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Exhibit 10.21
ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of
December 15, 2006, is by and among CARRIAGE CEMETERY SERVICES,
INC., a Texas corporation (the "Purchaser"), and SEASIDE CEMETERY,
INC., a Texas corporation (the "Company");
W I T N E
S S E T H :
WHEREAS, the Company owns and
operates (i) the Seaside Funeral Home (the "Seaside Home") and
the Seaside Memorial Park (the "Seaside Cemetery"), both located at
4357 Ocean Drive in Corpus Christi, Nueces County, Texas,
(ii) the Corpus Christi Funeral Home located at 2409 Baldwin
Blvd in Corpus Christi, Nueces County, Texas (the "Corpus Christi
Home" and, together with the Seaside Home, hereafter referred to as
the "Homes"), and (iii) the Sunshine Cemetery located at 2501
Rodd Field Road in Corpus Christi, Nueces County, Texas ("Sunshine
Cemetery" and, together with the Seaside Cemetery, hereafter
referred to as the "Cemeteries"); and
WHEREAS, the parties desire that
the Purchaser acquire substantially all of the assets, rights, and
properties of the Homes and the Cemeteries (collectively, the
"Businesses") from the Company, and that the parties enter into
certain related transactions, on the terms and subject to the
conditions hereafter set forth;
NOW, THEREFORE, the parties agree
as follows:
1. Purchase and Sale of
Assets .
1.1. Transfer of Assets by the
Company . Subject to the provisions of this Agreement, the
Company agrees to sell, and the Purchaser agrees to purchase, at
the Closing referred to in Section 2.1, all of the properties,
assets, rights and business of the Businesses of every kind and
description, tangible and intangible, real, personal or mixed,
wherever located (collectively, the "Assets"), as they shall exist
at the Effective Time (as defined in Section 2.2), including,
but not limited to, all of the following-described assets, rights
and properties (but excluding those described in
Section 1.2):
(i) all preneed and at-need notes
and accounts receivable of the Cemeteries, all preneed notes and
accounts receivable of the Homes, and all at-need accounts
receivable of the Homes, other than the Retained At-Need Funeral
Receivables described in Section 1.2(iii) below;
(ii) inventories of caskets (if
any), vaults, urns, accessories and monuments of the Homes,
inventories of vaults, crypts, markers, bases and monuments of the
Cemeteries, and all other goods and inventories of the
Businesses;
(iii) fee simple title to all of
the real estate and improvements of the Businesses described on
Schedule 3.5 (collectively, the "Real Property"); the Real
Property specifically includes, but is not limited to, the "Ocean
Drive Entrance Tract" (herein so called and so identified on
Schedule 3.5) to be acquired by the Company prior to the
Closing and included in the Assets to be transferred to the
Purchaser, as contemplated in Section 7.8 below;
(iv) machinery, equipment, motor
vehicles, furniture, fixtures, supplies, tools and the other Fixed
Assets and property, plant and equipment, including those described
on Schedule 3.8 hereto;
(v) all preneed contracts of the
Businesses, and all rights under policies of insurance available to
fund preneed obligations, together with all cash, securities and
other investments to fund preneed and perpetual care obligations
(whether in on deposit in the applicable preneed or perpetual care
account, awaiting deposit or in transit);
(vi) the agreements, leases and
commitments described on Schedule 3.9, excluding any thereon
as not being transferred to the Purchaser;
(vii) all rights of the Company to
the names "Seaside Funeral Home," "Seaside Memorial Park," "Corpus
Christi Funeral Home," and "Sunshine Cemetery," and all other trade
names used in the Businesses, together with all derivatives
thereof, and all trademarks, trade names, patents, processes,
copyrights, know-how and similar intangible rights;
(viii) all goodwill associated
with the foregoing and otherwise with the Businesses;
(ix) all permits and licenses of
the Businesses, to the extent transferable;
(x) all books, records, work
papers, brochures and literature necessary for the continued
operation of or otherwise located at the Businesses (whether in
tangible or electronic format), customer lists, computers and
computer software, the telephone and fax numbers and listings for
the Businesses, and all internet domain names (specifically
including www.seasidefuneral.com and
www.seasidefuneralcemetery.com); and
(xi) all other assets, rights and
properties owned or leased by the Company that are used in or
necessary for the Businesses at the Effective Time, excluding those
described in Section 1.2.
At the Closing, the Company shall
convey to the Purchaser the Assets free and clear of any and all
liens, security interests, pledges, encumbrances or other title
restrictions of any kind (collectively, "Liens"), other than
(i) Permitted Exceptions against Real Property described on
Schedule 3.3, and (ii) vehicle leases listed on
Schedule 3.9.
1.2. Retained Assets .
Notwithstanding the foregoing, the following properties, assets,
rights and interests (collectively, the "Retained Assets") are
hereby excluded from the purchase and sale contemplated hereby and
are therefore not included in the Assets:
(i) all cash on hand or on
deposit, including but not limited to bank account balances,
certificates of deposit and marketable securities, whether at Bank
of America, N.A. or elsewhere, excluding, however, the cash,
securities and other investments to fund preneed and perpetual care
obligations which are included in the Assets described in
Section 1.1(v) above;
(ii) accounts receivable of the
Homes arising from the at-need sale of funeral services and
merchandise, and for vaults and interment fees, to the extent
services have been performed or merchandise has been delivered in
which the date of death has
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occurred prior to the Effective Time, whether such receivables
are payable from insurance proceeds, trust funds or other form of
payment, and for which payment is collected (as provided in
Section 1.11 below) within 120 days after the Effective
Time (collectively, "Retained At-Need Funeral Receivables");
(iii) all other interests in real
property owned or leased by the Company other than the Real
Property, specifically including but not limited to the
Company’s interests in the Lake Placid Estates Property
described in Section 7.9; and
(iv) any other assets and
properties that are not used in connection with or are necessary
for the operation of the Businesses.
1.3. Purchase Price . The
purchase price for the Assets shall be $11,105,000 (the "Purchase
Price"). Of the Purchase Price, (i) an amount sufficient to
discharge certain indebtedness of the Company, as determined
pursuant to Section 1.4, shall be paid to the holders of such
indebtedness, (ii) the sum of $750,000 (the "Escrow Amount")
shall be placed into escrow on the Closing Date and thereafter
maintained and disbursed in accordance with Section 10.4 and
the Escrow Agreement described therein, (iii) there shall be
deducted from the Purchase Price the amount agreed to by the
parties to complete the Seaside Cemetery fence under
Section 1.15, as well as any adjustments for prorations agreed
to by the parties under Section 1.7, and (iv) the balance
of the Purchase Price shall be paid to the Company in cash at
Closing by wire transfer to such account as the Company shall
designate in writing at least three business days prior to the
Closing. The Purchase Price shall be subject to adjustment as
provided in Section 7.7.
1.4. Adjustment for Unassumed
Liabilities . Prior to the Closing, the Company shall deliver
to the Purchaser a written statement, certified by the Company to
be accurate and complete, setting forth a description, and the
outstanding balance as of the Effective Time, of all (i)
liabilities and obligations of the Company for borrowed money and
indebtedness secured by Liens against any of the Assets, and
(ii) accounts and trade payable of the Businesses, including
an aging thereof (collectively, "Unassumed Liabilities"). At
Closing, the Purchaser shall pay out of the Purchase Price such
portion thereof as shall be required to pay and discharge all
Unassumed Liabilities specified in clause (i) and those
specified in clause (ii) which as of the Effective Time are
more than 30 days past due. Notwithstanding such payment, the
Company shall remain responsible for paying any remaining Unassumed
Liabilities. Payments under this Section 1.4 shall be deemed
downward adjustments in the Purchase Price as provided in
Section 1.3.
1.5. Assumption of
Liabilities . The Purchaser, upon the sale and purchase of the
Assets, shall, subject to Section 1.6 below, assume and agree
to pay or discharge the following liabilities and obligations of
the Company (collectively, the "Assumed Liabilities"):
(i) liabilities under those
preneed contracts of the Businesses that are included in the
Assets, and for perpetual care at the Cemeteries, which are funded
to the extent required by applicable law (specifically including
preneed liabilities for the delivery of markers, for which preneed
income is not required to be trusted and as to which no amounts
have been funded into trust);
(ii) obligations arising after the
Effective Time under the agreements, leases and commitments of the
Businesses described in Schedule 3.9 (other than
agreements,
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leases and commitments, if any, which are indicated on such
Schedule as not to be assumed by the Purchaser);
(iii) obligations to provide
mausoleum spaces for crypts sold on a pre-construction basis under
the contracts listed on Schedule 1.5(iii);
(iv) obligations in respect of
employee reserves and residuals, as further described on
Schedule 3.17; and
(v) vacation and sick leave of
employees of the Businesses accrued in the ordinary course of the
Businesses, subject to proration as described in Section 1.7
below.
The assumption by the Purchaser of
the Assumed Liabilities shall not enlarge any rights or remedies of
any third parties under any contracts or arrangements so assumed.
Nothing herein shall prevent the Purchaser from contesting in good
faith any of the Assumed Liabilities. At Closing, the Purchaser
shall deliver to the Company an instrument, dated the Effective
Time and reasonably satisfactory in form and substance to it,
pursuant to which the Purchaser will assume the Assumed
Liabilities.
1.6. Limitations on
Assumption . Notwithstanding Section 1.5 above, the
Purchaser will not assume and does not agree to pay or discharge
any obligations or liabilities of the Company not specifically
included in the Assumed Liabilities. In particular, without
limiting the generality of the definition of "Unassumed
Liabilities" under Section 1.4 above, the Purchaser shall not
assume or agree to pay or discharge any of the following, whether
known or unknown:
(i) any notes or accounts payable
or other obligations for borrowed money;
(ii) any trade payables of any
kind, regardless of whether entered into in the ordinary course of
business, no-compete payments, and amounts payable to any employee
benefit plan or to any preneed or perpetual care trust;
(iii) any federal, state or local
tax of any type, whether arising by reason of the sale of the
Assets or by operation of the Businesses prior to the Closing
Date;
(iv) any losses, costs, damages or
expense based upon or arising from any claims, litigation, legal
proceedings or other actions against the Company based upon any set
of facts occurring prior to the Closing, including without
limitation any litigation disclosed on Schedule 3.14;
(v) the liabilities and
obligations under any warranties to customers with respect to goods
or products sold or services provided by the Company prior to
Closing;
(vi) all personal injury, product
liability claims, claims of environmental damage, claims of hazards
to health, strict liability, toxic torts, enforcement proceedings,
cleanup orders and other similar actions or claims instituted by
private parties or governmental agencies, if any, with respect to
the operation of the Businesses prior to Closing; or
(vii) any other liability or
obligation not specifically included within the Assumed
Liabilities.
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1.7. Certain Prorations .
All prepaid expenses and deposits, and all expenses for which
liability has accrued but whose payment is not yet due as of the
Effective Time (including but not limited to (i) utility
deposits and charges, including electricity, water and sewer
charges, (ii) transferable business and license fees,
including any retroactive adjustments thereof, (iii) real and
personal property taxes in connection with the Assets,
(iv) employee wages and operating expenses, and
(v) similar prepaid and deferred items), together with all
revenues and expenses arising from the operation of the Businesses,
shall be prorated and adjusted between the Company and the
Purchaser in accordance with the principle that the Company shall
retain all revenues and shall be responsible for all expenses
allocable to the conduct of the Businesses up to 11:59 p.m. on
December 31, 2006, and the Purchaser shall be entitled to all
revenues and shall be responsible for all expenses allocable to the
conduct of said Business after the Effective Time. Revenues and
expenses shall be allocated according to the date of death of the
deceased; provided that the Company shall be responsible to pay all
amounts due for markers to be delivered after the Effective Time to
the extent it has received payment from the customer prior to the
Effective Time. Utility services will be transferred to the
Purchaser’s name on the Closing Date. If the actual amounts
to be prorated are not known as of the Closing Date, the prorations
shall be made on the basis of the best evidence then available, and
thereafter, within thirty (30) days after actual figures are
received, a cash settlement will be made between the Company and
the Purchaser.
1.8. Instruments of
Transfer . At the Closing, the Company shall deliver to the
Purchaser such instruments of transfer, assignment and conveyance,
including (without limitation) general warranty deeds, bills of
sale, lease assignments and assignments of motor vehicle
registrations, all dated as of the Effective Time, transferring
title to the Assets to the Purchaser as may reasonably be requested
by the Purchaser. Such instruments shall be reasonably satisfactory
in form and substance to the Purchaser and shall vest in the
Purchaser good and marketable title to all the Assets, free and
clear of all Liens other than (i) Permitted Exceptions against
Real Property and (ii) vehicle leases listed on
Schedule 3.9.
1.9. Delivery of Records,
Contracts and Trust Funds . At the Closing, the Company will
deliver to the Purchaser all of the leases, contracts, commitments
and rights of the Businesses constituting a portion of the Assets,
with such assignments thereof and consents to assignment as the
Purchaser shall deem necessary to assure the Purchaser of their
full benefit. Simultaneously with such deliveries, the Company
shall take all requisite steps to put the Purchaser in actual
possession and operating control of the Assets and all of the
records, books and other data necessary for the operation of the
Businesses. In addition, at the Closing, the Company and the
Purchaser shall take all necessary or appropriate action to cause
the transfer of the preneed and perpetual care trust funds referred
to in Section 3.10 including, without limitation, the
obtaining of any governmental and third party consents and the
substitution of fund trustees.
1.10. Taxes . Any sales or
transfer taxes which may be payable in connection with the sale of
the Assets under this Agreement shall be paid by the Company.
1.11. Retained At-Need Funeral
Receivables . The Purchaser shall have the exclusive (even as
to the Company) right and control over the collection of Retained
At-Need Funeral Receivables. For each full or partial calendar
month during the 120-day period following the Effective Time in
which any Retained At-Need Funeral Receivables are collected, the
Purchaser shall remit 100% of such collections to the Company by no
later than the 15th day of the following month. The Purchaser shall
pursue collection of Retained At-Need Funeral
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Receivables by substantially the same efforts as used on its
collection of other accounts receivable, but in no event shall the
Purchaser be required to institute suit or refer any account to a
collection agency. Any collections on Retained At-Need Funeral
Receivables following expiration of such 120-day period shall be
for the account of the Purchaser.
1.12. Employee Matters . On
the Closing Date, the Purchaser may (but shall not be required to)
offer employment to each employee of the Businesses listed on
Schedule 3.17. Each such employee so offered employment who
accepts shall, effective as of the Closing Date, cease to be an
employee of the Company and shall thereupon become an employee of
the Purchaser. The Company shall be responsible for satisfying all
claims, if any, of such employees as to health benefits, workers
compensation claims, termination and severance benefits, and any
withdrawal liability and vested rights under any pension or profit
sharing plans, all arising and accrued to the Closing Date, and in
no event shall the Purchaser have any liability or responsibility
in respect thereof.
1.13. Lockbox/ACH Services
. The Company shall permit the Purchaser to utilize the
Company’s existing lockbox account and ACH wire services at
American Bank in Corpus Christi, for transitional purposes until
such time (not to exceed 180 days following the Effective
Time) that the Purchaser is able to have customer payments
redirected to the Purchaser’s own accounts. The parties shall
coordinate with one another such that the Purchaser receives out of
such accounts or funds transfers all cash which is included in the
Assets or otherwise for its account in accordance with this
Agreement, and that the Company receives any cash included in or
arising from the Retained Assets or which is otherwise for its
account in accordance with this Agreement.
1.14. Lakeside Perpetual Care
Fund . The parties acknowledge that the Company has established
a perpetual care account or fund with Bank of America, N.A. (the
"Lakeside PC Account") that was intended for the conversion of
Sunshine Cemetery from a family cemetery into a perpetual care
cemetery and the expansion thereof into the Lake Placid Estates
Property. The Company deposited the principal sum of $50,000 into
the Lakeside PC Account, has not withdrawn any of the principal
thereof, initially applied for the establishment of a perpetual
care cemetery but has not sold any spaces or other property at this
location. The Assets shall include the Company’s interests in
the Lakeside PC Account only insofar as it shall be necessary for
the Purchaser to comply with applicable law with respect to its
ownership and operation of the Sunshine Cemetery (without the
Purchaser having to fund any amounts thereto), provided that the
Purchaser will not itself sell any spaces or other property in
Sunshine Cemetery on a perpetual care basis supported by the
Lakeside PC Account. It is the Company’s intent to seek to
withdraw its application and permission to dissolve the Lakeside PC
Account and cause the distribution of all funds therein. The
Purchaser agrees to reasonably cooperate with the Company in such
efforts, at no out-of-pocket cost to the Purchaser. If the Company
demonstrates to the Purchaser’s reasonable satisfaction that
it has received all applicable consents and approvals required to
permit the dissolution of the Lakeside PC Account and the
distribution of all funds therein, the Purchaser shall take all
such action reasonably requested of it so that such funds may be
distributed to the Company or its designee.
1.15. Perimeter Fence . The
Company is in the process of completing construction of a fence
along the Airline Road side of the Seaside Cemetery. The Company
represents that it has previously purchased and has on hand at the
Seaside Cemetery all materials necessary to complete such
construction, and such materials shall be included in the Assets.
The Company has heretofore been utilizing Seaside Cemetery
personnel for such construction. If construction
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of the fence is not complete by the Closing Date, then at or
prior to the Closing, the parties shall mutually agree as to the
number of labor hours which are estimated to be required to
complete construction and the weighted average cost per hour, and
the product of such hours to completion multiplied by such average
cost shall be deducted from the Purchase Price, and the Purchaser
shall be responsible for completing such construction following the
Closing.
1.16. Further Assurances .
The Company shall from time to time after the Closing, without
further consideration, execute and deliver such instruments of
transfer, conveyance and assignment (in addition to those delivered
pursuant to Section 1.8), and shall take such other action, as
the Purchaser may reasonably request to more effectively transfer,
convey and assign to and vest in the Purchaser, and to put the
Purchaser in actual possession and control of, each of the
Assets.
2. The Closing .
2.1. Time and Place . The
closing of the transactions contemplated under this Agreement (the
"Closing") shall occur at the offices of Welder Leshin, L.L.P., 800
N. Shoreline, Suite 300-N, Corpus Christi, Texas 78401 at 9:00
a.m. on January 5, 2007, or at such other date, time or place
as may be mutually agreed upon by the parties, but in no event
later than January 31, 2007 (subject to Section 7.4,
hereafter the "Outside Closing Date"). The date and time on which
Closing actually occurs is herein called the "Closing Date." All
action to be taken at the Closing as hereinafter set forth, and all
documents and instruments executed and delivered, and all payments
made with respect thereto, shall be considered to have been taken,
delivered or made simultaneously, and no such action or delivery or
payment shall be considered as complete until all action incident
to the Closing has been completed.
2.2. Effective Time . The
parties agree that, regardless of when Closing actually occurs, the
purchase and sale of the Assets hereunder shall be deemed to have
occurred for all tax, accounting and other purposes as of
12:01 a.m. on January 1, 2007 (the "Effective Time"), and
the parties agree to reflect the Effective Time for such purposes
in all tax returns and reports in connection therewith. The Company
shall take reasonable measures between the Effective Time and the
Closing Date to minimize the amount of deposits made into Company
accounts, recognizing that if Closing occurs, revenues after the
Effective Time are for the Purchaser’s account. In any event,
if Closing occurs, the parties shall coordinate with one another at
and following Closing so that all business activity between the
Effective Time and the Closing shall be for the Purchaser’s
account.
2.3. Non-Competition
Agreement . In addition to the purchase and sale of the Assets,
at the Closing Michael L. Mintz and Henry Nuss, residents of Nueces
County, Texas (together, the "Directors") and the Purchaser shall
each execute and deliver to the other a Non-Competition Agreement
to be dated the Effective Time and in substantially the form
attached as Exhibit 2.2 (the "Non-Competition Agreement"). The
parties acknowledge that the Directors are members of the Board of
Directors of the Company, have had and continue to have access to
the trade secrets, customer information and other confidential and
proprietary information of the Businesses and have become
identified with the goodwill of the Homes and the Cemeteries, and
that the Purchaser would be unwilling to consummate the
transactions hereunder but for the Directors’ covenants and
agreements under the Non-Competition Agreement.
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3. Representations and
Warranties of the Company . The Company represents and warrants
to and agrees with the Purchaser that:
3.1. Organization and
Existence . The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Texas, with all requisite corporate power to enter into and
perform its obligations under this Agreement.
3.2. Financial Information
. The Company has delivered to the Purchaser (i) the unaudited
(compiled) statements of assets, liabilities and
stockholders’ equity-income tax basis of the Company at
December 31, 2005 and 2004 and the related unaudited
(compiled) statements of revenues, expenses and retained
earnings and cash flows-income tax basis for the respective
twelve-month periods of operations of the Company then ended,
together with the footnotes thereto and the compilation report
thereon of Jennings, Hawley & Co., P.C. dated April 21,
2006, and (ii) the unaudited balance sheet of the Company at
September 30, 2006 and the related unaudited income statement
for the nine-month period of operations then ended. All of such
financial statements are, to the Company’s knowledge, true
and correct, have been prepared in accordance with the books and
records of the Company, and present fairly the respective financial
positions of the Company at the dates thereof and the respective
results of its operations for the periods then ended in accordance
with the accounting basis used by the Company for federal income
tax purposes. Schedule 3.2 accurately sets forth for the
twelve-month periods ended December 31, 2004 and 2005 and for
the ten months ended October 31, 2006, to the Company’s
knowledge, (i) for each Home the number of contracts entered
into in which human remains have been prepared for final
disposition or delivery, and among such contracts the number or
percentage in which disposition is by burial, cremation or other
means, and (ii) for each Cemetery, the number of interments
performed. Schedule 3.2 also accurately sets forth, to the
Company’s knowledge for each Cemetery, the area which has
been platted, developed and dedicated for cemetery use, the area
which is undeveloped but usable, the area which is unusable for
development, and the approximate minimum number of unsold
individual grave spaces, unsold niches, unsold mausoleum crypts and
unsold lawn crypts.
3.3. Title to and Status of
Assets . All assets, rights and properties required in the
operation of the Businesses are owned or validly leased by the
Company and are included within the Assets. The Company is in
actual possession and control of all properties owned or leased by
it which are required in the operation of the Businesses, and the
Company has good and marketable title to all of the Real Property
and the other Assets, free and clear of all Liens other than (i)
Liens described on Schedule 3.3 that are to be released at or
prior to Closing, (ii) easements and other title exceptions to
the Real Property described on Schedule 3.3 as "Permitted
Exceptions" (herein so called), (iii) vehicle leases described
on Schedule 3.9, and (iv) the Ocean Drive Entrance Tract,
which the Company shall acquire prior to Closing as contemplated in
Section 7.8 and as to which at Closing the Company will have
good and marketable title, free and clear of all Liens other than
Permitted Exceptions.
3.4. Absence of Changes or
Events . Since September 30, 2006, there has not been, to
the Company’s knowledge:
(i) any material adverse change in
the financial condition, operations, properties or prospects of the
Businesses;
(ii) any material damage,
destruction or losses against the Businesses or any of its
properties;
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(iii) any claim made against the
Company alleging material damages for alleged negligence or other
tort or breach of contract by or affecting the Company;
(iv) any sale, transfer or other
disposition of, or agreement to sell, transfer or otherwise dispose
of, any of the inventories or other assets or properties of the
Company, except herein or in the ordinary course of business;
(v) any labor strike or labor
dispute, or the entering into of any collective bargaining
agreement, with respect to employees of the Company; or
(vi) any other material
transaction or event entered into or affecting the Company other
than in the ordinary course of the Businesses.
3.5. Real Property .
Schedule 3.5 sets forth a legal description of all parcels of
real property included in the Real Property, and also briefly
describes each building and major structure and improvement
thereon. No person other than the Company has any interest in, or
other right to occupy any portion of, the Real Property (except as
disclosed on Schedule 3.3, and except for the lease of the
flower shop disclosed on Schedule 3.9). The Real Property is
the only interest in real property required for the conduct of the
business of the Businesses as presently conducted. There is not, to
the Company’s knowledge, any pending or threatened proceeding
for the taking or condemnation of the Real Property or any portion
thereof. The Company is not a "foreign person" or a "United States
real property holding corporation" (as defined in
Section 1445(f)(3) of the Internal Revenue Code of 1986, as
amended [the "Code"], and the regulations issued thereunder). The
Company shall deliver at Closing a non-foreign affidavit in
recordable form containing such information as shall be required by
Code Section 1445(b)(2) and the regulations issued thereunder.
All bills and other payments due with respect to the
Company’s operation and maintenance of the Real Property have
been (or on the Closing Date will be) paid, and no Liens or other
claims for the same will be in force against any part of the Real
Property.
3.6. Tax Matters . All
federal, state, county, local and other taxes due and payable on or
before the date of this Agreement in respect of the operation of
the Company and the ownership of the Assets have been paid. All tax
returns and reports required to be filed for all such taxes have
been filed with all taxing authorities, and all such tax returns
and reports are, to the Company’s knowledge, true and
correct. True and correct copies of the federal income tax returns
filed by the Company for each of its last three taxable years have
been furnished to the Purchaser. No assessments of deficiencies
have been made against the Company which are presently pending or
outstanding. No agreements, waivers or extensions of time are in
effect for the assessment of deficiencies in respect of the
business or any of the Assets. Following the Closing, the Company
shall be responsible for accurately and completely preparing,
signing and filing all tax returns and paying all taxes in respect
of the assets and operations of the Company through the Effective
Time and for the sale of the Assets.
3.7. Accounts Receivable;
Inventory . The accounts receivable of the Businesses are, and
on the Closing Date will be, valid and legally enforceable
obligations of the account parties and are not subject to any claim
of offset or deduction against the Company. The Company does not
own any of its inventory of caskets; all such inventory is held on
consignment. At the Closing, the Company will deliver to the
Purchaser a list of (i) all accounts receivable of the
Businesses, segregated according to those included in the Assets
and those retained by the Company among the Retained Assets, in
each case as of a date no earlier than January 1, 2007, and
after giving effect to any bad debt reserves or charge-offs taken
by the Company in 2007 as
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show on such list, and (ii) a list of its consigned
inventory of caskets and a list of the Cemeteries’ inventory
of vaults and granite bases, as of the Effective Time.
3.8. Fixed Assets .
Schedule 3.8 lists all motor vehicles and other material items
of equipment, fixtures, furniture and other fixed assets used in
the operation of the Businesses ("Fixed Assets"), all of which are
included in the Assets. ALL IMPROVEMENTS ON THE REAL PROPERTY, AND
ALL FIXED ASSETS OF THE BUSINESSES, ARE BEING SOLD TO THE PURCHASER
HEREUNDER "AS IS," IN THEIR PRESENT CONDITION, WITHOUT
REPRESENTATION OR WARRANTY WHATSOEVER REGARDING THEIR PHYSICAL
CONDITION, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE.
3.9. Contracts and
Commitments . Schedule 3.9 sets forth a complete
description of:
(i) all (i) contracts or
commitments for capital expenditures for the Company involving
obligations aggregating in excess of $5,000, (ii) leases under
which personal property is leased by the Company and which are not
cancelable by either party thereto without penalty upon notice of
30 days or less or pursuant to which rentals exceed $1,000 per
annum or $5,000 in the aggregate, or (iii) cont
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