SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT, dated as of November 19, 1996 (the
"Agreement"), among ROSE HILLS HOLDINGS CORP., a Delaware
corporation formerly known as Tudor Holding Company ("Holdings"),
BLACKSTONE CAPITAL PARTNERS II MERCHANT BANKING FUND L.P., a
Delaware limited partnership ("BCPII"), ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ HILLS
OFFSHORE CAPITAL PARTNERS L.P., a Delaware limited partnership
("BROCP"), BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P., a
Delaware limited partnership ("BFIP" and, together with BCPII,
BROCP and each of their respective permitted assigns and
transferees as provided herein, "BCP"), ROSES DELAWARE, INC., a
Delaware corporation ("RDI"), THE ▇▇▇▇▇▇ GROUP INC, a British
Columbia corporation ("LWN"), ▇▇▇▇▇▇ GROUP INTERNATIONAL, INC., a
Delaware corporation ("LGII" and, together with LWN, RDI and each
of their respective permitted assigns and transferees as provided
herein, "▇▇▇▇▇▇"), and RHI MANAGEMENT DIRECT L.P., a Delaware
limited partnership ("▇▇▇▇"). BCP, ▇▇▇▇▇▇ and ▇▇▇▇ are herein
collectively referred to as the "Purchasers".
WHEREAS, pursuant to an Agreement and Plan of Merger, dated as of
September 19, 1996 (the "Merger Agreement"), among Roses, Inc.,
the stockholders of Roses, Inc. and Tudor Acquisition Corp., a
wholly owned subsidiary of Holdings which has been renamed Rose
Hills Acquisition Corp. and which is being renamed Rose Hills
Company ("Acquisition"), Acquisition has agreed to merge with and
into Roses, Inc.;
WHEREAS, pursuant to an Asset Purchase Agreement, dated September
19, 1996 (the "Asset Purchase Agreement"), between Rose Hills
Memorial Park Association (the "Association") and Acquisition,
Acquisition has agreed to purchase certain assets and assume
certain liabilities of the Association;
WHEREAS, Acquisition's rights under such agreements have been
assigned to wholly owned subsidiaries of Holdings;
WHEREAS, RDI, through its wholly owned subsidiaries which are
listed on Schedule 4.1 hereto (the "Subsidiaries"), owns and
operates certain funeral homes and combination properties located
in California which are described on Exhibit A hereto (the
"Satellite Properties");
WHEREAS, Holdings desires to own the Subsidiaries and operate the
Satellite Properties through one or more of its wholly owned
subsidiaries, and RDI is willing to convey the Subsidiaries to
Holdings in exchange for preferred shares of Holdings as herein
provided; and
WHEREAS, BCPII, BROCP, BFIP, LGII, RDI and ▇▇▇▇ are subscribing
for shares of Holdings pursuant to this Agreement, such that,
upon consummation of such subscription, all of the issued and
outstanding shares of capital stock of Holdings will be held by
such Purchasers;
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NOW, THEREFORE, in consideration of the mutual covenants and
conditions as hereinafter set forth, the parties hereto do hereby
agree as follows:
I. PURCHASE OF SHARES
1.1 Purchase of Common Shares by BCP. On the terms and
subject to the conditions of this Agreement, BCP hereby
subscribes for and agrees to purchase from Holdings, and Holdings
agrees to issue and sell to BCP, 785.2273 shares of unissued
common stock, par value $0.01 per share, of Holdings (the "BCP
Stock") for a purchase price of $44,000 per share, equal to an
aggregate purchase price of $34,550,000 (the "BCP Contribution").
The purchase of the BCP Stock shall be allocated among BCPII,
BROCP and BFIP as they shall agree.
1.2 Purchase of Common Shares by ▇▇▇▇. On the terms
and subject to the conditions of this Agreement, ▇▇▇▇ hereby
subscribes for and agrees to purchase from Holdings, and Holdings
agrees to issue and sell to ▇▇▇▇, 10.2273 shares of unissued
common stock, par value $0.01 per share, of Holdings (the "▇▇▇▇
Stock") for a purchase price of $44,000 per share, equal to an
aggregate purchase price of $450,000 (the "▇▇▇▇ Contribution").
1.3 Purchase of Common Shares by LGII. On the terms
and subject to the conditions of this Agreement, LGII hereby
subscribes for and agrees to purchase from Holdings, and Holdings
agrees to issue and sell to LGII, 204.5454 shares of unissued
common stock, par value $0.01 per share, of Holdings (the "LGII
Common Stock") for a purchase price of $44,000 per share, equal
to an aggregate purchase price of $9,000,000 (the "LGII Common
Contribution").
1.4 Purchase of Preferred Shares by LGII. On the terms
and subject to the conditions of this Agreement, LGII hereby
subscribes for and agrees to purchase from Holdings, and Holdings
agrees to sell to LGII, $63 million stated value of 10% Pay-in-
Kind Cumulative Preferred Stock, par value $.01 per share, of
Holdings (the "LGII Preferred Stock" and, together with the LGII
Common Stock, the "LGII Stock") for a purchase price of
$63,000,000 (the "LGII Preferred Contribution" and, together with
the LGII Common Contribution, the "LGII Contribution").
1.5 Purchase of Preferred Shares by RDI. On the terms
and subject to the conditions of this Agreement, RDI hereby
subscribes for and agrees to purchase from Holdings, and Holdings
agrees to sell to RDI, $23 million stated value of 10% Pay-in-
Kind Cumulative Preferred Stock, par value $.01 per share, of
Holdings (the "RDI Preferred Stock" and, together with the LGII
Stock, the "▇▇▇▇▇▇ Stock"), in exchange for the transfer to
Holdings of all the issued and outstanding shares of Capital
Stock of each of the Subsidiaries owned by RDI as set forth on
Schedule 4.1 free and clear of all encumbrances or other liens
(the "Subsidiary Stock") (the "RDI Preferred Contribution" and,
together with the LGII Contribution, the "▇▇▇▇▇▇ Contribution").
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1.6 Delivery of Funds and Certificates. The closing of
the purchases and sales of the BCP Stock, the ▇▇▇▇ Stock and the
▇▇▇▇▇▇ Stock (the "Closing" and the date on which the Closing
occurs, the "Closing Date") shall take place at the offices of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, concurrently with the closing of the transactions
contemplated by the Merger Agreement as described in Section 1.2
thereof and the Asset Purchase Agreement as described in Section
3.1 thereof. At the Closing, Holdings will deliver to the
Purchasers duly executed certificates, registered in the
Purchasers' respective names and representing the BCP Stock, the
▇▇▇▇ Stock and the ▇▇▇▇▇▇ Stock, as the case may be, against (i)
in the case of the BCP Contribution, the ▇▇▇▇ Contribution and
the LGII Contribution, payment of the BCP Contribution, the ▇▇▇▇
Contribution or the LGII Contribution (net, in the case of the
LGII Contribution, of amounts previously deposited or paid by
LGII which are referred to in Section 4.1(a)(i) of the Merger
Agreement and Section 2.4(a)(i) of the Asset Purchase Agreement,
to the extent such deposits reduce the amount of the purchase
price payable pursuant to such agreements, and amounts advanced
to cover certain costs and expenses associated with the offering
of the Notes (as hereinafter defined), plus accrued interest
thereon), as applicable, by transfer of immediately available
funds to an account of Holdings previously notified to the
Purchasers by Holdings and (ii) in the case of the RDI Preferred
Contribution, the transfer to Holdings of the share certificates
evidencing all of the Subsidiary Stock, duly endorsed in blank or
accompanied by duly executed stock powers, in form satisfactory
to Holdings, and with all required stock transfer tax stamps
affixed, which together represents payment in full for the BCP
Stock, the ▇▇▇▇ Stock and the ▇▇▇▇▇▇ Stock.
II. REPRESENTATIONS AND WARRANTIES OF HOLDINGS
Representations and Warranties of Holdings. Holdings represents
and warrants to the Purchasers as follows:
2.1 Holdings is a corporation duly incorporated,
validly existing and in good standing under the laws of the state
of Delaware and has all requisite corporate power and authority
to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by Holdings of
this Agreement, the performance by Holdings of its obligations
hereunder, and the consummation by Holdings of the transactions
contemplated hereby have been duly authorized by all requisite
corporate action. This Agreement has been duly executed and
delivered by Holdings and, assuming the due authorizations,
executions and deliveries thereof by the Purchasers, constitutes
a legal, valid and binding obligation of Holdings, enforceable
against Holdings in accordance with its terms.
2.2 The BCP Stock, the ▇▇▇▇ Stock and the ▇▇▇▇▇▇
Stock, when issued and delivered in accordance with the terms
hereof, and any shares of additional capital stock of Holdings
issued pursuant to Section 5.4 of the Stockholders' Agreement
("Additional Equity") when issued and delivered in accordance
with the terms thereof, will be duly authorized, validly issued,
fully paid and nonassessable.
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2.3 The execution, delivery and performance by
Holdings of this Agreement and the consummation by Holdings of
the transactions contemplated hereby or by Section 5.4 of the
Stockholders' Agreement do not and will not, with or without the
giving of notice or the passage of time or both, (i) violate the
provisions of any law, rule or regulation applicable to Holdings
or its properties or assets; (ii) violate the provisions of the
certificate of incorporation or bylaws of Holdings; (iii) violate
any judgment, decree, order or award of any court, governmental
or quasi-governmental agency or arbitrator applicable to Holdings
or its properties or assets or (iv) violate, conflict with or
result in a breach or termination of, or otherwise give any
contracting party additional rights or compensation under, or the
right to terminate or accelerate, or constitute a default under
any agreement or any writing of any nature to which Holdings is a
party or by which any of its assets may be bound.
2.4 No consent, approval, exemption or authorization
is required to be obtained from, no notice is required to be
given to and no filing is required to be made with any third
party (including, without limitation, governmental and quasi-
governmental agencies, authorities and instrumentalities of
competent jurisdiction) by Holdings, which has not been made or
obtained, in order (i) for this Agreement to constitute a legal,
valid and binding obligation of Holdings or (ii) to authorize or
permit the consummation by Holdings of the issuance of the BCP
Stock, the ▇▇▇▇ Stock, the ▇▇▇▇▇▇ Stock and the Additional
Equity.
III. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Representations and Warranties of the Purchasers. Each of the
Purchasers represents and warrants, severally and not jointly, to
Holdings and to the other Purchasers that:
3.1 The execution and delivery of this Agreement by
such Purchaser, the performance by such Purchaser of its
obligations hereunder and the consummation by it of the
transactions contemplated hereby have been duly authorized by all
requisite corporate or partnership action, as appropriate, on the
part of such Purchaser. This Agreement has been duly executed
and delivered by such Purchaser and, assuming the due
authorization, execution and delivery thereof by the other
parties hereto, constitutes a legal, valid and binding obligation
of such Purchaser, enforceable against it in accordance with its
terms.
3.2 The execution, delivery and performances by such
Purchaser of this Agreement and the consummation by such
Purchaser of the transactions contemplated hereby do not and will
not, with or without the giving of notice or the passage of time
or both, (i) violate the provisions of any law, rule or
regulation applicable to such Purchaser or its respective
properties or assets; (ii) violate the provisions of the
constituent organizational documents or other governing
instruments of such Purchaser, as amended to date; (iii) violate
any judgment, decree, order or award of any court, governmental
or quasi-governmental agency or arbitrator applicable to such
Purchaser or its properties or assets or (iv) violate, conflict
with or result in a breach or termination of, or otherwise give
any contracting party additional rights or compensation under, or
the right to terminate or accelerate, or constitute a default
under any agreement or any writing of any nature to which ▇▇▇▇▇▇
or any of the
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Subsidiaries or any of their affiliates is a party or by which
any of their respective assets or properties may be bound.
3.3 Except for filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR Act")
required to be made by BCP II, no consent, approval, exemption or
authorization is required to be obtained from, no notice is
required to be given to, and no filing is required to be made
with, any third party (including, without limitation,
governmental and quasi-governmental agencies, authorities and
instrumentalities of competent jurisdiction) by such Purchaser,
which has not been made or obtained, in order (i) for this
Agreement to constitute a legal, valid and binding obligation of
such Purchaser or (ii) to authorize or permit the consummation by
such Purchaser of the purchases of the BCP Stock, the ▇▇▇▇ Stock
or the ▇▇▇▇▇▇ Stock, as the case may be.
IV. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇
In addition to the several representations and warranties
contained in Article III above, each of the ▇▇▇▇▇▇ entities
jointly and severally represents and warrants to Holdings and BCP
that:
4.1 Corporate Matters; Subsidiary Stock. Each
Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of the incorporation state
indicated for such Subsidiary in Schedule 4.1. Each Subsidiary
is duly qualified and in good standing as a foreign corporation
in each jurisdiction in which it is required so to qualify,
except where the failure so to qualify could not be reasonably
expected to have a material adverse effect on the business,
operations or condition (financial or otherwise) of such
Subsidiary, and each has full corporate power and authority to
carry on the business in which it is now engaged. Schedule 4.1
also sets forth the name and business address of each funeral
home, cemetery and/or other related businesses owned or operated
by the particular Subsidiary. The articles of incorporation or
corporate charters of each Subsidiary and all amendments thereto,
certified by the Secretary of State of the state in which each is
incorporated, a certificate of good standing, or similar
certificate, dated and certified within 30 days of the Closing by
the applicable Secretary of State for each Subsidiary, and a copy
of each Subsidiary's bylaws, as amended to date, certified by the
appropriate recording officers of each, will be delivered to BCP
and Holdings prior to or at the Closing. The Subsidiaries do not
own, directly or indirectly, any interest in the capital stock of
any other corporation, association, trust or similar entity, any
interest in the equity of any partnership or similar entity, any
share in any joint venture, or any other equity or proprietary
interest in any entity or enterprise, however organized and
however such interest may be denominated or evidenced. Schedule
4.1 accurately sets forth the capitalization and ownership, and
the issued and outstanding capital stock, of each of the
Subsidiaries. As of the Closing Date, RDI will own all of the
outstanding capital stock of each of the Subsidiaries. All of
the outstanding capital stock of each Subsidiary is duly
authorized and validly issued, fully paid and nonassessable.
None of the shares of capital stock of any Subsidiary were issued
in violation of any preemptive rights. Between the date hereof
and the Closing, ▇▇▇▇▇▇ will cause each of the Subsidiaries not
to issue, sell or purchase, or agree to issue, sell or purchase,
any
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shares of common stock or any other security of such Subsidiary
(including, without limitation, any option, right or warrant to
purchase any common stock or any other security of such entity)
to any person or entity other than RDI, without the prior written
consent of BCP and Holdings. None of the Subsidiaries has
outstanding, or has agreed to issue or sell, any options, rights,
warrants, calls or other commitments (either in the form of
convertible securities or otherwise) pursuant to which the holder
thereof has or will or may have the right to purchase or
otherwise acquire any shares of common stock or any other
security of any of the Subsidiaries. Except as set forth on
Schedule 4.1, there are no agreements with minority shareholders
of any of the Subsidiaries, or any other person who might
otherwise have any interest in any Subsidiary. There are no
agreements which would prevent or impair or otherwise affect the
transfer of the Subsidiary Stock to Holdings, free and clear of
all encumbrances or other liens, nor are there any agreements to
which any Subsidiary is a party or by which it is subject that
would purport to limit the ability of such Subsidiary to compete.
4.2 Records, Etc. The minute and stock record books
of RDI and each of the Subsidiaries, true and complete copies of
which have been delivered to BCP and Holdings, contain complete
and accurate records in all material respects of all meetings and
other corporate actions of the shareholders and Boards of
Directors of RDI and each of the Subsidiaries and all
transactions with respect to the capital stock of RDI and each of
the Subsidiaries, as of the date hereof.
4.3 Absence of Changes. Since December 31, 1995, each
of the Subsidiaries and Satellite Properties have been operated
only in the ordinary course of business, consistent with past
practices (including the acquisition of any new funeral home,
cemetery or other related businesses), and, except as reflected
in the Unaudited Financials or the notes thereto, there has not
been:
(i) any material adverse change in the condition,
financial or otherwise, of the assets, liabilities, earnings,
book value, businesses or prospects of any of the Subsidiaries
individually or all of the Subsidiaries in the aggregate;
(ii) any damage, destruction or loss, whether or
not covered by insurance, materially and adversely affecting the
businesses or assets of any of the Subsidiaries;
(iii) the incurrence of any material obligation or
liability (whether absolute, accrued, contingent or otherwise and
whether due or to become due), affecting any of the Subsidiaries
(including any new indebtedness for borrowed money), other than
obligations or liabilities incurred in the ordinary course of
business and consistent with past practices;
(iv) any strike or work stoppage affecting any of
the Subsidiaries;
(v) the adoption of any statute, rule, regulation
or order which materially and adversely affects the businesses or
assets of any of the Subsidiaries;
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(vi) any sale, transfer or other disposition of
any assets of any of the Subsidiaries having a value individually
or in the aggregate in excess of $250,000 to any party, except
for payments of third party obligations incurred in the ordinary
course of business in accordance with the regular payment
practices of such Subsidiary, dispositions of surplus or used
equipment, or other dispositions in the ordinary course of
business, consistent with past practices;
(vii) any termination or waiver of any material
rights of value of any of the Subsidiaries other than in the
ordinary course of business;
(viii) any increase in the aggregate compensation
of the employees of any Subsidiary, including, without
limitation, any increase pursuant to any bonus, pension, profit
sharing or other plan or commitment other than those increases
occurring pursuant to the terms of the Plans (as defined in
Section 4.15 hereof) or in the ordinary course of business;
(ix) any expenditure or commitment individually or
in the aggregate in excess of $250,000 for acquisitions,
additions to or replacements of property, plant or equipment of
any of the Subsidiaries with the exception of the purchase of
property on ▇▇▇▇▇▇▇ Way in Van Nuys, California for ▇▇▇▇▇▇▇▇-
▇▇▇▇▇▇ Mortuary and plans to develop the same as a new mortuary;
(x) any forward purchase commitments by any of the
Subsidiaries, or to which any of them may be obligated, involving
individually or in the aggregate more than $250,000 from any one
supplier, except as necessary to fulfill the normal and ordinary
inventory and operational requirements of each of the
Subsidiaries, consistent with past practices;
(xi) any change in the accounting methods or
practices followed by any of the Subsidiaries;
(xii) any amendment to the articles or certificate
of incorporation or by-laws or other charter or organizational
documents of any of the Subsidiaries;
(xiii) any material change in the method of
conducting the business of any of the Subsidiaries (for purposes
of the foregoing, any changes in preneed sales techniques or
practices or funding arrangements for preneed products or in
investment strategies with respect to preneed trust funds (other
than such changes required by applicable law or made in order to
implement policies and practices commonly employed by ▇▇▇▇▇▇ at
newly acquired properties) will be deemed to be material); and
(xiv) any event which would permit any third party
to demand repayment of any indebtedness of any of the
Subsidiaries prior to its normal maturity date.
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4.4 Tax Matters.
(a) "Tax" shall mean any federal, state, local,
or foreign income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code 59A), customs duties,
capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated, or other tax of any
kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not. "Tax Return" shall mean any
return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
(b) All Tax Returns required to be filed with
respect to each of the Subsidiaries have been filed. All such
Tax Returns were correct and complete in all respects. All Taxes
owed by any of the Subsidiaries (whether or not shown on any Tax
Return) have been paid or adequate reserves have been
established. None of the Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax
Return.
(c) There is no material dispute or claim
concerning any Tax liability of any of the Subsidiaries either
claimed or raised by any authority in writing or as to which
LGII, RDI or their respective directors or officers has knowledge
based upon personal contact with any agent of such authority.
(d) Schedule 4.4(d) lists all Tax Returns filed
with respect to the Subsidiaries for taxable periods for which
the statute of limitations has not expired, indicates those Tax
Returns that have been audited, and indicates those Tax Returns
that currently are the subject of audit. None of the
Subsidiaries has waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency.
(e) None of the Subsidiaries has filed a consent
under Code 341(f) concerning collapsible corporations. None of
the Subsidiaries has made any material payments, is obligated to
make any material payments, or is a party to any agreement that
under certain circumstances could obligate it to make any
material payments that will not be deductible under Code 280G.
LGII and RDI are U.S. Persons for U.S. federal income tax
purposes. None of the Subsidiaries is a party to any tax
allocation or sharing agreement. None of the Subsidiaries has
been a member of an affiliated group filing a consolidated
federal income Tax Return other than the affiliated group of
which The ▇▇▇▇▇▇ Group Inc. is the common parent.
(f) The unpaid Taxes relating to the businesses
and assets of the Subsidiaries (A) did not, as of the most recent
fiscal month end, exceed by any material amount the reserve for
Tax liability (rather than any reserve for deferred taxes
established to reflect timing differences between book and tax
income) set forth on the face of the most recent balance sheet
respecting such Subsidiary (rather than any notes thereto)
delivered to Holdings and BCP and (B) will not exceed by any
material amount that reserve as adjusted
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for operations and transactions through the Closing Date in
accordance with the past custom and practice of the Subsidiaries
in filing their Tax Returns.
4.5 Title to Assets; Necessary Satellite Properties.
The Subsidiaries have, and as of the Closing will have, (a) good
and marketable title to the land, buildings, structures,
appurtenances and other real property owned by the Subsidiaries
and (b) good and marketable title to the tangible personal
property owned by the Subsidiaries and located at or used in
connection with the Satellite Properties, free and clear of all
property interests, liens, pledges, claims, charges, escrows,
encumbrances, options, rights of first refusal, mortgages,
indentures, easements, licenses, security agreements or other
agreements, arrangements, contracts, commitments or obligations
(collectively, the "Encumbrances"), except for (i) statutory
liens for taxes or other governmental charges with respect to
owned real property of the Subsidiaries not yet due and payable
or the amount or validity of which is being contested in good
faith by appropriate proceedings by ▇▇▇▇▇▇, and with respect to
which all reserves required by generally accepted accounting
principles have been established, (ii) mechanics, carriers,
workers, repairers and similar statutory liens arising or
incurred in the ordinary course of business for amounts which are
not delinquent and are not individually or in the aggregate, in
excess of $250,000, (iii) liens listed on Schedule 4.5, and (iv)
minor survey exceptions, reciprocal easement agreements and other
customary easements or encumbrances on title to real property
that (x) were not incurred in connection with any indebtedness,
(y) do not render title to the property encumbered thereby
unmarketable and (z) do not, individually or in the aggregate,
materially impair the use, for its current and anticipated
purposes, or value of such owned real property (such exceptions,
"Permitted Encumbrances"). Each of the Subsidiaries has all of
the properties, assets and rights which are necessary to carry on
their respective businesses as presently conducted.
4.6 Real Property Owned or Leased. (i) Schedule 4.6
contains a list and brief description of all real estate
(collectively, the "Real Property") used in the operation of each
of the Satellite Properties. For each parcel of Real Property
listed, Schedule 4.6 indicates whether such Real Property is
owned by a Subsidiary or leased by a Subsidiary as tenant or
landlord, the purpose to which such property is being employed
and, in the case of any such property which is leased, a
description of the parties to each lease, the termination date or
notice requirement with respect to termination, annual rental and
renewal or purchase options and any provisions limiting the
assignability thereof. To ▇▇▇▇▇▇'▇ best knowledge (i) the
structures, improvements and fixtures at or upon the Real
Property including, but not limited to, roofs and structural
elements thereof and the electrical, plumbing, heating,
ventilation, air conditioning and similar units and systems, have
to date been maintained by the respective Subsidiary in a manner
it considers to be reasonable for the conduct of the business and
are in reasonable operating condition to allow the business to
continue to be conducted as heretofore conducted, subject to the
provision of usual and customary maintenance and repair performed
in the ordinary course of business consistent with past practice;
and (ii) there is no material water diffusion or other intrusion
into any buildings, structures, or other improvements included in
the Real Property which would require a material expenditure for
repairs in the next twelve (12) months. The improvements on such
Real Property conform with all applicable federal, state and
local laws and regulations and the properties are zoned for the
various purposes for which such Real Property is currently being
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used (other than permissible prior non-conforming uses), or
variances from such zoning ordinances have been granted.
(ii) As of the Closing, with respect to Real Property
leased, (a) all such leases are in full force and effect and
constitute valid and binding obligations of the respective
parties thereto, (b) there has not been and there currently is
not any default thereunder by any party, (c) no event has
occurred which (whether with or without notice, lapse of time or
the happening or occurrence of any other event) would constitute
a default thereunder entitling the landlord to terminate any such
lease and (iv) the continuation, validity and effectiveness of
all such leases under the current rentals and other current
material terms thereof will in no way be affected by transfer of
the Subsidiary Stock to Holdings under this Agreement. ▇▇▇▇▇▇
has made available to Holdings true and complete copies of all
leases referred to in said Schedule 4.6.
(iii) All water, sewer, gas, steam, electric,
telephone, access and drainage facilities and all other utilities
required by law and by the normal operation of the Satellite
Properties are installed to the boundaries of such Real Property,
are connected to such Real Property where appropriate with valid
permits, and are adequate to service the Real Property for the
operation of the business currently conducted thereon and to
permit full compliance with all applicable law.
(iv) There is no pending or, to LGII's or any
Subsidiary's knowledge after due inquiry, threatened
condemnation, expropriation, eminent domain or similar proceeding
affecting all or any part of any Real Property, and neither
▇▇▇▇▇▇ nor any Subsidiary has received any written or oral notice
of any of the same.
(v) Except for the Permitted Encumbrances and the
leases identified on Schedule 4.6, there are no contracts or
agreements to which ▇▇▇▇▇▇ or any Subsidiary is a party granting
to any Person the right of use or occupancy of any portion of the
Real Property.
4.7 Trademark and Trade Names. The Subsidiaries own
all right, title and interest in, to and under the trademarks,
service marks, trade names, service names, corporate names,
business names and corresponding logos (collectively,
"Trademarks") or have the perpetual, irrevocable, exclusive
license to use all of the Trademarks used in connection with the
operation of the Satellite Properties and any business related
thereto. A true and complete list of all owned and licensed
Trademarks is included in Schedule 4.7.
4.8Insurance. Each of the Subsidiaries, or ▇▇▇▇▇▇ on
behalf of each of the Subsidiaries, maintains in effect insurance
covering the Satellite Properties in an amount (a) believed by
LGII and RDI to be adequate and (b) customary for businesses of
the kind engaged in by the Subsidiaries in the same geographical
areas where such businesses are located, and such insurance
coverage shall be maintained by ▇▇▇▇▇▇ or the Subsidiaries
through the Closing. Schedule 4.8 includes a list of all
policies of insurance maintained with respect to each of the
Satellite Properties, true and complete copies of which have been
provided to BCP and Holdings.
11
4.9 Agreements, Etc. Schedule 4.9 contains a list and
brief description of each of the following contracts, agreements
and other instruments relating to any of the Subsidiaries: (i)
contract with or commitment to any labor union; (ii) contract
involving more than $200,000 in any instance for the future
purchase of materials, supplies, equipment or services; (iii)
profit sharing, bonus, incentive, stock option, pension,
retirement, employee stock purchase, health, dental,
hospitalization, insurance or similar plan, agreement or policy,
formal or informal, providing benefits to any current or former
director, officer, shareholder or employee of any of the
Subsidiaries; (iv) indenture, mortgage, promissory note, loan
agreement, guarantee or other agreement or commitment for the
borrowing of money, for a line of credit or for a leasing
transaction required to be capitalized in accordance with
Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board; (v) contract or commitment
for expenditures, or letter of intent with respect thereto,
involving more than $200,000 in any instance; (vi) guaranty of
the obligations of a third party (other than guaranties by ▇▇▇▇▇▇
of the obligations of a Subsidiary); (vii) agreement which
restricts or regulates any of the Subsidiaries with respect to
its doing business anywhere in the world; (viii) agreement or
arrangement for the sale of any of the assets, property or rights
of any of the Subsidiaries outside the ordinary course of
business, consistent with past practice, or requiring the consent
of any party to the consummation of the transactions contemplated
hereby; (ix) any acquisition or similar agreement pursuant to
which ▇▇▇▇▇▇ or any Subsidiary acquired or will acquire prior to
the Closing any of the Satellite Properties or business related
to the Satellite Properties; and (x) any noncompete or consulting
agreement benefitting any of the Subsidiaries or Satellite
Properties. Each of LGII, RDI and the Subsidiaries has performed
all the obligations required to be performed by it under each
such contract to date except for any non-performance that could
not reasonably be expected to have a material adverse effect on
the business, operations or condition (financial or otherwise) of
any of the Subsidiaries or Satellite Properties. None of the
Subsidiaries is in material default or alleged to be in default
in any respect under any agreement, lease, contract, commitment,
instrument or obligation required to be listed in Schedule 4.9,
and there exists no event, condition or occurrence which, after
notice or lapse of time, or both, would constitute such a
material default by it of any of the foregoing. The
continuation, validity and effectiveness of each item on Schedule
4.9 under the current material terms thereof will in no way be
adversely affected by the transfer of the Subsidiary Stock to
Holdings under this Agreement. True and complete copies of all
written agreements and written summaries of all oral agreements
described in Schedule 4.9 have been provided to BCP and Holdings
by ▇▇▇▇▇▇. Without limiting the generality of the foregoing,
except as set forth on Schedule 4.9, the transfer to Holdings of
the Subsidiary Stock will not give rise to any right of any third
party to rescind, avoid or repudiate any agreement or arrangement
to which any of the Subsidiaries is a party or otherwise have any
adverse effect on Holdings, any Subsidiary or the transactions
contemplated by this Agreement.
4.10 Litigation, Etc. Except as set forth in Schedule
4.10, there are no actions, suits, claims, investigations or
legal or administrative or arbitration proceedings, foreign or
domestic, pending or, to the best of the knowledge of ▇▇▇▇▇▇ or
any of the Subsidiaries after due inquiry, threatened against or
affecting any of the Subsidiaries or Satellite Properties,
whether at law or in equity, or before or by any international,
federal, state, municipal or other governmental instrumentality.
To the best of ▇▇▇▇▇▇'▇ knowledge
12
after due inquiry, there exists no reasonable basis for
litigation against or affecting any Subsidiary or Property.
4.11 Compliance; Governmental Authorizations. Except
as set forth in Schedule 4.11, each of the Subsidiaries is in
compliance in all material respects with all applicable federal,
state, local or foreign laws, ordinances, regulations, treaties
and orders including, for example, matters relating to the
environment, anticompetitive practices, discrimination, trusting
of prepaid and preneed funeral and burial contract funds,
disclosure of funeral prices, employment, health and safety.
Without limiting the generality of the foregoing, each of the
Subsidiaries is in compliance in all material respects with all
requirements of the Occupational Safety and Health Act and the
Americans with Disabilities Act pertaining to its facilities and
operations, and with all requirements of the Federal Trade
Commission's Funeral Industry Practice Regulation. Except as set
forth on Schedule 4.11, each of the Subsidiaries has all material
federal, state, local and foreign governmental operating licenses
and permits necessary to conduct its business in the manner
presently conducted, and such operating licenses and permits are
in full force and effect, and no violations are or have been
recorded in respect of any thereof, and no proceeding is pending
or, to the best of ▇▇▇▇▇▇'▇ knowledge after due inquiry,
threatened, to revoke or limit any thereof. None of such
licenses and permits will be terminated, limited or otherwise
affected by the transfer of the Subsidiary Stock to Holdings
pursuant to this Agreement.
4.12 Customer Contracts and Funds. Except as set forth
on Schedule 4.12, (i) All monies paid to any of the Subsidiaries
in respect of prearranged, prepaid or at need contracts for
funeral, burial, merchandise, cremation, cemetery property,
cemetery merchandise arrangements or other services ("Customer
Contracts") and all amounts recorded for deferred merchandise and
service liabilities associated with preneed cemetery sales and
deferred revenues associated with preneed funeral sales and
amounts required to be maintained for the care and maintenance of
cemetery property (collectively, the "Funds") have been properly
deposited, accounted for and administered as required by
applicable laws and regulations, the particular underlying
Customer Contract, and, in the case of insurance-funded Customer
Contracts, been properly and duly paid over to insurance carriers
(less applicable insurance commissions) and the applicable
Subsidiary is the beneficiary of all such insurance policies;
(ii) none of the Subsidiaries has any net deferred merchandise or
service liability relating to Customer Contracts for cemetery
merchandise or services which have not yet been delivered to the
purchaser; (iii) all accounts, deposits and trusts of Funds, and
the amounts thereof, are presently held and administered in
compliance in all material respects with all applicable laws,
rules and regulations (and except as set forth on Schedule 4.12,
there is no Shortfall (as defined in Section 5.1 hereof) with
respect to any unfunded preneed cemetery contract or preneed
funeral service contract); (iv) all withdrawals from accounts,
deposits and trusts of Funds and the investment and other uses of
the Funds (including but not limited to payment to trustees of
the applicable trusts) by each of the Subsidiaries have been made
in compliance in all material respects with all applicable laws,
rules and regulations and the particular underlying Customer
Contract; (v) each of the Subsidiaries has complied in all
material respects with all requirements of federal, state and
local tax laws and regulations with regard to the reporting of
income and interest earned by Funds and, if required, the payment
of Taxes thereon; (vi) the terms and conditions of each Customer
Contract, including
13
but not limited to the collection of interest, comply in all
material respects with all applicable laws, rules and regulations
(including, but not limited to, full disclosure to customers of
all finance charges and other fees associated with multi-payment
plans for Customer Contracts); (vii) each of the Subsidiaries has
complied in all material respects with the terms and conditions
of all Customer Contracts to which they are parties and are not
aware of any default or allegation of default against any of them
thereunder; (viii) the Customer Contracts which have been
delivered to BCP and Holdings are the only agreements pursuant to
which caskets, funeral commodities or other inventory, funeral
services or cemetery merchandise, properties or services have
been sold by any of the Subsidiaries and (ix) all commissions
collected on behalf of commissioned salespeople in respect of the
Customer Contracts have been paid in the normal course of
business, consistent with past practices.
4.13 Labor Relations: Employees. Each of the
Subsidiaries is in compliance with all federal, state and local
laws and regulations respecting employment and employment
practices, terms and conditions of employment and wages and
hours, except for any non- compliance that could not reasonably
be expected to have a material adverse effect on the business,
operations or condition (financial or otherwise) of the
Subsidiary. Except as listed in Schedule 4.13, there has been no
unfair labor practice complaint against any of the Subsidiaries
and there is no claim pending against any of the Subsidiaries
before the National Labor Relations Board or any other
governmental agency. There are no strikes, disputes, slowdowns or
stoppages pending or, to the best knowledge of ▇▇▇▇▇▇,
threatened, against or involving any of the Subsidiaries and none
has occurred within the past three years. No representation
question exists with respect to the employees of any of the
Subsidiaries. None of the Subsidiaries is a party to any
collective bargaining agreement or other labor union contract,
and no collective bargaining agreement or other labor union
contract is currently being negotiated by any Subsidiary. No
grievance or arbitration proceeding is pending before any court
or governmental agency relating to any of the employees of any of
the Subsidiaries.
4.14 Compensation. ▇▇▇▇▇▇ has previously furnished to
BCP and Holdings a complete and accurate list of all current
officers, employees and consultants of each of the Subsidiaries
who, in the calendar years 1995 or 1996, have received or are
expected to receive aggregate remuneration in excess of $100,000
from ▇▇▇▇▇▇ or any Subsidiary, together with the current job
title and aggregate remuneration rate (bonus and salary) for each
such person, a copy of which is attached hereto as Schedule 4.14.
4.15 Employee Benefit Matters. (a) Schedule 4.15
contains a true and complete list of each material "employee
benefit plan" (within the meaning of section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
including, without limitation, multiemployer plans within the
meaning of ERISA section 3(37)), stock purchase, stock option,
severance, employment, change-in-control, fringe benefit,
collective bargaining, bonus, incentive, deferred compensation
and all other employee benefit plans, agreements, programs,
policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or
required in the future as a result of the transaction
contemplated by this Agreement or otherwise), whether formal or
informal, oral or written, under which any employee or former
employee of any of the Subsidiaries has any present
14
or future right to benefits or under which any of the
Subsidiaries has any present or future liability. All such
plans, agreements, programs, policies and arrangements shall be
collectively referred to as the "Plans."
(b) With respect to each Plan, ▇▇▇▇▇▇ has delivered to
BCP and Holdings a current, accurate and complete copy (or, to
the extent no such copy exists, an accurate description) thereof
and, to the extent applicable: (i) any related trust agreement or
other funding instrument; (ii) the most recent determination
letter, if applicable; (iii) any summary plan description and
other written communications (or a description of any oral
communications) by the Subsidiaries (or ▇▇▇▇▇▇ on behalf of the
Subsidiaries) to their employees concerning the extent of the
benefits provided under a Plan; and (iv) for the most recent year
(A) the Form 5500 and attached schedules, (B) audited financial
statements.
(c) (I) Each Plan has been established and
administered in accordance with its terms, and in compliance in
all material respects with the applicable provisions of ERISA,
the Code and other applicable laws, rules and regulations;
(ii) each Plan which is intended to be qualified within the
meaning of Code section 401(a) is so qualified and has received a
favorable determination letter as to its qualification, and
nothing has occurred, whether by action or failure to act, that
would cause the loss of such qualification and thereby adversely
affect any of the Subsidiaries; (iii) no event has occurred and
no condition exists with respect to any employee benefit plan (as
defined in Section 3(3) of ERISA) that would subject any of the
Subsidiaries, either directly or by reason of their affiliation
with any member of their "Controlled Group" (defined as any
organization which is a member of a controlled group of
organizations within the meaning of Code sections 414(b), (c),
(m) or (o)), to any material tax, fine, lien or penalty imposed
by ERISA, the Code or other applicable laws, rules and
regulations; (iv) for each Plan with respect to which a Form 5500
has been filed, no material change has occurred with respect to
the matters covered by the most recent Form 5500 since the date
thereof; and (v) no "reportable event" (as such term is defined
in ERISA section 4043), "prohibited transaction" (as such term is
defined in ERISA section 406 and Code section 4975) or
"accumulated funding deficiency" (as such term is defined in
ERISA section 302 and Code section 412 (whether or not waived))
has occurred with respect to any Plan.
(d) None of the Plans is subject to Title IV of ERISA.
(e) With respect to any multiemployer plan (within the
meaning of ERISA section 4001(a)(3)) to which any Subsidiary or
any member of their Controlled Group has any liability or
contributes (or has at any time contributed or had an obligation
to contribute): (i) none of the Subsidiaries or any member of
their Controlled Group has incurred any withdrawal liability
under Title IV of ERISA or would be subject to such liability if,
as of the Closing Date, any of the Subsidiaries or any member of
their Controlled Group were to engage in a complete withdrawal
(as defined in ERISA section 4203) or partial withdrawal (as
defined in ERISA section 4205) from any such multiemployer plan;
and (ii) no such multiemployer plan is in reorganization or
insolvent (as those terms are defined in ERISA sections 4241 and
4245, respectively).
(f) With respect to any Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary
course) are pending or to the knowledge of ▇▇▇▇▇▇
15
threatened, and (ii) no facts or circumstances exist that could
give rise to any such actions, suits or claims.
(g) No Plan exists that could result in the payment to
any present or former employee of any Subsidiaries of any money
or other property or accelerate or provide any other rights or
benefits to any present or former employee of any Subsidiaries as
a result of the transactions contemplated by this Agreement,
whether or not such payment would constitute a parachute payment
within the meaning of Code section 280G.
4.16 Financial Statements. ▇▇▇▇▇▇ has delivered to
BCP and Holdings true and complete copies of (i) the consolidated
balance sheets of each of the Subsidiaries which are included in
the Offering Memorandum for the Notes (as hereinafter defined)
for the year ended December 31, 1995, together with related
consolidated statements of operations and retained earnings,
shareholders' equity and cash flows for the period then ended
(collectively, the "Audited Financials"), in each case certified
by KPMG, independent chartered accountants, and (ii) the
unaudited consolidated balance sheet of each of the Subsidiaries
as at June 30, 1996, together with related consolidated
statements of operations and retained earnings, shareholders'
equity and cash flows for the six months then ended (the
"Unaudited Financials").
The Audited Financials and the Unaudited Financials (i) were, and
the SEC Financials (as defined in Section 5.7) will be, prepared
in accordance with U.S. generally accepted accounting principles
("GAAP"), consistently applied from period to period, and comply
as to form and substance with the rules and regulations of the
SEC, (ii) were, and the SEC Financials (as hereinafter defined)
will be, prepared in accordance with the books of account and
other financial records of each Subsidiary and (iii) present, and
the SEC Financials will present, fairly in all material respects
the consolidated financial position and results of operation of
each Subsidiary as at the dates thereof or for the periods
covered thereby in accordance with GAAP, applied on a basis
consistent with the past practices except for the capitalization
of covenants not to compete of each Subsidiary subject in the
case of the Unaudited Financials and any interim SEC Financials,
to normal year-end adjustments, none of which are expected to be
material.
4.17 Liabilities. At December 31, 1995, the
Subsidiaries taken as a whole had no material liabilities, Taxes
or obligations of any nature, fixed or contingent, matured or
unmatured, that were not recorded on the December 31, 1995
Audited Financials, and since December 31, 1995, none of the
Subsidiaries has incurred, nor does there exist on the Closing
Date any basis for, any liabilities, Taxes or obligations of any
nature, fixed or contingent, matured or unmatured, other than
those arising in the ordinary course of business.
4.18 Accounts Receivable. All of the accounts
receivable shown on the balance sheets contained in the Audited
and Unaudited Financials (i) reflect actual transactions, (ii)
have arisen from bona fide transactions in the ordinary and usual
course of the conduct of the business and (iii) to the knowledge
of ▇▇▇▇▇▇, are not subject to any setoff or counterclaim and are
fully collectible in accordance with the terms of the underlying
16
contracts, subject to the reserve(s) shown on the applicable
Financial Statements, which in all respects is (are) adequate.
4.19 Inventory. The values at which inventory is shown
on the Audited and Unaudited Financial Statements have been
determined in accordance with the normal valuation policies of
each of the Subsidiaries, consistently applied. All additions to
and deletions from inventory since December 31, 1995 have been
only in the ordinary course of business, consistent with past
practice. The inventory as of the date of this Agreement
consists only of items of a quality and quantity commercially
usable or saleable in the ordinary course of business.
4.20 Business Generally. Since December 31, 1995,
there has been no event, transaction or information which has had
or could reasonably be expected to have a material adverse effect
on the business, operations, condition (financial or otherwise)
or prospects of any of the Subsidiaries.
4.21 Bank Accounts; Officers. Schedule 4.21 is a list
of all bank accounts and safe deposit boxes in the name of or
controlled by any of the Subsidiaries, and details about the
persons having access thereto. Schedule 4.21 also contains a
list of all officers and directors of each of the Subsidiaries.
4.22 Insolvency. (i) No receiver has been appointed
for the whole or any part of the assets or business of any of the
Subsidiaries.
(ii) No petition has been presented, no order has been
made and no resolution has been passed for the winding-up of any
of the Subsidiaries.
(iii) No unsatisfied judgment is outstanding against
any of the Subsidiaries.
4.23 Environmental Matters. (i) Each of the
Subsidiaries and Satellite Properties is, and has been, in
compliance in all material respects with all applicable federal,
state and local statutes, laws, rules, regulations, common law,
decrees, judgments, orders and agreements relating to the
protection of the environment or human health, including without
limitation occupational health and safety laws and regulations,
(collectively, the "Environmental Laws"), including, but not
limited to, the Resource Conservation and Recovery Act ("RCRA"),
as amended, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), as amended, the
Occupational Health and Safety Act ("OSHA"), as amended, and the
regulations promulgated pursuant thereto, and, to the best of
▇▇▇▇▇▇'▇ knowledge, there is no condition that would reasonably
be expected to prevent or materially interfere with such
compliance in the future.
(ii) Without limiting the generality of the foregoing,
except as would not reasonably be expected to give rise to a
material liability:
(a) no hazardous waste or hazardous substance, as
those terms are defined by RCRA and CERCLA, respectively, or any
other substance, including without
17
limitation, petroleum, petroleum products and asbestos, that is
regulated, or that could result in liability, under any
Environmental Law, (Collectively, "Hazardous Substances"), have
been disposed of at any time at, on, under or about any real
property owned, leased or operated by any of the Subsidiaries and
no Hazardous Substances are or were otherwise located at, on
under or about such real property except in compliance with
applicable laws;
(b) no polychlorinated biphenyls are or were located on
any real property owned, leased or operated by any of the
Subsidiaries, whether in electrical transformers or elsewhere, at
any time;
(c) no storage tanks, whether underground or otherwise,
containing Hazardous Substances, are or were located on any of
the real property owned, leased or operated by any of the
Subsidiaries at any time except in compliance with applicable
laws;
(d) no asbestos is or was located in any building on
any of the real property owned, leased or operated by any of the
Subsidiaries at any time;
(e) no Environmental Claim (as hereinafter defined) is
currently pending regarding the properties, operations or
business of any of the Subsidiaries and, to the best knowledge of
▇▇▇▇▇▇, there is no reason to believe that any such Environmental
Claim will be made in the future. "Environmental Claim" means
any written or oral notice, claim, demand, action, suit,
complaint, proceeding or other written communication by any
person alleging liability or potential liability (including
without limitation liability or potential liability for
investigatory costs, cleanup costs, governmental response costs,
natural resource damages, property damage, personal injury, fines
or penalties) arising out of, relating to, based on or resulting
from (i) the presence, discharge, emission, release or threatened
release of any Hazardous Materials at any location, (ii)
circumstances forming the basis of any violation or alleged
violation of any Environmental Laws or Environmental Permits, or
(iii) otherwise relating to obligations or liabilities under any
Environmental Laws;
(f) none of the business and operations of any of the
Subsidiaries and Satellite Properties is subject to any judgment,
decree, order or other similar requirement of any governmental
authority under any Environmental Laws;
(g) Hazardous Materials have not been disposed of or
arranged to be disposed of by any of the Subsidiaries from any
property currently or formerly owned, leased or operated by the
Subsidiaries in violation of, or in a manner or to a location
that could give rise to liability under, any applicable
Environmental Laws;
(h) There are no past or present actions, activities,
events, conditions or circumstances relating to the properties,
operations or business of any of the Subsidiaries including
without limitation the release, threatened release, emission,
discharge, generation, treatment, storage or disposal of
Hazardous Materials, at or about any real property owned, leased
or operated by any of the Subsidiaries, that
18
could give rise to any liability or obligation, or result in any
restriction on the use of the real property owned, leased or
operated by any of the Subsidiaries, under any applicable
Environmental Laws; and
(i) Except for contractual assignments relating to
LGII's purchase of the Subsidiaries in regard to the operations
or business of the Subsidiaries, there has been no assumption,
contractually or by operation of law, of any liabilities or
obligations under any Environmental Laws.
(ii) Each of the Subsidiaries has obtained and
maintained and are, and have been, in compliance in all material
respects with all permits issued by environmental or health
administrative agencies that are required with respect to their
respective operations (the "Environmental Permits") and no
modification, revocation, reissuance, alteration, transfer, or
amendment of the Environmental Permits, or any review by, or
approval of, any third party of the Environmental Permits is
required in connection with the execution or delivery of this
Agreement or the consummation of the transactions contemplated
hereby or the continuation of the business and operations of the
Subsidiaries following such consummation.
(iii) ▇▇▇▇▇▇ has made available to BCP and Holdings all
reports of any health or environmental studies or investigations
in the possession or under the control of it or any of the
Subsidiaries that have been conducted in connection with the real
property owned, leased or operated by any of the Subsidiaries.
(iv) Except as set forth on Schedule 4.23, ▇▇▇▇▇▇ has
heretofore obtained environmental reports with respect to each
parcel of real property owned or leased by the Satellite
Properties (the "Environmental Reports") copies of which have
been made available to BCP and Holdings.
4.24 Brokers and Advisors. Except for the fees and
expenses of ▇▇▇▇▇ ▇▇▇▇▇▇, Inc. which will be paid by ▇▇▇▇▇▇, no
action taken by ▇▇▇▇▇▇ or any Subsidiary in connection with or in
furtherance of the transactions contemplated hereby has or shall
cause any of ▇▇▇▇▇▇, the Subsidiaries, BCP or Holdings to be
subject to any claim against it for a brokerage commission,
finder's fee, consulting fee, advisory fee or other like payment.
4.25 No Other Agreements to Sell the Shares or Assets.
Neither ▇▇▇▇▇▇ nor any Subsidiary has any legally enforceable
commitment or legal obligation, absolute or contingent, to any
other person or firm other than Holdings to sell, assign,
transfer or effect a sale of any of the Subsidiary Stock, any
other capital stock or equity investment in any Subsidiary, or
any material amount of the assets of any Subsidiary (other than
inventory in the ordinary course of business or fixed assets
which are no longer necessary to the operation of the business as
heretofore conducted), to effect any merger, consolidation,
liquidation, dissolution or other reorganization of any
Subsidiary, or to enter into any agreement or cause the entering
into of an agreement with respect to any of the foregoing.
4.26 Grave Spaces. To the best of ▇▇▇▇▇▇'▇ knowledge,
the undeveloped property owned by the Subsidiaries which is
presently contemplated as being usable as grave
(19)
spaces as indicated on Schedule 4.26 is suitable for such use
without unduly burdensome expense and consistent with past
practice of the applicable Subsidiary.
4.27 Disclosures. No representation or warranty by
▇▇▇▇▇▇ contained in this Agreement, and no statement contained in
any certificate, Exhibit, list or other writing furnished to BCP
and Holdings in connection with the transactions contemplated by
this Agreement, contains any untrue statement of material fact or
omits to state a material fact necessary in order to make the
statements contained herein or therein not misleading. All
copies of all writings furnished to BCP and Holdings hereunder or
in connection with the transactions contemplated hereby are true
and complete in all material respects. All Schedules to this
Agreement prepared by or on behalf of ▇▇▇▇▇▇ are true and
complete in all material respects.
4.28 Indebtedness. As of the Closing Date, the
aggregate unpaid principal and accrued interest of the Assumed
Obligations (as hereinafter defined), is less than or equal to
$1.6 million. Other than the Assumed Obligations, as of the
Closing Date, the Subsidiaries will have no indebtedness or other
contingent liabilities in respect of borrowed money.
V. OTHER AGREEMENTS AND COVENANTS OF THE PARTIES
5.1 Preneed Contracts and Trust Funds. (a) ▇▇▇▇▇▇
will, upon receipt of written notice from Holdings, reimburse
Acquisition within 15 days of the end of each month for the
Shortfall associated with fulfilling, when presented for
performance, each preneed contract outstanding on the date
hereof; it being understood that with respect to each and every
such preneed contract presented for performance, ▇▇▇▇▇▇ agrees to
pay to Acquisition the amount of the aggregate Shortfall, if any,
associated with such preneed contract. Notwithstanding the
foregoing, ▇▇▇▇▇▇ shall be relieved from such obligation at such
time as the estimated future liability for all such preneed
contracts as estimated by Deloitte & Touche is less than or equal
to the aggregate amount held in trust therefor. "Shortfall"
means the difference as of the Closing between the full contract
price associated with fulfilling each preneed contract
outstanding on the date hereof and the amount which Acquisition
reasonably determines has been positively and specifically
theretofore placed in trust with respect to such preneed
contract.
(b) Although the aggregate amount of each monthly
Shortfall shall be paid by ▇▇▇▇▇▇ to Acquisition as provided
above, ▇▇▇▇▇▇ shall be entitled to review the books and records
relevant to the determination as to whether a Shortfall exists
with respect to any particular preneed contract. ▇▇▇▇▇▇ shall be
entitled to dispute any such determination that resulted in a
payment under this section 5.1, and in such event that parties
shall attempt to resolve such dispute and, if necessary, refer it
to a third party for resolution, in accordance with substantially
the same procedures described in Section 5.5(B) of the Put/Call
Agreement At the Closing, RDI will take all such action as may be
required by applicable laws, rules and regulations and otherwise
in order for Holdings to replace the trustees and other
fiduciaries who are listed on Schedule 5.1 of the Funds and any
other trust funds and accounts relating to
20
the preneed contracts with persons selected by Holdings, which
shall be effective at the Closing.
5.2 Resignation/Election of Trustees. RDI and Holdings
shall arrange for replacement of all persons listed on Schedule
5.2 who presently serving as directors and officers of the
Subsidiaries with persons selected by Holdings, which shall be
effective at the Closing.
5.3 Completion of Harbor Lawn Projects. ▇▇▇▇▇▇ agrees
that it shall remain responsible and obligated to pay all costs
and expenses incurred in connection with the completion of (i)
the New Jewish Garden Mausoleum and niches and (ii) remediation
of earthquake damage to the existing mausoleum at Harbor Lawn
Memorial Park, Inc. in accordance with all of the construction
and other contracts relating thereto (the "Construction
Contracts"), all of which are listed on Schedule 5.3, and the
payment of all fees and other compensation relating thereto,
which payments shall be made by ▇▇▇▇▇▇ directly to the
contractors, architects, engineers and other persons who are
parties to the Construction Contracts, consistent with past
practice and that ▇▇▇▇▇▇ will use its reasonable best efforts to
insure that such projects will be completed by March 31, 1997.
5.4 Net Operating Capital. ▇▇▇▇▇▇ will cause the
aggregate Net Operating Capital for all of the Subsidiaries on
the Closing Date to be greater than or equal to $2.1 million.
"Net Operating Capital" shall mean current assets plus long term
accounts receivable less current accounts payable and current
accrued liabilities (but excluding current portion of long-term
debt and taxes payable). As promptly as practicable but no later
than 30 days after the Closing Date, ▇▇▇▇▇▇ shall cause to be
prepared a balance sheet for the Subsidiaries as of the Closing
Date which shall be used as the basis for calculating Net
Operating Capital as of the Closing Date. ▇▇▇▇▇▇ shall deliver
such balance sheet and Net Operating Capital calculation to BCP
and Holdings, together with a certificate of the Chief Financial
Officer of LGII to the effect that, to the best of their
knowledge after due inquiry, such balance sheet and calculation
are true and correct and have been prepared in a manner
consistent with the Audited Financials. As promptly as
practicable but no later than 30 days after the Closing Date,
LGII shall pay to Holdings the amount, if any, by which aggregate
Net Operating Capital for all of the Subsidiaries on the Closing
Date is less than $2.1 million. In the event of a disagreement
concerning the Net Operating Capital, each party shall make
available to the other such books and records as are relevant to
such disagreement and are in the possession of such party, and
the parties shall work together in good faith to resolve such
disagreement. The portion of the Net Operating Capital, if any,
as to which the parties are unable to agree upon after thirty
(30) days shall be referred for resolution to a nationally
recognized accounting firm, mutually and reasonably acceptable to
both parties. The determination of such third party, whose costs
and expenses shall be borne equally by the parties, shall be
final and determinative. Upon such determination, ▇▇▇▇▇▇ shall
make any additional payment required to be made within two (2)
days of such determination.
5.5 Harbor Lawn Lawsuit. ▇▇▇▇▇▇ shall remain
responsible and obligated to pay all costs and expenses relating
to the lawsuit entitled La Canada Flintridge Development Corp.,
et. al. v. Harbor Lawn Memorial Park, Inc. et. al., including all
appeals
21
thereof, and will be entitled to retain all proceeds relating to
such lawsuit, whether as a result of a judgment, settlement or
otherwise.
5.6 Assumption of Certain Obligations. Holdings agrees
to assume all payment obligations with respect to (i) the
Promissory Note, dated August 12, 1994, between ▇▇▇▇▇▇▇▇▇▇
California and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ with an original principal
balance of $1,375,327.07, (ii) the Promissory Note, dated August
12, 1994, between ▇▇▇▇▇▇▇▇▇▇ California and ▇▇▇▇ ▇. ▇▇▇▇ with an
original principal balance of $343,831.77 and (iii) the
agreements listed on Schedule 5.6 for covenants not to compete
entered into with the sellers of the Satellite Properties in
connection with the acquisition thereof with aggregate payments
not to exceed $819,878 (collectively, the "Assumed Obligations").
5.7 Financial Statements. ▇▇▇▇▇▇ agrees to provide to
Holdings and BCP, for inclusion in the registration statement
covering the exchange offer for the Notes, including amendments
thereto, such financial statements with respect to the Satellite
Properties (including Notes thereto) as are required under
applicable rules and regulations of the Securities and Exchange
Commission to be included in such registration statement or
amendment thereto (the "SEC Financials").
VI. CONDITIONS TO OBLIGATIONS OF BCP AND HOLDINGS
The obligations of BCP and Holdings to perform this Agreement are
subject only to the satisfaction of the following conditions on
or prior to the Closing, unless waived by BCP and Holdings:
6.1 Representations and Warranties. The
representations and warranties of ▇▇▇▇▇▇ in this Agreement or in
any Schedule, certificate or document delivered in connection
herewith shall have been true and correct in all material
respects on the Closing, and Holdings shall have received a
certificate signed by an officer of LGII and RDI to that effect.
6.2 Performance of Obligations of ▇▇▇▇▇▇. ▇▇▇▇▇▇ shall
have performed all obligations required to be performed by them
under this Agreement and complied with all covenants to be
complied with by them under this Agreement at or prior to the
Closing, and Holdings shall have received a certificate signed by
an executive officer of LGII and RDI to that effect.
6.3 No Litigation. Except as described in Schedule
4.10, no action, suit or other proceeding shall be pending before
any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the
transactions contemplated by this Agreement, or seeking to obtain
substantial damages in respect thereof, or involving a claim that
consummation thereof would result in the violation of any law,
decree or regulation of any governmental authority having
appropriate jurisdiction, or be one in which an adverse
determination could be reasonably expected to have a material
adverse effect on the business, operations or condition
(financial or otherwise) of any of the Satellite Properties or
Subsidiaries and Holdings shall have received a certificate
signed by an
22
executive officer of LGII and RDI that to their best knowledge,
no such action, suit or other proceeding is pending.
6.4 Regulatory Consents, Authorizations, Etc. All
required consents, authorizations, orders, opinions and approvals
of, and filings and registrations with, any United States federal
or state governmental commission, board or other regulatory body,
in form reasonably satisfactory to BCP and Holdings, shall have
been obtained or made and the applicable waiting period,
including any extension thereof, under the HSR Act shall have
expired; provided that Holdings shall have used its best efforts
and taken all reasonable actions necessary to obtain such
consents, authorizations, orders, opinions, approvals, filings
and registrations.
6.5 Corporate Action. Appropriate evidence of all
necessary corporate action by LGII and RDI in connection with the
transactions contemplated hereby, including, without limitation,
certified copies of resolutions duly adopted by the Board of
Directors of LGII and RDI approving the transactions contemplated
hereby, and authorizing the execution, delivery and performance
by LGII and RDI of this Agreement and the other agreements,
documents and instruments to which LGII and RDI are a party
contemplated hereby, and a certificate as to the incumbency of
officers of LGII and RDI executing any instrument or other
document delivered in connection with such transactions, shall
have been delivered.
6.6 Note Offering. The proceeds of the offering of
$80,000,000 aggregate principal amount of 9 1/2% Senior
Subordinated Notes due 2004 (the "Notes") have been or are
concurrently being made available to Acquisition.
6.7 Term Loan. Acquisition has or is concurrently
receiving $75 million of proceeds from a senior secured term loan
facility from a syndicate of financial institutions, with ▇▇▇▇▇▇▇
Sachs Credit Partners, an affiliate of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., as
arranging agent.
6.8 Cemetery and Mortuary Acquisition. All conditions
precedent, other than the receipt by Holdings of the BCP
Contribution, the ▇▇▇▇ Contribution and the ▇▇▇▇▇▇ Contribution,
have been or are concurrently being fulfilled such that upon
consummation of this Agreement, the transactions contemplated by
the Merger Agreement and the Asset Purchase Agreement can be
effected. The transactions contemplated by the Merger Agreement
and the Asset Purchase Agreement shall be consummated
concurrently with consummation of the transactions contemplated
by this Agreement.
6.9 Opinions. Opinions, dated the Closing Date, of
Stradley, Ronan, ▇▇▇▇▇▇▇ & Young, LLP, counsel to LGII and RDI,
in the form attached as Exhibit B, and of Canadian counsel,
counsel to LWN, in the form attached as Exhibit C, shall have
been delivered to Holdings.
6.10 Subsidiary Stock. Stock certificates representing
all of the Subsidiary Stock, duly endorsed in blank or
accompanied by duly executed stock powers, in form
23
satisfactory to BCP and Holdings and with all required stock
transfer tax stamps affixed have been delivered to Holdings.
6.11 Stockholder's Agreement. Concurrent with the
consummation of the subscription for shares provided by this
Agreement, the parties hereto shall execute and deliver to each
other a Stockholders' Agreement in the form of Exhibit C attached
hereto (the "Stockholders' Agreement").
6.12 Satisfaction of Intercompany Indebtedness. At the
Closing, there shall be no amounts owed by any of the
Subsidiaries to LGII or any affiliate of LGII.
6.13 Other Agreements. At or prior to the Closing,
▇▇▇▇▇▇ shall have executed and delivered any and all other
agreements as may reasonably be necessary, appropriate and/or
desirable in order to consummate the transactions contemplated by
this Agreement, including, without limitation, all documents
necessary to cancel and terminate, effective as of the Closing
Date, the Master Services Agreement, dated January 1, 1995, with
respect to each of the Subsidiaries and any other agreement
between ▇▇▇▇▇▇ or any of its affiliates and any Subsidiary (or
which affects any Subsidiary), in each case without there being
any further amounts owing by, or any further obligations of, any
Subsidiary (other than the Administrative Services Agreement
between LGII and Acquisition which will remain in effect
following the Closing).
6.14 No Material Adverse Change. From and including
the date hereof, there shall not have occurred any event which
has had in the aggregate a material adverse effect upon or a
material adverse change in the condition (financial or
otherwise), working capital, assets, liabilities, earnings, book
value, business, good will, going concern value or prospects of
any Subsidiary.
6.15 Resignations. Resignations executed by each
officer and director of each Subsidiary listed on Schedule 5.2
and resignations executed by each of the trustees and other
fiduciaries listed on Schedule 5.1 of each of the Funds and any
other trust funds and accounts relating to the preneed contracts,
all effective as of the Closing Date, shall have been delivered
to Holdings.
6.16 Outstanding Checks. Funds shall remain on deposit
at the Closing in each checking account maintained by each of the
Subsidiaries sufficient in amount to cover all outstanding checks
or drafts against such accounts.
6.17 Administrative Services Agreement. LWN, LGII and
Acquisition shall have entered into an Administrative Services
Agreement, substantially in the form attached as Exhibit D.
24
VII. CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇
The obligations of ▇▇▇▇▇▇ to perform this Agreement are subject
only to the satisfaction of the following conditions on or prior
to the Closing, unless waived by ▇▇▇▇▇▇:
7.1 Representations and Warranties. The
representations and warranties of BCP and Holdings in this
Agreement or in any Schedule, certificate or document delivered
in connection herewith shall have been true and correct when made
and shall be true and correct on the Closing as though made on
and as of the Closing, and ▇▇▇▇▇▇ shall have received a
certificate signed by an officer of BCP and Holdings to that
effect.
7.2 Performance of Obligations of BCP and Holdings.
BCP and Holdings shall have performed all obligations required to
be performed by them under this Agreement and complied with all
covenants to be complied with by them under this Agreement at or
prior to the Closing, and ▇▇▇▇▇▇ shall have received a
certificate signed by an executive officer of BCP and Holdings to
that effect.
7.3 No Litigation. No action, suit or other proceeding
shall be pending before any court, tribunal or governmental
authority seeking or threatening to restrain or prohibit the
consummation of the transactions contemplated by this Agreement,
or seeking to obtain substantial damages in respect thereof, or
involving a claim that consummation thereof would result in the
violation of any law, decree or regulation of any governmental
authority having appropriate jurisdiction, or be one in which an
adverse determination could be reasonably expected to have a
material adverse effect on the ability of Holdings to perform its
obligations under this Agreement and ▇▇▇▇▇▇ shall have received a
certificate signed by an executive officer of Holdings that to
his best knowledge, no such action, suit or other proceeding is
pending.
7.4 Regulatory Consents, Authorizations, Etc. All
required consents, authorizations, orders, opinions and approvals
of, and filings and registrations with, any United States federal
or state governmental commission, board or other regulatory body,
in form reasonably satisfactory to ▇▇▇▇▇▇, shall have been
obtained or made and the applicable waiting period, including any
extensions thereof, under the HSR Act have expired; provided
that ▇▇▇▇▇▇ shall have used its best efforts and taken all
reasonable actions necessary to obtain such consents,
authorizations, orders, opinions, approvals, filings and
registrations.
7.5 Corporate Action. Appropriate evidence of all
necessary corporate action by Holdings and BCP in connection with
the transactions contemplated hereby, including, without
limitation, certified copies of resolutions duly adopted by the
Board of Directors of Holdings and BCP approving the transactions
contemplated hereby, and authorizing the execution, delivery and
performance by Holdings and BCP of this Agreement and the other
agreements, documents and instruments to which Holdings and BCP
are a party contemplated hereby, and a certificate as to the
incumbency of officers of Holdings and BCP executing any
instrument or other document delivered in connection with such
transactions;
25
7.6 Note Offering. The proceeds of the offering of
$80,000,000 aggregate principal amount of 9 1/2% Senior
Subordinated Notes due 2004 (the "Notes") have been or are
concurrently being made available to Acquisition.
7.7 Term Loan. Acquisition has or is concurrently
receiving $75 million of proceeds from a senior secured term loan
facility from a syndicate of financial institutions, with ▇▇▇▇▇▇▇
▇▇▇▇▇ Credit Partners, an affiliate of ▇▇▇▇▇▇▇, Sachs & Co., as
arranging agent.
7.8 Cemetery and Mortuary Acquisition. All conditions
precedent, other than the receipt by Holdings of the BCP
Contribution, the ▇▇▇▇ Contribution and the ▇▇▇▇▇▇ Contribution,
have been or are concurrently being fulfilled such that upon
consummation of this Agreement, the transactions contemplated by
the Merger Agreement and the Asset Purchase Agreement can be
effected. The transactions contemplated by the Merger Agreement
and the Asset Purchase Agreement shall be consummated
concurrently with consummation of the transactions contemplated
by this Agreement.
7.9 Stockholder's Agreement. Concurrent with the
consummation of the subscription for shares provided by this
Agreement, the parties hereto shall execute and deliver to each
other the Stockholders' Agreement.
VIII. INDEMNIFICATION AND REMEDIES
8.1 Indemnification. (i) Each Purchaser severally
but not jointly agrees to indemnify, defend and hold Holdings,
its subsidiaries, each other Purchaser and each of their
respective affiliates and their respective directors, officers,
employees and agents harmless from and against and in respect of
any loss, claim, liability, fines, penalty, costs, expense or
damage incurred or sustained by such indemnified person, arising
out of or relating to any inaccuracy of, or breach by such
Purchaser of, representations and warranties contained in Article
III of this Agreement, obligations or covenants contained herein
or in certificates or other documents delivered hereunder or
pursuant hereto, and all reasonable costs and expenses (including
reasonable attorneys' fees) incurred by such indemnified person,
in connection with any action, suit, proceeding, demand,
assessment, settlement or judgment incident to any of the matters
indemnified against in this Section 8.1(i), including, without
limitation, all such costs and expenses incurred in investigating
and evaluating any of the foregoing.
(ii) Holdings agrees to indemnify, defend and hold
each Purchaser and each of their respective affiliates and their
respective directors, officers, employees and agents harmless
from and against and in respect of any loss, claim, liability,
fine, penalty, cost, expense or damage incurred or sustained by
such indemnified person any inaccuracy of, or breach by Holdings
of, any of its representations and warranties contained in
Article III of this Agreement, obligations or covenants,
contained herein or in certificates or other documents delivered
hereunder or pursuant hereto, and all reasonable costs and
expenses (including reasonable attorneys' fees) incurred by such
indemnified person in connection with any action, suit,
proceeding, demand, assessment, settlement or judgment incident
to any
26
of the matters indemnified against in this Section 8.1(ii),
including, without limitation, all such costs and expenses
incurred in investigating and evaluating any of the foregoing.
(iii) In addition to the indemnification provided in
Section 8.1(i) hereof, LWN, LGII and RDI jointly and severally
agree to indemnify, defend and hold Holdings, its subsidiaries
and BCP and each of their respective affiliates and their
respective directors, officers, employees and agents harmless, on
an after-tax basis, from and against and in respect of any loss,
claim, liability, fine, penalty, cost, expense, damage, judgment,
settlement, remedial and investigatory cost, and reasonable
attorneys', environmental consultants' and laboratory fees
incurred or sustained by such indemnified person resulting from,
arising out of or relating to
(a) any inaccuracy of, or breach by LWN, LGII or RDI
of, any of their respective representations and
warranties contained in Article IV of this Agreement it
being understood that (x) the schedules to Article IV
("Article IV Schedules") have been provided to Holdings
and BCP solely for informational purposes and (y)
certain provisions in Article IV have been qualified as
to knowledge solely for purposes of making the
representation or warranty true and correct and not for
purposes of elimination of liability hereunder; and
therefore, for purposes of determining indemnification
under this Section 8.1(iii)(a), (i) notwithstanding the
inclusion of any item or information on the Article IV
Schedules, ▇▇▇▇▇▇ shall be obligated fully under each
section of Article IV as if such item or information
were not set forth on the Article IV Schedules and (ii)
the Article IV representations and warranties shall be
read without any knowledge qualification, as
applicable;
(b) the operation of the Satellite Properties or any
business of the Subsidiaries prior to the Closing Date;
(c) any conduct, circumstance, event or condition
covered under Section 4.23 hereof or otherwise arising
out of or relating to Environmental Laws or Hazardous
Substances existing at or prior to the Closing relating
to the Subsidiaries or the Satellite Properties;
(d) the operation of Harbor Lawn Cemetery and Angels
Lawn Cemetery without a Certificate of Authority from
the State of California and the operation of San
▇▇▇▇▇▇▇▇ Mortuary, Inc. without a funeral establishment
license;
(e) the liens disclosed on Schedule 4.5;
(f) acquisition by LGII or RDI of their respective
interests in Holdings and their respective indirect
interests in Roses, Inc. and the Association;
(g) any Shortfall as defined in Section 5.1 hereof;
27
(h) any liability of any Subsidiary (x) for any Taxes
of the Subsidiary with respect to any Tax year or
portion thereof ending on or before the Closing Date
(or for any Tax year beginning before and ending after
the Closing Date to the extent allocable (determined in
a manner consistent with Sections 8.2(a) or (b) to the
portion of such period beginning before and ending on
the Closing Date), and (y) for the unpaid taxes of any
person (other than any of the Subsidiaries) under Reg.
1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by
contract, or otherwise;
(i) any Taxes relating to gains from the sale of the
assets of any of the Subsidiaries to the extent such
gains would have been realized if the asset had been
sold in a fully taxable transaction on the Closing
Date;
(j) any Transfer Taxes, as defined in Section 8.2
hereof;
(k) to the extent that one or more representations
contained in Article IV of this Agreement would have
been breached but for exceptions in the representations
permitting violations up to certain specified dollar
amounts, the excess of all such exceptions over
$250,000;
and all reasonable costs and expenses (including reasonable
attorneys' fees) incurred by such indemnified person in
connection with any action, suit, proceeding, demand, assessment,
settlement or judgment incident to any of the matters indemnified
against in this Section 8.1(iii), including, without limitation,
all such costs and expenses incurred in investigating and
evaluating any of the foregoing.
(iv) If the indemnification provided for in Section
8.1(iii) shall for any reason be unavailable to or insufficient
to hold harmless an indemnified party under Section 8.1(iii) in
respect of any loss, claim, liability, fine, penalty, cost,
expense, damage, judgment, settlement, remedial and investigatory
cost, and reasonable attorneys', environmental consultants' and
laboratory fees incurred or sustained in respect thereof,
referred to therein, then each indemnifying party shall, in lieu
of indemnifying such indemnified party, contribute to the amount
paid or payable by such indemnified party as a result of such
loss, claim, liability, fine, penalty, cost, expense, damage,
judgment, settlement, remedial and investigatory cost, and
reasonable attorneys', environmental consultants' and laboratory
fees incurred or sustained in respect thereof, in such proportion
as shall be appropriate to reflect the relative benefits received
by and the relative fault of the parties as well as any other
relevant equitable considerations.
(v) Any indemnity payment made pursuant to this Section
8 shall be treated as a contribution to the capital of Holdings,
provided, that such contribution shall not be deemed an
Additional LGII Contribution for purposes of the Put/Call
Agreement of even date herewith among BCP, LWN and LGII. In the
event that Holdings or its subsidiaries are liable for any Tax as
a result of an indemnity payment pursuant to this Section 8, then
the amount payable hereunder shall be increased to the extent
necessary to yield to Holdings (after payment of all Taxes) the
full amount of gains specified in this Section 8.
28
(vi) The representations and warranties contained
herein of the parties hereto shall survive the Closing and shall
continue in full force and effect (i) with respect to any
representation or warranty contained in Section 4.4 hereof, for
the applicable statute of limitations and (ii) with respect to
any other representation or warranty, for period of eight years
after the Closing. The expiration of any representation and
warranty shall not affect any claim made prior to the date of
such expiration, but shall extinguish a party's rights under
claims not made prior to such date. The covenants and agreements
of ▇▇▇▇▇▇ shall survive the Closing for an indefinite period.
(vii) Promptly after receipt by an indemnified party
under this Section 8.1 of notice of any claim or the commencement
of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this
Section 8.1, notify the indemnifying party in writing of the
claim or the commencement of that action, provided that the
failure to notify the indemnifying party shall not relieve it,
from any liability which it may have to the indemnified party
unless and only to the extent such failure materially prejudices
the ability of the indemnifying party to defend against or
mitigate damages arising out of such claim. If any claim shall
be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be
entitled to participate therein, and to assume the defense
thereof, with counsel reasonably satisfactory to the indemnified
party at the sole cost and expense of the indemnifying party.
After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or action,
the indemnifying party shall not be liable for other expenses
subsequently incurred by the indemnified party in connection with
the defense thereof other than reasonable costs of investigation,
provided, however, that if the indemnifying party elects not to
assume such defense or fails to give written notice to the
indemnified party assuming the defense of such claim within
thirty (30) days after the indemnifying party's receipt of notice
of such claim, the indemnified party may retain counsel
satisfactory to it, and the indemnifying party shall pay all
reasonable fees and expenses of such counsel for the indemnified
party promptly as statements therefore are received; provided,
however, that the indemnified party shall obtain the indemnifying
party's consent (which consent shall not be unreasonably withheld
or delayed) to any payment or settlement of any such claim.
▇▇▇▇▇▇, BCP and Holdings each agree to render to each other such
assistance as may reasonably be requested in order to insure the
proper and adequate defense of any such claim or proceeding, all
of which shall be at the cost of the indemnifying party. The
indemnified party shall also have the right to select its own
counsel, at its own expense, to represent the indemnified party
and to participate in the defense of such claim, as applicable.
An indemnified party may take over the defense of a claim at its
own expense at any time if it irrevocably waives its right to
indemnity as to that claim. The indemnified party shall be
obligated prior to claiming any indemnification or reimbursement
under this Agreement to use all reasonable efforts (at the
expense of the indemnifying party) to obtain any insurance
proceeds available to such indemnified party with regard to the
applicable claim; provided, however, that the success or failure
of such efforts on the part of the indemnified party shall not
relieve the indemnifying party of its obligation (i) to provide
indemnification hereunder or (ii) to assume the defense of the
claim, or, if failing to do so, to pay the fees and expenses of
counsel to the indemnified party.
29
8.2 Tax Matters. The following provisions shall
govern the allocation of responsibility as between ▇▇▇▇▇▇ and
Holdings for certain tax matters following the Closing:
(a) Tax Periods Ending on or Before the Closing Date.
▇▇▇▇▇▇ shall prepare or cause to be prepared and file or cause to
be filed all Tax Returns relating to the Subsidiaries for all
periods ending on or prior to the Closing Date which are filed
after the Closing Date and shall pay all Taxes shown as due and
payable on such Tax Returns.
(b) Tax Periods Beginning Before and Ending After the
Closing Date. Holdings shall prepare or cause to be prepared and
file or cause to be filed any Tax Returns relating to the
Subsidiaries for Tax periods which begin before the Closing Date
and end after the Closing Date. ▇▇▇▇▇▇ shall pay to Holdings
within fifteen (15) days after the date on which Taxes are paid
with respect to such periods an amount equal to the portion of
such Taxes which relates to the portion of such Taxable period
ending on the Closing Date. For purposes of this Section 8.2(b),
in the case of any Taxes that are imposed on a periodic basis and
are payable for a Taxable period that includes (but does not end
on) the Closing Date, the portion of such Tax which relates to
the portion of such Taxable period ending on the Closing Date
shall (A) in the case of any Taxes other than Taxes based upon or
related to income or receipts, be deemed to be the amount of such
Tax for the entire Taxable period multiplied by a fraction the
numerator of which is the number of days in the Taxable period
ending on the Closing Date and the denominator of which is the
number of days in the entire taxable period, and (B) in the case
of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant
Taxable period ended on the Closing Date. Any credits relating
to a taxable period that begins before and ends after the Closing
Date shall be taken into account as though the relevant taxable
period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a
manner consistent with prior practice of the applicable
Subsidiary.
(c) Refunds and Tax Benefits. Any Tax refunds that
are received by Holdings and its subsidiaries, and any amounts
credited against Tax to which Holdings or its subsidiaries become
entitled, that relate to Tax periods or portions thereof ending
on or before the Closing Date shall be for the account of ▇▇▇▇▇▇,
and Holdings shall pay over to ▇▇▇▇▇▇ any such refund or the
amount of any such credit within fifteen (15) days after receipt
or entitlement thereto.
(d) Cooperation on Tax Matters. (i) Holdings and its
subsidiaries and ▇▇▇▇▇▇ shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection
with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes.
Such cooperation shall include the retention and (upon the other
party's request) the provision of records and information which
are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder. Holdings and its
subsidiaries and ▇▇▇▇▇▇ (A) agree to retain all books and records
with respect to Tax matters pertinent to the Subsidiaries
relating to any Taxable period beginning before the Closing Date
until the expiration of the statute of limitations (and, to the
extent notified by ▇▇▇▇▇▇ or Holdings, any extensions thereof) of
the respective
(30)
Taxable periods, and to abide by all record retention agreements
entered into with any taxing authority, and (B) to give the other
party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the other party
so requests, ▇▇▇▇▇▇ or Holdings, as the case may be, shall allow
the other party to take possession of such books and records.
(ii) ▇▇▇▇▇▇ and Holdings further agree, upon request,
to use their best efforts to obtain any certificate or other
document from any governmental authority or any other person as
may be necessary to mitigate, reduce or eliminate any Tax that
could be imposed (including, but not limited to, with respect to
the transactions contemplated hereby).
(iii) ▇▇▇▇▇▇ and Holdings further agree, upon request,
to provide the other party with all information that either party
may be required to report pursuant to 6043 of the Code and all
Treasury Department Regulations promulgated thereunder.
(e) Tax Sharing Agreements. All tax sharing
agreements or similar arrangements with respect to or involving
the Subsidiaries shall be terminated as of the Closing Date and,
after the Closing Date, the Subsidiaries shall not be bound
thereby or have any liability thereunder.
(f) Certain Taxes. All transfer, documentary, sales,
use, stamp, registration and other such Taxes and fees (including
any penalties and interest thereon) incurred in connection with
this Agreement (including any New York State Gains Tax, New York
City Transfer Tax and any similar Tax imposed in other states or
subdivisions) (collectively, "Transfer Taxes"), shall be paid by
▇▇▇▇▇▇ when due, and ▇▇▇▇▇▇ will, at its own expense, file all
necessary Tax Returns and other documentation with respect to all
such transfer, documentary, sales, use, stamp, registration and
other Taxes and fees, and, if required by applicable law,
Holdings will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
IX. AGREEMENTS REGARDING THE BCP STOCK, THE ▇▇▇▇ STOCK AND THE
▇▇▇▇▇▇ STOCK
9.1 Legends. The certificate (or certificates)
representing the BCP Stock, the ▇▇▇▇ Stock and the ▇▇▇▇▇▇ Stock
shall bear the following legend (until such time as subsequent
transfers thereof are no longer restricted in accordance with the
Securities and Exchange Act or the Stockholders' Agreement):
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT
BE GIVEN, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
HYPOTHECATED, OR OTHERWISE DISPOSED OF UNLESS SUCH
GIFT, SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION
OR OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF
THE STOCKHOLDERS' AGREEMENT (THE "STOCKHOLDERS'
AGREEMENT"), DATED AS OF NOVEMBER 19, 1996, AMONG ROSE
31
HILLS HOLDINGS CORP. (THE "COMPANY"), BLACKSTONE
CAPITAL PARTNERS II MERCHANT BANKING FUND L.P., FAMILY
INVESTMENT PARTNERSHIP II L.P., ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ HILLS
OFFSHORE CAPITAL PARTNERS L.P., ▇▇▇▇▇▇ GROUP
INTERNATIONAL INC., ROSES DELAWARE, INC. AND RHI
MANAGEMENT DIRECT L.P. A COPY OF THE STOCKHOLDERS'
AGREEMENT IS ON FILE WITH THE SECRETARY OF THE COMPANY.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR THE SECURITIES LAWS OF ANY STATE, AND
EXCEPT AS OTHERWISE PROVIDED IN THE STOCKHOLDERS'
AGREEMENT NO SALE, ASSIGNMENT, TRANSFER, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY BE MADE EXCEPT (A)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE ACT AND ALL APPLICABLE STATE SECURITIES OR "BLUE
SKY" LAWS OR (B) TO THE EXTENT REQUESTED BY THE
COMPANY, IF THE COMPANY HAS BEEN FURNISHED WITH AN
OPINION OF COUNSEL WHICH SHALL BE REASONABLY
SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
SALE, ASSIGNMENT, TRANSFER, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF THE
ACT AND THE RULES AND REGULATIONS IN EFFECT THEREUNDER
AND IS NOT IN VIOLATION OF APPLICABLE STATE SECURITIES
LAWS. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF
THIS CERTIFICATE, ACKNOWLEDGES THAT IT IS BOUND BY THE
PROVISIONS OF THE STOCKHOLDERS' AGREEMENT TO THE EXTENT
PROVIDED THEREIN."
X. MISCELLANEOUS
10.1 Notices. Notices under this Agreement shall be
given in the manner provided in the Stockholders' Agreement.
10.2 Governing Law. This Agreement shall be governed
by and construed and enforced in accordance with the laws of the
state of New York without regard to the conflicts of law
principles thereof. Each of the parties by its execution hereof
hereby (i) irrevocably submits to the jurisdiction of the federal
and state courts located in the Southern District of New York for
the purpose of any suit, action or other proceeding arising out
of or based upon this Agreement or any other agreement
contemplated hereby or relating to the subject matter hereof or
thereof and (ii) waives to the extent not prohibited by
applicable law, and agrees not to assert by way of motion, as a
defense or otherwise, that its property is exempt or immune from
attachment or execution, that any such proceeding brought in one
of the above-named courts is improper, or that any right or
remedy relating to this Agreement or any other agreement
contemplated hereby, or the subject matter hereof or thereof, may
not be
32
enforced in or by such court. Each of the parties hereby
consents to service of process in any such proceeding in any
manner permitted by the laws of the state of New York, and agrees
that service of process by registered or certified mail, return
receipt requested, at its address specified herein as reasonably
calculated to give actual notice.
10.3 WAIVERS OF JURY TRIAL. EACH PARTY HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
10.4 No Assignment. No party hereto may assign its
rights and obligations hereunder without the prior consent of all
the other parties hereto.
10.5 Counterparts. This Agreement may be executed in
two or more counterparts, and by different parties on separate
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
10.6 Integration. This Agreement and the documents
referred to herein or delivered pursuant hereto, including the
exhibits hereto, contain the entire understanding of the parties
with respect to the subject matter hereof and thereof. There are
no agreements, representations, warranties, covenants or
undertakings with respect to the subject matter hereof and
thereof other than those expressly set forth herein and therein.
This Agreement supersedes all prior agreements and understandings
between the parties with respect to this subject matter.
10.7 Termination. This Agreement shall terminate upon
the termination of the Stockholders' Agreement.
10.8 Expenses. In the event that the transactions
contemplated by this Agreement are not consummated, then each
party shall bear its own costs and expenses.
10.9 Termination of Subscription Agreements. Holdings,
BCP II and LGII agree that upon execution of this Agreement, the
Subscription Agreements, dated September 12, 1996 to which each
of them is a party will be terminated without any liability or
further obligation to any other party and the subscription for
shares provided for therein shall be cancelled.
10.10 Transfer of BCP Stock. BCP represents and
warrants to LGII and LWN that it has no current plan to transfer
the BCP Stock to any of its affiliates.
33
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
ROSE HILLS HOLDINGS CORP.
By: /s/ executed
Name:
Title:
▇▇▇▇▇▇ GROUP INTERNATIONAL, INC.
By: /s/ F. ▇▇▇▇▇▇ ▇▇▇▇▇
Name: F. ▇▇▇▇▇▇ ▇▇▇▇▇
Title:
THE ▇▇▇▇▇▇ GROUP INC.
By: /s/ F. ▇▇▇▇▇▇ ▇▇▇▇▇
Name: F. ▇▇▇▇▇▇ ▇▇▇▇▇
Title:
ROSES DELAWARE, INC.
By: /s/ F. ▇▇▇▇▇▇ ▇▇▇▇▇
Name: F. ▇▇▇▇▇▇ ▇▇▇▇▇
Title:
BLACKSTONE CAPITAL PARTNERS II
MERCHANT BANKING FUND L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.,
its general partner
By: /s/ executed
Name:
Title:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ HILLS OFFSHORE CAPITAL PARTNERS L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.,
its general partner
By: /s/ executed
Name:
Title:
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: BLACKSTONE MANAGEMENT
ASSOCIATES II L.L.C.,
its general partner
By: /s/ executed
Name:
Title:
RHI MANAGEMENT DIRECT L.P.
By: PSI P&S CORP.,
its general partner
By: /s/ executed
Name:
Title:
Exhibit A
Satellite Properties
Angels Lawn Cemetary
Angels Lawn Funeral Home
Colton Funeral Home
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ Mortuary
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ West Covina
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Diamond & Sons ▇▇▇▇▇▇▇ Mortuary
Diamond-Garden Grove Funeral Home
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ Mortuary
Grove Colonial Funeral Home
Harbor Lawn Cemetary
Harbor Lawn Memorial Park
Neels Brea Mortuary
▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Mortuary
San ▇▇▇▇▇▇▇▇ Mortuary
White's Funeral Home
Exhibit B
Form of Opinion of
Stradley, Ronan, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP
November 19, 1996
Rose Hills Holdings Corp.
c/o The Blackstone Group
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to ▇▇▇▇▇▇ Group International Inc., a
Delaware corporation ("LGII") and Roses Delaware, Inc., a
Delaware corporation ("RDI") in connection with the transactions
contemplated by: 1) the subscription agreement, dated November
19, 1996, among Rose Hills Holdings Corp. ("Holdings"),
Blackstone Capital Partners II Merchant Banking Fund L.P.
("BCPII"), ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Hills Offshore Capital Partners L.P.
("BROCP"), Blackstone Family Investment Partnership II L.P.
("BFIP" and, together with BCPII, BOCP, "BCP"), The ▇▇▇▇▇▇ Group
Inc.("LWN"), LGII and RDI (the "Subscription Agreement"); 2) the
stockholders agreement, dated November 19, 1996, among Holdings,
BCP, LGII and RDI (the "Stockholders Agreement"); 3) the put/call
agreement, dated November 19, 1996, among BCP, LWN, LGII and RDI
(the "Put/Call Agreement"); and 4) the administrative services
agreement, dated November 19, 1996, among LGII, LWN and Rose
Hills Acquisition Corp. (the "Administrative Services
Agreement").
We have examined the Subscription Agreement, the Stockholders
Agreement, the Put/Call Agreement and the Administrative Services
Agreement and have examined such corporate records, agreements,
documents and other instruments and such certificates or
comparable documents of public officials and of officers and
representatives of the Company, and have made such other and
further investigations necessary as a basis for the opinions
hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us
as certified or photostatic copies, and the authenticity of the
originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. Each of LGII and RDI is a corporation organized and in
good standing under the laws of the State of Delaware.
2. The Stockholders Agreement has been duly authorized,
executed and delivered by LGII and RDI and constitutes a legal,
valid and binding obligation of LGII and RDI enforceable against
LGII and RDI in accordance with its terms.
3. Each of the Subscription Agreement and the Put/Call
Agreement has been duly authorized, executed and delivered by
LWN, LGII and RDI and constitutes a legal, valid and binding
obligation of LWN, LGII and RDI enforceable against LWN, LGII and
RDI in accordance with its terms.
4. The Administrative Services Agreement has been duly
authorized, executed and delivered by LWN and LGII and
constitutes a legal, valid and binding obligation of LWN and LGII
enforceable against LWN and LGII in accordance with its terms.
5. Upon receipt of consideration for and delivery of the
Subsidiary Stock (as defined in the Subscription Agreement) in
accordance with the Subscription Agreement, Holdings will acquire
all of the rights of RDI in the Subsidiary Stock.
For purposes of the opinions set forth above, we have assumed
that Pennsylvania law is the same as New York law. We are
members of the Bar of the Commonwealth of Pennsylvania, and we do
not express any opinion herein concerning any law other than the
law of the Commonwealth of Pennsylvania, the federal law of the
United States and the Delaware General Corporation Law.
This opinion letter is rendered to you in connection with the
above described transactions. This opinion letter may not be
relied upon by you for any other purpose, or relied upon by, or
furnished to, any other person, firm or corporation without our
prior written consent.
Very truly yours,
Exhibit C
Form of Opinion of
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
November 19, 1996
Rose Hills Holdings Corp.
c/o The Blackstone Group
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to the ▇▇▇▇▇▇ Group Inc., a British
Columbia corporation ("LWN") in connection with the transactions
contemplated by: 1) the subscription agreement, dated November
19, 1996, among Rose Hills Holdings Corp. ("Holdings"),
Blackstone Capital Partners II Merchant Banking Fund L.P.
("BCPII"), ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ Hills Offshore Capital Partners L.P.
("BROCP"), Blackstone Family Investment Partnership II L.P.
("BFIP" and, together with BCPII, BOCP, "BCP"), LWN, ▇▇▇▇▇▇ Group
International Inc., a Delaware corporation ("LGII") and Roses
Delaware, Inc., a Delaware corporation ("RDI")(the "Subscription
Agreement"); 2) the put/call agreement, dated November 19, 1996,
among BCP, LWN, LGII and RDI (the "Put/Call Agreement"); and 3)
the administrative services agreement, dated November 19, 1996,
among LGII, LWN and Rose Hills Acquisition Corp., a Delaware
corporation (the "Administrative Services Agreement").
We have examined the Subscription Agreement, the Put/Call
Agreement and the Administrative Services Agreement and have
examined such corporate records, agreements, documents and other
instruments and such certificates or comparable documents of
public officials and of officers and representatives of the
Company, and have made such other and further investigations
necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us
as certified or photostatic copies, and the authenticity of the
originals of such latter documents.
Based upon the foregoing, and subject to the qualifications and
limitations stated herein, we are of the opinion that:
1. LWN has been duly incorporated and is validly existing
and in good standing as a corporation under the laws of British
Columbia.
2. Each of the Subscription Agreement, the Put/Call
Agreement and the Administrative Services Agreement has been duly
authorized, executed and delivered by LWN.
3. All necessary corporate action has been taken by LWN to
authorize the Agreements and their execution and delivery by LWN.
We are members of the Bar of the province of British Columbia,
and we do not express any opinion herein concerning any law other
than the law of the province of British Columbia and the federal
law of Canada.
This opinion letter is rendered to you in connection with the
above described transactions. This opinion letter may not be
relied upon by you for any other purpose, or relied upon by, or
furnished to, any other person, firm or corporation without our
prior written consent.
Very truly yours,
