EXHIBIT 10.25
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is dated for reference the 15th day of March, 2000 between
Neptune Management Corp., a company incorporated under the laws of the State of
California (the "Purchaser"), Xxxxx Xxxxxxxx ("Xxxxxxxx") and Xxxx Xxxxxx
("Bethel") (collectively, the "Vendor") and The Neptune Society, Inc., a company
incorporated under the laws of the State of Florida ("Neptune").
WHEREAS:
A. Cremation Society of Iowa, Inc. ("CSI") operates and carries on, directly
and indirectly, a business known as "Cremation Society of Iowa" and
"Assured Care Funeral Service", providing funeral, burial and cremation
services including the provision and sale of pre-need cremation services
(the "Business").
B. The Vendor is the legal and beneficial owner of 100% of the issued and
outstanding shares of CSI (the "CSI Shares").
C. Neptune is the legal and beneficial owner of 100% of the issued and
outstanding shares of the Purchaser.
D. The Vendor has agreed to sell all of the issued and outstanding shares in
CSI and the Purchaser has agreed to purchase all of the issued and
outstanding shares of CSI on the terms and conditions set forth herein.
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:
5 INTERPRETATION
5.1 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:
(a) "Agreement" means this Agreement including the Schedules attached as
the same may be amended or supplemented from time to time;
(b) "Assets" means all of the Vendor's rights in the Pre-Need Contracts,
the Trust Accounts, the Intangible Assets, the Land and Buildings, the
Leased Assets, the Leases, the Material Contracts and all other leases
and contracts, subject to the Purchaser's right not to assume specific
contracts, the Other Operating and Fixed Assets, the Operating
Entities and all other fixed assets and equipment used in connection
with the Business, all licenses and other rights required in order for
the Purchaser to operate the Business, the Insurance Policies, all
existing and prospective customer lists, lists of suppliers, employee
contracts, promotional material, websites
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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 or the Excluded
Liabilities;
(c) "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 the
Vendor and used in connection with the Business;
(d) "Business Day" means any day except Saturday, Sunday or any statutory
holiday in the State of Iowa;
(e) "Charter Documents" means articles, articles of incorporation,
memorandum, memorandum of association, articles of association,
by-laws, or any similar document of a corporate entity;
(f) "Claim" means any claim by the Purchaser against the Vendor, or the
Vendor against the Purchaser, for any breach of representation,
warranty, covenant or other agreement or obligation of the Vendor or
Purchaser pursuant to this Agreement;
(g) "Closing" means the completion of the sale and purchase of the Assets
as provided in this Agreement;
(h) "Closing Date" means the close of business (i.e. 6:00 p.m.) on March
20, 2000 or such other date as the parties may agree to in writing;
(i) "CSI EBITDA" means earnings before income tax, depreciation, and
amortization from the Business generated from the CSI Locations,
determined in accordance with generally accepted accounting principles
of the United States of America, consistently applied. Schedule K sets
forth more particularly how the CSI EBITDA will be calculated for the
purposes of this Agreement;
(j) "CSI Locations" means the locations of the Business at 000 XX Xxxxxxxx
Xx., Xxxxxx, Xxxx and 000 X.X. Xxxxxxx, Xxxxxx, Xxxx, including any
replacements locations which the Neptune Entities operate as they may
determine;
(k) "CSI Net Income" means earnings after income tax, depreciation, and
amortization from the Business generated from the CSI Locations,
determined in accordance with generally accepted accounting principles
of the United States of America, consistently applied.
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(l) "Encumbrances" means and includes, whether or not registered or
recorded, any and all:
(i) mortgages, assignments of rent, liens, licences, 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;
(ii) claims, interests and estates against or in proper (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;
(iii)any option, or other right to acquire, or acquire any interest
in, any property; and
(iv) other encumbrances of whatsoever nature and kind against property
(whether real, personal, mixed, tangible or intangible);
(m) "Effective Date" means March 15, 2000;
(n) "Excluded Assets" means the accounts receivable balance for performed
at-need services of the Business at the Effective Date, the pre-paid
expenses of the Business at the Effective Date, and the cash and cash
equivalents of the Business at the Effective Date;
(o) "Excluded Liabilities" means all actual or accrued liabilities,
including but not limited to all trade payables, commissions payable,
sales tax, employee remittances of every kind whatsoever, federal,
municipal, and/or state taxes of any kind whatsoever, with respect to
the Business up to the Effective Date but does not include the
following debts (the "Excluded Debts"):
i. loan in the principal amount of $13,380.25 payable to Xxxx
Chevrolet Inc., in respect of purchase of Mercury Sable GS, due
on March 15, 2003; and
ii. loan in the principal amount of $9,879.25 payable to Xxxx
Chevrolet Inc., in respect of purchase of Ford Winstar, due on
January 13, 2003.
(p) "Gross CSI Revenues" means gross revenue from the Business generated
by the CSI Locations, determined in accordance with generally accepted
accounting principles of the United States of America, consistently
applied;
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(q) "Insurance Policies" means those insurance policies as set forth in
Schedule A;
(r) "Intangible Assets" means those 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 set forth in Schedule B;
(s) "Land and Buildings" means those interests in real property set forth
in Schedule C;
(t) "Leased Assets" means those assets included in the Assets which are
leased by the Vendor and set forth in Schedule D;
(u) "Leases" means the leases under which the Leased Assets are leased by
the Vendor;
(v) "Material Contracts" means those contracts described in Subsection
4.10;
(w) "Neptune Entities" means the Purchaser, Neptune, their subsidiaries,
affiliates, successors or assigns
(x) "Other Operating and Fixed Assets" means those operating and fixed
assets set forth in Schedule E;
(y) "Operating Entities" means any subsidiaries or affiliates of CSI
(z) "Person" means an individual, a corporation, a partnership, a trust,
an unincorporated organization or a government agency or
instrumentality;
(aa) "Place of Closing" means the offices of Xxxxxxx & Xxxxxxxx. P.C., 700
West Towers, 0000 Xxxxxx Xxxx Xxxxx, Xxxx Xxx Xxxxxx, Xxxx 00000-0000;
(bb) "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 assignors for
the provision of funeral cremation services;
(cc) "Purchase Price" has the meaning ascribed thereto in Subsection 2.1 of
this Agreement;
(dd) "Securities" means any shares of Neptune described in this Agreement;
(ee) "Specified Assets" means those specified assets set forth in Schedule
G;
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(ff) "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;
(gg) "Trade Names" means "Cremation Society of Iowa", and "Assured Care
Funeral Service";
(hh) "Trust Accounts" means all cash, 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 the Business;
(ii) "Unaudited Financial Statements" means the unaudited financial
statements of the Business for the 12 month periods ending December
31, 1997, December 31, 1998, and December 31, 1999, copies of which is
incorporated as Schedule I; and
5.2 Schedules : The following are the schedules delivered concurrently with,
and incorporated in, this Agreement:
Schedule Description Reference
A List of Insurance Policies 4.6(a)(b)(c)
B List of Intangible Assets 4.1(i)
C List of Land and Buildings 4.1(h)
D List of Leased Assets 4.1(c)
E List of Other Operating and Fixed Assets 4.1(d)(j)
F List of Pre-Need Contracts 4.10(b)
G List of Specified Assets 4.1(d)
H List of Trust Accounts 4.2
I Unaudited Financial Statements 4.4
J List of Bank Accounts 4.5(b)
K CSI EBITDA 3
L List of Employees and Employee Benefit Plans 4.8(a)(c)
M List of Material Contracts 4.10
N Required Consents, Assignments 4.14(a), 8.1(a)
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Schedule Description Reference
O Certificates of Accredited Investor 8.1(d)
P Xxxxxxxx Employment/Non-compete Agreement 8.1(j)
Q Bethel Employment/Non-compete Agreement 8.1(k)
R Disclosure Statement 8.1 (m)
5.3 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.
5.4 Genderand Number : Unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender
include both genders.
5.5 The Use of the Vendor: Unless otherwise specified, the use of the term the
Vendor shall refer to Xxxxxxxx and/or Bethel and all obligations of the
Vendor hereunder shall be joint and several as between Xxxxxxxx and Xxxxxx.
5.6 Currency : All dollar amounts referred to in this Agreement are stated in
United States of America currency, unless otherwise expressly stated.
6 PURCHASE AND PURCHASE PRICE
6.1 Purchase: On the Closing Date and subject to the terms and conditions
contained in this Agreement, the Vendor shall sell, assign and transfer the
CSI Shares, free from any and all Encumbrances, and the Purchaser shall
purchase the CSI Shares, free from any and all Encumbrances, for the
aggregate price of $1,110,000.00 plus the contingent purchase price as
described in Section 3 ("Contingent Purchase Price") below (the "Purchase
Price").
6.2 Payment of Purchase Price: At the Time of Closing, all amounts of the
Purchase Price other than the Contingent Purchase Price will be payable by
the Purchaser to the Vendor as follows:
(a) the sum of $10,000.00 by way of a deposit which both parties
acknowledge has been paid by the Purchaser to the Purchaser's attorney
pursuant to that certain letter of intent between the parties dated
January 20, 2000;
(b) the sum of $100,000.00 to be divided equally between Xxxxxxxx and
Bethel and paid to them by way of certified or attorneys' checks; and
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(c) the balance of the Purchase Price by way of 161,032 common shares of
Neptune (the "Neptune Shares") issued to Xxxxxxxx and Xxxxxx, in equal
portions; provided, however, as follows:
(i) in the event that the average closing price of the common shares
of Neptune on the NASD OTC Bulletin Board, or other stock
exchange in the United States of America, for the five day period
preceding the 120th day following the Closing Date (the "Deemed
Price") is less than $4.00 per share, the Purchaser, at its
option, will deliver to Xxxxxxxx and Bethel, in equal portions,
either (i) that number of common shares of Neptune which will
increase the aggregate deemed value of the Neptune Shares to
$1,000,000.00; (ii) cash in an amount equal to $1,000,000.00 less
the aggregate deemed value of the Neptune Shares on the Price
Date; or (iii) a combination of common shares of Neptune and cash
which, when added to the Neptune Shares, will equal an aggregate
deemed value of $1,000,000.00;
(ii) in the event that on the 120th day following the Closing, the
common shares of Neptune are not publically traded on the NASD
OTC Bulletin Board or any other recognized exchange in the United
States of America, the Neptune Shares will be deemed to have a
value of $5.00 per share and the Purchaser, at its option, will
deliver to Xxxxxxxx and Xxxxxx, in equal portions, either (i)
that number of common shares of Neptune which will increase the
aggregate deemed value of the Neptune Shares to $1,000,000.00;
(ii) cash in an amount equal to $1,000,000.00 less the aggregate
deemed value of the Neptune Shares at $5.00 per share; or (iii) a
combination of common shares of Neptune and cash which, when
added to the Neptune Shares, will equal an aggregate deemed value
of $1,000,000.00; and
(iii)the Purchaser will not issue fractional shares of Neptune to
Xxxxxxxx and Bethel.
6.3 Holdback: In the event that at the Time of Closing, any consents,
assignments or transfers of funeral licenses necessary for the Purchaser to
operate the Business as owner of CSI have not been obtained by the
Purchaser, the Purchaser is entitled to holdback of 10% of any compensation
paid to the Vendor under Section 2.2(c) (the Holdback). The Holdback will
only be issued to Xxxxxxxx and Xxxxxx immediately upon the Purchaser
obtaining any consents, assignments or transfers of funeral licenses
necessary for the Purchaser to operate the Business as owner of CSI.
6.4 Effective Date: Notwithstanding the Closing Date, all transactions
contemplated in this Agreement will be effective on the Effective Date. All
income from deaths occurring on or before the Effective Date shall be the
income of Vendor and all income from deaths occurring after the Effective
Date shall be the income of Purchaser.
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6.5 Control of Excluded Assets: From and after the Effective Date, the
Purchaser will have operational control and responsibility of the
management of the Excluded Assets.
6.6 Reconciliation: On or before April 15, 2000 (the "Reconciliation Date"),
the Purchaser will provide to the Vendor a reconciliation of the Excluded
Assets and Excluded Liabilities, being that amount of cash, collections and
amounts paid, respectively, from the Effective Date.
6.7 Payment of Difference: 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 by the
Purchaser to the Vendor on or before April 30, 2000. 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 will
be paid by the Vendor to the Purchaser on or before April 30, 2000. All
account receivables collected by the Purchaser after April 15, 2000 shall
be paid to the Vendor within ten (10) days of receipt.
6.8 Right of Set-Off: In the event that the Vendor owes the Purchaser any
amounts in connection with the reconciliation set forth in this Section 2,
the Purchaser and Neptune have the right to set-off any such amount against
any money due and owing to the Vendor from the Purchaser or Neptune under
this or any other Agreement.
7 CONTINGENT PURCHASE PRICE
3.1 First Contingency Purchase Price: Within sixty (60) days of the one year
anniversary of the Closing Date (such anniversary date to be referred to as
the First Contingency Date) the Purchaser will pay to the Vendor:
(a) 3% of the Gross CSI Revenues from the twelve (12) month period
immediately preceding the First Contingency Date; and
(b) 19% of the CSI EBITDA from the twelve (12) month period immediately
preceding the First Contingency Date
(collectively, the First Contingency Price)
by issuing to Xxxxxxxx and Xxxxxx, in equal portions, that number of common
shares of Neptune which equals the First Contingency Price divided by the
10 day average closing price of such shares on the NASD OTC Bulletin Board,
or other stock exchange in the United States of America, calculated five
business days before the First Contingency Date (the First Deemed Price),
provided, however, as follows:
(i) the Purchaser will not issue fractional shares of Neptune to the
Xxxxxxxx and Bethel;
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(ii) in the event that the First Deemed Price is less than $4.00 per
share on the First Contingency Date, the Purchaser, at its
option, will deliver to Xxxxxxxx and Xxxxxx, in equal portions,
either (1) cash in an amount equal to the First Contingency
Price; or (2) a combination of common shares of Neptune and cash
which equal an aggregate deemed value of the First Contingency
Price; and
(iii)in the event that on the First Contingency Date, the common
shares of Neptune are not publically traded on the NASD OTC
Bulletin Board or any other recognized exchange in the United
States of America, the Purchaser will pay the First Contingency
Price to Xxxxxxxx and Bethel, in equal portions, by way of
deliver of certified checks.
3.2 Second Contingency Purchase Price: Within sixty (60) days of the two year
anniversary of the Closing Date (such anniversary date to be referred to as
the Second Contingency Date) the Purchaser will pay to the Vendor:
(a) 3% of the Gross CSI Revenues from the twelve (12) month period
immediately preceding the Second Contingency Date; and
(b) 19% of the CSI EBITDA from the twelve (12) month period immediately
preceding the Second Contingency Date
(collectively, the Second Contingency Price)
by issuing to Xxxxxxxx and Xxxxxx, in equal portions, that number of common
shares of Neptune which equals the Second Contingency Price divided by the
10 day average closing price of such shares on the NASD OTC Bulletin Board,
or other stock exchange in the United States of America, calculated five
business days before the Second Contingency Date (the Second Deemed Price),
provided, however, as follows:
(i) the Purchaser will not issue fractional shares of Neptune to the
Xxxxxxxx and Bethel;
(ii) in the event that the Second Deemed Price is less than $4.00 per
share on the Second Contingency Date, the Purchaser, at its
option, will deliver to Xxxxxxxx and Xxxxxx, in equal portions,
either (1) cash in an amount equal to the Second Contingency
Price; or (2) a combination of common shares of Neptune and cash
which equal an aggregate deemed value of the Second Contingency
Price; and
(iii)in the event that on the Second Contingency Date, the common
shares of Neptune are not publically traded on the NASD OTC
Bulletin Board or any
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other recognized exchange in the United States of America, the
Purchaser will pay the Second Contingency Price to Xxxxxxxx and
Bethel, in equal portions, by way of deliver of certified checks.
3.3 Third Contingency Purchase Price: Within sixty (60) days of the three year
anniversary of the Closing Date (such anniversary date to be referred to as
the Third Contingency Date) the Purchaser will pay to the Vendor:
(a) 3% of the Gross CSI Revenues from the twelve (12) month period
immediately preceding the Third Contingency Date; and
(b) 19% of the CSI EBITDA from the twelve (12) month period immediately
preceding the Third Contingency Date
(collectively, the Third Contingency Price)
by issuing to Xxxxxxxx and Xxxxxx, in equal portions, that number of common
shares of Neptune which equals the Third Contingency Price divided by the
10 day average closing price of such shares on the NASD OTC Bulletin Board,
or other stock exchange in the United States of America, calculated five
business days before the Third Contingency Date (the Third Deemed Price),
provided, however, as follows:
(i) the Purchaser will not issue fractional shares of Neptune to the
Xxxxxxxx and Bethel;
(ii) in the event that the Third Deemed Price is less than $4.00 per
share on the Third Contingency Date, the Purchaser, at its
option, will deliver to Xxxxxxxx and Xxxxxx, in equal portions,
either (1) cash in an amount equal to the Third Contingency
Price; or (2) a combination of common shares of Neptune and cash
which equal an aggregate deemed value of the Third Contingency
Price; and
(iii)in the event that on the Third Contingency Date, the common
shares of Neptune are not publically traded on the NASD OTC
Bulletin Board or any other recognized exchange in the United
States of America, the Purchaser will pay the Third Contingency
Price to Xxxxxxxx and Bethel, in equal portions, by way of
deliver of certified checks.
3.4 Bonus Contingency Purchase Price: Within sixty (60) days of the expiration
of each twelve (12) month period following the four year anniversary of the
Closing Date (such expiration dates to be referred to as the Bonus
Contingency Dates) the Purchaser will pay to Xxxxxxxx and Xxxxxx, in equal
portions, by way of delivery of certified checks, 10.0% of the CSI Net
Income from the twelve (12) month period immediately preceding each
respective Bonus
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Contingency Date. The payments set forth in this Subsection 3.4 shall
continue so long as either Xxxxxxxx or Bethel continue as consultants or
employees of the Neptune Entities for the twelve (12) month period
immediately preceding each respective Bonus Contingency Date. In the event
that Xxxxxxxx ceases to be a consultant or employee of the Neptune
Entities, one half of the payments set forth in this Subsection 3.4 shall
be paid to Bethel. In the event that Bethel ceases to be a consultant or
employee of the Neptune Entities, one half of the payments set forth in
this Subsection 3.4 shall be paid to Xxxxxxxx.
3.5 Delivery of Financial Statements: As soon as possible following each
anniversary of the Closing Date, the Purchaser shall deliver to Xxxxxxxx
and Bethel copies of Neptunes consolidated financial statements, any other
financial statements used in determining Gross CSI Revenues, CSI EBITDA,
and CSI Net Income, and calculations of contingent purchase prices, along
with copies of any supporting working papers for the same.
8 JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIESOF XXXXXXXX AND XXXXXX WITH
RESPECT TO THE BUSINESS
Xxxxxxxx and Bethel jointly and severally represent and warrant to the Purchaser
as follows and acknowledge that the Purchaser is relying upon such
representations and warranties in connection with the purchase of the CSI
Shares:
8.1 Assets:
(a) Ownership: Except for the Leased Assets and the automobiles owned by
CSI, CSI has good and marketable title to all of the Assets free and
clear of all Encumbrances;
(b) Authority: Xxxxxxxx and Xxxxxx have the legal capacity, power and
authority to enter into this Agreement and to transfer the legal and
beneficial title and ownership of the CSI Shares to the Purchaser free
of Encumbrances;
(c) 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 without amendment thereto, 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 licences to which the CSI is a party which have a capitalized value
in excess of $1,000. CSI has not previously assigned the Leases nor
sublet its interest in any of the Leased Assets under the Leases. CSI
has not released any of the other parties to such leases from the
performance of any of their obligations thereunder. CSI is not in
breach of any of the terms of any Leases, and CSI 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 Xxxxxxxx and/or
Bethel, no event or condition has occurred which, either immediately
or after notice or lapse of time or both, could give rise to the
cancellation or termination of any of the Leases. There
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are no rent-free periods or outstanding lessor's contributions or
obligations for lessee incentives under any of the Leases which
consist of subleases under which CSI is a sublessor. Xxxxxxxx and/or
Bethel have 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;
(d) Condition of Assets: To the best of the knowledge of Xxxxxxxx and/or
Bethel, all fixed assets and equipment owned or used by CSI in the
conduct of the Business, all of which is listed in either Schedules E
or G, have been properly maintained and are in good working order and
contain no defects which could adversely affect the operation of the
Business to any material degree;
(e) Rights to Assets: No present or former director, officer, shareholder
or partner of CSI 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 the Business;
(f) Zoning: All real property at which CSI carries on the Business is
zoned to permit the particular activity carried out on such property;
(g) Rents and Taxes: To the best of the knowledge of Xxxxxxxx and/or
Bethel, all rents, operating costs, property taxes (whether municipal,
school, general and special taxes, rates, assessments, local
improvements charges or frontage taxes), business taxes, development
cost charges, other subdivision charges and costs and other levies
which are chargeable against the Land and Buildings leased by CSI have
been paid in full unless the same are not due and payable;
(h) Land and Buildings: The list of the Land and Buildings set out in
Schedule C accurately reflects all interests of CSI in real property
used in the conduct of the Business. Xxxxxxxx and/or Bethel represent
that all agreements with respect to CSI's interest in the Land and
Buildings are in force and effect and without amendment thereto and
CSI's interests in the Land and Buildings are free and clear of all
Encumbrances. To the best of the knowledge of Xxxxxxxx and/or Bethel,
neither asbestos nor urea formaldehyde foam is now used, or present,
in any of the buildings listed in Schedule C;
(i) 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 CSI on the date hereof free of Encumbrances; and
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(j) Other Operating and Fixed Assets: The list of the Other Operating and
Fixed Assets set out in Schedule E accurately reflects all operating
and fixed assets owned or held by CSI having an original capital cost
of $500 or more which are not disclosed elsewhere in this Subsection
1. Except for sales and purchases in the ordinary course of business
since January 20, 2000, CSI owns such assets on the date hereof free
of Encumbrances.
8.2 Trust Accounts:
(a) The Trust Accounts described in Schedule H accurately reflects all
funds received by CSI 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-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) To the best of the knowledge of Xxxxxxxx and/or Bethel, 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.
8.3 Business Operations:
(a) Operating Authorities: CSI 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 Xxxxxxxx and/or
Bethel, CSI is operating and using the Assets, and is conducting the
Business, in compliance with all applicable laws and regulations of
each jurisdiction in which the Assets are located or in which it
conducts the Business;
(c) Operating Entities: There are no Operating Entities other than CSI;
(d) Owner's Criminal Records: Neither Xxxxxxxx or Xxxxxx have criminal
records; and
(e) Jurisdictions in which Business is Carried On: CSI does not carry on
the Business or own or lease any assets in any jurisdiction other than
in the State of Iowa which would require registration or licensing in
such jurisdiction.
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8.4 Financial:
(a) Unaudited Financial Statements: The Unaudited Financial Statements
present fairly in all material respects the financial position of the
Business as at the respective dates of the said statements and the
results of CSI's operation of the Business for the 12 month period
then ended in accordance with accounting principles used by CSI
consistently applied.
(b) No Material Change: Since December 31, 1999 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 its business, nor has there been
any development or threatened or probable development of which CSI 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 previously been carried on. In addition, save as disclosed
herein, since December 31, 1999 and up to the Time of Closing CSI has
not:
(i) issued any shares or other securities;
(ii) incurred any liability or obligation (absolute or contingent)
save current liabilities incurred in the ordinary course of
business which as to their nature and amount are inconsistent
with the Business as carried on;
(iii)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;
(iv) declared, paid, authorized or made any dividend, payment or
distribution of any kind or nature to its shareholders or
redeemed or purchased or otherwise acquired any of its capital
stock or agreed to do so;
(v) subjected any of the Assets to any Encumbrances;
(vi) 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;
(vii) waived any rights of material value;
(viii) entered into any transaction or into any contracts or
agreements or modifications or cancellations thereof, other than
in the ordinary course of business;
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(ix) made or authorized any payment to officers, directors or
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;
(x) used any funds other than in the ordinary course of business as
theretofore carried on; and
(xi) made any capital expenditures greater than $1,000 or entered into
any lease with a capitalized value greater than $1,000;
(c) Books and Records: The Books and Records fairly and correctly set out
and disclose in all material respects the financial position of the
Business and all material financial transactions of the Business have
been accurately recorded in the Books and Records;
(d) Liabilities: Other than the Leased Assets and the Excluded Debts, CSI
, at the Time of Closing, 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.
(e) Receivables: All pre-need accounts receivable recorded on the books of
the Business 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.
(f) Accountants: CSI 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 Business; and
(g) Shareholder and Related Party Loans: At the Time of Closing, CSI will
not be indebted, directly or indirectly, to either Xxxxxxxx or Bethel,
any present or former director, officer, shareholder, partner or
employee of CSI or any person not dealing at arms length with any of
the foregoing and none of such persons is indebted to the CSI except
for matters arising out of normal relations between employee and
employer.
8.5 Banking:
(a) Loans and Credit Facilities: Other than the Excluded Debts, CSI 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
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agreements or other financial instruments), and does not have
outstanding any bonds, debentures, mortgages, notes or other similar
indebtedness and CSI is not obligated to create or issue any bonds,
debentures, mortgages, notes or other similar indebtedness;
(b) Bank Facilities: Schedule J contains a complete and accurate listing
showing the name of each bank, trust company or similar financial
institution in which CSI has an account, safety deposit box or other
banking facility, including the names of all persons authorized to
transact business in respect of such accounts;
(c) Guarantees/Indemnities: CSI 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.
8.6 Insurance:
(a) List of Policies: Schedule A contains a complete and accurate listing
of all insurance policies of CSI relating to the Assets and the
Business including all property damage, general liability, motor
vehicle, director and officer liability and life policies and does not
include any personal term life insurance policies of Xxxxxxxx and/or
Bethel which on which CSI has paid premiums from time to time;
(b) Good Standing: Each of the insurance policies listed in Schedule A is
in good standing, all premiums required to be paid by CSI 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 Xxxxxxxx and/or Bethel have no knowledge of any facts
which might render any of the policies invalid, unenforceable or
non-renewable; and
(c) Outstanding Claims: No threatened or actual claims against any of the
policies described in Schedule A have been made in the last 3 years.
CSI has given notice of or has otherwise presented in a timely fashion
every claim under each such insurance policy.
8.7 Tax Matters:
(a) Filings: Except for state and federal tax returns in respect of CSI's
1998 and 1999 tax years, CSI 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. 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
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designation, including accompanying schedules and statements is true,
correct and complete in all material respects;
(b) Payment: CSI has paid in full all amounts (including but not limited
to sales, capital, use and consumption taxes and taxes measured on
income and all instalments 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 CSI nor
with respect to the issuance of any assessment or reassessment;
(d) Adverse Proceedings: To the best of the knowledge of Xxxxxxxx and/or
Bethel, there are no actions, suits, proceedings, investigations or
claims by any governmental authority pending or threatened against CSI
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: CSI 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: CSI has not acquired property from, or disposed of
property to, any person, firm or corporation with whom CSI does not
deal at arm's length since December 31, 1999; and
(g) Other Jurisdictions: CSI has not filed or is not currently required to
file any returns, elections or designations with any taxation
authority located in any jurisdiction other than the State of Iowa.
8.8 Employee Matters:
(a) List of Employees: The list of employees set out in Schedule L is a
comprehensive list of the employees and commissioned sales people of
the Business as at the Closing Date and includes an accurate
description of the compensation and/or commission structure, position
and job classification;
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(b) Employment Contracts: Except as set forth in Schedule "L", CSI is not
a party to any oral or written consulting contract, management
contract, labour services contract or similar agreement for the
services of a particular individual and none of the employees of 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) Benefit Plans: Schedule L 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 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 CSI 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;
(d) Pension Plans: CSI does not have nor has it ever had a pension plan
for any of its employees; and
(e) Employer Associations: CSI is not a member of any employer,
management, industry or other trade or business association under
which the Business is obligated to contribute to any employee or
contractor employee benefit fund, including any pension plans, health
benefit plans or other similar employee entitlements.
8.9 Litigation and Claims :
(a) Adverse Proceedings: To the best of the knowledge of Xxxxxxxx and/or
Bethel, there are no outstanding actions, claims, demands, lawsuits,
prosecutions or governmental investigations by or against CSI and the
Business and there is no other adverse proceeding which is to the
knowledge of Xxxxxxxx and/or Bethel pending or threatened by, against,
or relating to CSI, the Assets, or the Business. Xxxxxxxx and/or
Bethel are 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 Xxxxxxxx and/or Bethel is aware relating to
the Assets, or the Business, from any police, fire department,
sanitation or health authorities, environmental agencies, or from any
other federal, state or municipal authority, department or agency, nor
does CSI have notice that there are any matters under
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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, CSI 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 CSI 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 Xxxxxxxx
and/or Bethel has been threatened against CSI; and
(e) Trademark and Patent Infringement: To the best of the knowledge of
Xxxxxxxx and/or Bethel, the conduct of the Business by CSI 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.
8.10 Contracts and Commitments:
(a) Material Contracts: Other than the Pre-Need Contracts and the Leases,
Schedule M contains a complete and accurate listing of all material
contracts, agreements, leases, commitments, instruments or other
dealings to which CSI is a party, by which CSI is bound or under which
CSI is entitled to any benefits. For the purposes of this Agreement a
contract shall be material if:
(i) performance of any right or obligation by any party to such
contract involves a payment by either party of $1,000 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 $1,000 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 March 1, 2000; and
(c) Good Standing: Except as disclosed herein, CSI is not in breach or
default of any of the terms of the Material Contracts or Pre-Need
Contracts, and neither Xxxxxxxx
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and/or Bethel is 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
Xxxxxxxx and/or Bethel 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 paragraph 4.10(c) would have a material adverse
effect on the Assets or the Business.
8.11 Contingency and Environmental Liabilities:
(a) Compliance: To the best of the knowledge of Xxxxxxxx and/or Bethel,
the Business is in compliance in all material respects with all
federal, state and municipal environmental laws and regulations (the
"Environmental Laws"). To the best of the knowledge of Xxxxxxxx and/or
Bethel, the existing activities of the Business and the crematories
and its prior uses and activities and the uses and activities of other
property now or previously owned or operated by CSI, comply and at all
times have complied with all Environmental Laws. CSI has filed all
environmental reports and notifications required to be filed under
applicable laws and regulations;
(b) Notice of Non-Compliance: To the best knowledge of Xxxxxxxx and/or
Bethel, CSI, or any prior owner or occupant of the property now leased
or operated by CSI, has 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. CSI 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: To the best knowledge of the Xxxxxxxx and/or
Bethel, CSI nor any other person or entity has engaged in or permitted
any operations or activities upon, or any use or occupancy of property
now or previously owned or operated by CSI, resulting in the storage,
emission, release, discharge or disposal of any hazardous materials
on, in, under or from any property used for or by the Business;
(d) Cremation Residue: CSI 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; and
(e) No Expenditures: To the best of the knowledge of Xxxxxxxx and/or
Bethel, no expenditures will be required in order for the Assets to
comply with Environmental Laws in connection with the current
operation and continued operation of the activities of the Business.
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4.12 Corporate Status and Authority:
(a) Corporate Status: CSI has been duly organized and is validly
subsisting under the laws of the State of Iowa and has all requisite
power and capacity to own or lease the Assets and to carry on the
Business. CSI is duly qualified and licensed to carry on its business
in all jurisdictions in which the nature of its 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 Business or the
Assets;
(b) Amendments to Charter: CSI has not made any amendments to its Charter
Documents other than those expressly reflected in its corporate
records; and
(c) Corporate Records: The corporate records and minute books of CSI
accurately reflect all material proceedings of its directors and
shareholders and include complete and accurate minutes of all meetings
of its directors and shareholders, copies of all resolutions passed,
up-to-date and accurate shareholder and director registers, transfer
registers and any other corporate registers required to be maintained
by CSI. All meetings of shareholders and directors and partners were
duly called and held and all resolutions, whether passed at meetings,
or in writing, are valid and effectual in all cases where the matters
dealt with at such meetings or in such resolutions could have a
material effect on CSI.
4.13 Share Capital and Partnership Units:
(a) Share Capital: The authorized and issued share capital of CSI is as
follows:
(i) Authorized: 500,000 Common Stock
500,000 Preferred Stock
Issued: 1,000 Common Stock
Shareholders: Xxxxx Xxxxxxxx - 490 Common Stock
Xxxx Xxxxxx - 510 Common Stock
The shares shown as constituting the issued share capital of each of
CSI have been duly issued and are outstanding and are fully paid and
non-assessable;
(b) Rights to Acquire Securities: No person has any agreement, option,
right or privilege (whether by law, pre-emptive, or contractual), or
any interest capable of becoming an agreement, including convertible
securities, warrants, or convertible obligations of any nature, for
the purchase, subscription, allotment or issuance of any of the
unissued shares of any of the Companies or any of the units in the
capital stock of each of the Partnerships.
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4.14 Effect of this Transaction:
(a) No Adverse Implications: Except as disclosed in Schedule N 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 CSI 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 CSI 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 CSI 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 CSI is a party or by which CSI or the Assets are
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.
(b) Notice Procedure: CSI may, at any time up to 5:00 p.m. on the day
which is two Business Days prior to the Closing, give notice to the
Purchaser advising it of any fact which, except for this Subsection
4.14, would constitute a breach of any of the representations and
warranties set out in this Section 4. Such notice shall state that it
is being given pursuant to this Subsection 4.14 and shall set out
sufficient information to enable the Purchaser to make a reasoned
business judgment with respect to the choices set out herein. Upon
receipt of such notice, the Purchaser may:
(i) postpone the Closing;
(ii) complete the Closing, in which case this Agreement shall be
deemed to be amended so that the representation and warranty in
respect of which the notice was given shall incorporate the
disclosure set out in the notice;
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(iii)or, terminate this agreement without further obligation on the
part of any party to this Agreement;
(c) Joint and Several: The obligations of Xxxxxxxx and Xxxxxx shall be
joint and several with respect to all the representations and
warranties set out in this Section 4.
5 JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES WITH RESPECT TO ISSUANCE
OF SECURITIES
Xxxxxxxx and Bethel represent and warrant to the Purchaser and to Neptune as
follows and acknowledges that the Purchaser and Neptune are relying upon such
representations and warranties in connection with the issuance of the
Securities:
5.1 Individual Authority: Xxxxxxxx and Xxxxxx have the legal capacity, power
and authority to hold the Securities to be owned by them at the Time of
Closing;
5.2 Receipt of the Securities : Xxxxxxxx and Bethel are accepting the
Securities as the Purchase Price as set out in Sections 2 and 3 only for
investment purposes on their own account and not for the purpose of selling
the Securities in connection with any distribution of the Purchaser's
securities. Xxxxxxxx and Xxxxxx acknowledge that the Securities have not
been registered under the Securities Xxx 0000, as amended, or the
securities laws of any state of the United States and may not be offered,
sold, transferred or assigned without registration under such act or
compliance with an exemption from such registration requirement and for
this reason, certificates evidencing the Securities shall display the
legend, substantially in the form as follows:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING SUCH
SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION THAT SUCH
SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO
THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE
904 OF REGULATION S UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED
STATES IN ACCORDANCE WITH RULE 144A UNDER THE SECURITIES ACT OR RULE
144 UNDER THE SECURITIES ACT, IF APPLICABLE, OR (D) IN A TRANSACTION
THAT IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS, PROVIDED THAT PRIOR TO SUCH SALE
THE CORPORATION SHALL
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HAVE RECEIVED AN OPINION OF COUNSEL OF RECOGNIZED STANDING, IN FORM
AND SUBSTANCE SATISFACTORY TO IT, AS TO THE AVAILABILITY OF AN
EXEMPTION."
5.3 Solicitation: Xxxxxxxx and Xxxxxx acknowledge that the Securities to be
received by them under this Agreement were not advertised in printed media
of general and regular paid circulation, radio or television.
5.4 Accredited Investor: Xxxxxxxx and Bethel are "accredited investors" as such
term is defined in Rule 501 of Regulation D promulgated by the Securities
and Exchange Commission under the Securities Act of 1933, as amended
(U.S.).
5.5 No Trades: Xxxxxxxx and/or Bethel have not traded in the common stock of
Neptune and will refrain from trading in or selling short any shares in the
common stock of Neptune or entering into any derivative transactions of
same prior to the Closing Date.
5.6 Residency : Xxxxxxxx and Xxxxxx are residents in the State of Iowa.
5.7 Joint and Several: The obligations of the Xxxxxxxx and Bethel shall be
joint and several with respect to all the representations and warranties
set out in this Section 5.
6 COVENANTS OF THE VENDOR
The Vendor covenants and agrees with the Purchaser as follows and acknowledge
that the Purchaser is relying upon such covenants and agreements in connection
with the purchase of the CSI Shares:
6.1 Access to the Business: CSI shall forthwith make available to the Purchaser
and its authorized representatives and, if requested by the Purchaser,
provide 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,
licences, orders, permits, books of account, accounting records, constating
documents and all other documents, information or data relating to CSI and
the Business. The Vendor shall afford the Purchaser and its authorized
representatives every reasonable opportunity to have free and unrestricted
access to the property, assets, undertaking, records and documents of CSI.
At the request of the Purchaser, the Vendor shall execute or cause to be
executed such consents, authorizations and directions as may be necessary
to permit any inspection of any property of CSI or to enable the Purchaser
or its authorized representatives to obtain full access to all files and
records relating to any of the assets of CSI maintained by governmental or
other public authorities. At the Purchaser's request, the Vendor shall
co-operate with the Purchaser in arranging any such meetings as the
Purchaser should reasonably request with:
(a) all employees of the CSI;
-25-
(b) customers, suppliers, distributors or others who have or have had a
business relationship with CSI; and
(c) auditors, attorneys or any other persons engaged or previously engaged
to provide services to CSI who have knowledge of matters relating to
the Business;
In particular, without limitation, the Vendor shall permit the Purchaser's
representatives or consultants to conduct such physical review of the
inventory of CSI 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 shall not mitigate or otherwise affect the
representations and warranties of the Vendor 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 CSI and the Assets.
6.2 Delivery of Books and Records : At the Time of Closing there shall be
delivered to the Purchaser by the Vendor all of the Books and Records and
Charter Documents. The Purchaser agrees that it will preserve the Books and
Records and Charter Documents so delivered to it for so long as such items
may be required to enable the Vendor to defend any claim against the Vendor
which could result in a Claim hereunder and at least until March 15, 2005.
The Purchaser will permit the Vendor or its authorized representatives
reasonable access thereto in connection with the affairs of the Vendor. The
Purchaser shall not be responsible or liable to the Vendor for or as a
result of any accidental loss or destruction of or damage to any such Books
or Records or Charter Documents, unless the Purchaser's negligence caused
the loss, destruction or damage.
6.3 Conduct Prior to Closing : Without in any way limiting any other
obligations of the Vendor hereunder, during the period from the date hereof
to the Time of Closing:
(a) Conduct Business in the Ordinary Course: The Vendor shall cause CSI to
conduct the Business in its ordinary and normal course and the Vendor
shall CSI to refrain from, without the prior written consent of the
Purchaser (such consent not to be unreasonably withheld), entering
into any transaction or take any action that, if effected after
January 20, 2000 and before the date of this Agreement, would
constitute a breach of any representation, warranty, covenant or other
obligation of the Vendor contained herein. In particular the Vendor
shall cause CSI to 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);
-26-
(b) Continue Insurance: The Vendor shall cause CSI to 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, 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: The Vendor shall use reasonable commercial efforts
to preserve, and cause CSI 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 CSI.
6.4 Delivery of Documents : The Vendor shall deliver to the Purchaser all
necessary transfers, assignments and other documentation reasonably
required to transfer to the Purchaser the CSI Shares with a good and
marketable title, free of Encumbrances and without any right of set-off.
6.5 Joint and Several: The covenants and agreements of the Vendor contained in
Section 6 shall be joint and several as between Xxxxxxxx and
Bethel.6.6ab.Vendors Taxes : The Vendor 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.
6.7 1998and 1998 Tax Returns: The Vendor will file, no later than March 31,
2000, state and federal tax returns for CSI in respect of CSI's 1998 and
1999 tax years.
7 JOINT AND SEVERAL REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
PURCHASER AND NEPTUNE
The Purchaser and Neptune represent, warrant and covenant to and with the Vendor
as follows and acknowledge that the Vendor is relying upon such representations,
warranties and covenants in connection with the sale of the CSI Shares:
7.1 Corporate Status and Authority : The Purchaser and Neptune are valid and
subsisting corporations, duly incorporated and in good standing under the
laws of the State of California and Florida, respectively, and are duly
qualified to carry on their businesses as they are presently carried on and
are duly qualified and authorized to carry on business and are in good
standing as a foreign corporation in each jurisdiction in which the
character of their properties or the nature of their businesses made such
qualification or authorization necessary and have all requisite power and
authority to carry on their business as they are now carried on and to own,
lease and operate their properties and assets.
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7.2 Authorization : The Purchaser and Neptune have full corporate 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.
7.3 Regulatory Approval : The Purchaser and Neptune have complied and will
comply fully with the requirements of all applicable corporate and
securities laws in relation to the issue of the Securities. The entering
into and performance of this Agreement and the transactions contemplated
herein will not result in the violation of any of the terms and provisions
of the articles or incorporation or bylaws of the Purchaser or Neptune, any
shareholders' or directors' resolution or of any indenture or other
agreement, written or oral, to which the Purchaser or Neptune may be a
party or by which the Purchaser or Neptune maybe bound or to which it may
be subject or any judgment, decree, order, rule or regulation of any court
or administrative body by which the Purchaser or Neptune is bound or to the
knowledge of the Purchaser or Neptune, any statute or regulation applicable
to the Purchaser or Neptune.
7.4 Share Transfer Restrictions : No order ceasing or suspending trading in
securities of the Purchaser or Neptune nor prohibiting the sale of such
securities has been issued to the Purchaser or Neptune or its directors,
officers or promoters or to any other companies that have common directors,
officers or promoters and no investigations or proceedings for such
purposes are pending or threatened in writing by an officer or official of
a competent authority.
7.5 Issued Share Capital : As at December 31, 1999, the authorized capital of
Neptune is 100,000,000 shares of which 13,194,543 shares are issued and
outstanding. In addition, Neptune has an obligation to issue 16,667 shares
in respect of private placement transactions and has 675,000 warrants (not
including stock options) outstanding as of December 31, 1999 which may by
the Time of Closing be exchanged or exercised into shares of Neptune.
7.6 Fully Paid Shares : Upon completion of the transactions contemplated in
this Agreement, the shares of the common trading stock of Neptune issued by
Neptune to the Vendor will be fully paid and non-assessable shares of the
common trading stock of Neptune.
7.7 Operation of Business: The Purchaser and Neptune will use reasonable
commercial efforts to preserve, or cause to be preserved, the Neptune
Entities and CSI and to promote and preserve, or cause to promote and
observe, the goodwill of suppliers, customers and others having business
relations with the Neptune Entities and CSI.
7.8 No Material Change: Save and except for the items set forth in Exhibit "A"
to Schedule R attached to this Agreement, since March 1, 2000 and up to the
date hereof, there has been no material adverse change in the financial
position of the Neptune Entities, except changes occurring in the ordinary
course of its business.
-28-
7.9 Expense of Compliance: The Purchaser will pay for any expenses incurred by
Xxxxxxxx and/or Bethel in respect of the sale of the Neptune Shares
pursuant to Rules 144 or 144A of the Securities Act of 1933, as amended
(U.S.) and Section 5.2.
7.10 Indemnity of Personal Guarantees: The Purchaser will use its best efforts
to obtain a release of any personal guarantee of Xxxxxxxx and/Xxxxxx in
respect of the Leased Assets or the Excluded Debts and if such released
cannot be obtained, the Purchaser hereby indemnifies Xxxxxxxx and/or Bethel
from any obligations they now or hereafter have under such personal
guarantees.
8 CONDITIONS OF CLOSING
8.1 Conditions of Closing in Favour of the Purchaser : The obligation of the
Purchaser to complete the sale and purchase of the Assets 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) Contractual Consents: The Vendor shall have delivered to the Purchaser
such waivers, consents and certificates, including but not limited to
those described in Schedule N, from parties having contractual
relations with CSI as may be necessary including, without limitation,
waivers under loan agreements to which CSI is a party;
(b) Representations and Warranties: The representations and warranties of
Xxxxxxxx and Xxxxxx 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 certificates of Xxxxxxxx and Bethel dated
the Closing Date to that effect shall have been delivered to the
Purchaser, such certificates to be in form and substance satisfactory
to the Purchaser, acting reasonably;
(c) Covenants: All of the covenants and agreements of the Vendor and all
other terms of this Agreement to be complied with or performed by the
Vendor at or before the Time of Closing shall have been complied with
or performed and certificates of the Vendor dated the Closing Date to
that effect shall have been delivered to the Purchaser, such
certificates to be in form and substance satisfactory to the
Purchaser, acting reasonably;
(d) Certificate of Accredited Investor: Xxxxxxxx and Xxxxxx have delivered
to the Purchaser and Neptune certificates of accredited investor in
the forms attached as Schedule O to this Agreement;
-29-
(e) Regulatory Consents: There shall have been obtained, from all
appropriate federal and state or other governmental or administrative
bodies or stock exchanges, such licences, permits, consents,
approvals, certificates, registrations and authorizations, including
but not limited to those described in Schedule N, as are required to
permit the change of ownership of the CSI Shares and the transactions
as contemplated herein;
(f) 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;
(g) 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 contemplated hereby;
(h) No Material Damage: No 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;
(i) No Agreements on Assets or Business: There is no fact not disclosed in
this Agreement relating to the Assets or the Business which, if known
to the Purchaser, might reasonably be expected to have a material
adverse effect on the value of the CSI Shares;
(j) Certificates of Accredited Investor: Xxxxxxxx and Bethel have each
signed Certificates of Accredited Investors attached as Schedule O to
this Agreement;
(k) Xxxxxxxx Consulting/Non-Compete Agreement: Xxxxxxxx has entered into a
consulting and non-competition agreement attached as Schedule P to
this Agreement;
(l) Bethel Employment/Non-Compete Agreement: Bethel has entered into an
consulting and non-competition agreement attached as Schedule Q to
this Agreement;
(m) Disclosure Statement: Xxxxxxxx and Xxxxxx have each acknowledged
receipt of the disclosure statement attached as Schedule R to this
Agreement;
(n) Opinion of Vendor's Attorney: The Purchaser and Neptune have received
legal opinions of the Vendor's attorneys, dated as of the date of
Closing, respecting the transactions contemplated in this Agreement,
consistent with standard agreements for the purchase and sale of
funeral businesses.
If any of the conditions contained in this Subsection 8.1 shall not be
performed or fulfilled at or prior to the Time of Closing to the
satisfaction of Neptune and the Purchaser, acting
-30-
reasonably, the Purchaser may, by notice to the Vendor, terminate this
Agreement and the obligations of the Vendor, Neptune and the Purchaser
under this Agreement, provided that the Purchaser may also bring an action
against the Vendor 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 (as the same may be
modified by a notice pursuant to Subsection 4.14(b) by the Vendor). 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
8.2 Conditions of Closing in Favour of the Vendor : The purchase and sale of
the Assets are subject to the following terms and conditions for the
exclusive benefit of the Vendor to be fulfilled or performed at or prior to
the Time of Closing:
(a) Representations and Warranties: The representations and warranties of
Neptune and 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 Neptune and the Purchaser dated the Closing
Date to that effect shall have been delivered to the Vendor, such
certificate to be in form and substance satisfactory to the Vendor
acting reasonably; and
(b) Covenants: All of the terms, covenants and conditions of this
Agreement to be complied with or performed by Neptune and the
Purchaser at or before the Time of Closing shall have been complied
with or performed and a certificate of Neptune and the Purchaser dated
the Closing Date to that effect shall have been delivered to the
Vendor, such certificate to be in form and substance satisfactory to
the Vendor acting reasonably.
If any of the conditions contained in this Subsection 8.2 shall not be
performed or fulfilled at or prior to the Time of Closing to the
satisfaction of the Vendor, acting reasonably, the Vendor may, by notice to
the Purchaser and Neptune, terminate this Agreement and the obligations of
the Vendor, Neptune and the Purchaser under this Agreement, provided that
the Vendor may also bring an action against the Purchaser and Neptune for
damages suffered by the Vendor where the non-performance or non-fulfilment
of the relevant condition is as a result of a breach of covenant,
representation or warranty (as the same may be modified by a notice
pursuant to Subsection 4.14(b) by the Purchaser or Neptune). Any such
condition may be waived in whole or in part by the Vendor without prejudice
to any claims they may have for breach of covenant, representation or
warranty.
8.3 Parties Efforts: The parties shall use reasonable commercial efforts
to satisfy the conditions contained in Section 8.
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9 CLOSING ARRANGEMENTS
9.1 Place of Closing: The closing shall take place at the Time of Closing at
the Place of Closing.
9.2 Transfer: At the Time of Closing, upon fulfilment of all the conditions set
out in Section 8 that have not been waived in writing by Neptune and the
Purchaser or the Vendor as the case may be:
(a) the Purchaser will cause to be delivered to Xxxxxxxx a certified or
attorney's check in the amount of $55,000.00 and will cause to be
delivered to Bethel a certified or attorney's check in the amount of
$55,000.00 in payment of the Purchase Price; and
(b) Neptune will issue the Neptune Shares, and/or cash in lieu thereof,
minus the Holdback, to the Vendor and deliver same to the Vendor's
attorney (Xxxxxxx & Xxxxxxxx, P.C.).
9.3 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 the sale of the CSI Shares and the Business to the
Purchaser, any provision of this Agreement, any agreement or other document
executed pursuant to this Agreement or any of the respective obligations
intended to be created by this Agreement.
10 INDEMNITY
10.1 Known Actions and Proceedings: Xxxxxxxx and Bethel, jointly and severally,
hereby indemnify and save harmless the Neptune Entities from and against
any and all losses, liabilities, damages, costs, tax assessments, charges
and claims, increases in insurance premiums, not in the ordinary course of
business, for policies (comparable to existing coverage at the Effective
Date) for renewals to December 31, 2000, and expenses of any kind
whatsoever including, without limitation, the costs of defending,
cross-claiming or claiming against third parties in respect of any action,
claim or matter, including attorney's fees, costs and disbursements at all
court and administrative levels, which at any time or from time to time may
be paid, incurred or asserted against the Neptune Entities or CSI, as to a
direct or indirect result of the operation of CSI and the Business up to
and including the Effective Date, including but not limited to the filing
of tax returns as set forth in Subsection 6.7, provided that such liability
is not the result of any actions taken by the Neptune Entities after the
Effective Date. The obligations of Xxxxxxxx and Xxxxxx set forth in this
Subsection 10.1 shall be subject to and limited by the following:
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(a) No claim shall be made unless the cumulative amount of all claims
under this Subsection 10.1 equals or exceeds $5,000;
(b) No claim shall be following the third anniversary of the Closing Date;
and
(b) The Purchaser and Neptune shall give written notice to Xxxxxxxx and/or
Bethel stating specifically the basis for the claim, the amount
thereof, and shall tender defense thereof to Xxxxxxxx and/or Bethel as
provided in Subsection 10.3 below.
10.2 Indemnification by Purchaser. The Purchaser hereby indemnifies and saves
harmless Xxxxxxxx and/or Bethel against any and all losses, liabilities,
damages, costs, and expenses of any kind whatsoever, including, without
limitation, the cost of defending, cross-claiming, or claiming against
third parties in respect of any action, claim, or matter, including legal
fees, costs, and disbursements of an attorney at all court and
administrative levels, which at the time or from time to time may be paid,
incurred, or asserted against Xxxxxxxx and/or Bethel as to the direct or
indirect result of the operation of CSI and the Business after the
Effective Date and/or related to any personal obligations of Xxxxxxxx
and/or Bethel in respect of the Leased Assets and the Excluded Debts. The
obligations of the Purchaser set forth in this Subsection 102 shall be
subject and limited by the following:
(a) Noclaims shall be made until the cumulative amount of all claims under
this Subsection 10.2 equals or exceeds $5,000; and
(b) Xxxxxxxx and/or Bethel shall give written notice to the Purchaser
stating specifically the basis for the claim, the amount thereof, and
shall tender defense thereof to Purchaser as provided in Subsection
10.3 below.
10.3 Tender of Defenses. Promptly upon receipt by any party of a notice of a
claim by a third-party which may give rise to a claim under Section 10, the
party seeking indemnification (the Indemnified Party) shall give written
notice thereof to the party obligated to provide indemnification (the
Indemnifying Party). If the Indemnifying Party gives to the Indemnified
Party an agreement in writing, in a form reasonably satisfactory to the
Indemnified Partys counsel, to defend such claim, the Indemnifying Party
may, at its sole expense, undertake the defense against such claim and may
contest or settle such claim on such terms, at such time and in such manner
as the Indemnifying Party, in its sole discretion, shall elect and the
Indemnified Party shall execute such documents and take such steps as may
be reasonably necessary in the opinion of its counsel to enable it to
conduct the defense of such claim. If the Indemnifying Party fails or
refuses to defend any claim hereunder, the Indemnifying Party may
nevertheless, at its own expense, participate in the defense of such claim
by the Indemnified Party in any and all settlement negotiations relating
thereto. In any and all events, the Indemnifying Party shall have such
access to the records and files of the Business relating to any claim as
may be reasonably necessary to effectively defend or participate in the
defense thereof.
-33-
10.3 Right to Set-Off: The Purchaser and Neptune have the right to set-off any
liquidated amount owed by the Vendor to the Purchaser pursuant to
Subsection 10.1 against any money due and owing to the Vendor from the
Purchaser or Neptune under this or any other agreement between the
Purchaser, Neptune and the Vendor, provided that the Purchaser or Neptune
gives written notification to the Vendor prior to set-off of the amount of
the set-off and any obligation(s) so satisfied.
11 GUARANTEE
Neptune hereby unconditionally guarantees each and every obligation of the
Purchaser arising from or under this Agreement. If the Purchaser should, for any
reason, fail to pay or perform any obligation, indebtedness, or liability
arising out of or pertaining to this Agreement, Neptune promises to pay or
perform the same upon demand. Neptune waives notice of acceptance in this
guaranty and also presentment, demand, protest, notice of protest, and notice of
dishonor of any obligation arising under this Agreement. No extension of time or
other indulgence granted by the Vendor, to the Purchaser will release or affect
the obligation of Neptune. No omission or delay on the part of the Vendor in
exercising any rights hereunder or in taking any action to collect or enforce
payment of any obligation arising under this Agreement will be a waiver of such
right or release or affect the obligation of Neptune hereunder. This guaranty is
given for the benefit of the Vendor. Neptune shall be jointly and severally
liable for said obligations, indebtedness, or liabilities.
12 GENERAL MATTERS
12.1 Governing Law and Arbitration : This Agreement shall be governed by and
construed in accordance with the laws of the State of Iowa. 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 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 Des Moines, Iowa. The language of arbitration shall be
English. 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 prevailing
parties shall also be entitled to an award of reasonable attorney's fees.
12.2 Entire Agreement : 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 subject matter and there are no oral statements, warranties,
representations or other agreements between the parties in connection with
the subject matter 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
-34-
deemed or shall constitute a waiver of any other provision nor shall any
such waiver constitute a continuing waiver unless otherwise expressly
provided.
12.3 Assignment: The Vendor will not assign their interests in this Agreement
without prior written consent of the Purchaser. Prior to payment of the
Purchase Price in full, the Purchaser may not assign its interests in this
Agreement without any prior written consent of the Vendor.
12.4 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 the Vendor or the Purchaser
without the prior approval of the other, such approval not to be
unreasonably withheld.
12.5 Confidential Information: The Purchaser and the Vendor covenant to hold in
strict confidence all information obtained in connection with the
transactions which are the subject matter of this Agreement. If the
transactions which are the subject matter of this Agreement are not
completed, this covenant shall continue in full force and effect. All
confidentiality obligations of the Purchaser with respect to the Vendor,
shall cease upon Closing. Notwithstanding the Closing, the Vendor covenants
to maintain as confidential all confidential information respecting the
Purchaser in the Vendor's possession prior to Closing and all information
obtained in connection with the transactions which are the subject matter
of this Agreement including all information concerning the Purchaser other
than information provided to the Vendor's personal advisers for the purpose
of filing personal tax returns and other similar matters and 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 Vendor and/or its representatives.
12.6 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 the Vendor 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.
12.7 Indemnification in Respect of Brokers or Agents: The Vendor indemnifies and
saves harmless the Purchaser, the Neptune Entities and CSI from and against
any claim for commission or other remuneration payable or alleged to be
payable to any broker, agent or other intermediary who claims to be so
entitled by virtue of a contract or other arrangement with the Vendor in
connection with the transaction contemplated herein. The Purchaser and
Neptune indemnify and save harmless the Vendor, Xxxxxxxx and Xxxxxx from
and against any claim for commission or other remuneration payable or
alleged to be payable to any broker, agent or other intermediary who claims
to be so entitled by virtue of a contract or other arrangement with the
Purchaser in connection with the transaction contemplated herein.
12.8 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 the Vendor. The Vendor shall not bear any legal,
accounting or other costs incurred by the Purchaser and the Neptune
Entities.
-35-
12.9 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:
(a) If to the Purchaser and Neptune:
Neptune Management Corp.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
(b) If to the Vendor:
Xxxx Xxxxxx
00000 Xxxxxxx Xxxxxx
Xxxxx, XX 00000
Xxxxx Xxxxxxxx
00000 Xxxxxxxx Xxxxx
Xxxxx, XX 00000
with a copy to:
Xxxx Xxxxxxxx
Xxxxxxx & Xxxxxxxx, PC
0000 Xxxxxx Xxxx Xxxxx
Xxxx Xxx Xxxxxx, Xxxx 00000
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.
12.10 Time of the Essence: Time shall be of the essence of this Agreement.
12.11 Further Assurances: Each of the parties hereto agrees promptly to do,
make, execute, deliver or cause to be done, made, executed or delivered at
their own expense all such further acts, documents and things as the other
party hereto may reasonably require for the purpose of giving effect to
this Agreement whether before or after the Closing.
12.12 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.
-36-
12.13 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 telecopied copy of this Agreement shall be effectual and
valid proof of execution and delivery.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
date first hereinabove written.
NEPTUNE MANAGEMENT CORP. THE NEPTUNE SOCIETY, INC.
Per: ----------------------------- Per: -----------------------------
Authorized Signatory Authorized Signatory
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SIGNED, SEALED AND DELIVERED by )
XXXXX XXXXXXXX in the presence of: )
)
----------------------------------------)
Witness )
)
----------------------------------------) -----------------------------------
Address ) XXXXX XXXXXXXX
)
----------------------------------------)
Occupation
SIGNED, SEALED AND DELIVERED by )
XXXX XXXXXX in the presence of: )
)
----------------------------------------)
Witness )
)
----------------------------------------) -----------------------------------
Address ) XXXX XXXXXX
)
----------------------------------------)
Occupation
-38-
Schedule "A"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
See Attached List of Insurance Policies
---------------------------------------
-39-
Schedule "B"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
List of Intangible Assets
-------------------------
1. Trade Names: Assured Care Funeral Service
Cremation Society of Iowa
-40-
Schedule "C"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
List of Land and Buildings
--------------------------
Description Nature of Interest Base Rent/Month Expiry Renewal
Date
000 XX Xxxxxxxx Xx., Leased Office $1,200.00 36676 one(1) year
Ankeny, Iowa Premises option
102 N.E. Trilein, Leased Office $1,130.00 Oct. 14 two(5) year
Ankeny, Iowa Premises 2003 options
-41-
Schedule "D"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
List of Leased Assets
---------------------
1. See Schedule "C".
2. Other Leased Assets:
In Agreement with Nature of Lease Total Expiry Date
Payments
per Month
CIT Group/Equipment retort and related $878.09 37414
Financing Inc. accessories
-42-
Schedule "E"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
See Attached List of Other Operating and Fixed Assets
-----------------------------------------------------
-43-
Schedule "F"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
See Attached List of Pre-Need Contracts
---------------------------------------
-44-
Schedule "G"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
List of Specified Assets
------------------------
-45-
Schedule "H"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
See Attached statement of trust account
---------------------------------------
No. 05003611 with Mercantile Bank of Des Moines, Iowa
-----------------------------------------------------
-46-
Schedule "I"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
See Attached Unaudited Financial Statements for years ended
-----------------------------------------------------------
December 31, 1997, December 31, 1998 and December 31, 1999
----------------------------------------------------------
-47-
Schedule "J"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
List of Bank Accounts
---------------------
1. USbank, Ankeny, Iowa, Checking Account #1-964-0000-2784
-48-
Schedule "K"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
CSI EBITDA
----------
1. For the purposes of this Agreement, CSI EBITDA will be calculated in
accordance with generally accepted accounting principles used in the United
States of America, consistently applied, with the following provisions:
(i) a portion of the corporate general and administrative expenses of the
Neptune Entities (the "Neptune Expenses") will allocated to the
expenses of the CSI Locations on a pro rate basis of the percentage of
gross revenue which the CSI Locations contribute to the gross revenue
of the Neptune Entities; and
(ii) no more than $20,000.00 per year of Neptune Expenses will be allocated
to the expenses of the CSI Locations.
-49-
Schedule "L"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
List of Employees and Employee Benefit Plans
Name Position Estimated 1999 Compensation
---- -------- ---------------------------
Xxxx Xxxxxx President and Operations $60,000 plus 4% of pre-need sales
Manager
Xxxxx Xxxxxxxx Vice President and $60,000 plus 4% of pre-need sales
Operations Manager
Xxxx Xxxxxxxx Office Manager/Receptionist $24,690
Xxxxxx Xxxxx Contract Funeral Director $100 per call ($12,790 in 1998)
Xxxxx Xxxxx Contract Funeral Director 10% of contract services value
Xxxxxx Xxxxx Pre-Need Sales Commission Fee of 9% of contract total
value plus auto and expenses ($73,000 in
1999)
Xxxxxxx Xxxxx Service Attendant $7.00 per hour part time
None of the employees are under contract. CSI does no maintain a health benefit
package but does reimburse Xxxxxx Xxxxx and Xxxx Xxxxxxxx for their monthly
health insurance coverage (approx. $120 each/month). Xxxxxx Xxxxx and Xxxx
Xxxxxxxx have also been entitled to vacations and sick leave.
-50-
Schedule "M"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
List of Material Contracts
--------------------------
1. Trust Agreement dated June 13, 1997 between Cremation Society of Iowa, Inc.
and Mercantile Bank of Des Moines, Iowa
2. See Schedule "C"
3. See Schedule "D"
4. The agreements in respect of the Excluded Debts as defined in Section 1(o)
-51-
Schedule "N"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
List of Required Consents
-------------------------
Contractual and Other Consents
------------------------------
1. Consent to assignment of the Leases described in Schedules D and C.
2. Termination of Shareholder Agreement signed by Xxxxxxxx, Xxxxxx and CSI and
waiver by CSI of any rights to acquire shares under Shareholder Agreement
3. Transfer of signing authority to designee of Purchaser in respect of:
a. USbank, Ankeny, Iowa, Checking Account #1-964-0000-2784; and
b. Mercantile Bank of Des Moines, Iowa, Trust Account No. 00000000
Regulatory Consents
-------------------
1. Consent of State of Iowa State Board of Mortuary Science Examiners for:
a. Funeral License No. 00347 (Cremation Society of Iowa, Inc. - X. Xxxxxx
and X. Xxxxxxxx)
b. Funeral License No. 00348 (Cremation Society of Iowa, Inc. - X. Xxxxxx
and X. Xxxxxxxx)
c. Funeral License No. 00516 (Assured Care Funeral Service - X. Xxxxxx
and X. Xxxxxxxx)
-52-
Schedule "O"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
See Attached Certificates of Accredited Investor
------------------------------------------------
-53-
Schedule "P"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
See Attached Xxxxxxxx Employment/Non-Compete Agreement
------------------------------------------------------
-54-
Schedule "Q"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
See Attached Bethel Employment/Non-Compete Agreement
----------------------------------------------------
55
Schedule "R"
to the Asset Purchase Agreement dated March 15, 2000
----------------------------------------------------
See Attached Disclosure Statement
---------------------------------
