EXHIBIT 10.36
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is dated for reference the 31st day of January, 2002 between
Western Management Services, L.L.C., an Oregon limited liability company (the
"Purchaser"), ▇▇▇▇▇▇▇ Mortuary, Inc., a corporation incorporated under the laws
of the State of Oregon ("Seller"), and The Neptune Society, Inc., a Florida
corporation ("Neptune Society"), and Neptune Society of America, Inc., a
California corporation ("Neptune America").
WHEREAS:
A. Neptune Society and its subsidiaries are in the business of marketing and
selling cremation services, pre-need cremation services and related
merchandise in the United States.
B. Seller is a wholly-owned subsidiary of Neptune Society, and Neptune America
is a wholly-owned subsidiary of Neptune Society.
C. Seller acquired certain equipment, inventory, receivables, contract rights,
general intangibles, trademarks and trade names and other assets of the
businesses known as "Heritage Memorial," "Heritage Memorial Society,"
"Heritage Memorial Cremation Society," "The Heritage Society," "Heritage
Cremation Society," "▇▇▇▇▇▇▇ Mortuary," "▇▇▇▇▇▇▇ Funeral Home," "▇▇▇▇▇▇▇
Crematory," "Oregon Cremation Company," "Oregon Cremation & Burial
Company," and "AAA Cremation Company," pursuant to certain agreements dated
July 5, 2000 by and among Seller (formerly, Neptune Acquisition, Inc.),
Heritage Memorial Society, L.L.C., an Oregon limited liability company,
Community Memorial Centers, L.L.C., an Oregon limited liability company
("CMC"), ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ and Neptune Society. Seller also
acquired certain real property at ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇, and legally described on Schedule C ---------- (the "Portland
Property"), used in connection with its business. Neptune Society issued a
debenture in the original principal amount of $1,000,000 dated July 5, 2000
(the "CMC Debenture") payable to CMC or its order as partial consideration
for the Portland Property. Payments under the CMC Debenture are secured by,
among other things, that certain Trust Deed dated July 5, 2000 executed by
Seller for the benefit of CMC, recorded on July 18, 2000 in Multnomah
County, Oregon as Fee No. 2000-098983, encumbering the Portland Property
(the "CMC Trust Deed").
D. Neptune Society acquired Seller pursuant to an agreement and plan of merger
dated July 5, 2000, effected by filing articles of merger with the office
of the Secretary of State in the state of Oregon on July 17, 2000.
E. Seller borrowed $1,575,000 from Green Leaf Investors I, LLC, a California
limited liability company ("▇▇▇▇▇▇▇▇▇") under the terms of a loan agreement
dated August 8, 2001, which indebtedness is evidenced by a promissory note
dated August 8, 2001 issued to ▇▇▇▇▇▇▇▇▇ in the initial principal amount of
$1,575,000 (the "▇▇▇▇▇▇▇▇▇ Note"), and secured by (i) a first priority
security interest in certain assets of Seller pursuant to a security
agreement dated
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August 8, 2001 (the "▇▇▇▇▇▇▇▇▇ Security Interest") and (ii) a trust deed
dated August 6, 2001 executed by Seller for the benefit of ▇▇▇▇▇▇▇▇▇,
encumbering the Portland Property (the "▇▇▇▇▇▇▇▇▇ Trust Deed").
F. Seller currently operates and carries on a funeral, burial and cremation
business in the state of Oregon located at the Portland Property under the
Trade Names set forth in Schedule B (the "Business"); ----------
G. Seller has agreed to sell substantially all of its assets and liabilities
and the Purchaser has agreed to purchase such assets and assume such
liabilities related to the Business on the terms and conditions set forth
herein; and
I. Concurrently with or as promptly as practicable following the execution and
delivery of this Agreement, Purchaser will enter into a Marketing and
Service Agreement (the "Service Agreement") with Neptune Society or a
designated subsidiary of Neptune Society, for the provision of certain
at-need cremation services and for certain other arrangements as may
reasonably be requested by Neptune Society.
NOW THEREFORE, in consideration of the mutual covenants and agreements contained
in this Agreement and other good and valuable consideration, the receipt and
sufficiency of which is acknowledged, the parties agree as follows:
1. INTERPRETATION
1.1 Definitions: In this Agreement and in any schedules and amendments, the
following terms shall have the meanings set forth below unless the context
otherwise requires:
(1) "Agreement" means this Agreement including the schedules attached as
the same may be amended or supplemented from time to time;
(2) "Assets" means all of Seller's rights in the assets used in connection
with the Business, including the Portland Property, the Pre-Need
Contracts, the Trust Accounts, the Intangible Assets, the Trade Names,
reputations, telephone numbers, the Leased Assets, the Leases, the
Material Contracts and all other leases and contracts, the Specified
Assets, the Other Operating and Fixed Assets and all other fixed
assets and equipment used in connection with the Business, all
licenses and other rights which Seller is reasonably capable of
transferring to the Purchaser to operate the Business, the Insurance
Policies, all existing and prospective customer lists, lists of
suppliers, employee contracts, promotional material, websites and
electronic commerce sites, price lists, the Books and Records and
other information relating to the day to day carrying on of the
Business, but does not include the Excluded Assets;
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(3) "Books and Records" means all files, ledgers, correspondence, lists,
manuals, reports, texts, notes, memoranda, invoices, receipts,
accounts, financial statements, financial working papers, computer
discs, tapes or other means of electronic storage, and all other
records or documents of any nature or kind whatsoever belonging to
Seller in connection with the Business, but does not include (i) the
articles of incorporation, bylaws, minutes, resolutions or any similar
documents belonging to Seller; or (ii) the files and records of
Seller's attorneys whether or not such attorneys' files and records
constitute privileged or confidential communications with Seller or
attorney-client work product of Seller;
(4) "Business Day" means any day except Saturday, Sunday or any statutory
holiday in the State of Oregon;
(5) "Cash and Cash Equivalents" means the cash and cash equivalents of the
Business on hand at the Closing Date including, without limitation,
the proceeds of any claims under the Insurance Policies paid after the
Closing with respect to a claim arising prior to the Closing;
(6) "Claim" means any claim by the Purchaser against Seller, or Seller
against the Purchaser, for any breach of representation, warranty,
covenant or other agreement or obligation of Seller or the Purchaser
pursuant to this Agreement;
(7) "Closing" means the completion of the sale and purchase of the Assets
and assumption of the Liabilities as provided in this Agreement;
(8) "Closing Date" means March 8, 2002 or such other date as the parties
may agree;
(9) "Debenture Assumption Agreement" means the Debenture Assumption
Agreement, attached hereto as Schedule O. ----------
(10) "Encumbrances" means and includes, whether or not registered or
recorded, any and all:
(a) mortgages, assignments of rent, liens, licenses, leases, charges,
security interests, hypothecs, and pledges against property
(whether real, personal, mixed, tangible or intangible), or
conditional sales contracts or title retention agreements or
equipment trusts or financing leases relating thereto, or any
subordination to any right or claim of others in respect thereof;
(b) claims, interests and estates against or in property (whether
real, personal, mixed, tangible or intangible) including
easements, rights-of-way servitudes or other similar rights in
property granted to or reserved or taken by any person or any
governmental body or authority;
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(c) any option, or other right to acquire, or acquire any interest
in, any property; and
(d) other encumbrances of whatsoever nature and kind against property
(whether real, personal, mixed, tangible or intangible);
but does not include any lien against the Leased Assets for payment of
rent under the Leases, any statutory tax liens, materialmen liens, or
any liens arising from or described in the ▇▇▇▇▇▇▇▇▇ Security
Interest, the ▇▇▇▇▇▇▇▇▇ Trust Deed, the CMC Trust Deed, or the ▇▇▇▇▇▇▇
Security Interest.
(11) "Excluded Accounts" means:
(a) the current trade accounts receivable for performed at-need
services of the Business at the Closing Date;
(b) the Cash and Cash Equivalents; and
(c) the Pre-Paid Accounts.
(12) "Excluded Assets" means:
(a) Excluded Accounts;
(b) all corporate certificates of authority and corporate minute
books and the corporate stock record or register of Seller;
(c) such licenses, permits or other certificates of authority which,
by their terms, are nonassignable; and
(d) the assets of Neptune Society and its subsidiaries (except for
the Seller), including, but not limited to, registered and
unregistered names, trade names, trademarks, designs, telephone
numbers, advertising copy, websites, copyrights, patents,
pre-need contracts, accounts, fixed assets, equipment, licenses,
insurance policies, existing and prospective customer lists,
lists of suppliers, employee contracts, promotional material,
websites and electronic commerce sites, price lists and other
assets used in connection with their businesses.
(13) "Excluded Liabilities" means (a) all current trade account payables up
to the Closing Date; (b) an obligation in the amount of $90,000 owed
to U.S. Bank by CMC assumed by ▇▇▇▇▇▇▇ under the terms of the
agreements dated July 5, 2000; and (c) certain obligations in the
amount of $4399.91 owed to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
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(14) "Insurance Policies" means those insurance policies as set forth in
Schedule A;
(15) "Intangible Assets" means those registered and unregistered names,
trade names, trademarks, designs, telephone numbers, advertising copy,
websites, copyrights, patents and similar rights (except the trade
names Neptune Society and Trident Society), specifically including,
but not limited to, the Trade Names and any proprietary software
expressly set forth in Schedule B;
(16) "Knowledge" means actual awareness of such fact or other matter at the
time in question.
(17) "Leased Assets" means those assets included in the Assets which are
leased by the Seller for the Business and set forth in Schedule D;
(18) "Leases" means the leases under which the Leased Assets are leased by
the Business;
(19) "Liabilities" means all of Seller's actual or accrued liabilities up
to the Closing Date, but does not include the Excluded Liabilities or
commissions payable, sales tax, employee remittances of every kind
whatsoever, federal, municipal, and/or state taxes of any kind
whatsoever, with respect to Seller;
(20) "Material Contracts" means those contracts described in Schedule L;
(21) "Note Assumption Agreement" means the note extension and assumption
agreement, attached hereto as Schedule P, related to the extension of
the ▇▇▇▇▇▇▇▇▇ Note due date to July 31, 2002 and the assumption of the
▇▇▇▇▇▇▇▇▇ Note by the Purchaser;
(22) "Other Operating and Fixed Assets" means those operating and fixed
assets set forth in Schedule E;
(23) "Person" means an individual, a corporation, a limited liability
company, a partnership, a trust, an unincorporated organization or a
government agency or instrumentality;
(24) "Place of Closing" means the law offices of ▇▇▇▇▇▇ ▇▇▇▇▇ at ▇▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇;
(25) "Pre-Need Contracts" means those pre-need contracts set forth in
Schedule F for cremation services sold prior to the death of the
beneficiary by or for the Business, its predecessors and assignees for
the provision of funeral cremation services;
(26) "Pre-Paid Accounts" means pre-paid taxes other than income taxes,
pre-paid insurance, pre-paid rent and other pre-paid accounts of a
similar nature;
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(27) "Purchase Price" has the meaning ascribed thereto in Section 2.1;
(28) "Real Estate Documents" means the closing documents required to
transfer the Portland Property from Seller to Purchaser listed on
Schedule W, including the Warranty Deed and the ▇▇▇▇▇▇▇ Trust Deed;
(29) "Security Agreement" means the Security Agreement in substantially the
form attached hereto as Schedule Q;
(30) "Seller's Unaudited Financial Statements" means the unaudited
financial statements of the Business for the 12 month period ending
December 31, 2001, copies of which are incorporated as Schedule I;
(31) "Service Agreement" means the Service Agreement in substantially the
form attached hereto as Schedule N;
(32) "Specified Assets" means those specified assets set forth in Schedule
G;
(33) "Time of Closing" means the time at which the Closing takes place,
which shall be 10:00 a.m. at the Place of Closing on the Closing Date
or such other time as the parties may agree upon;
(34) "Trade Names" means those trade and business names expressly set forth
in Schedule B;
(35) "Trust Accounts" means all cash, insurance policies, funds and
accounts and investments set forth in Schedule H which arise from the
sale of the Pre-Need Contracts which are administered in trust by
Seller;
(36) "Warranty Deed" means that certain Warranty Deed encumbering the
Portland Property naming Seller as the Grantor and Purchaser as the
Grantee attached hereto as Schedule V;
(37) "▇▇▇▇▇▇▇ Security Interest" means the security interest granted in the
Assets to Seller under the terms of the Security Agreement; and
(38) "▇▇▇▇▇▇▇ Trust Deed" mean that certain trust deed encumbering the
Portland Property in the form attached hereto as Exhibit X.
1.2 Schedules: The following are the schedules delivered concurrently with, and
incorporated in, this Agreement:
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Schedule Description
A List of Insurance Policies
B List of Intangible Assets
C Description of Portland Property
D List of Leased Assets
E List of Other Operating and Fixed Assets
F List of Pre-Need Contracts
G List of Specified Assets
H List of Trust Accounts
I Seller's Unaudited Financial Statements
J [Intentionally Left Blank]
K List of Employees, Employment Matters and Employee Benefit Plans
L List of Material Contracts
M Required Consents
N Service Agreement
O Debenture Assumption Agreement
P Note Assumption Agreement
Q Security Agreement
R Allocation of Purchase Consideration Certificate
S Seller's Closing Certificate
T Purchaser's Closing Certificate
U ▇▇▇▇ of Sale
V Warranty Deed
W Real Estate Closing Documents
X ▇▇▇▇▇▇▇ Trust Deed
1.3 Division, Headings, Index: The division of this Agreement into sections,
subsections and paragraphs and the insertion of headings and any index
provided are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
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1.4 Gender and Number: Unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender
include both genders.
1.5 Currency: All dollar amounts referred to in this Agreement are stated in
United States of America currency, unless otherwise expressly stated.
2. TRANSFER OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 Transfer and Purchase of Assets: On the Closing Date and subject to the
terms and conditions contained in this Agreement, Seller shall sell,
assign, convey, transfer and deliver to Purchaser the Liabilities and the
Assets free from any and all Encumbrances, and Purchaser agrees to assume
the Liabilities and to purchase, all right, title and interest of the
Seller in and to all of the Assets for the aggregate purchase price of
$2,500,000 (the "Purchase Price").
2.2 Payment Purchase Price: On the Closing Date and subject to the conditions
set forth in this Agreement, the Purchaser will pay the Purchase Price to
the Seller as follows:
(a) $1,500,000 payable by the Purchaser's assumption of the Seller's
obligations under the ▇▇▇▇▇▇▇▇▇ Note, under the terms of the Note
Assumption Agreement by and among Seller, Neptune Society, Purchaser
and ▇▇▇▇▇▇▇▇▇. Under the terms of the Note Assumption Agreement, (i)
Seller will have paid to ▇▇▇▇▇▇▇▇▇ $75,000 of the principal balance,
(ii) Seller will have paid to ▇▇▇▇▇▇▇▇▇ all accrued and unpaid
interest outstanding as of the Closing Date, (iii) ▇▇▇▇▇▇▇▇▇ will have
amended the due date under the ▇▇▇▇▇▇▇▇▇ Note to July 31, 2002, and
(iv) Purchaser will have assumed the balance of $1,500,000 of the
Seller's obligations plus interest under the ▇▇▇▇▇▇▇▇▇ Note, as
amended; and
(b) $1,000,000 payable by the Purchaser's assumption of the Neptune
Society's obligations under the CMC Debenture, under the terms of the
Debenture Assumption Agreement. Under the terms of the Debenture
Assumption Agreement, Neptune Society and CMC will have amended the
debenture and Purchaser will assume the balance of $1,000,000 of the
Neptune Society's obligations plus interest under the CMC Debenture,
as amended.
The Purchaser and Seller agree the Purchase Price shall be adjusted in
accordance with Section 2.9 of this Agreement.
2.3 Assumption of Liabilities. Purchaser, for itself and its successors and
assigns, hereby assumes and agrees to pay or cause to be paid or otherwise
discharged or cause to be discharged from all of Seller's obligations and
liabilities, whether firm or contingent, of every nature and description,
and to perform in accordance with their terms or otherwise satisfy, as of
the Closing Date:
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(a) the Liabilities; and
(b) Seller's obligations under the Leases, Material Contracts, Insurance
Policies, Pre-Need Contracts, and other agreements, contracts,
arrangements and licenses assigned to Seller pursuant to this
Agreement.
Notwithstanding the foregoing, Seller shall retain, and Purchaser shall not
assume the Excluded Liabilities.
2.4 Security Interests.
(a) Purchaser will grant Seller a security interest in certain assets as
security for performance of the Purchaser under the Note Assumption
Agreement, the Debenture Assumption Agreement and this Agreement,
including principal, interest and all other amounts owing under the
▇▇▇▇▇▇▇▇▇ Note and the CMC Debenture, as follows:
(i) Purchaser will grant to Seller a security interest in and to all
of the personal properties and other assets of every kind and
nature then and thereafter owned by the Purchaser and will
execute and deliver to Seller the Security Agreement and any
financing statement under the Uniform Commercial Code naming the
Purchaser as debtor and Seller as secured party and designating
such personal properties and other assets as security; and
(ii) Purchaser will execute for the benefit of Seller any document
reasonably required to assume the continuing lien on the Portland
Property under the CMC Trust Deed and the ▇▇▇▇▇▇▇▇▇ Trust Deed to
secure the Purchaser's obligations under the Note Assumption
Agreement, the Debenture Assumption Agreement and this Agreement.
(b) Notwithstanding the forgoing, Purchaser and Seller hereby accept the
existing and continuing ▇▇▇▇▇▇▇▇▇ Security Interest and agree that as
long as the ▇▇▇▇▇▇▇▇▇ Note is outstanding, ▇▇▇▇▇▇▇▇▇ will maintain a
first priority security interest in the Assets;
(c) Purchaser will assume the continuing lien on the Portland Property
under the CMC Trust Deed and the ▇▇▇▇▇▇▇▇▇ Trust Deed; and
(d) Purchaser will execute and deliver the ▇▇▇▇▇▇▇ Trust Deed.
2.5 Consents to Assignments. If a consent to assignment of an Asset is required
and is not obtained, or if an attempted assignment would be ineffective or
would adversely affect Seller's rights thereunder so that Purchaser would
not in fact receive all such rights, Seller, at Seller's reasonable
expense, shall cooperate in any arrangement Purchaser may reasonably
request to provide for Purchaser the benefits under such Asset, including
enforcement for the
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benefit of Purchaser of any and all rights of Seller against any other
party thereto arising out of the breach or cancellation thereof by such
party or otherwise.
2.6 Closing Date: All transactions contemplated in this Agreement will be
effective on the Closing Date. All income from services rendered or
merchandise sold related to deaths occurring on or before the Closing Date
shall be the income of Seller, and all income from services rendered or
merchandise sold related to deaths occurring after the Closing Date shall
be the income of the Purchaser.
2.7 Excluded Assets and Excluded Liabilities: From and after the Closing Date,
the Seller will have operational control, ownership and responsibility of
the management of the Excluded Assets and the Excluded Liabilities.
2.8 Reconciliation: On or before the day which is 120 days following the
Closing Date (the "Reconciliation Date"), the Purchaser will provide to
Seller a reconciliation of the Excluded Accounts and Excluded Liabilities,
being that amount of cash, collections and amounts paid, respectively, from
the Closing Date.
2.9 Adjustment to Purchase Price: Any amount of cash and collected receivables
that pertain to the Excluded Assets, which is in excess of the amount of
payments that pertain to the Excluded Liabilities, will be paid in cash by
the Purchaser to Seller, its successor or assigns on or before the day
which is 60 days following the Reconciliation Date (the "Reconciliation
Payment Date"). Any amount of cash and collected receivables that pertain
to the Excluded Assets which is less than the amount of payments that
pertain to the Excluded Liabilities (the "Seller Reconciliation Payment")
will be paid by in cash by Seller to the Purchaser on or before the
Reconciliation Payment Date.
2.10 Allocation of Purchase Consideration: In accordance with a determination
made by Purchaser and Seller and Section 1060 of the Internal Revenue Code
of 1986, as amended ("Code") Purchaser and Seller have determined an
"Allocation of Purchase Consideration" as described in Schedule R attached
hereto and Purchaser will deliver at closing a final written Allocation of
Purchase Consideration. Purchaser and Seller shall each file, in accordance
with Section 1060 of the Code an Asset Allocation Statement on Form 8594
(which conforms with such allocation) with its federal income tax return
for the tax year in which the Closing Date occurs and shall
contemporaneously provide the other party with a copy of the Form 8594
being filed. Each party agrees not to assert, in connection with any tax
return, audit or other similar proceeding, any allocation of the Purchase
Consideration which differs from the allocation determined by Buyer
hereunder.
2.12 Application of Bulk Sale Laws. The transaction contemplated by this
Agreement shall be closed without the necessity of compliance with any
possible applicable bulk sales or bulk transfer laws. If any claims are
asserted by the creditors of the Seller by reason of any possible
application of applicable bulk sales or bulk transfer laws, these claims
shall be the
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responsibility of the Purchaser hereunder and the responsibility of the
Seller as to any claims representing undisclosed liabilities of the Seller
or liabilities which the Purchaser has not assumed under the terms of this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller, Neptune Society and Neptune America represent and warrant to the
Purchaser as follows and acknowledges that the Purchaser is relying upon such
representations and warranties in connection with the purchase of the Assets and
the assumption of the Liabilities:
3.1 Corporate Status and Authority:
Seller is duly organized and validly subsisting under the laws of the State
of Oregon and has all requisite power and capacity to own or lease the
Assets. Seller is duly qualified and licensed to carry on the Business in
all jurisdictions in which the nature of the Business or the properties and
assets owned or leased by it make such qualification and licensing
necessary and where the failure to be so qualified and licensed would have
a material adverse effect on the Assets.
3.2 Authority to Sell:
Seller has the legal capacity, power and authority to enter into this
Agreement and to transfer the legal and beneficial title and ownership of
the Assets to the Purchaser free from all Encumbrances, except as otherwise
contemplated by this Agreement;
3.3 Assets:
(a) Ownership: Except for the Leased Assets, Seller has good and
marketable title to all of the Assets free and clear of all
Encumbrances, except as otherwise contemplated by this Agreement;
(b) Leased Assets: The Leased Assets are held under valid and subsisting
Leases, each of which is listed in Schedule D. Each Lease is in full
force and effect and the Leases and the Leased Assets are free and
clear of all Encumbrances. Except for the Leases, there are no leases,
agreements to lease, tenancy arrangements or licenses to which Seller
is a party which have an aggregate capitalized value in excess of
$5,000. Seller has not previously assigned the Leases nor sublet its
interest in any of the Leased Assets under the Leases. Seller has not
released any of the other parties to such leases from the performance
of any of their obligations thereunder. Seller is not in breach of any
of the terms of any Leases, and Seller is not aware of any of the
other parties to the Leases being in breach of any of the terms of the
Leases, and, to the best of the Knowledge of Seller, no event or
condition has occurred which, either immediately or after notice or
lapse of time or both, could give rise to the
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cancellation or termination of any of the Leases. There are no prepaid
rents, rent-free periods or outstanding lessor's contributions or
obligations for lessee incentives under any of the Leases which
consist of subleases under which Seller is a sublessor. Seller has no
Knowledge of anything or matter which does or shall give any of the
sublessees under any of the subleases any right of abatement, set-off
or deduction in respect of the rent payable by the sublessees;
(c) Condition of Assets: To the best of the Knowledge of Seller, all fixed
assets and equipment owned or used by Seller in the conduct of the
Business, all of which are listed in either Schedule E and/or Schedule
G, have been properly maintained and are in good working order and
contain no defects which could materially adversely affect the
operation of the Business to any material degree;
(d) Rights to Assets: No present or former shareholder of Seller or any
person not dealing at arm's length with any of the foregoing owns
directly or indirectly or has any agreement, option or commitment to
acquire or lease, any property, asset, right or license used by
Seller;
(e) Zoning: The Portland Property is zoned to permit the Business carried
out by the Seller on such property;
(f) Portland Property: The description set forth on Schedule C accurately
reflects all interests of Seller in the Portland Property;
(g) Intangible Assets: The list of the Intangible Assets set out in
Schedule B accurately reflects all registered and unregistered names,
trade names, trademarks, designs, copyrights, patents and similar
rights specifically including but not limited to the Trade Names and
any proprietary software used in connection with the Business and/or
owned or held by Seller on the date hereof free of Encumbrances; and
(h) Other Operating and Fixed Assets and Specified Assets: The list of the
Other Operating and Fixed Assets and Specified Assets set out in
Schedules E and G, respectively, accurately reflects all operating and
fixed assets owned or held by Seller having an original capital cost
of $5,000 or more which are not disclosed elsewhere in this Subsection
3.3. Except for sales and purchases in the ordinary course of business
since December 31, 2001, Seller owns such Assets on the date hereof
free of Encumbrances, except as otherwise disclosed on Schedule E
and/or Schedule G.
3.4 Trust Accounts:
(a) The Trust Accounts described in Schedule H accurately reflects all
funds received by Seller in connection with the sale of pre-need
funeral arrangements for the Business or for undelivered funeral
merchandise which has been placed in the Trust Accounts on behalf of
the pre-need customer to the extent required by the terms of the Pre-
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Need Contract with the customer and as required by the applicable laws
and regulations governing the Trust Accounts as of the date indicated
in Schedule H; and
(b) All investments of the Trust Accounts are in accordance with all
applicable state and federal laws and regulations pertaining to the
investment and administration of such Trust Accounts.
3.5 Business Operations:
(a) Operating Authorities: Seller has acquired, and currently holds, all
permits, licenses, consents, authorizations, approvals, privileges,
waivers, exemptions, orders, certificates, rulings, agreements and
other concessions granted by or entered into with any governmental or
regulatory authority required in connection with the Assets or the
Business, that are material to the Assets or the Business and all of
the foregoing are in good standing and are being complied with in all
material respects;
(b) Compliance with Laws: To the best of the Knowledge of Seller, Seller
is operating and using the Assets and conducting the Business in
compliance with all applicable laws and regulations of each
jurisdiction in which the Assets are located or in which Seller
conducts the Business;
(c) Subsidiaries: Seller does not own, directly or indirectly, any
ownership, equity, or voting interest in any corporation, partnership,
joint venture or other entity, and has no agreement or commitment to
purchase any such interest.
(d) Jurisdictions in which Business is Carried On: Seller does not carry
on the Business or own or lease any assets in any jurisdiction other
than in the State of Oregon which would require registration or
licensing in such jurisdiction.
3.6 Financial:
(a) Unaudited Financial Statements: The Seller's Unaudited Financial
Statements present fairly in all material respects the financial
position of Seller as at the respective dates of the said statements
and the results of Seller's operations for the 12-month period then
ended in accordance with generally accepted accounting principles in
the United States used by Seller consistently applied.
(b) No Material Change: Since December 31, 2001 and up to the date hereof
there has been no material adverse change in the nature or condition
of the Assets or the Business, financial or otherwise, except changes
occurring in the ordinary course of business, nor has there been any
development or threatened or probable development of which Seller is
aware which materially and adversely affects the Assets or the
Business. The Business has been carried on in the ordinary course as
it had
13
previously been carried on. In addition, save as disclosed herein,
since December 31, 2001 and up to the date hereof Seller has not:
(i) incurred any liability or obligation which as to their nature and
amount are inconsistent with the Business as carried on;
(ii) discharged or satisfied any Encumbrance or paid any obligation or
liability (absolute or contingent) except for current liabilities
incurred in the ordinary course of business and except for
regularly scheduled payments of term debt and lease payments;
(iii) subjected any of the Assets to any Encumbrances;
(iv) sold or transferred any of the Assets or cancelled or released
any debts or claims, except, in each case, in the ordinary course
of business;
(v) waived any rights of material value;
(vi) entered into any transaction or into any contracts or agreements
or modifications or cancellations thereof, other than in the
ordinary course of business;
(vii)made or authorized any payment to employees in their capacity as
such except in the ordinary course of business and at rates of
salary, bonus or other remuneration consistent with remuneration
of previous years;
(viii) used any funds other than in the ordinary course of business as
theretofore carried on; and
(ix) made any capital expenditures greater than $2,500 or entered into
any lease with a capitalized value greater than $2,500;
(c) Books and Records: The Books and Records fairly and correctly set out
and disclose in all material respects the value of the Assets and the
Business and all material transactions relating to the Assets and the
Business have been accurately recorded in the Books and Records;
(d) Liabilities: Seller does not have any debts or liabilities (whether
accrued, contingent, absolute or otherwise and whether or not
determined or determinable), including liabilities which arise
hereafter based on events which have occurred up to the date hereof,
and including liabilities relating to income and other taxes except:
(i) liabilities disclosed on, reflected in or provided for in the
Sellers Unaudited Financial Statements;
14
(ii) other liabilities disclosed in this Agreement; or
(iii)liabilities incurred in the ordinary course of its businesses
since December 31, 2001;
(e) Receivables: All accounts receivable recorded on the books of Seller
are due and payable and no right of set off or counterclaim exists
with respect to those accounts except for the right of cancellation of
Pre-Need Contracts as set forth in those agreements; and
(f) Accountants: Seller has not had any material disagreement or dispute
with their auditors or accountants over the accounting or tax
treatment of the financial information of the Assets or the Business.
3.7 Banking:
(a) Loans and Credit Facilities: Except as otherwise disclosed in the
Seller's Unaudited Financial Statements, Seller has not entered into,
or otherwise arranged for, any loans, operating lines of credit or
other credit facilities (including interest rate or currency swaps,
hedging contracts, forward loan or rate agreements or other financial
instruments), and does not have outstanding any bonds, debentures,
mortgages, notes or other similar indebtedness and Seller is not
obligated to create or issue any bonds, debentures, mortgages, notes
or other similar indebtedness; and
(b) Guarantees/Indemnities: Seller has not guaranteed or indemnified, or
agreed to guarantee or indemnify, or agreed to any other like
commitment, in respect of any debt, liability or other obligation of
any Person.
3.8 Insurance:
(a) List of Policies: Schedule A contains a complete and accurate listing
of all insurance policies of Seller relating to the Assets and the
Business including all property damage, general liability, motor
vehicle, director and officer liability and life policies;
(b) Good Standing: Each of the insurance policies listed in Schedule A is
in good standing, all premiums required to be paid by Seller have been
properly paid, there have been no misrepresentations or failures to
disclose material facts, and there has been no refusal to renew any of
the policies and Seller has no knowledge of any facts which might
render any of the policies invalid, unenforceable or non-renewable;
and
(c) Outstanding Claims: To the best of the Knowledge of Seller, no
threatened or actual claims against any of the policies described in
Schedule A have been made in the last
15
two years. Seller has given notice of or has otherwise presented in a
timely fashion every claim under each such insurance policy.
3.9 Tax Matters:
(a) Filings: Seller has duly and timely filed all returns, elections and
designations required to be filed by it with any taxation authority or
if not filed on a timely basis, all fees, penalties, interest and
other amounts payable as a result thereof have been paid. To the best
of the Knowledge of Seller, no such returns, elections or designations
contain any material misstatement or omit any material statements that
should have been included and each return, election and designation,
including accompanying schedules and statements is true, correct and
complete in all material respects;
(b) Payment: Seller has paid in full all amounts (including but not
limited to sales, capital, use and consumption taxes and taxes
measured on income and all installments of taxes) owing to all
federal, state and municipal taxation authorities due and payable by
it up to the date of this Agreement;
(c) Extensions: There are no agreements, waivers or other arrangements
with any taxation authority providing for an extension of time with
respect to the filing of any return, election or designation by, or
any payment of any amount by or governmental charge against Seller nor
with respect to the issuance of any assessment or reassessment;
(d) Adverse Proceedings: To the best of the Knowledge of Seller, there are
no actions, suits, proceedings, investigations or claims by any
governmental authority pending or threatened against Seller relating
to taxes, governmental charges or assessments. There are also no
matters under discussion with any governmental authority relating to
taxes, governmental charges or assessments asserted or to be asserted
by such authority;
(e) Deductions/Remittances: Seller has withheld and remitted all amounts
required to be withheld by it including without limitation, income
tax, Social Security Plan contributions and Employment Insurance
premiums and has paid such amounts including any penalties or interest
due to the appropriate authority on a timely basis and in the form
required under the appropriate legislation;
(f) Acquisitions: Seller has not acquired property from, or disposed of
property to, any Person with whom it does not deal at arm's length
since the date of its formation; and
(g) Other Jurisdictions: To the best of its Knowledge, Seller has not
filed or is not currently required to file any returns, elections or
designations with any state or local taxation authority located in any
jurisdiction other than the State of Oregon.
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3.10 Employee Matters:
(a) List of Employees: The list of employees set out in Schedule K is a
comprehensive list of the employees and commissioned sales people of
Seller and the Business as of the Closing Date and includes an
accurate description of their compensation, and/or commission
structure, position and job classification;
(b) Employment Contracts: Except as disclosed herein as a Material
Contract, Seller is not a party to any oral or written consulting
contract, management contract, labor services contract or similar
agreement for the services of a particular individual and none of the
employees of Seller or the Business are employed on other than an
indefinite hiring basis terminable on reasonable notice according to
law without further liability to the Business;
(c) Certain Employee Matters: Seller is in compliance in all material
respects with all applicable equal employment opportunity laws,
ordinances, regulations, nondiscrimination, wages, hours, benefits,
vacation benefits, social security and similar taxes and occupation
safety and health and other applicable rules (the "Employment
Regulations") and is not engaged in any practice that may give rise to
a claim under the Employment Regulations. Other than as set forth in
Schedule K, (i) Seller is not aware of any facts or circumstances,
which could form the basis for assertion of a claim or liability, in
each case, regarding non-compliance with Employment Regulations and
(ii) Seller is not subject to any discrimination claims or affirmative
action obligations;
(d) Benefit Plans: Schedule K contains a complete and accurate listing of
all benefit, bonus, profit-sharing, retirement income, termination or
severance, dental, medical, disability, health or other plan, program,
policy or other arrangement in place for the benefit or advantage of
the salaried employees of Seller and the Business as at the Closing
Date and there have been no material variations to this list since
that date other than in the ordinary course of business. All
contributions required to be made by Seller to such plans have been
properly made and all retirement plans are fully funded, and all
returns and other documents have been filed and all amounts owing to
any governmental or other regulatory authority relating to such plans,
programs, policies or arrangements have been paid;
(e) Pension Plans: Seller does not have nor have they ever had a pension
plan for any of its employees; and
(f) Employer Associations: Seller is not a member of any employer,
management, industry or other trade or business association under
which Seller or the Business is obligated to contribute to any
employee or contractor employee benefit fund,
17
including any pension plans, health benefit plans or other similar
employee entitlements.
3.11 Litigation and Claims:
(a) Adverse Proceedings: There are no outstanding actions, claims,
demands, lawsuits, prosecutions or governmental investigations by or
against Seller, the Assets and the Business and there is no other
adverse proceeding which is to the knowledge of Seller pending or
threatened by, against, or relating to Seller, the Assets or the
Business. Seller is not aware of any basis for any other action,
claim, demand, lawsuit, investigation or other adverse proceeding
which, if pursued would have a significant likelihood of having a
material adverse effect on any of the Assets or the Business;
(b) Compliance Directives: There are no outstanding compliance directives
or work orders of which Seller is aware relating to the Assets or the
Business, from any police or fire department, sanitation or health
authorities, environmental agencies, or from any other federal, state
or municipal authority, department or agency, nor does Seller have
notice that there are any matters currently under formal consideration
by any such authorities relating to any of the Assets or the Business;
(c) Notice of Default/Claims: Except as expressly disclosed in this
Agreement, Seller has not received any notice of any default,
violation or termination of any of the Pre-Need Contracts (other than
individual cancellations of Pre-Need Contracts within the ordinary
course of business), Material Contracts, Leases or other contracts
entered into by Seller which will, or is likely to, result in such a
default, violation or termination;
(d) No Seizure: There is no appropriation, expropriation or seizure of any
of the Assets that is pending or, which to the knowledge of Seller has
been threatened against Seller; and
(e) Trademark and Patent Infringement: The conduct of the Business by
Seller does not infringe upon any patent, trademark or other
proprietary right, domestic or foreign, of any Person in respect of
which there is any significant likelihood that it would have a
material adverse effect on the Assets or the Business.
3.12 Contracts and Commitments:
(a) Material Contracts: Other than the Pre-Need Contracts and the Leases,
Schedule L contains a complete and accurate listing of all material
contracts, agreements, leases, commitments, instruments or other
dealings to which Seller is a party, by which Seller is bound or under
which Seller is entitled to any benefits. For the purposes of this
Agreement a contract shall be material if:
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(i) performance of any right or obligation by any party to such
contract involves a payment by either party of $2,500 or more and
having a term of more than one year; or
(ii) if an expenditure, receipt or transfer or other disposition of
property with a value of greater than $2,500 may arise under such
contract (other than a contract with a customer or supplier in
the ordinary course of business); or
(iii)if such contract has been entered into out of the ordinary
course of business;
(b) Pre-Need Contracts: Schedule F contains a complete and accurate
listing of all active Pre-Need Contracts as of December 31, 2001; and
(c) Good Standing: Except as disclosed herein, Seller is not in breach or
default of any of the terms of the Material Contracts or Pre-Need
Contracts, and Seller is not aware of any breach or default of any of
the terms of the Material Contracts or Pre-Need Contracts by any other
party thereto, and each such contract is in good standing and in full
force and effect without amendment thereto. To the best of the
Knowledge of Seller, no state of facts exists, which, after notice or
lapse of time or both, would constitute such a default or breach where
there is any significant likelihood that such breach or default
referred to in this Subsection 3.12(c) would have a material adverse
effect on the Assets or the Business.
3.13 Environmental Liabilities:
(a) Compliance: To the best of the Knowledge of Seller, Seller and the
Business are in compliance in all material respects with all federal,
state and municipal environmental laws and regulations (the
"Environmental Laws"). Seller has filed all environmental reports and
notifications required to be filed under applicable laws and
regulations;
(b) Notice of Non-Compliance: Neither Seller or, to the best of its
knowledge, any prior owner or occupant of the Portland Property, have
received any notice or other communication alleging that they are not
in compliance with any Environmental Laws, or alleging any liability
under any Environmental Laws. Seller and the Business are not subject
to, and have not been subject to, any claim, judgement, decree, order,
writ, citation, fine, penalty, injunction, litigation or proceeding
relating to any Environmental Laws;
(c) Hazardous Material: Save and except for an underground oil storage
tank properly removed and abated, neither Seller or, to the best of
its knowledge, any other Person has engaged in or permitted any
operations or activities upon, or any use or occupancy of the Portland
Property, resulting in the storage, emission, release,
19
discharge or disposal of any hazardous materials on, in, under or from
the Portland Property; and
(d) Cremation Residue: Seller has not transported or disposed of, or
arranged for the transportation or disposal of, any cremation residue
or other waste to or at a site which is not in accordance with
applicable Environmental Laws.
3.14 Effect of this Transaction:
(a) No Adverse Implications: Except as disclosed in Schedule M with
respect to certain required consents, neither the execution and
delivery of this Agreement nor the completion and performance of the
transactions contemplated hereby will:
(i) give any Person the right to terminate or cancel any contractual
or other rights with Seller where such termination or
cancellation would have a material adverse effect on the Assets
or the Business;
(ii) violate any restriction of any nature applicable to Seller or
relating to the disposition of the Assets;
(iii)result in the creation of any liens or encumbrances on the
Assets or in the default under any agreement giving a third party
security against the Assets or in the crystallization of any
floating charge in a debenture as general security interest in a
security agreement granted, issued or assumed by Seller where any
of such events could have a material adverse effect on the Assets
or the Business; nor
(iv) violate any provision of any indenture, mortgage, lien, lease,
agreement, instrument, order, arbitration award, judgment or
decree to which Seller is a party or by which Seller is bound the
violation of which could have a material adverse effect on the
Assets or the Business or impair the legality or enforceability
of this Agreement or the transactions contemplated hereby.
3.15 Finder: There is no Person or entity that is entitled to a finder's fee or
any type of commission in relation to or in connection with the
transactions contemplated by this Agreement as a result of any agreement or
understanding with Seller.
3.16 Disclosure: No statement, certificate or schedule furnished by Seller or
any affiliate of the Seller, including any officer or director, in
connection with this Agreement contains or will contain any untrue
statement of material fact, or omits to state any material fact required to
make such statements contained herein or therein not misleading.
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4. COVENANTS OF SELLER
Seller covenants and agrees with the Purchaser as follows and acknowledges that
the Purchaser is relying upon such covenants and agreements in connection with
the purchase of the Assets:
4.1 Access to the Business: Seller has made available to the Purchaser and its
authorized representatives and, if requested by the Purchaser, has provided
a copy to the Purchaser of all title documents, contracts, financial
statements, minute books, share certificate books, share registers, limited
partnership agreements and records, plans, reports, licenses, orders,
permits, books of account, accounting records, constating documents and all
other documents, information or data relating to the Business. At the
Purchaser's reasonable request, Seller has cooperated and will cooperate
with the Purchaser in arranging meetings with:
(a) all employees of the Business;
(b) customers, suppliers, distributors or others who have or have had a
business relationship with the Business; and
(c) auditors, attorneys or any other Persons engaged or previously engaged
to provide services to the Business who have knowledge of matters
relating to the Business.
In particular, without limitation, Seller has permitted the Purchaser's
representatives or consultants to conduct such physical review of the
inventory of the Business as is necessary so as to enable the confirmation
of the condition of such inventory, to the reasonable satisfaction of the
Purchaser. The exercise of any rights of inspection by or on behalf of the
Purchaser under this Subsection 4.1 shall not mitigate or otherwise affect
the representations and warranties of Seller hereunder, which shall
continue in full force and effect. In exercising its rights hereunder the
Purchaser shall use its reasonable commercial efforts to avoid interfering
with the Business to the extent reasonably practical consistent with the
need to complete its review of the Business and the Assets.
4.2 Delivery of Books and Records: At the Time of Closing there shall be
delivered to the Purchaser by Seller all of the Books and Records. The
Purchaser agrees that it will preserve the Books and Records so
delivered to it for so long as such Books and Records may be required
to enable Seller, its successors or assigns to defend any claim
against Seller which could result in a Claim hereunder, with the
understanding that the Books and Records need not be retained after
January 31, 2012. The Purchaser will permit Seller, its successors or
assigns or their authorized representatives reasonable access thereto
in connection with matters involving the Purchaser that Seller, its
successors or assigns have a valid business reason to review. The
Purchaser shall not be responsible or liable to Seller, its successors
or assigns for or as a result of any loss or destruction of or damage
to any such Books or Records, unless the Purchaser's negligence or
willful misconduct caused the loss, destruction or damage.
21
4.3 Conduct Prior to Closing: Without in any way limiting any other
obligations of Seller hereunder, during the period from the date
hereof to the Time of Closing:
(a) Conduct Business in the Ordinary Course: Seller shall conduct the
Business in its ordinary and normal course and Seller shall not,
without the prior written consent of the Purchaser (such consent
not to be unreasonably withheld), enter into any transaction or
take any action that, if effected after December 31, 2001 and
before the date of this Agreement, would constitute a breach of
any representation, warranty, covenant or other obligation of
Seller contained herein. In particular Seller shall refrain from
entering into any contract or commitment which would, if entered
into prior to the date hereof, constitute a Material Contract or
Lease, save with the consent of the Purchaser (such consent not
to be unreasonably withheld);
(b) Continue Insurance: Seller shall continue to maintain in full
force and effect all policies of insurance or renewals thereof
now in effect, shall take out, at the expense of the Purchaser
until the Closing Date, such additional insurance as may be
reasonably requested by the Purchaser and shall give all notices
and present all claims under all policies of insurance in a due
and timely fashion; and
(c) Preserve Goodwill: Seller shall use reasonable commercial efforts
to preserve, intact, the Assets, the Business and to promote and
preserve for the Purchaser the goodwill of suppliers, customers
and others having business relations with the Business.
4.4 Delivery of Documents: Seller shall deliver to the Purchaser all necessary
transfers, assignments and other documentation reasonably required to
transfer to the Purchaser the Assets with a good and marketable title, free
of Encumbrances without any right of set-off, except as otherwise
contemplated by this Agreement;
4.5 Seller's Taxes: Seller is responsible for any federal, state or other taxes
which may be payable by them in connection with the completion of the
transactions contemplated in this Agreement.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
The Purchaser represents, warrants and covenants to and with Seller, Neptune
Society and Neptune America as follows and acknowledge that Seller is relying
upon such representations, warranties and covenants in connection with the sale
of the Assets and the assumption of the Liabilities:
5.1 Limited Liability Company Status and Authority: The Purchaser is a valid
and subsisting limited liability company, duly organized and in good
standing under the laws of the State of Oregon and has full legal power,
capacity and authority to enter into this Agreement on the terms and
conditions hereof and all necessary corporate acts have been performed in
order to authorize this Agreement.
22
5.2 Authorization of Asset Purchase Agreement. The execution, delivery and
performance of this Agreement, the Security Agreement, the Real Property
Documents and the transactions contemplated thereunder have been duly
authorized and approved by the members of Purchaser. This Agreement, the
Security Agreement, the Real Property Documents and other agreements
contemplated by this Agreement constitute valid and binding obligations of
Purchaser enforceable in accordance with its terms.
5.3 Approvals. No consent or approval is required of any person or entity,
private or governmental, for the execution, delivery and performance of
this Agreement, the Note Assumption Agreement, the Debenture Assumption
Agreement, the Security Agreement, the ▇▇▇▇▇▇▇ Trust Deed and other
agreements contemplated by this Agreement by Purchaser, and neither will
such execution, delivery or performance, nor the consummation of the
transactions contemplated herein breach any provision of any of Purchaser's
articles of organization, operating agreement, or any law, rule,
regulation, judgment, order, decree, agreement, instrument or arrangement
that would have a material adverse effect on Purchaser's ability to perform
its obligations hereunder.
5.4 Finder. There is no person or entity that is entitled to a finder's fee or
any type of commission in relation to or in connection with the
transactions contemplated by this Agreement as a result of any agreement or
understanding with Purchaser.
5.5 Disclosure: No statement, certificate or schedule furnished by Purchaser or
any affiliate of the Purchaser, including any officer, manager or member,
in connection with this Agreement contains or will contain any untrue
statement of material fact, or omits to state any material fact required to
make such statements contained herein or therein not misleading.
6. CONDITIONS OF CLOSING
6.1 Conditions of Closing in Favor of the Purchaser: The obligation of the
Purchaser to complete the sale and purchase of the Assets and Liabilities
is subject to the following terms and conditions for the exclusive benefit
of the Purchaser, to be fulfilled or performed at or prior to the Time of
Closing or waived in whole or in part by the Purchaser at its sole
discretion without prejudice to any rights the Purchaser may otherwise
have:
(a) Representations and Warranties: The representations and warranties of
Seller contained in this Agreement shall be true and correct in all
material respects at the Time of Closing, with the same force and
effect as if such representations and warranties were made at and as
of such time, and certificate of Seller dated the Closing Date to that
effect shall have been delivered to the Purchaser in the form attached
hereto as Schedule S;
(b) Covenants: All of the covenants and agreements of Seller and all other
terms of this Agreement to be complied with or performed by Seller at
or before the Time of
23
Closing shall have been complied with or performed and a certificate
of Seller dated the Closing Date to that effect shall have been
delivered to the Purchaser, such certificate to be in form and
substance satisfactory to the Purchaser, acting reasonably;
(c) Regulatory Consents: There shall have been obtained (or reasonable
expectations of such), from all appropriate federal and state or other
governmental or administrative bodies, such licenses, permits,
consents, approvals, certificates, registrations and authorizations,
including but not limited to those described in Schedule M, as are
required to permit the change of ownership of the Assets and the
transactions as contemplated herein, including, but not limited to,
the operation of the Business by the Purchaser. Notwithstanding
anything in this Section 6.1 to the contrary, the parties hereto
concur that, as soon as reasonably possible after the Time of Closing
(i) Seller and Purchaser will notify the Oregon State Mortuary &
Cemetery Board (the "Mortuary Board") of the purchase and sale of the
Assets and the assumption of the Liabilities (if any) as required by
Oregon Administrative Rules ("OAR"), and (ii) the Purchaser will
comply with the requisite ownership transfer licensing requirements
and regulations of the Mortuary Board necessary to consummate the
purchase and sale of the Assets and the assumption of the Liabilities
and operate the Business;
(d) Material Adverse Change: There shall have been no material adverse
changes in the condition of the Assets or the Business (financial or
otherwise) since the date of this Agreement up to the Time of Closing;
(e) No Action or Proceeding: No legal or regulatory action or proceeding
shall be pending or threatened by any Person to enjoin, restrict or
prohibit the purchase and sale of the Assets and the assumption of the
Liabilities contemplated hereby;
(f) No Material Damage: No material damage by fire or other hazard to the
whole or any material part of the Assets shall have occurred from the
date hereof to the Time of Closing which would have a material adverse
change in the condition of the Assets or the Business.
(g) Note Assumption Agreement. Seller, Purchaser, Neptune Society, Neptune
America and ▇▇▇▇▇▇▇▇▇ shall have entered into the Note Assumption
Agreement;
(h) ▇▇▇▇▇▇▇▇▇ Note Amendment. ▇▇▇▇▇▇▇▇▇ shall have amended the ▇▇▇▇▇▇▇▇▇
Note to amend the due date to July 31, 2002;
(i) Debenture Assumption Agreement. Seller, Purchaser, Neptune Society,
Neptune America and CMC shall have entered into the Debenture
Assumption Agreement;
(j) CMC Debenture Amendment. CMC shall have amended the CMC Debenture;
24
(k) Warranty Deed. Seller shall have delivered the Warranty Deed; and
(l) Real Estate Closing Documents. The completion of all closing
documentation necessary to transfer the Portland Property from Seller
to Purchaser.
If any of the conditions contained in this Subsection 6.1 shall not be
performed or fulfilled at or prior to the Time of Closing to the
satisfaction of the Purchaser, acting reasonably, the Purchaser may, by
notice to Seller, terminate this Agreement and the obligations of Seller
and the Purchaser under this Agreement, provided that the Purchaser may
also bring an action against Seller for damages suffered by the Purchaser
where the non-performance or non-fulfilment of the relevant condition is as
a result of a breach of covenant, representation or warranty. Any such
condition may be waived in whole or in part by the Purchaser without
prejudice to any claims it may have for breach of covenant, representation
or warranty
6.2 Conditions of Closing in Favor of Seller: The obligation of Seller to
complete the sale and purchase of the Assets and Liabilities is subject to
the following terms and conditions for the exclusive benefit of Seller, to
be fulfilled or performed at or prior to the Time of Closing or waived in
whole or in part by Seller at its sole discretion without prejudice to any
rights Seller may otherwise have:
(a) Representations and Warranties: The representations and warranties of
the Purchaser contained in this Agreement shall be true and correct at
the Time of Closing, with the same force and effect as if such
representations and warranties were made at and as of such time and a
certificate of the Purchaser dated the Closing Date to that effect
shall have been delivered to Seller in the form attached hereto as
Schedule T; and
(b) Covenants: All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Purchaser at or
before the Time of Closing shall have been complied with or performed
and a certificate of the Purchaser dated the Closing Date to that
effect shall have been delivered to Seller, such certificate to be in
form and substance satisfactory to Seller acting reasonably.
(c) No Action or Proceeding: No legal or regulatory action or proceeding
shall be pending or threatened by any Person to enjoin, restrict or
prohibit the purchase and sale of the Assets and assumption of the
Liabilities contemplated hereby;
(d) Service Agreement: The Purchaser will have entered into a services
contract with Neptune Society, in a form satisfactory to Neptune
Society and Purchaser, to perform at-need and fulfillment cremation
services after the Closing Date for Neptune Society, which will be
engaged in the business of selling pre-need cremation arrangements;
(e) Note Assumption Agreement. Seller, Purchaser, Neptune Society, Neptune
America and ▇▇▇▇▇▇▇▇▇ shall have entered into the Note Assumption
Agreement;
25
(f) Security Agreement. Seller and Purchaser shall have entered into the
Security Agreement;
(g) ▇▇▇▇▇▇▇▇▇ Note Amendment. ▇▇▇▇▇▇▇▇▇ shall have amended the ▇▇▇▇▇▇▇▇▇
Note to amend the due date to July 31, 2002;
(h) Debenture Assumption Agreement. Seller, Purchaser, Neptune Society,
Neptune America and CMC shall have entered into the Debenture
Assumption Agreement;
(i) CMC Debenture Amendment. CMC shall have amended the CMC Debenture;
(j) Regulatory Consents: There shall have been obtained (or reasonable
expectation of such), from all appropriate federal and state or other
governmental or administrative bodies, such licences, permits,
consents, approvals, certificates, registrations and authorizations as
are required to permit the operation of the Business by the Purchaser.
Notwithstanding anything in this Section 6.2 to the contrary, the
parties hereto concur that, as soon as reasonably possible after the
Time of Closing, Seller will comply with the requisite licensing
requirements and regulations of the Mortuary Board necessary to
operate the Business;
(k) Third-Party Consents: There shall have been obtained (or reasonable
expectation of such), from all appropriate third parties, such
licences, consents, approvals, waivers, agreements, assignments and
authorizations as are reasonably necessary to permit the operation of
the Business by the Purchaser;
(l) ▇▇▇▇▇▇▇ Trust Deed: Purchaser will have delivered the ▇▇▇▇▇▇▇ Trust
Deed; and
(m) Real Estate Closing Documents: The completion of all closing
documentation necessary to transfer the Portland Property from the
Seller to the Purchaser.
If any of the conditions contained in this Subsection 6.2 shall not be
performed or fulfilled at or prior to the Time of Closing to the
satisfaction of Seller, acting reasonably, Seller may, by notice to the
Purchaser, terminate this Agreement and the obligations of Seller and the
Purchaser under this Agreement, provided that Seller may also bring an
action against the Purchaser for damages suffered by Seller where the
non-performance or non-fulfilment of the relevant condition is as a result
of a breach of covenant, representation or warranty. Any such condition may
be waived in whole or in part by Seller without prejudice to any claims
they may have for breach of covenant, representation or warranty.
6.3 Parties' Efforts: The parties shall use reasonable commercial efforts to
satisfy the conditions contained in Section 6.
26
7. CLOSING ARRANGEMENTS
7.1 Place of Closing: The Closing shall take place at the Time of Closing at
the Place of Closing.
7.2 Transfer: At the Time of Closing, upon fulfillment of all the conditions
set out in Section 6 that have not been waived in writing by the Purchaser
or Seller as the case may be, the Purchaser will deliver the required
documents and consideration to Seller's attorney.
7.3 Closing Deliveries.
(a) On the Closing Date, Seller will deliver to Purchaser the following:
(i) ▇▇▇▇ of Sale conveying the Assets to Purchaser;
(ii) Warranty Deed;
(iii) Note Assumption Agreement;
(iv) Debenture Assumption Agreement;
(v) Seller's Closing Certificate;
(vi) Allocation of Purchase Consideration Certificate; and
(vii) Real Estate documents.
(b) On the Closing Date, Purchaser will execute and/or deliver to Seller
the following:
(i) Purchaser's Closing Certificate;
(ii) Service Agreement;
(iii) Debenture Assumption Agreement;
(iv) Note Assumption Agreement;
(v) Security Agreement;
(vi) ▇▇▇▇▇▇▇ Trust Deed;
(vii) Allocation of Purchase Consideration Certificate; and
(viii) Real Estate documents.
27
7.4 Title Insurance; Closing Costs; Prorations.
(a) The Commitment. Seller shall, prior to the Closing Date, furnish to
Purchaser a commitment ("Commitment") for an ALTA Form B 1992 Owner's
Policy of Title Insurance in the amount of $1,500,000 issued by TICOR
Title Insurance Company (the "Title Company"), insuring Purchaser's
interest in the Portland Property.
(b) Title Policy. Upon closing, Purchaser shall receive a title insurance
policy consistent with the Commitment and subject only to the
Permitted Exceptions (the "Title Policy").
(c) Closing Costs; Prorations. Taxes and assessments for the current year,
utilities constituting liens and other items of direct expense
relating to the Portland Property shall be prorated as of Closing.
Seller shall pay any real estate excise taxes, one-half (1/2) of the
Title Company's escrow fee, the cost of recording the Warranty Deed,
and the portion of the premium for the Title Policy attributable to
standard coverage. Purchaser shall pay one-half (1/2) of the Title
Company's escrow fee, and the portion of the premium for the Title
Policy attributable to extended coverage or endorsements.
7.5 Further Assurances: Each party to this Agreement covenants and agrees that,
from time to time subsequent to the Closing Date, it will, at the request
and expense of the requesting party, execute and deliver all such
documents, including, without limitation, all such additional conveyances,
transfers, consents and other assurances and do all such other acts and
things as any other party to this Agreement, acting reasonably, may from
time to time request be executed or done in order to better evidence or
perfect or effectuate any provision of this Agreement or of any agreement
or other document executed pursuant to this Agreement or any of the
respective obligations intended to be created by this Agreement.
8. SURVIVAL; INDEMNITY
8.1 The covenants, agreements, representations and warranties of the parties
hereto contained in this Agreement or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall survive the
Closing, subject to Subsection 8.2. Notwithstanding the preceding sentence,
any covenant, agreement, representation or warranty in respect of which
indemnity may be sought under Subsection 8.2 shall survive the time at
which it would otherwise terminate pursuant to the preceding sentence, if
notice of the inaccuracy or breach thereof giving rise to such right to
indemnity shall have been given to the party against whom such indemnity
may be sought prior to such time.
8.2 Indemnification
(a) Seller, Neptune Society and Neptune America hereby indemnify the
Purchaser from and against any and all losses, liabilities, damages,
costs and expenses of any kind
28
whatsoever (including without limitation reasonable expenses of
investigation and reasonable attorney's fees and expenses in
connection with any action, suit or proceeding and the costs of
cross-claiming or claiming against third parties) ("Damages") which at
any time or from time to time may be paid, incurred, asserted or
suffered by the Purchaser (1) as a direct or indirect result of the
operating of Seller and/or the Business, or the use of the Assets,
from July 5, 2000 up to and including the Closing Date (provided that
such liability is not the result of any actions taken by the Purchaser
after the Closing Date) or (2) arising out of any misrepresentation or
breach of warranty, covenant or agreement made or to be performed by
Seller pursuant to this Agreement, provided, however as follows:
(i) no claims shall be made under this Subsection 8.2(a) unless the
cumulative amount of all claims under this Subsection 8.2(a)
equals or exceeds $100,000, save and except for the Liabilities
arising out of any misrepresentation or breach of warranty under
Section 3.10(c), and equals or is less than $1,000,000;
(ii) no claims shall be made under this Section 8.2(a) based on any
misrepresentation or breach of warranty in the event the
Purchaser, or any member or manager of the Purchaser as of the
date of this Agreement, knew or should have known that such
representation or warranty is or might be inaccurate; and
(iii)no claims shall be made under this Subsection 8.2(a) after the
18 month anniversary of the Closing Date.
(b) The Purchaser hereby indemnifies Seller against, and agrees to hold
them harmless from, any and all Damages which at any time and from
time to time may be incurred or suffered by the Seller (1) as a direct
or indirect result of the operating of the Business, or the use of the
Assets, after the Closing Date (provided that such liability is not
the result of any actions taken by Seller before or after the Closing
Date) or (2) arising out of any misrepresentation or breach of
warranty, covenant or agreement made or to be performed by the
Purchaser pursuant to this Agreement, provided, however as follows:
(i) no claims shall be made under this Subsection 8.2(b) unless the
cumulative amount of all claims under this Subsection 8.2(b)
equals or exceeds $100,000 save and except for the Liabilities
assumed hereunder, including the ▇▇▇▇▇▇▇▇▇ Note and equals or is
less than $1,000,000;
(ii) no claims shall be made under this Section 8.2(b) based on any
misrepresentation or breach of warranty in the event the Seller,
or any officer
29
of the Seller as of the date of this Agreement, knew or should
have known that such representation or warranty is or might be
inaccurate; and
(iii)no claims arising solely out of any misrepresentation or breach
of warranty shall be made under this Subsection 8.2(b) after the
18-month anniversary of the Closing Date.
8.3 Procedures:
(a) Notice: The party seeking indemnification under Subsection 8.2
("Indemnified Party") shall give prompt notice to the party or parties
against whom indemnity is or may be sought (the "Indemnifying Party")
of the assertion of any claim, or the commencement of any suit, action
or proceeding in respect of which indemnity may be sought under such
Subsection 8.2 (collectively, an "Indemnity Claim"). Such notice shall
include the Indemnified Party's reasonable estimate of the potential
amount of potential losses with respect to such Indemnity Claim;
(b) Indemnity Claim Not Involving Litigation: If the Indemnity Claim does
not involve a pending suit or proceeding, then the Indemnifying Party
shall first have a period of sixty (60) calendar days from the date of
delivery of notice of an Indemnity Claim to it (the "Cure Period") to
cure, settle or otherwise resolve the Indemnity Claim. During such
period the Indemnified Party shall provide the Indemnifying Party with
such information and documentation as the Indemnifying Party may
reasonably request to assist the Indemnifying Party in curing,
settling or resolving the Indemnity Claim. Any settlement or
resolution of such Indemnity Claim and the continued handling of any
Indemnity Claim which has not been cured, settled or resolved within
the Cure Period, shall be handled in accordance with the balance of
this Section 8;
(c) Defense of Indemnity Claim: The Indemnifying Party shall defend,
contest or otherwise protect the Indemnified Party against any
Indemnity Claim and shall control the defense and settlement thereof.
The Indemnified Party shall have the right, but not the obligation, to
participate at its own expense in the defense thereof by counsel of
its own choice. In the event the Indemnifying Party fails or refuses,
within a reasonable period of time after its receipt of notice of the
Indemnity Claim to defend, contest or otherwise protect against such
Indemnity Claim, then the Indemnified Party shall have the right to do
so and to control the defense thereof; and
(d) Settlement of Indemnity Claim:
(i) If the Indemnifying Party has assumed the defense of the
Indemnity Claim, the Indemnifying Party may pay, settle or
compromise such Indemnity Claim without the consent of the
Indemnified Party provided that the payment,
30
settlement or compromise does not require the Indemnified Party
to take action or refrain from taking action not reasonable under
the circumstances;
(ii) If the Indemnifying Party failed or refused to defend the
Indemnity Claim, then the Indemnified Party shall have the right
to pay, settle or compromise such Indemnity Claim provided
however that it gives the Indemnifying Party at least fifteen
calendar days prior written notice of the proposed payment,
settlement or compromise. In such event, the Indemnifying Party
shall again have the right to assume and control the defense or
participate in the joint defense thereof within such fifteen day
period provided the Indemnifying Party provides reasonably
adequate assurance to the Indemnified Party that adequate funds
exist to fully indemnify the Indemnified Party in respect of such
Indemnity Claim;
(iii)Unless the Indemnifying Party has failed or refused to
participate in the defense of any Indemnity Claim, the
Indemnifying Party shall not be liable in respect of losses under
Subsection 8.2 for any payment, settlement or compromise of any
Indemnity Claim effected without its consent, which consent shall
not be unreasonably withheld; and
(iv) The Indemnified Party shall cooperate with the Indemnifying Party
in executing any settlement documents, including releases, as may
be reasonably requested by the Indemnifying Party.
8.4 Exclusivity After the Closing, Subsection 8.2 will provide the exclusive
remedy for any Indemnity Claim.
9. GENERAL MATTERS
9.1 Governing Law and Arbitration This Agreement shall be governed by and
construed in accordance with the laws of the State of Oregon.
Notwithstanding the fact that one or more of the parties to this Agreement
is now or may become a resident or citizen of a different state, all of the
terms and conditions set forth herein shall be governed by and construed in
accordance with the laws of the State of Oregon. Any dispute arising out of
or in connection with this Agreement, including any question regarding its
existence, validity or termination, shall be referred to and finally
resolved by arbitration under the rules of commercial arbitration of the
American Arbitration Association which rules are deemed to be incorporated
by reference into this clause. The number of arbitrators shall be one. The
place of arbitration shall be Portland, Oregon. The language of arbitration
shall be English. The parties shall be entitled to conduct discovery in
accordance with the Federal Rules of Civil Procedure, subject to limitation
by the arbitrator to secure just and efficient resolution of the dispute.
If the amount in controversy exceeds $10,000, the arbitrator's decision
shall include a statement specifying in reasonable detail the basis for and
computation of the amount of the
31
award, if any. The parties expressly waive and forego any right to
punitive, exemplary or other similar damages unless an applicable statute
requires the award of such damages or that compensatory damages be
increased in a specified manner. This provision is not intended to apply to
any award of arbitration costs to a party to compensate for dilatory or bad
faith conduct in the arbitration pursuant to this paragraph. The
substantially prevailing parties shall also be entitled to an award of
their costs and reasonable attorney's fees. Judgment upon the arbitration
award may be entered in any court having competent jurisdiction. Nothing,
herein, however, shall prevent a party from resort to a court of competent
jurisdiction in those instances where injunctive relief may be appropriate.
9.2 Entire Agreement; Amendment: Except as may be otherwise expressly agreed
between the parties in writing, this Agreement, including any agreements
contemplated herein, constitutes the entire agreement between the parties
pertaining to the purchase and sale of the Assets and assumption of the
Liabilities and there are no oral statements, warranties, representations
or other agreements between or among the parties in connection with the
purchase and sale of the Assets and assumption of the Liabilities except as
specifically set forth or referred to herein. No amendment, waiver or
termination of this Agreement shall be binding unless executed in writing
by the party or parties to be bound thereby. No waiver of any provision of
this Agreement shall be deemed or shall constitute a general waiver or a
waiver of any other provision nor shall any such waiver constitute a
continuing waiver unless otherwise expressly provided nor estop any party
from demanding that the other parties fully perform all promises and
obligations contained herein and shall in no way affect any party's rights
to enforce the same. A waiver by any party of any breach of this Agreement
shall not be held to be a waiver of any succeeding breach or a waiver of
this non-waiver clause.
9.3 Assignment: Seller will not assign their interests in this Agreement
without prior written consent of the Purchaser, which assignment shall not
be unreasonably withheld. The Purchaser will not assign its interests in
this Agreement without prior written consent of Seller, which assignment
shall not be unreasonably withheld.
9.4 Public Notices: Except as required by applicable law, regulatory authority
or any listing or trading agreement, no press release or other announcement
concerning this transaction shall be made by Seller and the Purchaser
without the prior approval of the others, such approval not to be
unreasonably withheld.
9.5 Confidential Information: Each of the parties hereto covenant to hold in
strict confidence all information obtained in connection with the
transactions which are the subject matter of this Agreement, including but
not limited to financial statements, business records, customer list,
buying book, vendor list, distributor list, supplier list, whether marked
"confidential" or not, will be held in strict confidence and will not be
copied or disclosed without the express consent of the other party. If the
purchase and sale of the Assets and assumption of the Liabilities is not
consummated, this covenant shall continue in full force and effect. All
confidentiality obligations of the Purchaser with respect to the Assets and
Liabilities shall
32
cease upon Closing. Notwithstanding the Closing, the Purchaser covenants to
maintain as confidential all confidential information respecting Seller,
not related to the Assets and Liabilities, in the Purchaser's possession
prior to Closing and all information obtained in connection with the
transactions which are the subject matter of this Agreement other than as
may be required to be disclosed by law and other than information that
becomes generally available to the public other than as a result of a
disclosure by the Purchaser or its representatives.
9.6 Non-Waiver: No investigations made by or on behalf of the Purchaser at any
time shall have the effect of waiving, diminishing the scope of or
otherwise affecting any representations or warranties made herein or
pursuant hereto. No investigations made by or on behalf of Seller at any
time shall have the effect of waiving, diminishing the scope of or
otherwise affecting any representations or warranties made herein or
pursuant hereto.
9.7 Expenses: All costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party
incurring such expense. The Purchaser shall not bear any legal, accounting
or other costs incurred by Seller. Seller shall not bear any legal,
accounting or other costs incurred by the Purchaser.
9.8 Notices: Any notice or other communication required or permitted to be
given hereunder shall be in writing and delivered or sent by overnight
mail, overnight delivery or telefax and, if telefaxed, shall be deemed to
have been received on the next Business Day following transmittal and
acknowledgment of receipt by the recipient's telefax machine or if
delivered by hand shall be deemed to have been received at the time it is
delivered. Notices addressed to an individual shall be validly given if
left on the premises indicated below. Notice of change of address shall
also be governed by this Subsection . Notices shall be delivered or
addressed as follows:
If to Seller:
c/o Neptune Management Corp.
Neptune Society
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
33
If to the Purchaser:
Western Management Services, L.L.C.
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Any party may give written notice of change of address in the same manner,
in which event such notice shall thereafter be given to it as above
provided at such changed address.
9.9 Time is of the Essence: Time shall be of the essence of this Agreement.
9.10 Severability: If any covenant, obligation or agreement of this Agreement,
or the application thereof to any Person or circumstance shall, to any
extent, be invalid or unenforceable, the remainder of this Agreement or the
application of such covenant, obligation or agreement to Persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each covenant, obligation
and agreement of this Agreement shall be separately valid and enforceable
to the fullest extent permitted by the law.
9.11 Counterparts: This Agreement may be executed in any number of counterparts,
each of which when delivered shall be deemed to be an original and all of
which together shall constitute one and the same document. A signed
facsimile or telefaxed copy of this Agreement shall be effectual and valid
proof of execution and delivery.
9.12 Binding Effect: The provisions of this Agreement shall inure to the benefit
of and be binding on the parties, their successors, assigns, and legal
representatives. The term "successor" includes any Person who succeeds to
any rights or obligations under this Agreement, whether by merger,
consolidation, transfer of all or substantially all assets, or otherwise.
9.13 Attorney's Fees: In the event the services of an attorney at law are
necessary to enforce any of the terms of this Agreement or to resolve any
disputes arising hereunder outside the confines of Subsection 9.1 above,
the prevailing party shall be entitled to recover its costs and reasonable
attorney's fees from the losing party as determined at trial or on appeal.
9.14 Third-Party Beneficiaries: The provisions of this Agreement are intended
solely for the benefit of the parties hereto and shall create no rights or
obligations enforceable by any third
34
party, including creditors of any party, except as otherwise provided
herein or by applicable law.
[This space intentionally left blank - signature page to follow]
35
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first hereinabove written.
▇▇▇▇▇▇▇ Mortuary, Inc. Western Management Services, L.L.C.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Per: ▇▇▇▇▇▇▇ ▇▇▇▇
------------------------ -------------------------
Authorized Signatory Authorized Signatory
The Neptune Society, Inc.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Authorized Signatory
Neptune Society of America, Inc.
Per: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------------
Authorized Signatory
36
SCHEDULE A
LIST OF INSURANCE POLICIES
[Need list to attach]
1
SCHEDULE B
LIST OF INTANGIBLE ASSETS
1. Trade Names:
a) ▇▇▇▇▇▇▇ Funeral Home
b) ▇▇▇▇▇▇▇ Funeral Home & Crematory
c) ▇▇▇▇▇▇▇ Mortuary
d) ▇▇▇▇▇▇▇ Crematory
e) AAA Cremation Company
f) Oregon Cremation Company
g) Oregon Cremation & Burial Company
h) Heritage Memorial
i) The Heritage Society
j) Heritage Cremation Society
k) Heritage Memorial Society
l) Heritage Memorial Cremation Society
2. The Director's Assistant Software and Accounting Package
1
SCHEDULE C
DESCRIPTION OF PORTLAND PROPERTY
Lots 1 and 2 and the East one-half of ▇▇▇▇ ▇, ▇, ▇ ▇▇▇ ▇, ▇▇▇▇▇ ▇, ▇▇▇▇ VIEW
PARK ADDITION TO THE CITY OF EAST PORTLAND, in the City of Portland, County of
Multnomah, State of Oregon
SUBJECT, HOWEVER, TO THE FOLLOWING:
o Taxes for the fiscal year 2001-2002 a lien not yet payable.
o Trust Deed, including the terms and provisions thereof, given to
secure an indebtedness of $1,000,000.00
Dated: July 5, 2000
Recorded: July 18, 2000 as Fee No. 2000-098983
Grantor: ▇▇▇▇▇▇▇ Mortuary, Inc.
Trustee: Ticor Title Insurance Company
Beneficiary: Community Memorial Centers, L.L.C., an Oregon limited
liability company
o Trust Deed, including the terms and provisions thereof, given to
secure an indebtedness of $1,575,000
Dated: August 6, 2001
Recorded: August 8, 2001 as Fee No. 2001-124418
Grantor: ▇▇▇▇▇▇▇ Mortuary, Inc.
Trustee: First American Title Insurance Company of Oregon
Beneficiary: Green Leaf Investors I, LLC
1
SCHEDULE D
LIST OF LEASED ASSETS
Monthly Payment
In Agreement with Nature of Lease Schedule Expiry Date
----------------- --------------- ---------------- -----------
Portland Typewriter Mita copy machine $115.00 October 8, 2003
▇▇▇▇▇▇▇ Mini Storage Archives Storage $247.00 Month to Month
▇▇▇▇▇ Water Systems Water filter $30.00 Month to Month
and cooler
TRM Copy Co. TRM Copy machine 125.00 April 5, 2004
1
SCHEDULE E
LIST OF OTHER OPERATING AND FIXED ASSETS
CASKET SELECTION ROOM
1 Marble display end table
1 Wood display end table
1 Picture
2 Leather lounge chairs
1 Silk tree
1 Silk floor plant
PORCH OFFICE
2 Wood desks
1 Wood computer desk
1 Computer dataguard
1 HP monitor
1 HP computer tower
1 HP laser jet printer
1 IBM typewriter
1 Metal typewriter stand
1 Metal four drawer filing cabinet
1 Metal tow drawer filing cabinet
3 Swivel office chairs
1 Panafax laser fax machine
2 Calculators
1 TV monitor
MAIN 1ST FLOOR ARRANGEMENT OFFICE
1 Wood conference table
6 Wood and fabric conference chairs
1 Wood lateral filing cabinet
1 Picture
2 Wall urn displays
1 Metal five drawer filing cabinet
1 Public Address system for chapel
1 CD player
1 Dual cassette tape player
4
1ST FLOOR FOYER
1 Metal attached to wall drinking fountain
1 Wood two drawer side table
2 Mirrors
3 Wood end tables
6 Fabric chairs
1 Fabric love seat
4 Fabric high back chairs
2 Fabric lounge chairs
6 Pictures
2 Metal lighted register stands
3 Metal touchier lamps
5 Small silk plants
1 Wood grandfathers clock
VIEWING ROOM #1
1 Wood side table
2 Wood and fabric conference chairs
1 Glass base floor lamp
6 Small pictures
VIEWING ROOM #2
1 Old electric organ
1 Catholic funeral set up
2 Fabric chairs
3 Wood easels
1 Picture
CHAPEL
6 Crystal hanging chandeliers
1 Wood urn display and desk combo unit
1 Wood podium
1 Microphone
2 Wood side tables
1 Fabric podium chair
1 Wood table
15 Fabric pews
5
CHAPEL FAMILY ROOM
1 Picture
20 Fabric chairs
1 Hanging lamp shade
1 Glass base floor lamp
1ST FLOOR BACK FUNERAL DIRECTOR'S OFFICE
1 Vacuum
3 Wood folding chairs
2 Metal four drawer filing cabinets
1 Wood two drawer filing cabinet
1 Wood desk
1 Swivel chair
1 IBM typewriter
1 14" monitor
1 CTC computer tower
1 HP laser jet printer
2 Wood wall mounted shelves
1 Electric elevator - Stops on four floors
Misc. memorial folders and memorial register books
2ND FLOOR MANAGER'S OFFICE
1 Wood desk
1 Swivel desk chair
1 Wood and fabric side chair
1 Computer desk
1 Wood fax table
1 Computer dataguard
1 HP inkjet printer
1 HP computer tower
1 HP monitor
1 Four drawer wooden filing cabinet
2 Wood desktop filers
2ND FLOOR ACCOUNTING OFFICE
1 Wood three piece sectional desk
1 HP laser jet printer
1 Computer dataguard
1 HP monitor
6
1 HP computer tower
1 ▇▇▇▇▇▇ calculator
1 Wood desktop filers
1 Wood two drawer filing cabinet
1 Wood bookcase
4 Metal four drawer filing cabinets
2 Swivel desk chairs
1 Window mounted AC unit
1 Desk Lamp
2ND FLOOR LOFT STORAGE
5 Metal four drawer vertical pre-need filing cabinets
3 Open metal file racks
1 Metal four drawer filing cabinet
1 Metal two drawer filing cabinet
1 Wood bookshelves
1 Open small metal file rack
Miscellaneous printed supplies
2ND FLOOR FUNERAL DIRECTORS OFFICE
2 Wood Desk
2 Wood computer desks
1 Wood printer table
1 Wood typewriter stand
6 Swivel desk chairs
2 Wood two drawer under desk file cabinets
2 HP monitors
2 HP computer towers
1 Oki laser printer
1 HP Inkjet printer
1 HP Scanner
2 Wood desktop filers
1 IBM typewriter
6 Plastic floor mat protectors
1 Window mounted AC unit
1 TV monitor
1 Office fan on metal stand 3 Calculators
7
2ND FLOOR KITCHEN
1 Microwave
1 Metal four drawer filing cabinet
1 Metal five drawer vertical filing cabinet
Misc. Office supplies - pens - tape - paper clips - rubber bands
2ND FLOOR ARRANGEMENT OFFICE
1 Glass conference table
3 Wood rolling conference chairs
2 Wall urn displays
2 Urn pedestals
1 Wood two drawer file cabinet
1 Picture
BASEMENT OPERATING AND PREPARATION ROOM
2 PE-10 embalming machines
5 Metal and wood dressing tables
2 Porcelain embalming tables
Misc. embalming instruments
Misc. Supply of embalming fluids, supplies and trocars
BASEMENT OFFICE
2 Wood desks
1 IBM typewriter
1 Swivel chair
1 Wood side chair
1 Metal five drawer filing cabinet
2 Metal four drawer filing cabinets
4 Metal two drawer filing cabinets
3 Wood shelves
BASEMENT STORAGE AREA
4 Wood and metal cremation church trucks
3 Metal casket church trucks
3 Metal three drawer filing cabinets
1 Metal "Macy" safe
1 Metal "The Dick" safe
1 EXT Panasonic electronic phone board
1 Minuteman 300 battery phone system back-up power source
8
15 Panasonic phones located in offices throughout building
2 Metal four drawer filing cabinets
1 Metal body lift
CREMATORY SECONDARY BUILDING
1 IEE cremains processor
1 Metal hooded fan
1 Wood desk
2 Metal shelves
2 Metal casket lifts with rollers
1 Metal three shelves storage cabinet
3 Metal crematory cleaning and body manipulation tools
OFF-SITE ▇▇▇▇▇▇▇ ROAD STORAGE FACILITY
2 Metal four drawer filing cabinets
2 Metal two drawer filing cabinets
Misc. cardboard file boxes of archive case files 1905-1999
9
SCHEDULE F
LIST OF PRE-NEED CONTRACTS
List of Pre-Need Contracts - Insurance Funded
Carrier Number of Total Face Amount
Individual Policies of Policies in Force
in Force
Beneficiary ▇▇▇▇▇▇▇ Funeral Home
Great Western Life 91 $195,332.00
United Heritage 441 $569,741.39
Beneficiary Heritage Memorial
Great Western Life 53 $60,422.00
United Heritage 1844 $1,149,651.83
Homesteaders 11 $8,234.04
Fore Thought 70 $86,514.19
GE Capital Life 8 $5,020.49
Total all Policies 2591 $2,074,915.94
in Force
10
SCHEDULE G
LIST OF SPECIFIED ASSETS
1. ▇▇▇▇▇▇▇▇ C100 Crematory Unit
2. ▇▇▇▇▇▇▇▇ C100 Crematory Unit
3. 7 Person Body Cooler
4. Power Pak Model II Crematory Unit, serial 30740997
11
SCHEDULE H
LIST OF TRUST ACCOUNTS
Trusts Held with Number of Individual Total Amount in Trust
Trust Accounts
▇▇▇▇▇▇▇ Funeral Home
American Funeral and 139 $272,008.09
Cemetery Trust Services
Heritage Memorial
American Funeral and 212 $134,159.49
Cemetery Trust Services
Total all Trust Accounts 351 $406,167.58
12
SCHEDULE I
SELLER'S UNAUDITED FINANCIAL STATEMENTS
13
SCHEDULE J
[INTENTIONALLY LEFT BLANK
14
SCHEDULE K
LIST OF EMPLOYEES, EMPLOYMENT MATTERS
AND EMPLOYEE BENEFIT PLANS
15
SCHEDULE L
LIST OF MATERIAL CONTRACTS
16
SCHEDULE M
REQUIRED CONSENTS
SCHEDULE N
SERVICE AGREEMENT
SCHEDULE O
DEBENTURE ASSUMPTION AGREEMENT
17
SCHEDULE P
NOTE ASSUMPTION AGREEMENT
18
SCHEDULE Q
SECURITY AGREEMENT
19
SCHEDULE R
ALLOCATION OF PURCHASE CONSIDERATION CERTIFICATE
1.1 The Purchase Price shall be allocated amongst the Assets as follows:
Description Purchase Price
Personal Property/Business Assets $1,000,000
Real Property $1,500,000
==========
TOTAL $2,500,000
IN WITNESS WHEREOF the parties hereto have executed this Certificate as of
March 8th, 2002.
▇▇▇▇▇▇▇ Mortuary, Inc. Western Management Services, L.L.C.
Per: Per:
------------------------ -------------------------
Authorized Signatory Authorized Signatory
Neptune Society, Inc.
Per:
------------------------
Authorized Signatory
Neptune Society of America, Inc.
Per:
------------------------
Authorized Signatory
20
SCHEDULE S
SELLER'S CLOSING CERTIFICATE
SELLER'S CLOSING CERTIFICATE
From: ▇▇▇▇▇▇▇ Mortuary, Inc., an Oregon corporation ("▇▇▇▇▇▇▇")
The Neptune Society, Inc., a Florida corporation ("Neptune Society")
Neptune Society of America, a California corporation ("Neptune America")
To: Western Management Services, L.L.C. ("Western")
With Respect To:
A. That certain Asset Purchase Agreement dated as of January 31, 2002 (the
"Asset Purchase Agreement") by and among Neptune Society, Neptune America,
▇▇▇▇▇▇▇ and Western in connection with the sale of substantially all of the
assets and business of ▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇ Assets"); and
B. Those certain agreements contemplated in the Asset Purchase Agreement,
including but not limited to the Service Agreement, Note Assumption Agreement,
Debenture Assumption Agreement and Security Agreement.
1. ▇▇▇▇▇▇▇, Neptune Society and Neptune America hereby certifies, in
accordance with Subsection 6.1(a) of the Asset Purchase Agreement, that all
representations and warranties contained in the Asset Purchase Agreement
are true and correct in all material respects as at the date hereof.
2. ▇▇▇▇▇▇▇ hereby certifies, in accordance with Subsection 6.1(b) of the Asset
Purchase Agreement, that all covenants and agreements of ▇▇▇▇▇▇▇ and all
other terms of the Asset Purchase Agreement have been complied with or
performed by ▇▇▇▇▇▇▇ as of the date hereof.
Dated as of the March 8th, 2002
21
▇▇▇▇▇▇▇ MORTUARY, INC.
Per:
--------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Authorized Signatory
THE NEPTUNE SOCIETY, INC.
Per:
----------------------------------------------
Authorized Signatory
NEPTUNE SOCIETY OF AMERICA, INC.
Per:
----------------------------------------------
Authorized Signatory
22
SCHEDULE T
PURCHASER'S CLOSING CERTIFICATE
From: Western Management Services, L.L.C. ("Western")
To: ▇▇▇▇▇▇▇ Mortuary, Inc. ("▇▇▇▇▇▇▇")
With Respect To:
A. That certain Asset Purchase Agreement dated as of January 31, 2002 (the
"Asset Purchase Agreement") by and among The Neptune Society, Inc., a Florida
corporation, Neptune Society of America, a California corporation, ▇▇▇▇▇▇▇ and
Western in connection with the sale of substantially all of the assets and
business of ▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇ Assets"); and
B. Those certain agreements contemplated in the Asset Purchase Agreement,
including but not limited to the Service Agreement, Note Assumption Agreement,
Debenture Assumption Agreement and Security Agreement.
1. Western hereby certifies, in accordance with Subsection 6.2(a) of the Asset
Purchase Agreement, that all representations and warranties contained in
the Asset Purchase Agreement are true and correct in all material respects
as at the date hereof.
2. Western hereby certifies, in accordance with Subsection 6.2(b) of the Asset
Purchase Agreement, that all covenants and agreements of Western and all
other terms of the Asset Purchase Agreement have been complied with or
performed by Western as of the date hereof.
Dated as of the March 8th, 2002
WESTERN MANAGEMENT SERVICES, L.L.C.
Per:
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇, Authorized Signatory
23
SCHEDULE U
▇▇▇▇ OF SALE
▇▇▇▇ OF SALE
THIS ▇▇▇▇ OF SALE is given pursuant to the Asset Purchase Agreement dated for
reference the 31st day of January, 2002 (the "Asset Purchase Agreement") by and
among Western Management Services, L.L.C., an Oregon limited liability company
(the "Purchaser") and ▇▇▇▇▇▇▇ Mortuary, Inc., a company incorporated under the
laws of the State of Oregon (the "Vendor"). The capitalized terms not otherwise
defined herein have the meanings assigned to them in the Asset Purchase
Agreement.
1. The Vendor, in consideration of the payments made by the Purchaser to the
Vendor pursuant to the Asset Purchase Agreement, hereby sells, conveys,
transfers, assigns and delivers to the Purchaser, to and for the benefit of the
Purchaser and its successors and assigns, to have and to hold all in singular to
its own use forever, all right, title and interest in and to all of the Assets.
2. The Vendor hereby confirms that the Purchaser is entitled to all the rights
regarding the representations and warranties with respect to the Assets in
accordance with the terms of, and subject to the limitations included in, the
Asset Purchase Agreement.
3. The Vendor hereby constitutes and appoints the Purchaser and its successors
and assigns as the attorney-in-fact of the Vendor with full power of
substitution, to institute and prosecute, in the name of the Vendor or the
Purchaser but on behalf of and for the benefit of the Purchaser, and at the
expense of the Purchaser, all proceedings which the Purchaser may deem desirable
to collect, assert or enforce any claim, right or title of any kind in or to the
Assets and to defend and compromise any and all actions, suits or proceedings
which the owner of the Assets is entitled to defend or compromise. The Vendor
agrees that the foregoing powers are coupled with an interest and are and shall
be irrevocable by the Vendor in any manner or for any reason (including the
dissolution of the Vendor).
4. The Vendor agrees that, at any time and from time to time after the delivery
hereof, it will, upon the reasonable request of the Purchaser, take all
appropriate action and execute and deliver all appropriate documents,
instruments and conveyances of any kind which may be desirable to carry out the
provisions of this ▇▇▇▇ of Sale.
5. This ▇▇▇▇ of Sale shall be governed by, and construed in accordance with, the
laws of the State of Oregon, without giving effect to the principles of
conflicts with laws thereof.
24
IN WITNESS WHEREOF the parties hereto have executed this ▇▇▇▇ of Sale as of the
8th day of March, 2002.
WESTERN MANAGEMENT SERVICES, L.L.C.
Per:
-------------------------------
Authorized Signatory
▇▇▇▇▇▇▇ MORTUARY, INC.
Per:
-------------------------------
Authorized Signatory
25
SCHEDULE V
WARRANTY DEED
26
SCHEDULE W
REAL ESTATE CLOSING DOCUMENTS
27
SCHEDULE X
▇▇▇▇▇▇▇ TRUST DEED
28