Exhibit 10.1

 

SERIES A PREFERRED UNIT

PURCHASE AGREEMENT

among

STONEMOR PARTNERS L.P.

and

THE PURCHASERS PARTY HERETO

 

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TABLE OF CONTENTS

 

         Page  

ARTICLE I DEFINITIONS

     1  

Section 1.01

  Definitions      1  

Section 1.02

  Accounting Procedures and Interpretation      6  

ARTICLE II AGREEMENT TO SELL AND PURCHASE

     6  

Section 2.01

  Closing      6  

Section 2.02

  Closing Conditions      7  

Section 2.03

  Independent Nature of Purchasers’ Obligations and Rights      10  

Section 2.04

  Further Assurances      10  

ARTICLE III REPRESENTATIONS AND WARRANTIES RELATED TO THE PARTNERSHIP

     10  

Section 3.01

  Existence      10  

Section 3.02

  Capitalization and Valid Issuance of Units      11  

Section 3.03

  General Partner      13  

Section 3.04

  Ownership of the Subsidiaries      13  

Section 3.05

  Partnership SEC Documents      13  

Section 3.06

  No Material Adverse Change; Absence of Changes; Operations in the Ordinary
Course      14  

Section 3.07

  No Registration Required      14  

Section 3.08

  No Registration Rights      14  

Section 3.09

  Litigation; Compliance with Laws      14  

Section 3.10

  No Default      14  

Section 3.11

  No Conflicts      15  

Section 3.12

  Authority; Enforceability      15  

Section 3.13

  Approvals      15  

Section 3.14

  Distribution Restrictions      16  

Section 3.15

  Partnership Status      16  

Section 3.16

  Investment Company Status      16  

Section 3.17

  Certain Fees      16  

Section 3.18

  No General Solicitation      16  

Section 3.19

  No Integrated Offering      16  

Section 3.20

  Employee Relations      17  

Section 3.21

  Insurance      17  

Section 3.22

  Books and Records; Sarbanes-Oxley Compliance      17  

Section 3.23

  Listing and Maintenance Requirements      18  

Section 3.24

  Taxes      18  

Section 3.25

  Environmental Matters      18  

Section 3.26

  Required Disclosures and Descriptions      18  

Section 3.27

  Title to Property      19  

Section 3.28

  Application of Takeover Protections; Rights Agreement      19  

Section 3.29

  Transactions With Affiliates      19  

Section 3.30

  Transfer Taxes      19  

 

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Section 3.31

  USA Patriot Act; Sanctions; Anti-Terrorism and Anti-Corruption Laws      19  

Section 3.32

  Compliance with Cemetery Laws      19  

Section 3.33

  No Disqualification Events      20  

Section 3.34

  No Other Purchaser Representations      20  

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

     20  

Section 4.01

  Existence      20  

Section 4.02

  Authorization, Enforceability      20  

Section 4.03

  No Breach      20  

Section 4.04

  Certain Fees      21  

Section 4.05

  Unregistered Securities      21  

Section 4.06

  Sufficient Funds      22  

ARTICLE V COVENANTS

     22  

Section 5.01

  Reporting Status      22  

Section 5.02

  Use of Proceeds      22  

Section 5.03

  Disclosure of Transactions      22  

Section 5.04

  Additional Issuances of Securities      22  

Section 5.05

  Rights Offering      25  

Section 5.06

  Cooperation; Further Assurances      25  

Section 5.07

  Transfer Restrictions      25  

Section 5.08

  No Integrated Offering      25  

Section 5.09

  Tax Estimates      25  

Section 5.10

  UBTI      26  

Section 5.11

  Governance Matters      26  

Section 5.12

  Blocker Entities      26  

ARTICLE VI INDEMNIFICATION, COSTS AND EXPENSES

     27  

Section 6.01

  Indemnification by the Partnership      27  

Section 6.02

  Indemnification by the Purchasers      27  

Section 6.03

  Indemnification Procedure      28  

Section 6.04

  Tax Matters      29  

ARTICLE VII MISCELLANEOUS

     29  

Section 7.01

  Expenses      29  

Section 7.02

  Interpretation      29  

Section 7.03

  Survival of Provisions      30  

Section 7.04

  No Waiver; Modifications in Writing      31  

Section 7.05

  Binding Effect      31  

Section 7.06

  Non-Disclosure      31  

Section 7.07

  Communications      31  

Section 7.08

  Removal of Legend      32  

Section 7.09

  Entire Agreement      33  

Section 7.10

  Governing Law; Submission to Jurisdiction      33  

Section 7.11

  Waiver of Jury Trial      33  

Section 7.12

  Exclusive Remedy      34  

 

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Section 7.13

  No Recourse Against Others      34  

Section 7.14

  No Third-Party Beneficiaries      35  

Section 7.15

  Execution in Counterparts      35  

EXHIBIT A – Form of A&R GP LLC Agreement

EXHIBIT B – Form of Amendment to Nomination and Director Voting Agreement
Amendment

EXHIBIT C – Form of Amendment to Voting and Support Agreement

EXHIBIT D – Form of Registration Rights Agreement

EXHIBIT E - Form of Opinion of Vinson & Elkins L.L.P.

EXHIBIT F – Form of Third A&R LPA

EXHIBIT G – Form of Amendment to Merger Agreement

EXHIBIT H - Form of Officer’s Certificate

EXHIBIT I - Form of General Partner Waiver

SCHEDULE A - Purchase Price Allocation

SCHEDULE B – Board of Directors of General Partner

 

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SERIES A PREFERRED UNIT PURCHASE AGREEMENT

This SERIES A PREFERRED UNIT PURCHASE AGREEMENT, dated as of June 27, 2019 (this
“Agreement”), is entered into by and among STONEMOR PARTNERS L.P., a Delaware
limited partnership (the “Partnership”), and the purchasers set forth in
Schedule A hereto (the “Purchasers”).

WHEREAS, the Partnership desires to issue and sell to the Purchasers, and the
Purchasers desire to purchase from the Partnership, the Partnership’s Series A
Preferred Units (as defined below), in accordance with the provisions of this
Agreement; and

WHEREAS, the Partnership has agreed to provide the Purchasers with certain
registration rights with respect to the Conversion Units (as defined below)
underlying the Series A Preferred Units acquired pursuant hereto.

NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. As used in this Agreement, the following terms have
the meanings indicated:

“A&R GP LLC Agreement” means the Third Amended and Restated Limited Liability
Company Agreement of StoneMor GP LLC, to be entered into at the Closing, between
StoneMor GP Holdings LLC and the Lead Purchaser, in the form attached hereto as
Exhibit A.

“Affiliate” means, with respect to any Person, any other Person that directly or
indirectly through one or more intermediaries controls, is controlled by or is
under common control with, the Person in question. As used herein, the term
“control” means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities, by contract or otherwise. For the avoidance of
doubt, for purposes of this Agreement, any fund or account managed, advised or
subadvised, directly or indirectly, by a Purchaser or its Affiliates, shall be
considered an Affiliate of such Purchaser.

“Agreement” has the meaning set forth in the introductory paragraph of this
Agreement.

“Amendment to Merger Agreement” has the meaning set forth in
Section 2.02(a)(iii).

“Amendment to Nomination and Director Voting Agreement Amendment” means the
Second Amendment to the Nomination and Director Voting Agreement, to be entered
into at the Closing, among the General Partner, StonMor GP Holdings LLC, Robert
B. Hellman Jr. as trustee under the Voting and Investment Trust Agreement for
the benefit of American Cemeteries Infrastructure Investors LLC, the Lead
Purchaser and certain Affiliates of the Lead Purchaser, in the form attached
hereto as Exhibit B.

 

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“Amendment to Voting and Support Agreement” means the Third Amendment to Voting
and Support Agreement, to be entered into at the Closing, among the Partnership,
the General Partner, the Lead Purchaser, certain Affiliates of the Lead
Purchaser, Robert B. Hellman, Jr. as trustee under the Voting and Investment
Trust Agreement for the benefit of American Cemeteries Infrastructure Investors
LLC and StoneMor GP Holdings LLC, in the form attached hereto as Exhibit C.

“Basic Amount” has the meaning specified in Section 5.04(b)(i).

“Business Day” means any day other than a Saturday, Sunday, any federal legal
holiday or day on which banking institutions in the State of New York or
Commonwealth of Pennsylvania are authorized or required by Law or other
governmental action to close.

“C-Corp Shares” means the shares of common stock of StoneMor Inc.

“C-Corporation Conversion” means the consummation of the transactions
contemplated by the A&R Merger Agreement, as may be amended or amended and
restated from time to time, or such other transaction permitted by the New
Indenture in which Preferred Units and Common Units of the Partnership are
exchanged for C-Corp Shares.

“Closing” has the meaning specified in Section 2.01.

“Closing Date” has the meaning specified in Section 2.01.

“Commission” means the United States Securities and Exchange Commission.

“Common Units” means common units representing limited partner interests in the
Partnership.

“Contract” means any contract, agreement, indenture, note, bond, mortgage, deed
of trust, loan, instrument, lease, license, commitment or other arrangement,
understanding, undertaking, commitment or obligation, whether written or oral.

“Conversion Units” means the Common Units issuable upon conversion of the
Purchased Units (without regard to any limitation on conversion included in the
Partnership Agreement).

“Delaware LP Act” means the Delaware Revised Uniform Limited Partnership Act, as
amended.

“Disqualification Event” has the meaning specified in Section 506(d)(1) of
Regulation D under the Securities Act.

“Exchange” means the New York Stock Exchange.

“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.

 

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“Existing Credit Agreement” means that certain Credit Agreement, dated as of
August 4, 2016, among StoneMor Operating LLC, the other borrowers party thereto,
the lenders party thereto, Capital One, National Association, as administrative
agent and the other agents party thereto, as amended, amended and restated or
supplemented from time to time.

“Existing Indenture” means that certain Indenture, dated as of May 28, 2013, by
and among the Partnership, certain Subsidiaries of the Partnership as Issuers
and Guarantors party thereto from time to time and Wilmington Trust, National
Association, as Trustee, as amended, amended and restated or supplemented from
time to time.

“Funding Obligation” means an amount equal to the Purchase Price multiplied by
the number of Purchased Units to be purchased by a Purchaser on the Closing
Date, as set forth opposite such Purchaser’s name on Schedule A.

“GAAP” means generally accepted accounting principles in the United States of
America as of the date hereof, consistently applied during the periods involved;
provided that for the financial statements of the Partnership prepared as of a
certain date, GAAP referenced therein shall be GAAP as of the date of such
financial statements.

“General Partner” means StoneMor GP LLC, a Delaware limited liability company
and the general partner of the Partnership.

“Governmental Authority” means, with respect to a particular Person, any
country, state, county, city and political subdivision in which such Person or
such Person’s Property is located or which exercises valid jurisdiction over any
such Person or such Person’s Property, and any court, agency, department,
commission, board, bureau or instrumentality of any of them and any monetary
authority which exercises valid jurisdiction over any such Person or such
Person’s Property. Unless otherwise specified, all references to Governmental
Authority herein with respect to the Partnership means a Governmental Authority
having jurisdiction over the General Partner and the Partnership Entities or any
of their respective Properties.

“Incentive Distribution Rights” has the meaning specified in Section 3.02(a).

“Indemnified Party” has the meaning specified in Section 6.03(b).

“Indemnifying Party” has the meaning specified in Section 6.03(b).

“Insolvent” means, with respect to any Person, (i) the present fair saleable
value of such Person’s assets is less than the amount required to pay such
Person’s total indebtedness, (ii) such Person is unable to pay its debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured, (iii) such Person intends to incur or
believes that it will incur debts that would be beyond its ability to pay as
such debts mature or (iv) such Person has unreasonably small capital with which
to conduct the business in which it is engaged as such business is now conducted
and is proposed to be conducted.

“Issuer Covered Person” has the meaning specified in Section 506(d)(1) of
Regulation D under the Securities Act.

 

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“Law” means any federal, state, local or foreign order, writ, injunction,
judgment, settlement, award, decree, statute, law (including common law), rule
or regulation.

“Lead Purchaser” means Axar Capital Management LP or its designee.

“Lien” means any mortgage, claim, encumbrance, pledge, lien (statutory or
otherwise), security agreement, conditional sale or trust receipt or a lease,
consignment or bailment, preference or priority, assessment, deed of trust,
charge, easement, servitude or other encumbrance upon or with respect to any
property of any kind.

“Material Adverse Effect” means a material adverse effect (a) on the business,
property, operations, assets, liabilities (actual or contingent), operating
results, prospects or financial condition of the Partnership and its
Subsidiaries, taken as a whole, (b) on the ability of the Partnership or its
Subsidiaries, as applicable, to perform any of their obligations under the
Transaction Documents or (c) on the validity or enforceability of any of the
Transaction Documents or the rights and remedies of the Purchasers thereunder.

“New Indenture” means the Indenture, dated as of June 27, 2019, by and among the
Partnership and certain Subsidiaries of the Partnership as Issuers and the
Subsidiary Guarantors party thereto from time to time and Wilmington Trust,
National Association, as Trustee and as Collateral Agent, as amended, amended
and restated, or supplemented from time to time.

“Notes” has the meaning set forth in Section 2.02(b)(v).

“Notice of Issuance” has the meaning specified in Section 5.04(b).

“Offered Securities” has the meaning specified in Section 5.04(b).

“Offering Size” has the meaning specified in Section 5.04(d).

“Organizational Documents” means, as applicable, an entity’s agreement or
certificate of limited partnership, limited liability company agreement,
certificate of formation, certificate or articles of incorporation, bylaws or
other similar organizational documents.

“Overallotment Securities” has the meaning specified in Section 5.04(e).

“Partnership” has the meaning set forth in the introductory paragraph of this
Agreement.

“Partnership Agreement” means Second Amended and Restated Agreement of Limited
Partnership of the Partnership, dated as of September 9, 2008, as amended to
date and as may be amended from time to time in accordance with the terms
thereof, including as the context requires, the Third A&R LPA.

“Partnership Entities” means, collectively the Partnership and the Partnership’s
Subsidiaries.

“Partnership Related Parties” has the meaning specified in Section 6.01.

 

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“Partnership SEC Documents” means the Partnership’s forms, registration
statements, reports, schedules and statements filed by it under the Exchange Act
or the Securities Act, as applicable.

“Permits” means any approvals, authorizations, consents, licenses, permits,
variances, waivers, grants, franchises, concessions, exemptions, orders,
registrations or certificates of a Governmental Authority.

“Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization, government or any agency, instrumentality or political subdivision
thereof or any other form of entity.

“Price Range” has the meaning specified in Section 5.04(d).

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible (including intellectual property
rights).

“Pro Rata Share” has the meaning specified in Section 5.04(b).

“Purchase Price” has the meaning specified in Section 2.01.

“Purchased Units” has the meaning specified in Section 2.01.

“Purchaser Related Parties” has the meaning specified in Section 6.01.

“Purchasers” has the meaning set forth in the introductory paragraph of this
Agreement.

“Refinancing” means the repayment of amounts owed under the Existing Credit
Agreement and the Existing Indenture using the net proceeds of the issuance of
the Preferred Units and the borrowing under the New Indenture.

“Registration Rights Agreement” means the Registration Rights Agreement, to be
entered into at the Closing, between the Partnership, the General Partner and
the Purchasers, in the form attached hereto as Exhibit D.

“Representatives” means, with respect to a specified Person, the investors,
shareholders, members, officers, partners, directors, managers, employees,
agents, advisors, counsel, accountants, investment bankers and other
representatives of such Person.

“Rights Offering” has the meaning specified in Section 5.05.

“Securities” means, collectively, the Series A Preferred Units and the
Conversion Units.

“Securities Act” means the Securities Act of 1933, as amended from time to time,
and the rules and regulations of the Commission promulgated thereunder.

“Series A Preferred Units” means the Partnership’s Series A Preferred Units.

“Subsequent Offering” has the meaning specified in Section 5.04(b).

 

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“Subsequent Offering Documents” has the meaning specified in Section 5.04(f).

“Subsequent Underwritten Offering” has the meaning specified in Section 5.04(d).

“Subsidiary” means, as to any Person, any corporation or other entity of which:
(a) such Person or a Subsidiary of such Person is a general partner or, in the
case of a limited liability company, the managing member or manager thereof;
(b) at any of the outstanding equity interest having by the terms thereof
ordinary voting power to elect a majority of the board of directors or similar
governing body of such corporation or other entity (irrespective of whether or
not at the time any equity interest of any other class or classes of such
corporation or other entity shall have or might have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or
controlled by such Person or one or more of its Subsidiaries; or (c) any
corporation or other entity as to which such Person consolidates for accounting
purposes.

“Third A&R LPA” has the meaning specified in Section 2.02(a)(ii).

“Third-Party Claim” has the meaning specified in Section 6.03(a).

“Transaction Documents” means, collectively, this Agreement, the Registration
Rights Agreement, the Third A&R LPA, the A&R Merger Agreement, the Amendment to
Voting and Support Agreement, the Amendment to Nomination and Director Voting
Agreement Amendment, the A&R GP LLC Agreement and the New Indenture, each as
amended to date, and any and all other agreements or instruments executed and
delivered by the Partnership or the General Partner hereunder, thereunder or in
connection with the Refinancing, as applicable.

“U.S. Affiliate” means an Affiliate that is a United States person.

“United States person” has the meaning specified in section 7701(a)(30) of the
Internal Revenue Code of 1986, as amended.

Section 1.02    Accounting Procedures and Interpretation. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements of the Partnership and certificates and reports as to
financial matters required to be furnished to the Purchasers hereunder shall be
prepared, in accordance with GAAP applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q promulgated by the
Commission) and in compliance as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the Commission with respect thereto.

ARTICLE II

AGREEMENT TO SELL AND PURCHASE

Section 2.01    Closing. On the Closing Date, subject to the terms and
conditions hereof, each Purchaser hereby agrees to purchase from the
Partnership, and the Partnership hereby agrees to issue and sell to each
Purchaser, the number of Series A Preferred Units under the Purchased Units
column set forth opposite each Purchaser’s name on Schedule A (the “Purchased
Units”) for a cash purchase price of $1.1040 per Series A Preferred Unit (the
“Purchase Price”). The

 

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consummation of the purchase and sale of the Purchased Units hereunder (the
“Closing”) shall take place on the date of this Agreement (such date, the
“Closing Date”), at the offices of Schulte, Roth & Zabel LLP, 919 Third Avenue,
New York, New York 10022. In the case of each Purchaser, the Securities to be
issued and sold to such Purchaser shall be held in book entry form by the
Partnership until such time as such Purchaser delivers written notice to deliver
such Preferred Units to such Purchaser or any of its Affiliates in the name of
such Purchaser or any of its Affiliates, as applicable.

Section 2.02    Closing Conditions.

(a)        Deliveries of the Partnership at the Closing. At the Closing, the
Partnership shall deliver or cause to be delivered to the Purchasers:

(i)        An opinion from Vinson & Elkins L.L.P., counsel for the General
Partner and the Partnership, substantially in the form attached hereto as
Exhibit E, which shall be addressed to the Purchasers and dated the Closing
Date;

(ii)        An executed copy of the Third Amended and Restated Agreement of
Limited Partnership of the Partnership, in the form attached to this Agreement
as Exhibit F (the “Third A&R LPA”);

(iii)        An executed copy of the Second Amendment to Merger and
Reorganization Agreement, by and among the Partnership, the General Partner,
StoneMor GP Holdings LLC and Hans Merger Sub, LLC, in the form attached to this
Agreement as Exhibit G (the “Amendment to Merger Agreement”);

(iv)        Evidence that an application to list the Conversion Units has been
submitted to the Exchange;

(v)        Evidence of issuance of the Purchased Units credited to book-entry
accounts maintained by the Partnership, bearing a restrictive notation meeting
the requirements of the Partnership Agreement, free and clear of any Liens,
other than transfer restrictions under the Partnership Agreement or the Delaware
LP Act and applicable federal and state securities laws;

(vi)        A certificate of an authorized officer of the General Partner, dated
as of the Closing Date, certifying as to the matters set forth in
Section 2.02(b)(ii), in the form attached hereto as Exhibit H;

(vii)        A certificate of the Secretary of the General Partner, on behalf of
the Partnership, dated the Closing Date, certifying as to and attaching (A) the
certificate of formation of the Partnership, (B) the Partnership Agreement,
(C) board resolutions authorizing the execution and delivery of the Transaction
Documents and the consummation of the transactions contemplated thereby,
(D) board resolutions authorizing the issuance of the Purchased Units and the
Conversion Units in form acceptable to Purchasers and (D) the incumbency of the
officers authorized to execute the Transaction Documents on behalf of the
Partnership or the General Partner, as applicable, setting forth the name and
title and bearing the signatures of such officers;

 

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(viii)        A duly executed waiver of the General Partner with respect to
certain of its rights under the Partnership Agreement, in substantially the form
attached hereto as Exhibit I;

(ix)        The Registration Rights Agreement, which shall have been duly
executed by the Partnership and the General Partner;

(x)        The Amendment to Nomination and Director Voting Agreement Amendment,
which shall have been duly executed by the General Partner and American
Infrastructure Funds LP and/or its Affiliates signatory thereto;

(xi)        The Amendment to Voting and Support Agreement, which shall have been
duly executed by the General Partner, the Partnership and American
Infrastructure Funds LP and/or its Affiliates signatory thereto;

(xii)        The A&R GP LLC Agreement, which shall have been duly executed by
StonMor GP Holdings LLC;

(xiii)        A letter from the Partnership’s transfer agent certifying the
number of Securities outstanding as of a date within five (5) days of the
Closing Date; and

(xiv)        Such other documents relating to the transactions contemplated by
this Agreement as the Purchasers or their counsel may reasonably request.

(b)        Conditions to Each Purchaser’s Obligation to Purchase.

(i)        Each Purchaser shall have received all documents contemplated to be
delivered by the Partnership pursuant to Section 2.02(a);

(ii)        The representations and warranties of the Partnership shall be true
and correct in all material respects (except for those representations and
warranties that are qualified by materiality or Material Adverse Effect, which
shall be true and correct in all respects) as of the date hereof (except for
representations and warranties that speak as of a specific date which shall be
true and correct in all material respects (except for those representations and
warranties that are qualified by materiality or Material Adverse Effect, which
shall be true and correct in all respects) as of such specified date) and the
Partnership shall have performed, satisfied and complied in all material
respects with the covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by the
Partnership at or prior to the Closing Date.

(iii)        The Common Units (I) shall be listed on the Exchange and (II) shall
not have been suspended, as of the Closing Date, by the Commission or the
Exchange from trading on the Exchange nor shall suspension by the Commission or
the Exchange have been threatened, as of the Closing Date, either (A) in writing
by the Commission or the Exchange or (B) by falling below the minimum listing
maintenance requirements of the Exchange.

(iv)        The Exchange shall have approved, orally or in writing, the listing
of the Conversion Units;

 

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(v)        All conditions to the issuance of the Senior Secured PIK Toggle Notes
due 2024 (the “Notes”) under the New Indenture shall have been satisfied (other
than the sale and issuance of the Series A Preferred Units pursuant to this
Agreement);

(vi)        Immediately prior to the consummation of the issuance of the Series
A Preferred Units, the Board of Directors of the General Partner shall have been
reconstituted to consist of seven (7) directors, with the initial designees to
the Board of Directors as set forth on Schedule B, and Andrew Axelrod shall have
been appointed Chairman of the General Partner; and

(vii)        The Partnership shall have obtained all governmental, regulatory or
third party consents and approvals, if any, necessary for the sale of the
Securities.

(c)        Deliveries of Each Purchaser at the Closing. At the Closing, each
Purchaser (except in the case of subclauses (ii), (iii) and (iv) below, solely
the Lead Purchaser and its respective Affiliates) shall deliver or cause to be
delivered to the Partnership:

(i)        The Registration Rights Agreement, which shall have been duly
executed by such Purchaser;

(ii)        The Amendment to Nomination and Director Voting Agreement Amendment,
which shall have been duly executed by such Purchaser;

(iii)        The Amendment to Voting and Support Agreement, which shall have
been duly executed by such Purchaser;

(iv)        The A&R GP LLC Agreement, which shall have been duly executed by and
an Affiliate of the Lead Purchaser;

(v)        A properly executed Internal Revenue Service Form W-9 from such
Purchaser;

(vi)        Payment of such Purchaser’s Funding Obligation payable by wire
transfer of immediately available funds to an account designated in writing on
the Partnership’s letterhead and executed by an authorized officer of the
Partnership in advance of the Closing Date; and

(vii)        Such other documents relating to the transactions contemplated by
this Agreement as the Partnership or its counsel may reasonably request.

(d)        Conditions to the Partnership’s Obligation to Sell to a Purchaser.

(i)        The Partnership shall have received all documents contemplated to be
delivered by such Purchaser pursuant to Section 2.02(c); and

(ii)        The representations and warranties of such Purchaser shall be true
and correct in all material respects (except for those representations and
warranties that are qualified by materiality or material adverse effect, which
shall be true and correct in all respects) as of the date hereof (except for
representations and warranties that speak as of a specific date

 

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which shall be true and correct (except for those representations and warranties
that are qualified by materiality or material adverse effect, which shall be
true and correct in all respects) as of such specified date) and such Purchaser
shall have performed, satisfied and complied in all material respects with the
covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by such Purchaser at or prior to the
Closing Date.

Section 2.03    Independent Nature of Purchasers’ Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Each Purchaser acknowledges by
executing this Agreement that such Purchaser is irrevocably committed to
purchase the Purchased Units in accordance with the terms of this Agreement, and
such purchase is not subject to any conditions precedent other than the
deliverables contemplated by Section 2.02(a), provided, that no Purchaser shall
be obligated to purchase Series A Preferred Units unless each other Purchaser
purchases the amount of Series A Preferred Units set forth opposite such
Purchaser’s name on Schedule A hereto, provided, further, that no defaulting
Purchaser shall be relieved from liability in the event any other Purchaser does
not purchase Series A Preferred Units. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Purchaser to
be joined as an additional party in any proceeding for such purpose.

Section 2.04    Further Assurances. From time to time after the date hereof,
without further consideration, the Partnership and each Purchaser shall use
their reasonable best efforts to take, or cause to be taken, all actions
necessary or appropriate to consummate the transactions contemplated by this
Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES RELATED TO THE PARTNERSHIP

The Partnership represents and warrants to and covenants with the Purchasers as
follows:

Section 3.01    Existence.

(a)        Each of the Partnership, the General Partner and the Subsidiaries has
been duly incorporated or formed, as the case may be, and is validly existing as
a limited liability company, limited partnership or corporation, as the case may
be, in good standing under the Laws of its jurisdiction of incorporation or
formation, as the case may be, and has the full limited liability company,
limited partnership or corporate, as the case may be, power and authority to own
or lease its Properties and assets and to conduct the businesses in all material
respects which it is engaged, and is duly registered or qualified as a foreign
limited liability company, limited partnership or corporation, as the case may
be, for the transaction of business under the laws of each jurisdiction in which
the character of the business conducted by it or the nature or location of the
properties

 

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owned or leased by it makes such registration or qualification necessary, except
where the failure to so register or qualify would not reasonably be expected to
have a Material Adverse Effect.

(b)        None of the Partnership, the General Partner or Subsidiaries is in
violation of its Organizational Documents.

(c)        The partnership agreement or limited liability company agreement, as
applicable, of each of the Partnership, the General Partner and the Subsidiaries
has been, and in the case of the Third A&R LPA for the Partnership and the A&R
GP LLC Agreement for the General Partner, at the Closing will be, duly
authorized, executed and delivered by StoneMor GP Holdings LLC, the General
Partner and any Partnership Entity party thereto, as applicable, and is, and in
the case of the Third A&R LPA and the A&R GP LLC Agreement, at the Closing will
be, a valid and legally binding agreement of such party thereto, enforceable
against such party thereto in accordance with their respective terms; provided,
that, with respect to each such agreement, the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or similar laws from time to time in effect affecting
creditors’ rights and remedies generally and by general principles of equity
(regardless of whether such principles are considered in a proceeding in equity
or at law).

Section 3.02    Capitalization and Valid Issuance of Units.

(a)        As of the date hereof, and immediately prior to the issuance and sale
of the Purchased Units, the issued and outstanding limited partner interests of
the Partnership consist of 38,288,857 Common Units and the incentive
distribution rights (as defined in the Partnership Agreement, the “Incentive
Distribution Rights”). All outstanding Common Units, Incentive Distribution
Rights and the limited partner interests represented thereby have been duly
authorized and validly issued in accordance with the Partnership Agreement and
are fully paid (to the extent required under the Partnership Agreement) and
nonassessable (except as such nonassessability may be affected by matters
described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act).

(b)        The General Partner holds a 1.04% general partner interest in the
Partnership; such general partner interest has been duly authorized and validly
issued in accordance with the Partnership Agreement and, after giving effect to
the Refinancing, the General Partner owns such interest free and clear of all
Liens (except (i) as disclosed in the Partnership SEC Documents, (ii) for Liens
arising under the Partnership Agreement or the Delaware LP Act and (iii) Liens
arising under the New Indenture.

(c)        The Purchased Units being purchased by the Purchasers hereunder and
the limited partner interests represented thereby will be duly authorized by the
Partnership pursuant to the Partnership Agreement prior to the Closing and, when
issued and delivered to the Purchasers against payment therefor in accordance
with the terms of this Agreement, will be validly issued, fully paid (to the
extent required by the Partnership Agreement) and nonassessable (except as such
nonassessability may be affected by matters described in Sections 17-303, 17-607
and 17-804 of the Delaware LP Act) and, after giving effect to the Refinancing,
will be free of any and all preemptive or similar rights, taxes, Liens and
restrictions on transfer, other than (i) restrictions on transfer under the
Transaction Documents and under applicable state and federal securities laws

 

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and (ii) such Liens arising under the Partnership Agreement or the Delaware LP
Act. The Purchased Units shall have the rights and preferences set forth in the
Partnership Agreement.

(d)        Except for the preemptive rights of the General Partner set forth in
the Partnership Agreement which are being waived in connection with the issuance
of the Purchased Units, there are no persons entitled to statutory, preemptive
or other similar contractual rights to subscribe for the Purchased Units; and,
except (i) for the Purchased Units to be issued pursuant to this Agreement and
the Partnership Agreement, (ii) for awards issued pursuant to the Partnership’s
long-term incentive plans or (iii) as disclosed in the Partnership SEC
Documents, no options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or exchange any
securities for, partnership securities or ownership interests in the Partnership
are outstanding.

(e)        Except as disclosed in the Partnership SEC Documents or Transaction
Documents or as otherwise awarded pursuant to the Partnership’s long-term
incentive plans, (i) none of the Partnership’s equity interests is subject to
preemptive rights or any other similar rights; (ii) there are no outstanding
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character issued or incurred by the Partnership or any of its Subsidiaries
relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any equity interests of the Partnership or any of its
Subsidiaries, or contracts, commitments, understandings or arrangements by which
the Partnership or any of its Subsidiaries is or may become bound to issue
additional equity interests of the Partnership or any of its Subsidiaries or
options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or
exercisable or exchangeable for, any equity interests of the Partnership or any
of its Subsidiaries; (iii) there are no outstanding debt securities, notes,
credit agreements, credit facilities or other agreements, documents or
instruments evidencing indebtedness of the Partnership or any of its
Subsidiaries or by which the Partnership or any of its Subsidiaries is or may
become bound; (iv) there are no agreements or arrangements under which the
Partnership or any of its Subsidiaries is obligated to register the sale of any
of their securities under the Securities Act; (v) there are no outstanding
securities or instruments of the Partnership or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Partnership or any of
its Subsidiaries is or may become bound to redeem a security of the Partnership
or any of its Subsidiaries; (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the
issuance of the Securities or the consummation of the Rights Offering;
(vii) neither the Partnership nor any Subsidiary has any stock appreciation
rights or “phantom stock” plans or agreements or any similar plan or agreement;
and (viii) the Partnership and its Subsidiaries have no liabilities or
obligations required to be disclosed in the Partnership SEC Documents but not so
disclosed in the Partnership SEC Documents, other than those incurred in the
ordinary course of the Partnership’s or any of its Subsidiaries’ respective
businesses and which, individually or in the aggregate, do not or would not have
a Material Adverse Effect.

(f)        Upon issuance in accordance with this Agreement and the Partnership
Agreement, the Conversion Units will be duly authorized, validly issued, fully
paid (to the extent required by the Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by matters described in
Sections 17-303, 17-607 and 17-804 of the Delaware LP Act) and will be free of
any and all Liens, preemptive or similar rights, taxes and restrictions on
transfer,

 

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other than (i) restrictions on transfer under the Transaction Documents and
under applicable state and federal securities laws and (ii) such Liens arising
under the Partnership Agreement or the Delaware LP Act.

Section 3.03    General Partner. The General Partner has full limited liability
company power and authority to serve as general partner of the Partnership.

Section 3.04    Ownership of the Subsidiaries. All of the outstanding shares of
capital stock or other equity interests of each Subsidiary (a) have been duly
authorized and validly issued (in accordance with the Organizational Documents
of such Subsidiary), are fully paid (in the case of an interest in a limited
partnership or limited liability company, to the extent required under the
Organizational Documents of such Subsidiary) and nonassessable (except (i) in
the case of an interest in a Delaware limited partnership or Delaware limited
liability company, as such nonassessability may be affected by Sections 17-607
and 17-804 of the Delaware LP Act or Sections 18-607 and 18-804 of the Delaware
LLC Act, as applicable, (ii) in the case of an interest in a limited partnership
or limited liability company formed under the laws of another domestic state, as
such nonassessability may be affected by similar provisions of such state’s
limited partnership or limited liability company statute, as applicable, and
(iii) in the case of an interest in an entity formed under the laws of a foreign
jurisdiction, as such nonassessability may be affected by similar provisions of
such jurisdiction’s corporate, partnership or limited liability company statute,
if any, as applicable) and (b) are owned, directly or indirectly, by the
Partnership, and, after giving effect to the Refinancing, free and clear of all
Liens other than Liens arising under the New Indenture, and the Organizational
Documents of such Subsidiaries. The Partnership or one of its Subsidiaries has
the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital
securities of its Subsidiaries as owned by the Partnership or such Subsidiary.

Section 3.05    Partnership SEC Documents. The Partnership SEC Documents, at the
time filed (except to the extent corrected by a subsequent Partnership SEC
Document filed on or prior to the date hereof) (a) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made in the case of any such documents
other than a registration statement, not misleading, (b) complied as to form in
all material respects with the applicable requirements of the Exchange Act and
the Securities Act, as the case may be, and (c) complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto. The financial
statements of the Partnership and other financial information included in the
Partnership SEC Documents were prepared in accordance with GAAP (except as may
be indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q of the Commission), and fairly present (subject in the
case of unaudited statements to normal and recurring and year-end audit
adjustments) in all material respects the consolidated financial position of the
Partnership and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of its operations and cash flows of the Partnership and its
consolidated Subsidiaries for the periods then ended. The independent auditor of
the Partnership as of the date of the most recent audited balance sheet of the
Partnership is an independent registered public accounting firm with respect to
the Partnership and has not resigned or been dismissed as independent registered
public accountants of the Partnership as a result of or in connection with any
disagreement with the Partnership on

 

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any matter of accounting principles or practices, financial statement disclosure
or auditing scope or procedures. Since December 31, 2018, based on an annual
evaluation of disclosure controls and procedures, the Partnership is not aware
of (x) except as disclosed in the Partnership SEC Documents, any significant
deficiency or material weakness in the design or operation of internal controls
over financial reporting that are likely to adversely affect its ability to
record, process, summarize and report financial data or (y) any fraud, whether
or not material, that involves management or other employees who have a
significant role in the internal controls over financial reporting of the
Partnership.

Section 3.06    No Material Adverse Change; Absence of Changes; Operations in
the Ordinary Course. Except as expressly set forth in the Partnership SEC
Documents, since December 31, 2018 through the date hereof no Material Adverse
Effect has occurred. Neither the Partnership nor any of its Subsidiaries has
taken any steps to seek protection pursuant to any law or statute relating to
bankruptcy insolvency, reorganization, receivership, liquidation or winding up
nor does the Partnership have any knowledge or reason to believe that any of its
or any of its Subsidiaries’ respective creditors intend to initiate involuntary
bankruptcy proceedings or any actual knowledge of any fact that would reasonably
lead a creditor to do so. The Partnership and its Subsidiaries, individually and
on a consolidated basis, are not as of the date hereof, and after giving effect
to the transactions contemplated hereby to occur at the Closing, will not be
Insolvent. Since March 31, 2019, and other than the transactions contemplated by
the Transaction Documents, each of the Partnership Entities has conducted its
business in the ordinary course of business, preserved intact its existence and
business organization, Permits, goodwill and business relationships with all
material customers, suppliers, licensors, distributors and others having
significant business relationships with the Partnership Entities.

Section 3.07    No Registration Required. Assuming the accuracy of the
representations and warranties of each Purchaser contained in Article IV, the
issuance and sale of the Purchased Units pursuant to this Agreement is exempt
from registration requirements of the Securities Act, and neither the
Partnership nor any authorized Representative acting on its behalf has taken or
will take any action hereafter that would cause the loss of such exemption.

Section 3.08    No Registration Rights. Except as disclosed in the Partnership
SEC Documents, none of the sale of the Securities as contemplated by this
Agreement, the entry into the Registration Rights Agreement and the filing of
any registration statement contemplated by the Registration Rights Agreement
give rise to any rights for or relating to the registration of any other
securities of the Partnership, except such rights as have been waived or
satisfied on or prior to the date hereof.

Section 3.09    Litigation; Compliance with Laws. The representations made by
the Partnership in Section 4.09 (Litigation; Compliance with Laws) of the New
Indenture are incorporated by reference as Section 3.09 of this Agreement,
mutatis mutandis.

Section 3.10    No Default. The representations made by the Partnership in
Section 4.21 (No Default) of the New Indenture are incorporated by reference as
Section 3.10 of this Agreement, mutatis mutandis.

 

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Section 3.11    No Conflicts. None of (a) the offering, issuance and sale by the
Partnership of the Securities and the application of the proceeds therefrom,
(b) the execution, delivery and performance of the Transaction Documents,
(c) the Refinancing or (d) the Rights Offering or (e) the consummation of the
transactions contemplated thereby (i) constitutes or will constitute a violation
of the Organizational Documents of the Partnership (as amended by the Third A&R
LPA) or the General Partner (as amended by the A&R GP LLC Agreement),
(ii) constitutes or will constitute a breach or violation of, or a default (or
an event which, with notice or lapse of time or both, would constitute such a
default) under or give to others any right of termination, amendment,
acceleration or cancellation of, any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Partnership or
the General Partner is a party or by which any of them or any of their
respective properties may be bound, (iii) violates or will violate any statute,
Law, Permit or regulation or any order, judgment, decree or injunction of any
court or Governmental Authority or body having jurisdiction over the Partnership
or the General Partner or any of their properties in a proceeding to which any
of them or their property is or was a party, or (iv) results or will result in
the creation or imposition of any Lien upon any property or assets of the
Partnership or the General Partner other than as contemplated by the Transaction
Documents, which conflicts, breaches, violations, defaults or liens, in the case
of clauses (ii), (iii) or (iv), would, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or materially impair
the ability of the Partnership to consummate the transactions contemplated by
this Agreement.

Section 3.12    Authority; Enforceability. The Partnership has all limited
partnership power and authority to issue, sell and deliver the Securities, in
accordance with and upon the terms and conditions set forth in this Agreement
and the Partnership Agreement. All partnership or limited liability company
action, as the case may be, required to be taken by the General Partner and the
Partnership for the authorization, issuance, sale and delivery of the
Securities, the execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby shall have been validly
taken. No approval from the holders of outstanding Common Units is required
under the Partnership Agreement or the rules of the Exchange in connection with
the Partnership’s issuance and sale of the Securities to the Purchasers. Each of
the Transaction Documents has been duly and validly authorized and has been or,
with respect to the Transaction Documents to be delivered at the Closing, will
be, validly executed and delivered by the Partnership or the General Partner, as
the case may be, and constitutes, or will constitute, the legal, valid and
binding obligations of the Partnership or the General Partner, as the case may
be, enforceable in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors’ rights and by general
principles of equity.

Section 3.13    Approvals. Excluding any matters covered by Section 3.08, no
authorization, consent, approval, waiver, license, qualification or written
exemption from, nor any filing, declaration, qualification or registration with,
any Governmental Authority or any other Person is required in connection with
the execution, delivery or performance by the Partnership of any of the
Transaction Documents or the Partnership’s issuance and sale of the Purchased
Units, except (a) in connection with the Partnership’s obligations under the
Registration Rights Agreement or the Transaction Documents, (b) as may be
required under the state securities or “Blue Sky” Laws, or (c) where the failure
to receive such authorization, consent, approval, waiver, license, qualification
or written exemption or to make such filing, declaration, qualification or

 

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registration would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.

Section 3.14    Distribution Restrictions. After giving effect to the
Refinancing, no Subsidiary is currently prohibited, directly or indirectly, from
making any distributions to the Partnership or another Subsidiary, from making
any other distribution on such Subsidiary’s equity interests, from repaying to
the Partnership or its affiliates any loans or advances to such Subsidiary from
the Partnership or its affiliates or from transferring any of such Subsidiary’s
property or assets to the Partnership or any other Subsidiary, except
(i) restrictions arising under the New Indenture, (ii) as described in the
Partnership SEC Documents, (iii) such prohibitions mandated by the laws of each
such Subsidiary’s state of formation and the terms of any such Subsidiary’s
Organizational Documents and (iv) where such prohibition would not reasonably be
expected to have a Material Adverse Effect.

Section 3.15    Partnership Status. The Partnership has not elected to be
classified as a corporation for U.S. federal income tax purposes. The
Partnership has for each taxable year during which the Partnership was in
existence met the gross income requirements of Section 7704(c)(2) of the
Internal Revenue Code of 1986, as amended (the “Code”). The Partnership expects
to meet the gross income requirements of Section 7704(c)(2) of the Code for its
taxable year ending December 31, 2019.

Section 3.16    Investment Company Status. None of the Partnership Entities is
now, and immediately after the sale of the Purchased Units hereunder and the
application of the net proceeds from such sale none of the Partnership Entities
will be an “investment company” or a company controlled by an “investment
company” within the meaning of the Investment Company Act of 1940, as amended.

Section 3.17    Certain Fees. No fees or commissions are or will be payable by
the Partnership to brokers, finders or investment bankers with respect to the
sale of any of the Purchased Units or the consummation of the transactions
contemplated by this Agreement. The Partnership agrees that it will indemnify
and hold harmless the Purchasers from and against any and all claims, demands,
or liabilities for broker’s, finder’s, placement, or other similar fees or
commissions incurred by the Partnership or alleged to have been incurred by the
Partnership in connection with the sale of the Purchased Units or the
consummation of the transactions contemplated by this Agreement.

Section 3.18    No General Solicitation. Neither the Partnership, nor any of its
Subsidiaries or Affiliates, nor any Person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offer or sale of the Securities.

Section 3.19    No Integrated Offering. None of the Partnership, its
Subsidiaries, or any of their respective Affiliates, nor any Person acting on
its or their behalf (excluding any of the Purchasers) has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
issuance of any of the Securities under the Securities Act, whether through
integration with prior offerings or otherwise, or cause this offering of the
Securities to require the approval of the equityholders of

 

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the Partnership for purposes of the Securities Act or any applicable shareholder
approval provisions, including, without limitation, under the rules and
regulations of any exchange or automated quotation system on which any of the
securities of the Partnership are listed or designated for quotation.

Section 3.20    Employee Relations.

(a)        No labor dispute with the employees of any of the Partnership
Entities exists or, to the knowledge of the Partnership, is imminent, that would
reasonably be expected to have a Material Adverse Effect.

(b)        Neither the Partnership nor any of its Subsidiaries is a party to any
collective bargaining agreement or employs any member of a union. The
Partnership and its Subsidiaries believe that their relations with their
respective employees are good. No executive officer of the Partnership or any of
its Subsidiaries (as defined in Rule 501(f) of the Securities Act) or other key
employee of the Partnership or any of its Subsidiaries has notified the
Partnership or any such Subsidiary that such officer intends to leave the
Partnership or any such Subsidiary or otherwise terminate such officer’s
employment with the Partnership or any such Subsidiary. No executive officer or
other key employee of the Partnership or any of its Subsidiaries is in violation
of any term of any employment contract, confidentiality, disclosure or
proprietary information agreement, non-competition agreement, or any other
contract or agreement or any restrictive covenant, except for any violation that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

(c)        The Partnership and its Subsidiaries are in compliance with all
federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, either individually or in the aggregate, reasonably be expected to result
in a Material Adverse Effect.

Section 3.21    Insurance. The Partnership maintains or is entitled to the
benefits of insurance from insurers of recognized financial responsibility
covering its properties, operations, personnel and businesses against such
losses and risks as are reasonably adequate to protect it and its businesses in
a reasonable manner and in amounts which are prudent and customary in the
businesses in which the Partnership and its Subsidiaries are engaged. All such
insurance is outstanding and duly in force on the date hereof, except for such
insurance for which the failure to be outstanding and duly in force would not
reasonably be expected to have a Material Adverse Effect. Neither the
Partnership nor any of its Subsidiaries has any reason to believe that it will
not be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect.

Section 3.22    Books and Records; Sarbanes-Oxley Compliance.

(a)        Except as set forth in the Partnership SEC Documents, the Partnership
maintains systems of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations,

 

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(ii) transactions are recorded as necessary to permit preparation of the
Partnership consolidated financial statements in conformity with GAAP and to
maintain accountability for its assets and liabilities, (iii) access to the
assets or incurrence of liabilities is permitted only in accordance with
management’s general or specific authorization, and (iv) the recorded
accountability for assets and liabilities is compared with existing assets and
liabilities at reasonable intervals and appropriate action is taken with respect
to any differences.

(b)        The Partnership has established and maintains disclosure controls and
procedures (to the extent required by and as defined in Rules 13a- 15(e) and
15d-15(e) under the Exchange Act), which are designed to provide reasonable
assurance that material information required to be disclosed by the Partnership
in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and communicated to the Partnership’s management,
including its principal executive officer and principal financial officer, as
appropriate, to allow for timely decisions regarding required disclosure. The
Partnership has carried out evaluations of the effectiveness of its disclosure
controls and procedures as of the end of the most recently completed fiscal
quarter covered by the Partnership’s periodic reports filed with the Commission,
and such disclosure controls and procedures are, except as described in the
Partnership SEC Documents, effective in all material respects to perform the
functions for which they were established.

(c)        The Partnership and, to the Partnership’s knowledge, the General
Partner’s directors or officers, in their capacities as such, are in compliance
with all applicable provisions of the Sarbanes-Oxley Act of 2002 and the rules
and regulations promulgated in connection therewith.

Section 3.23    Listing and Maintenance Requirements. The Common Units are
listed on the Exchange, and the Partnership has not received any notice of
delisting. The issuance and sale of the Purchased Units pursuant to the
Partnership Agreement and issuance of Conversion Units upon conversion of the
Purchased Units does not contravene Exchange rules and regulations. Without
limiting the generality of the foregoing, the Partnership is not in violation of
any of the rules, regulations or requirements of the Exchange and has no
knowledge of any facts or circumstances that would reasonably lead to delisting
or suspension of the Common Units by the Exchange in the foreseeable future.

Section 3.24    Taxes. The representations made by the Partnership in
Section 4.13 (Taxes) of the New Indenture are incorporated by reference as
Section 3.24 of this Agreement, mutatis mutandis.

Section 3.25    Environmental Matters. The representations made by the
Partnership in Section 4.16 (Environmental Matters) of the New Indenture is
incorporated by reference as Section 3.25 of this Agreement, mutatis mutandis.

Section 3.26    Required Disclosures and Descriptions. There are no legal or
governmental proceedings pending or, to the knowledge of the Partnership,
threatened, against any of the Partnership Entities, or to which any of the
Partnership Entities is a party, or to which any of their respective properties
is subject, that are required to be described in the Partnership SEC Documents
but are not described as required, and there are no agreements, contracts,
indentures, leases or other instruments that are required to be described in the
Partnership SEC Documents or to be filed as

 

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an exhibit to the Partnership SEC Documents that are not described or filed as
required by the Securities Act or the Exchange Act.

Section 3.27    Title to Property. Each of the Partnership Entities has good and
marketable title to all real property and good title to all personal property
described in the Partnership SEC Documents as owned by such Partnership Entity,
and after giving effect to the Refinancing, free and clear of all Liens except
such (a) as are described in the Partnership SEC Documents, (b) as arise under
the New Indenture, or (c) as would not, in the aggregate, reasonably be expected
to have a Material Adverse Effect. Any real property and facilities held under
lease by the Partnership or any of its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property and buildings by the Partnership or any of its Subsidiaries.

Section 3.28    Application of Takeover Protections; Rights Agreement. The
Partnership and its General Partner have taken all necessary action, if any, in
order to render inapplicable any control share acquisition, interested
shareholder, business combination, poison pill (including, without limitation,
any distribution under a rights agreement) or other similar anti-takeover
provision under the Partnership Agreement or other organizational documents or
the laws of the jurisdiction of its formation which is or could become
applicable to any Purchaser as a result of the transactions contemplated by this
Agreement, including, without limitation, the Partnership’s issuance of the
Securities and any Purchaser’s ownership of the Securities.

Section 3.29    Transactions With Affiliates. Except as set forth in the
Partnership SEC Documents or as contemplated by the Transaction Documents, none
of the officers, directors or employees of the General Partner, the Partnership
or any of its Subsidiaries is presently a party to any material transaction with
the General Partner, Partnership or any of its Subsidiaries (other than for
ordinary course services as employees, officers or directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any such officer, director or
employee or, to the knowledge of the Partnership or any of its Subsidiaries, any
corporation, partnership, trust or other entity in which any such officer,
director, or employee has a substantial interest or is an officer, director,
employee, trustee or partner.

Section 3.30    Transfer Taxes. On the Closing Date, all stock transfer or other
taxes (other than income or similar taxes) which are required to be paid in
connection with the sale and transfer of the Securities to be sold to each
Purchaser hereunder will be, or will have been, fully paid or provided for by
the Partnership, and all laws imposing such taxes will be or will have been
complied with.

Section 3.31    USA Patriot Act; Sanctions; Anti-Terrorism and Anti-Corruption
Laws. The representations made by the Partnership in Section 4.24 (USA Patriot
Act; Sanctions; Anti-Terrorism and Anti-Corruption Laws) of the New Indenture
are incorporated by reference as Section 3.31 of this Agreement, mutatis
mutandis.

Section 3.32    Compliance with Cemetery Laws. The representations made by the
Partnership in Section 4.26 (Compliance with Cemetery Laws) of the New Indenture
are incorporated by reference as Section 3.32 of this Agreement, mutatis
mutandis.

 

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Section 3.33    No Disqualification Events. With respect to Securities to be
offered and sold hereunder in reliance on Rule 506(b) under the Securities Act
(“Regulation D Securities”), no Issuer Covered Person is subject to any of the
“Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the
Securities Act (a “Disqualification Event”), except for a Disqualification Event
covered by Rule 506(d)(2) or (d)(3). The Partnership has exercised reasonable
care to determine whether any Issuer Covered Person is subject to a
Disqualification Event. The Partnership has complied, to the extent applicable,
with its disclosure obligations under Rule 506(e), and has furnished to the
Purchasers a copy of any disclosures provided thereunder.

Section 3.34    No Other Purchaser Representations. The Partnership acknowledges
and agrees that no Purchaser makes or has made any representations or warranties
with respect to the transactions contemplated hereby other than those
specifically set forth in Article IV.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

Each of the Purchasers, severally but not jointly and solely with respect to
itself, represents and warrants and covenants to the Partnership as follows:

Section 4.01    Existence. Such Purchaser is duly organized and validly existing
and in good standing under the laws of its state of formation, with all
necessary power and authority to own properties and to conduct its business as
currently conducted.

Section 4.02    Authorization, Enforceability. Such Purchaser has all necessary
legal power and authority to enter into, deliver and perform its obligations
under the Transaction Documents. The execution, delivery and performance of the
Transaction Documents by such Purchaser and the consummation by it of the
transactions contemplated thereby have been duly and validly authorized by all
necessary legal action, and no further consent or authorization of such
Purchaser is required. Each of the Transaction Documents to which it is a party
has been duly executed and delivered by such Purchaser and constitutes legal,
valid and binding obligations of such Purchaser; provided, that, with respect to
each such agreement, the enforceability thereof may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
similar laws from time to time in effect affecting creditors’ rights and
remedies generally and by general principles of equity (regardless of whether
such principles are considered in a proceeding in equity or at law).

Section 4.03    No Breach. The execution, delivery and performance of the
Transaction Documents by such Purchaser and the consummation by such Purchaser
of the transactions contemplated thereby will not (a) conflict with or result in
a breach or violation of any of the terms or provisions of, or constitute a
default under, any material agreement to which such Purchaser is a party or by
which such Purchaser is bound or to which any of the property or assets of such
Purchaser is subject, (b) conflict with or result in any violation of the
provisions of the organizational documents of such Purchaser, or (c) violate any
statute, order, rule or regulation of any court or governmental agency or body
having jurisdiction over such Purchaser or the property or assets of such
Purchaser, except in the case of clauses (a) and (c), for such conflicts,
breaches, violations or defaults as would not prevent the consummation by such
Purchaser of the transactions contemplated by the Transaction Documents.

 

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Section 4.04    Certain Fees. No fees or commissions are or will be payable by
such Purchaser to brokers, finders or investment bankers retained by such
Purchaser with respect to the purchase of any of the Purchased Units or the
consummation of the transactions contemplated by this Agreement.

Section 4.05    Unregistered Securities.

(a)        Accredited Investor Status; Sophisticated Purchaser. Such Purchaser
is an “accredited investor” within the meaning of Rule 501 under the Securities
Act and is able to bear the risk of its investment in the Securities. Such
Purchaser has such knowledge and experience in financial and business matters
that it is capable of evaluating the merits and risks of the purchase of the
Securities.

(b)        Information. Such Purchaser and its Representatives have been
furnished with all materials relating to the business, finances and operations
of the Partnership that have been requested and materials relating to the offer
and sale of the Securities that have been requested by such Purchaser. Such
Purchaser and its Representatives have been afforded the opportunity to ask
questions of the Partnership. Neither such inquiries nor any other due diligence
investigations conducted at any time by such Purchasers and its Representatives
shall modify, amend or affect such Purchasers’ right (i) to rely on the
Partnership SEC Documents or the Partnership’s representations and warranties
contained in Article III above or (ii) to indemnification or any other remedy
based on, or with respect to the accuracy or inaccuracy of, or compliance with,
the representations, warranties, covenants and agreements in any Transaction
Document. Such Purchaser understands that its purchase of the Purchased Units
involves a high degree of risk. Such Purchaser has sought such accounting, legal
and tax advice as it has considered necessary to make an informed investment
decision with respect to its acquisition of the Purchased Units.

(c)        Residency. Such Purchaser shall cooperate reasonably with the
Partnership to provide any information necessary for any applicable securities
filings. Such Purchaser is treated as a United States person, or a disregarded
entity of such United States person.

(d)        Legends. Such Purchaser understands that, until such time as the
Purchased Units have been registered pursuant to the provisions of the
Securities Act, or the Purchased Units are eligible for resale pursuant to Rule
144 promulgated under the Securities Act without any restriction as to the
number of securities as of a particular date that can then be immediately sold,
the Purchased Units will bear a restrictive legend as provided in the
Partnership Agreement. Each Purchaser understands that, until such time as the
Conversion Units have been registered pursuant to the provisions of the
Securities Act, or the Conversion Units are eligible for resale pursuant to Rule
144 promulgated under the Securities Act without any restriction as to the
number of securities as of a particular date that can then be immediately sold,
the Conversion Units will bear a restrictive legend as provided in the
Partnership Agreement.

(e)        Purchase Representation. Such Purchaser is purchasing the Purchased
Units for its own account and not with a view to distribution in violation of
any securities laws. Such Purchaser has been advised and understands that,
except as contemplated by the Registration Rights Agreement, neither the
Purchased Units nor the Conversion Units have been or will be registered under
the Securities Act or under the “blue sky” laws of any jurisdiction and may be

 

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resold only if registered pursuant to the provisions of the Securities Act (or
if eligible, pursuant to the provisions of Rule 144 promulgated under the
Securities Act or pursuant to another available exemption from the registration
requirements of the Securities Act).

(f)        Rule 144. Such Purchaser understands that there is no public trading
market for the Purchased Units and that none is expected to develop. Each
Purchaser has been advised and is aware of the provisions of Rule 144
promulgated under the Securities Act.

(g)        Reliance by the Partnership. Such Purchaser understands that the
Purchased Units are being offered and sold in reliance on a transactional
exemption from the registration requirements of federal and state securities
laws and that the Partnership is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
such Purchaser set forth herein in order to determine the applicability of such
exemptions and the suitability of such Purchaser to acquire the Purchased Units
and the Conversion Units issuable upon conversion thereof.

Section 4.06    Sufficient Funds. Such Purchaser will have available to it at
the Closing sufficient funds to enable such Purchaser to pay in full at the
Closing the entire amount of such Purchaser’s Funding Obligation in immediately
available cash funds.

ARTICLE V

COVENANTS

Section 5.01    Reporting Status. For so long as any Series A Preferred Units
are outstanding, the Partnership shall use its reasonable best efforts to timely
file, and in all cases file, all reports required to be filed with the
Commission pursuant to the Exchange Act.

Section 5.02    Use of Proceeds. The Partnership will use the proceeds from the
sale of the Securities for general corporate purposes, including effecting the
Refinancing and paying related expenses.

Section 5.03    Disclosure of Transactions. On or before 8:30 a.m., New York
City time, on the first Business Day following the date of this Agreement, the
Partnership shall issue a press release and file a Current Report on Form 8-K
(provided that such press release shall be issued and such Form 8-K shall be
filed at the same time), in each case, reasonably acceptable to the Purchasers,
describing the terms of the transactions contemplated by the Transaction
Documents in the form required by the Exchange Act and attaching the material
Transaction Documents as exhibits to such filing (including all attachments).

Section 5.04    Additional Issuances of Securities.

(a)        For purposes of this Section 5.04, “Trigger Date” means the date on
which a Purchaser ceases to own any Series A Preferred Units, Conversion Units
or C-Corp Shares such Purchaser receives in consideration for Series A Preferred
Units or Conversion Units pursuant to the consummation of the C-Corporation
Conversion. “Issuer” shall mean, prior to the consummation of the C-Corporation
Conversion, the Partnership, and, from and after the consummation of the
C-Corporation Conversion, StoneMor Inc.

 

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(b)        From the date hereof until the Trigger Date, in the event that the
Issuer proposes to offer for sale, pledge, grant any option to purchase or
otherwise dispose of (or the entry into any transaction or device that is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any Common Units or C-Corp Shares or securities
convertible into or exercisable or exchangeable for Common Units or C-Corp
Shares (other than (a) the Purchased Units as contemplated by the Transaction
Documents, (b) Common Units or C-Corp Shares issued pursuant to employee benefit
plans, qualified option plans or other employee compensation plans existing on
the date hereof or (c) pursuant to the Rights Offering (such offerings, sales,
pledges, grants or dispositions, a “Subsequent Offering” and such securities,
the “Offered Securities”), each Purchaser shall have the right to purchase, in
lieu of the person to whom the Issuer proposed to issue such Offered Securities,
in accordance with paragraph Section 5.04(c) below, a number of Offered
Securities equal to the product of (i) the total number or amount of Offered
Securities which the Issuer proposes to issue at such time and (ii) a fraction,
the numerator of which shall be the total number of Conversion Units (or C-Corp
Shares from which such Conversion Units were converted) which such Purchaser
beneficially owns at the relevant measurement point on an as converted basis,
and the denominator of which shall be the aggregate number of shares of Common
Units or C-Corp Shares, as applicable, then outstanding (the number referred to
in clause (ii), the “Pro Rata Share”).

(c)        Subject to the provisions of Section 5.04(d), in the event that the
Issuer proposes to undertake a Subsequent Offering, it shall give written notice
(a “Notice of Issuance”) of its intention to each Purchaser indicating the exact
price per Offered Security and the exact number of Offered Securities to be
issued by the Issuer, and describing the material terms of the Offered
Securities and the material terms of the Subsequent Offering. Each Purchaser
shall have five (5) Business Days from the date of receipt of the Notice of
Issuance to agree to purchase all or a portion of such Purchaser’s Pro Rata
Share of such number of Offered Securities (as determined pursuant to
Section 5.04(b) above) for the same consideration and otherwise upon the terms
specified in the Notice of Issuance (unless better terms are provided to any
other purchaser) by giving written notice to the Issuer and stating therein the
quantity of Offered Securities to be purchased by the Issuer. If any Purchaser
exercises its right to purchase Offered Securities pursuant to this
Section 5.04(c), the purchase and sale of such Offered Securities shall close at
the same time as the issuance of Offered Securities to the other purchaser or
purchasers and, subject to the preceding sentence, shall be issued on the same
terms and subject to the same conditions as applicable to the other purchaser or
purchasers. The rights given by the Issuer under this Section 5.04(c) shall
terminate and shall be deemed waived by the Purchaser if unexercised within five
(5) Business Days after receipt of the Notice of Issuance referred to in this
Section 5.04(c). Notwithstanding anything to the contrary contained herein, if
(i) the price or any other material terms upon which the Issuer proposes to
issue such Offered Securities are amended by the Issuer following the delivery
to the Purchasers of the Notice of Issuance or (ii) the offering of Offered
Securities to which a Notice of Issuance relates is not completed within 60 days
from the delivery of such notice to the Purchasers, each Purchaser’s election
with respect to the purchase of Offered Securities covered by such Notice of
Issuance shall be void and the Issuer shall be obligated to deliver a new Notice
of Issuance to each Purchaser, and each Purchaser shall be entitled to make a
new election with respect to the purchase by it of Offered Securities covered by
such notice within the five (5) Business Day period from the date of delivery of
the new Notice of Issuance and otherwise in accordance with the procedure
specified in the second sentence of this Section 5.04(c).

 

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(d)        Notwithstanding anything to the contrary contained in
Section 5.04(c), if the Issuer proposes to issue Offered Securities in an
aggregate amount of at least $15,000,000, in a transaction in which securities
of the Issuer is sold to an underwriter or underwriters on a firm commitment
basis for reoffering to the public, including any block sale to a financial
institution conducted as an underwritten public offering (such Subsequent
Offering, an “Subsequent Underwritten Offering”), the Notice of Issuance may,
(i) in lieu of providing the price at which the Issuer proposes to issue Offered
Securities as a fixed dollar amount, provide an estimated range of prices within
which the underwriter for such offering reasonably estimates the shares will
ultimately be priced and (ii) in lieu of providing an exact number of Offered
Securities to be issued by the Issuer in such Subsequent Underwritten Offering,
provide an estimated number the underwriter for such offering reasonably
estimates will ultimately be issued in such Subsequent Underwritten Offering
(the “Offering Size”). If a Purchaser desires to exercise its rights under this
Section 5.04(d) with respect to such Subsequent Underwritten Offering, such
Purchaser shall be required to make an election with respect to the purchase of
up to a number of Offered Securities being offered equal to its Pro Rata Share
of the Offering Size no later than five (5) Business Days from the date of
receipt of the Notice of Issuance; provided that each Purchaser’s obligation to
purchase the number of Offered Securities subject to its election shall be
conditioned upon (A) the issuance by the Issuer of a number of Common Units or
C-Corp Shares at least equal to the Offering Size and (B) the Offered Securities
so issued being priced not higher or lower than 10% above or below,
respectively, of the closing price of the Common Units or C-Corp Shares, as
applicable on the principal securities exchange on which either securities are
then listed on the date immediately prior to the date on which the Notice of
Issuance is delivered to the Purchasers pursuant to this Section 5.04(d) (the
“Price Range”). If a Subsequent Underwritten Offering contemplated by this
Section 5.04(d)is not completed within 60 days following the Notice of Issuance
with respect thereto, then the Issuer will be required to comply again with the
provisions of Section 5.04(c) or Section 5.04(d) in any Subsequent Offering.

(e)        Any Notice of Issuance provided by the Issuer to a Purchaser in
connection with an Subsequent Underwritten Offering may specify a number of
Common Units or C-Corp Shares, not to exceed 15% of the Offering Size, that the
underwriters or agents in such offering shall be entitled to purchase upon
exercise of an underwriter’s option to purchase additional Common Units or
C-Corp Shares (the “Overallotment Securities”). If a Purchaser desires to
exercise its rights under this Section 5.04(e) with respect to Overallotment
Securities, such Purchaser shall be required to make an election with respect to
the purchase of up to its Pro Rata Share of the Overallotment Securities at the
same time such Purchaser makes an election pursuant to Section 5.04(d); provided
that such Purchaser’s obligation to purchase Overallotment Securities in
accordance with its election shall be conditioned upon the Overallotment
Securities being priced within the Price Range.

(f)        The Issuer and each Purchaser agree that if such Purchaser elects to
participate in any offering pursuant to this Section 5.04, (x) neither the
underwriting or purchase agreements relating to such offering nor any other
transaction documents related thereto (collectively, the “Subsequent Offering
Documents”) shall include any term or provisions whereby such Purchaser shall be
required to agree to any restrictions in trading as to any securities of the
Issuer owned by such Purchaser prior to such offering, other than as required by
applicable law, and (y) any registration rights set forth in such Subsequent
Offering Documents shall be similar in all material respects to the registration
rights contained in the Registration Rights Agreement.

 

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Section 5.05    Rights Offering. As promptly as practicable after the issuance
of the Series A Preferred Units, the Partnership shall file a registration
statement on Form S-1 to effect a $40,185,483 rights offering of Common Units to
holders of Common Units (other than any Purchaser or holders of Common Units who
are Affiliates of a Purchaser, American Infrastructure Funds L.P. and its
Affiliates) at a purchase price of $1.20 per Common Unit (the “Rights
Offering”). The Partnership shall use its reasonable best efforts to complete
the Rights Offering within one hundred (100) days of the issuance of the Series
A Preferred Units.

Section 5.06    Cooperation; Further Assurances. Each of the Partnership and the
Purchasers shall use its respective reasonable best efforts to obtain all
approvals and consents required by or necessary to consummate the transactions
contemplated by this Agreement and the other Transaction Documents. Each of the
Partnership and the Purchasers agrees to execute and deliver all such documents
or instruments, to take all appropriate action and to do all other things it
determines to be necessary, proper or advisable under applicable Laws and
regulations or as otherwise reasonably requested by the other to consummate the
transactions contemplated by this Agreement.

Section 5.07    Transfer Restrictions. Without the prior written consent of the
Partnership, except as specifically provided in this Agreement, each Purchaser
and its Affiliates shall not offer, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, lend or otherwise transfer or dispose of, directly
or indirectly, any of the Purchased Units, provided, that such Purchaser may
transfer any Purchased Units to a U.S. Affiliate of such Purchaser.
Notwithstanding the foregoing, any transferee receiving any Purchased Units
pursuant to this Section 5.07 shall agree to the restrictions set forth in this
Section 5.07. Notwithstanding anything herein to the contrary, nothing in this
Section 5.07 or otherwise in this Agreement shall restrict a Purchaser from
entering into any swap or other derivatives transaction that transfers to a
United States person, in whole or in part, any of the economic benefits or risks
of ownership of such Purchaser’s Securities.

Section 5.08    No Integrated Offering. None of the Partnership, its
Subsidiaries, their Affiliates or any Person acting on their behalf will take
any action or steps referred to in Section 3.19 that would require registration
of the issuance of any of the Securities under the Securities Act or cause the
offering of any of the Securities to be integrated with other offerings for
purposes of any such applicable shareholder approval provisions.

Section 5.09    Tax Estimates.

(a)        Following receipt of a written request from a Purchaser that
continues to own Purchased Units, the Partnership shall provide such Purchaser
with a good faith estimate (and reasonable supporting calculations) of whether
there is sufficient Unrealized Gain attributable to the Partnership property on
the date of such request such that, if any of such Purchaser’s Series A
Preferred Units were converted to Common Units and such Unrealized Gain was
allocated to such Purchaser pursuant to Section 5.5(d) of the Third A&R LPA,
Purchaser’s Capital Account in respect of its Common Units would be equal to the
Per Unit Capital Amount for a then Outstanding Initial Common Unit without any
need for corrective allocations under Treasury Regulation
Section 1.704(b)(4)(x). Each Purchaser shall be entitled to make such a request
in connection with a conversion of the Purchased Units and prior to the
C-Corporation Conversion.

 

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(b)        For purposes of this Section 5.08, all capitalized terms used but not
defined herein shall have the meanings assigned to them in the Third A&R LPA.

Section 5.10    UBTI. The Schedule K-1s provided to the Purchasers shall include
such Purchaser’s distributive share of “unrelated business taxable income.”

Section 5.11    Governance Matters. From and after the C-Corporation Conversion,
StoneMor GP Holdings LLC, the General Partner, the Partnership and the entities
into which the General Partner and the Partnership convert in connection with
the C-Corporation Conversion, as applicable, shall take all necessary action to
nominate and cause:

(a)        the number of directors of StoneMor, Inc. (the “Corporation”) that
will constitute the full board of directors of the Corporation to be seven (7);

(b)        until the later of (i) the refinancing or repayment of the Notes
under the New Indenture and (ii) such time as the Lead Purchaser and its
controlled affiliated investment funds and managed accounts (collectively,
“Axar”) ceases to hold at least 15.00% of the issued and outstanding common
stock of the Corporation in the aggregate, three (3) individuals designated in
writing by the Lead Purchaser to be elected to the Corporation’s board of
directors, at least two of whom of whom shall be “independent” under the
standards set forth in Section 303A.02(b) of the New York Stock Exchange Listed
Company Manual for so long as the Corporation is not a “controlled company” for
purposes of the New York Stock Exchange, provided, however, that if, prior to
the refinancing or repayment of the Notes under the New Indenture, the number of
directors on the Corporation’s board of directors is increased, the number of
directors which shall be designated by the Lead Purchaser shall be increased to
be at least three-sevenths (3/7) of the total number of directors on the
Corporation’s board of directors;

(c)        solely after the refinancing or repayment of the Notes under the New
Indenture, until such time as Axar ceases to hold at least 10.00% of the issued
and outstanding common stock of the Corporation in the aggregate, two
(2) individual designated in writing by the Lead Purchaser to be elected to the
Corporation’s board of directors; and

(d)        solely after the refinancing or repayment of the Notes under the New
Indenture, until such time as Axar ceases to hold at least 5.00% of the issued
and outstanding common stock of the Corporation in the aggregate, one
(1) individual designated in writing by the Lead Purchaser to be elected to the
Corporation’s board of directors.

Section 5.12    Blocker Entities. The General Partner and the Partnership
acknowledge that one or more Purchasers are making their investment through one
or more newly-formed US “blocker entities” (i) whose only asset will be its
direct or indirect ownership of Purchased Units (each, a “Blocker Corp.”) and
cash or other consideration received as a result of ownership of such Purchased
Units, and (ii) whose only liabilities will be liabilities incurred in
connection with the ownership of such Purchased Units (e.g., taxes payable). In
connection with the consummation of the C-Corporation Conversion, if any
Purchaser shall so request at least five (5) Business Days prior to such
consummation, any such Blocker Corp. (or, as applicable, any such Purchaser)
shall have the right to be merged with, or contributed to (or, as applicable, to
cause such Blocker to be merged with or contributed to) StoneMor Inc. in a
transaction intended to be tax-free under Code

 

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section 368 or Code section 351, in exchange for the C-Corp Shares such
Purchaser would have received as consideration in the C-Corporation Conversion
without any discount. Any such Purchaser shall be responsible for and shall
indemnify StoneMor Inc. for any taxes of the Blocker Corp. for taxable periods
or portions thereof ending on or prior to the consummation of the C-Corporation
Conversion to the extent such taxes exceed the amount of cash held by the
Blocker Corp. at the time of the C-Corporation Conversion.

ARTICLE VI

INDEMNIFICATION, COSTS AND EXPENSES

Section 6.01    Indemnification by the Partnership. The Partnership agrees to
indemnify each Purchaser and its Representatives (collectively, “Purchaser
Related Parties”) from costs, losses, liabilities, damages, or expenses of any
kind or nature whatsoever, and hold each of them harmless against, any and all
actions, suits, proceedings (including any investigations, litigation or
inquiries), demands, and causes of action, and, in connection therewith,
promptly upon demand, pay or reimburse each of them for all costs, losses,
liabilities, damages, or expenses of any kind or nature whatsoever (including
the reasonable fees and disbursements of counsel and all other reasonable
expenses incurred in connection with investigating, defending or preparing to
defend any such matter that may be incurred by them or asserted against or
involve any of them), whether or not involving a Third-Party Claim, as a result
of, arising out of, or in any way related to (a) the failure of any of the
representations or warranties made by the Partnership contained herein to be
true and correct in all material respects (other than those representations and
warranties contained in Section 3.01 (Existence), Section 3.02 (Capitalization
and Valid Issuance of Units), Section 3.04 (Ownership of the Subsidiaries),
Section 3.12 (Authority: Enforceability), Section 3.15 (Partnership Status) or
Section 3.17 (Certain Fees) or other representations and warranties that are
qualified by materiality or Material Adverse Effect, which, in each case, shall
be true and correct in all respects) when made and as of the Closing Date
(except for any representations and warranties made as of a specific date, which
shall be required to be true and correct as of such date only) or (b) the breach
of any covenants of the Partnership contained herein, provided that, in the case
of the immediately preceding clause (a), such claim for indemnification is made
prior to the expiration of the survival period of such representation or
warranty; provided, however, that for purposes of determining when an
indemnification claim has been made, the date upon which a Purchaser Related
Party shall have given notice (stating in reasonable detail the basis of the
claim for indemnification) to the Partnership shall constitute the date upon
which such claim has been made; and provided, further, that the aggregate
liability of the Partnership to each Purchaser pursuant to this Section 6.01
shall not be greater in amount than such Purchaser’s Funding Obligation, and the
aggregate liability of the Partnership to all Purchasers pursuant to this
Section 6.01 shall not exceed the Total Funding Obligation. No Purchaser Related
Party shall be entitled to recover special, indirect, exemplary, incidental,
lost profits, speculative or punitive damages under this Section 6.01; provided,
however, that such limitation shall not prevent any Purchaser Related Party from
recovering under this Section 6.01 for any such damages to the extent that such
damages are direct damages in the form of diminution in value or are payable to
a third party in connection with any Third-Party Claims.

Section 6.02    Indemnification by the Purchasers. Each Purchaser agrees,
severally and not jointly or jointly and severally, to indemnify the
Partnership, the General Partner and their respective Representatives
(collectively, “Partnership Related Parties”) from, costs, losses,

 

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liabilities, damages, or expenses of any kind or nature whatsoever, and hold
each of them harmless against, any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), demands, and causes of
action, and, in connection therewith, promptly upon demand, pay or reimburse
each of them for all costs, losses, liabilities, damages, or expenses of any
kind or nature whatsoever (including the reasonable fees and disbursements of
counsel and all other reasonable expenses incurred in connection with
investigating, defending or preparing to defend any such matter that may be
incurred by them or asserted against or involve any of them), whether or not
involving a Third-Party Claim, as a result of, arising out of, or in any way
related to (a) the failure of any of the representations or warranties made by
such Purchaser contained herein to be true and correct in all material respects
as of the date made (except to the extent any representation or warranty
includes the word “material,” Material Adverse Effect or words of similar
import, with respect to which such representation or warranty, or applicable
portions thereof, must have been true and correct) or (b) the breach of any of
the covenants of such Purchaser contained herein; provided that, in the case of
the immediately preceding clause (a), such claim for indemnification relating to
a breach of any representation or warranty is made prior to the expiration of
the survival period of such representation or warranty; and provided, further,
that for purposes of determining when an indemnification claim has been made,
the date upon which a Partnership Related Party shall have given notice (stating
in reasonable detail the basis of the claim for indemnification) to such
Purchaser shall constitute the date upon which such claim has been made; and
provided, further, that the liability of each such Purchaser shall not be
greater in amount than the sum of such Purchaser’s Funding Obligation plus any
distributions paid to such Purchaser with respect to the Purchased Units. No
Partnership Related Party shall be entitled to recover special, indirect,
exemplary, lost profits, speculative or punitive damages under this
Section 6.02; provided, however, that such limitation shall not prevent any
Partnership Related Party from recovering under this Section 6.02 for any such
damages to the extent that such damages are in the form of diminution in value
or are payable to a third party in connection with any Third-Party Claims.

Section 6.03    Indemnification Procedure.

(a)        A claim for indemnification for any matter not involving a
Third-Party Claim may be asserted by notice to the party from whom
indemnification is sought; provided, however, that failure to so notify the
indemnifying party shall not preclude the indemnified party from any
indemnification which it may claim in accordance with this Article VI, except as
otherwise provided in Section 6.01.

(b)        As soon as reasonably practicable after any Purchaser Related Party
or Partnership Related Party (hereinafter, the “Indemnified Party”) has received
notice of any indemnifiable claim hereunder, or the commencement of any action,
suit or proceeding by a third person, which the Indemnified Party believes in
good faith is an indemnifiable claim under this Agreement (each a “Third-Party
Claim”), the Indemnified Party shall give the indemnitor hereunder (the
“Indemnifying Party”) written notice of such Third-Party Claim, but failure to
so notify the Indemnifying Party will not relieve the Indemnifying Party from
any liability it may have to such Indemnified Party hereunder except to the
extent that the Indemnifying Party is materially prejudiced by such failure.
Such notice shall state the nature and the basis of such Third-Party Claim to
the extent then known. The Indemnifying Party shall have the right to defend and
settle, at its own expense and by its own counsel who shall be reasonably
acceptable to the Indemnified Party, any such matter as long as the Indemnifying
Party pursues the same diligently

 

28

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and in good faith. If the Indemnifying Party undertakes to defend or settle, it
shall promptly, and in no event later than ten (10) days, notify the Indemnified
Party of its intention to do so, and the Indemnified Party shall cooperate with
the Indemnifying Party and its counsel in all commercially reasonable respects
in the defense thereof and the settlement thereof. Such cooperation of the
Indemnified Party shall be at the cost of the Indemnifying Party. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability; provided, however, that the Indemnified Party shall be entitled
(i) at its expense, to participate in the defense of such asserted liability and
the negotiations of the settlement thereof and (ii) if (A) the Indemnifying
Party has, within ten (10) Business Days of when the Indemnified Party provides
written notice of a Third-Party Claim, failed to assume the defense or employ
counsel reasonably acceptable to the Indemnified Party and to notify the
Indemnified Party of such assumption or (B) if the defendants in any such action
include both the Indemnified Party and the Indemnifying Party and counsel to the
Indemnified Party shall have concluded that there may be reasonable defenses
available to the Indemnified Party that are different from or in addition to
those available to the Indemnifying Party or if the interests of the Indemnified
Party reasonably may be deemed to conflict with the interests of the
Indemnifying Party, then the Indemnified Party shall have the right to select a
separate counsel and to assume such legal defense and otherwise to participate
in the defense of such action, with the expenses and fees of such separate
counsel and other expenses related to such participation to be reimbursed by the
Indemnifying Party as incurred. Notwithstanding any other provision of this
Agreement, the Indemnifying Party shall not settle any indemnified claim without
the consent of the Indemnified Party, unless the settlement thereof imposes no
liability or obligation on, and includes a complete and unconditional release
from liability of, and does not include any admission of wrongdoing or
malfeasance by, the Indemnified Party or its Affiliates. The remedies provided
for in this Section 6.03 are cumulative and are not exclusive of any remedies
that may be available to a party at law or in equity or otherwise.

Section 6.04    Tax Matters. All indemnification payments under this Article VI
shall be adjustments to the Purchaser’s Purchase Price except as otherwise
required by applicable Law.

ARTICLE VII

MISCELLANEOUS

Section 7.01    Expenses. Promptly following receipt of an invoice therefor, the
Partnership shall reimburse (x) the Lead Purchaser for the reasonable fees and
expenses of Schulte Roth & Zabel, LLP of $425,000.00 and (y) Vinson & Elkins for
its reasonable fees and expenses of $2,000,000.00; provided, that for U.S.
federal income tax purposes, the reimbursements described in Section 7.01(x)
are, and will be treated by the parties as, adjustments to the Purchase Price
paid by the Purchasers for the Purchased Units. All other costs and expenses,
including fees and disbursements of financial advisers and accountants, incurred
in connection with the Transaction Documents and the transactions contemplated
thereby shall be paid by the party incurring such costs and expenses.

Section 7.02    Interpretation. Article, Section, Schedule and Exhibit
references in this Agreement are references to the corresponding Article,
Section, Schedule or Exhibit to this

 

29

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Agreement, unless otherwise specified. All Exhibits and Schedules to this
Agreement are hereby incorporated and made a part hereof as if set forth in full
herein and are an integral part of this Agreement. All references to
instruments, documents, Contracts and agreements are references to such
instruments, documents, Contracts and agreements as the same may be amended,
supplemented and otherwise modified from time to time, unless otherwise
specified. The word “including” shall mean “including but not limited to” and
shall not be construed to limit any general statement that it follows to the
specific or similar items or matters immediately following it. Whenever the
Partnership has an obligation under the Transaction Documents, the expense of
complying with that obligation shall be an expense of the Partnership unless
otherwise specified. Any reference in this Agreement to “$” shall mean U.S.
dollars. Whenever any determination, consent or approval is to be made or given
by a Purchaser, such action shall be in such Purchaser’s sole discretion, unless
otherwise specified in this Agreement. If any provision in the Transaction
Documents is held to be illegal, invalid, not binding or unenforceable, (a) such
provision shall be fully severable and the Transaction Documents shall be
construed and enforced as if such illegal, invalid, not binding or unenforceable
provision had never comprised a part of the Transaction Documents, and the
remaining provisions shall remain in full force and effect so long as this
Agreement as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof and the
prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s), and
(b) the parties hereto shall negotiate in good faith to modify the Transaction
Documents so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby are consummated as originally contemplated to the greatest extent
possible. When calculating the period of time before which, within which or
following which any act is to be done or step taken pursuant to the Transaction
Documents, the date that is the reference date in calculating such period shall
be excluded. If the last day of such period is a non-Business Day, the period in
question shall end on the next succeeding Business Day. Any words imparting the
singular number only shall include the plural and vice versa. The words such as
“herein,” “hereinafter,” “hereof” and “hereunder” refer to this Agreement as a
whole and not merely to a subdivision in which such words appear unless the
context otherwise requires. The provision of a Table of Contents, the division
of this Agreement into Articles, Sections and other subdivisions and the
insertion of headings are for convenience of reference only and shall not affect
or be utilized in construing or interpreting this Agreement.

Section 7.03    Survival of Provisions. (A) The representations and warranties
set forth in Section 3.01(a), Section 3.02, Section 3.12, Section 3.15,
Section 3.17, Section 4.01, Section 4.02, Section 4.04, and Sections 4.05(a) and
(b) hereunder shall survive the execution and delivery of this Agreement
indefinitely, (B) the representations and warranties set forth in Section 3.24
and Section 3.30 shall survive until the date that is 60 days after the
expiration of the applicable statute of limitation and (C) the other
representations and warranties set forth herein shall survive for a period of
eighteen (18) months following the Closing Date, regardless of any investigation
made by or on behalf of the Partnership or the Purchasers. The covenants made in
this Agreement or any other Transaction Document shall survive the Closing and
remain operative and in full force

 

30

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and effect regardless of acceptance of any of the Purchased Units and payment
therefor and repayment, conversion or repurchase thereof.

Section 7.04    No Waiver; Modifications in Writing.

(a)        Delay. No failure or delay on the part of any party in exercising any
right, power or remedy hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such right, power or remedy preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy. The remedies provided for herein are cumulative and are not exclusive of
any remedies that may be available to a party at law or in equity or otherwise.

(b)        Specific Waiver. Except as otherwise provided herein, no amendment,
waiver, consent, modification or termination of any provision of any Transaction
Document (except in the case of the Partnership Agreement for amendments adopted
pursuant to Article XIII thereof) shall be effective against a Purchaser unless
signed by such Purchaser. Any amendment, supplement or modification of or to any
provision of any Transaction Document, any waiver of any provision of any
Transaction Document and any consent to any departure by the Partnership from
the terms of any provision of any Transaction Document shall be effective only
in the specific instance and for the specific purpose for which made or given.
Except where notice is specifically required by this Agreement, no notice to or
demand on the Partnership in any case shall entitle the Partnership to any other
or further notice or demand in similar or other circumstances. Any investigation
by or on behalf of any party shall not be deemed to constitute a waiver by the
party taking such action of compliance with any representation, warranty,
covenant or agreement contained herein.

Section 7.05    Binding Effect. This Agreement shall be binding upon the
Partnership, each of the Purchasers and their respective successors and
permitted assigns. Except as expressly provided in this Agreement, this
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement and their respective successors
and permitted assigns.

Section 7.06    Non-Disclosure. The Partnership and the General Partner agree
that the Purchasers may (i) publicize their ownership in the Partnership, as
well as the identity of the Partnership, the size of the investment and its
pricing terms with respect to the Series A Preferred Units on its internet site
or in marketing materials, press releases, published “tombstone” announcements
or any other print or electronic medium or in any regulatory filing and
(ii) display the Partnership’s logo in conjunction with any such reference.

Section 7.07    Communications. All notices and demands provided for hereunder
shall be in writing and shall be given by registered or certified mail, return
receipt requested, facsimile, email, air courier guaranteeing overnight delivery
or personal delivery to the following addresses

(a)        If to a Purchaser affiliated with Axar Capital Management L.P., to
the address set forth on Schedule A, with a copy to (which shall not constitute
notice):

Schulte Roth & Zabel, LLP

919 Third Avenue

 

31

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New York, NY 10022

Attention: Stuart D. Freedman

Facsimile: 212-593-5955

Email: Stuart.freedman@srz.com

(b)          If to another Purchaser, to the address set forth on Schedule A

(c)          If to the Partnership:

StoneMor Partners L.P.

3600 Horizon Boulevard

Trevose, PA 19053

Attention: General Counsel

Email: aso@stonemor.com

with a copy to (which shall not constitute notice):

Vinson & Elkins L.L.P.

1001 Fannin Street

Suite 2500

Houston TX 77002-6760

Attention: David P. Oelman

Email: doelman@velaw.com

or to such other address as the Partnership or the Purchasers may designate in
writing. All notices and communications shall be deemed to have been duly given:
at the time delivered by hand, if personally delivered; upon actual receipt if
sent by certified or registered mail, return receipt requested, or regular mail,
if mailed; upon actual receipt of the overnight courier copy, upon actual
receipt if sent via email or facsimile; and upon actual receipt when delivered
to an air courier guaranteeing overnight delivery.

Section 7.08    Removal of Legend. In connection with a sale of the Conversion
Units by a Purchaser in reliance on Rule 144 promulgated under the Securities
Act, the applicable Purchaser or its broker shall deliver to the Partnership a
broker representation letter providing to the Partnership any information the
Partnership deems necessary to determine that the sale of such Units is made in
compliance with Rule 144 promulgated under the Securities Act, including, as may
be appropriate, a certification as to facts allowing the Partnership to
determine whether such Purchaser is or is not an affiliate of the Partnership
(as defined in Rule 144 promulgated under the Securities Act) and a
certification as to the length of time the such Units have been held. Upon
receipt of such representation letter, the Partnership shall promptly remove the
notation of a restrictive legend in such Purchaser’s or the book-entry account
maintained by the Partnership, including the legend referred to in Section 4.05,
and the Partnership shall bear all costs (or reimburse such Purchaser for such
reasonable costs) associated therewith. At such time as the Conversion Units
have been sold pursuant to an effective registration statement under the
Securities Act or have been held by any Purchaser for more than one year where
such Purchaser is not, and has not been in the preceding three months, an
affiliate of the Partnership (as defined

 

32

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in Rule 144 promulgated under the Securities Act), if the book-entry account of
such Units still bears the notation of the restrictive legend referred to in
Section 4.05, the Partnership agrees, upon request of the Purchaser or permitted
assignee, to take all steps necessary to promptly effect the removal of the
legend described in Section 4.05 from such Units, and the Partnership shall bear
all costs (or reimburse such Purchaser for such reasonable costs) associated
therewith, regardless of whether the request is made in connection with a sale
or otherwise, so long as such Purchaser or its permitted assigns provide to the
Partnership any information the Partnership deems reasonably necessary to
determine that the legend is no longer required under the Securities Act or
applicable state laws, including (if there is no such registration statement) a
certification as to facts allowing the Partnership to determine whether such
Purchaser is or is not an affiliate of the Partnership (as defined in Rule 144
promulgated under the Securities Act), as well as a covenant to inform the
Partnership if it should thereafter become an affiliate (as defined in Rule 144
promulgated under the Securities Act) and to consent to the notation of an
appropriate restriction, and a certification as to the length of time such Units
have been held. The Partnership shall cooperate with each Purchaser to effect
the removal of the legend referred to in Section 4.05 at any time such legend is
no longer appropriate.

Section 7.09    Entire Agreement. This Agreement, the other Transaction
Documents and the other agreements and documents referred to herein are intended
by the parties as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and understanding of the
parties hereto in respect of the subject matter contained herein and therein.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein or the other Transaction Documents with
respect to the rights granted by the Partnership or any of its Affiliates or the
Purchasers or any of their respective Affiliates set forth herein or therein.
This Agreement, the other Transaction Documents and the other agreements and
documents referred to herein or therein supersede all prior agreements and
understandings between the parties with respect to such subject matter.

Section 7.10    Governing Law; Submission to Jurisdiction. This Agreement, and
all claims or causes of action (whether in contract or tort) that may be based
upon, arise out of or relate to this Agreement or the negotiation, execution or
performance of this Agreement (including any claim or cause of action based
upon, arising out of or related to any representation or warranty made in or in
connection with this Agreement), will be construed in accordance with and
governed by the laws of the State of New York without regard to principles of
conflicts of laws. Any action against any party relating to the foregoing shall
be brought in any federal or state court of competent jurisdiction located
within the State of New York, and the parties hereto hereby irrevocably submit
to the non-exclusive jurisdiction of any federal or state court located within
the State of New York over any such action. The parties hereby irrevocably
waive, to the fullest extent permitted by applicable Law, any objection which
they may now or hereafter have to the laying of venue of any such dispute
brought in such court or any defense of inconvenient forum for the maintenance
of such dispute. Each of the parties hereto agrees that a judgment in any such
dispute may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by Law.

Section 7.11    Waiver of Jury Trial. THE PARTIES TO THIS AGREEMENT EACH HEREBY
WAIVES, AND AGREES TO CAUSE ITS AFFILIATES TO WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY

 

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CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THIS AGREEMENT OR
(b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE
PARTIES HERETO IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED
HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN
CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY
AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT THE PARTIES TO THIS AGREEMENT
MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.

Section 7.12    Exclusive Remedy.

(a)        Each party hereto hereby acknowledges and agrees that the rights of
each party to consummate the transactions contemplated hereby are special,
unique and of extraordinary character and that, if any party violates or fails
or refuses to perform any covenant or agreement made by it herein, the
non-breaching party may be without an adequate remedy at law. If any party
violates or fails or refuses to perform any covenant or agreement made by such
party herein, the non-breaching party subject to the terms hereof, may institute
and prosecute an action in any court of competent jurisdiction to enforce
specific performance of such covenant or agreement or seek any other equitable
relief.

(b)        The sole and exclusive remedy for the Purchasers for any and all
claims arising under, out of, or related to this Agreement or the transactions
contemplated hereby, excluding for the avoidance of doubt, the failure of any of
the representations or warranties contained in any Transaction Document other
than this Agreement to be true and correct as of the date made, shall be the
rights of indemnification set forth in Article VI only, and no Purchaser will
have any other entitlement, remedy or recourse, whether in contract, tort or
otherwise, it being agreed that all of such other remedies, entitlements and
recourse are expressly waived and released by the Purchasers to the fullest
extent permitted by Law. Notwithstanding anything in the foregoing to the
contrary, nothing in this Agreement shall limit or otherwise restrict a fraud
claim brought by any party hereto or the right to seek specific performance
pursuant to Section 7.12(a).

Section 7.13    No Recourse Against Others.

(a)        All claims, obligations, liabilities or causes of action (whether in
contract or in tort, in law or in equity, or granted by statute) that may be
based upon, in respect of, arise under, out or by reason of, be connected with
or relate in any manner to this Agreement, or the negotiation, execution or
performance of this Agreement (including any representation or warranty made in,
in connection with, or as an inducement to, this Agreement), may be made only
against (and are expressly limited to) the Partnership and the Purchasers. No
Person other than the Partnership or the Purchasers, including no member,
partner, stockholder, Affiliate or Representative thereof, nor any member,
partner, stockholder, Affiliate or Representative of any of the foregoing, shall
have any liability (whether in contract or in tort, in law or in equity, or
granted by statute) for any claims, causes of action, obligations or liabilities
arising under, out of, in connection with or related in any manner to this
Agreement or based on, in respect of or by

 

34

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reason of this Agreement or its negotiation, execution, performance or breach;
and, to the maximum extent permitted by Law, each of the Partnership and the
Purchasers hereby waives and releases all such liabilities, claims, causes of
action and obligations against any such third Person.

(b)        Without limiting the foregoing, to the maximum extent permitted by
Law, (i) each of the Partnership and the Purchasers hereby waives and releases
any and all rights, claims, demands or causes of action that may otherwise be
available at law or in equity, or granted by statute, to avoid or disregard the
entity form of the other or otherwise impose liability of the other on any third
Person, whether granted by statute or based on theories of equity, agency,
control, instrumentality, alter ego, domination, sham, single business
enterprise, piercing the veil, unfairness, undercapitalization or otherwise; and
(ii) each of the Partnership and the Purchasers disclaims any reliance upon any
third Person with respect to the performance of this Agreement or any
representation or warranty made in, in connection with or as an inducement to
this Agreement.

Section 7.14    No Third-Party Beneficiaries. Nothing in this Agreement, express
or implied, is intended to or shall confer upon any Person, other than the
Partnership, the Purchasers, for purposes of Article VI only, the Purchaser
Released Parties, and, for purposes of Section 7.13 only, any member, partner,
stockholder, Affiliate or Representative of the Partnership or the Purchasers,
or any member, partner, stockholder, Affiliate or Representative of any of the
foregoing, any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.

Section 7.15    Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same agreement.

[Remainder of page intentionally left blank. Signature page follows.]

 

35

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IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of
the date first above written.

 

STONEMOR PARTNERS L.P.

By:    

  StoneMor GP LLC, its general partner  

By:

 

/s/ Joseph M. Redling

 

Name:

 

Joseph M. Redling

 

Title:

 

President and Chief Executive Officer

 

[Signature page to Purchase Agreement]

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

PURCHASERS AXAR SMP SPV LLC By: Axar Capital Management LP, its Investment
Manager By: /s/ Andrew Axelrod                                      Name: Andrew
Axelrod Title: Authorized Signatory STAR V PARTNERS LLC By: Axar Capital
Management LP, its Investment Manager By: /s/ Andrew
Axelrod                                     Name: Andrew Axelrod Title:
Authorized Signatory BLACKWELL PARTNERS LLC – SERIES E, solely with respect to
the assets for which Axar Capital Management LP acts as its Investment Manager
By: Axar Capital Management LP, its Investment Manager By: /s/ Andrew
Axelrod                                     Name: Andrew Axelrod Title:
Authorized Signatory

 

[Signature page to Purchase Agreement]

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

/s/ David Miller

David Miller

 

[Signature page to Purchase Agreement]

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

MANGROVE PARTNERS MPF INVESTCO 6, LLC By: The Mangrove Partners Fund (Cayman
Drawdown), L.P., its sole member By: Mangrove Partners, its investment manager
By: /s/ Ward Dietrich                                     Name: Ward Dietrich
Title: Authorized Person MPF INVESTCO 7, LLC By: The Mangrove Partners i-Feeder
1, Ltd., its sole member By: Mangrove Partners, its investment manager By: /s/
Ward Dietrich                                     Name: Ward Dietrich Title:
Authorized Person MPF INVESTCO 8, LLC By: The Mangrove Partners Fund (Cayman),
Ltd., its sole member By: Mangrove Partners, its investment manager By: /s/ Ward
Dietrich                                     Name: Ward Dietrich Title:
Authorized Person

 

[Signature page to Purchase Agreement]

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

THE MANGROVE PARTNERS FUND, L.P. By: Mangrove Partners, its investment manager
By: /s/ Ward Dietrich                                     Name: Ward Dietrich
Title: Authorized Person

THE MANGROVE PARTNERS FUND

(CAYMAN PARTNERSHIP), L.P.

By: Mangrove Partners, its investment manager By: /s/ Ward
Dietrich                                     Name: Ward Dietrich Title:
Authorized Person

 

[Signature page to Purchase Agreement]

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

Schedule A

Purchase Price Allocation

 

Purchaser and Address

  

    Purchased Units    

  

  Funding Obligation  

SMP SPV LLC

c/o Axar Capital Management, LP

1330 Avenue of the Americas, 30th Floor

New York, NY 10019

Attention: Andrew Axelrod

E-mail: aaxelrod@axarcapital.com

   24,963,768    $27,560,000.00   

 

  

 

Star V Partners LLC

c/o Axar Capital Management, LP

1330 Avenue of the Americas, 30th Floor

New York, NY 10019

Attention: Andrew Axelrod

E-mail: aaxelrod@axarcapital.com

   6,476,449    $7,150,000.00   

 

  

 

Blackwell Partners LLC – Series E

c/o Axar Capital Management, LP

1330 Avenue of the Americas, 30th Floor

New York, NY 10019

Attention: Andrew Axelrod

E-mail: aaxelrod@axarcapital.com

   8,324,275    $9,190,000.00   

 

  

 

MPF InvestCo 6, LLC

c/o Mangrove Partners

645 Madison Avenue, 14th Floor

New York, NY 10022

Attention: Ward Dietrich

Email: WDietrich@MangrovePartners.com

   1,455,949    $1,607,367.34   

 

  

 

MPF InvestCo 7, LLC

c/o Mangrove Partners

645 Madison Avenue, 14th Floor

New York, NY 10022

Attention: Ward Dietrich

Email: WDietrich@MangrovePartners.com

   594,385    $656,200.89   

 

  

 

 

Schedule A

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

MPF InvestCo 8, LLC

c/o Mangrove Partners

645 Madison Avenue, 14th Floor

New York, NY 10022

Attention: Ward Dietrich

Email: WDietrich@MangrovePartners.com

   1,585,145    $1,750,000.00   

 

  

 

The Mangrove Partners Fund, L.P.

c/o Mangrove Partners

645 Madison Avenue, 14th Floor

New York, NY 10022

Attention: Ward Dietrich

Email: WDietrich@MangrovePartners.com

   2,011,493    $2,220,687.78   

 

  

 

The Mangrove Partners Fund (Cayman Partnership), L.P.

c/o Mangrove Partners

645 Madison Avenue, 14th Floor

New York, NY 10022

Attention: Ward Dietrich

Email: WDietrich@MangrovePartners.com

   5,675,493    $6,265,743.99   

 

  

 

David Miller

1451 Brandywine lane

Wayne, PA 19087

Email: david@chesterbrookfinancial.com

   996,377    $1,100,000.00   

 

  

 

Total:

   52,083,333    $57,500,000.00   

 

  

 

 

Schedule A

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

Schedule B

Board of Director Designees

 

  1.

Andrew Axelrod

 

  2.

Spencer Goldenberg

 

  3.

David Miller

 

  4.

Stephen Negrotti

 

  5.

Patricia D. Wallenbach

 

  6.

Robert Hellman, Jr.

 

  7.

Joseph Redling

 

Schedule B

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EXHIBIT D

FORM OF OPINION OF VINSON & ELKINS L.L.P.

Capitalized terms used but not defined herein have the meanings assigned to such
terms in the Series A Preferred Unit Purchase Agreement (the “Purchase
Agreement”). The Partnership shall furnish to the Purchasers at the Closing an
opinion of Vinson & Elkins L.L.P., counsel for the Partnership, addressed to the
Purchasers and dated the Closing Date in form satisfactory to the Purchasers,
stating that:

In connection with the opinions expressed below, we have examined the following:

(i)        The Purchase Agreement;

(ii)        the constitutive documents (the “Organizational Documents”) of the
entities listed on Schedule I hereto (the “Covered Opinion Parties”)1;

(iii)        copies of certain resolutions duly adopted by the Board of
Directors of the StoneMor GP LLC and the Conflicts Committee thereof; and

(iv)        such other documents as we have deemed appropriate for purposes of
the opinions expressed below.

(i) Each of the Covered Opinion Parties is validly existing and in good standing
under the laws of its jurisdiction of formation. Each of the Covered Opinion
Parties has all requisite corporate, limited liability company or partnership
power and authority, as applicable, under the laws of its jurisdiction of
formation necessary to own or lease its properties and to conduct its business,
in each case as described in the Partnership SEC Documents. The Covered Opinion
Parties are each duly qualified to do business and are each in good standing in
each jurisdiction listed on Schedule I.

(ii) Other than the preemptive rights of the General Partner set forth in the
Partnership Agreement which are being waived in connection with the issuance of
the Purchased Units, there are no preemptive rights or other rights to subscribe
for or to purchase, nor any restriction upon the voting or transfer of, any
interests in the Partnership pursuant to the Organizational Documents of the
Partnership or the General Partner.

(iii) The Purchased Units to be issued and sold to the Purchasers by the
Partnership pursuant to the Purchase Agreement and the limited partner interests
represented thereby have been duly authorized in accordance with the Partnership
Agreement and, when issued and delivered to the Purchasers against payment
therefor in accordance with the terms of the Purchase Agreement, will be validly
issued in accordance with the terms of the Partnership Agreement, fully paid and
nonassessable (except as such nonassessability may be affected by matters
described in Sections 17-303, 17-607 and 17-804 of the Delaware LP Act).

 

 

1 Schedule to include StoneMor GP LLC.

 

Exhibit D

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(v) The Conversion Units have been duly authorized by the General Partner on
behalf of the Partnership pursuant to the Partnership Agreement and, when issued
upon conversion of the Purchased Units in accordance with the terms of the
Partnership Agreement, will be validly issued, fully paid (to the extent
required by applicable law and the Partnership Agreement) and nonassessable
(except as such nonassessability may be affected by Sections 17-303, 17-607 and
17-804 of the Delaware LP Act).

(vi) No consent, approval, authorization, filing with or order of any federal or
Delaware court, Governmental Authority is required for the issuance and sale by
the Partnership or the General Partner of the Purchased Units, the execution,
delivery and performance by the Partnership or the General Partner of the
Opinion Documents to which it is a party, or the consummation of the
transactions contemplated by the Opinion Documents, except (A) as may be
required in connection with the Partnership’s obligations under the Registration
Rights Agreement to register the resale of the Conversion Units under the
Securities Act, (B) those that have been obtained, (C) as may be required under
state securities or “Blue Sky” laws, as to which we do not express any opinion,
(D) as are contemplated in the Transaction Documents, or (E) such that the
failure to obtain would not reasonably be expected to have a Material Adverse
Effect.

(vii) Assuming the accuracy of the representations and warranties of the
Purchasers and the Partnership contained in the Purchase Agreement, the offer,
issuance and sale of the Purchased Units by the Partnership to the Purchasers
solely in the manner contemplated by the Purchase Agreement are, and the
issuance and delivery of the Conversion Units will be, exempt from the
registration requirements of the Securities Act; provided, however, that we
express no opinion as to any subsequent sale or resale of the Purchased Units or
the Conversion Units.

(viii) The Partnership is not an “investment company” as such term is defined in
the Investment Company Act of 1940, as amended.

(ix) None of the offering, issuance or sale by the Partnership of the Purchased
Units or the execution, delivery and performance of the Opinion Documents by the
Partnership or the General Partner, as the case may be, or the consummation of
the transactions contemplated thereby will result in a breach or violation of,
or constitute a default (or an event which, with the giving of notice or lapse
of time or both, constitutes or would constitute a default) under, or give rise
to any right of termination, cancellation or acceleration under (A) the
Organizational Documents of the Partnership or the General Partner, as the case
may be, (B) the Delaware LP Act, the Delaware Limited Liability Company Act (the
“Delaware LLC Act”) or U.S. federal law, which in the case of clause (B), would
be reasonably expected to have a Material Adverse Effect.

(x) Each of Opinion Documents has been duly authorized and validly executed and
delivered by the Partnership or the General Partner, as the case may be, and the
Third A&R LPA constitutes a valid and binding obligation of the General Partner,
enforceable against the General Partner in accordance with its terms, and the
A&R GP LLC Agreement constitutes a valid and binding obligation of StoneMor GP
Holdings LLC and the General Partner, enforceable against StoneMor GP Holdings
LLC and the General Partner in accordance with its terms, except insofar as the
enforceability thereof may be limited by (A) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or similar laws from time to
time in effect affecting creditors’ rights and remedies generally and by general
principles of equity (regardless of whether such

 

Exhibit D

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principles are considered in a proceeding in equity or at law) and (B) public
policy, applicable law relating to fiduciary duties and indemnification and an
implied covenant of good faith and fair dealing. The Partnership, the General
Partner and StoneMor GP Holdings LLC each has the requisite power and authority
to execute, deliver and perform all of its obligations under the Opinion
Documents, including, without limitation, the issuance of the Securities in
accordance with the terms thereof.

 

Exhibit D

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Schedule I

Operating Subsidiaries

 

Name of Entity   

Jurisdiction of  

Formation

  

Other Jurisdictions of Registration or

Qualification

[●]

   [●]   

[●]

 

Exhibit D

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EXHIBIT H

OFFICER’S CERTIFICATE

OF

STONEMOR PARTNERS L.P.

June 27, 2019

Reference is made to that certain Series A Preferred Unit Purchase Agreement,
dated as of June 27, 2019, by and among StoneMor Partners L.P., a Delaware
limited partnership (the “Partnership”), and the purchasers set forth on
Schedule A thereto (as such agreement may be amended from time to time,
the “Purchase Agreement”). All capitalized terms used herein but not otherwise
defined shall have the meanings ascribed to them in the Purchase Agreement.
Pursuant to Section 2.02(a)(vi) of the Purchase Agreement, [•], in his capacity
as [•] of StoneMor GP LLC, a Delaware limited liability company and the general
partner of the Partnership, hereby certifies on behalf of the Partnership that:

 

  1.

the representations and warranties of the Partnership are true and correct in
all material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which are true and correct
in all respects) as of the date hereof (except for representations and
warranties that speak as of a specific date which are true and correct in all
material respects (except for those representations and warranties that are
qualified by materiality or Material Adverse Effect, which are true and correct
in all respects) as of such specified date) and the Partnership has performed,
satisfied and complied in all material respects with the covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied
or complied with by the Partnership at or prior to the date hereof.

[Signature page follows.]

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IN WITNESS WHEREOF, the undersigned has executed this Officer’s Certificate as
of the date first set forth above.

 

STONEMOR GP LLC

By: __________________________________

Name:

Title:

 

Exhibit H

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EXHIBIT I

FORM OF GENERAL PARTNER WAIVER

June 27, 2019

StoneMor GP LLC (the “General Partner”), a Delaware limited liability company
and the general partner of StoneMor Partners LP (the “Partnership”), in its own
capacity and in its capacity as the general partner of the Partnership, hereby
waives any preemptive rights it may hold pursuant to Section 5.9 of the Second
Amended and Restated Agreement of Limited Partnership of the Partnership, dated
as of September 9, 2008 (as amended, including, without limitation, by the Third
Amended and Restated Agreement of Limited Partnership of the Partnership, dated
as of June 27, 2019, the “Partnership Agreement”), with respect to the
Partnership’s privately negotiated Series A Preferred Unit Purchase Agreement,
dated as of June 27, 2019, by and among the Partnership and each of the
Purchasers set forth in Schedule A thereto (the “Purchase Agreement”), to issue
and sell an aggregate of 52,083,333 Series A Preferred Units representing
limited partner interests of the Partnership for a cash purchase price of
$1.1040 per Series A Preferred Unit.

IN WITNESS WHEREOF, the undersigned executes this General Partner Waiver,
effective as of the date first above written.

 

StoneMor GP LLC

By: __________________________________

Name:

Title:

 

Exhibit I