TRANSITION AGREEMENT
Exhibit 10.2
TRANSITION AGREEMENT
TRANSITION AGREEMENT (this “Agreement”), dated as of December 7, 2007, by and between StoneMor Operating LLC, a Delaware limited liability company (“StoneMor LLC”), joined herein by those of its direct and indirect subsidiary entities which are parties to the Purchase Agreement, as defined herein (collectively, with StoneMor LLC, the “Buyer”), and SCI Funeral Services, Inc., an Iowa corporation (“Parent”), joined herein by those of its direct and indirect subsidiary entities which are parties to the Purchase Agreement (collectively, with Parent, the “Seller”).
RECITALS
A. In accordance with that certain Asset Purchase and Sale Agreement, dated as of December 4, 2007 (the “Purchase Agreement”), Seller is selling the Business (as defined in the Purchase Agreement) and the assets associated therewith to Buyer.
B. Buyer has made application for all Permits required for the operation of the Business which Buyer anticipates receiving on or before the Closing Date. Exhibit “A” sets forth as of the date hereof the current status of applications for Permits at the Owned Locations and Managed Locations which comprise the Business (collectively the “Locations”). Buyer and Seller wish to make certain arrangements in the event Buyer does not obtain all of the Permits required to operate the Business and is unable to arrange for Interim Approval as hereinafter defined.
NOW, THEREFORE, in consideration of the covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer and Seller, intending to be legally bound, hereby agree as follows:
ARTICLE I
EFFECT AND DEFINITIONS
1.1 Effect of Agreement. This Agreement supplements the Purchase Agreement.
1.2 Definitions. Defined terms used in this Agreement and not otherwise defined in this Agreement will have their respective meanings set forth in the Purchase Agreement.
ARTICLE II
PERMITS
2.1 On or before the Closing Date, Buyer shall identify on Exhibit “B” the Locations for which Buyer does not anticipate receiving as of the Closing Date either (a) the Permits that it requires to operate or (b) interim approval from applicable regulatory authorities that permit it to operate pending receipt of required Permits (“Interim Approval”). (Such Locations are referred to as Locations Pending Approval). For each of the Locations Pending Approval, Seller has agreed to continue to operate such Locations for the account of and for the benefit of the Buyer. Buyer agrees to make both the assets comprising and the employees staffing such Locations available to Seller for such purpose. Buyer further agrees that during the term of this arrangement as hereinafter provided,
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it will continue to diligently pursue Interim Approval and/or required Permits from applicable regulatory authorities. The parties agree that upon receipt of either required Permits or Interim Approvals for a Location Pending Approval, Buyer shall promptly assume and undertake operations at such Locations, and Seller shall cease to operate such Location for the benefit of the Buyer. The parties further agree to amend Exhibit “B” from time to time to delete the Locations Pending Approval for which Buyer has secured Interim Approval or required Permits.
ARTICLE III
DURATION
3.1 The term of this Agreement (the “Term”) will commence as of the Closing Date and will continue on a Location by Location basis until Buyer as to each Location Pending Approval has secured required Permits or Interim Approval.
ARTICLE IV
FEES
4.1 Buyer agrees to reimburse the Seller for all costs incurred by Seller while operating Owned Locations for the benefit of Buyer as provided in Article II.
ARTICLE V
MISCELLANEOUS
5.1 Notices. All notices and other communications required or provided for hereunder shall be in writing and shall be deemed to be given:
(a) When delivered personally to the individual, or to an officer of the company, to which the notice is directed;
(b) Three (3) business days after the same has been deposited in the United States mail, sent Certified or Registered mail with Return Receipt Requested, postage prepaid and addressed as provided in this Section; or
(c) One (1) business day after the same has been deposited with a generally recognized overnight delivery service (including United States Express Mail), with receipt acknowledged and with all charges prepaid by the sender addressed as provided in this Section. Except as specifically provided otherwise herein, notices and other communications relating to this Agreement or the transactions contemplated hereby shall be directed as follows:
| if to Seller, to: | ||
| President SCI Funeral Services, Inc. 1929 Allen Parkway Houston, Texas 77019 | ||
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| with a copy to:
General Counsel Service Corporation International 1929 Allen Parkway Houston, Texas 77019 | ||
| if to Buyer, to: | ||
| StoneMor Operating, LLC Attention: Lawrence Miller, President & Chief Executive Officer 155 Rittenhouse Circle Bristol, Pennsylvania 19007
with a copy to:
Blank Rome LLP Attention: Lewis J. Hoch One Logan Square 18th & Cherry Streets Philadelphia, Pennsylvania 19103-6998 | ||
or at such other place or places or to such other person or persons as shall be designated by like notice by any party hereto.
5.2 Compliance. Each of Seller and Buyer agrees that it will take appropriate action by instruction of or agreement with its personnel to ensure that all personnel performing services under this Agreement will be bound by and comply with all of the terms and conditions of this Agreement.
5.3 Relationship of Parties. The relationship between the parties created by this Agreement is that of independent contractors and not partners, joint venturers or agents.
5.4 Arbitration. Any dispute concerning this Agreement, its effect, or the transactions contemplated by it, shall be settled by arbitration in accordance with Section 8.6 of the Purchase Agreement.
5.5 Assignment; Parties in Interest. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. This Agreement shall not be assigned by any party hereto without the prior written consent of the other parties. Nothing in this Agreement, expressed or implied, is intended to confer upon any third person any rights or remedies under or by reason of this Agreement.
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5.6 Entire Agreement; Amendment; Waiver.
(a) This Agreement together with the Exhibits hereto and the Purchase Agreement embody the whole agreement of the parties with respect to the subject matter hereof and thereof. There are no promises, terms, conditions, or obligations other than those contained herein and therein. All previous negotiations between the parties, either verbal or written, not herein or therein contained are hereby withdrawn and annulled. This Agreement, together with the Exhibits hereto, and the Purchase Agreement supersede all previous communications, representations, or agreements, either verbal or written, between the parties hereto with respect to the subject matter hereof.
(b) This Agreement may not be amended except by an instrument in writing signed by an authorized representative on behalf of each party hereto.
(c) No provision of this Agreement may be waived unless such waiver is in writing and signed by the party against whom the waiver is to be effective. No waiver by any party of any provision of this Agreement in a particular instance shall be deemed to constitute a waiver of such provision thereafter unless otherwise agreed in writing and signed by the party against whom the waiver is to be effective.
(d) No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.
5.7 Severability. If one or more provisions of this Agreement shall be held invalid, illegal or unenforceable, such provision shall, to the extent possible, be modified in such manner as to be valid, legal and enforceable but so as to most nearly retain the intent of the parties, and if such modification is not possible, such provision shall be severed from this Agreement. In either case, the balance of this Agreement shall be interpreted as if such provision were so modified or excluded, as the case may be, and shall be enforceable in accordance with its terms.
5.8 Certain Interpretive Matters. The section and subsection headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. No provision of this Agreement will be interpreted in favor of, or against, any of the parties to this Agreement by reason of the extent to which any such party or its counsel participated in the drafting thereof or by reason of the extent to which any such provision is inconsistent with any prior draft hereof or thereof. The singular form of any word used herein shall be deemed to include the plural form of such word and vice versa. References herein to feminine, masculine or neuter gender shall be deemed to include all genders. As used herein, the words “and” and “or” shall be deemed to mean “and/or” as the context requires.
5.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
5.10 Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, without regard to principles of conflicts of laws.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective duly authorized officers on the date first above written.
BUYER:
STONEMOR OPERATING LLC,
a Delaware limited liability company
STONEMOR ALABAMA LLC,
an Alabama limited liability company
STONEMOR ALABAMA SUBSIDIARY, INC.,
an Alabama corporation
STONEMOR ARKANSAS SUBSIDIARY LLC,
an Arkansas limited liability company
STONEMOR CALIFORNIA, INC.,
a California corporation
STONEMOR CALIFORNIA SUBSIDIARY, INC.,
a California corporation
STONEMOR FLORIDA SUBSIDIARY LLC,
a Florida limited liability company
STONEMOR HAWAII LLC,
a Hawaii limited liability company
STONEMOR HAWAII SUBSIDIARY LLC,
a Hawaii limited liability company
STONEMOR IOWA LLC,
an Iowa limited liability company
STONEMOR IOWA SUBSIDIARY LLC,
an Iowa limited liability company
STONEMOR ILLINOIS LLC,
an Illinois limited liability company
STONEMOR ILLINOIS SUBSIDIARY LLC,
an Illinois limited liability company
TRANSITION AGREEMENT
STONEMOR INDIANA LLC,
an Indiana limited liability company
STONEMOR INDIANA SUBSIDIARY LLC,
an Indiana limited liability company
STONEMOR KENTUCKY LLC,
a Kentucky limited liability company
STONEMOR KENTUCKY SUBSIDIARY LLC,
a Kentucky limited liability company
STONEMOR MISSOURI LLC,
a Missouri limited liability company
STONEMOR MISSOURI SUBSIDIARY LLC,
a Missouri limited liability company
STONEMOR NORTH CAROLINA LLC,
a North Carolina limited liability company
STONEMOR NORTH CAROLINA SUBSIDIARY LLC,
a North Carolina limited liability company
CEMETERY MANAGEMENT SERVICES OF OHIO,
an Ohio limited liability company
CORNERSTONE FUNERAL AND CREMATION SERVICES LLC,
a Delaware limited liability company
STONEMOR OREGON LLC,
an Oregon limited liability company
STONEMOR OREGON SUBSIDIARY LLC,
an Oregon limited liability company
STONEMOR SOUTH CAROLINA LLC,
a South Carolina limited liability company
STONEMOR SOUTH CAROLINA SUBSIDIARY LLC,
a South Carolina limited liability company
LAKEWOOD HAMILTON CEMETERY LLC,
a Tennessee limited liability company
TRANSITION AGREEMENT
LAKEWOOD HAMILTON CEMETERY SUBSIDIARY, INC.,
a Tennessee corporation
STONEMOR TENNESSEE SUBSIDIARY, INC.,
a Tennessee corporation
STONEMOR WASHINGTON, INC.,
a Washington corporation
STONEMOR WASHINGTON SUBSIDIARY, INC.,
a Washington corporation
CORNERSTONE FAMILY SERVICES OF WEST VIRGINIA SUBSIDIARY, INC.,
a West Virginia corporation
STONEMOR PUERTO RICO LLC,
a Puerto Rico limited liability company
STONEMOR PUERTO RICO SUBSIDIARY LLC,
a Puerto Rico limited liability company
In each case,
| By: | /s/ PAUL WAIMBERG | |
| PAUL WAIMBERG, Vice President of Finance |
TRANSITION AGREEMENT
SELLER:
SCI FUNERAL SERVICES, INC.,
an Iowa corporation
ECI ALABAMA SERVICES, LLC,
an Alabama limited liability company
JPH PROPERTIES, INC.,
a Texas corporation
SCI ALABAMA FUNERAL SERVICES, INC.,
an Alabama corporation
SCI ARKANSAS FUNERAL SERVICES, INC.,
an Arkansas corporation
ALDERWOODS GROUP (CALIFORNIA), INC.,
a California corporation
SCI CALIFORNIA FUNERAL SERVICES, INC.,
a California corporation
UNIVERSAL MEMORIAL CENTERS VI, INC.,
a California corporation
SECURITY TRUST PLANS, INC.,
a Florida corporation
HAWAIIAN MEMORIAL LIFE PLAN, LTD.,
a Hawaii corporation
SCI IOWA FUNERAL SERVICES, INC.,
an Iowa corporation
ALDERWOODS (CHICAGO NORTH), INC.,
an Illinois corporation
PINEVIEW MEMORIAL PARK, INC.,
an Illinois corporation
ALDERWOODS (ILLINOIS), INC.,
an Illinois corporation
WOODLAWN MEMORIAL PARK, INC.,
an Illinois corporation
TRANSITION AGREEMENT
ELMWOOD ACQUISITION CORPORATION,
an Illinois corporation
ALDERWOODS (INDIANA), INC.,
an Indiana corporation
SCI INDIANA FUNERAL SERVICES, INC.,
a Delaware corporation
SCI KENTUCKY FUNERAL SERVICES, INC.,
a Kentucky corporation
SCI MISSOURI FUNERAL SERVICES, INC.,
a Missouri corporation
LINEBERRY GROUP, INC.,
a North Carolina corporation
CAROTHERS HOLDING COMPANY, INC.,
a North Carolina corporation
CINCINNATI CEMETERIES LIMITED PARTNERSHIP,
an Ohio limited partnership
ALDERWOODS (OHIO) FUNERAL HOME, INC.,
an, Ohio corporation
UNIVERSAL MEMORIAL CENTERS I, INC.,
an Oregon corporation
ALDERWOODS (OREGON), INC.,
an Oregon corporation
ALDERWOODS (SOUTH CAROLINA), INC.,
a South Carolina corporation
GRACELAND CEMETERY DEVELOPMENT CO.,
a South Carolina corporation
ALDERWOODS (TENNESSEE), INC.,
a Tennessee corporation
ALDERWOODS (WASHINGTON), INC.,
a Washington corporation
TRANSITION AGREEMENT
ALDERWOODS (WEST VIRGINIA), INC.,
a West Virginia corporation
SCI PUERTO RICO FUNERAL AND CEMETERY SERVICES, INC.,
a Puerto Rico corporation
SCI OHIO FUNERAL SERVICES, INC.,
an Ohio corporation
ALDERWOODS (OHIO) CEMETERY MANAGEMENT, INC.,
an Ohio corporation
In each case,
| By: | /s/ Michael D. Lehman | |
| Michael D. Lehman, Vice President |
TRANSITION AGREEMENT
EXHIBIT A
Dignity 2007 – Licensure Status Chart
(last revised 12/6/2007)
| State | Status of Licensure | |
| ALABAMA
(2 cemeteries, 2 funeral homes) | funeral establishment licensure is issued post-closing - Board of Funeral Services | |
| cemetery/funeral establishment preneed licensure is pending, expected in December - Department of Insurance, | ||
| ARKANSAS
(2 funeral homes) | funeral establishment licensure is issued post-closing - State Board of Embalmers and Funeral Directors
preneed pending, expected in December - Insurance Department | |
| CALIFORNIA
(7 cemeteries, 8 funeral homes, 4 crematories) | pending, expected in December; interim approval being sought to coincide with public offering - Cemetery and Funeral Bureau | |
| FLORIDA
(1 funeral home) | pending, funeral establishment licensure expected by Board teleconference meeting in January and preneed licensure expected at Board meeting in February - Board of Funeral, Cemetery and Consumer Services | |
| HAWAII
(1 cemetery) | pending, expected in December - Cemetery and Pre-Need Funeral Authority | |
| ILLINOIS
(5 cemeteries, 2 funeral homes, 2 crematories) | pending, expected in December (subject to satisfactory audits of SCI) - Comptroller, Cemetery Care and Burial Trust Division | |
TRANSITION AGREEMENT
A-1
| State | Status of Licensure | |
| INDIANA
(5 cemeteries, 1 crematory) | 8 of 12 licenses issued December 6, remaining 4 licenses expected shortly (pending status for those 4 noted in Board’s licensure database) - State Board of Funeral and Cemetery Service | |
| IOWA
(1 cemetery) | Pending, expected by December 19 subject to satisfactory SCI audit - Insurance Division, Securities and Regulated Industries Bureau | |
| KENTUCKY
(1 cemetery) | licenses issued October 1, 2007 - Office of the Attorney General | |
| MISSOURI
(2 cemeteries, 1 funeral home) | licensure issues post-closing, awaiting confirmation receipt of City of Sedalia business licenses as a licensure condition - Office of Endowed Care Cemeteries; State Board of Embalmers and Funeral Directors | |
| NORTH CAROLINA
(3 cemeteries) | October 17 meeting approval - Cemetery Commission | |
| OHIO
(7 cemeteries, 1 funeral home, 1 crematory) | Cemetery licensure approved at December 6 meeting subject to conditions to be satisfied within 30 days - Cemetery Dispute Resolution Commission
funeral establishment licensure is issued post-closing - State Board of Embalmers and Funeral Directors | |
TRANSITION AGREEMENT
A-2
| State | Status of Licensure | |
| OREGON
(2 cemeteries, 3 funeral homes) | pending, the Board has advised they will attempt to issue temporary authority to operate all facilities prior to the intended closing date of December 19 - Mortuary and Cemetery Board
preneed is issued post-closing after transfer of assumed names - Division of Finance and Corporate Securities | |
| SOUTH CAROLINA
(2 cemeteries, 2 funeral homes) | cemetery licensure approved at November 28 meeting subject to conditions being satisfied - Perpetual Care Cemetery Board
funeral establishment licensure expected at December 13 meeting - Board of Funeral Service
pending preneed funeral homes, expected in December 19 - Department of Consumer Affairs | |
| TENNESSEE
(3 cemeteries, 4 funeral homes) | pending, expected in December; interim approval being sought to coincide with public offering - Department of Commerce and Insurance | |
| WASHINGTON
(2 cemeteries) | Licenses issued 9/28/2007 - Department of Licensing, Funeral and Cemetery Licensing Office | |
| WEST VIRGINIA
(1 funeral home) | funeral establishment licensure pending (require contract or price list modifications), expected in December - Board of Funeral Service Examiners
preneed licensure is issued post-closing upon notice of closing - Consumer Protection and Antitrust Division | |
TRANSITION AGREEMENT
A-3
| State | Status of Licensure | |
| PUERTO RICO
(2 cemeteries, 1 funeral home) | post-closing - Ponce Municipal Permits Office; Regulations and Permits Administration Office - Health Department, Fire Department - use permits will issue approximately 2 to 3 months post-closing |
TRANSITION AGREEMENT
A-4
EXHIBIT B
TRANSITION AGREEMENT
B-1
