EXHIBIT 10.2
SHARE PURCHASE AGREEMENT
BETWEEN
Lari Acquisition Company, Inc. (the "Purchaser"),
the Xxxxxxx Xxxxxxxxx Inter Vivos Trust (the 'Trust'),
Xxxxxxx Xxxxxxxxx ("Xxxxxxxxx"),
Neptune Management Corp. ("Neptune"),
Heritage Alternatives, Inc. ("Heritage"),
Neptune Pre-Need Plan, Inc. ("Neptune Pre-Need")
(the Trust, Weintraub, Neptune, Heritage and Neptune Pre-Need
are collectively referred to as the "Vendors")
and Lari Corp. ("Lari").
DATED: March 26, 1999
TABLE OF CONTENTS
Page
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1 INTERPRETATION.............................................................................................2
1.1 Definitions.......................................................................................2
1.2 Schedules.........................................................................................2
1.3 Division, Headings, Index.........................................................................5
1.4 Gender and Number.................................................................................6
1.5 Currency..........................................................................................7
2 PURCHASE AND PURCHASE PRICE................................................................................7
2.1 Purchase..........................................................................................7
2.2 Payment of Purchase Price.........................................................................7
2.3 Elections.........................................................................................7
2.4 Effective Date....................................................................................8
2.5 Excluded Assets and Excluded Liabilities..........................................................8
2.6 Reconciliation....................................................................................8
2.7 Payment of Difference.............................................................................8
2.8 Right of Set-Off..................................................................................8
2.9 Assignment of Accounts Receivable.................................................................8
3 JOINT AND SEVERAL REPRESTATIONS AND WARRANTIES
OF THE VENDORS WITH RESPECT TO THE OPERATING ENTITIES.............................................8
3.1 Corporate Status and Authority....................................................................8
3.2 Share Capital and Partnership Units:..............................................................9
3.3 Assets...........................................................................................10
3.4 Trust Accounts...................................................................................11
3.5 Business Operations..............................................................................12
3.6 Financial........................................................................................12
3.7 Banking..........................................................................................15
3.8 Insurance........................................................................................15
3.9 Tax Matters......................................................................................16
3.10 Employee Matters.................................................................................17
3.11 Litigation and Claims............................................................................18
3.12 Contracts and Commitments........................................................................18
3.13 Contingency and Environmental Liabilities........................................................19
3.14 Effect of this Transaction.......................................................................20
4 REPRESENTATIONS AND WARRANTIES OF THE TRUST...............................................................21
4.1 Individual Authority.............................................................................21
4.2 Receipt of the Securities........................................................................21
4.3 Solicitation.....................................................................................21
4.4 Accredited Investor..............................................................................21
4.5 Residency........................................................................................21
4.6 Joint and Several................................................................................21
5 COVENANTS OF THE VENDORS..................................................................................22
5.1 Access to the....................................................................................22
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5.2 Delivery of Books and Records....................................................................23
5.3 Conduct Prior to Closing.........................................................................23
5.4 Delivery of Documents............................................................................23
5.5 Minority Shares:.................................................................................24
5.6 Joint and Several................................................................................24
5.7 Vendors' Taxes...................................................................................24
6 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER................................................24
6.1 Corporate Status and Authority...................................................................24
6.2 Authorizations...................................................................................24
6.3 Regulatory Approval..............................................................................24
6.4 Share Transfer Restrictions......................................................................25
6.5 Issued Share Capital.............................................................................25
6.6 Fully Paid Shares................................................................................25
6.7 General Security Agreement.......................................................................25
6.8 Purchaser's Liabilities..........................................................................25
7 CONDITIONS OF CLOSING.....................................................................................25
7.1 Conditions of Closing in Favour of the Purchaser.................................................25
7.2 Conditions of Closing in Favour of the Vendors...................................................27
7.3 Parties' Efforts.................................................................................38
8 CLOSING ARRANGEMENTS......................................................................................28
8.1 Place of Closing.................................................................................28
8.2 Transfer.........................................................................................28
8.3 Further Assurances...............................................................................29
9 LIABILITY FOR CLAIMS......................................................................................29
9.1 Claims...........................................................................................29
9.2 Subrogation......................................................................................30
9.3 Insurance........................................................................................30
10 INDEMNITY.................................................................................................30
10.1 Known Actions and Proceedings....................................................................30
10.2 Right to Set-Off.................................................................................31
11 GENERAL MATTERS...........................................................................................31
11.1 Governing Law and Arbitration....................................................................31
11.2 Entire Agreement.................................................................................31
11.3 Assignment.......................................................................................31
11.4 Public Notices...................................................................................31
11.5 Confidential Information.........................................................................32
11.6 Non-Waiver.......................................................................................32
11.7 Indemnification in Respect of Brokers or Agents..................................................32
11.8 Expenses.........................................................................................32
11.9 Notices..........................................................................................32
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11.10 Time of the Essence..............................................................................33
11.11 Further Assurances...............................................................................33
11.12 Severability.....................................................................................33
11.13 Counterparts.....................................................................................34
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is dated for reference the 26th day of March, 1999 between Lari
Acquisition Company, Inc., a company incorporated under the laws of the State of
California (the "Purchaser"), the Xxxxxxx Xxxxxxxxx Inter Vivos Trust (the
"Trust"), Xxxxxxx Xxxxxxxxx, a businessman ("Xxxxxxxxx"), Neptune Management
Corp., a company incorporated under the laws of the State of California
("Neptune"), Heritage Alternatives, Inc., a company incorporated under the laws
of the State of California ("Heritage"), Neptune Pre-Need Plan, Inc., a company
incorporated under the laws of the State of California ("Neptune Pre-Need") (the
Trust, Weintraub, Neptune, Heritage and Neptune Pre-Need are collectively
referred to as the "Vendors") and Lari Corp., a company incorporated under the
laws of the State of Florida ("Lari").
WHEREAS:
A. Neptune is the general partner and a 50% owner of each of Neptune-Los
Angeles, Ltd., a limited partnership under the laws of the State of
California ("Neptune LA"), Neptune-Santa Xxxxxxx, Ltd., a limited
partnership under the laws of the State of California ("Neptune SB"),
Neptune-Miami, Ltd., a limited partnership under the laws of the State of
Florida ("Neptune MI"), Neptune-St. Petersburg, Ltd., a limited partnership
under the laws of the State of Califomia ("Neptune SP"), Neptune-Ft.
Lauderdale, Ltd., a limited partnership under the laws of the State of
Florida ("Neptune FT"), Neptune-Nassau, Ltd., a limited partnership under
the laws of the State of California ("Neptune NA"), and
Neptune-Westchester, Ltd., a limited partnership under the laws of the
State of California ("Neptune WT").
B. Heritage is the general partner and a 50% owner of Heritage Alternatives,
L.P., a limited partnership under the laws of the State of California
("Heritage ALT").
C. The Vendors operate and carry on a funeral, burial and cremation business
known as "Neptune Society" operating under Neptune, Heritage, Neptune
Pre-Need (collectively, the "Companies"), Neptune LA, Neptune SB, Neptune
MI, Neptune SP, Neptune FT, Neptune NA, Neptune WT and Heritage ALT
(collectively, the "Partnerships").
D. The Trust is the legal and beneficial owner of the following:
(i) 82% of the issued and outstanding shares of Neptune;
(ii) 95% of the issued and outstanding shares of Heritage; and
(iii) all of the issued and outstanding shares of Neptune Pre-Need.
E. The Trust has agreed to sell all of its issued and outstanding shares in
the Companies and the Purchaser has agreed to purchase all of its issued
and outstanding shares in the Companies.
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NOW THEREFORE, in consideration of $10.00 payable by the Purchaser to the
Vendors, the mutual covenants and agreements contained in this Agreement and
other good and valuable consideration, the receipt and sufficiency of which is
acknowledged, the parties agree as follows:
1 INTERPRETATION
1.1 Definitions: In this Agreement and in any schedules and amendments, the
following terms shall have the meanings set forth below unless the context
otherwise requires:
(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 Companies' and/or the Partnerships' 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 Specified
Assets, the Other Operating and Fixed Assets and all other fixed
assets and equipment used in connection with the Business, all
licenses and other rights 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 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
Vendors and the Partnerships in connection with the Business;
(d) "Business" means the business of providing funeral, burial and
cremation services including the provision and sale of pre-need
cremation services carried on by the Vendors directly and indirectly
through the Partnerships and any other business now carried on by the
Vendors and the Partnerships;
(e) "Business Day" means any day except Saturday, Sunday or any statutory
holiday in the State of California;
(f) "Charter Documents" means articles, articles of incorporation,
memorandum, memorandum of association, articles of association,
by-laws, limited partnership agreements or any similar constating
document of a corporate or limited partnership entity;
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(g) "Claim" means any claim by the Purchaser against the Vendors, or the
Vendors against the Purchaser, for any breach of representation,
warranty, covenant or other agreement or obligation of the Vendors or
Purchaser pursuant to this Agreement;
(h) "Closing" means the completion of the sale and purchase of the
Weiritraub Shares as provided in this Agreement;
(i) "Closing Date" means April 9, 1999 or such earlier or later date as
the parties may agree to in writing;
(j) "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 whether
fixed or floating 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);
(k) "Effective Date" means March 31, 1999;
(1) "Escrow Agent" means City National Bank at 000 Xxxxx Xxxxxxx Xxxxx,
Xxxxx 000, Xxxxxxx Xxxxx, Xxxxxxxxxx, XXX 00000;
(m) "Excluded Assets" means the accounts receivable balance for the
(at-need) services in the accounts of the Partnerships, the cash and
cash equivalents at the Effective Date and the balance of cash
remaining from the collection of accounts receivable at the Effective
Date from the sale of pre-need services prior to the Effective Date up
to and including the close of business on April 23, 1999 less the
amounts due and owing for merchandise, commissions, taxes of all kinds
and payments due to the Trust Accounts in accordance with the Pre-Need
Contracts sold to the Effective Date;
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(n) "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 Operating Entities up to the Effective Date and partnership draws
accrued to the Effective Date for the benefit of the limited partners
of Neptune FT, Neptune NA, Neptune Ml, Neptune SP and Neptune WT;
(o) "Insurance Policies" means those insurance policies described in
Schedule J;
(p) "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 as described in Schedule E;
(q) "Land and Buildings" means those interests in real property described
in Schedule D;
(r) "Leased Assets" means those assets included in the Assets which are
leased by any of the Operating Entities as lessee and as are described
in Schedule B;
(s) "Leases" means the leases under which the Leased Assets are leased by
any of the Operating Entities;
(t) "Material Contracts" means those contracts described in Subsection
3.12;
(u) "Operating Entities" means each of the Companies and the Partnerships;
(v) "Other Operating and Fixed Assets" means those operating and fixed
assets described in Schedule F;
(w) "Person" means an individual, a corporation, a partnership, a trust,
an unincorporated organization or a government agency or
instrumentality;
(x) "Place of Closing" means the offices of DuMoulin & Xxxxxxxxx at Suite
1800, 1095 West Xxxxxx Street, Vancouver, B.C.;
(y) "Pre-Need Contracts" means those pre-need contracts for cremation
services sold prior to the death of the beneficiary by or for the
Operating Entities, their predecessors and assignors for the provision
of funeral cremation services as described in Schedule N;
(z) "Purchase Price" has the meaning ascribed thereto in Subsection 2.1 of
this Agreement;
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(aa) "Securities" means the Note, the Lari Shares and the Xxxxxxxxx Note as
described in Subsection 2.2 of this Agreement;
(ab) "Specified Assets" means those specified assets described in Schedule
C;
(ac) "Time of Closing" means the time at which the Closing takes place,
which shall be 10:00 am, at the Place of Closing on the Closing Date
or such other time as the parties may agree upon;
(ad) "Trade Name" means "Neptune Society";
(ae) For further clarification, "Trust" means the trust created and defined
by the Xxxxxxx Xxxxxxxxx Inter Vivos Trust Agreement, dated February
26, 1996;
(af) "Trustee" means Xxxxxxx Xxxxxxxxx as trustee of the Trust;
(ag) "Trust Accounts" means all cash, funds and accounts and investments,
as described in Schedule G, which arise from the sale of the Pre-Need
Contracts which are administered in trust by the Operating Entities;
(ah) "Unaudited Financial Statements" means the unaudited financial
statements of each of the Companies and the Partnerships (except for
Heritage), for the 12 month period ending December 31, 1998, a copy of
each of which is incorporated as Schedule H; and
(ai) "Xxxxxxxxx Shares" means the shares in the capital of Neptune,
Heritage and Neptune Pre-Need beneficially owned by Xxxxxxxxx, either
directly or indirectly, at the Time of Closing being that number and
class of shares set out in Schedule A to this Agreement.
1.2 Schedules: The following are the schedules delivered concurrently with, and
incorporated in, this Agreement:
Schedule Description Reference
-------- ----------- ---------
A Authorized and Issued Share Capital of Each of the Companies 3.2(a)(b)
and Issued Partnership Units of Each of the Partnerships
B List of Leased Assets 3.3(b)
C List of Specified Assets 3.3(d)
D List of Land and Buildings 3.3(h)
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Schedule Description Reference
-------- ----------- ---------
E List of Intangible Assets 3.3(i)
F List of Other Operating and Fixed Assets 3.3(j)
G List of Trust Accounts 3.4(a)
H Unaudited Financial Statements 3.6(a)
I List of Bank Accounts 3.7(b)
J List of Insurance Policies 3.8(a)(b)(c)
K List of Employees and Employee Benefit Plans 3.10(a)(c)
L List of Adverse Proceedings 3.8(c) and
3.11(a)
M List of Material Contracts 3.12(a)
N List of Pre Need Contracts 3.12(b)
O Required Consents 3.14(a) and
8.1(a)
P Certificate of Accredited Investor 8.1(d)
Q Minority Shareholder Agreements 8.1(k)
R Interest Purchase Agreements 8.1(l)
S Xxxxxxxxx Consulting Agreement 8.1(n)
T Xxxxxx Employment Agreement 8.1(o)
U Form of Note 2.4(c)
V Form of Xxxxxxxxx Note 2.4(d)
W Limited Partner Units Not Tendered 6.1
1.3 Division, Headings, Index: The division of this Agreement into sections,
subsections and paragraphs and the insertion of headings and any index
provided are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
1.4 Gender and Number: Unless the context otherwise requires, words importing
the singular include the plural and vice versa and words importing gender
include both genders.
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1.5 Currency: All dollar amounts referred to in this Agreement are stated in
United States of America currency, unless otherwise expressly stated.
2 PURCHASE AND PURCHASE PRICE
2.1 Purchase: On the Closing Date and subject to the terms and conditions
contained in this Agreement, the Trust shall sell, assign and transfer the
Xxxxxxxxx Shares and Lari through the Purchaser, shall purchase the
Xxxxxxxxx Shares for the aggregate price of $14,698,017.00 (the "Purchase
Price").
2.2 Payment of Purchase Price: At the Time of Closing, the Purchase Price will
be payable by the Purchaser to the Trust as follows:
(a) the sum of $506,583.00 by way of a solicitor's cheque payable to the
Escrow Agent;
(b) 513,273 shares of common stock of Lari (the "Lari Shares") issued by
Lari to the Trust and delivered to the Escrow Agent in trust for the
benefit of the Trust, provided that the closing price of such shares
on the NASD OTC on the trading day that is two Business Days prior to
the Closing Date (the "Price Date") is equal to or greater than $5.00
per share (the "Deemed Price"). In the event that the Deemed Price is
less that $5.00 per share on the Price Date, the Purchaser will
deliver on Closing the Lari Shares plus that number of shares in the
common trading stock of Lari which will increase the aggregate deemed
value of the Lari Shares to $2,566,368.00;
(c) the sum of $9,625,069.00 by way of an undivided interest to the Trust
in a promissory note in the form attached as Schedule U to this
Agreement (the "Note"), delivered to the Escrow Agent in trust for the
benefit of the Trust; and
(d) the sum of $2,000,000.00 by way of a promissory note payable by the
Purchaser to the Trust in the form attached as Schedule V to this
Agreement (the "Xxxxxxxxx Note");
which shall be good and sufficient payment to the Trust to the extent of
such amounts.
2.3 Effective Date: Notwithstanding the Closing Date, all transactions
contemplated in this Agreement will be effective on the Effective Date and
all income from the Business will accrue to the benefit of the Purchaser
from the Effective Date.
2.4 Excluded Assets and Excluded Liabilities: From and after the Effective
Date, the Purchaser will have operational control and responsibility of the
management of the Excluded Assets and Excluded Liabilities.
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2.5 Interim Payments: The Purchaser will cause the Operating Entities to pay to
the Trust on each of May 17, 1999 and June 15, 1999, an amount of
$200,000.00 (or such lesser amount in the event that there is insufficient
working capital to operate the Business in the ordinary course) subject to
withholding or to other statutory deductions, if any (the "Interim
Payments").
2.6 Reconciliation: On or before June 30, 1999 (the "Reconciliation Date"), the
Purchaser will provide to Xxxxxxxxx a reconciliation of the Excluded Assets
and Excluded Liabilities, being that amount of cash, collections and
amounts paid, respectively, from the Effective Date less the Interim
Payments.
2.7 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 plus any Interim
Payments, will be paid by the Purchaser to the Trust on or before July 15,
1999. 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 plus any Interim Payments will be paid by
Xxxxxxxxx to the Purchaser on or before July 31, 1999.
2.8 Right of Set-Off: In the event that Xxxxxxxxx owes the Purchaser any
amounts in connection with the reconciliation set forth in Section 2, the
Purchaser and Lari have the right to set-off any such amount against any
money due and owing to Xxxxxxxxx or to the Trust from the Purchaser or Lari
under this or any other Agreement.
3 JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES
OF THE VENDORS WITH RESPECT TO THE OPERATING ENTITIES
The Vendors 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 Xxxxxxxxx Shares:
3.1 Corporate Status and Authority:
(a) Corporate Status: Each of the Operating Entities has been duly
organized and is validly subsisting under the laws of the State of
California or the State of Florida as the case may be and have all
requisite power and capacity to own or lease the Assets and to carry
on the Business. The Operating Entities are duly qualified and
licensed to carry on their business in all jurisdictions in which the
nature of their business or the properties and assets owned or leased
by them 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;
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(b) Amendments to Charter: The Operating Entities have not made any
amendments to their Charter Documents other than those expressly
reflected in their corporate records; and
(c) Corporate Records: The corporate and/or limited partnership records
and minute books of the Operating Entities accurately reflect all
material proceedings of its directors and shareholders and partnership
proceedings, as the case may be, and include complete and accurate
minutes of all meetings of its directors, shareholders or partners, as
the case may be, copies of all resolutions passed, up-to-date and
accurate shareholder, director and partner registers, transfer
registers and any other corporate and limited partnership registers
required to be maintained by the Operating Entities. All meetings of
shareholders, directors and partners, as the case may be, 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 the Operating Entities as the case may be.
3.2 Share Capital and Partnership Units:
(a) Share Capital: The authorized and issued share capital of each of the
Companies is accurately described in Schedule A to this Agreement. The
shares shown as constituting the issued share capital of each of the
Companies have been duly issued and are outstanding and are fully paid
and non-assessable;
(b) Partnership Units: The total number of partnership units outstanding
in the capital stock of each of the Partnerships is accurately
described in Schedule A to this Agreement; and
(c) 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.
3.3 Assets:
(a) Ownership: Except for the Leased Assets, the Operating Entities have
good and marketable title to all of the Assets free and clear of all
Encumbrances;
(b) Leased Assets: The Leased Assets are held under valid and subsisting
Leases, each of which is listed in Schedule B. Each Lease is in full
force and effect and without amendment thereto, and the Leases and the
Leased Assets are free and
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clear of all Encumbrances. Except for the Leases, there are no leases,
agreements to lease, tenancy arrangements or licences to which the
Operating Entities are a party which have a capitalized value in
excess of $1,000. The Operating Entities have not previously assigned
the Leases nor sublet their interest in any of the Leased Assets under
the Leases. The Operating Entities have not released any of the other
parties to such leases from the performance of any of their
obligations thereunder. The Operating Entities are not in breach of
any of the terms of any Leases, and the Vendors are 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 the Vendors, 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 are no prepaid rents,
rent-free periods or outstanding lessor's contributions or obligations
for lessee incentives under any of the leases which consist of
subleases under which the Operating Entities are a sublessor. The
Vendors 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;
(c) Condition of Assets: To the best of the knowledge of the Vendors, all
fixed assets and equipment owned or used by the Operating Entities in
the conduct of the Business all, of which is listed in either
Schedules C or F, 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;
(d) Condition of Specified Assets: The Specified Assets 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 the Operating Entities 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 the Operating Entities carry on the
Business is zoned to permit the particular activity carried out on
such property;
(g) Rents and Taxes: 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 the Operating Entities have been paid in fill unless the
same are not due and payable;
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(h) Land and Buildings: The list the Land and Buildings set out in
Schedule D accurately reflects all interests of the Operating Entities
in real property used in the conduct of the Business. The Vendors
represent that all agreements with respect to the Operating Entities'
interests in the Land and Buildings are in force and effect and
without amendment thereto and the interests in the Land and Buildings
are free and clear of all Encumbrances. To the best of the knowledge
of the Vendors, neither asbestos nor urea formaldehyde foam is now
used in any of the buildings listed in Schedule D;
(i) Intangible Assets: The list the Intangible Assets set out in Schedule
E 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 the Operating Entities on the date hereof free of
Encumbrances; and
(j) Other Operating and Fixed Assets: The list the Other Operating and
Fixed Assets set out in Schedule F accurately reflects all operating
and fixed assets owned or held by the Operating Entities having an
original capital cost of $500 or more which are not disclosed
elsewhere in this Subsection 3.3. Except for sales and purchases in
the ordinary course of business since January 12, 1999, the Operating
Entities own such assets on the date hereof free of Encumbrances.
3.4 Trust Accounts:
(a) The Trust Accounts described in Schedule G accurately reflects all
funds received by the Operating Entities in connection with the sale
of pre-need funeral arrangements 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 G;
(b) All investments of the Trust Accounts are in accordance with all
applicable state and federal laws and regulations pertaining to the
investment and administration of such Trust Accounts; and
(c) The Operating Entities have delivered to the customer, or at the
election of the customer stored for the benefit of the customer, all
pre-need merchandise sold by the Operating Entities to the customer
under the Pre-Need Contracts. Any such storage of merchandise is in an
appropriate storage facility in accordance with the applicable laws
and regulations regarding such storage.
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3.5 Business Operations:
(a) Operating Authorities: Except as set forth in Subsection 3.11, the
Operating Entities have acquired, and currently hold, 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: The Operating Entities are operating and using
the Assets, and are conducting the Business, in compliance with all
applicable laws and regulations of each jurisdiction in which the
Assets are located or in which they conduct the Business; and
(c) Jurisdictions in which Business is Carried On: The Operating Entities
do not carry on the Business or own or lease any assets in any
jurisdiction other than in the State of California, the State of
Florida and the State of New York which would require registration or
licensing in such jurisdiction.
3.6 Financial:
(a) Unaudited Financial Statements: The Unaudited Financial Statements
present fairly in all material respects the financial position of the
Operating Entities as at the respective dates of the said statements
and the results of their operations for the 12 month period then ended
in accordance with accounting principles used by the Operating
Entities applied on a basis consistent annually except as noted in the
Xxxxxx-Xxxxxx & Company reconciliations as reviewed by Deloitte &
Touche.
(b) No Material Change: Since January 12, 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 the
Vendors are 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 January 12, 1999 and up to the date hereof the Operating
Entities have not:
(i) issued any shares, units or other securities;
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(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 consistent 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
partners in their capacity as such or redeemed or purchased
or otherwise acquired any of its capital stock or agreed to
do so except for an accrual included as an Excluded
Liability at March 31, 1999 in the aggregate amount of
$24,993.00 to be paid as a partner draw to the limited
partners of Neptune FT, Neptune NA, Neptune MI, Neptune SP
and Neptune WT as at March 30, 1999;
(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;
(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
Operating Entities and all material financial transactions of the
Operating Entities have been accurately recorded in the Books and
Records;
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(d) Liabilities: The Operating Entities do not have any debts or
liabilities (whether accrued, contingent, absolute or otherwise and
whether or not determined or determinable), including liabilities
which arise hereafter based on events which have occurred up to the
date hereof, and including liabilities relating to income and other
taxes except:
(i) liabilities disclosed on, reflected in or provided for in
the Unaudited Financial Statements;
(ii) other liabilities disclosed in this Agreement; or
(iii) liabilities incurred in the ordinary course of its
businesses since January 12, 1999;
(e) Current Liabilities: Notwithstanding paragraph 3.6(d) above, the
Operating Entities do not have accounts or trade payables or any other
current liabilities, including any sales tax or commissions payable,
which exceed $300,000.00 at the Effective Date.
(f) Receivables: All accounts receivable recorded on the books of the
Operating Entities 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. The reserves taken for doubtful or bad accounts as shown
on the Unaudited Financial Statements have been determined on a basis
consistent with past practice of the Operating Entities and consistent
with the accounting procedures used by the Operating Entities in
previous fiscal periods. There is no circumstance of which any of the
Vendors is aware which would indicate that such reserve is not
adequate;
(g) Accountants: The Operating Entities have not had any material
disagreement or dispute with their auditors or accountants over the
accounting or tax treatment of their financial information during this
period or for the period ended January 12, 1999; and
(h) Shareholder and Related Party Loans: At the Time of Closing, the
Operating Entities will not be indebted, directly or indirectly, to
any of the Vendors, any present or former director, officer,
shareholder, partner or employee of the Operating Entities or any
person not dealing at arms length with any of the foregoing and none
of such persons is indebted to the Operating Entities except for
matters arising out of normal relations between employee and employer.
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3.7 Banking:
(a) Loans and Credit Facilities: Except for the promissory note issued by
Neptune SP on March 19, 1996, the Operating Entities have not entered
into, or otherwise arranged for, any loans, operating lines of credit
or other credit facilities (including interest rate or currency swaps,
hedging contracts, forward loan or rate agreements or other financial
instruments), and do not have outstanding any bonds, debentures,
mortgages, notes or other similar indebtedness and the Operating
Entities are not obligated to create or issue any bonds, debentures,
mortgages, notes or other similar indebtedness;
(b) Bank Facilities: Schedule I contains a complete and accurate listing
showing the name of each bank, trust company or similar financial
institution in which the Operating Entities have 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) Cash Balance: The Operating Entities have cash and cash equivalents,
not including the Trust Accounts, which is no less than $900,000.00;
and
(d) Guarantees/Indemnities: The Operating Entities have not guaranteed or
indemnified, or agreed to guarantee or indemnify, or agreed to any
other like commitment, in respect of any debt, liability or other
obligation of any person.
3.8 Insurance:
(a) List of Policies: Schedule J contains a complete and accurate listing
of all insurance policies of the Operating Entities relating to the
Assets and the Business including all property damage, general
liability, motor vehicle, director and officer liability and life
policies;
(b) Good Standing: Each of the insurance policies listed in Schedule J is
in good standing, all premiums required to be paid by the Operating
Entities have been properly paid, there have been no
misrepresentations or failures to disclose material facts, and except
as provided for by CNA, there has been no refusal to renew any of the
policies and none of the Vendors have any knowledge of any facts which
might render any of the policies invalid, unenforceable or
non-renewable; and
(c) Outstanding Claims: Except as disclosed in Schedule L no threatened or
actual claims against any of the policies described in Schedule J have
been made in the last 3 years. The Operating Entities have given
notice of or have otherwise presented in a timely fashion every claim
under each such insurance policy.
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3.9 Tax Matters:
(a) Filings: Each of the Operating Entities have 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 designation, including
accompanying schedules and statements is true, correct and complete in
all material respects;
(b) Payment: Each of the Operating Entities have 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 any of the
Operating Entities, nor with respect to the issuance of any assessment
or reassessment;
(d) Adverse Proceedings: To the best of the knowledge of the Vendors,
there are no actions, suits, proceedings, investigations or claims by
any governmental authority pending or threatened against any of the
Operating Entities relating to taxes, governmental charges or
assessments, except as described in Schedule L. 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: Each of the Operating Entities have 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: None of the Operating Entities have acquired property
from, or disposed of property to, any person, firm or corporation with
whom any of the Operating Entities does not deal at arm's length since
January 12, 1999; and
(g) Other Jurisdictions: None of the Operating Entities have filed or are
currently required to file any returns, elections or designations with
any taxation authority located in any jurisdiction other than the
State of California, the State of Florida and the State of New York.
- 17 -
3.10 Employee Matters:
(a) List of Employees: The list of employees set out in Schedule K is a
comprehensive list of the employees and commissioned sales people of
the Operating Entities as at March 31, 1999 and includes an accurate
description of, the compensation, and/or commission structure,
position, job classification, date of hire and age. There have been no
material variations to this list since March 31, 1999 except such
changes as occur in the ordinary course of business;
(b) Employment Contracts: Except for the Independent Contractor Agreements
and Amendments thereto, as set out in Schedule M and except for the
employment contract with Xxxxx Xxxxxx to be entered into as
contemplated in paragraph 7.1(n), the Operating Entities are 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 Operating
Entities are employed on other than an indefinite hiring basis
terminable on reasonable notice according to law without further
liability to the Operating Entities;
(c) Benefit Plans: Schedule K contains a complete and accurate listing of
all benefit, bonus, profit-sharing, retirement income, termination or
severance, dental, medical, disability, health or other plan, program,
policy or other arrangement in place for the benefit or advantage of
the salaried employees of the Operating Entities as at March 22, 1999
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 the Operating Entities 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: The Operating Entities do not have nor have they ever
had a pension plan for any of its directors, officers, employees or
affiliates thereof; and
(e) Employer Associations: None of the Operating Entities is a member of
any employer, management, industry or other trade or business
association under which any of the Operating Entities is obligated to
contribute to any employee or contractor employee benefit fund,
including any pension plans, health benefit plans or other similar
employee entitlements.
3.11 Litigation and Claims:
(a) Adverse Proceedings: The list of outstanding claims contained in
Schedule L is a complete and accurate listing of all outstanding
actions, claims, demands, lawsuits, prosecutions or governmental
investigations by or against any of the
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Operating Entities, and there is no other adverse proceeding which is
to the knowledge of any of the Vendors pending or threatened by,
against, or relating to any of the Operating Entities, the Assets, or
the Business. Except as set out in Schedule L, the Vendors 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 Operating Entities;
(b) Compliance Directives: Except as set out in Schedule L, there are no
outstanding compliance directives or work orders of which the Vendors
are 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 do any of the Vendors have notice that there
are any matters under formal consideration by any such authorities
relating to any of the Operating Entities;
(c) Notice of Default/Claims: Except as expressly disclosed in this
Agreement, none of the Operating Entities have 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 the Operating Entities 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 any of the
Vendors has been threatened against any of the Operating Entities; and
(e) Trademark and Patent Infringement: Except as set out in Schedule L,
the conduct of the Business by any of the Operating Entities does not
infringe upon any patent, trademark or other proprietary right,
domestic or foreign, of any person in respect of which there is any
significant likelihood that it would have a material adverse effect on
the Assets or the Business.
3.12 Contracts and Commitments:
(a) Material Contracts: Other than the Pre-Need Contracts and the Leases,
Schedule M contains a complete and accurate listing of all material
contracts, agreements, leases, commitments, instruments or other
dealings to which each of the Operating Entities is a party, by which
either any of the Operating Entities is bound or under which any of
the Operating Entities is entitled to any benefits. For the purposes
of this Agreement a contract shall be material if:
- 19 -
(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 N contains a complete and accurate
listing of all active pre-need contracts sold by or for the Operating
Entities, their predecessors and assignors for the provision of
funeral cremation services as of December 31, 1998;
(c) Good Standing: Except as disclosed herein, the Operating Entities are
not in breach or default of any of the terms of the Material Contracts
or Pre-Need Contracts, and none of the Vendors are 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 the Vendors 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 3.12(c) would have a
material adverse effect on the Assets or the Business; and
(d) Shareholder Agreements: At the Time of Closing, except for an
agreement dated February 11, 1980 between Xxxxxxx Xxxxxxx and
Neptune's predecessor-in-interest, there will be no shareholder
agreements, unanimous shareholder agreements, voting trust, pooling or
any other similar agreement among or between any of the shareholders
or partners of the Operating Entities.
3.13 Contingency and Environmental Liabilities:
(a) Compliance: The Operating Entities are in compliance in all material
respects with all federal, state and municipal environmental laws and
regulations (the "Environmental Laws"). The existing activities of the
Operating Entities and the crematories and, to the best knowledge of
the Vendors, its prior uses and activities and the uses and activities
of other property now or previously owned or operated by the Operating
Entities, comply and at all times have complied with all Environmental
Laws, with the exception of citations for excessive emissions at
Heritage which citations have all been corrected (the "Citations").
The Operating Entities have filed all environmental reports and
notifications required to be filed under applicable laws and
regulations;
- 20 -
(b) Notice of Non-Compliance: None of the Operating Entities have nor, to
the best knowledge of the Operating Entities, any prior owner or
occupant of the property now leased or operated by the Vendors, 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, except for the Citations. The Vendors
and the Operating Entities 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, except for the Citations;
(c) Hazardous Material: None of the Operating Entities nor, to the best
knowledge of the Vendors, 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 the Operating
Entities, 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 Operating Entities;
(d) Cremation Residue: Except as set forth in Schedule L, none of the
Operating Entities have 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;
(e) No Expenditures: 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
Operating Entities.
3.14 Effect of this Transaction:
(a) No Adverse Implications: Except as disclosed in Schedule O 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 any of the Operating
Entities 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 the
Vendors or relating to the disposition of any of the
Xxxxxxxxx Shares;
(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
- 21 -
general security interest in a security agreement granted,
issued or assumed by the Operating Entities where any of
such events could have a material adverse effect on the
Assets or the Business;
(iv) violate any provision of any indenture, mortgage, lien,
lease, agreement, instrument, order, arbitration award,
judgment or decree to which any of the Operating Entities is
a party or by which any of the Operating Entities 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; nor
(v) be contrary to the provisions of the Charter Documents of
the Operating Entities;
(b) Notice Procedure: The Vendors 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 3.14, would constitute a breach of any of the
representations and warranties set out in this Section 3 or Section 4.
Such notice shall state that it is being given pursuant to this
Subsection 3.14 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; and
(ii) at any time prior to the Closing Date as specified in
Section 1 or as postponed as set out above, either 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; or, terminate this
agreement without further obligation on the part of any
party to this Agreement;
(c) Joint and Several: The obligations of the Vendors shall be joint and
several with respect to all the representations and warranties set out
in this Section 3.
4 REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trustee represents and warrants to the Purchaser and to Lari as follows with
respect to the Trust and not with respect to any other of the Vendors. The
Trustee acknowledges that the Purchaser and Lari are relying upon such
representations and warranties in connection with the issuance of the
Securities:
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4.1 Individual Authority: The Trust has have the legal capacity, power and
authority to hold the Securities to be owned by it at the Time of Closing,
to enter into this Agreement and to transfer the legal and beneficial title
and ownership of the Xxxxxxxxx Shares to the Purchaser free of
Encumbrances;
4.2 Receipt of the Securities: The Trust is accepting the Securities as the
Purchase Price as set out in Section 2 only for investment purposes on its
own account and not for the purpose of selling the Securities in connection
with any distribution of the Purchaser securities. The Trustee acknowledges
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 HAVE RECEIVED AN OPINION OF COUNSEL OF
RECOGNIZED STANDING, IN FORM AND SUBSTANCE SATISFACTORY TO IT, AS TO
THE AVAILABILITY OF AN EXEMPTION."
4.3 Solicitation: The Trustee acknowledges that the Securities to be received
by the Trust at Closing were not advertised in printed media of general and
regular paid circulation, radio or television.
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4.4 Accredited Investor: The Trust is an "accredited investor" 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.).
4.5 No Trades: The Trustee and the Trust have not traded in the common stock of
Lari and will refrain from trading in or selling short any shares in the
common stock of Lari or entering into any derivative transactions of same
prior to the Closing Date.
4.6 Residency: The Trust is resident at 000 Xxxxx Xxx, Xxxxxxx Xxxx,
Xxxxxxxxxx..
4.7 Joint and Several: The obligations of the Trustee and the Trust shall be
joint and several with respect to all the representations and warranties
set out in this Section 4.
5 COVENANTS OF THE VENDORS
The Vendors covenant and agree with the Purchaser as follows and acknowledge
that the Purchaser is relying upon such covenants and agreements in connection
with the purchase of the Xxxxxxxxx Shares:
5.1 Access to the Operating Entities: The Vendors 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 the Operating Entities. The Vendors 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 the Operating Entities. At the request of the Purchaser, the
Vendors shall execute or cause to be executed such consents, authorizations
and directions as may be necessary to permit any inspection of any property
of the Operating Entities 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 the Operating Entities maintained by governmental or
other public authorities. At the Purchaser's request, the Vendors shall
co-operate with the Purchaser in arranging any such meetings as the
Purchaser should reasonably request with:
(a) all employees of the Operating Entities;
(b) customers, suppliers, distributors or others who have or have had a
business relationship with the Operating Entities; and
- 24 -
(c) auditors, solicitors or any other persons engaged or previously
engaged to provide services to the Operating Entities who have
knowledge of matters relating to the Operating Entities.
In particular, without limitation, the Vendors shall permit the Purchasers
representatives or consultants to conduct such physical review of the
inventory of the Operating Entities 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 Vendors
hereunder, which shall continue in full force and effect. In exercising its
rights hereunder the Purchaser shall use its reasonable commercial efforts
to avoid interfering with the Business to the extent reasonably practical
consistent with the need to complete its review of the Business and the
Assets.
5.2 Delivery of Books and Records: At the Time of Closing there shall be
delivered to the Purchaser by the Vendors all of the Books and Records. The
Purchaser agrees that it will preserve the Books and Records so delivered
to it for so long as such Books and Records may be required to enable the
Vendors to defend any claim against the Operating Entities which could
result in a Claim hereunder and at least until December 31, 2005. The
Purchaser will permit the Vendors or their authorized representatives
reasonable access thereto in connection with the affairs of the Vendors.
The Purchaser shall not be responsible or liable to the Vendors for or as a
result of any accidental loss or destruction of or damage to any such Books
or Records, unless the Purchaser's negligence caused the loss, destruction
or damage.
5.3 Conduct Prior to Closing: Without in any way limiting any other obligations
of the Vendors hereunder, during the period from the date hereof to the
Time of Closing:
(a) Conduct Business in the Ordinary Course: The Vendors shall cause the
Operating Entities to conduct its business in its ordinary and normal
course and the Operating Entities shall not, without the prior written
consent of the Purchaser (such consent not to be unreasonably
withheld), enter into any transaction or take any action that, if
effected after January 12, 1999 and before the date of this Agreement,
would constitute a breach of any representation, warranty, covenant or
other obligation of the Vendors contained herein. In particular the
Vendors shall cause the Operating Entities 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);
(b) Continue Insurance: The Vendors shall cause the Operating Entities 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
- 25 -
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 Vendors shall use reasonable commercial efforts
to preserve, and cause the Operating Entities to preserve intact the
Assets, the Business and to promote and preserve for the Purchaser the
goodwill of suppliers, customers and others having business relations
with the Operating Entities.
5.4 Delivery of Documents: The Trustee shall deliver to the Purchaser all
necessary transfers, assignments and other documentation reasonably
required to transfer to the Purchaser the Xxxxxxxxx Shares owned by the
Trust with a good and marketable title, free of Encumbrances without any
right of set-off;
5.5 Minority Shares: Notwithstanding paragraph 7.1(k), Xxxxxxxxx will use his
reasonable, good faith efforts to deliver to the Purchaser, on or before
July 31, 2000, an agreement of the minority shareholders of each of Neptune
and Heritage in the form attached to this Agreement as Schedule Q (the
"Minority Shareholder Agreements").
5.6 Joint and Several: The covenants and agreements of the Vendors contained in
Section 5 shall be joint and several.
5.7 Vendors' Taxes: The Vendors are 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. Neptune and Heritage are
responsible for any federal, state or other taxes which may arise in
connection with the purchase by Neptune and Heritage of the limited
partnership interests.
6 COVENANTS OF XXXXXXXXX AND THE TRUST
Xxxxxxxxx and the Trust covenant and agree with the Purchaser as follows and
acknowledge that the Purchaser is relying upon such covenants and agreement in
connection with the purchaser of the Xxxxxxxxx Shares:
6.1 Limited Partner Units Not Tendered: Schedule W accurately sets out the
names and number of units in each Partnership and consideration to be paid
to each of the limited partners so listed who have indicated that they will
not or may not be tendering their Partnership units for sale at the Closing
Date (the "Dissident Partners') to the Purchaser, Lari, Neptune or
Heritage, as the case may be (the "Tenderees").
6.2 Reasonable Effort to Cause Tenders of Partnership Units: Xxxxxxxxx will use
reasonable effort to have the Dissident Partners tender their respective
Partnership units for sale on or before the Closing Date to the Tenderees.
All costs, expenses or any other payments incurred by Xxxxxxxxx in
connection with the above (except the sales price) will be the
- 26 -
responsibility of Xxxxxxxxx and will not be paid or incurred by any of the
Operating Entities, Purchaser or Lari.
6.3 Option to Dissolve: If any of the Dissident Partners do not tender their
Partnership units to the Tenderees on or before July 28, 1999, Neptune and
Heritage may at their option, and in accordance with all applicable
Partnership agreements, give written notice to Xxxxxxxxx of the
Partnerships intention to dissolve after July 31, 1999.
6.4 Right to Set-Off: In order for the dissolution of Partnerships as
contemplated in Subsection 6.3 to be completed, Xxxxxxxxx and the Trust
agree that the Purchaser will set-off from the July 31, 1999 payment of the
Note an amount equal to the total consideration allocated to the Dissident
Partner under Schedule W (the "Set-Off Amount") to be used solely, but not
necessarily in its entirety for the purchase of the assets of any of the
Partnerships being dissolved. The Purchaser and the Trust acknowledge and
agree that the Set-Off Amount, if any, will be an unsecured loan to the
Purchaser from the Trust and such Set-Off Amount will be repayable, on an
installment basis and such other reasonable terms and conditions
satisfactory to the Purchaser and the Trust, on the termination of the
consulting agreement between the Purchaser and Xxxxxxxxx which is being
entered into pursuant to this Agreement.
6.5 Indemnity: In the event that the dissolution of any of the Partnerships
results in any of the Dissident Partners receiving cash distributed on the
dissolution which is in excess of the consideration allocated to the
Dissident Partner on Schedule W, Xxxxxxxxx will indemnify the Tenderees to
the amount so exceeded and the Purchaser will be entitled to set-off that
amount on any monies due to Xxxxxxxxx or the Trust pursuant to this or any
other agreement.
6.6 Right to Recover: If the dissolution of any of the Partnerships results in
any of the Dissident Partners receiving cash distributed on the dissolution
in an amount less than the amount withheld pursuant to Subsection 6.4
above, the Purchaser will pay that difference to the Trust within 10
Business Days of completing the distribution of assets on the dissolution
of a Partnership.
6.7 Majority Tendered: Notwithstanding Schedule W, Xxxxxxxxx will arrange for
greater than 7.5 units of each of the Partnerships, except for Neptune WT
and Neptune MI, to be tendered for sale on the Closing Date.
7 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
The Purchaser and Lari represent, warrant and covenant to and with the Vendors
as follows and acknowledges that the Vendors are relying upon such
representations, warranties and covenants in connection with the sale of the
Xxxxxxxxx Shares:
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7.1 Corporate Status and Authority: The Purchaser and Lari 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.
7.2 Authorization: The Purchaser and Lari 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 Lari have complied and will comply
fully with the requirements of all applicable corporate and securities laws
in relation to the issue of the Securities and Xxxxxxxxx Note on the
acquisition of the Xxxxxxxxx Shares (subject to the accuracy of the
representations of the Trust contained herein) and Xxxxxxxxx'x entering
into a non-competition agreement. 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 constating documents of
the Purchaser or Lari, any shareholders' or directors' resolution or of any
indenture or other agreement, written or oral, to which the Purchaser or
Lari may be a party or by which the Purchaser or Lari may be 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 Lari is bound
or to the knowledge of the Purchaser or Lari, any statute or regulation
applicable to the Purchaser or Lari.
7.4 Share Transfer Restrictions: No order ceasing or suspending trading in
securities of the Purchaser or Lari nor prohibiting the sale of such
securities has been issued to the Purchaser or Lari 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 March 19, 1999, the authorized capital of Lari
is 100,000,000 shares of which 3,000,000 shares are issued and outstanding.
In addition, Lari has 8,000,000 warrants outstanding as of March 19, 1999
which may by the Time of Closing be exchanged or exercised into 8,000,000
shares of Lari.
7.6 Fully Paid Shares: Upon completion of the transactions contemplated in this
Agreement, the shares of the common trading stock of Lari issued by Lari to
Xxxxxxxxx will be fully paid and non-assessable shares of the common
trading stock of Lari.
7.7 General Security Agreement: The Purchaser will, at Closing, enter into
general security agreements (the "Security Agreements") with the Trust to
secure the Note and the Xxxxxxxxx
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Note (which will be subordinated to the Note) provided any such Security
Agreements are on terms and conditions reasonably satisfactory to the
Purchaser..
7.8 Purchaser's Liabilities: As at the Time of Closing, the Purchaser will not
have existing debts or liabilities in excess of $300,000.00.
8 CONDITIONS OF CLOSING
8.1 Conditions of Closing in Favour of the Purchaser: The obligation of Lari
and the Purchaser to complete the sale and purchase of the Xxxxxxxxx Shares
is subject to the following terms and conditions for the exclusive benefit
of Lari and the Purchaser, to be fulfilled or performed at or prior to the
Time of Closing or waived in whole on in part by Lari and the Purchaser at
their sole discretion without prejudice to any rights to Lari and the
Purchaser may otherwise have:
(a) Contractual Consents: The Vendors shall have delivered to the
Purchaser such waivers, consents and certificates, including but not
limited to those described in Schedule O from parties having
contractual relations with the Operating Entities as may be necessary
including, without limitation, waivers under loan agreements to which
the any of the Operating Entities is a party;
(b) Representations and Warranties: The representations and warranties of
the Vendors 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 the Vendors 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 Vendors and all
other terms of this Agreement to be complied with or performed by the
Vendors at or before the Time of Closing shall have been complied with
or performed and certificates of the Vendors 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: The Trust and Xxxxxxxxx have
delivered to the Purchaser and Lari a certificate of accredited
investor in the form attached as Schedule P to this Agreement;
(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 authorization
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as are required to permit the change of ownership of the Xxxxxxxxx
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 on
prohibit the purchase and sale of the Xxxxxxxxx Shares 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: The Purchaser shall be satisfied
that 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 Xxxxxxxxx Shares;
(j) No Payments from Shareholders' Equity: The Purchaser shall be
satisfied that no payments have been made from the Companies'
shareholders' equity accounts and no distributions have been made from
the Partnerships without the prior written consent of the Purchaser;
(k) Purchase and Sale of Minority Shares: The Purchaser has entered into
the Minority Shareholder Agreements attached as Schedule Q to this
Agreement, on or before the Closing Date;
(l) Escrow Arrangements: The Trust, Xxxxxxxxx, Xxxx and the Purchaser have
entered into an escrow arrangement with the Escrow Agent on terms and
conditions satisfactory to the Purchaser and Lari ;
(m) Xxxxxxxxx Consulting Agreement: Xxxxxxxxx has entered into a
consulting and non-competition agreement attached as Schedule S to
this Agreement;
(n) Xxxxxx Employment Agreement: Xxxxx Xxxxxx, an employee of the Vendors,
has entered into an employment and non-competition agreement attached
as Schedule T to this Agreement;
(o) Opinion of Vendors' Attorney: The Purchaser and Lari have received
legal opinions of the Vendors' solicitors, dated as of the date of
Closing, respecting the transactions
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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 Lari and the Purchaser and Lari, acting reasonably, the
Purchaser may, by notice to the Vendors, terminate this Agreement and the
obligations of the Vendors, Lari and the Purchaser under this Agreement,
provided that the Purchaser may also bring an action against the Vendors
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 3.14(b)) by the Vendors. 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 Vendors: The purchase and sale of
the Xxxxxxxxx Shares are subject to the following terms and conditions for
the exclusive benefit of the Vendors to be fulfilled or performed at or
prior to the Time of Closing:
(a) Representations and Warranties: The representations and warranties of
Lari 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 Lari and the Purchaser dated the Closing Date to
that effect shall have been delivered to the Vendors, such certificate
to be in form and substance satisfactory to the Vendors acting
reasonably;
(b) Covenants: All of the terms, covenants and conditions of this
Agreement to be complied with or performed by Lari and the Purchaser
at or before the Time of Closing shall have been complied with or
performed and a certificate of Lari and the Purchaser dated the
Closing Date to that effect shall have been delivered to the Vendors,
such certificate to be in form and substance satisfactory to the
Vendors acting reasonably;
(c) The Purchaser will, at Closing, enter int general security agreements
with the Trust to secure the Note and the Xxxxxxxxx Note (which will
be subordinated to the Note), a stock pledge agreement and a trademark
security agreement on terms and conditions reasonably satisfactory to
the Vendors; and
(d) Lari will, at Closing, enter into a guarantee of the Purchaser's
obligations under this Agreement, the Note and the Xxxxxxxxx Note on
terms and conditions reasonably satisfactory to the Vendors.
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 Vendors, acting reasonably, the
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Vendors may, by notice to Lari and the Purchaser, terminate this Agreement
and the obligations of the Vendors and the Purchaser under this Agreement,
provided that the Vendors may also bring an action against the Purchaser
for damages suffered by the Vendors where the non-performance or
non-fulfilment of the relevant condition is as a result of a breach of
covenant, representations or warranty by the Purchaser. Any such condition
may be waived in whole or in part by the Vendors 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 7.
9 CLOSING ARRANGEMENTS
9.1 Place of Closing: The closing shall take place at the Time of Closing at
the offices of DuMoulin & Xxxxxxxxx at Xxxxx 0000, 0000 Xxxx Xxxxxx Xxxxxx,
Xxxxxxxxx, X.X.
9.2 Transfer: At the Time of Closing, upon fulfilment of all the conditions set
out in Section 7 that have not been waived in writing by Lari and the
Purchaser or the Vendors as the case may be:
(a) the Purchaser will cause to be delivered to the Escrow Agent a
solicitor's cheque in the amount of $506,583.00 payable to the Escrow
Agent;
(b) Lari will issue 513,273 shares in the capital of Lari to the Trust and
deliver same to the Escrow agent;
(c) the Purchaser will issue the Note to the Escrow Agent;
(d) the Purchaser will issue the Xxxxxxxxx Note to the Trust; and
(e) the Vendors shall deliver to the Purchaser certificates respecting all
the Xxxxxxxxx Shares, duly endorsed in blank for transfer and will
cooperate with the Purchaser in having the Xxxxxxxxx Shares
transferred to the Purchaser or its nominee and in changing the
directors to persons nominated by the Purchaser.
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 any provision of this Agreement or of any agreement
or other document executed pursuant to this Agreement or any of the
respective obligations intended to be created by this Agreement.
- 32 -
10 LIABILITY FOR CLAIMS
10.1 Claims: If any person shall make any claim or demand against any of the
Operating Entities or the Purchaser which gives rise or may give rise to
any Claim, the Purchaser shall promptly notify Xxxxxxxxx giving the general
nature of such claim or demand along with such further information known to
the Purchaser as may be reasonably required to enable Xxxxxxxxx to decide
whether or not to assume the defence thereof. The Purchaser shall not be
under any liability or obligation to Xxxxxxxxx for any failure to so notify
Xxxxxxxxx or for the sufficiency of the notice unless and then only to the
extent that the rights and remedies of the Operating Entities, or Xxxxxxxxx
shall have been prejudiced as a result. Xxxxxxxxx shall be entitled (but
not required) to assume the defence in the name of the Operating Entities
of any suit brought against the Purchaser or the Operating Entities to
enforce such claim or demand and to assert any counterclaim of the
Operating Entities if, but only if, the Purchaser shall be entitled to make
a Claim for the full amount of the claim or demand, and if the defence
shall be through legal counsel acceptable to the Purchaser, acting
reasonably. Xxxxxxxxx shall indemnify and save harmless the Purchaser, the
Operating Entities of and from all costs and expenses incurred or to be
incurred in connection with such defence. Such right shall be subject to
the rights of any insurer to defend any action. In all cases, the Purchaser
shall have the right to retain at its own expense, additional counsel to
act on its behalf. Xxxxxxxxx shall not settle or (without giving the
Purchaser a reasonable opportunity to take carriage thereof) abandon any
such claim or demand which it has elected to defend unless they have first
unconditionally acknowledged to the Purchaser that they will pay to the
Purchaser the full amount of such claim or demand. Xxxxxxxxx shall keep the
Purchaser reasonably informed as to the progress thereof. The Purchaser
shall at all times cooperate in all reasonable ways with, make all its
relevant files and records and those of the Operating Entities available
for inspection and copying by, and make its employees and those of the
Operating Entities reasonably available or otherwise render reasonable
assistance to, Xxxxxxxxx (i) in the defence of any claim or demand for
which indemnity is sought hereunder and (ii) in any action brought by
Xxxxxxxxx to assert any related claim, counterclaim or right of subrogation
under Subsection 9.3 hereof No claim or demand may be settled or
compromised by the Purchaser without the written consent of Xxxxxxxxx, such
consent not to be unreasonably withheld.
10.2 Subrogation: Xxxxxxxxx and the Trust shall be subrogated to the claims and
rights of the Purchaser and the Operating Entities as against other
Persons, and shall be entitled to contribution from any such Person, with
respect to any Claim paid by Xxxxxxxxx and the Trust under this Section 9,
but only after the Purchaser shall have received payment in full of its
Claim with interest.
10.3 Insurance: The Vendors shall not be liable to the Purchaser with respect to
any liability of the Operating Entities if and to the extent that:
- 33 -
(a) the Operating Entities would have been insured against such liability
under the insurance coverage maintained by the Operating Entities, as
the case may be, prior to the Closing; and
(b) the Operating Entities are not insured against such liability at the
time the liability arises.
The Purchaser shall take all steps necessary to make claims under the
Companies and Partnerships insurance policies with respect to any liability
of the Operating Entities which could be the subject of any Claim and the
Vendors shall not be liable to the Purchaser with respect to any Claim to
the extent that they have been prejudiced by a failure to make such claim.
Nothing in this Subsection 9.3 shall effect any rights of subrogation.
11 INDEMNITY
11.1 Known Actions and Proceedings: The Trust and Xxxxxxxxx, jointly and
severally, hereby indemnity and saves harmless the Operating Entities, the
Purchaser and Lari and their successors and assigns from and against any
and all losses, liabilities, damages, costs, increases in insurance
premiums for policies (comparable to existing coverage at the Effective
Date) for renewals to December 31, 1999, 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 legal fees, costs and disbursements on a
solicitor and his own client basis and at all court and administrative
levels, which at any time or from time to time may be paid, incurred or
asserted against the Operating Entities, the Purchaser or Lari, as to a
direct or indirect result of the outstanding claims listed in Schedule L or
any actions, claims, demands, lawsuits, assessments, penalties,
prosecutions or governmental investigations by or against the Operating
Entities in respect of the operation of the Business up to and including
the Effective Date, provided that such liability is not the result of any
actions taken by the Purchaser after the Effective Date, or in respect of
any action, claim or matter, including legal fees (on a solicitor and his
own client basis), costs and disbursements and at all court and
administrative levels, which at any time or from time to time may be paid,
incurred or asserted against the Operating Entities, the Purchaser or Lari,
as to a direct or indirect result of the sale of any of the interests of
the limited partnership units of the Partnerships to the Purchaser, Lari,
Neptune or Heritage, as the case may.
11.2 Right to Set-Off: The Operating Entities, the Purchaser and Lari have the
right to set-off any amount owed by the Trust or Xxxxxxxxx to the Operating
Entities, the Purchaser or Lari, pursuant to Subsection 10.1 of this
Agreement, against any money due and owing to Xxxxxxxxx or to the Trust (at
the option of the Operating Entities, the Purchaser or Lari) from the
Purchaser under this or any other agreement between the Purchaser and
Xxxxxxxxx or the Trust.
- 34 -
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 California. 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 Los Angeles, California. 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, the Security Agreements, Note and
Xxxxxxxxx Note constitute 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 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 Vendors 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 Vendors.
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 Vendors or the Purchaser
without the prior approval of the other, such approval not to be
unreasonably withheld.
12.5 Confidential Information: The Purchaser and each of the Vendors 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 Vendors,
including but not limited to the Partnerships, shall cease upon Closing.
Notwithstanding the Closing, each of the Vendors covenants to maintain as
confidential all confidential information respecting the Purchaser in that
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 that Vendor's personal advisers
- 35 -
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 Vendors or their 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 Vendors 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: Except for any fee payable
to Xxxx Xxxxx or any other finder or broker engaged by the Purchaser or
Lari, Xxxxxxxxx and the Trust severally indemnifies and saves harmless the
Purchaser and the Operating Entities 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 such Vendor.
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 Vendors. The Vendors shall not bear any
legal, accounting or other costs incurred by the Purchaser.
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 11.9. Notices shall be delivered or
addressed as follows:
(a) If to the Purchaser:
Xxxxx Xxxxxx
Barrister & Solicitor
0000 - 000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX. X0X 0X0
Fax (000) 000-0000
- 36 -
(b) If to the Vendors:
Xxxxx & Flugge, LLP
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Fax (000) 000-0000
Attention: Xxxxxxx Xxxxxx, Esq.
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.
[The remainder of this page has been intentionally left blank.]
- 37 -
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.
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.
LARI ACQUISITION COMPANY, INC. LARI CORP.
Per: /s/ Xxxxxxx X. Xxxx Per: /s/ Xxxxxxx X. Xxxx
-------------------------------- ------------------------------
Authorized Signatory Xxxxxxx Xxxx, President
XXXXXXX XXXXXXXXX
INTER VIVOS TRUST
Per: /s/ Xxxxxxx Xxxxxxxxx
--------------------------------
Xxxxxxx Xxxxxxxxx, Trustee
NEPTUNE MANAGEMENT CORP. NEPTUNE PRE-NEED PLAN, INC.
Per: /s/ Xxxxxxx Xxxxxxxxx Per: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------- ------------------------------
Xxxxxxx Xxxxxxxxx Xxxxxxx Xxxxxxxxx
HERITAGE ALTERNATIVES, INC.
Per: /s/ Xxxxxxx Xxxxxxxxx
--------------------------------
Xxxxxxx Xxxxxxxxx
- 38 -
SIGNED, SEALED AND DELIVERED by )
XXXXXXX XXXXXXXXX in the presence of: )
)
/s/Xxxxxxx X. Xxxxxx )
------------------------------------------ )
Witness Signature )
0000 Xxxxxx Xxxx., Xxxxx 000 )
Xxx Xxxxxxx, XX 00000 XXX )
------------------------------------------ )
Address ) /s/ Xxxxxxx Xxxxxxxxx
) -----------------------------
Attorney ) XXXXXXX XXXXXXXXX
------------------------------------------ )
Occupation )
