exv10w2



 






Exhibit 10.2




STOCK PURCHASE AGREEMENT




BY




CARRIAGE CEMETERY SERVICES OF IDAHO, INC.,




AS BUYER




AND




TIMOTHY T. GIBSON,




AS SELLER




Dated




June 12, 2007




 









 






TABLE OF CONTENTS




	 	 	 	 	 
	Article I. Definitions and Interpretation
	 	 	1	 
	1.1 Definitions
	 	 	1	 
	1.2 Interpretation
	 	 	8	 
	Article II. Purchase and Sale of Shares and Closing
	 	 	8	 
	2.1 Purchase and Sale
	 	 	8	 
	2.2 Purchase Price
	 	 	8	 
	2.3 The Closing
	 	 	8	 
	Article III. Representations and Warranties of Seller
	 	 	9	 
	3.1 Title to Shares
	 	 	9	 
	3.2 Valid and Binding Agreement
	 	 	9	 
	3.3 No Breach; Consents
	 	 	9	 
	3.4 Finders
	 	 	10	 
	Article IV. Representations and Warranties Regarding the Company
	 	 	10	 
	4.1 Incorporation; Power and Authority
	 	 	10	 
	4.2 No Breach; Consents
	 	 	10	 
	4.3 Capitalization
	 	 	11	 
	4.4 Financial Statements
	 	 	11	 
	4.5 Books and Records
	 	 	12	 
	4.6 Absence of Certain Developments
	 	 	12	 
	4.7 Inventory; Preneed Accounts Receivable
	 	 	14	 
	4.8 Tax Matters
	 	 	14	 
	4.9 Intellectual Property
	 	 	15	 
	4.10 Contracts
	 	 	15	 
	4.11 Preneed Agreements and Trust Accounts
	 	 	16	 
	4.12 Litigation
	 	 	18	 
	4.13 Insurance and Claims
	 	 	18	 
	4.14 Governmental Authorizations
	 	 	18	 
	4.15 Compliance with Laws
	 	 	19	 
	4.16 Environmental Matters
	 	 	19	 
	4.17 Employees
	 	 	20	 
	4.18 Employee Benefit Plans
	 	 	20	 
	4.19 Title to and Status of Assets
	 	 	20	 
	4.20 Real Property
	 	 	21	 
	4.21 Tangible Personal Property
	 	 	21	 
	4.22 Full Disclosure
	 	 	21	 
	4.23 Availability of Documents
	 	 	22	 
	4.24 C&G
	 	 	22	 
	Article V. Representations and Warranties of Buyer
	 	 	23	 
	5.1 Incorporation; Power and Authority
	 	 	23	 
	5.2 Valid and Binding Agreement
	 	 	23	 
	5.3 No Breach; Consents
	 	 	23	 






 i




 









 





	 	 	 	 	 
	5.4 Investment Intent
	 	 	24	 
	5.5 Finders
	 	 	24	 
	5.6 Full Disclosure
	 	 	24	 
	Article VI. Agreements of Seller
	 	 	24	 
	6.1 Conduct of the Business
	 	 	24	 
	6.2 Notice of Developments
	 	 	25	 
	6.3 Access to Information
	 	 	25	 
	6.4 Waivers; Payment of Indebtedness
	 	 	26	 
	6.5 Conditions
	 	 	26	 
	6.6 Consents and Authorizations; Regulatory Filings
	 	 	26	 
	6.7 No Shop
	 	 	27	 
	6.8 Employee Training; Systems Installation
	 	 	27	 
	6.9 Non-Competition.
	 	 	27	 
	6.10 338(h)(10) Election
	 	 	29	 
	6.11 Interim Financials and Tax Return
	 	 	30	 
	6.12 Water Well Access and Easement
	 	 	30	 
	Article VII. Agreements of Buyer
	 	 	30	 
	7.1 Conditions
	 	 	30	 
	7.2 Post-Closing Access
	 	 	31	 
	7.3 Signage
	 	 	31	 
	7.4 Cash and At-Need Accounts Receivables
	 	 	31	 
	7.5 Family Funerals
	 	 	32	 
	7.6 338(h)(10) Election
	 	 	32	 
	7.7 Marker Trust Account
	 	 	33	 
	7.8 Water Well Access and Easement
	 	 	33	 
	Article VIII. Conditions to Closing
	 	 	33	 
	8.1 Conditions to Obligation of Each Party to Close
	 	 	33	 
	8.2 Conditions to Buyer’s Obligation to Close
	 	 	33	 
	8.3 Conditions to Seller’s Obligation to Close
	 	 	36	 
	8.4 Closing Deliveries of Seller
	 	 	37	 
	8.5 Closing Deliveries of Buyer
	 	 	37	 
	Article IX. Termination
	 	 	38	 
	9.1 Termination
	 	 	38	 
	9.2 Effect of Termination
	 	 	39	 
	Article X. Indemnification
	 	 	39	 
	10.1 Indemnification by Seller
	 	 	39	 
	10.2 Indemnification by Buyer
	 	 	41	 
	10.3 Procedures for Indemnification
	 	 	42	 
	10.4 Indemnification for 338(h)(10) Election
	 	 	43	 
	Article XI. General
	 	 	44	 
	11.1 Press Releases and Announcements
	 	 	44	 






 -ii-




 









 





	 	 	 	 	 
	11.2 Expenses
	 	 	44	 
	11.3 Further Assurances
	 	 	44	 
	11.4 Amendment and Waiver
	 	 	44	 
	11.5 Notices
	 	 	45	 
	11.6 Assignment
	 	 	46	 
	11.7 No Third Party Beneficiaries
	 	 	46	 
	11.8 Severability
	 	 	46	 
	11.9 Complete Agreement
	 	 	46	 
	11.10 Schedules
	 	 	46	 
	11.11 Signatures; Counterparts
	 	 	46	 
	11.12 Specific Performance
	 	 	47	 
	11.13 Governing Law; Dispute Resolution
	 	 	47	 
	11.14 Construction
	 	 	48	 
	11.15 Farming
	 	 	48	 
	EXHIBIT A C&G Assignment and Assumption Agreement
	 	 	1	 
	EXHIBIT B C&G General Bill of Sale
	 	 	1	 
	EXHIBIT C C&G License Agreement
	 	 	1	 
	EXHIBIT D Employment Agreement
	 	 	1	 
	EXHIBIT E Retirement Insurance Policies
	 	 	1	 
	EXHIBIT 4.11(d) Pre-Trust Law Liabilities
	 	 	1	 
	EXHIBIT 4.11(e)-(i) Registered Marker Orders
	 	 	1	 
	EXHIBIT 4.11(e)-(ii) Registered Marker Orders
	 	 	1	 
	EXHIBIT 4.11(e)-(iii) Registered Marker Orders
	 	 	1	 
	EXHIBIT 6.12 Water Well Access and Easement Agreement
	 	 	1	 
	EXHIBIT 7.4(a) Employee Reserves
	 	 	1	 
	EXHIBIT 8.4(f) Opinion of Ken Mallea
	 	 	1	 
	EXHIBIT 8.5(c) Opinion of Elsaesser Jarzabek Anderson Marks Elliott & McHugh, Chtd
	 	 	1	 
	EXHIBIT 10.1(b)(ii) Escrow Agreement
	 	 	1	 
	EXHIBIT 10.1(b)(v) Disclosure
	 	 	1	 






 -iii-





 









 








STOCK PURCHASE AGREEMENT




     This STOCK PURCHASE AGREEMENT (this “Agreement”) is made as of June 12, 2007, by Carriage
Cemetery Services of Idaho, Inc., an Idaho corporation (“Buyer”), and Timothy T. Gibson, an
individual (“Seller”). Buyer and Seller shall each be referred to herein as a “Party” and
collectively as the “Parties.”



Recitals




     WHEREAS, Seller owns all of the issued and outstanding shares of common stock, par value
$100.00 per share (the “Company Common Stock”), of Cloverdale Park, Inc., an Idaho corporation (the
“Company”).



     WHEREAS, the Company owns and operates (a) a funeral business, a cemetery business, a
cremation business, a funeral home and the cemetery real estate located at 1200 North Cloverdale
Road, Boise, Idaho (the “Cloverdale Home”) and (b) a cemetery business and the cemetery real estate
of Terrace Lawn Cemetery (“Terrace Lawn Cemetery”, and together with the Cloverdale Home, the
“Facilities”) located at 4225 East Fairview Avenue, Boise, Idaho (collectively, the “Businesses”).



     WHEREAS, Seller desires to sell, and Buyer desires to buy, 100% of the issued and outstanding
capital stock of the Company on the terms and subject to the conditions set forth in this
Agreement.



     WHEREAS, prior to the Closing or simultaneously therewith, Seller shall enter into an
employment agreement with Buyer, or Buyer’s Affiliate.



     NOW, THEREFORE, in consideration of the mutual representations, warranties and agreements
contained in this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:



ARTICLE I.

DEFINITIONS AND INTERPRETATION




     1.1 Definitions. In this Agreement, the following capitalized terms shall have the
meanings set forth below:



     “AAA” has the meaning set forth in Section 11.13(b).



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



     “Annual Financial Statements” has the meaning set forth in Section 4.4(a).



     “Businesses” has the meaning set forth in the recitals of this Agreement.



-1-









 





     “Business Day” means a day (excluding Saturday and Sunday) on which banks generally are open
for the transaction of business in the State of Idaho.



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



     “Buyer Indemnified Party” has the meaning set forth in Section 10.1(a).



     “C&G” means C&G Security Plans, Inc., an Idaho corporation.



     “C&G Assets” means (i) all of C&G’s rights, benefits, title and interests in and to the
properties, assets, claims and contracts principally relating to, or principally used in or
necessary for the conduct of the Businesses, including (A) all books of account, records, files and
invoices (whether in paper or electronic format) and (B) all rights, privileges, claims, demands,
chooses of action, prepayments, deposits, refunds, claims in bankruptcy, offsets and other claims
and (ii) a fully paid-up, royalty-free, perpetual license to use the name “C&G Security Plans” in
the operation of the Businesses.



     “C&G Assignment and Assumption Agreement” means the General Assignment and Assumption
Agreement in the form attached hereto as Exhibit A.



     “C&G Bill of Sale” means the General Bill of Sale in the form attached hereto as Exhibit
B.



     “C&G Contract” has the meaning set forth in Section 4.24(d).



     “C&G Documents” has the meaning set forth in Section 4.24(a).



     “C&G License Agreement” means the License Agreement by and between Buyer, Seller and C&G in
the form attached hereto as Exhibit D.



     “CERCLA” means the Comprehensive Environmental Compensation and Liability Act of 1980, as
amended.



     “Claim” means any demand, claim, action, investigation, legal proceeding or arbitration,
whether or not ultimately determined to be valid.



     “Claim Notice” has the meaning set forth in Section 10.3(a).



     “Closing” has the meaning set forth in Section 2.3(a).



     “Closing Date” has the meaning set forth in Section 2.3(a).



     “Cloverdale Home” has the meaning set forth in the recitals of this Agreement.



-2-









 





     “Code” means the Internal Revenue Code of 1986, as amended.



     “Collection Receivables” has the meaning set forth in Section 7.4(b).



     “Company” has the meaning set forth in the recitals of this Agreement.



     “Company Common Stock” has the meaning set forth in the recitals of this Agreement.



     “Confidentiality Agreement” means that certain Confidentiality Agreement between Carriage
Services, Inc. and Seller, dated March 21, 2006.



     “Consent” means any authorization, consent, approval, filing, waiver, exemption or other
action by or notice to any Person.



     “Contract” means a contract, agreement, commitment or binding understanding, whether oral or
written, that is in effect as of the date of this Agreement or any time after the date of this
Agreement.



     “Direct Claim” has the meaning set forth in Section 10.3(a).



     “Dispute” has the meaning set forth in Section 11.13(b).



     “Election” has the meaning set forth in Section 6.10.



     “Employment Agreement” means the Employment Agreement between Seller and Carriage Funeral
Holdings, Inc., a Delaware corporation, substantially in the form attached hereto as Exhibit
D.



     “Encumbrance” means any charge, Claim, community property interest, condition, equitable
interest, lien, option, pledge, security interest, right of first refusal or restriction of any
kind, including any restriction on use, voting, transfer, receipt of income or exercise of any
other attribute of ownership.



     “Escrow Agreement” has the meaning set forth in Section 10.1(b)(ii).



     “Environmental Laws” means all Laws, Governmental Authorizations or Governmental Orders
relating to pollution or protection of the environment (including all those relating to the
presence, use, production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, Release, threatened Release, control or
cleanup of any Hazardous Materials, substances or wastes, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation).



-3-









 





     “Environmental Permits” means licenses, permits, registrations, governmental approvals,
agreements and consents which are required under or are issued pursuant to Environmental Law.



     “ERISA” has the meaning set forth in Section 4.18.



     “Excluded Liabilities” means, with respect to the Company and C&G, the following Liabilities
relating to, or occurring or existing in connection with or arising out of acts or omissions before
the Closing Date (i) Liabilities for Taxes accruing before the Closing Date; (ii) any trade
payables of any kind, regardless of whether entered into in the Ordinary Course of Business,
non-compete payments, and amounts payable to any employee benefit plan (except for Liabilities
relating to (A) the Retirement Insurance Policies and (B) any other employment Liabilities related
to the employment by the Company and compensation, severance and termination of Hazel Thompson and
Dave Ferrera as employees of the Company); or (iii) any amounts owed under the Company’s bank debt
(consisting of principal, unpaid interest, prepayment penalties and other amounts required to pay
the debt in full) in excess of $820,000.



     “Facilities” has the meaning set forth in the recitals of this Agreement.



     “Financial Statements” has the meaning set forth in Section 4.4(a).



     “GAAP” means United States generally accepted accounting principles, as in effect from time to
time.



     “Governmental Authorization” means any approval, consent, license, permit, waiver,
registration or other authorization issued, granted, given, made available or otherwise required by
any Governmental Entity or pursuant to Law.



     “Governmental Entity” means any federal, state, local, foreign, international or multinational
entity or authority exercising executive, legislative, judicial, regulatory, administrative or
taxing functions of or pertaining to government.



     “Governmental Order” means any judgment, injunction, writ, order, ruling, award or decree by
any Governmental Entity or arbitrator.



     “Hazardous Material” means (i) any “hazardous waste,” “industrial waste,” “solid waste,”
“hazardous material,” “hazardous substance,” “toxic substance,” “hazardous material,” “pollutant,”
or “contaminant” as those or similar terms are defined, identified, or regulated under any
Environmental Laws; (ii) any asbestos, polychlorinated biphenyls, or radon; (iii) any petroleum,
petroleum hydrocarbon or petroleum products; and (iv) any substance that, whether
by its nature or its use, is subject to regulation under any Environmental Laws or
Governmental Entity that requires environmental investigation, remediation, or monitoring.



-4-









 





     “Indemnified Party” has the meaning set forth in Section 10.3.



     “Indemnifying Party” has the meaning set forth in Section 10.3.



     “Insurance Commission Receivables” has the meaning set forth in Section 7.4(c).



     “Intellectual Property Rights” means (i) rights in patents, patent applications and patentable
subject matter, whether or not the subject of an application, (ii) rights in trademarks, service
marks, trade names, trade dress and other designators of origin, registered or unregistered, (iv)
trade secrets, (v) rights in Internet domain names, uniform resource locators and e-mail addresses,
(vi) rights in semiconductor topographies (mask works), registered or unregistered, (vii) know-how
and (viii) all other intellectual and industrial property rights of every kind and nature and
however designated, whether arising by operation of Law, Contract, license or otherwise.



     “Interim Financials” has the meaning set forth in Section 6.11.



     “Knowledge,” when used with respect to Seller, means the actual knowledge of Seller or any
director or officer of the Company.



     “Law” means (i) all federal, state or local laws, regulations and rules (to the extent having
the force of law) of any Governmental Entity, and (ii) all orders, decrees, rulings, awards, writs,
judgments, statutes, ordinances, codes, rules, regulations and license of any Governmental Entity.



     “Liabilities” means all indebtedness, obligations and other liabilities of the Company of any
nature whatsoever, whether direct or indirect, matured or unmatured, absolute, accrued, contingent
(or based on any contingency), known or unknown, fixed or otherwise, or whether due or to become
due.



     “Litigation” means any Claim, action, arbitration, mediation, audit, hearing, investigation,
proceeding, litigation or suit (whether civil, criminal, administrative, investigative or informal)
commenced, brought, conducted or heard by or before, or otherwise involving, any Governmental
Entity or arbitrator or mediator.



     “Loss” means any Litigation, Governmental Order, complaint, Claim, demand, damage, deficiency,
penalty, fine, cost, amount paid in settlement, liability, obligation, Taxes, Encumbrance, loss,
expense or fee, including court costs and attorneys’ fees and expenses.



     “Marker Trust Account” has the meaning set forth in Section 7.7.



-5-









 





     “Material Adverse Effect” means any change, effect, event or condition, individually or in the
aggregate, that has had, or, with the passage of time, could have, a material adverse effect on (i)
the business, condition (financial or otherwise), results of operations, prospects or customer,
supplier or employee relationships of the Company or (ii) the ability of Seller to consummate the
transactions contemplated hereby or to perform its obligations hereunder.



     “Material Contract” has the meaning set forth in Section 4.10(b).



     “Ordinary Course of Business” means the ordinary course of business of the Company or C&G, as
the case may be, consistent with past custom and practice.



     “Organizational Documents” means (i) the articles or certificate of incorporation and the
bylaws of a corporation, (ii) any charter or similar document adopted or filed in connection with
the creation, formation or organization of a Person and (iii) any amendment to any of the
foregoing.



     “Outside Closing Date” has the meaning set forth in Section 9.1(e).



     “Party” or “Parties” has the meaning set forth in the first paragraph of this Agreement.



     “Permitted Encumbrances” means [TO COME].



     “Person” means any individual, corporation, partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, Governmental Entity or other
entity.



     “Plans” has the meaning set forth in Section 4.18.



     “Pre-Trust Law Liabilities” has the meaning set forth in Section 4.11(d).



     “Purchase Price” has the meaning set forth in Section 2.2.



     “Real Property” has the meaning set forth in Section 4.20.



     “Release” has the meaning set forth in CERCLA.



     “Remedies Exception,” when used with respect to any Person, means performance of such Person’s
obligations except to the extent enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights
generally and by general equitable principles.



     “Restricted Business” has the meaning set forth in Section 6.9(a).



     “Retained At-Need Funeral Receivables” has the meaning set forth in Section 7.4(b).



-6-









 





     “Retirement Insurance Policies” means the retirement insurance policies covering Hazel
Thompson and Dave Ferrera, which are attached hereto as Exhibit E.



     “Returns” means all returns, declarations, reports, estimates, information returns and
statements pertaining to any Taxes.



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



     “Seller Disclosure Schedule” has the meaning set forth in Section 3.1.



     “Seller Indemnified Parties” has the meaning set forth in Section 10.2.



     “Shares” has the meaning set forth in Section 2.1.



     “Tangible Personal Property” has the meaning set forth in Section 4.21.



     “Taxes” means all taxes, charges, fees, levies or other assessments, including all net income,
gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, social security, unemployment, excise, estimated, severance,
stamp, occupation, property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, including all interest and penalties thereon, and additions to tax or additional
amounts imposed by any Governmental Entity upon the Company.



     “Tax Return” means any return, report or statement required to be filed with respect to any
Tax (including any attachments thereto), including any information return, Claim for refund,
amended return or declaration of estimated Tax.



     “Terrace Lawn Cemetery” has the meaning set forth in the recitals of this Agreement.



     “Territory” has the meaning set forth in Section 6.9(a).



     “Third Party Claim” has the meaning set forth in Section 10.3(a).



     “338 Indemnification Amount” has the meaning set forth in Section 10.4(a).



     “338 Request” has the meaning set forth in Section 6.10.



     “Title Company” has the meaning set forth in Section 8.2(h).



     “Treasury Regulations” means the rules and regulations under the Code.



     “West Idaho Property” has the meaning set forth in Section 8.2(l).



-7-









 





     1.2 Interpretation. Unless the context of this Agreement otherwise requires:



          (a) words of any gender include each other gender;




          (b) words using the singular or plural number also include the plural or singular number,
respectively;




          (c) the terms “hereof,” “herein,” “hereby”, “hereto,” and similar words refer to this entire
Agreement and not to any particular Article, Section, Clause, Exhibit or Schedule or any
subdivision of this Agreement;




          (d) references to “Article,” “Section,” “Exhibit” or “Schedule” are to the Articles, Sections,
Exhibits and Schedules, respectively, of this Agreement or the Seller Disclosure Schedule;




          (e) the words “include” or “including” shall be deemed to be followed by “without limitation”
or “but not limited to” whether or not such words are followed by such phrases or phrases of like
import; and




          (f) references to “this Agreement” or any other agreement or document shall be construed as a
reference to such agreement or document as amended, modified or supplemented and in effect from
time to time and shall include a reference to any document which amends, modifies or supplements
it. Whenever this Agreement refers to a number of days, such number shall refer to calendar days
unless Business Days are specified.




ARTICLE II.

PURCHASE AND SALE OF SHARES AND CLOSING




     2.1 Purchase and Sale. On the terms and subject to the conditions set forth in this
Agreement, Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, 3.875 shares
of Company Common Stock (the “Shares”), which constitutes 100% of the issued and outstanding shares
of the Company Common Stock, free and clear of any and all Encumbrances.



     2.2 Purchase Price . Subject to Section 10.1(b)(ii) and 10.4(d), the aggregate Purchase Price (the
“Purchase Price”) for the Shares is $9,000,000, plus the assumption of the Company’s bank debt of
up to $820,000. Subject to the total amount of money placed in escrow pursuant to the terms of
Section 10.1(b)(ii), the Purchase Price shall be paid on the Closing Date by wire transfer
of immediately available funds to an account designated in writing (no later than three Business
Days prior to the Closing) by Seller to Buyer.



     2.3 The Closing.



-8-









 





          (a) Except as herein provided, the Closing of the transactions contemplated by this Agreement
(the “Closing”) will take place at such place, as may be mutually agreed upon in writing by Buyer
and Seller, and on the date of this Agreement (the “Closing Date”).




          (b) All proceedings to be taken and all documents to be executed and delivered by all Parties
at the Closing shall be deemed to have been taken and executed simultaneously, and no proceedings
shall be deemed taken nor any documents executed or delivered until all have been taken, executed
and delivered.




ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF SELLER




          Seller hereby represents and warrants to Buyer as follows:




     3.1 Title to Shares. Seller owns, of record and beneficially, the Shares listed on
Section 3.1 of the disclosure schedules (which will be delivered by Seller to Buyer prior to the
execution of this Agreement (the “Seller Disclosure Schedule”)), free and clear of any Encumbrance
and free of any other limitation or restriction (including any restriction on the right to vote,
sell or otherwise dispose of the Shares).



     3.2 Valid and Binding Agreement. The execution, delivery and performance of this
Agreement and the Employment Agreement by Seller have been duly and validly authorized by all
necessary corporate action. This Agreement has been duly executed and delivered by Seller and
constitutes the valid and binding obligation of Seller, enforceable against him in accordance with
its terms, subject to the Remedies Exception. The Employment Agreement, when executed and
delivered by Seller, will constitute the valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, subject to the Remedies Exception.



     3.3 No Breach; Consents. The execution, delivery and performance of this Agreement and
the Employment Agreement will not:



          (a) violate or conflict with any Law, Governmental Order or Governmental Authorization;




          (b) conflict with, result in any breach of any of the provisions of, constitute a default (or
any event that would, with the passage of time or the giving of notice or both, constitute a
default) under, result in a violation of, increase the burdens under, result in the termination,
amendment, suspension, modification, abandonment or acceleration of payment (or any right to
terminate) or require a Consent under any Contract or Governmental Authorization that is either
binding upon or enforceable against Seller;




-9-









 





          (c) result in the creation of any Encumbrance upon the Shares held by Seller; or




          (d) require any Governmental Authorization.




     3.4 Finders. Seller is not a party to or in any way obligated under any Contract, and
there are no outstanding Claims against Seller, for the payment of any broker’s or finder’s fee in
connection with the origin, negotiation, execution or performance of this Agreement.



ARTICLE IV.

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY




          Seller, hereby represents and warrants to Buyer as follows:




     4.1 Incorporation; Power and Authority.



          (a) The Company is a legal entity duly organized, validly existing and in good standing under
the Laws of Idaho, and has all necessary power and authority necessary to own, lease and operate
its assets and to carry on its business as now conducted and presently proposed to be conducted.
The Company is duly qualified to do business as a foreign corporation in each jurisdiction in which
the nature of its business or its ownership of property requires it to be so qualified. Section
4.1 of the Seller Disclosure Schedule lists, for the Company, the jurisdiction of its organization,
its form as a legal entity and each jurisdiction in which it is so qualified.




          (b) The Company is in material compliance with all provisions of its Organizational Documents.




          (c) The Company does not hold or beneficially own any direct or indirect interest (whether a
partnership, joint venture, common or preferred stock or any comparable ownership interest in any
Person), or any subscriptions, options, warrants, rights, calls, convertible securities or other
agreements or commitments for any interest in any Person.




     4.2 No Breach; Consents. The execution, delivery and performance of this Agreement will
not:



          (a) contravene any provision of the Organizational Documents of the Company;




          (b) violate or conflict with any Law, Governmental Order or Governmental Authorization;




-10-









 





          (c) conflict with, result in any breach of any of the provisions of, constitute a default (or
any event which would, with the passage of time or the giving of notice or both, constitute a
default) under, result in a violation of, increase the burdens under, result in the termination,
amendment, suspension, modification, abandonment or acceleration of payment (or any right to
terminate) or require a Consent under any Contract or Governmental Authorization that is either
binding upon or enforceable against the Company;




          (d) result in the creation of any Encumbrance upon the Company or any of the assets of the
Company; or




          (e) require any Governmental Authorization.




     4.3 Capitalization. The authorized capital stock of the Company consists solely of 500
shares of Company Common Stock, of which 3.875 shares are issued and outstanding, and 146.125
shares are held in treasury. Section 4.3 of the Seller Disclosure Schedule lists the name and
address of the record holder of the issued and outstanding Company Common Stock, the number of
shares held by such holder and the share certificate number. All issued and outstanding shares of
Company Common Stock are duly authorized, validly issued, fully paid and nonassessable, free of
preemptive rights or any other third-party rights and in certificated form, and have been offered,
sold and issued by the Company in compliance with applicable securities and corporate Laws,
Contracts applicable to the Company and the Company’s Organizational Documents and in compliance
with any preemptive rights, rights of first refusal or similar rights. The rights and
privileges of the Company Common Stock are set forth in the Company’s Organizational
Documents. There is no option, warrant, call, subscription, convertible security, right (including
preemptive right) or Contracts of any character to which the Company is a party or by which it is
bound obligating the Company to issue, exchange, transfer, sell, repurchase, redeem or otherwise
acquire any shares of capital stock of the Company or obligating the Company to grant, extend,
accelerate the vesting of or enter into any such option, warrant, call, subscription, convertible
security, right or Contract. There are no outstanding or authorized stock appreciation, phantom
stock or similar rights with respect to the Company. Except as contemplated by this Agreement,
there are no registration rights agreements, no voting trust, proxy or other Contract and no
restrictions on transfer with respect to any capital stock of the Company.



     4.4 Financial Statements.



          (a) Seller has delivered to Buyer the unaudited (compiled) statements of assets, liabilities
and stockholders’ equity-income tax basis of the Company at December 31, 2006, 2005 and 2004 and
the related unaudited (compiled) statements of revenues, expenses and retained earnings for the
respective 12-month periods of operations of the Company then ended, together with the footnotes
thereto (the “Annual Financial Statements” or the “Financial




-11-









 




Statements”). All of the Financial Statements are true and correct, have been prepared on an accrued income tax basis of accounting,
which is a comprehensive basis of accounting other than GAAP, and are true and correct and present
fairly the respective financial position, results of operations and cash flows of the Company at
the respective dates and for the respective periods indicated.




          (b) Except as set forth in the Financial Statements, the Company has no, and none of its
assets or properties are subject to any, Liabilities other than unsecured trade accounts, payable
and accrued expenses arising in the ordinary course of the Businesses, and there is no known basis
for any present or future Litigation, charge, complaint, Claim or demand against any of the assets
or properties giving rise to any liability or obligation, except Liabilities that have arisen after
the date of the Financial Statements in the Ordinary Course of Business, none of which is a
Liability for breach of Contract, breach of warranty, tort, infringement, Litigation or violation
of Governmental Order, Governmental Authorization or Law.




          (c) Section 4.4 of the Seller Disclosure Schedules accurately sets forth for the 12-month
periods ended December 31, 2006, 2005 and 2004, (i) for the Cloverdale Home, the number of
contracts entered into in which human remains have been prepared for final disposition or delivery,
and among such contracts, the number or percentage in which disposition is by burial, cremation or
other means, and (ii) for each of the Facilities, the number of interments performed. Section 4.4
of the Seller Disclosure Schedule also accurately sets forth for
each Facility the number of acres that have been platted, developed and dedicated for cemetery
use, are undeveloped but usable, and that are unusable for development, and also the minimum number
of unsold individual grave spaces, unsold niches, unsold mausoleum crypts and unsold lawn crypts.




     4.5 Books and Records. The books of account of the Company are complete and correct and
have been maintained in accordance with sound business practices, including the maintenance of an
adequate system of internal controls. The minute books and stock or equity records of the Company,
all of which have been made available to Buyer, are complete and correct. The minute books of the
Company contain accurate records of all meetings held and actions taken by the holders of stock or
equity interests, the boards of directors and committees of the boards of directors or other
governing body of the Company, and no meeting of any such holders, boards of directors or other
governing body or committees has been held for which minutes are not contained in such minute
books. At the Closing, all such books and records will be in the possession of Seller.



     4.6 Absence of Certain Developments. Since December 31, 2006, there has not been any
Material Adverse Effect and:



-12-









 





          (a) the Company has not sold, leased, transferred or assigned any of its assets, tangible or
intangible, other than for a fair consideration in the Ordinary Course of Business;




          (b) the Company has not entered into any Contract (or series of related Contracts) outside the
Ordinary Course of Business;




          (c) no party (including the Company) has accelerated, suspended, terminated, modified or
canceled any Contract (or series of related Contracts) outside the Ordinary Course of Business;




          (d) no Encumbrance has been imposed on any assets of the Company;




          (e) the Company has not made any capital expenditure (or series of related capital
expenditures) outside the Ordinary Course of Business;




          (f) the Company has not made any capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of related capital investments, loans and
acquisitions) outside the Ordinary Course of Business or acquired (by merger, exchange,
consolidation, acquisition of stock or assets or otherwise) any Person;




          (g) the Company has not issued any note, bond or other debt security, or created, incurred,
assumed or guaranteed any indebtedness for borrowed money (including advances on existing credit
facilities) or capitalized lease obligation;




          (h) the Company has not delayed, postponed or accelerated the payment of accounts payable or
other liabilities or the receipt of any accounts receivable, in each case outside the Ordinary
Course of Business;




          (i) the Company has not canceled, compromised, waived or released any right or Claim (or
series of related rights or Claims) that it might have against any other Person;




          (j) there has been no change made or authorized in the Organizational Documents of the
Company;




          (k) the Company has not issued, sold or otherwise disposed of any of its capital stock or
equity interests, or granted any options, warrants or other rights to purchase or obtain (including
upon conversion, exchange or exercise) any of its capital stock;




          (l) the Company has not declared, set aside or paid any dividend or made any distribution with
respect to its capital stock or equity interests (whether in cash or in kind) or redeemed,
purchased or otherwise acquired any of its capital stock or split, combined or reclassified any
outstanding shares of its capital stock;




-13-









 





          (m) the Company has not made any loan to, or entered into any other transaction with, any of
its directors, officers or employees outside the Ordinary Course of Business;




          (n) the Company has not entered into any employment or collective bargaining agreement,
written or oral, or modified the terms of any such existing agreement;




          (o) the Company has not granted any increase in the base compensation or made any other change
in employment terms of any of its directors, officers or employees outside of the Ordinary Course
of Business;




          (p) the Company has not discharged or satisfied any Encumbrance or paid any liability, other
than current liabilities paid in the Ordinary Course of Business;




          (q) to the Knowledge of Seller, there is not any new competitor that has built, commenced to
build or announced intentions to establish or build a funeral home, mortuary, crematory or cemetery
in direct competition with the Businesses;




          (r) the Company has not made any change in accounting principles or practices from those
utilized in the preparation of the Financial Statements; and




          (s) the Company has not committed to take any of the actions described in this Section 4.6.




     4.7 Inventory; Preneed Accounts Receivable. All inventories of the Businesses are
saleable or usable in the Ordinary Course of Business at usual and customary prices, subject to
normal returns and markdowns consistent with past practice. All accounts receivable relating to
the preneed products and services of the Businesses are valid and legally enforceable obligations
of the account parties and are not subject to any Claim of offset or deduction against the Company.
At the Closing, Seller shall deliver to Buyer lists, certified by them to be complete and correct,
of all of the accounts receivable related to the preneed products and services of the Businesses
and the inventory of the Businesses, in each case as of the Closing Date.



     4.8 Tax Matters.



          (a) The Company (i) has filed (or there has been filed on its behalf) with the appropriate
Governmental Entity all Tax Returns required to be filed, and all such Tax Returns are true and
correct and (ii) has paid all Taxes due and payable;




          (b) There are no outstanding waivers in writing or comparable consents regarding the
application of any statute of limitations in respect of Taxes of the Company;




-14-









 





          (c) There is no action, suit, investigation, audit, Claims or assessment pending or proposed
in writing with respect to Taxes of the Company, and no facts exist that would constitute grounds
for any such actions;




          (d) There are no Liens for Taxes upon the assets of the Company, except for Liens relating to
current Taxes not yet due;




          (e) All Taxes which the Company is required by Law to withhold or to collect for payment have
been duly withheld and collected, and have been paid or accrued, reserved against and entered on
the books of the Company on an accrued income tax basis of accounting, which is a comprehensive
basis of accounting other than GAAP; and




          (f) True and correct copies of Tax Returns filed by the Company for each of its last three
years have been furnished to Buyer and are set forth on Section 4.8 of the Seller Disclosure
Schedule.




     4.9 Intellectual Property. Section 4.9 of the Seller Disclosure Schedule contains a
complete and accurate list of all:



          (a) patented or registered Intellectual Property Rights owned by the Company;




          (b) pending patent applications and applications for other registrations of Intellectual
Property Rights filed by or on behalf of the Company;




          (c) material licenses and other rights granted by the Company to any third party with respect
to any Intellectual Property Rights;




          (d) all material licenses and other rights granted by any third party to the Company with
respect to any Intellectual Property Rights. The Company owns and possesses or has the right to
use, pursuant to a valid and enforceable license, all Intellectual Property Rights necessary for
the operation of the Businesses of the Company as presently conducted, free and clear of all Liens.
The Company is not charged with infringement or misappropriation of any Intellectual Property
Rights of any other Person, nor, to Seller’s Knowledge, has any Person infringed upon,
misappropriated or conflicted with any Intellectual Property Rights owned by the Company; and




          (e) all internet domain names owned by the Company.




     4.10 Contracts.



-15-









 





          (a) Section 4.10 of the Seller Disclosure Schedule sets forth an accurate description of:




               (i) all Contracts evidencing any money borrowed by the Company or the creation or existence of
any Encumbrance against any of the assets or properties of the Company, and all Contracts relating
to any debt secured in whole or in part by any such Liens;



               (ii) all collective bargaining agreements, employment contracts, noncompetition agreements and
other agreements relating to any present or former owners or employees of the Company;



               (iii) all joint venture agreements and all other agreements involving the sharing of profits
involving the Company or either of the Businesses;



               (iv) all (i) Contracts for capital expenditures for the Company involving obligations
aggregating in excess of $5,000; (ii) Contracts under which personal property is leased by the
Company and which are not cancelable by either party thereto without penalty upon notice of 30 days
or less or pursuant to which rentals exceed $1,000 per annum or $5,000 in the aggregate; or (iii)
Contracts of the Company that do not terminate or are not terminable by the Company upon notice of
30 days or less or which involves an obligation on its part in excess of $1,000 per annum or $5,000
in the aggregate; and



               (v) all other Contracts of the Company entered into outside the Ordinary Course of Business.



          (b) Each Contract required to be described in Section 4.10 of the Seller Disclosure Schedule
(each a “Material Contract”). Each Material Contract is valid and binding, currently in force and
enforceable in accordance with its terms, subject to the Remedies Exception. The Company has
performed all obligations required to be performed by it in connection with each Material Contract.
The Company has not received any notice of any Claims of default under or termination of any
Material Contract. The Company does not have any present expectation or intention of not fully
performing any obligation pursuant to any Material Contract, and there is no breach, anticipated
breach or default by any other party to any Material Contract. There are no renegotiations of,
attempts to renegotiate or outstanding rights to renegotiate any material terms of any Material
Contract, and no Person has made written demand for such renegotiation. A true and correct copy of
each document listed on Section 4.10 of the Seller Disclosure Schedule has been made available to
Buyer by Seller.




     4.11 Preneed Agreements and Trust Accounts.



          (a) Section 4.11 of the Seller Disclosure Schedule accurately lists:




-16-









 





               (i) a list of all insurance policies used to fund preneed agreements, including policy number,
insured and owner names, issue date, current and face amount of insurance, and other data normally
included in the Company’s internal records in a compilation of insurance policies (and for each
carrier providing such insurance benefits, the contact information for the carrier, including
contact person, address and phone number);



               (ii) a list of all trust accounts (preneed and perpetual care) relating to the Businesses,
indicating the location of and the amount held in each trust; and



               (iii) a list of all cemetery merchandise relating to the Businesses that are warehoused for
delivery in accordance with Section 54-1134 of the Idaho Code and covered by the vanguard account,
indicating the location of each piece of merchandise, the amount paid to register such merchandise,
the registration expiration date for such merchandise and the outstanding amount owed for each
piece of such merchandise upon delivery.



          (b) Seller has separately provided to Buyer true and complete copies of the trust agreements
for the trust accounts listed in Section 4.11(a)(ii) of the Seller Disclosure Schedule, as amended
and currently in effect; and copies of the following as of the most recent date available (but in
no event older than 45 days) and for each of 2005 and 2006: bank statements or other periodic
report of the trustee for each trust, tax returns, and the audit or other reports furnished to or
prepared by the state regulatory agency which oversees such trusts, and all work papers supporting
such reports.




          (c) Except for certain discounted prices given by Seller to certain of his family members and
friends, all preneed agreements of the Businesses:




               (i) have been entered into in the Ordinary Course of Business at regular retail prices, or
pursuant to a sales promotion program, solely for use by the named customers and members of their
families, and, to the Knowledge of Seller, on terms not more favorable than shown on the specimen
contracts which have been delivered to Buyer;



               (ii) are subject to the rules and regulations of the Businesses as now in force (copies of
which have been delivered to Buyer); and



               (iii) are in full force and effect, subject to no offsets, claims or waivers, and neither the
Company nor such customer is in default thereunder. Except as set forth on Section 4.11(c)(iii) of
the Seller Disclosure Schedule, all funds received by the Company under preneed agreements and for
perpetual care have been deposited in the appropriate accounts and administered and reported in
accordance with the terms thereof and as required by applicable Laws. The aggregate market value
of such preneed accounts, trusts and other deposits is equal to or greater than the aggregate
preneed Liability related thereto. The services heretofore provided



-17-









 




by the Businesses have been rendered in a professional and competent manner consistent with prevailing professional standards,
practices and customs.




          (d) Notwithstanding anything to the contrary in this Agreement, the Liabilities associated
with fully funding trusts for the preneed agreements of the Businesses that (i) were entered into
by the Company before July 1, 1989 and (ii) on or after June 30, 1964 (such “Pre-Trust Law
Liabilities”), will not exceed $675,000 (such amount determined, and to be confirmed
after the Closing by Buyer, in accordance with the valuation procedures and methodologies set
forth in Exhibit 4.11(d)).




          (e) All funds received by the Company with respect to the cemetery merchandise covered by the
vanguard account have been deposited in the vanguard account and administered and reported in
accordance with applicable Laws. After the establishment of the Marker Trust Account, to be
established by Buyer pursuant to Section 7.7, no more than $75,000 will be required to fund the
Marker Trust Account as required by applicable Laws after (i) the payment for orders for the
registered markers set forth in Exhibit 4.11(e)-(i), (ii) placing funds into the Marker
Trust Account for the cost of the unregistered markers set forth in Exhibit 4.11(e)-(ii),
and (iii) placing funds into the Marker Trust Account for the payment of any other items set forth
in Exhibit 4.11(e)-(iii).




     4.12 Litigation. No Litigation is pending or, to the Knowledge of Seller, threatened by or
against the Company or otherwise affecting the Businesses or the Company, or any of the assets and
properties of the Company, at Law or in equity or before or by any Governmental Entity. The
Company is not subject to, and its assets and properties are not affected by, any continuing
Governmental Order nor is the Company in default with respect to any Governmental Order.



     4.13 Insurance and Claims. The Company maintains such policies of insurance in such
amounts, and which insure against such losses and risks, as are generally maintained for comparable
businesses and properties. There are no currently pending Claims under any such policies, and no
insurer has denied any material Claim of the Company under any policy of insurance within the
preceding three years. Valid policies for such insurance will be outstanding and duly in force at
all times prior to the Closing.



     4.14 Governmental Authorizations. Section 4.14 of the Seller Disclosure Schedule lists all
Governmental Authorizations currently held by or issued to the Company, and by each employee of the
Company in connection with the Businesses which are all that are necessary or appropriate for the
operation of the Businesses. All such items are in full force and effect, and the Company has
complied in all material respects with all Governmental Authorizations applicable to it.



-18-









 





     4.15 Compliance with Laws. The Company has materially complied with all applicable Laws
and Governmental Orders (including all occupational safety and health rules, regulations and Laws,
and Laws and regulations applicable to preneed contracts and trust accounts, including the so-called “FTC
Funeral Rule”). The Company is not relying on any exemption from or deferral of any Law,
Governmental Order or Governmental Authorization that would not be available to the Company after
the Closing.



     4.16 Environmental Matters.



          (a) The Company (including the Company’s assets, properties and business) is not in violation
of any Environmental Laws and/or Environmental Permits, which violation would have a Material
Adverse Effect. The Company possesses all Environmental Permits which are required for the
operation of its Business, where the failure to possess such Environmental Permits would have a
Material Adverse Effect, and is in compliance with the provisions of all such Environmental
Permits, except where the failure to so comply would not have a Material Adverse Effect.




          (b) The Company has not received any notice, report or other information regarding any
Liabilities relating to its Business or any of its Real Property arising under Environmental Laws.




          (c) Except as set forth in the Environmental Site Assessment performed by Criterium Engineers
(a copy of which is attached to Section 4.16(c) of the Seller Disclosure Schedule), none of the
following exists on any portion of the Real Property owned or leased by the Company:




               (i) underground storage tank or surface impoundments;



               (ii) asbestos-containing material in any form or condition; or



               (iii) materials or equipment containing polychlorinated biphenyls.



          (d) To the best Knowledge of Seller, the Company has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or Released any substance,
including any Hazardous Materials, or owned or operated any facility or property, so as to give
rise to Liabilities for response costs, natural resource damages or attorneys fees pursuant to
CERCLA or similar state Environmental Laws, except for formaldehyde and other chemicals used in the
Ordinary Course of Business, which the Company has obtained, used, stored, handled and disposed of
in accordance with all Environmental Laws. Neither this Agreement nor the consummation of the
transactions contemplated by this Agreement will result in any obligations for site investigation
or cleanup, or notification to or consent of any governmental authority or third parties, pursuant
to any so-called “transaction-triggered” or




-19-









 




“responsible property transfer” Environmental Laws. To
the best Knowledge of Seller, without limiting the foregoing, no facts, events or conditions
relating to the past or present facilities,
properties or operations of the Company will prevent, hinder or limit continued compliance
with Environmental Laws, give rise to any investigatory, remedial or corrective obligations
pursuant to Environmental Laws, or give rise to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become due, whether known or unknown, and
regardless of whether asserted) pursuant to Environmental Laws, including any relating to onsite or
offsite Releases or threatened Releases of Hazardous Materials, substances or wastes, personal
injury, property damage or natural resource damage.




     4.17 Employees. Section 4.17 of the Seller Disclosure Schedule correctly and completely
lists (a) the names and annual or hourly rates of salary and other compensation of all the
employees and agents of the Company, and (b) the outstanding balance of and method for calculating
employee reserves and residuals. To the best Knowledge of Seller, there are not any pending or
threatened against the Company general labor disputes, strikes or concerted work stoppages, and
there are no discussions, negotiations, demands or proposals that are pending or have been
conducted or made with or by any labor union or association with respect to any employees of the
Company. There are no actions, suits, claims, labor disputes, grievances or controversies pending,
or to the Knowledge of Seller threatened, involving the Company and any of its employees or former
employees. The Company has not made any loans (except advances against accrued salaries or for
business travel, lodging or other expenses in the Ordinary Course of Business) to any employee of
the Company.



     4.18 Employee Benefit Plans. Section 4.18 of the Seller Disclosure Schedule lists all
plans, contracts, commitments, programs and policies (including pension, profit sharing, thrift,
bonus, deferred compensation, severance, retirement, disability, medical, life, dental and
accidental insurance, vacation, sick leave, death benefit and other similar employee benefit plans
and policies) providing benefits to any employee or former employee of the Company (collectively,
the “Plans”). Seller has delivered to Buyer true and correct copies of all documents embodying the
Plans. All obligations of the Company under the Plans have been fully paid or fully funded in
accordance with applicable Law. No Plan constitutes a defined benefit plan or defined contribution
plan within the meaning of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).



     4.19 Title to and Status of Assets. All of the property, rights and assets, real and
personal, tangible and intangible, necessary for the carrying on of the Businesses, as and to the
extent to which it is presently conducted and contemplated to be conducted by Seller, are owned or
validly leased by the Company. The consummation of the transactions contemplated herein will not
impair Buyer’s ability to so conduct the Businesses, except for such impairment or impairments as would not
have or reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect. The Company is in actual possession and control of all



-20-









 







assets, rights and properties owned or leased by it that are required in the operation of the Businesses, and the Company has good and
marketable title to all of the Real Property and the other assets and rights of the Company, free
and clear of all Encumbrances other than Permitted Encumbrances.



     4.20 Real Property. Section 4.20 the Seller Disclosure Schedule sets forth a legal
description of all parcels of Real Property included in the real estate and improvements of the
Businesses (collectively, the “Real Property”). No Person other than the Company has any interest
in, or other right to occupy any portion of, the Real Property. The Real Property is the only
interest in Real Property required for the conduct of the business of the Businesses as presently
conducted. None of the buildings, structures and improvements located on the Real Property, or the
operation or maintenance thereof as now operated or maintained, contravenes any zoning ordinance or
Law, or Environmental Laws, the effect of which would interfere with or prevent their continued use
for the purposes for which they are now being used. Except as set forth in Section 4.20 of the
Seller Disclosure Schedule, there is not pending nor, to the Knowledge of Seller, threatened any
proceeding for the taking or condemnation of the Real Property or any portion thereof. All bills,
taxes and other payments due with respect to the Company’s operation and maintenance of the Real
Property are paid, and no Encumbrances or other claims for the same have been filed or asserted
against any part of the Real Property. The Real Property has physical and legal access to an open
and publicly dedicated street. To the best Knowledge of Seller, no portion of the Real Property is
located within an area that has been designated by the Federal Insurance Administration, the Army
Corp of Engineers, or any other governmental agency or body as being subject to special flooding
hazards.



     4.21 Tangible Personal Property. Section 4.21 of the Seller Disclosure Schedule lists all
equipment, motor vehicles and other tangible personal property owned or leased by the Company and
used in the conduct of the Businesses, including all vehicles, office furniture, and operating and
other supplies, tools, repair parts and spare parts located at the Facilities (collectively,
"Tangible Personal Property”). EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT AND ANY OTHER DOCUMENTS DELIVERED IN CONNECTION WITH THIS AGREEMENT, ALL IMPROVEMENTS ON
THE REAL PROPERTY, AND ALL TANGIBLE PERSONAL PROPERTY OF THE BUSINESSES ARE BEING SOLD TO BUYER
HEREUNDER “AS IS,” IN THEIR PRESENT CONDITION, WITHOUT REPRESENTATION OR WARRANTY WHATSOEVER
REGARDING THEIR PHYSICAL CONDITION.



     4.22 Full Disclosure. The representations and warranties made by Seller hereunder or in
any Schedules or certificates furnished to Buyer pursuant hereto do not and will not contain any
untrue statement of a fact or omit to state a fact required to be stated herein or therein or
necessary to make the representations or warranties herein or therein, in light of the
circumstances in which they are made.



-21-









 





     4.23 Availability of Documents. Seller has delivered or made available to Buyer correct
and complete copies of the items referred to in the Disclosure Schedule or in this Agreement (and
in the case of any items not in written form, a written description thereof).



     4.24 C&G. 




          (a) Incorporation; Power and Authority. C&G is a corporation duly organized, validly
existing and in good standing under the Laws of Idaho, with all necessary power and authority to
execute, deliver and perform the C&G Assignment and Assumption Agreement, the C&G Bill of Sale and
the C&G License Agreement (collectively, the “C&G Documents”).




          (b) Valid and Binding Agreement. The execution, delivery and performance of each of the
C&G Documents by C&G have been duly and validly authorized by all necessary corporate action. The
C&G Documents has been duly executed and delivered by C&G and constitutes the valid and binding
obligation of C&G, enforceable against it in accordance with its terms, subject to the Remedies
Exception.




          (c) No Breach; Consents. The execution, delivery and performance of the C&G
Documents by C&G will not:



               (i) contravene any provision of the Organizational Documents of C&G;




               (ii) violate or conflict with any Law, Governmental Order or Governmental Authority;



               (iii) conflict with, result in any breach of any of the provisions of, constitute a default
(or any event which would, with the passage of time or the giving of notice or both, constitute a
default) under, result in a violation of, increase the burdens under, result in the termination,
amendment, suspension, modification, abandonment or acceleration of payment
(or any right to terminate) or require a Consent, including any Consent under any Contract or
Governmental Authorization that is either binding upon or enforceable against C&G; or



               (iv) require any Governmental Authorization.



          
(d) C&G Contracts. Section 4.24(d) of the
Seller Disclosure Schedule lists each contract that makes up part of the C&G Assets (each such
contract, a “C&G Contract”). Each C&G Contract is valid and binding, currently in force and
enforceable in accordance with its terms, subject to the Remedies Exception. C&G has performed all
obligations required to be performed by it in connection with each C&G Contract. C&G has not
received any notice of any Claims of default under or termination of any C&G Contract. C&G does
not have any present expectation or intention of not fully performing any obligation pursuant to
any C&G Contract, and there is no breach, anticipated breach or default by any other party to any
C&G Contract. There are no renegotiations of, attempts to renegotiate or outstanding rights to
renegotiate any material terms of any C&G Contract, and no Person has made written demand for such
renegotiation. A true



-22-









 







and correct copy of each document listed on Section 4.24(d) of the Seller Disclosure Schedule has been made available to Buyer by Seller.



          (e) Litigation. No Litigation is pending or, to the Knowledge of Seller, threatened by or
against C&G or otherwise affecting the Businesses or C&G, or any of the C&G Assets, at Law or in
equity or before or by any Governmental Entity. C&G is not subject to, and the C&G Assets are not
affected by, any continuing Governmental Order nor is C&G in default with respect to any
Governmental Order.



          
(f) C&G Assets. All of the C&G Assets are owned by C&G. The
consummation of the transactions contemplated herein and the C&G Documents will not impair Buyer’s
ability to so conduct the Businesses, except for such impairment or impairments as would not have
or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
C&G is in actual possession and control of all of the C&G Assets and has good and marketable title
to all of the C&G Assets, free and clear of all Encumbrances other than Permitted Encumbrances.




ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF BUYER




     Buyer represents and warrants to Seller that as of the date of this Agreement and as of the
Closing Date (as though made then and as though the Closing Date were substituted for the date of
this Agreement):



     5.1 Incorporation; Power and Authority. Buyer is a corporation duly organized, validly existing and in good standing under the Laws
of Idaho, with all necessary power and authority to execute, deliver and perform this Agreement.



     5.2 Valid and Binding Agreement. The execution, delivery and performance of this
Agreement by Buyer have been duly and validly authorized by all necessary corporate action. This
Agreement has been duly executed and delivered by Buyer and constitutes the valid and binding
obligation of Buyer, enforceable against it in accordance with its terms, subject to the Remedies
Exception. The Employment Agreement, when executed and delivered by Carriage Funeral Holdings,
Inc., will be a binding obligations of Carriage Funeral Holdings, Inc., enforceable against
Carriage Funeral Holdings, Inc. in accordance with its terms, subject to the Remedies Exception.



     5.3 No Breach; Consents. The execution, delivery and performance of this Agreement by
Buyer and the Employment Agreement by Carriage Funeral Holdings, Inc. will not:



          (a) contravene any provision of the Organizational Documents of Buyer or Carriage Funeral
Holdings, Inc., as the case may be;




-23-









 





          (b) violate or conflict with any Law, Governmental Order or Governmental Authority;




          (c) conflict with, result in any breach of any of the provisions of, constitute a default (or
any event which would, with the passage of time or the giving of notice or both, constitute a
default) under, result in a violation of, increase the burdens under, result in the termination,
amendment, suspension, modification, abandonment or acceleration of payment (or any right to
terminate) or require a Consent, including any Consent under any Contract or Governmental
Authorization that is either binding upon or enforceable against Buyer or Carriage Funeral
Holdings, Inc., as the case may be; or




          (d) require any Governmental Authorization.




     5.4 Investment Intent. Buyer is purchasing the Shares for its own account for investment
purposes and not with a view to the distribution thereof.



     5.5 Finders. Buyer is not a party to or in any way obligated under any Contract or other agreement, and
there are no outstanding claims against it, for the payment of any broker’s or finder’s fee in
connection with the origin, negotiation, execution or performance of this Agreement.



     5.6 Full Disclosure. The representations and warranties made by Buyer hereunder or in any
certificates furnished to Seller pursuant hereto do not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated herein or therein or
necessary to make the representations or warranties herein or therein, in light of the
circumstances in which they are made.



ARTICLE VI.

AGREEMENTS OF SELLER




     6.1 Conduct of the Business. From the date of this Agreement to the Closing Date, (a) the
Businesses shall be operated only in the Ordinary Course of Business and in accordance with
applicable Law and (b) the Company shall use its best efforts to preserve its business organization
and goodwill, keep available the services of its officers and employees and maintain satisfactory
relationships with vendors, customers or others having business relationships with the Company. In
particular, without the prior written consent of Buyer, the Company shall not (and Seller shall not
cause or permit the Company to):



               (i) amend or modify any Material Contract or enter into any Contract that would have been a
Material Contract if such Contract had been in effect on the date of this Agreement, except that
the Company may enter into Contracts with vendors or customers in the Ordinary Course of Business;



-24-









 





               (ii) amend its articles of incorporation, bylaws or other similar Organizational Documents;



               (iii) enter into any new line of business;



               (iv) change any of its methods of accounting;



               (v) cancel or permit any insurance to lapse or terminate, unless renewed or replaced by like
coverage;



               (vi) commit any act or permit the occurrence of any event or the existence of any condition of
the type described in Section 4.6;



               (vii) enter into any Contract of the type described in Section 4.10;



               (viii) hire, fire, reassign or make any other change in key personnel of the Company, or
increase the rate of compensation of or declare or pay any bonuses to any employee in excess of
that listed on Section 4.17 of the Seller Disclosure Schedule;



               (ix) take any other action that would cause any of the representations and warranties made in
Article IV hereof not to be true and correct in all material respects, on and as of the Closing
Date, with the same force and effect as if the same had been made on and as of the Closing Date;
and



               (x) enter into any commitment to take any of the actions prohibited by any of the foregoing
clauses.



     6.2 Notice of Developments. Seller shall notify Buyer of any emergency or other change in
the Ordinary Course of Business of the Company or the commencement or threat of Litigation. Seller
shall promptly notify Buyer in writing if Seller should discover that any representation or
warranty made by Seller in this Agreement was made, or has subsequently become, untrue in any
respect. No disclosure pursuant to this Section 6.2 will be deemed to amend or supplement the
Seller Disclosure Schedule or to prevent or cure any inaccuracy, misrepresentation, breach of
warranty or breach of agreement.



     6.3 Access to Information.



          (a) Upon reasonable advance notice and subject to the Confidentiality Agreement, Seller shall
cause the Company to afford the officers, employees, accountants, counsel and other representatives
of Buyer, access, during normal business hours during the period prior to the Closing, to all of
the Company’s properties, Real Property, books, Contracts, commitments, records, officers,
employees, accountants and counsel and other representatives




-25-









 




during such period. Seller shall
cause the Company to make available to Buyer all information concerning the Company’s business,
properties and personnel as Buyer may reasonably request. Seller shall not be required to provide
access to or to disclose information where such access or disclosure would violate or prejudice the
rights of its customers, jeopardize any attorney-client privilege or contravene any Law, rule,
order, judgment, decree, fiduciary duty or binding agreement entered into prior to the date of this
Agreement. The Parties will make appropriate substitute disclosure arrangements under
circumstances in which the restrictions of the preceding sentence apply.




          (b) After the Closing Date, Seller will afford to Buyer, its officers, employees, accountants,
counsel and other representatives, during normal business hours, upon reasonable request,
reasonable access to the books and records of Seller pertaining to the Company to the extent that
such access may be requested at no cost to Seller for a legitimate business purpose. Any
information provided in accordance with terms of this Section 6.3 will be subject to the
terms of a confidentiality agreement with terms substantially similar to the Confidentiality
Agreement.




     6.4 Waivers; Payment of Indebtedness. To assure that Buyer obtains the full benefit of
this Agreement, effective as of the Closing Date, Seller hereby waives any Claim it might have
against the Company, whether arising out of this Agreement or otherwise, and irrevocably offers to
terminate any Contract between Seller and the Company at no cost to the Company. Seller shall
cause the members of the immediate family of Seller and any Person controlled by Seller to repay,
in full, prior to the Closing, all indebtedness owed to the Company by such Person. Effective as
of the Closing Date, Seller agrees that it shall not make any Claim for indemnification against the
Company by reason of the fact that such Seller was a director, officer, employee or agent of any
such entity or was serving at the request of any such entity as a partner, trustee, director,
officer, employee or agent of another entity for any Loss (whether such Claim is pursuant to any
Law, Organizational Document, Contract or otherwise) with respect to any Litigation (whether such
Litigation is pursuant to this Agreement, applicable Law or otherwise) and waives and releases any
Claim for indemnification Seller may have against the Company.



     6.5 Conditions. Seller will use its best efforts to cause the conditions set forth in
Sections 8.1 and 8.3 to be satisfied and to consummate the transactions contemplated by
this Agreement as soon as reasonably possible and in any event prior to the Closing Date.



     6.6 Consents and Authorizations; Regulatory Filings. Seller shall use its best efforts to
obtain the necessary consents and approvals of other Persons that may be required to be obtained on
their part to consummate the transactions contemplated by this Agreement.



-26-









 





     6.7 No Shop. For so long as this Agreement remains in effect, Seller shall not, and shall
not cause any other Person to, directly or indirectly, enter into any Contracts, or initiate,
solicit or encourage any offers, proposals or expressions of interest, or otherwise hold any
discussions with any potential buyers, investment bankers or finders, with respect to (a) the
possible sale or other disposition of all or any substantial portion of the assets, rights and properties of
the Company, the sale of all or a controlling interest in the stock of the Company, or the merger
or consolidation of the Company, other than with Buyer or (b) pledging, hypothecating or otherwise
placing any Encumbrance on any Shares. If Seller receives from any third party any inquiry
regarding such a transaction, Seller shall promptly notify Buyer.



     6.8 Employee Training; Systems Installation. To help prepare for and facilitate the
transition of the Businesses to Buyer’s ownership at and following the Closing, Buyer intends,
prior to Closing, to begin providing certain training to select employees of the Businesses and to
begin installation of certain of Buyer’s management information systems. Seller hereby agrees to
cooperate in Buyer’s efforts in providing such training and installation. All training modules and
all such systems shall remain the sole and exclusive property of Buyer, but Buyer’s training and
installation shall be at its sole cost, expense and risk. Seller shall not be required to incur
any out-of-pocket expenses in connection with such training and installation, and Seller makes no
representation or warranty whatsoever regarding the compatibility of each Business’s system with
those of Buyer. If this Agreement is terminated for any reason, Buyer will be entitled to remove,
at its sole cost, expense and risk, all training modules and systems so provided or installed by
it.



     6.9 Non-Competition. If the Closing occurs, Seller agrees that he shall not, directly or
indirectly, for a period commencing on the Closing Date and ending 10 years thereafter, do any of
the following:



          (a) engage, as principal, agent, trustee or through the agency of any entity, anywhere within
a 50-mile radius of either of the Facilities (the “Territory”), in the funeral, mortuary,
crematory, burial insurance, cemetery or any related line of business (the “Restricted Business”);




          (b) own or hold any beneficial interest in one percent or more of the voting securities in any
entity which conducts its operations, in whole or in part, in the Restricted Business within the
Territory;




          (c) become an employee of or consultant to, or otherwise serve in any similar capacity with,
any corporation, partnership or other business entity that conducts its business, in whole or in
part, in the Restricted Business within the Territory;




-27-









 





          (d) cause or induce any present or future employee of Buyer or any of its Affiliates to leave
the employ of Buyer or any such Affiliate to accept employment with Seller or with any Person with
which Seller may be or become affiliated; or




          (e) make any public statements recommending the use of any competitor of Buyer or criticizing
Buyer or its business, operations, practices or policies, or otherwise knowingly or intentionally
do or say any act or thing which will or may impair, damage or destroy the goodwill of Buyer within
the Territory.




          (f) Without limiting the generality of the foregoing, Seller shall be deemed directly or
indirectly engaged in the Restricted Business if Seller:




               (i) acts as a funeral director for any funeral establishment within the Territory,



               (ii) engages in the sale or marketing of preneed contracts for services to be performed or
merchandise to be sold within the Territory,



               (iii) promotes or finances (by loan, guaranty or otherwise) any family member or Affiliate to
operate a Restricted Business or engage in any of the foregoing activities within the Territory,



               (iv) direct or indirect use or disclosure of Confidential Information (as defined in the
Confidentiality Agreement) related to the Restricted Business, or



               (v) lends or licenses his name or likeness to any Restricted Business within the Territory,
with or without compensation.



          (g) Reformation. The above covenants shall not be held invalid or unenforceable
because of the scope of the territory or actions subject thereto or restricted thereby, or the
period of time within which such covenants are operative; but any judgment of a court of competent
jurisdiction may define the maximum territory and actions subject to and restricted thereby and the
period of time during which such covenants are enforceable.




          (h) Remedies. Seller and Buyer agree that Buyer shall have all available legal and
equitable remedies and rights, and the specific inclusion of any remedy in this Agreement shall not
constitute a whole or partial election or waiver of any other available remedy or right. Seller
agrees that a violation of the terms, provisions, covered obligations, duties and conditions
described in this Section 6.9 will give rise to Buyer’s or its Affiliate’s causes of action
(including breach of the Employment Agreement) against Seller for, among other relief, issuance of
injunctive relief, issuance of a temporary restraining order, specific performance, recovery of
damages, and recovery of Buyer’s costs, attorney’s fees, and expert witness fees. Seller further




-28-









 




agrees that it is difficult to calculate the amount and extent of any damages caused by such a
violation and such a violation threatens to injure or actually does injure Buyer and the Company.
Seller agrees that Buyer shall have the non-exclusive right to apply for and to receive a temporary
restraining order, a temporary or preliminary and a permanent injunction to enforce
the terms, provisions, covenants, obligations, duties and conditions described in this Section
6.9. Seller further agrees that Buyer, in applying for or receiving any restraining order or
injunctive relief, need only post, and shall only be required to post, a bond of not more than
$1,000.00. In addition, the ten-year term of this Section 6.9 shall be extended by the period of
time during which Seller is in material breach hereof as determined by a court of competent
jurisdiction.




          (i) Representations. Seller represents and warrants to and agrees with Buyer that (i)
he understands that the foregoing restrictions are being made incident to and as a condition of the
purchase and sale of the Shares hereunder, and that such covenants are necessary in order to
protect the Businesses and goodwill being acquired thereby, (ii) such covenants are not oppressive
to Seller in any respect, (iii) the consideration for such restrictions is included in the Purchase
Price, which consideration Seller acknowledges is fair and adequate for the giving of the covenants
herein and for which Seller acknowledges a direct and valuable benefit, and (iv) the foregoing
restrictions and covenants comply with applicable Laws regarding the reasonable limitations and the
restraint of trade and that such restrictions and covenants to not violate such Laws.




          (j) Purchase Price Allocation. The Parties agree to allocate $50,000 of the Purchase
Price to the foregoing covenants for federal income tax purposes. Such allocation is not intended
to be a measure of the amount or range of damages that Buyer may suffer or recover as a result of
any breach of the foregoing covenants, and Seller acknowledges that in case of any such breach,
Buyer shall be entitled to seek in excess of such amount as it may otherwise be able to demonstrate
itself justly entitled to.




     6.10 338(h)(10) Election(a). Seller hereby covenants that, upon the written request of
Buyer pursuant to Section 7.6 (the “338 Request”), Seller shall make an election (the “Election”)
under Code Section 338(h)(10) with respect to his sale of the Shares hereunder; provided, however,
that Buyer shall have the right, but not the obligation, to make the Election as described under
Section 7.6. If Buyer makes the 338 Request, then the following shall occur: (a) before the
deadline as established by the IRS, Seller shall provide R. Craig Rasmussen, CPA or any other
impartial accountant agreed upon by Seller and Buyer with the information necessary to prepare and
file an IRS Form 8023, including, without limitation, all additional data and materials required to
be attached to such Form 8023 pursuant to the instructions thereto; (b) Seller shall take all other
actions necessary and appropriate (including filing IRS Form 8883 and such additional forms,
returns, elections, schedules and other documents as may be required) to effect and preserve such
Election in accordance with Code Section 338(h)(10), the Treasury Regulations thereunder, any and
all comparable provisions of applicable state and local law and



-29-









 







any successor provisions; (c) within 10 calendar days after Seller has filed IRS Form 8023 and IRS Form 8883 for the Election,
Seller shall provide counsel for Buyer with a copy of each form (as filed) and written proof of filing with the IRS and any other taxing authority at the
address set forth in this Agreement; and (d) Seller shall take no action inconsistent with, and
shall not fail to take any action necessary for, the approval and continuing validity of the
Election, such prohibited actions to include any action or position inconsistent with the Election
or otherwise disputing the validity of the Election upon examination of any tax return, in any
refund claim, in any litigation or otherwise with respect to such tax returns.



     6.11 Interim Financials and Tax Return.



          (a) Within 30 days of the Closing Date, Seller shall deliver to Buyer interim or management
level financial statements for the period January 1, 2007 through May 31, 2007. Within 180 days of
the Closing Date, Seller shall deliver to Buyer financial statements for the period January 1, 2007
through the Closing Date. With respect to the financial statements required under the two preceding
sentences, Seller shall include the related unaudited income statement for the period of operations
then ended and the unaudited balance sheet for the applicable period (such interim financials, the
"Interim Financials”). All of Interim Financials will be true and correct as of the date
delivered, will have been prepared on an accrued income tax basis of accounting, which is a
comprehensive basis of accounting other than GAAP, and will be true and correct and will present
fairly the respective financial position, results of operations and cash flows of the Company at
the respective dates and for the respective periods indicated.




          (b) Within 180 days of the Closing Date, Seller shall deliver to Buyer the short year Tax
Return for the Company covering the period January 1, 2007 through the Closing Date. Such Tax
Return will be true and correct.




     6.12 Water Well Access and Easement. Seller hereby covenants that, within 45 days of the
Closing Date, Seller shall in good faith cooperate and work diligently with Buyer to: (i) finalize
the Water Well Access and Easement Agreement (the “Easement Agreement”), a draft of which is
attached hereto as Exhibit 6.12; and (ii) transfer and/or convey from Buyer to Seller,
thirteen (13) acres of the sub-surface water rights located in or under the Cloverdale Home (i.e.,
the ground water only and no other sub-surface interest, including by way of limitation,
only oil, gas and other minerals), the form and substance of such conveyance document shall be
prepared by Buyer and shall remain in Buyer’s sole discretion.



ARTICLE VII.

AGREEMENTS OF BUYER




     7.1 Conditions. Buyer agrees that Buyer will use its best efforts to cause the conditions
set forth in Sections 8.1 and 8.2 to be satisfied and to consummate the
transactions



-30-









 







contemplated by this Agreement as soon as reasonably possible and in any event prior
to the Closing Date.



     7.2 Post-Closing Access. After the Closing Date, Buyer will afford to Seller and his
accountants, counsel and other representatives, during normal business hours, upon reasonable
request, reasonable access to the books and records of Buyer pertaining to the Company to the
extent that such access may be requested at no cost to Seller for a legitimate business purpose.
Any information provided in accordance with terms of this Section 7.2 will be subject to
the terms of a confidentiality agreement with terms substantially similar to the Confidentiality
Agreement.



     7.3 Signage. Buyer agrees that Seller may, at his own cost, construct and maintain a
commercial sign to market or advertise Seller’s retained property to the south of Terrace Lawn
Cemetery at the approximate location of the intersection of Fairview Avenue and Venture Street,
which sign and location must be approved in writing by Buyer prior to the construction of such sign
(which approval shall not be unreasonably withheld, conditioned or delayed). Seller shall be
solely responsible for obtaining all necessary governmental approvals for such sign in accordance
with applicable Laws.



     7.4 Cash and At-Need Accounts Receivables.



          (a) Subject to the terms of this Section 7.4, Buyer hereby acknowledges that Seller
shall retain all non-preneed cash or cash equivalents and funeral home and cemetery at-need
accounts receivables, except for any cash to fund the payment or reimbursement of Company
employee’s reserves, as further described in Exhibit 7.4(a).




          (b) Buyer hereby acknowledges that Seller shall retain accounts receivable of the Businesses
arising from the at-need sale of funeral services and merchandise, and for vaults and interment
fees, to the extent services have been performed or merchandise has been delivered in which the
date of death has occurred prior to the Closing Date, whether such receivables are payable from
insurance proceeds, trust funds or other form of payment, and for
which payment is collected after the Closing Date (collectively, “Retained At-Need Funeral
Receivables”). Buyer shall have the exclusive (even as to the Company) right and control over the
collection of Retained At-Need Funeral Receivables. Except as provided in the next sentence, Buyer
shall pursue collection of Retained At-Need Funeral Receivables by substantially the same efforts
as used on its collection of other accounts receivable, but in no event shall Buyer be required to
institute suit or refer any account to a collection agency. After the Closing, Buyer and Seller
shall meet when agreed upon to discuss the collection of the Retained At-Need Funeral Receivables,
and at such meeting, both Seller and Buyer will determine what Retained At-Need Funeral
Receivables, if any, will be referred to Buyer’s collection agency for collection (such Retained
At-Need Funeral Receivables, “Collection




-31-









 




Recevables"), and any Collection Receivables collected
shall be, subject to the next sentence, for the account of Buyer. For each full or partial
calendar month following the Closing Date in which (i) any Retained At-Need Funeral Receivables are
collected, Buyer shall remit 100% of such collections to Seller or (ii) any Collection Receivables
are collected by the collection agency, after deducting the collection agency fee(s) from such
collection amount, Buyer shall remit 50% of such adjusted collection amount to Seller, in each
case, by no later than the 15th day of the following month.




          (c) Buyer hereby acknowledges that Seller shall retain accounts receivable of the Businesses
arising from commissions relating to the sale of insurance polices by the Company or its Affiliates
for the Great Western Funeral Plan insurance policies (“Great Western”) to the extent such policies
were sold prior to the Closing Date (collectively, “Insurance Commission Receivables”). Buyer
shall have the exclusive (even as to the Company) right and control over the collection of the
Insurance Commission Receivables. For each full or partial calendar month following the Closing
Date in which any Insurance Commission Receivables are collected, Buyer shall remit 100% of such
collections to Seller by no later than the 15th day of the following month.
Furthermore, no later than 10 Business Days after the delivery by Buyer to Seller of written notice
of amounts owed to Great Western by the Company as a result of Great Western’s over payment of
Insurance Commission Receivables (and Buyer shall include in such notice evidence of amounts owed
to Great Western), Seller shall pay to Buyer in immediately available funds any and all amounts
owed to Great Western as set forth in such notice.




     7.5 Family Funerals. Buyer agrees that (a) it will provide merchandise to Seller, Ruth
Gibson, John Marria, Margarita Asla, Mick Ysursa, Ramon Ysursa, Begona Ysursa and Teresa Ysursa for
the cost to Buyer of such merchandise selected for such individual’s funeral and (b) with respect
to funeral services for such individuals, it will not charge professional service fees or charges
for Buyer staff and employees for services performed and completed at the Businesses.



     7.6 338(h)(10) Election. If Buyer makes the 338 Request (which it can make in its sole
discretion at any time), then the following shall occur: (a) Buyer shall make the Election with
respect to its purchase of the Shares hereunder; (b) before the deadline as established by the IRS,
Buyer shall prepare and file an IRS Form 8023, including all additional data and materials required
to be attached to such Form 8023 pursuant to the instructions thereto; (c) Buyer shall take all
other actions necessary and appropriate (including filing IRS Form 8883 and such additional forms,
returns, elections, schedules and other documents as may be required) to effect and preserve such
Election in accordance with Section 338(h)(10) of the Code, the Treasury regulations thereunder,
any and all comparable provisions of applicable state and local law and any successor provisions;
(d) within 10 calendar days after Buyer has filed IRS Form 8023 and IRS Form 8883 for the Election,
Buyer shall provide counsel for Seller with a copy of each form



-32-









 







(as filed) and written proof of filing with the IRS and any other taxing authority at the address set forth in this Agreement; and
(e) Buyer shall take no action inconsistent with, and shall not fail to take any action necessary
for, the approval and continuing validity of the Election, such prohibited activities to include
any action or position inconsistent with the Election or otherwise disputing the validity of the
Election upon examination of any tax return, in any refund claim, in any litigation or otherwise
with respect to such tax returns.



     7.7 Marker Trust Account. At the Closing, Buyer shall deduct from the Purchase Price
$345,000, and Buyer shall establish and open a marker trust account (the “Marker Trust Account”)
with such funds.



     7.8 Water Well Access and Easement. Buyer hereby covenants that Buyer shall in good faith
cooperate and work diligently with Seller to finalize the Easement Agreement and the transactions
in connection therewith, as described in Section 6.12 above.



ARTICLE VIII.

CONDITIONS TO CLOSING




     8.1 Conditions to Obligation of Each Party to Close. The respective obligations of each
Party to effect the transactions contemplated hereby shall be subject to the satisfaction or waiver
at or prior to the Closing Date of the following conditions:



          (a) no preliminary or permanent injunction or other Governmental Order shall have become
effective restraining, enjoining or otherwise prohibiting or making illegal the consummation of any
of the transactions contemplated hereby; and




          (b) all Consents of other Persons and Governmental Entities to the transactions contemplated
by this Agreement shall have been obtained.




     8.2 Conditions to Buyer’s Obligation to Close. Buyer’s obligation to effect the
transactions contemplated by this Agreement shall be subject to the satisfaction or waiver on or
prior to the Closing Date of all of the following conditions (it being understood and agreed that
no such waiver of any condition set forth herein shall constitute a waiver of any rights or
remedies that Buyer may have under this Agreement with respect to the facts and circumstances
giving rise to the failure of such condition to be satisfied):



          (a) Representations and Warranties True. (i) The representations and warranties of
Seller set forth in Section 4.19 shall be true and correct as of the date of this Agreement
and (except to the extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date; and (ii) the representations and
warranties of Seller set forth in this Agreement (other than the representations and warranties set
forth in Section 4.19 of this Agreement) shall be true and




-33-









 




correct in all material respects as of the date of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of the Closing Date;
provided, however, that for purposes of determining the satisfaction of the
condition contained in this clause (ii), no effect shall be given to any exception in such
representations and warranties relating to materiality or a Material Adverse Effect; and
provided further, however, that, for purposes of this clause (ii), such
representations and warranties shall be deemed to be true and correct in all material respects
unless the failure or failures of such representations and warranties to be so true and correct,
individually or in the aggregate, represent or would reasonably be expected to represent a Material
Adverse Effect.




          (b) Covenants. The covenants and agreements of Seller to be performed on or prior to
the Closing Date in accordance with this Agreement shall have been duly performed in all material
respects.




          (c) Certificate of Officer. Buyer shall have received a certificate dated the Closing
Date and duly executed by and on behalf of the Company, certifying as to the satisfaction of the
conditions set forth in Sections 8.2(a) and 8.2(b) herein.




          (d) No Loss or Damage. After the date of this Agreement, there shall not have
occurred a Material Adverse Effect. In the event of any Loss to any substantial portion of
the assets, rights or properties of the Company, Seller shall promptly inform Buyer, and
Seller shall be allowed a reasonable time thereafter (not to exceed 60 days after the Outside
Closing Date) within which to repair or replace such Loss. Seller, however, shall be under no
obligation to repair or replace such Loss. In the event Seller does not promptly begin such repair
or replacement or does not complete such repair or replacement within said 60-day period, Buyer may
(in its sole discretion) either (i) complete the sale contemplated by this Agreement (with such
assets or property in their damaged condition) and receive an assignment of the Company’s insurance
claim or claims relating to such loss or damage, or (ii) terminate this Agreement without any
obligation to pay any amounts to Seller.




          (e) Approval by Counsel. All actions, proceedings, instruments and documents required
to carry out the transactions contemplated by this Agreement or incidental thereto, and all other
related legal matters shall have been approved by counsel for Buyer, and such counsel shall have
been furnished with such certified copies of actions and proceedings and other instruments and
documents as they shall have been reasonably requested.




          (f) Pre-Acquisition Review. Buyer and its representatives shall have completed a
pre-acquisition review of the financial information, books and records, and properties and assets
of the Company and the Businesses and shall have discovered no change in the Business, assets,
operations, financial condition or prospects of the Company or the Businesses that could, in the
sole determination of Buyer, have Material Adverse Effect.




-34-









 





          (g) Environmental, OSHA and Structural Reports. There shall have been conducted, at
Buyer’s expense, (i) a Phase I (and, if deemed necessary by Buyer, a Phase II) environmental
inspection of the Businesses and the Real Property by an environmental consulting firm selected by
Buyer, (ii) a health and safety inspection of the Businesses by a Person (who may be an employee of
Buyer) or firm selected by Buyer and who is qualified and experienced in such matters in the
funeral industry, and (iii) a structural inspection of the Businesses by an engineering firm
selected by Buyer. If any remedial or corrective actions are recommended as a result of such
inspections, then the cost thereof in an amount not to exceed $25,000 in the aggregate shall be
deducted from the Purchase Price; if the cost of such actions exceeds $25,000, then Buyer may (in
its sole discretion) either (x) proceed with Closing and deduct $25,000 from the Purchase Price, or
(y) terminate this Agreement without any obligation to pay any amounts to Seller. In any event, it
shall be a condition to Buyer’s obligations under this Agreement that the results of the reports of
such firms or Persons shall be satisfactory to Buyer in its sole discretion.




          (h) Title Insurance. Buyer shall have received a current owner’s policy of title
insurance issued to the Company insuring the Company’s fee simple ownership interest in each parcel
of Real Property. Such policies shall have been issued in an agreed-upon amount by First American
Title Insurance Company or another title company reasonably acceptable to the
Parties (the “Title Company”) and shall be subject only to Permitted Encumbrances;
provided, however, that such policies shall have deleted any exceptions regarding
restrictions or be limited to restrictions that are Permitted Encumbrances, any standard exceptions
pertaining to discrepancies, conflicts or shortages in area shall be deleted except for “shortages
in area”, and any standard exceptions for taxes shall be limited to subsequent years. All premiums
and other costs associated with issuing such policy shall be borne equally by Seller and Buyer.




          (i) Survey. Buyer shall have received an ALTA/ACSM survey prepared by a licensed
surveyor approved by Buyer and acceptable to the Title Company, with respect to each parcel of the
Real Property, which survey shall comply with any applicable standards under Idaho law, be properly
certified to the Company and Title Company, be sufficient for Title Company to delete any survey
exception contained in the owner’s policy of title insurance referred to in Section 8.2(h),
and otherwise be in form and content acceptable to Buyer. The fees and costs associated with such
survey shall be borne equally between Seller and Buyer.




          (j) Lien Releases. The holders of any Liens against any of the assets, rights and
properties of the Company shall have executed and delivered written releases of such Liens, all in
recordable form and otherwise acceptable to Buyer.




          (k) Other Management Arrangements. Seller shall have identified to Buyer such
personnel of the Businesses as may be key to the continued effective management and operation of
the Businesses after the Closing, and Buyer shall have entered into mutually




-35-









 




satisfactory arrangements regarding the continued employment of such personnel at the Businesses following the
Closing.




          (l) Deed Restriction. A deed restriction that prohibits the use of Seller’s real
property located at 507 West Idaho Street, Boise, Idaho (the “West Idaho Property”), as a funeral
home, mortuary, crematory, cemetery or for the burial insurance business or any business related to
any of the foregoing uses shall have been duly recorded in the Real Property Records of Ada County,
Idaho.




          (m) Closing Deliveries. Buyer shall have received the documents referred to in
Section 8.4.




     8.3  Conditions to Seller’s Obligation to Close. Seller’s obligation to effect the
transactions contemplated by this Agreement shall be subject to the satisfaction or waiver on or
prior to the Closing Date of all of the following conditions (it being understood and agreed that
no such waiver of any condition set forth herein shall constitute a waiver of any rights or
remedies that Buyer may have under this Agreement with respect to the facts and circumstances
giving rise to the failure of such condition to be satisfied):



          (a) Representations and Warranties True. Each of the representations and warranties
of Buyer contained in this Agreement shall be true and correct, as of the Closing Date (except to
the extent such representation and warranty speaks as of an earlier date), as though made on and as
of the Closing Date, except where the failure to be so true and correct would not, individually or
in the aggregate, have or be reasonably likely to have a material adverse effect on Buyer’s ability
to effect the transactions contemplated herein.




          (b) Covenants. The covenants and agreements of Buyer to be performed on or prior to
the Closing Date in accordance with this Agreement shall have been duly performed in all material
respects.




          (c) Certificate of Officer. Seller shall have received a certificate dated the
Closing Date and executed on behalf of Buyer, certifying as to the matters specified in
Sections 8.3(a) and 8.3(b);




          (d) Closing Deliveries. Seller shall have received the payment and the documents
referred to in Section 8.5.




          (e) Approval by Counsel. All actions, proceedings, instruments and documents required
to carry out the transactions contemplated by this Agreement or incidental thereto and all other
related legal matters shall have been approved by counsel for Seller, and such counsel shall have
been furnished with such certified copies of actions and proceedings and other instruments and
documents as they shall have reasonably requested.




-36-









 





     8.4 Closing Deliveries of Seller. At the Closing, Seller shall deliver, or cause to be
delivered, to Buyer, the following:



          (a) the certificate(s) representing the Shares, free and clear of all Encumbrances, duly
endorsed or accompanied by a duly executed stock power;




          (b) the certificate referred to in Section 8.2(c);




          (c) the minute books, stock or equity records, corporate seal and other materials related to
the corporate administration of the Company;




          (d) resignations in writing (effective as of the Closing Date) from such of the officers and
directors of the Company as Buyer may have requested prior to the Closing Date;




          (e) a certificate (in form and substance reasonably satisfactory to Buyer) that, as of the
Closing Date, Seller is not a foreign Person within the meaning of Section 1445 of the
Code of 1986 and the Treasury Regulations thereunder, such certificate to be substantially in
the form described in Treasury Regulations Section 1.1445-2(b)(2)(iii)(B);




          (f) an opinion of Ken Mallea, counsel for Seller, dated the Closing Date, in substantially the
form attached hereto as Exhibit 8.4(f);




          (g) an executed counterpart of the Employment Agreement, duly executed by Seller;




          (h) an executed counterpart of the C&G Bill of Sale, duly executed by C&G;




          (i) an executed counterpart of the C&G Assignment and Assumption Agreement, duly executed by
C&G;




          (j) an executed counterpart of the C&G License Agreement, duly executed by C&G and Seller;




          (k) a duly recorded copy of the deed restriction for the West Idaho Property; and




          (l) copies of all written Releases of Liens against any of the assets, rights and properties
of the Company.




     8.5 Closing Deliveries of Buyer. At the Closing, Buyer shall deliver, or cause to be
delivered, to Seller, the following:



-37-









 





          (a) the wire transfer(s) of immediately available U.S. dollar funds in the amount of the
Purchase Price, as adjusted, representing the Shares, free and clear of all Encumbrances, duly
endorsed or accompanied by a duly executed stock power;




          (b) the certificate referred to in Section 8.3(c);




          (c) an opinion of Elsaesser Jarzabek Anderson Marks Elliott & McHugh, Chtd., special Idaho
counsel for Buyer, dated the Closing Date, in substantially the form attached hereto as Exhibit
8.5(c);




          (d) an executed counterpart of the C&G General Bill of Sale, duly executed by Buyer;




          (e) an executed counterpart of the C&G Assignment and Assumption Agreement, duly executed by
Buyer;




          (f) an executed counterpart of the C&G License Agreement, duly executed by Buyer; and




          (g) an executed counterpart of the Employment Agreement, duly executed by Buyer.




ARTICLE IX.

TERMINATION




     9.1 Termination. This Agreement may be terminated prior to the Closing Date only, and
then only by any of the following:



          (a) by written agreement of Seller and Buyer;




          (b) at the election of Buyer if any condition set forth in Sections 8.1 and
8.2 (other than Sections 8.2(d) and 8.2(g)) becomes incapable of
fulfillment and is not waived by Buyer, unless the failure of the Closing to occur shall be due to
the failure of Buyer to perform or observe the covenants and agreements of Buyer set forth herein;
provided, however, that any such condition relating to a breach or a failure to
perform a representation, warranty, covenant or other agreement prior to the Closing Date shall be
a cause for termination of this Agreement only if such breach or failure cannot be or has not been
cured within thirty (30) days after the giving of written notice of such breach or failure to
Seller, such notice to be given promptly after Buyer becomes aware of such breach or failure;




          (c) at the election of Seller if any condition set forth in Sections 8.1 and
8.3 becomes incapable of fulfillment and is not waived by Seller, unless the failure of the
Closing to




-38-









 




occur shall be due to the failure of Seller to perform or observe the covenants and
agreements of Seller set forth herein; provided, however, that any such condition
relating to a breach or a failure to perform a representation, warranty, covenant or other
agreement prior to the Closing Date shall be a cause for termination of this Agreement only if such
breach or failure cannot be or has not been cured within thirty (30) days after the giving of
written notice of such breach or failure to Buyer, such notice to be given promptly after Seller
becomes aware of such breach or failure;




          (d) under the circumstances described in Section 8.2(d) or 8.2(g); or




          (e) at the election of Seller or Buyer, if the Closing shall have not occurred by the earlier
of August 15, 2007 (the “Outside Closing Date”) (other than as a result of a breach of this
Agreement by the Party seeking termination).




     9.2 Effect of Termination. Upon termination of this Agreement pursuant to Section
9.1, no Party, or its shareholders, directors, officers and employees shall thereafter have any
further liability or obligation hereunder; provided, however, that such termination shall not
relieve (a) any Party of any liability for any breach of this Agreement prior to the date of such
termination, (b) the obligations of the Parties set forth in Sections 11.1, 11.2, and 11.13
and such Sections 11.1, 11.2, and 11.13 shall not be affected by a termination or abandonment of
this Agreement, and (c) nothing herein shall affect the rights and obligations of either Party from
any obligations arising under the Confidentiality Agreement.



ARTICLE X.

INDEMNIFICATION




     10.1 Indemnification by Seller.



          (a) Subject to the express provisions of this Article X, Seller shall indemnify, defend and
hold harmless Buyer, its Affiliates and the respective officers, directors, employees and agents of
Buyer and its Affiliates (collectively, the “Buyer Indemnified Parties”) from and against all
Losses incurred or suffered by a Buyer Indemnified Party, arising from or related to:




               (i) any inaccuracy or breach of any representation or warranty made by Seller in this
Agreement, any Schedule to this Agreement or the Employment Agreement;



               (ii) any breach by Seller of any of its covenants, obligations or agreements contained in this
Agreement other than those covenants, obligations or agreements contained in Sections 6.3(b), 6.4,
6.9, 11.3, 11.6, 11.13 and 11.14 and this Article X;



-39-









 





               (iii) any breach by Seller of any of its covenants, obligations or agreements contained in
Sections 6.3(b), 6.4, 6.9, 6.10, 6.11, 7.4, 11.3, 11.6, 11.13 and 11.14 and this Article X; and



               (iv) any Excluded Liability.



          (b) Notwithstanding any provision to the contrary:




               (i) Materiality. For purposes of this Section 10.1, (A) a breach of a representation
or warranty shall be deemed to exist either if such representation or warranty is actually
inaccurate or breached or would have been inaccurate or breached if such representation or warranty
had not contained any limitation or qualification as to materiality, Material Adverse
Effect or similar language, and (B) the amount of Losses in respect of any breach of a
representation or warranty, including any deemed breach resulting from the application of clause
(A), shall be determined as if such representation and warranty had not contained any limitation or
qualification as to materiality, Material Adverse Effect or similar language set forth in such
representation or warranty.



               (ii) Escrow. Of the Purchase Price, the sum of $1,000,000 shall be placed into escrow
pursuant to an escrow agreement (substantially the form attached hereto as Exhibit
10.1(b)(ii) (the “Escrow Agreement”)) to be entered into on the Closing Date among Seller,
Buyer and Wells Fargo Bank, N.A. or another financial institution with banking offices in Idaho
having total assets of at least $100 million and otherwise mutually acceptable to the Parties,
which shall act as escrow agent. The amount so held under the Escrow Agreement shall be maintained
as security for the payment of any and all Claims by Buyer and its successors and permitted assigns
against Seller arising under or in connection with Sections 10.1(a)(i) and 10.1(a)(ii). Subject to
the terms of the Escrow Agreement, (A) on the 365th day following the Closing Date,
one-half of such escrow amount, less the amount of any Losses for which distributions to Buyer have
already been made out of escrow or for which there are Claims then pending, shall be distributed to
Seller, and (B) on the 730th day following the Closing Date, the balance of such escrow
amount, less the amount of any such Losses theretofore distributed to Buyer or subject to pending
claims, shall be distributed to Seller. Interest earned on such escrow account shall be disbursed
in accordance with disbursements of principal. IF THE CLOSING OCCURS, SUBJECT TO THE TERMS OF THIS
ARTICLE X, (X) BUYER ACKNOWLEDGES THAT ITS SOLE RECOURSE FOR ANY LOSSES ARISING UNDER SECTIONS
10.1(a)(i) AND 10.1(a)(ii) OF THIS AGREEMENT SHALL BE PURSUANT TO THE ESCROW AGREEMENT,
AND THAT IN NO EVENT SHALL SELLER HAVE ANY LIABILITY FOR ANY SUCH LOSSES IN EXCESS OF AMOUNTS
AVAILABLE THEREFOR UNDER THE ESCROW AGREEMENT, AND (Y) SELLER ACKNOWLEDGES THAT THIS SECTION
10.1(b)(ii) DOES NOT APPLY TO OR LIMIT IN ANY WAY CLAIMS BY BUYER AND ITS SUCCESSORS AND
PERMITTED ASSIGNS AGAINST



-40-









 







SELLER ARISING IN CONNECTION WITH ANY OTHER SECTION OF THIS AGREEMENT,
INCLUDING CLAIMS FOR LOSSES UNDER SECTIONS 10.1(a)(ii)AND 10.1(a)(iv).



               (iii) Indemnity Claims Covered by Insurance. For purposes of this Article X, all
Losses shall be computed net of any insurance coverage with respect thereto; provided, however,
that, in all cases, the timing of the receipt or realization of insurance proceeds shall be taken
into account in determining the amount of reduction of Losses. If the Indemnified Party elects to
do so, the costs and expenses (including reasonable fees and disbursements of counsel) reasonably
incurred by the Indemnified Parties in pursuing any insurance proceeds or indemnity, contribution
or other similar payment from any insurer shall
reduce the total amount of insurance coverage received in connection with such Losses, except
to the extent such costs and expenses are paid or reimbursed by such insurer or other third party.



               (iv) Deductible. No indemnification pursuant to Section 10.1(a)(i) (except
for Losses arising under Section 10.1(a)(i) relating to Losses arising out of the inaccuracy or
breach of any representation and warranty of Seller set forth in Section 4.11, which shall not be
subject to this Section 10.1(b)(iv)) shall be required unless the aggregate of all Losses
of Buyer described in Section 10.1(a)(i) shall exceed $25,000 for Buyer, in which case Seller shall
be liable only for all Losses in excess of $25,000.



               (v) Matters Disclosed Prior to Closing. Seller will not be obligated to make an
indemnification payment to Buyer for any breach of a representation or warranty made herein if, and
only to the limited extent that, a matter involving such representation or warranty is expressly
listed on Exhibit 10.1(b)(v); and for the avoidance of doubt, in no event shall Buyer ever
be liable for any cost, expense, fee, or obligation related to or arising out of any Excluded
Liability or any covenants, obligations or agreements set forth in Section 10.1(a)(iii), even if a
matter is listed on Exhibit 10.1(b)(v) that is related to or is in any way connected with
any Excluded Liability or any covenants, obligations or agreements set forth in Section
10.1(a)(iii).



     10.2 Indemnification by Buyer. Subject to the express provisions of this Article X, Buyer
shall indemnify and hold harmless Seller, its Affiliates, and the respective officers, directors,
employees and agents of Seller and its Affiliates (collectively, the “Seller Indemnified Parties”)
from and against all Losses incurred or suffered by a Seller Indemnified Party arising from or
related to:



          (a) any inaccuracy or breach of any representation or warranty made by Buyer in this Agreement
or any Schedule to this Agreement; and




          (b) any breach by Buyer of any of its covenants, obligations and agreements contained in this
Agreement.





-41-









 








     10.3 Procedures for Indemnification. The Buyer Indemnified Parties or Seller Indemnified
Parties, as the case may be, making a claim for indemnification under Section 10.1 or
Section 10.2 shall be, for the purposes of this Agreement, referred to as the “Indemnified Party”
and the Party or Parties against whom such claims are asserted under this Article X shall be, for
the purposes of this Agreement, referred to as the “Indemnifying Party.” All claims by any
Indemnified Party under this Article X shall be asserted and resolved as follows:



          (a) Notice. In the event that (i) any Claim is asserted or instituted by any person
other than Buyer or Seller or their respective Affiliates that could give rise to Losses for which
an Indemnifying Party could be liable to an Indemnified Party under this Agreement (such claim,
demand or proceeding, a “Third Party Claim”) or (ii) any Indemnified Party under this Agreement
shall have a claim to be indemnified by any Indemnifying Party under this Agreement that does not
involve a Third Party Claim (such claim, a “Direct Claim”), the Indemnified Party shall promptly
send to the Indemnifying Party a written notice specifying the nature of such claim, demand or
proceeding and the amount or estimated amount thereof if known (which amount or estimated amount
shall not be conclusive of the final amount, if any, of such claim, demand or proceeding) (a “Claim
Notice”); provided, however, that the failure to provide such notice shall not
release the Indemnifying Party from any of its obligations under this Article X except to the
extent that the Indemnifying Party is materially prejudiced by such failure. In the event of a
Direct Claim, the Indemnifying Party shall notify the Indemnified Party within sixty (60) Business
Days of receipt of a Claim Notice whether or not the Indemnifying Party disputes such claim.




          (b) Right to Contest Third Party Claims. In the event of a Third Party Claim, if the
Indemnifying Party acknowledges in writing its obligations to indemnify the Indemnified Party
hereunder against any Losses that may result from such Third Party Claim, the Indemnifying Party
shall be entitled to appoint counsel of the Indemnifying Party’s choice at the expense of the
Indemnifying Party to represent the Indemnified Party and any others the Indemnifying Party may
reasonably designate in connection with such claim, demand or proceeding (in which case the
Indemnifying Party shall not thereafter be responsible for the fees and expenses of any separate
counsel retained by any Indemnified Party except as set forth below). Notwithstanding an
Indemnifying Party’s election to appoint counsel to represent an Indemnified Party in connection
with a Third Party Claim, an Indemnified Party shall have the right to employ separate counsel, and
the Indemnifying Party shall bear the reasonable fees, costs and expenses of such separate counsel
if (i) the Indemnified Party reasonably believes that there exists a conflict of interest that,
under applicable principles of legal ethics, could prohibit a single legal counsel from
representing both the Indemnified Party and the Indemnifying Party in such claim, demand or
proceeding or (ii) the Indemnifying Party has failed or is failing to prosecute or defend
vigorously such claim, demand or proceeding. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its counsel in contesting any
claim, demand or proceeding which the Indemnifying Party defends, or, if




-42-









 




appropriate and related to the claim, demand or proceeding in question, in making any counterclaim against the Person
asserting the Third Party Claim, or any cross-complaint against any Person.




          (c) Settlement. No Third Party Claim may be settled or compromised (i) by the
Indemnified Party without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably conditioned, withheld or delayed, or (ii) by the Indemnifying Party
without the prior written consent of the Indemnified Party, which consent shall not be
unreasonably conditioned, withheld or delayed; provided that if the Indemnifying Party
submits to the Indemnified Party a bona fide settlement offer from a third party claimant of any
Third Party Claim (which settlement offer will include as an unconditional term of it the full and
unconditional release by the claimant or the plaintiff to the Indemnified Party from all liability
in respect of such claim) and the Indemnified Party refuses to consent to such settlement, then
thereafter the Indemnifying Party’s liability to the Indemnified Party with respect to such Third
Party Claim will not exceed the settlement amount included in such bona fide settlement offer, and
the Indemnified Party will either assume control and responsibility for the payment of the defense
of such Third Party Claim or pay the attorneys’ fees and other out-of-pocket costs and expenses
incurred by the Indemnifying Party thereafter in continuing the defense of such Third Party Claim.
In the event any Indemnified Party settles or compromises or consents to the entry of any judgment
with respect to any Third Party Claim without the prior written consent of the Indemnifying Party,
such Indemnified Party shall be deemed to have waived all rights against the Indemnifying Party for
indemnification under this Article X with respect to such Third Party Claim.




     10.4 Indemnification for 338(h)(10) Election.



          (a) If Buyer makes the 338 Request, then, pursuant to Sections 6.10 and 7.6, Seller and Buyer
shall each make the Election and, as described in Section 10.4(b), Buyer shall pay an amount (the
"338 Indemnification Amount”) to Seller equal to the excess of (a) the federal and state Taxes owed
by Seller from his sale of the Shares, over (b) the federal and state Taxes that would have been
owed by Seller from his sale of the Shares during 2007 if Seller and Buyer had not made the
Election.




          (b) If Buyer makes the 338 Request, then, within 30 calendar days after Seller delivers to
Buyer (pursuant to Section 6.11(b)) the short year Tax Return to be filed by the Company, Buyer
shall pay the entire 338 Indemnification Amount to Seller. For purposes of this Section 10.4(b),
the 338 Indemnification Amount shall be determined and agreed upon by Seller and Buyer in
consultation with R. Craig Rasmussen, CPA or any other impartial accountant agreed upon by Seller
and Buyer; provided, however, that if Seller and Buyer are unable to agree upon the entire 338
Indemnification Amount to be paid by Buyer to Seller within 30 calendar




-43-









 




days after Seller delivers to Buyer (pursuant to Section 6.11(b)) the short year Tax Return to be filed by the Company, such
dispute shall be resolved in accordance with Section 11.13.




          (c) Seller and Buyer hereby agree and acknowledge that Buyer shall pay all fees owed to Craig
Rasmussen, CPA or any other impartial accountant agreed upon by Seller and
Buyer, provided that such fees result from Seller’s Election, Buyer’s Election and/or the
calculation of the 338 Indemnification Amount under this Section 10.4.




          (d) Seller and Buyer hereby agree and acknowledge that, for all tax purposes, they will treat
the 338 Indemnification Amount (if any) as additional Purchase Price paid by Buyer to Seller for
the Shares under Section 2.2.




ARTICLE XI.

GENERAL




     11.1 Press Releases and Announcements. Any public announcement, including any announcement
to employees, customers or suppliers and others having dealings with the Company, or similar
publicity with respect to this Agreement or the transactions contemplated by this Agreement, will
be issued, if at all, at such time and in such manner as Buyer determines and approves. Buyer will
have the right to be present for any in-person announcement. Unless consented to by Buyer or
required by Law, Seller will keep, and Seller will cause the Company to keep, this Agreement and
the transactions contemplated by this Agreement confidential.



     11.2 Expenses. Except as otherwise expressly provided for in this Agreement, Seller, on
the one hand, and Buyer, on the other hand, will each pay all expenses incurred by each of them
(and, in the case of Seller, the expenses incurred by the Company and Seller) in connection with
the transactions contemplated by this Agreement, including legal, accounting, investment banking
and consulting fees and expenses incurred in negotiating, executing and delivering this Agreement
and the other agreements, exhibits, documents and instruments contemplated by this Agreement
(whether the transactions contemplated by this Agreement are consummated or not).



     11.3 Further Assurances. On and after the Closing Date, Seller will take all appropriate
action and execute any documents, instruments or conveyances of any kind that may be reasonably
requested by Buyer to carry out any of the provisions of this Agreement.



     11.4 Amendment and Waiver. This Agreement may not be amended, nor may any provision of
this Agreement or any default, misrepresentation, or breach of warranty or agreement under this
Agreement be waived, except in writing executed by the party against which such amendment or waiver
is sought to be enforced. Neither the failure nor any delay by any Person in exercising any right,
power or privilege under this Agreement will operate as a waiver of such right, power or privilege, and
no single or partial exercise of any such right, power or privilege will preclude any other or
further exercise of such right, power or privilege or



-44-









 







the exercise of any other right, power or privilege. In addition, no course of dealing between or among any Persons having any interest in
this Agreement will be deemed effective to modify or amend any part of this Agreement or any rights
or obligations of any Person under or by reason of this Agreement. The rights and remedies of the
parties to this Agreement are cumulative and not alternative.



     11.5 Notices. All notices, demands and other communications to be given or delivered under
or by reason of the provisions of this Agreement will be in writing and will be deemed to have been
given (a) when delivered, if personally delivered by hand (with written confirmation of receipt),
(b) when received, if sent by a nationally recognized overnight courier service (receipt
requested), (c) five (5) business days after being mailed, if sent by first class mail, return
receipt requested, or (d) when receipt is acknowledged by an affirmative act of the Party receiving
notice, if sent by facsimile, telecopy or other electronic transmission device (provided that such
an acknowledgement does not include an acknowledgment generated automatically by a facsimile or
telecopy machine or other electronic transmission device). Notices, demands and communications to
Buyer and Seller will, unless another address is specified in writing, be sent to the address
indicated below:


If to Buyer:



Carriage Cemetery Services of Idaho, Inc.

3040 Post Oak Blvd., Suite 300

Houston, Texas 77056

Attention: President

Facsimile No. (713) 332-8401



With a copy to:



Greenberg Traurig, LLP

1000 Louisiana, Suite 1800

Houston, TX 77002

Attn: William Sultemeier

Facsimile No: (713) 374-3505



If to Seller :



Timothy T. Gibson

2074 Ribier Dr.

Meridian, Idaho 83646




-45-









 




With a copy to:



Kenneth Mallea

Mallea Law Offices

78 S.W. 5th Avenue, Suite 1

Meridian, Idaho 83642-2923

Facsimile No.: (208) 888-2789




     11.6 Assignment. Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any Party without the prior written consent of the other Parties to
this Agreement, except that Buyer may assign any of its rights under this Agreement to any of its
Affiliates. Subject to the foregoing, this Agreement and all of the provisions of this Agreement
will be binding upon and inure to the benefit of the Parties to this Agreement and their respective
successors and permitted assigns.



     11.7 No Third Party Beneficiaries. Nothing expressed or referred to in this Agreement
confers any rights or remedies upon any Person that is not a Party or permitted assign of a Party.



     11.8 Severability. Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable Law, but if any provision of this
Agreement is held to be prohibited by or invalid under applicable Law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.



     11.9 Complete Agreement. This Agreement, the Confidentiality Agreement and when executed
and delivered the Employment Agreement, contain the complete agreement between the Parties and
supersede any prior understandings, agreements or representations by or between the Parties,
written or oral.



     11.10 Schedules. The Seller Disclosure Schedules contains a series of schedules
corresponding to the sections contained in Articles III and IV. Without limiting the generality of
the foregoing, the mere listing (or inclusion of a copy) of a document or other item is not deemed adequate to
disclose an exception to a representation or warranty unless the representation or warranty relates
solely to the existence of the document or other item itself. The sections of the Seller
Disclosure Schedules relate only to the representations and warranties in the section and
subsection of this Agreement to which they correspond and not to any other representation or
warranty in this Agreement. In the event of any inconsistency between the statements in this
Agreement and statements in the Seller Disclosure Schedules, the statements in this Agreement will
control and the statements in the Seller Disclosure Schedules will be disregarded.



     11.11 Signatures; Counterparts. This Agreement may be executed in one or more counterparts,
any one of which need not contain the signatures of more than one Party, but all such counterparts
taken together will constitute one and the same instrument. A facsimile signature will be
considered an original signature.



-46-









 





     11.12 Specific Performance. Each of the Parties acknowledges and agrees that the subject
matter of this Agreement, including the Businesses, assets and properties of the Company, is
unique, that the other Party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or otherwise are breached,
and that the remedies at Law would not be adequate to compensate such other Parties not in default
or in breach. Accordingly, each of the Parties agrees that the other Party will be entitled to an
injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions of this Agreement in addition to any other
remedy to which they may be entitled, at Law or in equity. The Parties waive any defense that a
remedy at Law is adequate and any requirement to post bond or provide similar security in
connection with actions instituted for injunctive relief or specific performance of this Agreement.



11.13 Governing Law; Dispute Resolution. 




          (a) THE DOMESTIC LAW, WITHOUT REGARD TO CONFLICTS OF LAWS AND PRINCIPLES, OF THE STATE OF
IDAHO WILL GOVERN ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS
AGREEMENT AND THE PERFORMANCE OF THE OBLIGATIONS IMPOSED BY THIS AGREEMENT.




          (b) Every controversy, Claim, or dispute arising from or relating to this Agreement
(“Dispute”) shall be resolved in accordance with this Section 11.13. The Parties will attempt in
good faith to resolve promptly any Dispute by negotiations between Seller and an officer of Buyer.
If the Parties so agree, such individuals may be assisted by a mediator supplied
by the American Arbitration Association (“AAA”), and the costs and fees of the mediation will
be borne equally by the Parties. If the Dispute is not resolved within 30 days of a Party’s
written request for negotiation, either Party may initiate arbitration as hereinafter provided.




          (c) A Party initiating arbitration shall file a demand in accordance with the Commercial
Arbitration Rules of the AAA. The Parties agree that they have a contractual obligation hereunder
to conduct the arbitration of any Dispute in good faith. The AAA shall appoint a single neutral
arbitrator from its Commercial Arbitration Panel or its Large Complex Case Panel to decide the
Dispute. Except as otherwise specifically provided herein, the AAA’s Commercial Arbitration Rules
shall govern the arbitration proceedings. The arbitration will take place in Boise, Idaho. During
the conduct of the arbitration proceedings, the arbitrator shall have full discretion concerning
the admissibility and relevance of evidence. The final award of the arbitrator shall be rendered
in writing and signed by the arbitrator. Unless otherwise agreed to by the Parties, the final
award shall be rendered within 30 days of the conclusion of the arbitration proceeding. Each Party
shall bear its own costs and attorneys’ fees arising out of the arbitration, except under
circumstances in which such costs and fees are otherwise recoverable as




-47-









 




provided in this Agreement. Each Party shall be solely responsible for any filing fees which that Party owes to the AAA on
account of any claims and/or counterclaims asserted by such Party during the proceedings. Each
Party agrees to abide by the arbitration award and further agrees that judgment may be entered upon
the award in any court of competent jurisdiction.




          (d) Notwithstanding the foregoing and anything to the contrary in this Agreement, Buyer
retains the right to seek any form of relief available to it in a court of applicable jurisdiction
in the case of any breach or threatened breach of Section 6.9.




     11.14 Construction(a). The Parties and their respective counsel have participated jointly
in the negotiation and drafting of this Agreement. In addition, each of the Parties acknowledges
that it is sophisticated and has been advised by experienced counsel and, to the extent it deemed
necessary, other advisors in connection with the negotiation and drafting of this Agreement. In
the event an ambiguity or question of intent or interpretation arises, this Agreement will be
construed as if drafted jointly by the Parties and no presumption or burden of proof will arise
favoring or disfavoring any Party by virtue of the authorship of any of the provisions of this
Agreement. The Parties intend that each representation, warranty and agreement contained in this
Agreement will have independent significance. If any Party has breached any representation,
warranty or agreement in any respect, the fact that there exists another representation, warranty
or agreement relating to the same subject matter (regardless of the relative levels of specificity)
that the Party has not breached will not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty or agreement. Any reference
to any Law will be deemed to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.



     11.15 Farming. The Parties hereby agree use good faith efforts in cooperating with one
another in the (a) management and maintenance of the farming operations that exist as of the date
of this Agreement on the real property owned by either Buyer or Seller and (b) allocation and
payment of costs associated with, and profits earned as a result of, such farming operations;
provided, however, that either Party may terminate at any time the farming operations on its
respective real property at its sole discretion.



-48-









 





          IN WITNESS WHEREOF, Buyer and Seller have executed this Stock Purchase Agreement as of the
date first above written.




	 	 	 	 	 	 	 	 	 	 	 
	BUYER:	 	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	CARRIAGE CEMETERY SERVICES OF IDAHO, INC.	 	 	 	TIMOTHY T. GIBSON	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ W. Clark Harlow
 

	 	 
	 	By:
	 	/s/ Timothy T. Gibson
 

	 	 
	Name: W. Clark Harlow	 	 	 	 	 	 	 	 
	Title: Vice President	 	 	 	 	 	 	 	 






[SIGNATURE PAGE TO CARRIAGE CEMETERY SERVICES OF IDAHO, INC. STOCK

PURCHASE AGREEMENT]




 









 





EXHIBIT A

C&G Assignment and Assumption Agreement




Exhibit A




 









 





EXHIBIT B

C&G General Bill of Sale




Exhibit B




 









 





EXHIBIT C

C&G License Agreement




Exhibit C




 









 





EXHIBIT D

Employment Agreement




Exhibit D




 









 





EXHIBIT E

Retirement Insurance Policies




Exhibit F




 









 





EXHIBIT 4.11(d)

Pre-Trust Law Liabilities




Exhibit 4.11(d)




 









 





EXHIBIT 4.11(e)-(i)

Registered Marker Orders




Exhibit 4.11(e)-(i)




 









 





EXHIBIT 4.11(e)-(ii)

Registered Marker Orders




Exhibit 4.11(e)-(ii)




 









 





EXHIBIT 4.11(e)-(iii)

Registered Marker Orders




Exhibit 6.12




 









 





EXHIBIT 6.12

Water Well Access and Easement Agreement




Exhibit 6.12




 









 





EXHIBIT 7.4(a)

Employee Reserves




Exhibit 7.4(a)




 









 





EXHIBIT 8.4(f)

Opinion of Ken Mallea




Exhibit 8.4(f)




 









 





EXHIBIT 8.5(c)

Opinion of Elsaesser Jarzabek Anderson Marks Elliott & McHugh, Chtd.




Exhibit 8.5(c)




 









 





EXHIBIT 10.1(b)(ii)

Escrow Agreement




Exhibit 10.1(b)(ii)




 









 





EXHIBIT 10.1(b)(v)

Disclosure




Exhibit 10.1(b)(v)