Exhibit 10.2

ASSET PURCHASE AND SALE AGREEMENT

dated March 30, 2010

by and among

STONEMOR OPERATING LLC, PLYMOUTH WAREHOUSE FACILITIES LLC,

SCI FUNERAL SERVICES, LLC, SCI MICHIGAN FUNERAL SERVICES, INC.,

HILLCREST MEMORIAL COMPANY, SUNRISE MEMORIAL GARDENS CEMETERY, INC., FLINT
MEMORIAL PARK ASSOCIATION, STONEMOR MICHIGAN LLC

AND STONEMOR MICHIGAN SUBSIDIARY LLC

--------------------------------------------------------------------------------

TABLE OF CONTENTS

 

ARTICLE I PURCHASE AND SALE    2

Section 1.1

  

Transfer of Acquired Assets

   2

Section 1.2

  

Excluded Assets

   4

Section 1.3

  

Consideration for Acquired Assets Payable at the Closing

   5

Section 1.4

  

Intentionally Omitted

   5

Section 1.5

  

Liabilities

   5

Section 1.6

  

Intentionally omitted

   6

Section 1.7

  

Prorations; Services in Progress; Transaction Taxes

   6

Section 1.8

  

Allocation of Closing Purchase Price

   7

Section 1.9

  

Effective Time

   8

ARTICLE II CLOSING

   8

Section 2.1

  

Closing

   8

Section 2.2

  

Instruments of Conveyance and Transfer

   8

ARTICLE III REPRESENTATIONS AND WARRANTIES BY SELLER

   8

Section 3.1

  

Organization; Standing; Authorization; Capacity

   9

Section 3.2

  

Financial Statements

   9

Section 3.3

  

Tax Matters

   9

Section 3.4

  

No Violation

   10

Section 3.5

  

Status of Acquired Assets

   10

Section 3.6

  

Improvements

   11

Section 3.7

  

Real Property Approvals

   11

Section 3.8

  

Zoning

   11

Section 3.9

  

No Violations Relating to Real Property

   12

Section 3.10

  

Real Estate Taxes

   12

Section 3.11

  

Eminent Domain

   12

Section 3.12

  

Inventory

   12

Section 3.13

  

Litigation

   12

Section 3.14

  

Court Orders and Decrees

   13

Section 3.15

  

Trade Names

   13

Section 3.16

  

Contracts

   13

Section 3.17

  

Licenses and Permits

   13

Section 3.18

  

Consents

   14

Section 3.19

  

Compliance with Laws

   14

Section 3.20

  

OSHA or ADA

   14

Section 3.21

  

Labor Relations

   14

Section 3.22

  

Employees and Independent Contractors

   15

Section 3.23

  

No Brokers

   15

Section 3.24

  

Operations in Ordinary Course of Business

   15

Section 3.25

  

Full Disclosure

   16

Section 3.26

  

No Other Representations or Warranties

   17

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER

   17

 

i

--------------------------------------------------------------------------------

Section 4.1

  

Authority

   17

Section 4.2

  

Intentionally Omitted

   17

Section 4.3

  

No Brokers

   17

Section 4.4

  

Knowledge of Seller Breach

   17

Section 4.5

  

No Other Representations or Warranties

   18

ARTICLE V COVENANTS

   18

Section 5.1

  

Access to Business

   18

Section 5.2

  

Conduct of Business Pending Closing

   19

Section 5.3

  

Consents and Licenses

   19

Section 5.4

  

Cooperation Regarding Publicity

   19

Section 5.5

  

Title to Real Estate

   20

Section 5.6

  

Inspections

   20

Section 5.7

  

Delivery of Seller Schedules

   20

Section 5.8

  

Satisfaction of Pre-Closing Covenants

   20

Section 5.9

  

Post Closing Access

   21

Section 5.10

  

Tax Matters

   22

Section 5.11

  

Employees

   22

Section 5.12

  

No Solicitation; Notification

   22

Section 5.13

  

Confidentiality

   23

Section 5.14

  

Cooperation Regarding Financial Information

   24

Section 5.15

  

Further Assurances

   24

Section 5.16

  

Notice of Breaches

   25

Section 5.17

  

Casket Supply Agreement

   25

ARTICLE VI CONDITIONS PRECEDENT TO CLOSING

   26

Section 6.1

  

Conditions to Seller Closing

   26

Section 6.2

  

Conditions to Buyer Closing

   26

ARTICLE VII CLOSING DELIVERIES

   27

Section 7.1

  

Seller’s Closing Deliveries

   27

Section 7.2

  

Buyer’s Closing Deliveries

   28

ARTICLE VIII SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
INDEMNIFICATION; ENFORCEMENT OF AGREEMENT

   29

Section 8.1

  

Nature of Representations

   29

Section 8.2

  

Survival of Representations, Warranties, and Covenants

   29

Section 8.3

  

Indemnification by Seller

   30

Section 8.4

  

Indemnification by Buyer

   31

Section 8.5

  

Defense of Claims; Payment

   31

Section 8.6

  

Dispute Resolution

   32

Section 8.7

  

Enforcement of Agreement

   33

Section 8.8

  

Definitions

   34

Section 8.9

  

Cooperation

   34

ARTICLE IX TERMINATION OF AGREEMENT

   35

Section 9.1

  

Termination

   35

Section 9.2

  

Effect of Termination

   35

 

ii

--------------------------------------------------------------------------------

ARTICLE X MISCELLANEOUS

   36

Section 10.1

  

Certain Defined Terms

   36

Section 10.2

  

Notices

   39

Section 10.3

  

Expenses

   40

Section 10.4

  

Attorney’s Fees

   40

Section 10.5

  

Assignment; Parties in Interest

   41

Section 10.6

  

Entire Agreement; Amendment; Waiver

   41

Section 10.7

  

Severability

   41

Section 10.8

  

Certain Interpretive Matters

   42

Section 10.9

  

Counterparts

   42

Section 10.10

  

Governing Law

   42

 

iii

--------------------------------------------------------------------------------

ASSET PURCHASE AND SALE AGREEMENT

This ASSET PURCHASE AND SALE AGREEMENT (“Agreement”) dated this 30th day of
March, 2010, is made by and among STONEMOR OPERATING LLC, a Delaware limited
liability company (“StoneMor LLC”), PLYMOUTH WAREHOUSE FACILITIES LLC, a
Delaware limited liability company (“Plymouth,” and individually and
collectively with StoneMor LLC, “Buyer”), SCI FUNERAL SERVICES, LLC, an Iowa
limited liability company (“Parent”), SCI MICHIGAN FUNERAL SERVICES, INC., a
Michigan corporation (“SCI Michigan” and together with Parent, “Seller”), and
solely for purposes of Section 5.17 herein, HILLCREST MEMORIAL COMPANY, a
Delaware corporation (“Hillcrest”), SUNRISE MEMORIAL GARDENS CEMETERY, Inc., a
Michigan corporation (“Sunrise”), FLINT MEMORIAL PARK ASSOCIATION, a Michigan
corporation (“Flint”), StoneMor Michigan LLC, a Michigan limited liability
company (“StoneMor Michigan”), and StoneMor Michigan Subsidiary LLC, a Michigan
limited liability company (“StoneMor Subsidiary”).

W I T N E S S E T H:

WHEREAS, SCI Michigan owns and operates the warehouse facility under the name of
“Christian Memorial Warehouse” consisting of approximately 74,913 square feet of
floor area (the “Business”) located at 350 South Mill Street, Plymouth, Wayne
County, Michigan 48170 comprising approximately 5.02 acres (the “Location”);

WHEREAS, the Seller, StoneMor LLC, StoneMor Michigan, StoneMor Subsidiary
(StoneMor LLC, StoneMor Michigan and StoneMor Subsidiary are collectively
referred to as the “Michigan Buyers”), Hillcrest, Sunrise, Flint, and Christian
Memorial Cultural Center, Inc., a Michigan corporation (“Christian” and together
with Hillcrest, Sunrise and Flint, the “Michigan Sellers”),

 

1

--------------------------------------------------------------------------------

have entered into an Asset Purchase and Sale Agreement of even date herewith
which contemplates the sale of certain assets of the Michigan Sellers to the
Michigan Buyers (the “Michigan Asset Purchase and Sale Agreement”);

WHEREAS, in connection with the transactions contemplated by the Michigan Asset
Purchase and Sale Agreement, the parties desire to provide for the purchase,
sale and transfer of the Business, including certain of the personal property
located at, used in connection with, or arising out of, such Business, together
with the real estate utilized in the Business, in exchange for cash and other
consideration, upon the terms and subject to the conditions herein set forth;
and

WHEREAS, this Agreement sets forth the terms and conditions to which the parties
have agreed;

NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements, representations and warranties herein contained, the parties,
intending to be legally bound hereby, agree as follows:

ARTICLE I

Purchase and Sale

Section 1.1 Transfer of Acquired Assets. Subject to the terms and conditions of
this Agreement, and except as provided in Section 1.2, Seller does hereby agree
to sell, transfer, convey, assign and deliver to Buyer, and Buyer does hereby
agree to purchase and accept from Seller free and clear of all Liens and
Liabilities (other than the Assumed Liabilities (as defined below)), all right,
title and interest to the following property and rights located at, used in
connection with, arising out of or relating to the Business (collectively, the
“Acquired Assets”):

(a) The real property used in the operation of the Business as specifically
described in the commitment for title insurance received from Land Services USA,
Inc. (the “Title Company”), together with all buildings, structures,
improvements, fixtures, easements, benefits and rights and appurtenances
benefiting, belonging or pertaining thereto, (the “Real Property”);

 

2

--------------------------------------------------------------------------------

(b) All furniture, equipment, tools, supplies and other tangible personal
property owned or used by Seller exclusively or primarily in the operation of
the Business as of the date hereof or acquired between the date hereof and the
Effective Time, including, without limitation, those items listed on Schedule 2
to this Agreement;

(c) All vehicles listed on Schedule 3 to this Agreement;

(d) All caskets, including related pillow sets and interiors, supplies and other
merchandise inventory of the Business (“Inventory”), including, without
limitation, the items stored for customers of the Business, plus or minus any
changes to such Inventory which result from the ordinary course of operation of
the Business, consistent with past practices, subsequent to the date(s) of such
listing(s) and until the Effective Time (and specifically limited to the rights
permitted by or provided under applicable Laws with regard to merchandise
designated as being “stored” for customers under Pre-/At-Need Contracts), and
all Services in Progress (as hereinafter defined);

(e) All benefits, rights and entitlements of or relating to the Business under
and in all contracts, agreements, leases, licenses and commitments listed on
Schedule 5 to this Agreement (“Business Contracts”);

(f) All benefits, rights and entitlements under any leases for any real property
at the Location or otherwise exclusively or primarily related to the Business
(whether Seller is lessee or lessor thereunder) (“Real Property Leases” and,
together with the Business Contracts, the “Assumed Contracts”), including,
without limitation, those listed on Schedule 5 to this Agreement, together with
any security deposits held or paid on account of any of the Real Property
Leases;

(g) All of the Permits of the Seller necessary for the ownership, operation,
maintenance or presently planned expansion (by Seller) of the Business, to the
extent transferable;

(h) All utility and other deposits previously paid to and/or held by third
parties in connection with the operation of the Business as of the Effective
Time;

(i) All of the Seller’s rights and incidents of interest in and to causes of
action, suits, proceedings, judgments, claims and demands of any nature,
whenever maturing or asserted, relating to or arising directly or indirectly out
of any of the Acquired Assets or the Business; and

(j) All goodwill associated with the Business, together with all lists of
present or former customers of the Business, all business books, documents,
records, files, databases and reports relating to the Acquired Assets and
reasonably necessary for Buyer to continue the Business (collectively, “Seller
Records”) (whether or not the Seller Records are physically located at any of
the Locations), the wired telephone numbers and listings for the Business, and
all Intellectual Property owned and/or used by the Seller exclusively or
primarily in connection with the Business (“Business Intellectual Property”),
including, without limitation, all right, title and interest in and the right to
use the trademarks, service marks and trade names for the Location as listed on
Exhibit A hereto. All Seller Records not physically

 

3

--------------------------------------------------------------------------------

located at the Location shall be copied and, at the election of Buyer, either
delivered in person to a representative of Buyer at the location where such
Seller Records are held on the Closing Date (as defined below) or shipped to
Buyer by Seller at Buyer’s expense by such delivery service selected by Buyer.
All requests and other communications from Buyer to Seller regarding Seller
Records, either before or after the Closing (as defined below), shall be
directed to Michael Lehmann, Service Corporation International, 1929 Allen
Parkway, Houston, Texas 77019, fax: (713) 525-7372 and
Michael.Lehmann@sci-us.com.

Except as specifically provided in Section 1.2, it is intended that the assets,
properties and rights of the Business to be sold to Buyer pursuant to this
Agreement shall include all of the assets, properties and rights reflected in
the Schedules relating to the subsections of Section 1.1, other than those
assets, properties and rights that may have been disposed of in the ordinary
course of business prior to the Effective Time, but including all similar
assets, properties and rights of the Business that may have been acquired in the
ordinary course of business since the dates of the listings in the Schedules
relating to the subsections of Section 1.1 until the Effective Time.

Section 1.2 Excluded Assets. Seller shall not transfer, convey or assign to
Buyer, and Buyer shall not purchase, the following assets (collectively, the
“Excluded Assets”): (a) non-preneed related cash and cash equivalents,
(b) computer software and information and similar rights (provided, however,
that none of the Seller Records shall be deemed to be an Excluded Asset, whether
or not contained or stored in or on the hard drive of any computers or on any
computer system or server, disk or any other electronic media), (c) corporate
records, minutes and records of shareholders’ and directors’ meetings of Seller,
(d) those items specifically identified in Schedule 2 as being subject to a
corporate lease or otherwise excluded from the sale of the Acquired Assets, and
(e) all other assets of Seller which are not used exclusively or primarily in
the ownership, operation or maintenance of the Business and which are not
necessary to the continued operation of the Business in a manner consistent with
the Seller’s past practices, including training, promotional materials,
procedure and policy manuals.

 

4

--------------------------------------------------------------------------------

Section 1.3 Consideration for Acquired Assets Payable at the Closing. On the
terms and subject to the conditions of this Agreement, Buyer, in consideration
for the transfer and delivery to it of the Acquired Assets as herein provided,
will, in addition to the assumption of liabilities set forth in Section 1.5(a)
below, pay to Seller at the Closing (as defined below) the sum of Five Hundred
Thousand Dollars ($500,000) (the “Closing Purchase Price”), which will be deemed
part of, and included in, the $14,000,000 consideration paid in connection with
the Michigan Asset Purchase and Sale Agreement, and which will be paid in
accordance with the terms of the Michigan Asset Purchase and Sale Agreement.

Section 1.4 Intentionally Omitted.

Section 1.5 Liabilities.

(a) Assumed Liabilities. From and after the Effective Time, Buyer agrees to
assume and perform the liabilities and obligations of the Business (“Assumed
Liabilities”) under and pursuant to the terms and conditions of any Assumed
Contract, but only to the extent such obligations arise, accrue or first become
due after the Effective Time under the terms of the Assumed Contracts; provided,
however, that Buyer will not assume or be responsible for any such liabilities
or obligations which arise from any breach or default by Seller under any
Assumed Contract that occurs prior to the Effective Time or that arises out of
or relates to events or circumstances that occur or exist prior to the Effective
Time, all of which liabilities and obligations will constitute Retained
Liabilities (as defined herein). Notwithstanding anything to the contrary
contained in this Agreement or any document delivered in connection herewith,
Buyer’s obligations in respect of the Assumed Liabilities will not extend beyond
the extent to which Seller were obligated in respect thereof and will be subject
to Buyer’s right to contest in good faith the nature and extent of any liability
or obligation (but such right to contest shall not affect Buyer’s
indemnification responsibilities under Section 8.4(a)(iii)).

(b) Retained Liabilities. Except as provided in Section 1.5(a) hereof, Seller
will retain, and Buyer will not assume or be responsible or liable with respect
to, any Liabilities of the Business that precede the Effective Time (except as
specifically provided in subclause (vi) of this Section 1.5(b)), whether or not
arising out of or relating to the conduct of Seller or associated with or
arising from any of the Acquired Assets, whether fixed or contingent or known or
unknown (collectively, the “Retained Liabilities”), including, without
limitation, the following:

(i) Liabilities relating to any Excluded Asset irrespective of whether such
liability relates to the period before or after Closing;

 

5

--------------------------------------------------------------------------------

(ii) Liabilities of Seller that constitute trade payables;

(iii) Liabilities of Seller arising under or relating to any Assumed Contract to
the extent such Liabilities relate to periods prior to the Effective Time or
arise from any breach or default by Seller (or any of its Affiliates) under any
Assumed Contract that occurs prior to the Effective Time or that arises out of
or relates to events or circumstances that occur or exist prior to the Effective
Time;

(iv) Liabilities of Seller arising under or relating to any Contract other than
an Assumed Contract;

(v) Liabilities with respect to (A) any Employee Plan maintained, sponsored,
contributed to or participated in by Seller or any of its Affiliates for the
benefit of or relating to any current or former employee of the Business
(“Seller Employee Plan”) and the amendment to or the termination of any Seller
Employee Plan, or (B) any person at any time employed by Seller or any of its
Affiliates (including, without limitation, any such person who fails to accept
an offer of employment by Buyer or any of its Affiliates), and any such person’s
spouse, children, other dependents or beneficiaries, with respect to any such
person’s employment or termination of employment by Seller or any of its
Affiliates including, without limitation, claims arising under health, medical,
dental, disability or other benefit plan for products, supplies or services
provided or rendered prior to the Effective Time;

(vi) Liabilities of Seller based, in whole or in part, on violations of Law or
environmental conditions occurring or existing prior to the Closing and arising
out of or relating to Environmental Requirements, except to the extent that such
Liabilities are identified in the Environmental Reports;

(vii) Except as otherwise specifically provided in this Agreement, all
Liabilities of Seller for any Tax for (A) operations of the Business prior to
the Effective Time; (B) the transfer of the Acquired Assets; and

(viii) Liabilities of Seller arising out of or relating to any Proceeding to
which Seller is a party on the date of this Agreement and relating to the
Business or any of the matters referenced on Schedule 10.

Section 1.6 Intentionally omitted.

Section 1.7 Prorations; Services in Progress; Transaction Taxes.

(a) Seller shall be responsible for all Taxes arising as a result of the
operation of the Business or ownership of the Acquired Assets prior to the
Effective Time. At Closing, all real and personal property Taxes shall be
prorated between Seller on the one hand and Buyer on the other hand on a per
diem basis.

(b) The parties shall cooperate in transferring from the Seller, to Buyer all
water, electrical, gas and other utility services provided to or benefiting the
Real Property, and as and to whatever extent billings are received by any party
relating to services utilized both before

 

6

--------------------------------------------------------------------------------

the Effective Time (for which Seller shall be jointly and severally responsible)
and after the Effective Time (for which Buyer shall be responsible), the parties
will cooperate to make appropriate adjustments and reimbursements between them
to accomplish the proper allocation of such billings.

(c) Except as set forth in Sections 1.7(d) and (e) below, Seller shall be
responsible, jointly and severally, for the timely payment of, and shall
indemnify and hold harmless Buyer against, all sales, use, value added,
documentary, stamp, gross receipts, registration, transfer (including, without
limitation, real estate), conveyance, excise and other similar Taxes and fees
(collectively, “Transfer Taxes”) arising out of or in connection with or
attributable to (i) the transfer of the Acquired Assets and (ii) the
transactions contemplated by this Agreement. Seller shall prepare and timely
file all Tax Returns required to be filed in respect of such Transfer Taxes.
Seller shall be responsible, jointly and severally, for filing all required
notices related to bulk sales laws and shall indemnify and hold harmless Buyer
against all Taxes or other Losses that Buyer becomes liable for as a result of
the Seller’s failure to file any applicable bulk sales notices or pay any of its
Taxes.

(d) The parties shall share in the payment of any recording and other similar
fees arising out of or in connection with or attributable to the transactions
contemplated by this Agreement in accordance with the normal practices in
Michigan; provided, however, that Seller shall pay for the recording of the
release of any Lien (other than Permitted Encumbrances) with respect to any
Acquired Asset.

(e) Buyer shall be responsible for the timely payment of, and shall indemnify
and hold harmless Seller against, all Transfer Taxes arising out of or in
connection with or attributable to the transfer of the vehicles listed on
Schedule 3 to this Agreement. Buyer shall prepare and timely file all Tax
Returns required to be filed in respect of such Transfer Taxes.

Section 1.8 Allocation of Closing Purchase Price.

(a) On or prior to the Closing Date, Buyer and Seller shall mutually agree upon
a written statement (the “Statement of Allocation”) setting forth an allocation
of the Closing Purchase Price (“Purchase Price Allocation”) (which for such
purpose shall be increased by the amount of the liabilities assumed by Buyer).
The Statement of Allocation shall include an allocation of the portion of the
Closing Purchase Price paid by or on behalf of Plymouth (“Purchased Acquired
Assets Allocation”) among each of the respective categories of Acquired Assets
that are purchased. Buyer and Seller agree that each of the allocations required
to be prepared pursuant to this Section 1.8 shall be prepared in accordance with
the provisions of Section 1060 of the Code, the Treasury Regulations promulgated
thereunder and any similar provisions of state, local or foreign law, as
applicable.

(b) All federal, state, local, and foreign income Tax Returns of Seller and
Buyer shall be filed consistently with the information set forth on the
Statement of Allocation. Moreover, Seller and Buyer further agree to file IRS
Form 8594 (and any corresponding form required to be filed by a state or local
Taxing Authority) in a manner that is consistent with the Purchased Acquired
Assets Allocation. Seller and Buyer agree to promptly provide each other with
any information necessary to complete such Tax Returns and IRS Form 8594 (and
any corresponding form required to be filed by a state or local Taxing
Authority). Seller and

 

7

--------------------------------------------------------------------------------

Buyer shall not take any position on a Tax Return, tax proceeding or audit that
is inconsistent with any information set forth on the Statement of Allocation.

Section 1.9 Effective Time. The Effective Time of the transfer of the Acquired
Assets shall be 11:59 p.m. on the Closing Date.

ARTICLE II

Closing

Section 2.1 Closing. The closing of the transaction provided for in this
Agreement (the “Closing”) shall take place at the offices of Buyer’s counsel,
Blank Rome LLP, One Logan Square, Philadelphia, PA 19103, on March 30, 2010 (the
“Closing Date”), or at such other location, time and date as the parties shall
mutually agree. In the event of any postponement thereof, all references in this
Agreement to the Closing Date shall be deemed to refer to the time and to the
date to which the Closing Date shall have been so postponed as herein provided.

Section 2.2 Instruments of Conveyance and Transfer. At the Closing, Seller shall
deliver to Buyer such special warranty deeds, bills of sale, endorsements,
assignments, title affidavits and other documents reasonably requested by the
Title Company (as referenced in Section 5.5), and such other instruments of
transfer, conveyance and assignment as may be reasonably requested by Buyer, in
forms reasonably satisfactory to Buyer, in order to more fully vest in Buyer
good and marketable title to the Acquired Assets. Seller shall take all such
steps as may be reasonably requested by Buyer to put Buyer in actual possession
and control of the Acquired Assets and the Business as of the Closing.

ARTICLE III

Representations and Warranties by Seller

Seller, jointly and severally, hereby represents and warrants to Buyer, both as
of the date hereof and as of the Effective Time, as follows:

 

8

--------------------------------------------------------------------------------

Section 3.1 Organization; Standing; Authorization; Capacity. Each of Seller is a
corporation or limited liability company, as applicable, duly organized, validly
existing and in good standing under the laws of its state of formation as
designated in the introductory paragraph of this agreement, with all requisite
power and authority to own the Acquired Assets and to conduct the Business as it
is now being conducted and is presently proposed (by Seller) to be conducted.
Each of Seller is duly qualified to conduct business and is in good standing in
each jurisdiction in which the nature of its business or location of its
properties makes such qualification necessary, except where the failure to be so
qualified would not reasonably be expected to have a Material Adverse Effect.
The execution, delivery and performance of this Agreement by each of Seller has
been duly and effectively authorized by all necessary action on the part of
Seller, including authorization by the board of directors or board of managers,
as applicable, of each of Seller, and no further action or Consent is required
in connection with such execution, delivery and performance of this Agreement by
Seller. This Agreement has been duly executed and delivered by Seller, and
constitutes the valid and binding obligation of each of Seller, enforceable
against Seller in accordance with its terms.

Section 3.2 Financial Statements. The unaudited income and expense statements
for the Business for the twelve month period ending December 31, 2008 and the
six month period ending June 30, 2009 (collectively, the “Financial
Statements”), copies of which are attached hereto as Schedule 4, accurately
reflect in all material respects the income and expenses of such Locations for
the periods covered.

Section 3.3 Tax Matters.

(a) (i) Each of Seller has properly and timely filed all Tax Returns required to
be filed by it; (ii) each of Seller has paid all Taxes required to be paid by it
(whether or not shown on a Tax Return); and (iii) there are no encumbrances for
Taxes on the Acquired Assets other than for Taxes not yet due and payable.

(b) Each of Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor,

 

9

--------------------------------------------------------------------------------

creditor, shareholder or other person for all periods for which the statutory
period of limitations for the assessment of such Tax has not yet expired and all
IRS Forms W-2 and 1099 (and other applicable forms required to be filed by a
state or local Taxing Authority) required with respect thereto have been
properly completed and timely filed.

(c) Seller is not a “foreign person” as such term is defined in
Section 1445(f)(3) of the Code.

Section 3.4 No Violation. Neither the execution and delivery of this Agreement
by the Seller nor the performance of their respective obligations hereunder or
thereunder will, subject to receipt of all Required Consents, (a) violate,
conflict with or result in a breach of any Law, (b) violate, conflict with or
result in a breach or termination of, or otherwise give any contracting party
additional rights or compensation under, or the right to terminate or
accelerate, or constitute (with notice or lapse of time, or both) a default
under the terms of any organizational documents (i.e., charter, bylaws,
operating agreement, partnership agreement or similar document), any note, deed,
lease, instrument, permit, security agreement, mortgage, commitment, contract,
agreement, order, judgment, decree, license or other instrument or agreement,
whether written or oral, express or implied, including, without limitation, the
Assumed Contracts, to which Seller is a party or by which any of the Acquired
Assets or the Business is bound, or (c) result in the creation or imposition of
any Liens with respect to the Acquired Assets or the Business.

Section 3.5 Status of Acquired Assets.

(a) Title to Acquired Assets. Seller has fee simple title to the Real Property
and good and marketable title to all of the Acquired Assets, subject to no
Liens, except for Permitted Encumbrances and as otherwise disclosed in Schedules
1 or 5. At the Closing, Buyer will acquire fee simple title to the Real Property
and good and marketable title to all of the Acquired Assets, in each case free
and clear of any and all Liens except Permitted Encumbrances. Other than as
disclosed in Schedule 1, Seller has not entered into any Contract granting
rights to third parties in any real or personal property of Seller included in
the Acquired Assets, and no Person has any right to possession or occupancy of
any of the Acquired Assets.

(b) Condition of Acquired Assets. The Real Property and the tangible Acquired
Assets that are reasonably necessary for the operation of the Business are in
operating

 

10

--------------------------------------------------------------------------------

condition and reasonable repair (subject to normal wear and tear) and are
sufficient to permit Buyer to conduct the Business as presently conducted.

Section 3.6 Improvements. To the Knowledge of Seller, no municipal or other
governmental improvements affecting the Real Property are in the course of
construction or installation, and no such improvement has been ordered to be
made; and any municipal or other governmental improvements affecting the Real
Property which have been constructed or installed have been paid for and will
not hereafter be assessed (except with respect to any currently recorded
assessments which are to become due after the Closing), and all assessments
heretofore made have been paid in full, other than any recorded assessments
which are to become due after the Closing; and Seller has not entered into any
private contractual obligations relating to the installation of or connection to
any sanitary sewers, storm sewers or any other improvements.

Section 3.7 Real Property Approvals. To the Knowledge of Seller, all permanent
certificates of occupancy and all other licenses, permits, authorizations,
consents, certificates and approvals required by all Governmental Authorities
having jurisdiction and the requisite certificates of the local board of fire
underwriters (or other body exercising similar functions), if applicable, have
been issued for the Real Property, have been paid for, and are in full force and
effect.

Section 3.8 Zoning. Except as disclosed on the letters delivered by the zoning
code enforcement officers for the municipalities where the Real Property is
located, Seller has not received notice from any Governmental Authority that:
(i) any parcel of the Real Property is not in compliance with current zoning and
use classifications under the respective municipal zoning ordinance governing
such Real Property; and (ii) the current construction, operation and use of the
buildings and other improvements constituting the Real Property violate any
zoning, subdivision, building or similar law, ordinance, order, regulation or
recorded plat or any certificate of occupancy issued for the Real Property.

 

11

--------------------------------------------------------------------------------

Section 3.9 No Violations Relating to Real Property. No portion of the Real
Property, and no current use of the Real Property, is in violation of any
applicable Law, except where such violation would not have a Material Adverse
Effect. Seller has not received notice of any presently outstanding and uncured
violations of any building, housing, safety or fire ordinances with respect to
the Real Property.

Section 3.10 Real Estate Taxes. Seller has not received notice of any proceeding
pending for the adjustment of the assessed valuation of all or any portion of
the Real Property. To the Knowledge of Seller, there is no abatement, reduction
or deferral in effect with respect to all or any portion of the real estate
Taxes or assessments applicable to the Real Property.

Section 3.11 Eminent Domain. Seller has not received any notice of any
condemnation proceeding or other proceedings in the nature of eminent domain
(“Taking”) in connection with the Real Property and, to the Knowledge of Seller,
no Taking has been threatened.

Section 3.12 Inventory. Seller has good and marketable title to the Inventory
free and clear of any and all Liens (other than a customer’s rights in items
being stored for such customer). The Inventory does not consist of any material
amount of items that are obsolete or damaged or items held on consignment.
Seller has not acquired or committed to acquire or produce Inventory for sale
which is not of a quality usable in the ordinary course of business within a
reasonable period of time and consistent with past practice.

Section 3.13 Litigation. No Proceeding before any Governmental Authority,
mediator or arbitrator is pending or, to the Knowledge of Seller, threatened,
involving Seller wherein a judgment, decree, order, settlement or other
resolution would have a Material Adverse Effect, or which would prevent the
carrying out of this Agreement, declare unlawful the transactions contemplated
by this Agreement, cause such transactions to be rescinded, or require Buyer to
divest itself of any of the

 

12

--------------------------------------------------------------------------------

Acquired Assets or the Business. To the Knowledge of Seller, no facts or
circumstances or other events have occurred that can reasonably be expected to
give rise to any such Proceeding.

Section 3.14 Court Orders and Decrees. There is not outstanding or, to the
Knowledge of Seller, threatened any order, writ, injunction or decree of any
Governmental Authority, mediator or arbitrator against or affecting Seller,
relating to any of the Acquired Assets or the Business.

Section 3.15 Trade Names. The Location names set forth on Exhibit A constitute
the only trade names held for use or used by the Seller in connection with the
Business and, other than such trade names, there are no Trademarks that are
material to the Business. Seller has the legal right to use such the Location
names set forth on Exhibit A, as used by Seller in connection with the Business,
without the Consent of any other Person.

Section 3.16 Contracts. Except for the Assumed Contracts (copies of which have
been delivered to Buyer), neither Seller, nor any Affiliate of Seller, is a
party to or bound by any material Contract relating to the Acquired Assets or
the Business. All of the Assumed Contracts are in full force and effect, and
there exists no default or breach thereunder by Seller or, to the Knowledge of
Seller, any other party thereto. Seller has not received any notice (written or
oral) indicating the intention of any party to any Assumed Contract to amend,
modify, rescind or terminate such Assumed Contract. All of the Assumed Contracts
are in full force and effect and are enforceable against the Seller and any of
its Affiliates that is a party thereto and, to the Knowledge of Seller, against
all other parties thereto in accordance with their terms and applicable Laws.

Section 3.17 Licenses and Permits. Seller holds all of the Permits required to
own, operate and maintain the Business under any applicable Law as currently
conducted or proposed (by Seller) to be conducted (“Existing Permits”), and all
Existing Permits are, and as of immediately prior to the Closing will be, in
full force and effect. To the Knowledge of Seller, there are no material
restrictions on Buyer’s ability to replace or renew any of the Existing Permits.
Each of Seller is in

 

13

--------------------------------------------------------------------------------

compliance with all Existing Permits, except where the failure to be in
compliance would not have a Material Adverse Effect.

Section 3.18 Consents. Each of Seller has, or will have prior to the Closing,
obtained, satisfied or made all Consents (the “Required Consents”) that are
required to be obtained, satisfied or made pursuant to any Laws, Permits,
Assumed Contracts or other agreements by which Seller, or any of their
properties or business assets, including, without limitation, the Acquired
Assets, are bound in connection with (a) the execution and delivery of this
Agreement by Seller, or (b) the sale and transfer to Buyer of the Acquired
Assets, including, without limitation, the Assumed Contracts and, if
transferable to Buyer under applicable Law, the Existing Permits.

Section 3.19 Compliance with Laws. The Business presently is conducted, and the
Acquired Assets and their respective uses are, in compliance with all Laws
applicable to them, except where the failure to so comply would not have a
Material Adverse Effect. Seller has not received any written notice of any
administrative, civil or criminal investigation or audit by any Governmental
Authority relating to, or which could result in a Material Adverse Effect.

Section 3.20 OSHA or ADA. There is no Proceeding pending with respect to Seller,
and, to the Knowledge of Seller, no charge or claim has been made against Seller
that has not been dismissed, discharged or otherwise fully resolved, under the
Occupational Safety and Health Act (“OSHA”) or the Americans with Disabilities
Act (“ADA”) pertaining to the facilities and operations of the Business.

Section 3.21 Labor Relations. Seller is not a party to any collective bargaining
or union Contract, and Seller is not aware of any current union organization
effort with respect to employees of the Business. There are no pending or
unresolved unfair labor practice complaints from or with respect to any
employees of the Business. Since December 31, 2008, Seller has not received any
written notice of any strikes, slowdowns, work stoppages, lockouts or threats
thereof, by or with

 

14

--------------------------------------------------------------------------------

respect to any employees of the Business. Since December 31, 2008, Seller has
not had an “employment loss” within the meaning of the WARN Act or any similar
Law.

Section 3.22 Employees and Independent Contractors. Schedule 6 sets forth a list
of all employees of the Business, together with (a) their titles or
responsibilities, (b) their annual salaries or wages, (c) their dates of hire,
(d) any employment or severance agreements with them, and (e) any outstanding
loans or advances made to them. Except as limited by any employment Contracts
listed in Schedules 5 and 6 and except for any limitations of general
application which may be imposed under applicable employment Laws, Seller has
the right to terminate the employment of each employee of the Business at will
and without incurring any penalty or liability other than Retained Liabilities.
Each of Seller is in compliance with all Laws respecting employment practices,
except where the failure to so comply would not have a Material Adverse Effect.
To the Knowledge of Seller, no employee of the Business has provided to Seller
(or any Affiliate of Seller) written notice of such employee’s intent to
terminate his or her employment with the Business after the date hereof.

Section 3.23 No Brokers. Neither Seller nor any Person acting on behalf of
Seller has agreed to pay to any Person any commission, finder’s or investment
banking fee, or similar payment in connection with this Agreement or the
transactions contemplated thereby, nor has Seller or any Person acting on behalf
of Seller, taken any action on which a claim for any such payment could be
based.

Section 3.24 Operations in Ordinary Course of Business. Since December 31, 2008,
Seller has operated and conducted the Business in the ordinary and usual course
consistent with past practices. Since December 31, 2008, there has been no
material adverse change in the financial condition, assets, liabilities, or
operations of the Business, nor have any events occurred, nor to the Knowledge
of Seller do there exist any circumstances, which would constitute, either
before or after

 

15

--------------------------------------------------------------------------------

the Closing, any such change. Without limiting the generality of the foregoing,
since December 31, 2008, Seller has not:

(a) sold, assigned, leased or transferred any of their assets, which are
material to the Business singly or in the aggregate, other than assets sold or
disposed of in the ordinary course of business, consistent with past practice;

(b) canceled, terminated, amended, modified or waived any material term of any
Contract relating to the Business to which either of them is a party or by which
either of them or any of their assets is bound providing for aggregate annual
revenues to Seller in excess of $25,000;

(c) (i) increased the base compensation payable or to become payable to any of
its employees or independent contractors, except for normal periodic increases
in such base compensation in the ordinary course of business, consistent with
past practices (including, without limitation, past practices with respect to
amounts and timing), (ii) granted, made or accrued any loan, bonus, fee,
incentive compensation (excluding sales commissions), service award or other
like benefit, contingently or otherwise, to or for the benefit of any of its
employees or independent contractors, except in the ordinary course of business
consistent with past practices (including, without limitation, past practices
with respect to amounts and timing), or (iii) entered into any new employment,
collective bargaining or consulting agreement or caused or suffered any written
or oral termination, cancellation or amendment thereof (except for Assumed
Contracts or with respect to any employee at will without a written agreement);

(d) executed any lease for real or personal property for the Business or
incurred any Liability therefor except as otherwise disclosed herein;

(e) suffered any damage, destruction or loss (whether or not covered by
insurance) affecting the Business or any assets used in the Business that
exceeds $25,000 in any one instance or $100,000 in the aggregate; or

(f) mortgaged or pledged, or otherwise made or suffered any Lien (other than any
Permitted Encumbrance) on, any material asset of the Business or group of assets
that are material in the aggregate to the Business.

Section 3.25 Full Disclosure. None of the representations and warranties made by
Seller in this Agreement (including the Schedules hereto) or in any document
delivered to Buyer by or on behalf of Seller pursuant to Section 7.1, contains
any untrue statement of a material fact, or omits any material fact necessary to
make any of them, in light of the circumstances in which it was made, not
misleading.

 

16

--------------------------------------------------------------------------------

Section 3.26 No Other Representations or Warranties. Except as expressly stated
in this Agreement, Seller makes no other representation or warranty of any kind
whatsoever.

ARTICLE IV

Representations and Warranties of Buyer

Buyer hereby represents and warrants to Seller, both as of the date hereof and
as of the Effective Time, as follows:

Section 4.1 Authority.

(a) Each of StoneMor LLC and Plymouth is a limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation. The execution, delivery and performance of this
Agreement by StoneMor LLC and Plymouth have been duly authorized and consented
to by the Board of Managers of such Person, and no other or additional consent
or authorization on the part of such Person is required in connection therewith.
The consummation of the transactions contemplated by this Agreement will not
result in a breach, violation or default by StoneMor LLC or Plymouth of or under
any judgment, decree or Contract applicable to any of them except to the extent
that any such breach, violation or default would not reasonably be expected to
have a material adverse effect on the ability of StoneMor LLC and Plymouth to
perform their obligations hereunder.

(b) Upon execution and delivery hereof, this Agreement shall constitute the
valid and binding obligation of StoneMor LLC and Plymouth, enforceable against
each of them in accordance with its terms.

Section 4.2 Intentionally Omitted.

Section 4.3 No Brokers. Neither Buyer, nor any Person acting on behalf of Buyer,
has agreed to pay a commission, finder’s or investment banking fee, or similar
payment in connection with this Agreement or any matter related hereto to any
Person, nor has any such Person taken any action on which a claim for any such
payment could be based.

Section 4.4 Knowledge of Seller Breach. Except as disclosed to Seller in
writing, none of the Buyer Representatives (as defined below) have actual
knowledge of a breach by Seller of any representation or warranty contained in
Article III, or any covenant or agreement to be performed or complied with by
Seller in accordance with this Agreement prior to the Effective Time. For
purposes

 

17

--------------------------------------------------------------------------------

of this Section 4.4, the term “Buyer Representative” means Paul Waimberg, Frank
Milles, Michael Stache, Gregg Strom, Alan Fisher, Ken Lee, Penny Casey and Tim
Yost, and such persons shall be deemed to have actual knowledge of any breach
referred to in the preceding sentence of which any individual assigned by a
third-party representative or advisor of Buyer to provide substantial services
in connection with the transaction contemplated hereby has actual knowledge.

Section 4.5 No Other Representations or Warranties. Except as expressly stated
in this Agreement, Buyer makes no other representation or warranty of any kind
whatsoever.

ARTICLE V

Covenants

Section 5.1 Access to Business. From and after the date of this Agreement,
Seller will give Buyer and its representatives full and free access to all
properties, Contracts, books and records of the Business so that Buyer may have
full opportunity to make such investigation as it shall desire to make of the
affairs of the Business, including, without limitation, the conduct of any
environmental investigations or assessments, provided that (i) such
investigation or assessment shall not unreasonably interfere with the operations
of the Business, and (ii) prior to Buyer or any of its representatives or
contractors contacting any Location or Location personnel, Buyer shall first
communicate with and receive approval from Michael Lehmann, which approval shall
not be unreasonably withheld. Seller agrees to furnish to Buyer and its
representatives all data and information of a financial or operational nature
concerning the Acquired Assets and the Business that may be reasonably requested
by them to conduct a complete and thorough due diligence review of the Acquired
Assets, the Business and the employees of the Business. In furtherance and not
in limitation of the foregoing, Seller agrees to fully cooperate with Buyer as
reasonably requested and as reasonably necessary in connection with the
arrangement of any debt financing required by Buyer to

 

18

--------------------------------------------------------------------------------

consummate the transaction contemplated by this Agreement; provided, however,
such cooperation shall impose no monetary obligation on Seller.

Section 5.2 Conduct of Business Pending Closing. From and after the date of this
Agreement until the Closing, and except as otherwise permitted by this Agreement
or as consented to by Buyer in writing, Seller covenants that:

(a) Seller will conduct the Business only in the ordinary course consistent with
past practices, which shall include, without limitation, compliance in all
material respects with all applicable Laws and the maintenance in force of all
insurance policies;

(b) Seller shall maintain the Acquired Assets in their current state of repair,
excepting normal wear and tear and use their commercially reasonable efforts to
protect the goodwill of the Business and to maintain for the Business the
current relationships with suppliers and customers of the Business and others
having business relations with the Business;

(c) Seller shall use its commercially reasonable efforts to ensure that key
employees and key independent contractors continue their association with the
Business through the Closing Date; and

(d) Seller shall not engage in any practice, take, fail to take, or omit any
action, or enter into any transaction, (i) of the kind described in Section 3.24
or (ii) which would make any of the representations and warranties in Article
III not true.

Section 5.3 Consents and Licenses. Each of Seller will use its commercially
reasonable efforts to obtain, satisfy or make, prior to the Closing, all
Required Consents.

Section 5.4 Cooperation Regarding Publicity. Neither Seller nor Buyer shall make
any press release or other public announcement or filing regarding the
transactions contemplated herein without prior consultation and coordination
with the other party(ies) hereto, so that the business interests of all are
properly served. Notwithstanding the foregoing or anything else to the contrary,
Seller and its Affiliates on the one hand, and Buyer and its Affiliates on the
other hand, may make one or more public announcements or filings in connection
with the transactions contemplated by this Agreement to the extent that such
announcement or filing is reasonably required for the party making such
announcement or filing (or any of such party’s Affiliates) to avoid Liability
under applicable

 

19

--------------------------------------------------------------------------------

Laws; provided, however, that the party making such announcement or filing shall
notify the other party(ies) hereto, if reasonably possible, at least three
business days prior to making such filing.

Section 5.5 Title to Real Estate. Buyer has obtained (and provided copies to
Seller), one-half at Buyer’s expense and one-half at Seller’s expense, a
commitment for title insurance in an aggregate amount equal to the portion of
the Closing Purchase Price deemed allocated to the Real Property as reflected on
the Statement of Allocation from the Title Company, showing title to the Real
Property to be held in fee simple and good, marketable and vested in Seller
subject to the liens, claims and encumbrances, easements, rights-of-way,
reservations, restrictions, outstanding mineral interests and other matters
affecting the Real Property or the title thereto (i) identified on Schedule 1,
or (ii) otherwise constituting Permitted Encumbrances. At Closing or soon
thereafter as practicable, the Title Company shall issue, one-half at Buyer’s
expense and one-half at Seller’s expense, its title insurance policy(ies)
consistent with its previous title commitment(s) approved by Buyer.

Section 5.6 Inspections. Buyer and Seller acknowledge that Buyer has performed
and obtained inspections and surveys of the Real Property at Buyer’s expense.

Section 5.7 Delivery of Seller Schedules. On or before the fifth (5) business
day preceding the Closing Date, the Seller shall deliver to Buyer Schedule 1
through and including Schedule 10 to this Agreement on a compact disk (the
“Seller Schedules”). Such delivery shall constitute Seller’s certification that
the Seller Schedules, which shall thereupon be incorporated herein by reference,
conform to the requirements of the Agreement. Each such Schedule shall set forth
true, accurate, and complete information as to the matters set forth in the
respective Sections of the Agreement herein, all as of the date of such
delivery, unless otherwise indicated thereon.

Section 5.8 Satisfaction of Pre-Closing Covenants. Seller and Buyer shall use
their commercially reasonable efforts to satisfy at or prior to Closing all of
the covenants and agreements

 

20

--------------------------------------------------------------------------------

to be performed or complied with by each of them, respectively, pursuant to this
Agreement at or prior to Closing.

Section 5.9 Post Closing Access.

(a) For a period of eight (8) years from the Closing Date, Seller shall retain
and make available to Buyer for any lawful purpose, upon reasonable notice and
at reasonable times, Seller’s Tax records, general ledgers and other books of
original entry, and original payroll records with respect to periods prior to
the Effective Time. If Seller ceases to conduct operations prior to the end of
such eight-year period, Seller shall give Buyer 60 days’ prior written notice
and an opportunity to accept (without charge to Buyer) from Seller a transfer of
such books and records, and if Buyer elects not to accept such books and
records, the Seller’s obligations under this paragraph (a) shall cease.

(b) For a period of eight (8) years from the Closing Date, Buyer shall retain
and make available to Seller for any lawful purpose, upon reasonable notice and
at reasonable times, the books and records of the Business with respect to
periods prior to the Effective Time and to actions and events after the
Effective Time, to the extent they relate to periods prior to the Effective
Time. If Buyer ceases to conduct operations prior to the end of such eight-year
period, Buyer shall give Seller 60 days’ prior written notice and an opportunity
to accept (without charge to Seller) from Buyer a transfer of such books and
records from Buyer, and if Seller elects not to accept such books and records,
Buyer’s obligations under this paragraph (b) shall cease.

(c) After the Closing, for a period of 30 days, Buyer shall provide and allow
Seller reasonable access, at such times as are mutually agreed upon in advance
by Seller, and Buyer, to the facilities in which the Business is conducted as
reasonably necessary to collect and remove the Excluded Assets; provided,
however, Buyer’s employees shall not be obligated to physically assist in the
collection and removal of Excluded Assets and in no event shall such collection
and removal of Excluded Assets unreasonably disrupt or interfere with the
operations of the Business, and provided, further that, Seller, jointly and
severally, shall fully indemnify Buyer for any and all Losses arising from or
relating to Seller’s collection and removal of the Excluded Assets.

(d) Within 45 days following the Closing, Buyer will remove from all computers
located at any of the Locations all Seller proprietary software using “F disks”
and instructions provided by Seller transition personnel. Additionally, within
the same 45-day period, all Seller-held software licenses for non-proprietary
software will be terminated by and/or otherwise transferred to Buyer as a result
of Buyer communication directly with applicable software vendors/owners.

 

21

--------------------------------------------------------------------------------

Section 5.10 Tax Matters.

(a) Seller shall be responsible for preparing and filing, at Seller’s expense,
as applicable, within the times and in the manner prescribed by law (subject,
however, to filing under any extension) all Tax Returns of Seller, as
applicable, for all Tax periods.

(b) Seller and Buyer shall cooperate fully, as and to the extent reasonably
requested by the other party, in connection with any Tax proceeding relating to:
(i) the Acquired Assets; (ii) the Business; or (iii) the transactions
contemplated by this Agreement. Such cooperation shall include the retention and
(upon the other party’s request) the provision of records and information which
are reasonably relevant to any Tax audit, litigation or other proceeding and
making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Seller agrees to
retain all books and records with respect to Tax matters pertinent to Seller
relating to any taxable period beginning before the Closing Date until the
longer of (x) sixty (60) days after the expiration of the statute of limitations
of the respective taxable periods or (y) eight years, and to abide by all record
retention agreements entered into with any Taxing Authority.

(c) Seller and Buyer agree, upon request, to use their commercially reasonable
efforts to obtain any ruling, certificate or other document from any Taxing
Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed solely with respect to the transactions
contemplated by this Agreement.

Section 5.11 Employees.

(a) Buyer may, but shall not be obligated to, offer employment to any employees
of the Business on such terms and conditions as Buyer may determine. Seller
shall retain all obligations and liabilities arising on or prior to the
Effective Time in respect of its current and former employees under any and all
employee benefit plans, policies or practices of each of Seller or any of its
Affiliates and applicable Laws. Prior to the Closing, Buyer shall notify Seller
of those employees of the Business to whom Buyer expects to make an offer of
employment. Buyer shall not assume or otherwise be responsible for any
obligation or liability of employee benefit plans, policies or practices of
Seller or any of its Affiliates, or from any employee’s employment with or
termination of employment by Seller or any Affiliate of Seller at or prior to
the Closing.

(b) Seller (or any of its Affiliates), as applicable, shall be responsible for
providing health benefit continuation coverage under Section 162(k) and
Section 4980B of the Code with respect to (i) any former employee of Seller (or
any of its Affiliates) and any other qualified beneficiary under any group
health plan who as of the Closing is receiving or is eligible to receive such
continuation coverage, and (ii) any employee of the Seller (or any of its
Affiliates) and any qualified beneficiary with respect to such employee.

(c) Seller shall be responsible for, and shall comply with, any and all WARN Act
obligations relating to periods prior to Closing or associated with, or incurred
as a result of, the transactions contemplated by this Agreement.

Section 5.12 No Solicitation; Notification.

 

22

--------------------------------------------------------------------------------

(a) No Solicitation. Prior to Closing, Seller shall not, and Seller shall cause
its representatives (including, without limitation, investment bankers,
attorneys and accountants), employees, directors, members, partners and other
Affiliates not to, directly or indirectly, enter into, solicit, initiate,
conduct or continue any discussions or negotiations with, or encourage or
respond to any inquiries or proposals by, or participate in any negotiations
with, or provide any information to, or otherwise cooperate in any other way
with, any Person other than Buyer and its representatives concerning any sale of
all or any portion of the assets of the Business of, or of any shares of capital
stock or other units of equity interests in Seller, or any merger,
consolidation, recapitalization, liquidation, dissolution or similar transaction
involving Seller that encompasses any portion of the Business or the Acquired
Assets (each such transaction being referred to herein as a “Proposed
Acquisition Transaction”). Each of Seller hereby represents and warrants that it
is not now engaged in discussions or negotiations with any party other than
Buyer with respect to any Proposed Acquisition Transaction. Seller shall not,
and Seller shall cause its representatives (including, without limitation,
investment bankers, attorneys and accountants), employees, directors, members,
partners and other Affiliates not to, agree to release any third party from, or
waive any provision of, any confidentiality or standstill agreement that relates
in any way to all or a portion of the Business.

(b) Notification. Seller shall (i) immediately notify Buyer if any written
offer, inquiry or proposal is made or given to Seller (or any of its Affiliates)
with respect to any Proposed Acquisition Transaction, and (ii) promptly provide
Buyer with a copy of any such offer, proposal or inquiry; provided, however,
that no such notice hereunder shall relieve Seller of its respective obligations
under Section 5.14(a).

Section 5.13 Confidentiality. The parties acknowledge that the transactions
described herein are of a confidential nature and shall not be disclosed except
to consultants, advisors, lenders or other financial sources and Affiliates, or
as required by Law, until such time as the parties make a public announcement
regarding the transaction as provided hereunder. In connection with the
negotiation of this Agreement, the preparation for the consummation of the
transactions contemplated hereby, and the performance of obligations hereunder,
each party acknowledges that it has had, and will continue to have, access to
confidential information relating to the other party. Each party shall treat
such information as confidential, preserve the confidentiality thereof and not
disclose such information, except to its advisors, consultants and other
representatives and to Affiliates, or as required by Law, in connection with the
transactions contemplated hereby. Notwithstanding the foregoing, Buyer may
disclose this Agreement and the information and data in Buyer’s possession in

 

23

--------------------------------------------------------------------------------

connection herewith to its lenders, but shall advise them of the requirement to
maintain the confidentiality of such information and data. This Section 5.13
shall not apply to any information that is (a) in the public domain through no
fault on the part of the receiving party hereto or any of their Affiliates or
the employees, agents or representatives of such party or any of its Affiliates,
or (b) learned or discovered through any independent source that is not
obligated to maintain such information as confidential. Because of the
difficulty of measuring economic loss as a result of a breach of the foregoing
covenants in this Section 5.13, and because of the immediate and irreparable
damage that would be caused for which there may be no other adequate remedy at
law, the parties hereto agree that, in the event of a breach by any of them of
the foregoing covenants in this Section 5.13, such covenants may be enforced
against them by injunction or restraining order.

Section 5.14 Cooperation Regarding Financial Information. After the Closing,
without limiting the generality of any other provision of this Agreement, and
without further consideration, Seller shall, and shall cause its respective
Affiliates to, provide reasonable cooperation (including reasonable access to
Seller’s files, records and employees) to Buyer and its agents and
representatives (including Buyer’s external auditors) in connection with the
preparation of financial statements and financial information and disclosures
relating to the Business and the Acquired Assets, including, without limitation,
disclosures required under Items 2.01 and 9.01 of Form 8-K adopted by the
Securities and Exchange Commission (“SEC”), including all requirements for pro
forma financial information.

Section 5.15 Further Assurances. From time to time after the Closing, at the
request of Buyer, and without further consideration but at no cost to Seller,
Seller will execute and deliver such additional documents and will take such
other actions as Buyer reasonably may request to more fully and absolutely
convey, assign, transfer, deliver and vest in Buyer title to the Acquired Assets
and the Business and to otherwise carry out the terms of this Agreement.

 

24

--------------------------------------------------------------------------------

Section 5.16 Notice of Breaches. Seller shall give prompt notice to Buyer in
writing of (a) the occurrence, or failure to occur, of any event, which
occurrence or failure causes or would reasonably be expected to cause any
representation or warranty of Seller contained in this Agreement or in any
Exhibit or Schedule hereto to be untrue or inaccurate, (b) any Material Adverse
Effect, and (c) any failure of Seller or any of its respective Affiliates,
shareholders or representatives to comply with, perform or satisfy any covenant,
condition or agreement to be complied with, performed by or satisfied by them
under this Agreement or any Exhibit or Schedule hereto; and if after receiving
such disclosure Buyer shall elect to proceed with the Closing, such disclosure
shall be deemed to cure, and shall relieve Seller of any Liability with respect
to any breach of, or failure to satisfy, any representation, warranty, covenant,
condition or agreement hereunder to the extent such breach or failure was fully
and accurately described in such disclosure.

Section 5.17 Casket Supply Agreement. Flint, Sunrise and Hillcrest are each
parties to an agreement (collectively, the “Casket Supply Agreement”) entered
into with the Universal Casket Company of Mt. Morris, Michigan (“Universal”)
sometime in 1990. Under the terms of the Casket Supply Agreement,
Universal remains obligated to deliver 1165 caskets to Flint, 89 caskets to
Sunrise, and 98 caskets to Deepdale Memorial Gardens, a location owned by
Hillcrest. The Michigan Sellers and SCI, pursuant to the Michigan Asset Purchase
and Sale Agreement, propose to assign their rights under the Casket Supply
Agreement with the consent of Universal to the Michigan Buyers, and the Michigan
Buyers agree to accept such assignment subject to the provisions hereof. The
Michigan Sellers and SCI agree to provide replacement caskets or otherwise
assist the Michigan Buyers in obtaining replacement caskets in the event
Universal does not perform in accordance with the terms of the Casket Supply
Agreement and to reimburse the Michigan Buyers for out of pocket costs incurred
as a result of the failure of Universal to perform in accordance with the terms
of the

 

25

--------------------------------------------------------------------------------

Casket Supply Agreement; provided, however, the Michigan Sellers shall incur no
liability under this Section until costs incurred by the Michigan Buyers exceed
$10,000 in the aggregate.

ARTICLE VI

Conditions Precedent to Closing

Section 6.1 Conditions to Seller Closing. The obligations of Seller to
consummate the transactions contemplated by this Agreement are subject to the
satisfaction on or before the Closing of the following conditions, any one or
more of which may be waived by Seller at its option:

(a) the representations and warranties of Buyer contained in this Agreement
shall be true and correct, both on the date of this Agreement and at and as of
the Closing, except for representations or warranties made as of some other
specified date, which as of the Closing shall remain true and correct as of such
specified date;

(b) Buyer shall have discharged, performed or complied with, in all material
respects, all covenants and agreements contemplated by this Agreement to be
performed or complied with by Buyer at or prior to the Closing; and

(c) Buyer shall have delivered, or caused to be delivered, to Seller each of the
documents required by Section 7.2.

Section 6.2 Conditions to Buyer Closing. The obligations of Buyer to consummate
the transactions contemplated by this Agreement are subject to the satisfaction
on or before the Closing of the following conditions, any one or more of which
may be waived by Buyer at its option:

(a) the representations and warranties of Seller contained in this Agreement
shall be true and correct, both on the date of this Agreement and at and as of
the Closing, except for representations or warranties made as of some other
specified date, which as of the Closing shall remain true and correct as of such
specified date;

(b) Seller shall have discharged, performed or complied with, in all material
respects, all covenants and agreements contemplated by this Agreement to be
performed or complied with by Seller at or prior to the Closing;

(c) Seller shall have delivered, or caused to be delivered, to Buyer each of the
documents required by Section 7.1;

 

26

--------------------------------------------------------------------------------

(d) There shall have been no material adverse change in the condition
(financial, physical or otherwise) of the assets, commercial relationships,
business or operations of the Business or the Acquired Assets from and after
December 31, 2008;

(e) No Law, order or judgment shall have been enacted, entered, issued or
promulgated by any Governmental Authority, arbitrator or mediator, which
challenges, or seeks to prohibit, restrict or enjoin the consummation of the
transactions contemplated hereby, nor shall there be pending or threatened, any
action, suit or proceeding by or before any Governmental Authority, arbitrator
or mediator, challenging any of the transactions contemplated by this Agreement,
seeking monetary relief by reason of the consummation of such transactions or
seeking to effect any material divestiture or to revoke or suspend any material
Contract or Permit of the Business by reason of any or all of the transactions
contemplated by this Agreement;

(f) Buyer shall have obtained all required Permits for the operation of the
Business;

(g) All Required Consents shall have been made, obtained or given, including
without limitation, those of Buyer’s existing lenders, and such Consents shall
be in full force and effect;

(h) Buyer shall have received the Seller Schedules and such Seller Schedules
shall not be different from the information that was contained on the Bowne Data
Room(s) containing information regarding the Business and accessible to Buyer,
as that information existed on December 20, 2009, to such an extent that the
difference would (in the reasonable judgment of a third party) have a Material
Adverse Effect on the value of the Business to be purchased hereunder; and

(i) The closing of the transactions contemplated by the Michigan Asset Purchase
and Sale Agreement.

ARTICLE VII

Closing Deliveries

Section 7.1 Seller’s Closing Deliveries. At the Closing, Seller will deliver to
Buyer the following documents, duly executed as required, and each in form and
substance reasonably acceptable to Buyer and its counsel:

(a) motor vehicle transfer/tax forms transferring the automobiles comprised in
the Acquired Assets to Buyer, free and clear of all Liens (one for each
automobile) and duly endorsed certificates of title for the automobiles
evidencing that title to such vehicles are held in Buyer and are free and clear
of all Liens (one for each automobile); provided, however, that as to all such
vehicles which are covered by leases from Wheels, Inc., as referenced above,
Buyer recognizes that Wheels, Inc. will cause new certificates of title to be
issued and

 

27

--------------------------------------------------------------------------------

delivered to Buyer after Closing according to the standard procedures of the
applicable states regarding such matters;

(b) a bill of sale conveying the applicable Acquired Assets to Buyer, in form
and substance reasonably acceptable to Buyer;

(c) an Assignment and Assumption Agreement assigning to Buyer all of the Assumed
Contracts;

(d) a certificate of Seller to the effect that the conditions set forth in
Sections 6.2(a) and (b) hereof have been satisfied;

(e) a certificate of Seller to the effect that Seller is not a foreign person
within the meaning of Section 1445 of the Code (or any comparable law);

(f) Special Warranty Deeds conveying to Buyer title in fee simple to the Real
Property;

(g) fully executed counterparts of any and all required transfer tax forms;

(h) such title affidavits, opinions and indemnities as may be requested by the
Title Company to issue the policy to Buyer;

(i) all other bills of sale, deeds, leases, transfers, assignments, acts, things
and assurances as may be required in the reasonable opinion of Buyer for more
perfectly and absolutely assigning, transferring, conveying, assuring to and
vesting in Buyer title to the Acquired Assets free and clear of all Liens;

(j) copies of all Required Consents, duly executed by the Person from whom
consent is required to be obtained;

(k) an estoppel certificate from Plymouth Packaging, Inc. relating to its lease
of a portion of the Location; and

(l) such other documents as may be reasonably required to consummate the
transaction contemplated hereunder.

Section 7.2 Buyer’s Closing Deliveries. At the Closing, Buyer will deliver to
Seller the following:

(a) in the form and manner specified in Section 1.3 hereof, the Closing Purchase
Price, as adjusted pursuant to this Agreement;

(b) Intentionally Omitted;

(c) a certificate of Buyer, signed by an executive officer thereof, to the
effect that the conditions set forth in Sections 6.1(a) and (b) hereof have been
satisfied; and

 

28

--------------------------------------------------------------------------------

(d) such other documents as may be reasonably required to consummate the
transaction contemplated hereunder.

ARTICLE VIII

Survival of Representations, Warranties and Covenants; Indemnification;
Enforcement of Agreement

Section 8.1 Nature of Representations. For purposes of this Agreement, the
contents of all Exhibits, certificates, Schedules, and other items incorporated
herein by reference shall, in addition to the representations, warranties and
covenants made in this Agreement, constitute representations, warranties, and
covenants made in this Agreement by Seller or Buyer, as the case may be.

Section 8.2 Survival of Representations, Warranties, and Covenants. The
representations, warranties, and covenants of the parties made in this Agreement
shall survive the Closing, without regard to any investigation by the parties
with respect thereto, as follows:

(a) The representations and warranties set out in Sections 3.1 (Organization,
Standing; Authorization; Capacity)), 3.3 (Tax Matters), 3.5(a) (Title to
Acquired Assets), 3.10 (Real Estate Taxes), 3.23 (No Brokers) and 4.1
(Authority) (claims with respect to any of the foregoing representations and
warranties referred to herein as “Special Claims”), and the indemnification
obligations of the parties with respect to breaches of such representations and
warranties, shall survive for a period equal to the statute of limitations
pertaining thereto;

(b) All other representations and warranties made in this Agreement, and the
indemnification obligations of the parties with respect to breaches of such
representations and warranties, shall survive for a period of two (2) years
after the Closing;

(c) Any claims, actions or suits that either the Seller, on the one hand, or the
Buyer, on the other hand, may have against the other that arise from any actual
fraud on the part of such other party in connection with this Agreement or the
transactions contemplated hereunder, shall continue in full force and effect
without limitation;

(d) All covenants and agreements made in this Agreement, and the indemnification
obligations of the parties with respect to breaches of such covenants and
agreements, shall survive for a period equal to the statute of limitations or
the period of time specified herein for a particular covenant or agreement;
provided, however that the covenants contained in Section 5.15 (Further
Assurances) and the indemnification obligations of the parties with respect to
breaches thereof, shall survive the Closing indefinitely; and

 

29

--------------------------------------------------------------------------------

(e) Notwithstanding the foregoing or anything else to the contrary, if any claim
or proceeding is to be made or brought by an Indemnitee (as defined in
Section 8.8) within the applicable time period set forth above in this
Section 8.2, such claim, and the representation, warranty and/or covenant
alleged to have been breached in such claim or proceeding, and all
indemnification obligations of the parties with respect thereto, shall survive
until the final resolution of such claim by settlement, arbitration, litigation
or otherwise.

Section 8.3 Indemnification by Seller.

(a) Seller, jointly and severally, agrees to indemnify and hold each Indemnitee
(as defined in Section 8.8), harmless from all Losses incurred, suffered or
paid, directly or indirectly, as a result of or arising out of:

(i) any breach or default in the performance by Seller of any covenant or
agreement of Seller contained in this Agreement or any related document executed
pursuant hereto;

(ii) any breach of warranty or inaccurate or erroneous representation made by
Seller herein (except to the extent that a Buyer Representative had actual
knowledge thereof in breach of Section 4.4);

(iii) any Retained Liabilities;

(iv) any Taxes of Seller, including, without limitation, (A) Transfer Taxes; and
(B) the portion of real and personal property Taxes for which Seller is liable
for pursuant to Section 1.7; and

(v) any unpaid Taxes of any Person including under United States Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law) as a transferee or successor of Seller, by Contract or otherwise.

(b) Notwithstanding anything herein to the contrary, Buyer shall have no claim
for indemnification hereunder until the total amount of all Losses incurred
which would otherwise be subject to indemnification hereunder, including Losses
incurred by Seller and the Michigan Sellers in connection with the Michigan
Asset Purchase and Sale Agreement, exceeds $200,000 and then only to the extent
of such excess, but in no event shall the aggregate amount of all Losses subject
to indemnification under this Section 8.3 exceed the Closing Purchase Price;
provided, however, that the amounts set forth in this Section 8.3(b) shall not
apply to any Losses resulting from or arising out of, directly or indirectly,
(i) any Special Claims, (ii) claims under Sections 8.3(a)(i), 8.3(a)(iii) (other
than the Retained Liabilities identified in Section 1.5(b)(vi)), 8.3(a)(iv) or
8.3(a)(v) or (iii) claims arising from any actual fraud on the part of Seller,
as to each of which Seller shall have liability for the entire amount of such
Loss without any limitation; and

(c) Except as provided in Section 8.7, the indemnification obligations of Seller
hereunder shall be the exclusive remedy of Buyer with respect to any matter
subject to indemnification hereunder.

 

30

--------------------------------------------------------------------------------

(d) Seller will be entitled to receive as a credit against any indemnification
amount owing to Buyer hereunder an amount equal to the net proceeds of any
insurance policy actually received by Buyer for any Loss for which Seller agreed
to indemnify Buyer under this Section 8.3.

Section 8.4 Indemnification by Buyer.

(a) Buyer agrees to indemnify and hold each Indemnitee (as defined in
Section 8.8) harmless from all Losses incurred, suffered or paid, directly or
indirectly, as a result of or arising out of:

(i) any breach or default in the performance by Buyer of any covenant or
agreement of Buyer contained in this Agreement or any related document executed
pursuant hereto;

(ii) any breach of warranty or inaccurate or erroneous representation made by
Buyer herein (except to the extent that Seller had actual knowledge thereof
prior to the Closing); and

(iii) the failure of Buyer to fully pay and discharge as and when same are due
the Assumed Liabilities or any of the obligations, liabilities and/or duties
relating to or arising from the Business from and after the Effective Time.

(b) Except as provided in Section 8.7, the indemnification obligations of Buyer
hereunder shall be the exclusive remedy of Seller with respect to any matter
subject to indemnification hereunder.

(c) Buyer will be entitled to receive as a credit against any indemnification
amount owed to Seller hereunder an amount equal to the net proceeds of any
insurance policy actually received by Seller for a Loss for which the Buyer
agreed to indemnify Seller under this Section 8.4.

Section 8.5 Defense of Claims; Payment.

(a) Any Indemnitee seeking indemnification with respect to any actual or alleged
Loss shall give notice to the applicable Indemnitor within the applicable
survival period set forth in Section 8.2. If any claim, suit, demand or action
is asserted or threatened by a third party (“Claim”) after the Closing Date for
which an Indemnitor may be liable under the terms of Article VIII, then the
Indemnitee shall notify the Indemnitor within thirty (30) days after such Claim
is known to the Indemnitee (provided, however, that failure to provide such
notice will not affect the Indemnitee’s rights to indemnity hereunder from
Indemnitor, unless the Indemnitee can show actual material prejudice resulting
from such failure and then only to the extent of such actual material prejudice)
and shall give the Indemnitor a reasonable opportunity: (i) to take part in any
examination of any books and records; (ii) to conduct any proceedings or
negotiations in connection therewith and necessary or appropriate to defend the
Indemnitee; (iii) to take all other required steps or proceedings to settle or
defend any such Claim; and (iv) to employ counsel to contest any such Claim in
the name of the Indemnitee or otherwise (except as set forth below in
Section 8.5(b)).

 

31

--------------------------------------------------------------------------------

(b) If the Indemnitor intends to assume the defense of such Claim, it shall give
written notice of such intention to the Indemnitee within 15 days after
Indemnitor first receives written notice of such Claim, whereupon Indemnitee
shall permit, and Indemnitor shall assume, the defense of any such Claim,
through counsel reasonably satisfactory to the Indemnitee. Notwithstanding the
foregoing, the Indemnitee may participate in such defense of such Claim (with
one or more counsel of its own choice) at its own expense, provided, however,
that if the parties to any such Claim (including any impleaded parties) include
both the Indemnitor and the Indemnitee, and the Indemnitor shall have been
advised in writing by counsel for the Indemnitee that there may be one or more
defenses available to the Indemnitee that are not available to the Indemnitor or
legal conflicts of interest pursuant to applicable rules of professional conduct
between the Indemnitor and the Indemnitee, the Indemnitor shall not have the
right to assume the defense of such Claim on behalf of the Indemnitee and the
fees and expenses of one such separate counsel employed by the Indemnitee shall
be at the expense of the Indemnitor.

(c) If the Indemnitor fails to assume the defense of any Claim within 15 days
after Indemnitor first receives written notice of such Claim, the Indemnitee may
defend against such Claim in such manner as it may deem appropriate (provided
that the Indemnitor may participate in such defense at its own expense) and a
recovery against the Indemnitee in such Claim for damages suffered by it in good
faith, shall be conclusive in its favor against the Indemnitor.

(d) The Indemnitor shall not, without the written consent of the Indemnitee,
settle or compromise any Claim or consent to the entry of any judgment with
respect thereto which does not include, as an unconditional term thereof, the
giving to the Indemnitee a release by all other participants from all liability
in respect of such Claim. Unless the Indemnitor shall have elected not to assume
the defense of any claim subject to Article VIII or, after reasonable written
notice of any Claim that is subject to the indemnification provisions of this
Article VIII shall have failed to assume or participate in the defense thereof,
the Indemnitee may not settle or compromise such Claim without the written
consent of the Indemnitor, such consent not to be unreasonably withheld.

(e) Upon determination of the amount due to an Indemnitee (“Indemnification
Amount”) in connection with any matter for which indemnification is sought under
this Article VIII (“Indemnification Matter”) (whether by agreement between the
Indemnitor and the Indemnitee or after a settlement agreement is executed or a
final judgment or order is rendered by an arbitrator or court of competent
jurisdiction with respect to the Indemnification Matter), the Indemnitor shall
promptly (and in any event, not later than 10 days after such determination) pay
the Indemnification Amount, in cash, to the Indemnitee. Any Indemnification
Amount that is not paid in full within 10 days after final determination of the
Indemnification Amount as set forth above, such unpaid amount shall thereafter
accrue interest through the date of payment at the prime rate as reported in The
Wall Street Journal, Eastern Edition for the date of such final determination.

Section 8.6 Dispute Resolution.

(a) Except as provided in Section 8.6(g), any and all disputes among the parties
to this Agreement (defined for the purpose of this provision to include their
respective officers,

 

32

--------------------------------------------------------------------------------

directors, managers, members, partners, shareholders, agents and/or other
Affiliates) arising out of or in connection with the negotiation, execution,
interpretation, performance or nonperformance of this Agreement and the
transactions contemplated herein shall be solely and finally settled by
arbitration, which shall be conducted in such city in Michigan as the parties
shall mutually agree, or if they are unable to agree, in Wilmington, Delaware,
by a single arbitrator selected by the parties. The arbitrator shall be a lawyer
familiar with business transactions of the type contemplated in this Agreement
who shall not have been previously employed by or affiliated with any of the
parties hereto. If the parties fail to agree on the arbitrator within thirty
(30) days of the date one of them invokes this arbitration provision, either
party may apply to the American Arbitration Association to make the appointment.

(b) The parties hereby renounce all recourse to litigation and agree that the
award of the arbitrator shall be final and subject to no judicial review. The
arbitrator shall conduct the proceedings pursuant to the Commercial Arbitration
Rules of the American Arbitration Association, as now or hereafter amended (the
“Rules”).

(c) The arbitrator shall decide the issues submitted (i) in accordance with the
provisions and commercial purposes of this Agreement, and (ii) with all
substantive questions of Law determined under the Laws of the State of Delaware
(without regard to its principles of conflicts of laws). The arbitrator shall
promptly hear and determine (after giving the parties due notice and a
reasonable opportunity to be heard) the issues submitted and shall render a
decision in writing within six (6) months after the appointment of the
arbitrator. No fees shall be paid to the arbitrator with respect to services
rendered by the arbitrator after the elapse of six (6) months after the
appointment of the arbitrator.

(d) The parties agree to facilitate the arbitration by (i) conducting
arbitration hearings to the greatest extent possible on successive days, and
(ii) observing strictly the time periods established by the Rules or by the
arbitrator for submission of evidence or briefs.

(e) The parties shall share equally the fees and expenses of the arbitrator.

(f) Judgment on the award of the arbitrator may be entered in any court having
jurisdiction over the party against which enforcement of the award is being
sought and the parties hereby irrevocably consent to the jurisdiction of any
such court for the purpose of enforcing any such award.

(g) The parties hereto agree that the provisions of this Section 8.6 shall not
be construed to prohibit any party from obtaining, in the proper case, specific
performance or injunctive relief in any court of competent jurisdiction with
respect to the enforcement of any covenant or agreement of another party to this
Agreement as provided herein.

Section 8.7 Enforcement of Agreement. Each party hereto acknowledges that
irreparable damage would result if this Agreement is not specifically enforced.
Therefore, the covenants, agreements, rights and obligations of the parties
under the Agreement, including, without limitation,

 

33

--------------------------------------------------------------------------------

their respective rights and obligations to sell and purchase the Acquired Assets
and the Business and the rights and obligations of the parties under Articles V,
VIII and X, shall be enforceable by a decree of specific performance issued by
any court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. Each party hereto agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Agreement and hereby agrees
to waive the defense that a remedy at law may be adequate in any action for
specific performance hereunder.

Section 8.8 Definitions.

(a) In the case of a claim of indemnification brought pursuant to Section 8.3,
“Indemnitee” shall mean Buyer and Buyer’s Affiliates and the directors,
officers, partners, members, managers, employees, successors and assigns of
Buyer or any of its Affiliates, and in the case of a claim of indemnification
brought pursuant to 8.4, it shall mean Seller and its Affiliates and the
directors, officers, partners, members, managers, employees, successors and
assigns of Seller or any of its Affiliates.

(b) In the case of a claim of indemnification brought pursuant to Section 8.3,
“Indemnitor” shall mean Seller, and in the case of a claim of indemnification
brought pursuant to Section 8.4, it shall mean Buyer.

Section 8.9 Cooperation.

(a) If Buyer or Seller submits to an insurance carrier for any of their
respective insurance policies, a claim arising from or relating to a claim or
action by a third party which may otherwise be subject to indemnification
pursuant to Section 8.3 or Section 8.4, as the case may be, and if such
insurance carrier agrees to defend such claim, then the defense of such claim
shall be tendered to such insurance carrier and the rights of the parties
between themselves regarding the assumption and control of such defense shall be
subject to the reasonable requirements of such insurance carrier.

(b) After the Closing Date, the parties agree to cooperate with each other in
connection with the resolution of any on-going or future litigation, regulatory
matter, consumer complaint or any other Claim or matter related to the operation
of the Business prior to the Closing Date, or for any matter arising after the
Closing Date, for which either party may be obligated to indemnify the other
(“Litigation Matters”). Cooperation may include, but is not limited to,
providing access to books and records related to a Litigation Matter, access to
employees who have or may have information related to a Litigation Matter for
interview, deposition or trial, or any other reasonable cooperation requested by
one party of the other in connection with a Litigation Matter.

 

34

--------------------------------------------------------------------------------

ARTICLE IX

Termination of Agreement

Section 9.1 Termination. Except where a right to terminate this Agreement is
otherwise specifically provided for herein, this Agreement may be terminated by
written notice of termination at any time before the Closing Date only as
follows:

(a) by mutual consent of Seller and Buyer;

(b) by Buyer, upon written notice to Seller given at any time after June 30,
2010, if any or all of the conditions precedent to Buyer’s obligations hereunder
set forth in Section 6.2 hereof have not been met without fault of Buyer; or

(c) by Seller, upon written notice to Buyer given at any time after June 30,
2010, if any or all of the conditions precedent to Seller’s obligations
hereunder set forth in Section 6.1 hereof have not been met without fault of
Seller; or

(d) by Seller or Buyer upon termination of the Michigan Asset Purchase and Sale
Agreement.

Section 9.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of Section 9.1: (a) this Agreement shall
become void and have no effect, without any liability on the part of any of the
parties except for the provisions of Section 5.15 and except as provided below
in this Section 9.2; (b) each party shall return all documents, work papers and
other material of any other party relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof, to the party
furnishing the same; and (c) no confidential information received by any party
with respect to the business of any other party or its Affiliates shall be
disclosed to any third party, unless required by Law. Notwithstanding the
foregoing or anything else to the contrary, neither Seller nor Buyer shall be
relieved of liability under, and as provided in, this Agreement for a breach of
this Agreement occurring prior to such termination, or for a breach of any
provision of this Agreement which specifically survives termination hereunder.

 

35

--------------------------------------------------------------------------------

ARTICLE X

Miscellaneous

Section 10.1 Certain Defined Terms. The following terms shall have the following
meanings for purposes of this Agreement, which meanings shall be equally
applicable to both the singular and plural forms of such terms:

“Affiliate” means, with respect to any Person, one who at such time controls, is
controlled by, or is under common control with, such Person.

“Code” means the Internal Revenue Code of 1986, as amended, and all rules and
regulations promulgated thereunder.

“Consent” means any consent, waiver, approval, order or authorization of, or
registration, declaration or filing with or notice to, any Governmental
Authority or other Person.

“Contract” means and includes all contracts, agreements, indentures, leases,
franchises, licenses, commitments or legally binding arrangements, express or
implied, written or oral.

“Employee Plans” means all employee benefit plans as defined in Section 3(3) of
ERISA and all severance, bonus, retirement, pension, profit sharing and deferred
compensation plans and other similar material, fringe or employee benefit plans,
programs or arrangements, and all material employment or compensation
agreements, written or otherwise.

“Environmental Reports” means the Phase I and/or Phase II Environmental
Assessment Reports, the Baseline Environmental Assessments and Phase II Limited
Subsurface Investigation Reports specifically identified on Exhibit B.

“Environmental Requirements” means all applicable Laws, Permits and similar
items of any Governmental Authority relating to the protection of the
environment, including all requirements pertaining to reporting, licensing,
permitting, investigation, and remediation of emissions, discharges, releases,
or threatened releases of Hazardous Materials.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Governmental Authority” means any federal, state, local or foreign government
or any subdivision, authority, department, commission, board, bureau, agency,
court or other instrumentality thereof.

“Hazardous Materials” means any substance: (A) the presence of which requires
investigation or remediation under any Law; (B) which is or has been identified
as a potential hazardous waste, hazardous substance, pollutant or contaminant
under any applicable Law, or (C) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic, reactive, or
otherwise hazardous and has been identified as regulated by any Governmental
Authority.

 

36

--------------------------------------------------------------------------------

“Intellectual Property” means all intellectual property and all intellectual
property and industrial property rights owned, held or used, including but not
limited to (i) inventions, designs, algorithms and discoveries, know-how,
methods, and processes, and all enhancements and improvements thereto, whether
patentable or unpatentable, and whether or not reduced to practice, and all
patents therefor or in connection therewith, whether U.S. or foreign, and all
patent applications, patent disclosures, and all divisions, continuations,
continuations-in-part, reissues, re-examinations and extensions thereof;
(ii) trademarks, trade names and service marks, trade dress, logos, fictitious
names, internet domain names, slogans, and symbols (collectively, “Trademarks”),
and all goodwill and similar value associated with any of the foregoing, and all
applications, registrations, and renewals therefor or in connection therewith
(collectively, “Trademark Applications”); (iii) mask works, written works
(excluding computer software programs and applications and documentation of or
for such software programs), audio works, multimedia works, works of authorship,
lists, databases and copyrights (whether or not registered) and all
registrations and applications for registration and renewals thereof, as well as
moral, paternity, and integrity rights; (iv) trade secrets (as such are
determined under applicable law), and other confidential business information,
including trade secret or confidential technical information, marketing plans,
research, designs, plans, methods, techniques, and processes, any and all
technology, supplier lists, statistical models, e-mail lists, inventions,
databases, and data, whether in tangible or intangible form and whether or not
stored, compiled or memorialized physically, electronically, graphically,
photographically or in writing; (v) any and all other rights to existing and
future registrations and applications for any of the foregoing and any and all
rights in or under, or relating to, any of the foregoing, including, without
limitation, remedies against and rights to sue for past infringements, and
rights to damages and profits due or accrued in or relating to any of the
foregoing; and (vi) any and all other intangible proprietary property,
information and materials and rights therein and thereto.

“IRS” means the United States Internal Revenue Service.

“Laws” means any laws, statutes, rules, regulations, ordinances, orders, codes,
common laws, arbitration awards, judgments, decrees, orders or other legal
requirements of any Governmental Authority.

“Liability” means any direct or indirect indebtedness, liability, assessment,
expense, obligation or responsibility (whether known or unknown, whether
asserted or unasserted, whether absolute or contingent, whether disputed or
undisputed, whether choate or inchoate, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due), including any
liability for Taxes.

“Liens” means any and all liens, mortgages, security interests or other
encumbrances.

“Losses” means any and all demands, claims, assessments, judgments, losses,
liabilities, damages, costs, and expenses (including interest, penalties,
reasonable attorney’s fees and expenses, reasonable accounting fees and
investigation costs).

“Material Adverse Effect” means any effect, change or circumstance that,
individually or in the aggregate with any other like effect, change or
circumstance, is materially adverse to the Business (including with respect to
any one particular Location), including, without limitation, the financial
condition and the results of operations of the Business.

 

37

--------------------------------------------------------------------------------

“Permits” means any licenses, permits, approvals, registrations, certificates
(including, but not limited to, certificates of occupancy and any licensure
required for the operation of cemeteries) and other evidence of authority.

“Permitted Encumbrances” means (i) liens, encumbrances or restrictions related
to taxes not yet due or payable or which are being contested in good faith and
for which appropriate reserves have been taken, (ii) any matters shown on the
title commitment(s) not objected to by Buyer as provided for in this Agreement
or, if objected to by Buyer, later waived by Buyer as provided for in this
Agreement and (iii) liens, encumbrances or restrictions that are created by
Buyer.

“Person” means any individual, firm, corporation, partnership, trust, estate,
association or other entity.

“Pre-/At-Need Contracts” means any Contracts, engagements and commitments,
written or oral, relating to the provision or sale by the Business of at need or
pre-need cemetery merchandise, properties or services.

“Proceeding” means any suit, action, litigation, investigation, notice of
violation, audit, arbitration, administrative hearing or any other similar
proceeding.

“Purchase Price” means the Closing Purchase Price plus the assumption of the
Assumed Liabilities by Buyer, as adjusted pursuant to and in accordance with the
terms and conditions of this Agreement.

“Seller’s Knowledge”, “Knowledge of the Seller” or any other reference to the
“Knowledge” of the Seller means the knowledge of (i) Michael Lehmann, Margie
Stewart-Runnels, Eileen Farrell, Carla Patrick and Michael Smith and (ii) any
other individual who is serving as a director, officer, manager or member of
Seller, after reasonable inquiry. For purposes of this definition, the persons
referenced in the immediately preceding sentence shall be deemed to have
knowledge of matters of which any individual assigned by a third-party
representative or advisor of Seller to provide substantial services in
connection with the transaction contemplated hereby has actual knowledge.

“Services in Progress” means any “at need” cemetery related services for which a
Contract has been entered into, but which have not been completed as of the
Effective Time. For purposes of this Agreement, such cemetery related services
are complete when the body or remains have been cremated or interred.

“Tax” means any income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, property, environmental, windfall profit,
customs, vehicle, airplane, boat, vessel or other title or registration, capital
stock, franchise, employees’ income withholding, foreign or domestic
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer (including, without limitation, realty transfer
and burial lot transfer), value added, alternative, add-on minimum and other
tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever and
any interest, penalty, addition or additional amount thereon imposed, assessed
or collected by or under the authority of any governmental body or payable under
any tax-sharing agreement or any other Contract.

 

38

--------------------------------------------------------------------------------

“Taxing Authority” shall mean any domestic, foreign, federal, national, state,
county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising tax
regulatory authority.

“Tax Return” means any return (including any information return), report,
statement, schedule, notice, form, declaration, claim for refund or other
document or information filed with or submitted to, or required to be filed with
or submitted to, any governmental body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any law
relating to any Tax, including any amendment thereto.

“WARN Act” means the Worker Adjustment and Retraining Notification Act, as the
same may be amended from time to time.

Section 10.2 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, 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:

(1)      if to Seller, to:

President

SCI Michigan Funeral Services, Inc.

1929 Allen Parkway

Houston, Texas 77019

with a copy to:

General Counsel

Service Corporation International

1929 Allen Parkway

Houston, Texas 77019

 

39

--------------------------------------------------------------------------------

and if before Closing, also with a copy to:

John Burleson

Pakis, Giotes, Page & Burleson, P.C.

P.O. Box 58

Waco, Texas 76703-0058

(2)      if to Buyer, to:

StoneMor Operating LLC

Attention: Lawrence Miller, President & Chief Executive Officer

311 Veterans Highway, Suite B

Levittown, Pennsylvania 19056

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.

Section 10.3 Expenses. Except as otherwise specifically provided in Section 1.7,
Section 5.5 and Section 5.6 and any other provision of this Agreement, each
party hereto shall pay its own expenses, including without limitation, fees and
expenses of its agents, representatives, counsel, auditors, and accountants,
incidental to the consideration, negotiation, preparation and carrying out of
this Agreement and the transactions contemplated hereby.

Section 10.4 Attorney’s Fees. In the event of any controversy, claim or dispute
between or among any of the parties hereto arising out of or relating to this
Agreement, or any default or breach or alleged default or breach hereof, each
party shall pay its own attorney’s fees, costs and expenses associated with any
such action except as provided in Article VIII. If any party hereto shall be
joined as a party in any judicial, administrative, or other legal proceeding
arising from or incidental to any obligation, conduct or action of another party
hereto, the party so joined shall be entitled to be reimbursed by the other
party for its reasonable attorney’s fees and costs associated therewith.

 

40

--------------------------------------------------------------------------------

Section 10.5 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, except that
prior to Closing, Buyer may assign its rights and obligations hereunder to any
one or more of its direct or indirect subsidiaries, provided that any such
assignment shall not relieve Buyer from its obligations and liabilities
hereunder. Except as provided in Article VIII, 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.

Section 10.6 Entire Agreement; Amendment; Waiver.

(a) This Agreement together with the Schedules and Exhibits hereto and the other
agreements and documents delivered, or to be delivered, pursuant to Section 7.1
and Section 7.2 (all of which are hereby incorporated herein by reference)
embody the whole agreement of the parties with respect to the subject matter
hereof and thereof, and 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 contained are hereby withdrawn
and annulled. This Agreement, together with the Schedules and Exhibits hereto,
supersedes 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 or modified except by an instrument in
writing signed 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.

Section 10.7 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

 

41

--------------------------------------------------------------------------------

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.

Section 10.8 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. Unless the context
otherwise requires, all references in this Agreement to Sections, Articles,
Exhibits or Schedules are to Sections, Articles, Exhibits or Schedules of or to
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. The word “including” (and with correlative meaning, the word
“include”) means including without limiting the generality of any description
preceding such word.

Section 10.9 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.

Section 10.10 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.

[Signature Pages Follow]

 

42

--------------------------------------------------------------------------------

In Witness Whereof, the undersigned parties hereto have duly executed this
Agreement on the date first above written.

 

BUYER: STONEMOR OPERATING LLC, a Delaware limited liability company PLYMOUTH
WAREHOUSE FACILITIES LLC, a Delaware limited liability company Each by: /s/ Paul
Waimberg PAUL WAIMBERG, Vice President of Finance SELLER: SCI FUNERAL SERVICES,
LLC, an Iowa limited liability company By: /s/ Michael D. Lehmann MICHAEL D.
LEHMANN, Vice President SCI MICHIGAN FUNERAL SERVICES, INC., a Michigan
corporation By: /s/ Michael D. Lehmann MICHAEL D. LEHMANN, Vice President

 

43

--------------------------------------------------------------------------------

SOLELY FOR PURPOSES OF SECTION 5.17: HILLCREST MEMORIAL COMPANY, a Delaware
corporation SUNRISE MEMORIAL GARDENS CEMETERY, INC., a Michigan corporation
FLINT MEMORIAL PARK ASSOCIATION, a Michigan corporation Each by: /s/ Kirk L.
Carpenter KIRK L. CARPENTER, President SOLELY FOR PURPOSES OF SECTION 5.17:
STONEMOR MICHIGAN LLC, a Michigan limited liability company STONEMOR MICHIGAN
SUBSIDIARY LLC, a Michigan limited liability company Each by: /s/ Paul Waimberg
PAUL WAIMBERG, Vice President of Finance

 

44

--------------------------------------------------------------------------------

EXHIBIT A

Trade Names

Christian Memorial Warehouse

--------------------------------------------------------------------------------

EXHIBIT B

Environmental Reports

Phase I Environmental Site Assessment Reports

 

  1. Phase I Limited Subsurface Investigation for Christian Memorial Gardens
Warehouse, 350 South Mill Street, Plymouth, Michigan prepared by Vertex
Environmental Services, Inc. for StoneMor Partners L.P., dated March 24, 2010.

Baseline Environmental Assessments

 

  1. Baseline Environmental Assessment for Christian Memorial Gardens Warehouse,
350 South Mill Street, Plymouth, Michigan prepared by Vertex Environmental
Services, Inc. for StoneMor Partners L.P., dated March 24, 2010.

Phase II Limited Subsurface Investigation Report

 

  1. Phase II Limited Subsurface Investigation for Christian Memorial Gardens
Warehouse, 350 South Mill Street, Plymouth, Michigan prepared by Vertex
Environmental Services, Inc. for StoneMor Partners L.P., dated March 24, 2010.