Issuers by a Responsible Officer of each Issuer who, in the case of the Officer’s Certificate required by clause (i) of “—Certain Covenants— Financial Statements, Reports, etc.,” must be a Financial Officer of the Partnership (or C-Corporation), which meets the requirements set forth in the Indenture.

“Operating Cash Flow Amount” means, on any date, the aggregate amount of “net cash provided by operating activities” (or successor line item) set forth in the financial statements that have been (or were required to be) delivered for the relevant Test Period.

“Operating Company” means StoneMor Operating LLC, a Delaware limited liability company.

“Opinion of Counsel” means a written opinion from legal counsel who is reasonably acceptable to the Trustee. The counsel that delivers an Opinion of Counsel on behalf of the Issuers or other person may be an employee of, or counsel, to the Issuers or such other person.

“Old Notes” has the meaning assigned to such term in “—General.”

“Parent Entity” means any direct or indirect parent of the Partnership (including, without limitation, the General Partner, but excluding, for the avoidance of doubt, any Permitted Holder).

“Partnership Agreement” means that certain Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of September 9, 2008, as amended, restated, modified, extended, renewed, replaced or supplemented from time to time as permitted under the Indenture.

“Patents” means (i) any and all patents and patent applications; (ii) all inventions and improvements described and claimed therein; (iii) all reissues, divisions, continuations, renewals, extensions, and continuations-in-part thereof; (iv) all licenses of the foregoing whether as licensee or licensor; (v) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future infringements thereof; (vi) all rights to sue for past, present, and future infringements thereof and (vii) all rights corresponding to any of the foregoing throughout the world.

 

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“Paying Agent” has the meaning assigned to such term in “—Paying Agent and Registrar.”

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

“Permitted Holders” means, Axar Capital Management, L.P., the C-Corporation and their respective Affiliates other than, for the avoidance of doubt, the Partnership and any of its Subsidiaries.

“Permitted Investments” means:

 

(i)

direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America), in each case maturing within one year from the date of acquisition thereof;

 

(ii)

investments in commercial paper maturing within one year from the date of acquisition thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

 

(iii)

investments in certificates of deposit, banker’s acceptances and time deposits maturing within one year from the date of acquisition thereof issued or guaranteed by or placed with, and money market deposit accounts issued or offered by, any domestic office of any commercial bank organized under the laws of the United States of America or any State thereof which has a combined capital and surplus and undivided profits of not less than $250,000,000;

 

(iv)

fully collateralized repurchase agreements with a term of not more than thirty days for securities described in clause (i) above and entered into with a financial institution satisfying the criteria described in clause (iii) above; and

 

(v)

money market funds that (a) comply with the criteria set forth in SEC Rule 2a-7 under the Investment Company Act of 1940, (b) are rated AAA by S&P and Aaa by Moody’s and (c) have portfolio assets of at least $5,000,000,000.

“Permitted Liens” has the meaning assigned to such term in “—Certain Covenants—Limitation on Liens.”

“Permitted Refinancing Indebtedness” means any Indebtedness issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease or refund (collectively, to “Refinance”), the Indebtedness being Refinanced (or previous refinancings thereof constituting Permitted Refinancing Indebtedness); provided that (i) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and premium (including tender premiums) thereon and underwriting discounts, defeasance costs, fees, commissions, expenses, plus an amount equal to any existing commitment unutilized thereunder and letters of credit undrawn thereunder), (ii)(a) the final maturity date of such Permitted Refinancing Indebtedness is on or after the final maturity date of the Indebtedness being Refinanced and (b) the Weighted Average Life to Maturity of such Permitted Refinancing Indebtedness (excluding customary amortization) is greater than or equal to the lesser of (1) the Weighted Average Life to Maturity of the Indebtedness being Refinanced and (2) the Weighted Average Life to Maturity of the Notes then outstanding, (iii) if the Indebtedness being Refinanced is subordinated in right of payment and/or in lien priority to the Note Obligations under the Indenture, such Permitted Refinancing Indebtedness shall be subordinated in right of payment and/or in lien priority, as applicable, to such Note Obligations on terms not materially less favorable to the Noteholder Parties as those contained in the documentation governing the Indebtedness being Refinanced, (iv) no Permitted Refinancing Indebtedness shall have obligors that are not (or would not have been) obligated with respect to the Indebtedness being so Refinanced, (v) the other terms of such Permitted Refinancing Indebtedness (other than interest rates, fees, floors, funding discounts and redemption or prepayment premiums and other pricing terms) are substantially similar to, or not more restrictive to the Partnership and the Subsidiaries than, in each case taken as a whole, the terms applicable to the Notes (except for (a) covenants or other provisions applicable only to periods after the Maturity Date or (b) those that are otherwise reasonably acceptable to the Issuers and the Required Noteholder Parties (with communication of such covenants or

 

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provisions, if any, to be delivered to the Issuers, the Trustee and the Collateral Agent in writing) (or, if more restrictive, the Note Documents are amended to contain such more restrictive terms to the extent required to satisfy the foregoing standard)) and (vi) at the time of such Refinancing, no Event of Default shall have occurred or be continuing.

“Perpetual Care Trust” means a trust fund or other reserve, trust, escrow or any similar arrangement established and administered by a Note Party as required in accordance with applicable law for the purpose of receiving the aggregate of all amounts required by applicable law derived from the sale of interests in real property, or fixtures, including, without limitation, mausoleums, niches, columbaria, urns, or crypts, used in connection with the final disposition, memorialization, interment, entombment, or inurnment of human remains and set aside in reserve, trust, escrow or any similar arrangement and administering such amounts for the perpetual care and maintenance of cemetery lots, graves, grounds, landscaping, roads, paths, parking lots, fences, mausoleums, columbaria, vaults, crypts, utilities, and other improvements, structures and embellishments.

“person” means any natural person, corporation, business trust, joint venture, association, company, partnership, limited liability company or government, individual or family trusts, or any agency or political subdivision thereof.

“PIK Interest” means the interest on the Notes due in respect of the PIK Interest Portion on an Interest Payment Date, which is paid, at the Issuers’ election, by increasing the amount of outstanding Notes or by issuing additional PIK Notes.

“PIK Interest Portion” has the meaning assigned to such term in “—Principal, Maturity and Interest.”

“PIK Payment” has the meaning assigned to such term in “—Principal, Maturity and Interest.”

“Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA that is subject to Title IV of ERISA or Section 412 of the Code (other than a Multiemployer Plan) maintained or contributed to by the Partnership, any Subsidiary or any ERISA Affiliate or to which the Partnership, any Subsidiary or any ERISA Affiliate has or may have an obligation to contribute, and each such plan for the six-year period immediately following the latest date on which the Partnership, any Subsidiary or any ERISA Affiliate maintained, contributed to or had an obligation to contribute to (or is deemed under Section 4069 of ERISA to have maintained or contributed to or to have had an obligation to contribute to, or otherwise to have liability with respect to) such plan.

“Platform” shall have the meaning assigned to such term in “—Certain Covenants—Financial Statements, Reports, etc.”

“Preferred Stock” means any Equity Interest with preferential right of payment of dividends or upon liquidation, dissolution, or winding up.

“primary obligor” has the meaning assigned to such term in the definition of the term “Guarantee.”

“Pro Forma Compliance” means, at any date of determination, that the Partnership and the Subsidiaries shall be in compliance, after giving pro forma effect to the relevant transactions, with the Financial Covenants, recomputed as at the last day of the most recently ended fiscal quarter of the Partnership and the Subsidiaries for which the financial statements and certificates required pursuant to”—Certain Covenants—Financial Statements, Reports, etc.” have been delivered.

“pro forma effect” or “pro forma basis” means, as to any person, for any Specified Transaction that occurs subsequent to the commencement of a period for which the financial effect of such Specified Transaction is being calculated, and giving effect to the Specified Transaction for which such calculation is being made as well

 

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as all other Specified Transactions that have occurred subsequent to the commencement of such period and or prior to the date of such calculation, such calculation as will give pro forma effect to all such Specified Transaction as if such Specified Transaction occurred on the first day of the four consecutive fiscal quarter period ended on or before the occurrence of such Specified Transaction.

“Public Noteholder Party Information” shall have the meaning assigned to such term in “—Certain Covenants—Financial Statements, Reports, etc.”

“Qualified Stock” of any Person means Equity Interests of such Person other than Disqualified Stock of such Person.

“Real Property” means, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned in fee or leased by any Note Party, whether by lease, license, or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, incidental to the ownership, lease or operation thereof.

“Record Date” has the meaning assigned to such term in “—Principal, Maturity and Interest.”

“Refinance” has the meaning assigned to such term in the definition of the term “Permitted Refinancing Indebtedness,” and “Refinanced” shall have a meaning correlative thereto.

“Refinanced Credit Agreement Agent” means Capital One, National Association as Administrative Agent under the Refinanced Credit Agreement.

“Refinanced Credit Agreement” means that certain Credit Agreement, dated as of August 4, 2016, among StoneMor Operating LLC, the other borrowers party thereto, the lenders party thereto, the Refinanced Credit Agreement Agent, and the other agents and parties thereto, as amended through Amendment No. 8, dated as of February 4, 2019, and which was terminated on the Indenture Closing Date as part of the Transactions.

“Refinanced Senior Notes” means the 7 7/8% Senior Notes due 2021, issued under the Refinanced Senior Notes Indenture.

“Refinanced Senior Notes Indenture” means that indenture, dated as of May 28, 2013, by and among StoneMor Partners L.P., Cornerstone Family Services of West Virginia Subsidiary, Inc., the guarantor subsidiaries party thereto and Wilmington Trust, National Association, as trustee, which governed the Refinanced Senior Notes and which was terminated on the Indenture Closing Date as part of the Transactions.

“Registrar” has the meaning assigned to such term in “—Paying Agent and Registrar.”

“Registration Rights Agreement” has the meaning assigned to such term in “—General.”

“Regulation U” means Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“Release” means any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating or migrating in, into, onto or through the Environment.

“Reportable Event” means any reportable event as defined in Section 4043(c) of ERISA or the regulations issued thereunder as to which the PBGC has not waived the requirement of Section 4043(a) of ERISA that it be notified of such event with respect to a Plan under subsections .22, .23, .25, .27 or .28 of 29 CFR Part 4043.

 

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“Required Noteholder Parties” means, at any time, Holders holding Notes (including PIK Notes, if any) that, taken together, represent more than 50% of the principal amount of the Notes outstanding at such time (including PIK Notes, if any), voting as a single class.

“Requirement of Law” means, as to any person, any law, treaty, rule, regulation, statute, order, ordinance, decree, judgment, consent decree, writ, injunction, settlement agreement or governmental requirement enacted, promulgated or imposed or entered into or agreed by any Governmental Authority, in each case applicable to or binding upon such person or any of its property or assets or to which such person or any of its property or assets is subject.

“Responsible Officer” means, in relation to any Person, any of the following: the Chairman of the Board of Directors, the Chief Executive Officer, the Chief Financial Officer, the President, any Vice President, the Treasurer or the Secretary of such Person (or, if such Person is organized as a limited partnership, its general partner).

“Restricted Payments” has the meaning assigned to such term in “—Certain Covenants—Limitation on Dividends and Distributions.” The amount of any Restricted Payment made other than in the form of cash or cash equivalents shall be the fair market value thereof (as determined by the Issuers in good faith).

“Rights Offering” has the meaning specified in “—Certain Covenants—Limitation on Dividends and Distributions.”

“S&P” means Standard & Poor’s Rating Services, a division of McGraw Hill, Inc., a New York corporation, or any successor rating agency.

“Sale and Lease-Back Transaction” has the meaning assigned to such term in “—Certain Covenants— Limitation on Sale and Lease-Back Transactions.”

“SEC” means the Securities and Exchange Commission or any successor thereto.

“Secured Parties” means, collectively, the Trustee, the Collateral Agent, each Agent, each Noteholder Party and each subagent appointed pursuant to the Indenture by the Trustee with respect to matters relating to the Note Documents or by the Collateral Agent with respect to matters relating to any Security Document.

“Securities Account” has the meaning assigned to such term in the Uniform Commercial Code.

”Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Security Documents” means the Mortgages, the Collateral Agreement, each intellectual property security agreement, and each of the security agreements, pledge agreements and other instruments and documents executed and delivered at any time pursuant to any of the foregoing or pursuant to the post-closing and the further assurances and additional security affirmative covenants in the Indenture.

“Specified Equity Contribution” has the meaning assigned to such term in “—Events of Default and Remedies.”

“Specified Transaction” means (i) any Disposition of all or substantially all the assets of or all the Equity Interests of any Subsidiary of the Partnership or of any product line, business unit or line of business of the Partnership, (ii) any Investment that results in a person becoming a Subsidiary of the Partnership, (iii) the incurrence, assumption, issuance or permanent redemption or repayment of any Indebtedness or (iv) the entry into any other transaction or the making of any payment for which Pro Forma Compliance is required by the terms of the Indenture.

 

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“Subagent” means one or more trustees, co-trustees, collateral co-agents, collateral subagents or attorneys-in-fact with respect to all or any part of the Collateral that each Agent may appoint from time to time, when it deems it to be necessary or desirable; provided that no such Subagent shall be authorized to take any action with respect to any Collateral unless and except to the extent expressly authorized in writing by the Trustee or the Collateral Agent.

“subsidiary” means, with respect to any person (herein referred to as the “parent”), any corporation, partnership, association or other business entity (i) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or more than 50% of the general partnership interests are, at the time any determination is being made, directly or indirectly, owned, Controlled or held or (ii) that is, at the time any determination is made, otherwise Controlled, by the parent or one or more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

“Subsidiary” means, unless the context otherwise requires, a subsidiary of the Partnership. Notwithstanding the foregoing, the Archdiocese Holdco shall not constitute a “Subsidiary” for purposes of this “Description of the New Notes,” the Indenture or any other Note Document.

“Subsidiary Guarantor” means each Subsidiary of the Partnership that is not an Excluded Subsidiary.

”Successor Issuer” has the meaning assigned to such term in clause (x) of “—Certain Covenants—Mergers, Consolidations, Sales of Assets and Acquisitions.”

“Taxes” means any and all present or future taxes, duties, levies, imposts, assessments, withholdings or other similar charges imposed by any Governmental Authority, whether computed on a separate, consolidated, unitary, combined or other basis and any interest, fines, penalties or additions to tax with respect to the foregoing.

“Termination Date” means the date on which the principal of and interest on each Note and all other expenses or amounts payable under any Note Document shall have been paid in full (other than in respect of contingent indemnification and expense reimbursement claims not then due) or the Indenture shall have otherwise been discharged in accordance with the provisions described in”—Satisfaction and Discharge.”

“Test Period” means, on any date of determination, the period of four consecutive fiscal quarters of the Partnership then most recently ended (taken as one accounting period) for which financial statements have been (or were required to be) delivered pursuant to clauses (i) or (ii) of “—Certain Covenants—Financial Statements, Reports, etc.;” provided that, prior to the first date financial statements have been delivered pursuant to clauses (i) or (ii) of “—Certain Covenants—Financial Statements, Reports, etc.,” the Test Period in effect shall be the four fiscal quarter period ended March 31, 2019.

“Third Party Funds” means any accounts or funds, or any portion thereof, received by the Partnership or any of its Subsidiaries as agent on behalf of third parties in accordance with a written agreement that imposes a duty upon the Partnership or one or more of its Subsidiaries to collect and remit those funds to such third parties.

“Trademarks” means (i) all trademarks (including service marks), trade names, trade dress, and trade styles and the registrations and applications for registration thereof and the goodwill of the business symbolized by the foregoing; (ii) all licenses of the foregoing, whether as licensee or licensor; (iii) all renewals of the foregoing; (iv) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and future infringements thereof; (v) all rights to sue for past, present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing and (vi) all rights corresponding to any of the foregoing throughout the world.

“Transactions” means, collectively, the transactions that previously occurred in connection with the issuance of the Old Notes pursuant to the Note Documents, including (i) the execution, delivery and performance of the

 

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Note Documents, the creation of the Liens pursuant to the Security Documents, and the purchase and sale of the Old Notes under the Indenture, the issuance of the Old Notes and the use of proceeds thereof; (ii) the issuance of the Convertible Preferred Units; (iii) the repayment in full of, and the termination and release of all obligations, security interests and commitments under, the Refinanced Credit Agreement and the Refinanced Senior Notes Indenture and (iv) the payment of all fees and expenses owed in connection with the foregoing.

“Treasury Rate” has the meaning assigned to such term in “—Optional Redemption.”

“Trust Accounts” means, collectively, the Perpetual Care Trusts and Merchandise Trusts.

“Trust Committee” has the meaning assigned to such term in “—Certain Covenants—Maintenance of Trust Funds and Trust Accounts.”

“Trust Funds” means, as of any date of determination in connection with the Trust Accounts, the aggregate of all amounts required by applicable law to be set aside in reserve, trust or escrow or any similar arrangement.

“Trust Indenture Act” has the meaning assigned to such term in “—General.”

“Trustee” has the meaning assigned to such term in “—General” until a successor replaces it and, thereafter, means the successor.

“Uniform Commercial Code” or “UCC” means the Uniform Commercial Code as the same may from time to time be in effect in the State of New York or the Uniform Commercial Code (or similar code or statute) of another jurisdiction, to the extent it may be required to apply to any item or items of Collateral.

“Unrestricted Cash” means cash or cash equivalents of the Partnership or any of its Subsidiaries that would not appear as ”restricted” on a consolidated balance sheet of the Partnership or any of its Subsidiaries; provided that amounts pledged with respect to cash collateralized letters of credit shall be excluded from the calculation of Unrestricted Cash for all purposes under the Indenture.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing: (i) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment by (ii) the then outstanding principal amount of such Indebtedness.

“Wholly Owned Subsidiary” of any person means a subsidiary of such person, all of the Equity Interests of which (other than directors’ qualifying shares or nominee or other similar shares required pursuant to applicable law) are owned by such person or another Wholly Owned Subsidiary of such person. Unless the context otherwise requires, “Wholly Owned Subsidiary” means a Subsidiary of the Partnership that is a Wholly Owned Subsidiary of the Partnership.

“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

“Yield Maintenance Premium” has the meaning assigned to such term in “—Optional Redemption.”

 

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BOOK-ENTRY; DELIVERY AND FORM

With the exception of one definitive note, the New Notes initially will be represented by one or more notes in registered, global form without interest coupons (collectively, the “Global Notes”). The Global Notes will be deposited upon issuance with the Trustee as custodian for DTC, in New York, New York, and registered in the name of DTC or its nominee, in each case, for credit to an account of a direct or indirect participant in DTC as described below. Beneficial interests in the Global Notes may be held only through the Euroclear System (“Euroclear”) and Clearstream Banking, S.A. (“Clearstream”) (as indirect participants in DTC).

Except as set forth below, the Global Notes may be transferred, in whole and not in part, only to another nominee of DTC or to a successor of DTC or its nominee. Beneficial interests in the Global Notes may not be exchanged for definitive notes in registered certificated form (“Definitive Notes”) except in the limited circumstances described below. See “—Exchange of Global Notes for Definitive Notes.” Except in the limited circumstances described below, owners of beneficial interests in the Global Notes will not be entitled to receive physical delivery of notes in certificated form.

Transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of DTC and its direct or indirect participants (including, if applicable, those of Euroclear and Clearstream), which may change from time to time.

Depository Procedures

The following description of the operations and procedures of DTC, Euroclear and Clearstream is provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to changes by them. The Issuers take no responsibility for these operations and procedures and urges investors to contact the system or their participants directly to discuss these matters.

DTC has advised the Issuers that DTC is a limited-purpose trust company organized under the laws of the State of New York, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act, and that it was created to hold securities for its participating organizations (collectively, the “Participants”) and to facilitate the clearance and settlement of transactions in those securities between Participants through electronic book-entry changes in accounts of its Participants. The Participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations.

Access to DTC’s system is also available to other entities such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a Participant, either directly or indirectly (collectively, the “Indirect Participants”). Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through the Participants or the Indirect Participants. The ownership interests in, and transfers of ownership interests in, each security held by or on behalf of DTC are recorded on the records of the Participants and Indirect Participants.

DTC has also advised the Issuers that, pursuant to procedures established by it:

 

(1)

upon deposit of the Global Notes, DTC will credit the accounts of Participants designated by the exchange agent with portions of the principal amount of the Global Notes; and

 

(2)

ownership of these interests in Global Notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interests in Global Notes).

Investors in the Global Notes who are Participants may hold their interests therein directly through DTC. Investors in the Global Notes who are not Participants may hold their interests therein indirectly through

 

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organizations (including Euroclear and Clearstream) that are Participants. Euroclear and Clearstream will hold interests in the Global Notes on behalf of their participants through customers’ securities accounts in their respective names on the books of their respective depositories, which are Euroclear Bank SA./ NV, as operator of Euroclear, and Citibank, N.A., as operator of Clearstream. All interests in a Global Note may be subject to the procedures and requirements of DTC. Interests in a Global Note held through Euroclear or Clearstream may be subject to the procedures and requirements of those systems (as well as to the procedures and requirements of DTC).

The laws of some jurisdictions may require that certain persons take physical delivery in definitive form of securities that they own and the ability to transfer beneficial interests in a Global Note to persons that are subject to those requirements will be limited to that extent. Because DTC can act only on behalf of Participants, which in turn act on behalf of Indirect Participants, the ability of a person having beneficial interests in a Global Note to pledge those interests to persons that do not participate in the DTC system, or otherwise take actions in respect of those interests, may be affected by the lack of a physical certificate evidencing those interests.

Except as described below, owners of an interest in Global Notes will not have notes registered in their names, will not receive physical delivery of Definitive Notes and will not be considered the registered owners or “Holders” thereof under the Indenture for any purpose.

Payments in respect of the principal of, and interest and premium, if any, on, a Global Note registered in the name of DTC or its nominee will be payable to DTC in its capacity as the registered holder under the Indenture. Under the terms of the Indenture, the Issuers and the Trustee will treat the persons in whose names Notes, including Global Notes, are registered as the owners of such Notes for the purpose of receiving payments and for all other purposes. Consequently, neither the Issuers, the Trustee nor any agent of the Issuers or the Trustee has or will have any responsibility or liability for:

 

(1)

any aspect of DTC’s records or any Participant’s or Indirect Participant’s records relating to or payments made on account of beneficial ownership interests in Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in Global Notes; or

 

(2)

any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants.

DTC has advised the Issuers that its current practice, upon receipt of any payment in respect of securities such as the Notes (including principal and interest), is to credit the accounts of the relevant Participants with the payment on the payment date unless DTC has reason to believe it will not receive payment on that payment date. Each relevant Participant is credited with an amount proportionate to its beneficial ownership of an interest in the principal amount of the relevant security as shown on the records of DTC. Payments by the Participants and the Indirect Participants to the beneficial owners of Notes will be governed by standing instructions and customary practices and will be the responsibility of the Participants or the Indirect Participants and will not be the responsibility of DTC, the Trustee or the Issuers. Neither the Issuers nor the Trustee will be liable for any delay by DTC or any of its Participants or Indirect Participants in identifying the beneficial owners of any Notes, and the Issuers and the Trustee may conclusively rely on and will be protected in relying on instructions from DTC or its nominee for all purposes.

Transfers between Participants in DTC will be effected in accordance with DTC’s procedures, and will be settled in same-day funds. Transfers between participants in Euroclear and Clearstream will be effected in accordance with their respective rules and operating procedures.

Cross-market transfers between the Participants, on the one hand, and Euroclear or Clearstream participants, on the other hand, will be effected through DTC in accordance with DTC’s rules on behalf of Euroclear or Clearstream, as the case may be, by its respective depositary; however, such cross-market transactions will require delivery of instructions to Euroclear or Clearstream, as the case may be, by the counterparty in such

 

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system in accordance with the rules and procedures and within the established deadlines (Brussels time) of such system. Euroclear or Clearstream, as the case may be, will, if the transaction meets its settlement requirements, deliver instructions to its depositary to take action to effect final settlement on its behalf by delivering or receiving interests in the relevant Global Note from DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Euroclear participants and Clearstream participants may not deliver instructions directly to the depositaries for Euroclear or Clearstream.

DTC has advised the Issuers that it will take any action permitted to be taken by a holder of Notes only at the direction of one or more Participants to whose account DTC has credited the interests in Global Notes and only in respect of such portion of the aggregate principal amount of the Notes as to which that Participant or those Participants has or have given the relevant direction. However, if there is an Event of Default under the Indenture, DTC reserves the right to exchange the applicable Global Notes for Definitive Notes, and to distribute those Notes to its Participants.

Although DTC, Euroclear and Clearstream have agreed to the foregoing procedures in order to facilitate transfers of interests in Global Notes among Participants, they are under no obligation to perform or to continue to perform those procedures, and may discontinue or change those procedures at any time. Neither the Issuers nor the Trustee nor any of their respective agents will have any responsibility for the performance by DTC, Euroclear, Clearstream or their respective participants or indirect participants of their respective obligations under the rules and procedures governing their operations.

Exchange of Global Notes for Definitive Notes

A Global Note is exchangeable for Definitive Notes if:

 

•

DTC (a) notifies the Issuers that it is unwilling or unable to continue as depositary for the applicable Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, a successor depositary is not appointed;

 

•

the Issuers, at their option, notify the Trustee in writing that they elect to cause the issuance of Definitive Notes; or

 

•

there has occurred and is continuing a Default with respect to the Notes.

In addition, beneficial interests in a Global Note may be exchanged for Definitive Notes upon prior written notice given to the Trustee by or on behalf of DTC in accordance with the Indenture. In all cases, Definitive Notes delivered in exchange for any Global Note or beneficial interests in a Global Note will be registered in the names, and issued in any approved denominations, requested by or on behalf of the depositary (in accordance with its customary procedures).

Same-Day Settlement and Payment

The Notes represented by the Global Notes are expected to be eligible to trade in DTC’s Same-Day Funds Settlement System, and any permitted secondary market trading activity in such Notes will, therefore, be required by DTC to be settled in immediately available funds. The Issuers expect that secondary trading in any Definitive Notes will also be settled in immediately available funds. Because of time zone differences, the securities account of a Euroclear or Clearstream participant purchasing an interest in a Global Note from a Participant will be credited, and any such crediting will be reported to the relevant Euroclear or Clearstream participant, during the securities settlement processing day (which must be a business day for Euroclear and Clearstream) immediately following the settlement date of DTC. DTC has advised the Issuers that cash received in Euroclear or Clearstream as a result of sales of interests in a Global Note by or through a Euroclear or Clearstream participant to a Participant will be received with value on the settlement date of DTC, but will be available in the relevant Euroclear or Clearstream cash account only as of the business day for Euroclear or Clearstream following DTC’s settlement date.

 

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CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

The following discussion summarizes the material U.S. federal income tax consequences of the exchange of the Old Notes for the New Notes pursuant to the exchange offer, but does not purport to be a complete analysis of all potential tax effects relating thereto. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local or foreign tax laws are not discussed. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the U.S. Internal Revenue Service (the “IRS”), in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a holder of the Old Notes or the New Notes. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the exchange of the Old Notes for the New Notes pursuant to the exchange offer.

This discussion applies only to Holders who purchased the Old Notes pursuant to their original issuance for cash on June 27, 2019, participate in the exchange offer and held the Old Notes, and will hold the New Notes as capital assets within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a Holder’s particular circumstances. In addition, it does not address consequences relevant to Holders subject to special rules, including, without limitation:

 

•

U.S. expatriates and former citizens or long-term residents of the U.S.;

 

•

persons subject to the alternative minimum tax;

 

•

U.S. persons (as defined in the Code) whose functional currency is not the U.S. dollar;

 

•

persons holding the Old Notes or New Notes as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated investment;

 

•

banks, insurance companies and other financial institutions;

 

•

REITs or regulated investment companies;

 

•

brokers, dealers or traders in securities;

 

•

“controlled foreign corporations,” “passive foreign investment companies” and corporations that accumulate earnings to avoid U.S. federal income tax;

 

•

S corporations, partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);

 

•

tax-exempt organizations or governmental organizations;

 

•

persons subject to special tax accounting rules as a result of any item of gross income with respect to the Old Notes or New Notes being taken into account in an applicable financial statement;

 

•

individual retirement accounts or qualified pension plans; and

 

•

persons deemed to sell the Old Notes or New Notes under the constructive sale provisions of the Code.

If a partnership (including any entity or arrangement classified as a partnership for U.S. federal income tax purposes) holds an Old Note or New Note, the tax treatment of a partner in that partnership generally will depend on the status of the partner, certain determinations made at the partner level and the activities of the partnership. Holders of the Old Notes or New Notes that are partnerships and partners in those partnerships are urged to consult their tax advisors regarding the U.S. federal income tax consequences of the exchange of Old Notes for New Notes.

 

96

THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE EXCHANGE OF THE OLD NOTES FOR THE NEW NOTES ARISING UNDER OTHER U.S. FEDERAL TAX LAWS (INCLUDING ESTATE AND GIFT TAX LAWS), UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.

Exchange Pursuant to the Exchange Offer

The exchange of Old Notes for New Notes pursuant to the exchange offer will not be treated as an “exchange” for U.S. federal income tax purposes, because the New Notes will not be considered to differ materially in kind or extent from the Old Notes. Accordingly, the exchange of Old Notes for New Notes will not be a taxable event to Holders for U.S. federal income tax purposes. As a result, a Holder will not recognize any taxable gain or loss on the exchange of Old Notes for New Notes. Moreover, the New Notes will have the same tax attributes as the Old Notes exchanged therefor and the same tax consequences to Holders as the Old Notes have to Holders, including without limitation, the same issue price, tax basis and holding period.

 

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PLAN OF DISTRIBUTION

Based on interpretations by the staff of the SEC in no-action letters issued to third parties, we believe that you may transfer New Notes issued under the exchange offer in exchange for the Old Notes if:

 

•

you acquire the New Notes in the ordinary course of your business;

 

•

you are not engaged in, and do not intend to engage in, and have no arrangement or understanding with any person to participate in, the distribution (within the meaning of the Securities Act) of such New Notes; and

 

•

you are not our “affiliate” (within the meaning of Rule 405 under the Securities Act).

Each broker-dealer that receives New Notes for its own account pursuant to the exchange offer in exchange for Old Notes that were acquired by such broker-dealer as a result of market-making or other trading activities must acknowledge that it will deliver a prospectus in connection with any resale of such New Notes. To date, the staff of the SEC has taken the position that broker-dealers may fulfill their prospectus delivery requirements with respect to transactions involving an exchange of securities such as this exchange offer with this prospectus. This prospectus, as it may be amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of New Notes received in exchange for Old Notes, where such Old Notes were acquired as a result of market-making activities or other trading activities. We have agreed that, for a period of 90 days after the exchange offer registration statement is declared effective, we will make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with any such resale. In addition, until such date, all dealers effecting transactions in New Notes may be required to deliver this prospectus.

We are entitled under certain circumstances under the Registration Rights Agreement to suspend the use of this prospectus to the extent it is included in a shelf registration statement by broker-dealers if, in our good faith determination, the continued effectiveness of the registration statement and the use of this prospectus would require the public disclosure of material non-public information. If we suspend the use of this prospectus, the period referred to above during which we have agreed to make this prospectus, as amended or supplemented, available to any broker-dealer for use in connection with certain resales, will be extended by a number of days equal to the period of the suspension and we will pay additional interest, if required, pursuant to the Registration Rights Agreement.

If you wish to exchange New Notes for your Old Notes in the exchange offer, you will be required to make representations to us as described in “The Exchange Offer—Representations We Need From You Before You May Participate in the Exchange Offer” in this prospectus and in the letter of transmittal. In addition, if you are a broker-dealer who receives New Notes for your own account in exchange for Old Notes that were acquired by you as a result of market-making activities or other trading activities, you will be required to acknowledge that you will deliver a prospectus in connection with any resale by you of such New Notes.

We will not receive any proceeds from any sale of New Notes by broker-dealers. New Notes received by broker-dealers for their own account pursuant to the exchange offer may be sold from time to time in one or more transactions in any of the following ways:

 

•

in the over-the-counter market;

 

•

in negotiated transactions;

 

•

through the writing of options on the New Notes or a combination of such methods of resale;

 

•

at market prices prevailing at the time of resale;

 

•

at prices related to such prevailing market prices; or

 

•

at negotiated prices.

 

98

Any such resale may be made directly to purchasers or to or through brokers or dealers who may receive compensation in the form of commissions or concessions from any such broker-dealer or the purchasers of any such New Notes. Any broker-dealer that resells New Notes that were received by it for its own account pursuant to the exchange offer in exchange for Old Notes that were acquired by such broker-dealer as a result of market- making or other trading activities and any broker or dealer that participates in a distribution of such New Notes may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of New Notes received by it in the exchange offer, and any profit on any such resale of New Notes and any commission or concessions received by any such persons may be deemed to be underwriting compensation under the Securities Act. The letter of transmittal states that by acknowledging that it will deliver and by delivering a prospectus, a broker- dealer will not be deemed to admit that it is an “underwriter” within the meaning of the Securities Act.

We agreed to permit the use of this prospectus for a period of up to 90 days after the completion of the exchange offer by such broker-dealers to satisfy this prospectus delivery requirement. For a period of 90 days after the consummation of the exchange offer, we will promptly send additional copies of this prospectus and any amendment or supplement to this prospectus to any broker-dealer that requests such documents as provided in the letter of transmittal. Furthermore, we agree to amend or supplement this prospectus during such period, if so requested, in order to expedite or facilitate the disposition of any New Notes by broker-dealers.

We have agreed to pay all expenses incident to the exchange offer, other than fees and expenses of counsel to the Holders and brokerage commissions and transfer taxes, if any, and will indemnify the Holders of the Old Notes (including any broker-dealers) against certain liabilities, including liabilities under the Securities Act. We have also agreed to pay the reasonable fees and expenses of one counsel for Holders whose Old Notes are included in a shelf registration statement.

 

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LEGAL MATTERS

The validity of the New Notes offered in this exchange offer will be passed upon for us by Duane Morris LLP, Philadelphia, Pennsylvania, which will also pass upon for us certain matters of California, Connecticut, Delaware, Florida, Georgia, Illinois, Maryland, New Jersey, New York, Ohio, Pennsylvania and Virginia law. Certain matters under Alabama law will be passed upon for us by Baker, Donelson, Bearman, Caldwell & Berkowitz P.C. Certain matters of Arkansas law will be passed upon for us by Dover Dixon Horne PLLC. Certain matters of Colorado law will be passed upon for us by Holland and Hart LLP. Certain matters of Hawaii law will be passed upon for us by McCorriston Miller Mukai MacKinnon LLP. Certain matters of Indiana law will be passed upon for us by May Oberfell Lorber. Certain matters of Iowa law will be passed upon for us by Nyemaster Goode, P.C. Certain matters of Kansas law will be passed upon for us by Gilliland Green LLC. Certain matters of Kentucky law will be passed upon for us by Vorys, Sater, Seymour and Pease LLP. Certain matters of Michigan law will be passed upon for us by Honigman Miller Schwartz and Cohn LLP. Certain matters of Mississippi law will be passed upon for us by Mitchell, McNutt & Sams, P.A. Certain matters of Missouri law will be passed upon for us by Husch Blackwell LLP. Certain matters of North Carolina law will be passed upon for us by Holland & Knight LLP. Certain matters of Oklahoma law will be passed upon for us by GableGotwals. Certain matters of Oregon and Washington law will be passed upon for us by Davis Wright Tremaine LLP. Certain matters of Puerto Rico law will be passed upon for us by Pietrantoni Méndez & Alvarez LLC. Certain matters of Rhode Island law will be passed upon for us by Brennan, Recupero, Cascione, Scungio & McAllister, LLP. Certain matters of South Carolina law will be passed upon for us by Fox Rothschild LLP. Certain matters of Tennessee law will be passed upon for us by Bass, Berry & Sims PLC. Certain matters of West Virginia law will be passed upon for us by Spilman Thomas & Battle, PLLC. Certain matters of Wisconsin law will be passed upon for us by DeWitt LLP.

 

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EXPERTS

The audited financial statements as of and for the years ended December 31, 2019 and 2018 included in Annex B to this prospectus have been so included in reliance upon the report of Grant Thornton LLP, independent registered public accountants, upon the authority of said firm as experts in accounting and auditing.

 

101

Annex A-1

LETTER OF TRANSMITTAL

FOR HOLDERS OF GLOBAL NOTES

TO TENDER

Old 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024

OF

STONEMOR PARTNERS L.P.

AND

CORNERSTONE FAMILY SERVICES OF WEST VIRGINIA

SUBSIDIARY, INC.

PURSUANT TO THE EXCHANGE OFFER AND

PROSPECTUS DATED JUNE 4, 2020

 

The Exchange Agent for the Exchange Offer is:

Wilmington Trust, National Association

(Exchange Agent/Depositary addresses)

By Mail, Overnight Mail or Courier:

Wilmington Trust, National Association

c/o Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-1626

Attn: Workflow Management – 5th Floor

By Facsimile: (302) 636-4139

Attn: Workflow Management – 5th Floor

By Email: DTC@wilmingtontrust.com

If you wish to exchange currently outstanding 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024 for an equal aggregate principal amount at maturity of new 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024 pursuant to the Exchange Offer, you must validly tender (and not withdraw) outstanding notes to the Exchange Agent prior to 5:00 p.m. New York City time on the Expiration Date by causing an agent’s message to be received by the Exchange Agent prior to such time.

The undersigned hereby acknowledges receipt of the Prospectus, dated June 4, 2020 (the “Prospectus”), of StoneMor Partners L.P. and Cornerstone Family Services of West Virginia Subsidiary, Inc. (together, the “Issuers”), and this Letter of Transmittal (the “Letter of Transmittal”), which together describe the Issuers’ offer (the “Exchange Offer”) to exchange their issued and outstanding 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024 (the “Old Notes”) for a like principal amount of their 9.875%/11.500% Senior Secured PIK

 

A-1

Toggle Notes due 2024 (the “New Notes”) that have been registered under the Securities Act, as amended (the “Securities Act”). Capitalized terms used but not defined herein have the respective meanings given to them in the Prospectus.

The Issuers reserve the right, at any time or from time to time, to extend the Exchange Offer at their discretion, in which event the term “Expiration Date” shall mean the latest date to which the Exchange Offer is extended. To extend the Exchange Offer, we will notify the exchange agent of any extension. We will notify the registered holders of Old Notes of the extension by a press release issued no later than 9:00 a.m., New York City time, on the business day after the previously scheduled Expiration Date.

This Letter of Transmittal is to be used by holders of the Old Notes that were issued in book-entry form and are represented by global notes held for the account of The Depository Trust Company (“DTC”). Tender of such Old Notes is to be made according to the Automated Tender Offer Program (“ATOP”) of DTC pursuant to the procedures set forth in the Prospectus under the caption “Exchange Offer—Procedures for Tendering—Notes Represented by Global Notes Held in Book-Entry Form.” DTC participants that are accepting the Exchange Offer must transmit their acceptance to DTC, which will verify the acceptance and execute a book-entry delivery to the Exchange Agent’s DTC account. DTC will then send a computer-generated message known as an “agent’s message” to the exchange agent for its acceptance. For you to validly tender your Old Notes in the Exchange Offer, the Exchange Agent must receive, prior to the Expiration Date, an agent’s message under the ATOP procedures that confirms that:

 

•

DTC has received your instructions to tender your Old Notes; and

 

•

you agree to be bound by the terms of this Letter of Transmittal.

BY USING THE ATOP PROCEDURES TO TENDER OLD NOTES, YOU WILL NOT BE REQUIRED TO DELIVER THIS LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT. HOWEVER, YOU WILL BE BOUND BY ITS TERMS, AND YOU WILL BE DEEMED TO HAVE MADE THE ACKNOWLEDGEMENTS AND THE REPRESENTATIONS AND WARRANTIES IT CONTAINS, JUST AS IF YOU HAD SIGNED IT.

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

Ladies and Gentlemen:

 

(1)

By tendering Old Notes in the Exchange Offer, you acknowledge receipt of the Prospectus and this Letter of Transmittal.

 

(2)

By tendering Old Notes in the Exchange Offer, you represent and warrant that you have full authority to tender the Old Notes described above and will, upon request, execute and deliver any additional documents deemed by the Issuers to be necessary or desirable to complete the tender of Old Notes.

 

(3)

The tender of the Old Notes pursuant to all of the procedures set forth in the Prospectus will constitute an agreement between the undersigned and the Issuers as to the terms and conditions set forth in the Prospectus.

 

(4)

The Exchange Offer is being made in reliance upon interpretations contained in no-action letters issued to third parties by the staff of the Securities and Exchange Commission (the “SEC”), including Exxon Capital Holdings Corp., SEC No-Action Letter (available May 13, 1988), Morgan Stanley & Co., Inc., SEC No-Action Letter (available June 5, 1991) and Shearman & Sterling, SEC No-Action Letter (available July 2, 1993), that the New Notes issued in exchange for the Old Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than a broker-dealer who purchased Old Notes exchanged for such New Notes directly from the Issuers to resell pursuant to Rule 144A or any other available exemption under the Securities Act, and any such holder that is an “affiliate” of the Issuers within the meaning of Rule 405 under the Securities Act)

 

A-2

without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holders’ business and such holders are not participating in, and have no arrangement with any other person to participate in, the distribution of such New Notes.

 

(5)

By tendering Old Notes in the Exchange Offer, you hereby represent and warrant that:

 

(a)

the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the undersigned, whether or not you are the holder;

 

(b)

neither you nor any such other person have any arrangement or understanding with any person to participate in the distribution of such New Notes;

 

(c)

neither you nor any such other person is engaging in or intends to engage in a distribution of such New Notes;

 

(d)

neither you nor any such other person is an “affiliate,” as such term is defined under Rule 405 promulgated under the Securities Act, of either Issuer or a Guarantor; and

 

(e)

if you are a broker-dealer that will receive New Notes for your own account in exchange for Old Notes, you acquired those Old Notes as a result of market-making activities or other trading activities, and you will deliver a prospectus, as required by law, in connection with any resale of such New Notes.

 

(6)

If you are a broker-dealer that will receive New Notes for your own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, you acknowledge, by tendering Old Notes in the Exchange Offer, that you will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus, you will not be deemed to admit that you are an “underwriter” within the meaning of the Securities Act.

 

(7)

If you are a broker-dealer and Old Notes held for your own account were not acquired as a result of market-making or other trading activities, such Old Notes cannot be exchanged pursuant to the Exchange Offer.

 

(8)

Any of your obligations hereunder shall be binding upon your successors, assigns, executors, administrators, trustees in bankruptcy, and legal and personal representatives.

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

 

1.	Book-Entry Confirmations

Any confirmation of a book-entry transfer to the Exchange Agent’s account at DTC of Old Notes tendered by book-entry transfer (a “Book-Entry Confirmation”), as well as an agent’s message and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date.

 

2.	Partial Tenders

Tenders of Old Notes will be accepted only in minimum denominations of $1.00 and integral multiples of $1.00 in excess thereof. The entire principal amount of Old Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise communicated to the Exchange Agent. If the entire principal amount of all Old Notes is not tendered, then Old Notes for the principal amount of Old Notes not tendered and New Notes issued in exchange for any Old Notes accepted will be delivered to the holder via the facilities of DTC promptly after the Old Notes are accepted for exchange.

 

A-3

3.	Validity of Tenders

All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Old Notes will be determined by the Issuers, in their sole discretion, which determination will be final and binding. The Issuers reserve the absolute right to reject any or all tenders not in proper form or the acceptance for exchange of which may, in the opinion of counsel for the Issuers, be unlawful. The Issuers also reserve the absolute right to waive any of the conditions of the Exchange Offer or any defect or irregularity in the tender of any Old Notes. The Issuers’ interpretation of the terms and conditions of the Exchange Offer (including the instructions on the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Issuers shall determine. Although the Issuers intend to notify holders of defects or irregularities with respect to tenders of Old Notes, neither the Issuers, the Exchange Agent nor any other person shall be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in the Letter of Transmittal, promptly following the Expiration Date.

 

4.	Waiver of Conditions

The Issuers reserve the absolute right to waive, in whole or part, up to the expiration of the Exchange Offer, any of the conditions to the Exchange Offer set forth in the Prospectus or in this Letter of Transmittal.

 

5.	No Conditional Tender

No alternative, conditional, irregular or contingent tender of Old Notes will be accepted.

 

6.	Requests for Assistance or Additional Copies

Requests for assistance or for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Exchange Agent at the address or telephone number set forth on the cover page of this Letter of Transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer.

 

7.	Withdrawal

Tenders may be withdrawn only pursuant to the withdrawal rights set forth in the Prospectus under the caption “Exchange Offer—Withdrawal of Tenders.”

 

8.	No Guarantee of Late Delivery

There is no procedure for guarantee of late delivery in the Exchange Offer.

IMPORTANT: BY USING THE ATOP PROCEDURES TO TENDER OLD NOTES, YOU WILL NOT BE REQUIRED TO DELIVER THIS LETTER OF TRANSMITTAL TO THE EXCHANGE AGENT. HOWEVER, YOU WILL BE BOUND BY ITS TERMS, AND YOU WILL BE DEEMED TO HAVE MADE THE ACKNOWLEDGEMENTS AND THE REPRESENTATIONS AND WARRANTIES IT CONTAINS, JUST AS IF YOU HAD SIGNED IT.

 

 

A-4

Annex A-2

LETTER OF TRANSMITTAL

FOR HOLDERS OF DEFINITIVE NOTES

TO TENDER

Old 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024

OF

STONEMOR PARTNERS L.P.

AND

CORNERSTONE FAMILY SERVICES OF WEST VIRGINIA

SUBSIDIARY, INC.

PURSUANT TO THE EXCHANGE OFFER AND

PROSPECTUS DATED JUNE 4, 2020

 

The Exchange Agent for the Exchange Offer is:

Wilmington Trust, National Association

(Exchange Agent/Depositary addresses)

By Mail, Overnight Mail or Courier:

Wilmington Trust, National Association

c/o Wilmington Trust Company

Rodney Square North

1100 North Market Street

Wilmington, DE 19890-

1626

Attn: Workflow Management – 5th Floor

By Facsimile: (302) 636-4139

Attn: Workflow Management – 5th Floor

By Email: DTC@wilmingtontrust.com

If you wish to exchange currently outstanding 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024 for an equal aggregate principal amount at maturity of new 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024 pursuant to the Exchange Offer, you must validly tender (and not withdraw) outstanding notes to the Exchange Agent prior to 5:00 p.m. New York City time on the Expiration Date by causing an agent’s message to be received by the Exchange Agent prior to such time.

The undersigned hereby acknowledges receipt of the Prospectus, dated June 4, 2020 (the “Prospectus”), of StoneMor Partners L.P. and Cornerstone Family Services of West Virginia Subsidiary, Inc. (together, the “Issuers”), and this Letter of Transmittal (the “Letter of Transmittal”), which together describe the Issuers’ offer (the “Exchange Offer”) to exchange their issued and outstanding 9.875%/11.500% Senior Secured PIK Toggle

 

A-5

Notes due 2024 (the “Old Notes”) for a like principal amount of their 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024 (the “New Notes”) that have been registered under the Securities Act, as amended (the “Securities Act”). Capitalized terms used but not defined herein have the respective meanings given to them in the Prospectus.

The Issuers reserve the right, at any time or from time to time, to extend the Exchange Offer at their discretion, in which event the term “Expiration Date” shall mean the latest date to which the Exchange Offer is extended. To extend the Exchange Offer, we will notify the exchange agent of any extension. We will notify the registered holders of Old Notes of the extension by a press release issued no later than 9:00 a.m., New York City time, on the business day after the previously scheduled Expiration Date.

This Letter of Transmittal is to be used by holders of the Old Notes who hold their Notes in definitive form. Tender of Old Notes is to be made according to the procedures set forth in the Prospectus under the caption “Exchange Offer—Procedures for Tendering—Notes Held in Definitive Form.” For you to validly tender your Old Notes in the Exchange Offer, the Exchange Agent must receive, prior to the Expiration Date:

 

•

The certificate(s) representing the Old Notes to be exchanged in the Exchange Offer; and

 

•

A properly completed and duly executed copy of this Letter of Transmittal.

List below the Old Notes enclosed herewith to which this Letter of Transmittal relates. If the space below is inadequate, list the registered numbers and principal amounts on a separate signed schedule and affix the list to this Letter of Transmittal.

 

Name(s) and Address(es) of Registered Holder(s) Exactly as Name(s) Appear(s) on Old Notes (Please Fill In, If Blank)

Old Note(s) Tendered

Registered Number(s)

Aggregate Principal Amount Represented by Old Notes(s)

Principal Amount Tendered*

*   Unless otherwise indicated, any tendering holder of Old Notes will be deemed to have tendered the entire aggregate principal amount represented by such Old Notes. All tenders must be in minimum denominations of $1.00 and in integral multiples of $1.00 in excess thereof.

PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.

Ladies and Gentlemen:

 

(1)

By tendering Old Notes in the Exchange Offer, you acknowledge receipt of the Prospectus and this Letter of Transmittal.

 

(2)

By tendering Old Notes in the Exchange Offer, you represent and warrant that you have full authority to tender the Old Notes described above and will, upon request, execute and deliver any additional documents deemed by the Issuers to be necessary or desirable to complete the tender of Old Notes.

 

A-6

(3)

The tender of the Old Notes pursuant to all of the procedures set forth in the Prospectus will constitute an agreement between the undersigned and the Issuers as to the terms and conditions set forth in the Prospectus.

 

(4)

The Exchange Offer is being made in reliance upon interpretations contained in no-action letters issued to third parties by the staff of the Securities and Exchange Commission (the “SEC”), including Exxon Capital Holdings Corp., SEC No-Action Letter (available May 13, 1988), Morgan Stanley & Co., Inc., SEC No-Action Letter (available June 5, 1991) and Shearman & Sterling, SEC No-Action Letter (available July 2, 1993), that the New Notes issued in exchange for the Old Notes pursuant to the Exchange Offer may be offered for resale, resold and otherwise transferred by holders thereof (other than a broker-dealer who purchased Old Notes exchanged for such New Notes directly from the Issuers to resell pursuant to Rule 144A or any other available exemption under the Securities Act, and any such holder that is an “affiliate” of the Issuers within the meaning of Rule 405 under the Securities Act) without compliance with the registration and prospectus delivery provisions of the Securities Act, provided that such New Notes are acquired in the ordinary course of such holders’ business and such holders are not participating in, and have no arrangement with any other person to participate in, the distribution of such New Notes.

 

(5)

By tendering Old Notes in the Exchange Offer, you hereby represent and warrant that:

 

(a)

the New Notes acquired pursuant to the Exchange Offer are being obtained in the ordinary course of business of the undersigned, whether or not you are the holder;

 

(b)

neither you nor any such other person have any arrangement or understanding with any person to participate in the distribution of such New Notes;

 

(c)

neither you nor any such other person is engaging in or intends to engage in a distribution of such New Notes;

 

(d)

neither you nor any such other person is an “affiliate,” as such term is defined under Rule 405 promulgated under the Securities Act, of either Issuer or a Guarantor; and

 

(e)

if you are a broker-dealer that will receive New Notes for your own account in exchange for Old Notes, you acquired those Old Notes as a result of market-making activities or other trading activities, and you will deliver a prospectus, as required by law, in connection with any resale of such New Notes.

 

(6)

If you are a broker-dealer that will receive New Notes for your own account in exchange for Old Notes that were acquired as a result of market-making activities or other trading activities, you acknowledge, by tendering Old Notes in the Exchange Offer, that you will deliver a prospectus in connection with any resale of such New Notes; however, by so acknowledging and by delivering a prospectus, you will not be deemed to admit that you are an “underwriter” within the meaning of the Securities Act.

 

(7)

If you are a broker-dealer and Old Notes held for your own account were not acquired as a result of market-making or other trading activities, such Old Notes cannot be exchanged pursuant to the Exchange Offer.

 

(8)

Unless otherwise indicated under “Special Issuance Instructions,” please issue the New Notes issued in exchange for the Old Notes accepted for exchange and return any Old Notes not tendered or not exchanged, in the name(s) of the undersigned. Similarly, unless otherwise indicated under “Special Delivery Instructions,” please mail or deliver the New Notes issued in exchange for the Old Notes accepted for exchange and any Old Notes not tendered or not exchanged (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned’s signature(s). In the event that both “Special Issuance Instructions” and “Special Delivery Instructions” are completed, please issue the New Notes issued in exchange for the Old Notes accepted for exchange in the name(s) of, and return any Old Notes not tendered or not exchanged to, the person(s) so indicated. The undersigned recognizes that the Issuers have no obligation pursuant to the “Special Issuance Instructions” and “Special Delivery Instructions” to transfer any Old Notes from the name of the registered holder(s) thereof if the Issuers do not accept for exchange any of the Old Notes so tendered for exchange.

 

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(9)

Any of your obligations hereunder shall be binding upon your successors, assigns, executors, administrators, trustees in bankruptcy, and legal and personal representatives.

 

 

 

A-8

 

 

A-9

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER

 

1.	Delivery of This Letter of Transmittal and Old Notes.

All Old Notes in definitive form as well as a properly completed and duly executed copy of this Letter of Transmittal and any other documents required by this Letter of Transmittal, must be received by the Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City time, on the Expiration Date.

The method of delivery of the tendered Old Notes, this Letter of Transmittal and all other required documents to the Exchange Agent is at the election and risk of the holder and, except as otherwise provided below, the delivery will be deemed made only when actually received or confirmed by the Exchange Agent. If such delivery is by mail, it is recommended that registered mail, properly insured, with return receipt requested, be used. Instead of delivery by mail, it is recommended that the holder use an overnight or hand delivery service. In all cases, sufficient time should be allowed to assure delivery to the Exchange Agent before the Expiration Date. No Letter of Transmittal or Old Notes should be sent to the Issuers.

 

2.	Tender by Holder.

Only a holder of Old Notes may tender such Old Notes in the Exchange Offer. Any beneficial holder of Old Notes who is not the registered holder and who wishes to tender should arrange with the registered holder to execute and deliver this Letter of Transmittal on his behalf or must, prior to completing and executing this Letter of Transmittal and delivering his Old Notes, either make appropriate arrangements to register ownership of the Old Notes in such holder’s name or obtain a properly completed bond power from the registered holder.

 

3.	Partial Tenders.

Tenders of Old Notes will be accepted only in minimum denominations of $1.00 and integral multiples of $1.00 in excess thereof. The entire principal amount of Old Notes delivered to the Exchange Agent will be deemed to have been tendered unless otherwise communicated to the Exchange Agent. If the entire principal amount of all Old Notes is not tendered, then Old Notes for the principal amount of Old Notes not tendered and New Notes issued in exchange for any Old Notes accepted will be sent to the holder at his or her registered address promptly after the Old Notes are accepted for exchange.

 

4.	Signatures on this Letter of Transmittal; Bond Powers and Endorsements; Guarantee of Signatures.

If this Letter of Transmittal (or facsimile hereof) is signed by the registered holder(s) of the Old Notes tendered hereby, the signature must correspond with the name(s) as written on the face of the Old Notes without alteration, enlargement or any change whatsoever.

If this Letter of Transmittal (or facsimile hereof) is signed by the registered holder or holders of Old Notes tendered hereby and the New Notes issued in exchange therefor are to be issued (or any untendered principal amount of Old Notes is to be reissued) to the registered holder, the said holder need not and should not endorse any tendered Old Notes, nor provide a separate bond power. In any other case, such holder must either properly endorse the Old Notes tendered or transmit a properly completed separate bond power with this Letter of Transmittal, with the signatures on the endorsement or bond power guaranteed by an Eligible Institution.

If this Letter of Transmittal (or facsimile hereof) is signed by a person other than the registered holder or holders of any Old Notes listed, such Old Notes must be endorsed or accompanied by appropriate bond powers, in each case signed as the name of the registered holder or holders appears on the Old Notes.

If this Letter of Transmittal (or facsimile hereof) or any Old Notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and, unless waived by the Issuers, evidence satisfactory to the Issuers of their authority to act must be submitted with this Letter of Transmittal.

 

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Endorsements on Old Notes or signatures on bond powers required by this Instruction 4 must be guaranteed by an Eligible Institution.

No signature guarantee is required if (i) this Letter of Transmittal (or facsimile hereof) is signed by the registered holder(s) of the Old Notes tendered hereby and the New Notes are to be issued directly to such registered holder(s) and neither the box entitled “Special Delivery Instructions” nor the box entitled “Special Registration Instructions” has been completed, or (ii) such Old Notes are tendered for the account of an Eligible Institution. In all other cases, all signatures on this Letter of Transmittal (or facsimile hereof) must be guaranteed by an Eligible Institution.

 

5.	Special Registration and Delivery Instructions.

Tendering holders should indicate, in the applicable box or boxes, the name and address to which New Notes or substitute Old Notes for principal amounts not tendered or not accepted for exchange are to be issued or sent, if different from the name and address of the person signing this Letter of Transmittal. In the case of issuance in a different name, the taxpayer identification or social security number of the person named must also be indicated.

 

6.	Transfer Taxes.

The Issuers will pay all transfer taxes, if any, applicable to the exchange of Old Notes pursuant to the Exchange Offer. If, however, New Notes or Old Notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be registered or issued in the name of, any person other than the registered holder of the Old Notes tendered hereby, or if tendered Old Notes are registered in the name of any person other than the person signing this Letter of Transmittal, or if a transfer tax is imposed for any reason other than the exchange of Old Notes pursuant to the Exchange Offer, then the amount of any such transfer taxes (whether imposed on the registered holder or any other persons) will be payable by the tendering holder. If satisfactory evidence of payment of such taxes or exemption therefrom is not submitted with this Letter of Transmittal, the amount of such transfer taxes will be billed directly to such tendering holder.

 

7.	Important Tax Information.

Under U.S. federal income tax law, a holder of New Notes may be subject to backup withholding on reportable payments received in respect of the New Notes unless the holder provides the Exchange Agent with its correct taxpayer identification number (“TIN”) and certain other information on Internal Revenue Service (“IRS”) Form W-9, which is included herein, or otherwise establishes an exemption. If the Exchange Agent is not provided with the correct TIN or an adequate basis for an exemption, a holder may be subject to a penalty imposed by the IRS, and backup withholding (currently at a rate of 24%) may apply to any reportable payments made to such holder. Backup withholding is not an additional tax. Rather, the U.S. federal income tax liability of a person subject to backup withholding will be reduced by the amount withheld. If withholding results in an overpayment of taxes, a refund may be obtained, provided that the required information is timely provided to the IRS.

To prevent backup withholding on reportable payments in respect of the New Notes, each holder that is a U.S. person for U.S. federal income tax purposes must provide such holder’s correct TIN by completing the enclosed IRS Form W-9, certifying that (i) the TIN provided on the IRS Form W-9 is correct (or that the holder is awaiting a TIN), (ii) the holder is not subject to backup withholding because (x) the holder is exempt from backup withholding, (y) the holder has not been notified by the IRS that he or she is subject to backup withholding as a result of a failure to report all interest or dividends, or (z) the IRS has notified the holder that he or she is no longer subject to backup withholding, (iii) the holder is a U.S. person for U.S. federal income tax purposes (including a U.S. resident alien), and (iv) the FATCA code entered on the IRS Form W-9, if any, to indicate that the holder is exempt from FATCA reporting, is correct.

 

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Certain holders (including, among others, corporations and certain non-U.S. persons) are not subject to backup withholding. Exempt U.S. holders should indicate their exempt status on IRS Form W-9 by entering the appropriate exempt payee code. Please see the instructions to the enclosed IRS Form W-9 for more detailed information about how to complete the IRS Form W-9, including information regarding the exempt payee codes.

A non-U.S. holder may qualify as an exempt recipient by submitting to the Exchange Agent a properly completed IRS Form W-8BEN or other appropriate IRS Form W-8, signed under penalties of perjury, attesting to that holder’s exempt status. Non-U.S. holders are urged to consult with their tax advisors to determine which IRS Form W-8 is appropriate. The applicable IRS Form W-8 can be obtained from the Exchange Agent or the IRS website at www.irs.gov.

 

8.	Validity of Tenders

All questions as to the validity, form, eligibility (including time of receipt), acceptance and withdrawal of tendered Old Notes will be determined by the Issuers, in their sole discretion, which determination will be final and binding. The Issuers reserve the absolute right to reject any or all tenders not in proper form or the acceptance for exchange of which may, in the opinion of counsel for the Issuers, be unlawful. The Issuers also reserve the absolute right to waive any of the conditions of the Exchange Offer or any defect or irregularity in the tender of any Old Notes. The Issuers’ interpretation of the terms and conditions of the Exchange Offer (including the instructions on the Letter of Transmittal) will be final and binding on all parties. Unless waived, any defects or irregularities in connection with tenders of Old Notes must be cured within such time as the Issuers shall determine. Although the Issuers intend to notify holders of defects or irregularities with respect to tenders of Old Notes, neither the Issuers, the Exchange Agent nor any other person shall be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give such notification. Tenders of Old Notes will not be deemed to have been made until such defects or irregularities have been cured or waived. Any Old Notes received by the Exchange Agent that are not properly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Exchange Agent to the tendering holders, unless otherwise provided in the Letter of Transmittal, promptly following the Expiration Date.

 

9.	Waiver of Conditions

The Issuers reserve the absolute right to waive, in whole or part, up to the expiration of the Exchange Offer, any of the conditions to the Exchange Offer set forth in the Prospectus or in this Letter of Transmittal.

 

10.	No Conditional Tender

No alternative, conditional, irregular or contingent tender of Old Notes will be accepted.

 

11.	Requests for Assistance or Additional Copies

Requests for assistance or for additional copies of the Prospectus or this Letter of Transmittal may be directed to the Exchange Agent at the address or telephone number set forth on the cover page of this Letter of Transmittal. Holders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Exchange Offer.

 

12.	Withdrawal

Tenders may be withdrawn only pursuant to the withdrawal rights set forth in the Prospectus under the caption “Exchange Offer—Withdrawal of Tenders.”

 

13.	No Guarantee of Late Delivery

There is no procedure for guarantee of late delivery in the Exchange Offer.

 

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Form W-9 (Rev. October 2018) Department of the Treasury Internal Revenue Service		Request for Taxpayer Identification Number and Certification   u Go to www.irs.gov/FormW9 for instructions and the latest information.		Give Form to the requester. Do not send to the IRS.

Part I		Taxpayer Identification Number (TIN)

Enter your TIN in the appropriate box. The TIN provided must match the name given on line 1 to avoid backup withholding. For individuals, this is generally your social security number (SSN). However, for a resident alien, sole proprietor, or disregarded entity, see the instructions for Part I, later. For other entities, it is your employer identification number (EIN). If you do not have a number, see How to get a TIN, later.   Note. If the account is in more than one name, see the instructions for line 1. Also see What Name and Number To Give the Requester for guidelines on whose number to enter.

Social security number

-

-

or

Employer identification number

-

Part II		Certification

Under penalties of perjury, I certify that:

 

1.

The number shown on this form is my correct taxpayer identification number (or I am waiting for a number to be issued to me); and

 

2.

I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (IRS) that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and

 

3.

I am a U.S. citizen or other U.S. person (defined below); and

 

4.

The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.

Certification instructions. You must cross out item 2 above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest and dividends on your tax return. For real estate transactions, item 2 does not apply. For mortgage interest paid, acquisition or abandonment of secured property, cancellation of debt, contributions to an individual retirement arrangement (IRA), and generally, payments other than interest and dividends, you are not required to sign the certification, but you must provide your correct TIN. See the instructions for Part II, later.

 

Sign Here		Signature of U.S. person  u		Date  u

 

Cat. No. 10231X		Form W-9 (Rev. 10-2018)

Form W-9 (Rev. 10-2018)				Page 2

 

 

Form W-9 (Rev. 10-2018)				Page 3