EXHIBIT 10.19
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of November 19, 1997, among CARRIAGE FUNERAL
HOLDINGS, INC., a Delaware corporation (the "Purchaser"), XXXX-XXXXXXXX FUNERAL
HOME, INC., an Alabama corporation (the "Company"), and XXXX XXXXXXXXX, XXXXXXX
XXXX, XXXXX XXXX and XXXX XXXXXXXX (collectively, the "Shareholders") (the
Company and the Shareholders being sometimes hereafter referred to together as
the "Sellers");
W I T N E S S E T H:
WHEREAS, the Company owns all of the operating assets, rights and
properties associated with the operation of the Xxxx-Xxxxxxxx Funeral Home
located at 0000 Xxxxxxxx Xxxxxxx in Dothan, Houston County, Alabama (the
"Home"), and the Shareholders collectively own all of the issued and outstanding
capital stock of the Company; and
WHEREAS, the parties desire that the Purchaser acquire substantially all of
such assets, rights and properties of the Home from the Company, and that the
parties enter into certain related transactions, on the terms and subject to the
conditions hereafter set forth;
NOW, THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1. TRANSFER OF ASSETS BY THE COMPANY. Subject to the provisions of this
Agreement, the Company agrees to sell, and the Purchaser agrees to purchase, at
the Closing referred to in Section 2.1, substantially all of the properties,
assets, rights and business of the Home of every kind and description, tangible
and intangible, real, personal or mixed, wherever located, as they shall exist
at the time of the Closing (collectively, the "Assets"), including, but not
limited to, all of the following-described assets, rights and properties (but
excluding those described in Section 1.2):
(i) inventories of caskets, vaults, urns, accessories, monuments and
other goods and inventories;
(ii) fee simple title to all of the interests in real property used in
the business and operations of the Home, more particularly described on
Schedule 3.5 hereto (collectively, the "Real Property");
(iii) machinery, equipment, motor vehicles (five), furniture,
fixtures, supplies, tools and other fixed assets and property, plant and
equipment, including those described on Schedule 3.10 hereto;
(iv) all cash balances in bank accounts and certificates of deposit
and other investments to fund obligations under preneed contracts;
(v) all pre-need contracts of the Home and other agreements, leases
and commitments described on Schedule 3.11 (other than those shown thereon,
if any, as not being assumed by the Purchaser);
(vi) all rights to the name "Xxxx-Xxxxxxxx Funeral Home" and all
derivatives thereof, and all trademarks, trade names, patents, processes,
copyrights, know-how and similar intangible rights, and all goodwill
associated therewith;
(vii) all permits, licenses, books, records, brochures and literature,
rights in unemployment compensation, industrial accident and other similar
funds, and prepaid items; and
(viii) all other assets, rights and properties owned or leased by the
Company that are used in or necessary for the Home at the time of Closing,
excluding those described in Section 1.2.
At the Closing, the Company shall convey to the Purchaser the Assets free and
clear of any and all liens, security interests, pledges, encumbrances,
easements, rights-of-way or title restrictions of any kind (collectively,
"Liens"), other than easements and other similar restrictions against Real
Property described on Schedule 3.5 ("Permitted Encumbrances").
1.2. RETAINED ASSETS. Notwithstanding the foregoing, the following
properties, assets, rights and interests (the "Retained Assets") are hereby
excluded from the purchase and sale contemplated hereby and are therefore not
included in the Assets:
(i) all cash on hand, in transit or on deposit, including bank account
balances, certificates of deposit and marketable securities, excluding,
however, account balances and certificates of deposit to fund preneed
contracts;
(ii) notes and accounts receivable; and
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(iii) any prepaid federal income taxes of the Company, and any rights
to or claims for federal income tax refunds, in respect of the operation of
the Home prior to the Closing.
1.3. PURCHASE PRICE. The purchase price for the Assets shall be
$1,000,000.00 PLUS the amount (if any) of the Contingent Purchase Price payable
under Section 1.5 below (the "Purchase Price"). Of the Purchase Price, (i) an
amount sufficient to discharge indebtedness of the Company as determined by the
Purchaser pursuant to Section 1.4 shall be paid to the holders of such
indebtedness, (ii) the Contingent Purchase Price, if earned, shall be payable in
the manner specified in Section 1.5, and (iii) the balance of the Purchase
Price, after deducting the amounts in clauses (i) through (ii) above, shall be
paid to the Company in cash at Closing by wire transfer to such account as the
Sellers shall designate in writing at least three business days prior to the
Closing. The Purchase Price shall be subject to adjustment following the Closing
as provided in Sections 1.4 and 1.5.
1.4. ADJUSTMENT TO PURCHASE PRICE. At least two business days prior to the
Closing, the Sellers shall deliver to the Purchaser a written statement,
certified by them to be accurate and complete, setting forth a description, and
the outstanding balance as of the date of such statement, of all liabilities and
obligations of the Company, including (but not limited to) indebtedness for
borrowed money, indebtedness secured by Liens against any of the Assets,
accounts and trade payable, accrued liabilities, federal, state and local taxes,
any liabilities under suits, claims judgments or orders then pending, or any
other liability or obligation (collectively, "Unassumed Liabilities"), excluding
only Assumed Liabilities described in Section 1.6. At Closing, the Purchaser
shall pay out of the Purchase Price such portion thereof as shall be required to
pay and discharge those Unassumed Liabilities as the Purchaser in its sole
discretion deems appropriate, which at a minimum shall include liabilities
secured by Liens against any of the Assets, and any and unsecured indebtedness
for borrowed money, but may also include any of such other liabilities.
Notwithstanding such payment, the Sellers shall remain responsible for paying
any remaining Unassumed Liabilities. Payments under this Section 1.4 shall be
deemed downward adjustments in the Purchase Price.
1.5. CONTINGENT PURCHASE PRICE. If the Earnout Amount (as hereafter
calculated) is determined to be greater than $1,000,000.00, then the Purchaser
shall pay,
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as additional Purchase Price hereunder, the amount by which the Earnout Amount
exceeds $1,000,000.00, without interest. If the Earnout Amount is equal to or
less than $1,000,000.00, then no adjustment to the Purchase Price shall be made
hereunder. If the Contingent Purchase Price is so earned, the Purchaser shall
pay the same on or before March 31, 2001, either in cash or in shares of Class A
Common Stock, $.01 par value ("Class A Common Stock") (based upon its Fair
Market Value, as hereafter defined, determined as of December 31, 2000), of
Carriage Services, Inc., a Delaware corporation ("Parent"), as the Shareholders
shall indicate by written notice delivered to the Purchaser on or before
February 28, 2001 (and in the absence of such notice, the entire amount of the
Contingent Purchase Price shall be payable in cash). The Contingent Purchase
Price shall be subject to offset as provided in Section 10.4. For purposes
hereof:
"Earnout Amount" means the product of (x) the sum of the Home's
Operating Net Income (as hereafter defined) for the Purchaser's fiscal
years ending December 31, 1998-2000, divided by three, MULTIPLIED BY (y)
seven.
"Operating Net Income" of the Home means for any fiscal year, the net
income for such fiscal year attributable to the revenues and expenses from
the Home, determined in accordance with generally accepted accounting
principles and as reflected in the unaudited statement of income of the
operations of the Home for such Fiscal Year, PLUS federal income taxes,
interest, depreciation and amortization deducted for purposes of
calculating such net income. In no event will there be charged against
Operating Net Income, for purposes of the above calculation, any corporate
overhead charges from the Purchaser's corporate offices in Houston, Texas,
other than auditors fees, insurance premiums, legal expenses and other
similar costs of the Purchaser, all of which must be reasonably and
directly attributable to the Home's operations.
"Fair Market Value" means the average Trading Value of a share of
Class A Common Stock for the ten trading days immediately preceding the
date of determination. For purposes of the foregoing, "Trading Value"
means, on any trading day for the Class A Common Stock, (i) if the Class A
Common Stock is traded on a national securities exchange on such trading
day, then the closing price on such trading day as reflected in the
consolidated trading tables of the WALL STREET JOURNAL or any other
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appropriate publication, (ii) if the Class A Common Stock is traded
over-the-counter and reported on NASDAQ, then the average of the high and
low sales prices on such trading day as reported in such publication or, if
not so published, then as reported by NASDAQ, or (iii) if the Class A
Common Stock is not traded on a national securities exchange or in the
NASDAQ National Market System on such trading day, then the representative
bid and asked prices at the end of such trading day in such market as
reported by NASDAQ.
1.6. ASSUMPTION OF LIABILITIES. The Purchaser, upon the sale and purchase
of the Assets, shall, subject to Section 1.7 below, assume and agree to pay or
discharge only the following liabilities and obligations of the Company
(collectively, the "Assumed Liabilities"):
(i) liabilities under those preneed contracts of the Home that are
included in the Assets, provided that as of the Closing such liabilities
are fully covered by trust or insurance; and
(ii) obligations arising after Closing under the agreements, leases
and commitments of the Home described in Schedule 3.11 (other than
agreements, leases and commitments, if any, which are indicated on such
Schedule as not to be assumed by the Purchaser).
The assumption by the Purchaser of the Assumed Liabilities shall not
enlarge any rights or remedies of any third parties under any contracts or
arrangements so assumed. Nothing herein shall prevent the Purchaser from
-contesting in good faith any of the Assumed Liabilities. At Closing, the
Purchaser shall deliver to the Company an instrument, dated the Closing Date and
reasonably satisfactory in form and substance to it, pursuant to which the
Purchaser will assume the Assumed Liabilities.
1.7. LIMITATIONS ON ASSUMPTION. Notwithstanding Section 1.6 above, the
Purchaser will not assume and does not agree to pay or discharge any obligations
or liabilities of the Company not specifically included in the Assumed
Liabilities. In particular, without limiting the generality of the definition of
"Unassumed Liabilities" under Section 1.4 above, the Purchaser shall not assume
or agree to pay or discharge any of the following:
(i) any notes or accounts payable;
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(ii) any trade payables of any kind, regardless of whether entered
into in the ordinary course of business;
(iii) any federal, state or local tax of any type, whether arising by
reason of the sale of the Assets or by operation of the Home prior to the
Closing Date;
(iv) any losses, costs, damages or expense based upon or arising from
any claims, litigation, legal proceedings or other actions against the
Company based upon any set of facts occurring prior to the Closing;
(v) the liabilities and obligations under any warranties to customers
with respect to goods or products sold or services provided by the Company
prior to Closing;
(vi) all personal injury, product liability claims, claims of
environmental damage, claims of hazards to health, strict liability, toxic
torts, enforcement proceedings, cleanup orders and other similar actions or
claims instituted by private parties or governmental agencies, with respect
to the operation of the Home prior to Closing; or
(vii) any other liability or obligation not specifically included
within the Assumed Liabilities.
1.8. CERTAIN PRORATIONS. All normal and customarily proratable items,
including without limitation, real estate and personal property taxes, rents
under leases and utility bills, shall be prorated as of the Closing Date, the
Company being charged and credited for all of same up to such date and the
Purchaser being charged and credited for all of same on and after such date.
Utility services will be transferred to the Purchaser's name on the Closing
Date. If the actual amounts to be prorated are not known as of the Closing Date,
the prorations shall be made on the basis of the best evidence then available,
and thereafter, within thirty (30) days after actual figures are received, a
cash settlement will be made between the Company and the Purchaser.
1.9. INSTRUMENTS OF TRANSFER. At the Closing, the Sellers shall deliver to
the Purchaser such instruments of transfer, assignment and conveyance, including
(without limitation) bills of sale, general warranty deeds,
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lease assignments and assignments of motor vehicle registrations, transferring
title to the Assets to the Purchaser as may reasonably be requested by the
Purchaser. Such instruments shall be reasonably satisfactory in form and
substance to the Purchaser and shall vest in the Purchaser good and marketable
title to all the Assets, free and clear of all Liens except (in the case of Real
Property) for any Permitted Encumbrances.
1.10. DELIVERY OF RECORDS. CONTRACTS AND TRUST FUNDS. At the Closing, the
Company will deliver to the Purchaser all of the leases, contracts, commitments
and rights of the Home constituting a portion of the Assets, with such
assignments thereof and consents to assignment as the Purchaser shall deem
necessary to assure the Purchaser of their full benefit. Simultaneously with
such deliveries, the Company shall take all requisite steps to put the Purchaser
in actual possession and operating control of the Assets and all of the records,
books and other data of the Home. In addition, at the Closing, the Sellers and
the Purchaser shall take all necessary or appropriate action to cause the
transfer of the trust-funds referred to in Section 3.12 including, without
limitation, the obtaining of governmental and third party consents.
1.11. TAXES. Any sales or transfer taxes which may be payable in connection
with the sale of the Assets under this Agreement shall be paid by the Sellers.
1.12. EMPLOYEE MATTERS. On the Closing Date, the Purchaser may (but shall
not be required to) offer employment to each employee of the Home listed on
Schedule 3.19. Each such employee so offered employment-who accepts shall,
effective as of the Closing Date, cease to be an employee of the Company and
shall thereupon become an employee of the Purchaser. The Sellers shall be
responsible for satisfying all claims, if any, of such employees as to accrued
vacation and holiday, health benefits, workers compensation claims, termination
and severance benefits, and any withdrawal liability and vested rights under any
pension or profit sharing plans, all arising and accrued through the Closing
Date, and in no event shall the Purchaser have any liability or responsibility
in respect thereof.
1.13. FURTHER ASSURANCES. The Sellers shall from time to time after the
Closing, without further consideration, execute and deliver such instruments of
transfer, conveyance and assignment (in addition to those delivered pursuant to
Section 1.9), and shall take such other action, as the Purchaser may reasonably
request to
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more effectively transfer, convey and assign to and vest in the Purchaser, and
to put the Purchaser in actual possession and control of, each of the Assets.
2. THE CLOSING.
2.1. TIME AND PLACE. The closing of the transactions contemplated under
this Agreement (the "Closing") shall occur at the offices of Xxxxxxxx Xxxx, 000
X. Xxxx Xxxx., Xxxxxx Xxxx, Xxxxxxx 00000, at 9:00 a.m. on November 20, 1997, or
at such other date, time or place as may be mutually agreed upon by the parties,
but in no event later than November 30, 1997. The date and time of the Closing
is herein called the "Closing Date", and shall be deemed to have occurred as of
the commencement of business on the Closing Date. All action to be taken at the
Closing as hereinafter set forth, and all documents and instruments executed and
delivered, and all payments made with respect thereto, shall be considered to
have been taken, delivered or made simultaneously, and no such action or
delivery or payment shall be considered as complete until all action incident to
the Closing has been completed.
2.2. RELATED TRANSACTIONS. In addition to the purchase and sale of the
Assets, the following transactions shall take place at the Closing:
(i) the Purchaser, on the one hand, and each of Xxxxxxx Xxxxxx
("Xxxxxx") and Xxxx Xxxxxxx ("Xxxx"), on the other, shall each execute and
deliver to the other an Employment Agreement to be dated the Closing Date,
substantially in the forms of Exhibit A-1 and A-2, respectively, hereto
(collectively, the "Employment Agreements"); and
(ii) on the date of this Agreement, Parent, Carriage Services of
Florida, Inc. ("Carriage-Florida"), Forest Lawn/Evergreen Management Corp.
("Forest Lawn) and the shareholders of Forest Lawn have entered into a
Merger Agreement (the "Merger Agreement") providing for, among other
things, the merger of Forest Lawn with and into Carriage-Florida, and the
Closing hereunder is subject to the closing substantially simultaneously
therewith of such merger transaction under the Merger Agreement.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The Sellers jointly and
severally represent and warrant to and agree with the Purchaser that:
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3.1. ORGANIZATION AND EXISTENCE. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Alabama, and has all requisite corporate power to enter into and perform its
obligations under this Agreement.
3.2. OWNERSHIP OF THE COMPANY. The Shareholders collectively own and hold
all of the issued and outstanding capital stock of the Company.
3.3. FINANCIAL STATEMENTS. The Sellers have delivered to the Purchaser (i)
the unaudited balance sheet of the Company at December 31, 1996 (the "Company
Balance Sheet") and the related unaudited income statement of the Company for
the twelve-month period of operations then ended, and (ii) the unaudited balance
sheet of the Company at December 31, 1995 and the related unaudited income
statement of the Company for the twelve-month period of operations then ended.
All of such financial statements are true and correct, have been prepared in
accordance with the books and records of the Company, and present fairly the
financial positions of the Company at the dates thereof and the results of
operations of the Company for the periods then ended in accordance with the
federal income tax method of accounting applied on a consistent basis. The Home
performed at least 114 adult casketed funeral services for the twelve months
ended December 31, 1995, at least 164 adult casketed funeral services for the
twelve months ended December 31, 1996, and at least 74 adult casketed funeral
services for the seven months ended July 31, 1997.
3.4. TITLE TO AND STATUS OF ASSETS. All assets, rights and properties
required in the operation of the -Home are owned or validly leased by the
Company and are included within the Assets. The Company is in actual possession
and control of all properties owned or leased by it which are required in the
operation of the Home, and has good and marketable title to all of the Assets,
free and clear of all Liens (except, in the case of Real Property, for Permitted
Encumbrances).
3.5. REAL PROPERTY.
(a) DESCRIPTION. Schedule 3.5 sets forth a legal description of all parcels
included within the Real Property, and also briefly describes each building and
major structure and improvement thereon. The Company has good and marketable fee
simple title to the Real Property as shown on Schedule 3.5, free and clear of
any and all Liens, other than Permitted Encumbrances. No person other than the
Company has any ownership, leasehold or
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other interest of any kind in the Real Property. The Real Property constitutes
all of the interests in real property required for the operation of the Home as
presently conducted. All of the buildings, structures and improvements located
on the Real Property are in good operating condition, ordinary wear and tear
excepted. None of such buildings, structures or improvements, or the operation
or maintenance thereof as now operated or maintained, contravenes any zoning
ordinance or other administrative regulation or violates any restrictive
covenant or any provision of law, the effect of which would interfere with or
prevent their continued use for the purposes for which they are now being used.
There is not pending nor, to the knowledge of any Seller, threatened any
proceeding for the taking or condemnation of the Real Property or any portion
thereof.
(b) NO FLOOD HAZARDS. The Real Property is not located within an area that
has been designated by the Federal Insurance Administration, the Army Corp of
Engineers, or any other governmental agency or body as being subject to special
flooding hazards.
(c) NON-FOREIGN STATUS. The Company is not a "foreign person" or a "United
States real property holding corporation" (as defined in Section 1445(f)(3) of
the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
issued thereunder), and the Company shall deliver at Closing a non-foreign
affidavit in recordable form containing such information as shall be required by
Code Section 1445(b)(2) and the regulations issued thereunder.
(d) BILLS PAID. All bills and other payments due -with respect to the
ownership, operation, and maintenance of the Real Property have been (and on the
Closing Date will be) paid, and no Liens or other claims for the same have been
filed or asserted against any part of the Real Property.
3.6. ABSENCE OF CHANGES OR EVENTS. Since the date of the Company Balance
Sheet, there has not been:
(i) any adverse change in the financial condition, operations,
properties or prospects of the Home;
(ii)any material damage, destruction or losses against the Home or any
of its properties;
(iii) any claim or liability for any material damages for any actual
or alleged negli-
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gence or other tort or breach of contract against or affecting the Company;
(iv) any declaration or payment of any bonus or other extraordinary
compensation to any employee of the Company;
(v) any hiring, firing, reassignment or other change in any key
personnel of the Company;
(vi) any sale, transfer or other disposition of, or agreement to sell,
transfer or otherwise dispose of, any of the inventories or other assets or
properties of the Company, except in the ordinary course of business;
(vii) any labor strike or labor dispute, or the entering into of any
collective bargaining agreement, with respect to employees of the Company;
(viii) any new competitor that has, to the knowledge of any
Shareholder, built, commenced to build or announced intentions to build a
funeral home or mortuary in direct competition with the Home; or
(ix) any other transaction or event entered into or affecting the
Company other than in the ordinary course of business.
3.7. ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the Company
Balance Sheet and in this Agreement, the Company has no, and none of its assets
or properties are subject to any, liabilities or obligations, other than
unsecured trade accounts payable and accrued expenses arising in the ordinary
course of business since the date of the Company Balance Sheet.
3.8. TAX MATTERS. All federal, state, county, local and other taxes due and
payable on or before the date of this Agreement in respect of the Company and
the ownership of the Assets have been paid. All tax returns and reports required
to be filed for all such taxes have been filed with all taxing authorities, and
all such tax returns and reports are true and correct. True and correct copies
of the federal, state and local income tax returns filed by the Company for each
of its last three taxable years have been furnished to the Purchaser. No
assessments of deficiencies have been made against the Company which are
presently pending or outstanding, and no state or facts exist which would
constitute grounds
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for any such assessment. No agreements, waivers or extensions of time are in
effect for the assessment of deficiencies in respect of the business or any of
the Assets. Following the Closing, the Sellers shall be responsible for
accurately and completely preparing, signing and filing all tax returns and
paying all taxes in respect of the assets and operations of the Company through
the Closing Date and for the sale of the Assets.
3.9. INVENTORY. All inventories reflected in the Company Balance Sheet are,
and all inventories of the Company on the Closing Date will be, (i) accounted
for in accordance with the federal income tax method of accounting applied on a
consistent basis, and (ii) saleable or usable in the ordinary course of business
at usual and customary prices, subject to normal returns and markdowns
consistent with past practice. At the Closing, the Sellers will deliver to the
Purchaser a list, certified by them to be complete and correct, of all of the
inventory of the Home.
3.10.FIXED ASSETS. Schedule 3.10 lists all motor vehicles and other
material items of equipment, fixtures, furniture and other fixed assets used in
the operation of the Home, all of which are included in the Assets. All such
items are in good and operating condition and repair, ordinary wear and tear
excepted.
3.11.CONTRACTS AND COMMITMENTS. Schedule 3.11 sets forth a complete
description of:
(i) all documents evidencing any money borrowed by the Company or the
creation or existence of any Lien against any of the Assets, and all
documents relating to any debt secured in whole or in part by any such
Liens;
(ii) all collective bargaining agreements, employment contracts,
noncompetition agreements and other agreements relating to the employment
of any employees of the Company;
(iii) all joint venture agreements and all other agreements involving
the sharing of profits, involving the Company or the Home;
(iv) all (i) contracts or commitments for capital expenditures for the
Company involving obligations aggregating in excess of $5,000, (ii) leases
under which personal property is leased by the Company and which are not
cancelable by either party thereto without penalty upon notice of 30
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days or less or pursuant to which re $1,000 per annum or $5,000 in the
aggregate, or (iii) contracts and agreements of the Company which do not
terminate or are not terminable by the Company upon notice of 30 days or
less or which involves an obligation on its part in excess of $1,000 per
annum or $5,000 in the aggregate; and
(v) all other contracts and commitments of the Company entered into
outside course of business.
Each contract and other document required to be described in Schedule 3.11 is
valid and in full force and effect and neither the Company, nor, to the
knowledge of the Sellers, none of the other parties thereto, are in default
thereunder. A true and correct copy of each document listed on Schedule 3.11 has
been delivered to the Purchaser by the Sellers.
3.12. PRE-NEED CONTRACTS AND TRUST ACCOUNTS. Schedule 3.12 accurately
lists, as of the date of this Agreement, (i) all preneed contracts of the Home
unfulfilled as of such date, including contracts for the sale of funeral
merchandise and services, and (ii) all trust accounts relating of the Company,
indicating the location of each and the balance thereof. All preneed contracts
required to be listed on Schedule 3.12 (x) have been entered into in the normal
course of business at regular retail prices, or pursuant to a sales promotion
program, solely for use by the named customers and members of their families on
terms not more favorable than shown on the specimen contracts which have been
delivered to the Purchaser, (y) are subject to the rules and regulations of the
Home as now in force (copies of which have been delivered to the Purchaser), and
(z) on the date hereof are in full force and effect, subject to no offsets,
claims or waivers, and neither the the company nor, except as disclosed on
Schedule 3.12, such customer is in default thereunder. All funds received by the
company under preneed contracts have been deposited in the appropriate accounts
and administered and reported in accordance with the terms thereof and as
required by applicable laws and regulations. The aggregate market value of such
preneed accounts, trusts and other depoosits in equal to or greater than the
aggregate preneed liability related thereto. The services heretofore provided by
the Home have been rendered in a professional and competent manner consistent
with prevailing professional standards, practices and customs.
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3.13. INTANGIBLE RIGHTS. There are no patents, patent applications, patent
licenses, trademarks, trademark applications or trademark or trademark licenses
(collectively, "Intangible Rights") used in the operation of the Home, except as
described on Schedule 3.13. The Company is not charged with infringement of any
Intangible Rights, nor do the Sellers know of any such infringement, whether or
not claimed by any person.
3.14. INSURANCE AND CLAIMS. The Company maintains such policies of
insurance in such amounts, and which insure against such losses and risks, as
are generally maintained for comparable businesses and properties. Valid
policies for such insurance will be outstanding and duly in force at all times
prior to the Closing.
3.15. LICENSES. PERMITS. ETC. Schedule 3.15 lists all licenses, franchises,
permits, certificates, consents, rights and privileges that are necessary or
appropriate for the operation of the Home. All such items are in full force and
effect.
3.16. LITIGATION. There are no claims, actions, suits, proceedings or
investigations pending or, to the Sellers' knowledge, threatened against or
affecting the Company or any of the Assets, at law or in equity or before or by
any court or federal, state, municipal or other governmental department,
commission, board, agency or instrumentality. The Company is not subject to any
continuing court or administrative order, writ, injunction or decree, nor is the
Company in default with respect to any order, writ, injunction or decree issued
by any court or foreign, federal, state, municipal or other governmental
department, commission, board, agency or instrumentality.
3.17. COMPLIANCE WITH LAWS. The Company has operated and is operating the
Home in compliance with all federal, state, municipal and other statutes, rules,
ordinances and regulations applicable to the operation of the Home and the
Assets (including without limitation all environmental protection and
occupational safety and health rules, regulations and laws, and laws and
regulations applicable to preneed contracts and trust accounts, including the
so-called "FTC Funeral Rule").
3.18. ENVIRONMENTAL MATTERS.
(a) The Company has complied and is in compliance with all Environmental
Laws (as hereinafter defined).
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(b) Without limiting the generality of the foregoing, the Company has
obtained, and has complied and is in compliance with, all permits, licenses and
other authorizations that may be required pursuant to Environmental Laws for the
occupation of the Real Property and the operation of the business of the
Company.
(c) The Company has not received any notice, report or other information
regarding any liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise) or investigatory, remedial or corrective obligations, relating to
their respective businesses or any of the Real Property arising under
Environmental Laws.
(d) Except as set forth on Schedule 3.18, none of the following exists on
any portion of the Real Property:
(i) Underground storage tanks or surface impoundments;
(ii) Asbestos-containing material in any form or condition; or
(iii) Materials or equipment containing polychlorinated biphenyls.
(e) The Company has not treated, stored, disposed of, arranged for or
permitted the disposal of, transported, handled, or Released any substance,
including without limitation any Hazardous Materials, or owned or operated any
facility or property, so as to give rise to liabilities for response costs,
natural resource damages or attorneys fees pursuant to the Comprehensive
-Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), as
amended, or similar state Environmental Laws.
(f) Neither this Agreement nor the consummation of the transaction that is
the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of any governmental
authority or third parties, pursuant to any so-called "transaction-triggered" or
"responsible property transfer" Environmental Laws.
(g) Without limiting the foregoing, no facts, events or conditions relating
to the past or present facilities, properties or operations of the Company will
prevent, hinder or limit continued compliance with Environmental Laws, give rise
to any investigatory, remedial or corrective obligations pursuant to
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Environmental Laws, or give rise to any other liabilities (whether accrued
absolute, contingent, unliquidated or otherwise) pursuant to Environmental Laws,
including without limitation any relating to onsite or offsite Releases or
threatened Releases of Hazardous Materials, substances or wastes, personal
injury, property damage or natural resource damage.
(h) For purposes of this Section 3.18:
"Environmental Laws" means all laws concerning pollution or protection of
the environment (including without limitation all those relating to the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
Release, threatened Release, control or cleanup of any Hazardous Materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byptoducts, asbestos,
polychlorinated biphenyls, noise or radiation).
"Hazardous Materials" means any hazardous, toxic, dangerous or other waste,
substance of material defined as such in, regulated by or for purposes of any
Environmental Law.
"Release" has the meaning set forth in CERCLA.
3.19. EMPLOYEES. Schedule 3.19 correctly and completely lists the names and
annual or hourly rates of salary and other compensation of all the employees and
agents of the Company. Schedule 3.19 also sets forth the date of the last salary
increase for each employee listed thereon, and the outstanding balances of all
loans and advances made by the Company to any such employee or agent. There are
not pending or threatened against the Company any general labor disputes,
strikes or concerted work stoppages, and there are no discussions, negotiations,
demands or proposals that are pending or have been conducted or made with or by
any labor union or association with respect to any employees of the Company. No
Shareholder is aware of the existence of any serious health condition of any key
management personnel of the Home that might impair any such person's ability to
carry on the essential functions of his or her position into the foreseeable
future after the Closing. The Sellers believe that the relations between the
Company and its employees are good.
3.20. EMPLOYEE BENEFIT PLANS. Schedule 3.20 lists all plans, contracts,
commitments, programs and policies
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(including, without limitation, pension, profit sharing, thrift, bonus, deferred
compensation, severance, retirement, disability, medical, life, dental and
accidental insurance, vacation, sick leave, death benefit and other similar
employee benefit plans and policies) providing benefits to any employee or
former employee of the Company (collectively, the "Plans"). The Sellers have
delivered to the Purchaser true and correct copies of all documents embodying
the Plans. All obligations of the Company under the Plans have been fully paid,
fully funded or adequate accruals therefor have been made on the Company Balance
Sheet. No Plan constitutes a defined benefit plan or defined contribution plan
within the meaning of the Employee Retirement Income Security Act of 1974.
3.21. BOOKS AND RECORDS. All books and records of the Company are true,
correct and complete, have been maintained in accordance with good business
practice and in accordance with all laws, regulations and other requirements
applicable to the Home.
3.22. FINDERS. Except as described in Section 13.1, no Seller is a party to
or in any way obligated under any contract or other agreement, and there are no
outstanding claims against any of them, for the payment of any broker's or
finder's fee in connection with the origin, negotiation, execution or
performance of this Agreement.
3.23. AUTHORITY OF THE COMPANY. The execution, delivery and performance of
this Agreement by the Company have been duly authorized by its Board of
Directors. This Agreement is legally binding and enforceable against the Company
in accordance with its terms. Neither the execution, delivery nor performance of
this Agreement by the Company will result in a violation or breach of, nor
constitute a default or accelerate the performance required under, the Articles
of Incorporation or bylaws of the Company or any indenture, mortgage, deed of
trust or other contract or agreement to which the Company is a party or by which
it or its properties are bound, or violate any order, writ, injunction or decree
of any court, administrative agency or governmental body.
3.24. AUTHORITY OF THE SHAREHOLDERS. Each Shareholder has full authority to
enter into this Agreement and the Documents (as hereafter defined) to which he,
she or it is a party, and to perform his, her or its obligations hereunder and
thereunder, and neither the execution, delivery nor performance by such
Shareholder of this Agreement or such Documents will result in a violation or
breach of any term or provision of, nor con-
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stitute a default under, any contract, agreement or other commitment to which
such Shareholder is a party or by which such Shareholder or the Assets are
bound, or violate any order, writ, injunction or decree of any court,
administrative agency or governmental body. This Agreement is, and such
Documents upon their execution and delivery as herein provided will be, valid
and binding obligations of each Shareholder enforceable against such Shareholder
in accordance with their respective terms. For purposes of this Agreement, the
term "Documents" shall mean, as to any party hereto, any and all agreements,
certificates and other instruments expressly contemplated in this Agreement or
any exhibit hereto to be executed or delivered by or on behalf of such party at
or in connection with the Closing hereunder.
3.25. FULL DISCLOSURE. The representations and warranties made by the
Sellers hereunder or in any Schedules or certificates furnished to the Purchaser
pursuant hereto do not and will not contain any untrue statement of a fact or
omit to state a fact required to be stated herein or therein or necessary to
make the representations or warranties herein or therein, in light of the
circumstances in which they are made, not misleading.
3.26. SCHEDULES. The Schedules referred to in this Section 3 have been
prepared as of the date hereof in a separate binder or volume contemporaneously
with the execution of this Agreement, and have been signed for identification by
the Sellers.
4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. The Purchaser
represents and warrants to and agrees with the Sellers that:
4.1. ORGANIZATION AND EXISTENCE. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has all requisite corporate power to enter into and perform its
obligations under this Agreement and the Documents to which it is a party.
4.2. AUTHORITY OF THE PURCHASER. The execution, delivery and performance by
the Purchaser of this Agreement and the Documents to which it is a party have
been duly authorized by its Board of Directors. This Agreement is, and upon
execution and delivery as herein provided the Documents to which the Purchaser
is a party will be, valid and binding upon the Purchaser and enforceable against
it in accordance with their respective terms. Neither the execution, delivery or
performance by the Purchaser of this Agreement or such
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Documents will conflict with or result in a violation or breach of any term or
provision of, nor constitute a default under, the Certificate of Incorporation
or bylaws of the Purchaser or under any indenture, mortgage, deed of trust or
other contract or agreement to which it is a party or by which the Purchaser or
its property is bound, or violate any order, writ, injunction or decree of any
court, administrative agency or governmental body.
4.3. FINDERS. The Purchaser is not a party to or in any way obligated under
any contract or other agreement, and there are no outstanding claims against it,
for the payment of any broker's or finder's fee in connection with the origin,
negotiation, execution or performance of this Agreement.
4.4. FULL DISCLOSURE. The representations and warranties made by the
Purchaser hereunder or in any certificates furnished to the Sellers pursuant
hereto do not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated herein or therein or
necessary to make the representations or warranties herein or therein, in light
of the circumstances in which they are made, not misleading.
5. COVENANTS OF THE SELLERS PENDING CLOSING. The Sellers jointly and
severally covenant with the Purchaser that:
5.1. CONDUCT OF BUSINESS. From the date of this Agreement to the Closing
Date, the Home will be operated only in the ordinary course, and, in particular,
without the prior written consent of the Purchaser, the Company will not (and
the Shareholders will not cause or permit the Company to):
(i) cancel or permit any insurance to lapse or terminate, unless
renewed or replaced by like coverage;
(ii) commit any act or permit the occurrence of any event or the
existence of any condition of the type described in Section 3.6;
(iii) enter into any contract, agreement or other commitment of the
type described in Section 3.11;
(iv) hire, fire, reassign or make any other change in key personnel of
the Company, or increase the rate of compensation of or declare or
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pay any bonuses to any employee in excess of that listed on Schedule 3.19;
or
(v) take any other action which would cause any of the representations
and warranties made in Section 3 hereof not to be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as if the same had been made on and as of the Closing Date.
5.2. ACCESS TO INFORMATION. Prior to Closing, the Sellers will give to the
Purchaser and its counsel, accountants and other representatives, full and free
access to all of the properties, books, contracts, commitments and records of
the Company so that the Purchaser may have full opportunity to make such
investigation as it shall desire to make of the Home and the affairs of the
Company and the Assets.
5.3. CONSENTS AND APPROVALS. The Sellers will use their best efforts to
obtain the necessary consents and approvals of other persons which may be
required to be obtained on their part to consummate the transactions
contemplated by this Agreement.
5.4. NO SHOP. For so long as this Agreement remains in effect, the Sellers
agree that they shall not enter into any agreements or commitments, or initiate,
solicit or encourage any offers, proposals or expressions of interest, or
otherwise hold any discussions with any potential buyers, investment bankers or
finders, with respect to the possible sale or other disposition of all or any
substantial portion of the Assets, the sale of all or a controlling interest in
the stock of the Company, or-the merger or consolidation of the Company, other
than with the Purchaser.
6. COVENANTS OF THE PURCHASER PENDING CLOSING. The Purchaser covenants with
the Sellers that:
6.1. CONSENTS AND APPROVALS. The Purchaser will use its best efforts to
obtain the necessary consents and approvals of other persons which may be
required to be obtained on its part to consummate the transactions contemplated
in this Agreement.
6.2. CONFIDENTIALITY. Prior to the Closing, the Purchaser and its
representatives will hold in confidence any data and information obtained with
respect to the Home from any representative or employee of the Company,
including the accountants or legal counsel of the Sellers, or from any books or
records of any of them, in
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connection with the transactions contemplated by this Agreement. If the
transactions contemplated hereby are not consummated, neither the Purchaser nor
its representatives shall use such data or information or disclose the same to
others, except as such data or information is published or is a matter of public
knowledge or is required by an applicable law or regulation to be disclosed. If
this Agreement is terminated for any reason, all written data and information
obtained by the Purchaser from the Sellers or their representatives in
connection with the transactions contemplated by this Agreement shall be
returned to the Sellers.
7. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The obligations of the
Purchaser under this Agreement shall be subject to the following conditions, any
of which may be expressly waived by them in writing:
7.1. REPRESENTATIONS AND WARRANTIES TRUE: COVENANTS PERFORMED. The
Purchaser shall not have discovered any material error, misstatement or omission
in the representations and warranties made by the Sellers in Section 3 hereof;
the representations and warranties made by the Sellers herein shall be deemed to
have been made again at and as of the time of Closing and shall then be true and
correct; the Sellers shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by them
at or prior to the Closing; and the Purchaser shall have received a certificate,
signed by each Shareholder and the President of the Company, to the effect of
the foregoing provisions of this Section 7.1.
7.2.OPINION OF COUNSEL. The Sellers shall have caused to be delivered to
the Purchaser an opinion of Xxxxxxxx Xxxx, counsel for the Sellers, dated the
Closing Date, to the effect that:
(i) the Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Alabama, with full
corporate authority to enter into and perform its obligations under this
Agreement;
(ii) the execution, delivery and performance of this Agreement by the
Company have been duly authorized by all necessary corporate action
required on the part of the Company;
(iii) this Agreement and the Documents to which the Sellers are
parties have been duly and validly executed and delivered by the Sellers
and
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constitute the valid and binding obligations of the Sellers enforceable
against them in accordance with their respective terms;
(iv) neither the execution, delivery or consummation of the
transactions contemplated by this Agreement or the Documents to which the
Sellers are parties will (x) result in the breach of or constitute a
default under the Articles of Incorporation or bylaws of the Company, or
under any loan or credit agreement, indenture, mortgage, deed of trust or
other contract or agreement known to such counsel and to which any Seller
is a party or by which the Sellers or the Assets are bound, or (y) violate
any order, writ, injunction or decree known to such counsel of any court,
administrative agency or governmental body;
(v) no authorization, approval or consent of or declaration or filing
with any governmental authority or regulatory body, federal, state or
local, is necessary or required in connection with the execution and
delivery by the Sellers of this Agreement or the Documents to which they
are parties, or the performance of their obligations hereunder or
thereunder; and
(vi) to the knowledge of such counsel after due inquiry, there are no
claims, actions, suits, proceedings or investigations pending or threatened
against or affecting the Company or any of the Assets, at law or in equity
or before or by any court or federal, state, municipal or other
governmental department, commission, board, agency or instrumentality.
Such opinion may, as to matters of fact, be given in reliance upon certificates
of the Shareholders and officers of the Company, copies of which shall be
provided to Purchaser at Closing. Any opinion as to the enforceability of any
document may be limited by bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights and by principles of equity. Such
opinion may be limited to federal law and the internal laws of the State of
Alabama.
7.3. CONSENTS AND APPROVALS. The Sellers shall have obtained all consents
and approvals of other persons and governmental authorities to the transactions
contemplated by this Agreement.
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7.4. NO LOSS OR DAMAGE. Prior to the Closing there shall not have occurred
any loss or damage to any substantial portion of the Assets, regardless of
whether such loss or damage was insured.
7.5. APPROVAL BY COUNSEL. All actions, proceedings, instruments and
documents required to carry out the transactions contemplated by this Agreement
or incidental thereto and all other related legal matters shall have been
approved by counsel for the Purchaser, and such counsel shall have been
furnished with such certified copies of actions and proceedings and other
instruments and documents as they shall have reasonably requested.
7.6. RELATED TRANSACTIONS. Forest Lawn shall have been merged with and into
Carriage-Florida in accordance with the Merger Agreement substantially
simultaneously with the Closing hereunder; and Xxxxxx and Xxxx shall have
executed and delivered to the Purchaser their respective Employment Agreements.
7.7. ENVIRONMENTAL. OSHA AND STRUCTURAL REPORTS. There shall have been
conducted, at the Purchaser's expense, (i) a Phase I (and, if deemed necessary
by Purchaser, a Phase II) environmental audit of the Home and the Real Property
by an environmental consulting firm selected by Purchaser (or, in lieu thereof,
in the Purchaser's sole discretion, an environmental questionnaire, on forms
provided by the Purchaser, shall have been completed by the manager of the Home
and delivered to the Purchaser), (ii) a health and safety inspection of the Home
by a person (who may be an employee of the Purchaser) or firm selected by the
Purchaser and who is qualified and experienced in such matters in the funeral
service industry, and (iii) a structural inspection of the Home by an
engineering firm selected by the Purchaser. The Sellers agree to pay the costs
and to take the action reasonably recommended by such firms and/or persons, up
to $25,000 in the aggregate. In any event, it shall be a condition to the
Purchaser's obligations hereunder that the results of the reports of such firms
or persons (together with any remedial action taken by Sellers, regardless of
the cost, in response thereto) shall be satisfactory to Purchaser in its sole
discretion.
7.8. TITLE INSURANCE. The Purchaser shall have received one or more Owner's
Policies of Title Insurance issued to the Purchaser in agreed-upon amounts,
issued by Commonwealth Land Title Insurance Company or another title company
acceptable to the parties (the "Title Company"), insuring that the Purchaser is
the owner of
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each parcel of the Real Property subject only to the Permitted Encumbrances, and
any standard printed exceptions included in the standard form Owner Policy of
Title Insurance in Alabama. Such policies shall have deleted any exception
regarding restrictions or be limited to restrictions that are Permitted
Encumbrances, any standard exception pertaining to discrepancies, conflicts or
shortages in area shall be deleted except for "shortages in area", and any
standard exception for taxes shall be limited to the year in which the Closing
occurs. All premiums and other costs associated with issuing such policy or
policies shall be borne equally between the Sellers and the Purchaser.
7.9. SURVEY. The Purchaser shall have received an ALTA/ACSM survey prepared
by a licensed surveyor approved by the Purchaser and acceptable to the Title
Company, with respect to each parcel of Real Property, which survey shall comply
with any applicable standards under Alabama law, be sufficient for the Title
Company to delete any survey exception contained in the title insurance policies
referred to in Section 7.8, save and except for the phrase "shortages in area",
and otherwise be in form and content acceptable to Purchaser. The fees and costs
associated with such survey shall be borne equally between the Sellers and the
Purchaser.
7.10. LIEN RELEASES. The holders of any Liens against any of the Assets
(other than Permitted Encumbrances against Real Property) shall have executed
and delivered written releases of such Liens, all in recordable form and
otherwise acceptable to the Purchaser and its lender.
7.11. OTHER MANAGEMENT ARRANGEMENTS. The Sellers shall have identified to
the Purchaser such personnel of the Home (in addition to Xxxxxx) as may be key
to the continued effective management and operation of the Home after the
Closing, and the Purchaser shall have entered into mutually satisfactory
arrangements regarding the continued employment of such personnel at the Home
following the Closing.
7.12. APPROVED BUDGET. The Purchaser and the Shareholders shall have
reached agreement regarding the proposed Operating Budget for the Home for the
current fiscal year of the Purchaser and for the next succeeding fiscal year;
and the Purchaser shall have received from the Shareholders their certificate,
acceptable in form and substance to the Purchaser, setting forth their
acknowledgement regarding such Budget and the agreement
-24-
of Xxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxx to utilize their best efforts to
achieve the results therein contained.
8. CONDITIONS TO OBLIGATIONS OF THE SELLERS. The obligations of the Sellers
under this Agreement shall be subject to the following conditions, any of which
may be expressly waived by the Sellers in writing:
8.1 REPRESENTATIONS AND WARRANTIES TRUE: COVENANTS PERFORMED. The Sellers
shall not have discovered any material error, misstatement or omission in the
representations and warranties made by the Purchaser in Section 4 hereof; the
representations and warranties made by the Purchaser herein shall be deemed to
have been made again at and as of the time of Closing and shall then be true and
correct; the Purchaser shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by it at
or prior to the Closing; and the Sellers shall have received a certificate,
signed by an executive officer of the Purchaser, to the effect of the foregoing
provisions of this Section 8.1.
8.2.OPINION OF COUNSEL. The Purchaser shall have caused to be delivered to
the Sellers an opinion of Xxxxx & Xxxxx, A Professional Corporation, counsel for
Purchaser to the effect that:
(i) the Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and the
Purchaser has all requisite corporate power to enter into and perform its
obligations under this Agreement and the Documents to which it is a party;
(ii) the execution, delivery and performance by the Purchaser of this
Agreement and the Documents to which it is a party have been duly
authorized by its Board of Directors;
(iii) this Agreement is, and upon execution and delivery as herein
provided the Documents to which the Purchaser is a party will be, valid and
binding upon the Purchaser and enforceable against it in accordance with
their respective terms;
(iv) neither the execution, delivery or performance by the Purchaser
of this Agreement or the Documents to which it is a party will conflict
with or result in a violation or breach of any term or provision of, nor
constitute a default under,
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the Certificate of Incorporation or bylaws of the Purchaser or under any
loan or credit agreement, indenture, mortgage, deed of trust or other
contract or agreement known to such counsel and to which the Purchaser is a
party or by which it or its property is bound, or violate any order, writ,
injunction or decree known to such counsel and of any court, administrative
agency or governmental body; and
(v) no authorization, approval or consent of or declaration or filing
with any governmental authority or regulatory body, federal, state or
local, is necessary or required in connection with the execution and
delivery by the Purchaser of this Agreement or the Documents to which the
Purchaser is a party or the performance of its obligations hereunder or
thereunder.
Such opinion may, as to matters of fact, be given in reliance upon
certificates of officers of the Purchaser and certificates of public officials,
copies of which shall be provided to Sellers at Closing. Any opinion as to the
enforceability of any document may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors rights and
by principles of equity. Such opinion may be limited to federal law, the General
Corporation Law of the State of Delaware and the internal laws of the State of
Texas.
8.3. CONSENTS AND APPROVALS. The Purchaser shall have obtained all consents
and approvals of other persons and governmental authorities to the transactions
contemplated by this Agreement.
8.4. RELATED TRANSACTIONS. The Purchaser shall have executed and delivered
to Xxxxxx and Xxxx their respective Employment Agreements; and Forest Lawn shall
have been merged with and into Carriage-Florida in accordance with the Merger
Agreement substantially simultaneously with the Closing hereunder. In addition,
the Purchaser shall have entered into an Employment Agreement with Xxxx Xxxxxxxx
on terms mutually acceptable to them.
9. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
9.1. NATURE OF STATEMENTS. All statements contained in this Agreement or
any Schedule or Exhibit hereto shall be deemed representations and warranties of
the party executing or delivering the same.
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9.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Regardless of any
investigation made at any time by or on behalf of any party hereto, all
covenants, agreements, representations and warranties made hereunder or pursuant
hereto or any Schedule or Exhibit hereto or in connection with the transactions
contemplated hereby and thereby shall not terminate but shall survive the
Closing and continue in effect thereafter.
10. INDEMNIFICATION.
10.1. INDEMNIFICATION BY THE SELLERS. The Sellers jointly and severally
agree to indemnify and hold harmless the Purchaser and its successors and
assigns from and against any and all losses, damages, liabilities, obligations,
costs or expenses (any one such item being herein called a "Loss" and all such
items being herein collectively called "Losses") which are caused by or arise
out of (i) any breach or default in the performance by the Sellers of any
covenant or agreement of the Sellers contained in this Agreement, (ii) any
breach of warranty or inaccurate or erroneous representation made by the Sellers
herein, in any Schedule delivered to the Purchaser pursuant hereto or in any
certificate or other instrument delivered by or on behalf of the Sellers
pursuant hereto, (iii) any claim made against the Purchaser in respect of any of
the Unassumed Liabilities, and (iv) any and all actions, suits, proceedings,
claims, demands, judgments, costs and expenses (including reasonable legal fees)
incident to any of the foregoing.
10.2. INDEMNIFICATION BY THE PURCHASER. The Purchaser agrees to indemnify
and hold harmless the Sellers and their heirs, successors and assigns from and
against-any Losses which are caused by or arise out of (i) any breach or default
in the performance by the Purchaser of any covenant or agreement of the
Purchaser contained in this Agreement, (ii) any breach of warranty or inaccurate
or erroneous representation made by the Purchaser herein or in any certificate
or other instrument delivered by or on behalf of the Purchaser pursuant hereto,
(iii) any claim made against the Sellers in respect of the Assumed Liabilities,
and (iv) any and all actions suits, proceedings, claims, demands, judgments,
costs and expenses (including reasonable legal fees) incident to any of the
foregoing.
10.3. THIRD PARTY CLAIMS. If any third person asserts a claim against an
indemnified party hereunder that, if successful, might result in a claim for
indemnification against an indemnifying party hereunder, the indemnifying party
shall be given prompt written notice
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thereof and shall have the right (i) to participate in the defense thereof and
be represented, at his or its own expense, by advisory counsel selected by him,
her or it, and (ii) to approve any settlement if the indemnifying party is, or
will be, required to pay any amounts in connection therewith. Notwithstanding
the foregoing, if within ten business days after delivery of the indemnified
party's notice described above, the indemnifying party indicates in writing to
the indemnified party that, as between such parties, such claims shall be fully
indemnified for by the indemnifying party as provided herein, then the
indemnifying party shall have the right to control the defense of such claim,
provided that the indemnified party shall have the right (i) to participate in
the defense thereof and be represented, at his or its own expenses, by advisory
counsel selected by him, her, or it, and (ii) to approve any settlement if the
indemnified party's interests are, or would be, affected thereby.
10.4. OFFSET. If any Seller becomes obligated to indemnify the Purchaser
after the Closing date pursuant to this Agreement, at any time when any
Contingent Purchase Price under Section 1.5 or any amount in respect of Closing
Date Receivables under Section 12.1 may then or thereafter be payable, then the
Purchaser may, at its option and without prejudice to any right of the Purchaser
its proceed directly against any Seller, set-off the amount for which any such
Seller shall be so obligated against the Contingent Purchase Price and the
Closing Date Receivables. The exercise of such right of set-off shall be
evidenced by means of a written notice to such effect given by the Purchaser to
the Sellers, describing the basis for indemnity and set-off hereunderand the
amount of the set-off.
11. TERMINATION.
11.1. BEST EFFORTS TO SATISFY CONDITIONS The Sellers agree to use their
best efforts the satisfaction of the conditions specified in Section 7 hereof,
and the Purchaser agrees to use its best efforts to bring about the satisfaction
of specified in Section 8 hereof.
11.2. TERMINATION. This Agreement may be terminated prior to Closing by:
(a) the mutual written consent of the Sellers and the Purchaser;
(b) the Purchaser if a material default shall be made by any Seller in
the observance or in the
-28-
due and timely performance by any of the Sellers' covenants herein
contained, or if there shall have been a material breach or
misrepresentation by any Seller of any of the Sellers' warranties and
representations herein contained, or if the conditions of this Agreement to
be complied with or performed by the Sellers at or before the Closing shall
not have been complied with or performed at the time required for such
compliance or performance and such noncompliance or nonperformance shall
not have been expressly waived by the Purchaser in writing;
(c) the Sellers if a material default shall be made by the Purchaser
in the observance or in the due and timely performance by the Purchaser of
any of the covenants of the Purchaser herein contained, or if there shall
have been a material breach or misrepresentation by the Purchaser of any of
its warranties and representations herein contained, or if the conditions
of this Agreement to be complied with or performed by the Purchaser at or
before the Closing shall not have been complied-with or performed at the
time required for such compliance or performance and such noncompliance or
nonperformance shall not have been expressly waived by the Sellers in
writing; or
(d) either the Sellers or the Purchaser, if the Closing has not
occurred by November 30, 1997.
11.3. LIABILITY UPON TERMINATION. If this Agreement is terminated under
paragraph (a) or (d) of Section 11.2, then no party shall have any liability to
any other party hereunder. If this Agreement is terminated under paragraph (b)
or (c) of Section 11.2, then (i) the party so terminating this Agreement shall
not have any liability to any other party hereto, provided the terminating party
has not breached any representation or warranty or failed to comply with any of
its covenants in this Agreement, and (ii) such termination shall not prejudice
the rights and remedies of the terminating party against any other party which
has breached any of its representations, warranties or covenants herein prior to
such termination.
12. POST-CLOSING COVENANTS.
12.1. CLOSING DATE RECEIVABLES. As described in Section 1.2(ii), all of the
accounts and notes receivable of the Company at the Closing ("Closing Date
Receivables") shall be retained by the Company. At the Closing, the Sellers
shall provide to the Purchaser a listing (certified by them to be complete and
accurate) of the
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Closing Date Receivables in order to identify those to be retained by the
Company. Notwithstanding such retention of ownership, the Purchaser shall have
the exclusive (even as to the Sellers) right and control over the collection of
Closing Date Receivables. After the Closing, for each month in which any Closing
Date Receivables are collected, the Purchaser shall remit 100% of such
collections to the Company by no later than the 15th day of the following month.
The Purchaser shall have no duty to pursue collection of Closing Date
Receivables by means greater than used on its collection of other accounts
receivable, and in no event shall the Purchaser be required to institute suit or
refer any account to a collection agency. At any time after the Closing, the
Purchaser may at any time, by written notice to the Company, return the right
and control over collection of Closing Date Receivables to the Company, in which
case the Purchaser shall be thereafter relieved of all further responsibility
hereunder other than in respect of collections received prior to the giving of
such notice.
12.2. RESTRICTIVE COVENANTS.
(a) NON-COMPETITION. If the Closing occurs, the Shareholders agree
that they shall not, and by their execution hereof the respective spouses
of those Shareholders who are married (the Shareholders, together with all
such spouses, being herein collectively referred to as the "Covenantors")
agree that they shall not, directly or indirectly, for a period commencing
on the Closing Date and ending fifteen (15) years thereafter, do any of the
following
(i) engage, as principal, agent, trustee or through the agency of
any corporation, partnership, association or agent or agency, anywhere
within a 50-mile radius of the Home (the "Territory"), in the funeral,
mortuary, crematory, monument, or any related line of business
(collectively, the "Business");
(ii) own or hold any beneficial interest in one percent (1%) or
more of the voting securities in any corporation, partnership or other
business entity which conducts its operations, in whole or in part, in
the Business within the Territory;
(iii) become an employee of or consultant to, or otherwise serve
in any similar
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capacity with, any corporation, partnership or other business entity
that conducts its business, in whole or in part, in the Business
within the Territory; or
(iv) cause or induce any present or future employee of the
Purchaser or any of its affiliates to leave the employ of the
Purchaser or any such affiliate to accept employment with such
Covenantor or with any person, firm, association or corporation with
which such Covenantor may be or become affiliated.
Without limiting the generality of the foregoing, a Covenantor shall be
deemed directly or indirectly engaged in the Business if he or she acts as a
funeral director at any funeral establishment within the Territory, if such
Covenantor engages in the sale or marketing of preneed funeral contracts for
services to be performed within the Territory, or if such Covenantor promotes or
finances any family member or affiliate to operate a Business or engage in any
of the foregoing activities within the Territory.
(b) REFORMATION. The above covenants shall not be held invalid or
unenforceable because of the scope of the territory or actions subject thereto
or restricted thereby, or the period of time within which such covenants are
operative; but any judgment of a court of competent jurisdiction may define the
maximum territory and actions subject to and restricted thereby and the period
of time during which such covenants are enforceable.
(c) REMEDIES. The Covenantors agree that any remedy at law for any actual
or threatened breach of any of the foregoing covenants would be inadequate and
that the Purchaser shall be entitled to specific performance hereof or
injunctive relief or both, by temporary or permanent injunction or such other
appropriate judicial remedy, writ or order as may be entered into by a court of
competent jurisdiction in addition to any damages that the Purchaser may be
legally entitled to recover together with reasonable expenses of litigation,
including attorneys' fees incurred in connection therewith, as may be approved
by such court.
(d) REPRESENTATIONS. Each Covenantor represents and warrants to and agrees
with the Purchaser
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that (i) such Covenantor understands that the foregoing restrictions are being
made incident to and as a condition of the purchase and sale of the Assets
hereunder, and that such covenants are necessary in order to protect the
business and goodwill being acquired thereby, (ii) such covenants are not
oppressive to such Covenantor in any respect, and (iii) the consideration for
such restrictions is included in the Purchase Price, which consideration such
Covenantor acknowledges is fair and adequate for the giving of the covenants
herein and for which such Covenantor acknowledges a direct and valuable benefit.
(e) PURCHASE PRICE ALLOCATION. The parties agree to allocate $50,000 of the
Purchase Price to the foregoing covenants for federal income tax purposes. Such
allocation is not intended to be a measure of the amount or range of damages
which the Purchaser may suffer or recover as a result of any breach of the
foregoing covenants, and the Shareholders acknowledge that in case of any such
breach, the Purchaser shall be entitled to seek in excess of such amount as it
may otherwise be able to demonstrate itself justly entitled to.
12.3. CHANGE OF NAME. Promptly following the Closing (but in no event later
than 30 days thereafter), the Sellers shall cause the Articles of Incorporation
of the Company to be amended so as to change its name to one wholly dissimilar
to "Xxxx-Xxxxxxxx" or its equivalent, and will furnish the Purchaser with
written evidence of such amendment.
13. MISCELLANEOUS.
13.1.EXPENSES. Regardless of whether the Closing occurs, the parties shall
each pay their own expenses in connection with the negotiation, preparation and
carrying out of this Agreement and the consummation of the transactions
contemplated herein. Without limiting the generality of the foregoing, all
finders' and similar fees and expenses of Xxxxxx, Xxxxxx & Co., sales
representative for the Sellers, shall be borne solely by the Sellers, and in no
event shall the Purchaser be charged or responsible therefor.
13.2.BULK SALES LAWS. The transactions contemplated by this Agreement shall
be consummated without compliance with the bulk sales laws of any state. If by
reason of any applicable bulk sales law any claims are asserted by creditors of
the Company, such claims shall
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be the responsibility of the Purchaser in the case of claims arising under any
of the Assumed Liabilities, or the responsibility of the Sellers in the case of
claims arising under any other liabilities of the company.
13.3. Notices. All notices, requests, consents and other communication
hereunder shall be in writing and shall be deemed to have been given on the date
personnally delivered, three business days following the date mailed, first
class, registered or certified mail, postage pre-paid, or when sent by telex or
telecopy and receipt is confirmed, as follows:
(i) if to any Seller, to:
Xxxx-Xxxxxxxx Funeral Home, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxxx 00000
Attn: Xx. Xxxx Xxxxxxxxx
with a copy to:
Xx. Xxxxxxxx Xxxx
000 X. Xxxx Xxxx.
Xxxxxx Xxxx, Xxxxxxx 00000
(ii) if to the Purchaser, to:
Carriage Funeral Holdings, Inc
0000 Xxxx Xxx Xxxx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: President
with a copy to:
Xxxxx & Xxxxx,
A Professional Corporation
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Mr. W. Xxxxxxxxxxx Xxxxxxxx
or to such other address as shall be given in writing by any party to the other
parties hereto.
13.4 Assignment. The Agreement may not be assigned by any party hereto
without the prior written consent of the other parties, provided, however, that
following the Closing the Purchaser may assign its rights hereunder without the
consent of the Sellers to a successor-in-interest to the Purchaser (whether by
merger, sale of assets or otherwise). Nothing in this Agreement, express or
implied, is intended to confer upon
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any person, other than the parties to this Agreement and their successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
13.5.SUCCESSORS BOUND. Subject to the provisions of Section 13.4, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, assigns, heirs and personal representatives.
13.6.SHAREHOLDER CONSENT. The Shareholders, in their capacities as the
shareholders of the Company, hereby (i) consent to the sale of the Assets
hereunder pursuant to Alabama Code S10-2B-12.02, and (ii) irrevocably and
unconditionally waive all dissenters' and other similar rights with respect to
the sale of the Assets under and pursuant to Alabama Code ss.10-2B-13.21, et
SEQ.
13.7.SECTION AND PARAGRAPH HEADINGS. The section and paragraph headings in
this Agreement are for reference purposes only and shall not affect the meaning
or interpretation of this Agreement.
13.8.AMENDMENT. This Agreement may be amended only by an instrument in
writing executed by both parties hereto.
13.9.ENTIRE AGREEMENT. This Agreement and the Exhibits, Schedules,
certificates and other documents referred to herein constitute the entire
agreement of the parties hereto, and supersede all prior understandings with
respect to the subject matter hereof and thereof (including, without limitation,
the letter of intent between the Purchaser and the Sellers dated June 9, 1997).
13.10. GOVERNING LAW. This Agreement shall be construed and enforced under
and in accordance with and governed by the law of the State of Alabama.
13.11. CONSTRUCTION. As the context requires or permits: pronouns used
herein shall include the masculine, the feminine and neuter; terms used in
plural shall include the singular, and singular terms shall include the plural;
"hereof", "herein", "hereunder" and "hereto" shall refer to this Agreement; and
section and paragraph references, when not expressly referring to another
agreement or document, shall mean sections or paragraphs in this Agreement.
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13.12. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which shall constitute the same
instrument.
IN WITNESS WHEREOF, this Agreement has been executed and delivered as of
the date first above written.
THE PURCHASER:
CARRIAGE FUNERAL HOLDINGS, INC.
By: Xxxx X. Xxxxxx, President
THE COMPANY:
XXXX-XXXXXXXX FUNERAL HOME, INC.
By: Xxxx Xxxxxxxxx, President
THE SHAREHOLDERS:
XXXX XXXXXXXXX
XXXXXXX XXXX
XXXXX XXXX
XXXX XXXXXXXX
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The undersigned spouses of those Shareholders who are married hereby join
in the execution of this Agreement in order to evidence their agreement to be
bound by the provisions of Section 12.2 hereof.
XXXXXX X XXXXXXXXX, spouse of
XXXX XXXXXXXXX
XXXXX XXXX, spouse of
XXXXXXX XXXX
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EXHIBIT DESCRIPTION
A-1 Employment Agreement (Xxxxxxx Xxxxxx)
A-2 Employment Agreement (Xxxx Xxxxxxx)
SCHEDULES DESCRIPTION
3.5 Real Property
3.10 Fixed Assets
3.11 Contracts and Commitments
3.12 Preneed Contracts and Trust Accounts
3.13 Intangible Assets
3.15 Licenses, Permits, Etc.
3.18 Environmental Matters
3.19 Employees
3.20 Employee Benefit Plans
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