Document:

exv10w19

 

Exhibit 10.19

EMPLOYMENT AGREEMENT

     THIS
AGREEMENT, dated September 11, 2006, is between CARRIAGE
SERVICES, INC., a Delaware
corporation (the “Company”), and J. BRADLEY GREEN, a resident of Harris County, Texas (the
“Employee”).

     1. Employment
Term. The Company hereby employs the Employee for a term commencing effective as of October 9, 2006 and, subject to earlier termination as provided in
Section 7 hereof, continuing until September 30, 2009 (such term being herein referred to as the
“term of this Agreement”). The Employee agrees to accept such employment and to perform the
services specified herein, all upon the terms and conditions hereinafter stated.

     2.
Duties. The Employee shall serve the Company and shall report to, and be subject
to the general direction and control of the Chief Financial Officer of the Company. The Employee
shall perform the professional, management and administrative duties of Vice President of Human
Resources and General Counsel of the Company. The Employee shall also serve as Vice President and
Assistant Secretary of any subsidiary of the Company as requested by
the Company, and the Employee
shall perform such other duties as are from time to time assigned to
him by the Chief Financial
Officer as are not inconsistent with the provisions hereof.

     3. Extent of Service. The Employee shall devote his full business time and
attention to the business of the Company, and, except as may be specifically permitted by the
Company, shall not be engaged in any other business activity during the term of this Agreement.
The foregoing shall not be construed as preventing the Employee from making passive investments
in other businesses or enterprises, provided, however, that such investments will not require
services on the part of the Employee which would in any way impair the performance of his duties
under this Agreement.

     4. Compensation. During the term of this Agreement, the Company shall pay the
Employee a salary of $15,000.00 per full calendar month of service completed, appropriately
prorated for partial months at the commencement and end of the term
of this Agreement. The
Employee’s salary and benefits will be reviewed annually, but any change therein shall remain in
the sole discretion of the Company. The salary set forth herein shall be payable in bi-weekly
installments in accordance with the payroll policies of the Company in effect from time to time
during the term of this Agreement. The Company shall have the right to deduct from any payment of
all compensation to the Employee hereunder (x) any federal, state or local taxes required by law
to be withheld with respect to such payments, and (y) any other amounts specifically authorized
to be withheld or deducted by the Employee.

     5. Benefits. In addition to the base salary under Section 4, the Employee shall be
entitled to participate in the following benefits during the term of this Agreement:

     (i) Consideration for an annual performance-based bonus within the sole discretion of
the Company, as may be recommended by the Chief Financial Officer and

 

 

approved by the Company’s Chief Executive Officer, with a maximum bonus target of 30% of
base salary.

     (ii) A one-time inducement bonus in the amount of $20,000, payable in four
installments of $5,000 each (in each instance, less applicable withholdings), payable on
the first regular payroll date after commencement of employment and continuing on each
payroll date thereafter until paid in full.

     (iii)
An Award of 20,000 shares of the Company’s Restricted Stock as of the first day
of employment, within the meaning of and subject to the terms and conditions of the
Company’s 2006 Long Term Incentive Plan (“2006 Plan”) and the related Award Agreement to
entered into between the Company and the Employee evidencing such Award; provided that
such Award shall vest at the rate of 5,000 shares on each of the first through fourth
anniversaries of the date of Award.

     (iv) Eligibility for consideration of future Awards of Restricted Stock or other
incentive-based compensation under the terms of the 2006 Plan or one or more of the
Company’s other incentive plans, as the Chief Executive Officer in his sole discretion may
determine and subject to approval of the Company’s Compensation Committee.

     (v) Three weeks of paid vacation in each calendar year, subject to the Company’s
personnel policies respecting such matters.

     (vi) Participation in the Company’s group health and hospitalization program, and
inclusion in such other employee benefits, as are available generally to executive-level
employees of the Company.

     6. Certain
Additional Matters. The Employee agrees that at all times during the
term of this Agreement and for a period of two years following any cessation of employment with
the Company:

     (a) The Employee will not knowingly or intentionally do or say any act or thing which
will or may impair, damage or destroy the goodwill and esteem for the Company of its
suppliers, employees, patrons, customers and others who may at any time have or have had
business relations with the Company.

     (b) The Employee will not reveal to any third person any difference of opinion, if
there be such at any time, between him and the management of the Company as to its
personnel, policies or practices.

     (c) The Employee will not knowingly or intentionally do any act or thing detrimental
to the Company or its business.

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     7. Termination.

     (a) Death. If the Employee dies during the term of this Agreement and while in
the employ of the Company, this Agreement shall automatically terminate and the Company
shall have no further obligation to the Employee or his estate except that the Company shall
pay the Employee’s estate that portion of the Employee’s base salary under Section 4 accrued
through the date on which the Employee’s death occurred. Such payment of base salary to
the Employee’s estate shall be made in the same manner and at the same times as they would
have been paid to the Employee had he not died.

     (b)
Disability. If during the term of this Agreement, the Employee shall be
prevented from performing his duties hereunder by reason of disability, and such disability
shall continue for a period of six months, then the Company may terminate this Agreement at
any time after the expiration of such six-month period. For purposes of this Agreement, the
Employee shall be deemed to have become disabled when the Company, upon the advice of a
qualified physician, shall have determined that the Employee has become physically or mentally incapable (excluding infrequent and temporary absences due to ordinary illness) of
performing his duties under this Agreement. In the event of a termination pursuant to this
paragraph (b), the Company shall be relieved of all its obligations under this Agreement,
except that the Company shall pay to the Employee (or his estate in the event of his
subsequent death) the Employee’s base salary under Section 4 through the date on which such
termination shall have occurred, reduced during such period by the amount of any benefits
received under any disability policy maintained by the Company. All such payments to the
Employee or his estate shall be made in the same manner and at the same times as they
would have been paid to the Employee had he not become disabled.

     (c)
Discharge for Cause. Prior to the end of the term of this Agreement, the Company may
discharge the Employee for Cause and terminate this Agreement. In such case this Agreement shall
automatically terminate and the Company shall have no further obligation to the Employee or his
estate other than to pay to the Employee (or his estate in the event of his subsequent death)
that portion of the Employee’s salary accrued through the date of termination. For purposes of
this Agreement, the Company shall have “Cause” to discharge the Employee or terminate the
Employee’s employment hereunder upon (i) the Employee’s commission of any felony or any other
crime involving moral turpitude, (ii) the Employee’s failure or refusal to perform all of his
duties, obligations and agreements herein contained or imposed by law, including his fiduciary
duties, to the reasonable satisfaction of the Company, (iii) the Employee’s commission of acts
amounting to gross negligence or willful misconduct to the material detriment of the Company, or
(iv) the Employee’s breach of any provision of this Agreement or uniformly applied provisions of
the Company’s employee handbook or other personnel policies, including without limitation, its
Code of Business Conduct and Ethics.

     (d)
Discharge Without Cause. Prior to the end of the term of this Agreement, the Company
may discharge the Employee without Cause (as defined in paragraph (c) above) and terminate this
Agreement. In such case this Agreement shall automatically terminate and

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the Company shall have no further obligation to the Employee or his estate, except that the
Company shall continue to pay to the Employee (or his estate in the event of his subsequent
death) the Employee’s base salary under Section 4 for a period of twelve months following
the date of discharge. In addition, if following the date of such discharge, the Employee
becomes eligible to elect continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act (COBRA) and properly elects such coverage, the Company shall reimburse
the Employee or pay on his behalf the amount of the premiums under COBRA for the Company’s
group health and hospitalization insurance coverage which the Employee had in effect as of
the date of discharge, for so long during such 12-month period as he remains eligible for
COBRA coverage. All such payments and benefits to the Employee or his estate shall be made
in the same manner and at the same times as they would have been paid to the Employee had
he not been discharged.

     8. Restrictive Covenants. The Employee acknowledges that in the course of his
employment with the Company as a member of the Company’s senior executive and management team, he
will have access to confidential and proprietary business information of the Company and its
affiliates, and will develop through such employment business systems, methods of doing business,
and contacts within the death care industry, all of which will help to identify him with the
business and goodwill of the Company. Consequently, it is important that the Company protect its
interests in regard to such matters from unfair competition. The parties therefore agree that for
so long as the Employee shall remain employed by the Company and, if the employment of the
Employee ceases for any reason (including voluntary resignation), then for a period of two (2)
years thereafter, the Employee shall not, directly or indirectly:

     (i) alone or for his own account, or as a officer, director, shareholder, partner,
member, trustee, employee, consultant, advisor, agent or any other capacity of any
corporation, partnership, joint venture, trust, or other business organization or entity,
encourage, support, finance, be engaged in, interested in, or concerned with (x) any of
the companies and entities described on Schedule I hereto, except to the extent that any
activities in connection therewith are confined exclusively outside the Continental United
States, or (y) any other business within the death care industry having an office or being
conducted within a radius of fifty (50) miles of any funeral home, cemetery or other death
care business owned or operated by the Company or any of its subsidiaries at the time of
such termination;

     (ii) induce or assist anyone in inducing in any way any employee of the Company or
any of its subsidiaries to resign or sever his or her employment or to breach an
employment contract with the Company or any such subsidiary; or

     (iii) own, manage, advise, encourage, support, finance, operate, join, control, or
participate in the ownership, management, operation, or control of or be connected in any
manner with any business which is or may be in the funeral, mortuary, crematory, cemetery
or burial insurance business or in any business related thereto (x) as part of any of the
companies or entities listed on Schedule I, or (y) otherwise within a radius of fifty (50)
miles of any funeral home, cemetery or other death care business owned or operated by the
Company or any of its subsidiaries at the time of such termination.

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     Notwithstanding the foregoing, the above covenants shall in no event prohibit the passive
ownership of not more than one percent (1%) of the outstanding voting securities of any entity
within the death care industry. In addition, the foregoing shall not be construed as restricting
the right of the Employee to engage in the practice of law after termination of employment that
would cause the Employee to violate Rule 5.06 of the Texas Disciplinary Rules of Professional
Conduct, it being acknowledged, however, that as a result of the Employee’s having access to
confidential and privileged information of the Company and its subsidiaries during the course of
employment, the Employee will be presumed to have a conflict of interest preventing him from
providing legal services to any of the companies or entities listed on Schedule I for at least
the duration of the covenants described in this Section 8.

     The foregoing covenants shall not be held invalid or unenforceable because of the scope of
the territory or actions subject hereto or restricted hereby, or the period of time within which
such covenants respectively are operative, but the maximum territory, the action subject to such
covenants and the period of time they are enforceable are subject to any determination by a final
judgment of any court which has jurisdiction over the parties and subject matter.

     9.
Confidential Information; Copyrightable Material. The Employee acknowledges
that in the course of his employment by the Company he will receive certain trade secrets,
management methods, financial and accounting data (including but not limited to reports, studies,
analyses, spreadsheets and other materials and information), operating techniques, prospective
acquisitions, employee lists, training manuals and procedures, personnel evaluation procedures,
and other confidential information and knowledge concerning the business of the Company and its
affiliates (hereinafter collectively referred to as “Information”) which the Company desires to
protect. The Employee understands that the Information is confidential and he agrees not to
reveal the Information to anyone outside the Company so long as the confidential or secret nature
of the Information shall continue. The Employee further agrees that he will at no time use the
Information in competing with the Company. Upon termination of this Agreement, the Employee shall
surrender to the Company all papers, documents, writings and other property produced by his or
coming into his possession by or through his employment or relating to the Information and the
Employee agrees that all such materials will at all times remain the property of the Company. The
Employee acknowledges that all materials and other copyrightable works and subject matter
(regardless of whether or not constituting “Information”) produced by the Employee within the scope
of his employment (regardless of whether or not denoted as copyrighted material) shall be deemed
“works made for hire” and shall be owned by and proprietary to the Company and may not be used or
reproduced in whole or in part without the Company’s prior written consent.

     10. Remedies. The parties recognize that the services to be rendered under this Agreement
by the Employee are special, unique, and of extraordinary character, and that in the event of
the breach by the Employee of the covenants contained in Section 8 or Section 9 hereof, the
Company may suffer irreparable harm as a result. The parties therefore agree that, in the event
of any breach or threatened breach of any of such covenants, the Company shall be entitled to
specific performance or injunctive relief, or both, and may, in addition to and not in lieu of
any claim or proceeding for damages, institute and prosecute proceedings in any court of
competent jurisdiction to

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enforce through injunctive relief such covenants. In addition, the Company may, if it so elects,
suspend (if applicable) any payments due under this Agreement pending any such breach and offset
against any future payments the amount of the Company’s damages arising from any such breach. The
Employee agrees to waive and hereby waives any requirement for the Company to secure any bond in
connection with the obtaining of such injunction or other equitable relief.

     11. Notices. All notices, requests, consents and other communications under this Agreement
shall be in writing and shall be deemed to have been delivered on the date personally delivered
or three business days after the date mailed, postage prepaid, by certified mail, return receipt
requested, or when sent by telex or telecopy and receipt is confirmed, if addressed to the
respective parties as follows:

	 	 	 	 	 
	 
	 	If to the Employee:	 	Mr. J. Bradley Green
	 
	 	 	 	3032 Del Monte
	 
	 	 	 	Houston, TX 77019
	 
	 	 	 	 
	 
	 	If to the Company:	 	Carriage Services, Inc.
	 
	 	 	 	3040 Post Oak Blvd, Suite 300
	 
	 	 	 	Houston, Texas 77056
	 
	 	 	 	Attn: Chief Financial Officer

Either party hereto may designate a different address by providing written notice of such new
address to the other party hereto.

     12. Severability. Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law but if any provision of this
Agreement shall be prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such provision or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.

     13. Assignment. This Agreement may not be assigned by the Employee. Neither the Employee nor
his estate shall have any right to commute, encumber or dispose of any right to receive payments
hereunder, it being agreed that such payments and the right thereto are nonassignable and
nontransferable.

     14. Binding
Effect. Subject to the provisions of Section 13 of this Agreement, this
Agreement shall be binding upon and inure to the benefit of the parties hereto, the Employee’s
heirs and personal representatives, and the successors and assigns of the Company.

     15. Captions. The section and paragraph headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or interpretation of this
Agreement.

     16. Complete Agreement. This Agreement represents the entire agreement between the
parties concerning the subject hereof and supersedes all prior agreements and arrangements
between the parties concerning the subject thereof.

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     17. Governing
Law; Venue. A substantial portion of the Employee’s duties under this
Agreement shall be performed at the Company’s corporate headquarters in Houston, Texas, and this
Agreement has been substantially negotiated and is being executed and delivered in the State of
Texas. This Agreement shall be construed and enforced in accordance with and governed by the laws
of the State of Texas. Any suit, claim or proceeding arising under or in connection with this
Agreement or the employment relationship evidenced hereby must be brought, if at all, in a state
district court in Harris County, Texas or federal district court in the Southern District of Texas,
Houston Division. Each party submits to the jurisdiction of such courts and agrees not to raise any
objection to such jurisdiction.

     18. Counterparts. This Agreement may be executed in multiple original counterparts,
each of which shall be deemed an original, but all of which together shall constitute one and the
same instrument.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date and year
first above written.

	 	 	 	 	 	 	 
	 	 	CARRIAGE SERVICES, INC.
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Joseph Saporito	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	JOSEPH SAPORITO, Executive Vice President	 	 
	 

	 	 	 	and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ J. Bradley Green
	 	 	 
	 

	 	J. BRADLEY GREEN
	 	 	 	 

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SCHEDULE I

TO

EMPLOYMENT AGREEMENT

(J. BRADLEY GREEN)

	1.	 	The following entities, together with all Affiliates thereof:

Service Corporation International

Alderwoods Group, Inc.

Stewart Enterprises, Inc.

Keystone Group Holdings, Inc.

Meridian Mortuary Group, Inc.

StoneMor Partners LP

Hamilton Group, Inc.

Century Group

Saber Group

Thomas Pierce & Co.

	 	 	For purposes of the foregoing, an “Affiliate” of an entity is a person that directly or
indirectly controls, is under the control of or is under common control with such entity.
	 
	2.	 	Any new entity which may hereafter be established which
acquires any combination of ten or
more funeral homes and/or cemeteries from any of the entities described in 1 above.
	 
	3.	 	Any funeral home, cemetery or other death care enterprise which is managed by any entity
described in 1 or 2 above.exv10w20

 

Exhibit 10.20

CONTINGENT ASSET SALE AGREEMENT

Conejo Mountain Funeral Home & Memorial Park

Camarillo, California 93012

     CONTINGENT ASSET SALE AGREEMENT (“Agreement”) dated this 22nd day of November, 2006, by and
among CARRIAGE CEMETERY SERVICES, INC., a Texas corporation (“Buyer”), and SCI FUNERAL SERVICES,
INC., an Iowa corporation (“SCI Funeral Services”);

W I T N E S S E T H:

     WHEREAS, there is currently pending a transaction (the “Alderwoods Transaction”) described in
and to be accomplished pursuant to an Agreement and Plan of Merger dated April 2, 2006 by and among
Service Corporation International (“SCI Parent”), Coronado Acquisition Corporation and Alderwoods
Group, Inc. (“Alderwoods Parent”);

     WHEREAS, upon the closing of the Alderwoods Transaction (the “Alderwoods Merger Closing”), SCI
Funeral Services will be an affiliate of Alderwoods Group (California), Inc., a California
corporation (“Seller”);

     WHEREAS, Buyer desires to purchase certain assets of the Seller;

     WHEREAS, contingent upon the Alderwoods Merger Closing, SCI Funeral Services will cause the
Seller to assume all obligations as the “Seller” under the terms of this Agreement and to be bound
by the terms of this Agreement, and upon such assumption, SCI Funeral Services will be released of
all liability arising under this Agreement, all as set forth below;

     WHEREAS, Seller owns and operates a funeral business and cemetery business and conducts such
business under the name Conejo Mountain Funeral Home & Memorial Park located at 2052 Howard Road,
Camarillo, California 93012 (the “Business”);

     WHEREAS, the names Conejo Mountain Funeral Home and Conejo Mountain Memorial Park (whether
separately or in combination with each other) are hereinafter referred to as the “Trade Names”;

     WHEREAS, SCI Funeral Services and Buyer desire to establish, contingent upon the Alderwoods
Merger Closing, the terms for the sale and transfer from Seller to Buyer of the Assets (hereafter
defined), in exchange for cash, upon the terms and subject to the conditions herein set forth; and

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

 

 

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

TERMS OF CONTINGENCY

     A. SCI Funeral Services shall promptly advise Buyer of the occurrence of the Alderwoods Merger
Closing and agrees that, contingent upon the Alderwoods Merger Closing, within ten (10) days after
the date of the Alderwoods Merger Closing (the “Alderwoods Merger Closing Date”), SCI will cause
(x) the Seller (i) to execute the joinder (the “Seller Joinder”) following the signature page of
this Agreement whereby the Seller will assume all obligations as a “Seller” under this Agreement,
and (ii) to deliver the executed Seller Joinder to Buyer and (y) SCI California Funeral Services,
Inc., a California corporation (“SCI California”), to execute and deliver to Buyer the guaranty of
Seller’s obligations under this Agreement (the “Guaranty”) following the signature page of this
Agreement. Buyer agrees that subject to and upon the occurrence of Alderwoods Merger Closing,
Seller’s execution of the Seller Joinder and SCI California’s execution of the Guaranty, Buyer will
thereupon become obligated to purchase the Assets (defined below) of Seller subject to the terms
and conditions of this Agreement.

     B. Buyer acknowledges that SCI Funeral Services does not and will not own the Assets and that
the sole obligation of SCI Funeral Services under this Agreement is to cause the Seller to execute
the Seller Joinder and SCI California to execute the Guaranty within ten (10) days after the
Alderwoods Merger Closing Date, but only if and when the Alderwoods Merger Closing occurs. If the
Alderwoods Merger Closing Date has not occurred on or before December 15, 2006, then either SCI
Funeral Services or Buyer, at its option, may terminate this Agreement upon fifteen (15) days prior
written notice to the other of its election to terminate this Agreement and, in such event, no
party shall have any further liability or obligation under this Agreement, provided that no such
termination will be effective if the Alderwoods Merger Closing Date occurs during such 15-day
notice period; in which event SCI Funeral Services will immediately cause the Seller to assume the
obligations as a “Seller” under this Agreement. None of Alderwoods Parent, SCI Parent, SCI Funeral
Services, nor Buyer, nor any of its respective affiliates, shall have any liability to any other
party if the Alderwoods Merger Closing is delayed or never occurs for any reason whatsoever. In no
event shall the foregoing operate to extend the Closing past the Outside Closing Date specified in
Section 2.1, and this Agreement shall automatically terminate if Buyer has not received the Seller
Joinder and the Guaranty on or before the fifth business day preceding the Outside Closing Date.

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     C. SCI Funeral Services and Buyer expressly agree that even though the terms of this Agreement
as set forth below in Articles I-X are written as being effective on the date hereof, such terms
will only become effective on the date, if ever, that Seller executes the Seller Joinder and SCI
California executes the Guaranty, and then such provisions will be effective only between Seller
and Buyer (and, pursuant to the Guaranty, SCI California); provided however, that (i) SCI Funeral
Services and Buyer agree that the provisions of Section 8.6 and Article X shall apply to and govern
this Terms of Contingency Section, (ii) once Seller executes the Seller Joinder, the
representations and warranties of Seller hereunder shall be effective as of and relate back to the
effective date of this Agreement, and (iii) notwithstanding when the Alderwoods Merger Closing Date
or Seller Joinder occurs, SCI Funeral Services shall permit Buyer beginning no later than the day
after the date of this Agreement to have the access described in Section 5.2 and to enable the
Survey described in Section 7.2 and inspections described in Section 7.3 to be conducted.

ARTICLE I

Purchase and Sale

     Section 1.1. Transfer of Assets. Subject to the terms and conditions of this
Agreement, Seller does hereby agree to sell, transfer, convey and deliver to Buyer, and Buyer does
hereby agree to purchase and accept from Seller, all of the assets, property and rights located at,
used in connection with or arising out of the Business, including without limitation those
described below, excluding only the Excluded Assets described in Section 1.2:

     (a) Fee simple title to the real property described in Schedule 1 to Exhibit A to this
Agreement (the “Real Property”);

     (b) All furniture, fixtures, equipment, and other tangible personal property owned by Seller
located at the Real Property which is necessary to operate the Business including, without
limitation, those items listed on Schedule 2 to Exhibit A to this Agreement;

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

     (d) All merchandise inventory located at the Business, including but not limited to that
described in Schedule 4 to Exhibit A to this Agreement, plus or minus any changes in said
inventories which result from the ordinary course of the operation of the Business subsequent to
the date of such listing and until the Effective Time and all Services in Progress (as hereinafter
defined);

     (e) All rights of the Business in all contracts, agreements and commitments listed on Schedule
5 to Exhibit A to this Agreement;

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     (f) All preneed funeral and/or cemetery merchandise and/or service agreements generated in the
operation of the Business (the “Preneed Agreements”), including, without limitation, those
described in Schedules 7 and/or 8 to Exhibit A to this Agreement, including contracts and accounts
receivable associated therewith;

     (g) All interest of Seller in all proceeds of insurance policies relating to or arising from
the Preneed Agreements, including those described in Schedule 7 to Exhibit A to this Agreement;

     (h) All interest of Seller in and to all bank, trust, investments or other funds or accounts
relating to or arising from the Preneed Agreements, including those described in Schedule 8 to
Exhibit A to this Agreement;

     (i) All funeral at need accounts and notes receivable, and all cemetery preneed and at need
accounts and notes receivable, in each case generated in the operation of the Business including,
without limitation, those listed on Schedule 9 to Exhibit A to this Agreement, plus or minus any
changes in said receivables which result from the ordinary course of the operation of the Business
subsequent to the date(s) of such listing(s) and until the Effective Time (as hereafter defined),
but not including any receivables due from insurance companies or trust funds as a result of the
Preneed Agreements Serviced (as hereafter defined) by the Business prior to the Effective Time;

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

     (k) The goodwill of Seller in the Business, together with all lists of present or former
customers of the Business, all business books and records (whether in tangible or electronic
format) that are beneficial and useful to Buyer in continuing the Business, the telephone and fax
numbers and listings for the Business and all internet domain names (if any), all transferable
government licenses and permits of the Business, and all of Seller’s right, title and interest in
and the right to use the Trade Names throughout the trade areas in which the Business is currently
doing business, and any other names so similar as to require consent of Seller to their rightful
use, and all goodwill associated therewith; and

     (l) All other assets, rights and properties owned or held by Seller used in the operation of,
or in connection with, the Business or located thereon, excluding those described in Section 1.2.

     All property to be sold by Seller to Buyer described above shall be hereinafter collectively
referred to as the “Assets.” At the Closing referred to in Section 2.1, the Seller shall

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convey to the Buyer the Assets free and clear of any and all liens, security interests,
pledges, encumbrances, leases (including vehicle leases) or title restrictions of any kind
(collectively, “Liens”), other than the Permitted Encumbrances against Real Property determined in
accordance with Section 7.2.

     Section 1.2. Excluded Assets. Seller shall not transfer, convey or assign to
Buyer the following assets: (a) non-preneed related cash and cash equivalents, subject to Section
1.6(b) below, (b) accounts receivable related to funeral or cemetery Preneed Agreements that have
matured and been Serviced (as defined below) prior to the Effective Time, (c) computer software and
similar rights, (d) corporate records, minutes and records of shareholders’ and directors’
meetings, and (e) all other assets of the Seller which are not used exclusively or primarily in the
ownership, operation or maintenance of the Business and which are not necessary or useful to the
continued operation of the Business in a manner consistent with the Seller’s past practices
including training, promotional materials, procedure and policy manuals and other similar
intellectual property rights (together the “Excluded Assets”). Except as specifically excepted
above, it is intended that the assets, properties and rights of the Business to be sold to the
Buyer shall include all of the assets, properties and rights reflected in the Schedules to Exhibit
A to this Agreement, other than inventory and accounts receivable that are disposed of, and/or
Preneed Agreements that are Serviced (as defined below) or transferred/refunded, in each case in
the ordinary course of business prior to the Effective Time, but including all similar assets,
properties and rights that may have been acquired in the ordinary course of business since the date
of such listings and prior to the Effective Time.

     Section 1.3. Consideration for Assets Payable at the Closing. On the terms and
subject to the conditions of this Agreement, Buyer, in consideration for the transfer and delivery
to it of the Assets as herein provided, will, in addition to the assumption of liabilities set
forth in Section 1.4 below, pay to Seller at the Closing the sum of Eight Million and No/100
Dollars ($8,000,000.00) (the “Purchase Price”), in cash, to be delivered by bank wire transfer to
such account as Seller shall designate to Buyer at least one business day prior to the Closing
Date.

     Section 1.4. Assumption of Liabilities. From and after the Effective Time,
Buyer agrees to assume and perform only the following liabilities and obligations (collectively,
the “Assumed Liabilities”):

     (a) The obligations of Seller under and pursuant to the terms and conditions of the Preneed
Agreements, including any contracts associated therewith as well as all Services in Progress, as
defined below, but excluding obligations under any Preneed Agreements not

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disclosed in Schedules 7 and/or 8 to Exhibit A unless such undisclosed Preneed Agreements are
properly funded (by trust funds, insurance or otherwise) to legally required levels which will
become available to Buyer upon Servicing thereof (“Undisclosed Preneed Obligations”); and

     (b) The obligations of the Business under and pursuant to the terms and conditions of those
contracts included in Schedule 5 to Exhibit A to this Agreement.

     The assumption by the Buyer of the Assumed Liabilities shall not enlarge any rights or
remedies of any third parties under any contracts or arrangements with the Seller. Nothing herein
shall prevent the Buyer from contesting in good faith any of the Assumed Liabilities, but such
right to contest shall not affect Buyer’s obligation to indemnify Seller from the Assumed
Liabilities, as set forth herein.

     Section 1.5. Limitations on Assumption. Notwithstanding Section 1.4 above,
the Buyer will not assume and does not agree to pay or discharge any obligations or liabilities of
the Seller not specifically included in the Assumed Liabilities and, in particular, Buyer shall not
assume or agree to pay or discharge any of the following:

     (a) any notes or accounts payable of any kind, regardless of whether entered into in the
ordinary course of the Business;

     (b) any federal, state or local tax of any type, whether arising by reason of the sale of the
Assets (except as otherwise set forth herein) or by operation of the Business prior to the
Effective Time;

     (c) any losses, costs, damages or expense based upon or arising from any claims, litigation,
legal proceedings or other actions against the Seller or the Business, whether asserted or
unasserted, known or unknown, based upon any set of facts occurring prior to the Effective Time,
including but not limited to litigation (if any) disclosed on Exhibit A hereto;

     (d) the liabilities and obligations under any warranties to customers with respect to goods or
products sold or services provided by the Seller or the Business prior to Effective Time;

     (e) all personal injury, product liability claims, claims of environmental damage, claims of
hazards to health, strict liability, toxic torts, enforcement proceedings, cleanup orders and other
similar actions or claims instituted by private parties or governmental agencies, with respect to
the conduct of the Business by and operations of the Seller prior to the Effective Time;

     (f) all wages, salaries, compensation, employment taxes and employee benefit costs arising and
accrued prior to the Effective Time;

     (g) Undisclosed Preneed Obligations; and

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     (h) any other liability or obligation not specifically included within the Assumed
Liabilities.

     Section 1.6. Prorations; Services in Progress; Transaction Taxes.

     (a) At Closing, real and personal property taxes, as well as rents under leases and utility
bills, and payments under the contracts included in Assumed Liabilities, shall be prorated as of
the Effective Time, the Seller being charged and credited for all of same up to such date and Buyer
being charged and credited for all of same on and after such time.

     (b) All revenues from and direct costs for merchandise paid to third parties associated with
Services in Progress will be allocated to the Buyer. For purposes of this Agreement, “Services in
Progress” means any “at need” funeral or cemetery related services (including preneed maturities)
for which a contract has been entered into, but which has not been Serviced, as of the Effective
Time. For purposes of this Agreement, a funeral or cemetery related service is deemed “Serviced”
when the body or remains have been cremated or interred. Seller shall account to Buyer for the
amount of any cash or other payments received by it for Services in Progress. Buyer shall be
responsible for the delivery of any merchandise remaining after Closing to be delivered under
Serviced contracts, whether preneed or at-need, but shall be entitled to all trust withdrawals
associated with that merchandise.

     (c) Seller shall pay all transfer taxes, and Buyer shall pay all sales taxes, deed stamps and
the like, in each case that arise directly as a result of the transactions provided for in this
Agreement.

     Section 1.7. Allocation of Purchase Price. The parties agree that the
Purchase Price shall be allocated among the categories of Assets as set out in Exhibit B to this
Agreement, for all accounting and tax purposes, and that they shall not take any position
inconsistent therewith without the other party’s prior consent.

     Section 1.8. Effective Time. The “Effective Time” of the transfer of the
Assets shall be 12:01 a.m. on the Closing Date.

ARTICLE II

Closing

     Section 2.1. Closing. The closing of the transaction provided for in this
Agreement (the “Closing”) shall take place at the offices of Seller, 1929 Allen Parkway, Houston,
Texas 77019, at 11:00 o’clock a.m. on the later to occur of (i) February 7, 2007, or (ii) the fifth
business day following the later to occur of (x) the date that all Regulatory Approvals are
obtained for Buyer’s acquisition of the Business, as described in Section 6.5, or (y) the date on
which Buyer

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receives from Seller its Seller Joinder and from SCI California the Guaranty, under “Terms of
Contingency” above (the “Closing Date”), or at such other location, time and date as the parties
shall mutually agree, but in no event later than March 15, 2007 (“Outside Closing Date”). In the
event of any postponement thereof, all references in this Agreement to the Closing Date shall be
deemed to refer to the time and to the date to which the Closing Date shall have been so postponed
as herein provided.

     Section 2.2. Instruments of Conveyance and Transfer. At the Closing, Seller
shall deliver to Buyer such warranty deeds, bills of sale, endorsements, lease and other
assignments, motor vehicle registrations, internet domain name transfers, and other good and
sufficient instruments of transfer, conveyance and assignment, in form reasonably satisfactory to
Buyer, as shall be effective to vest in Buyer good and marketable title to the Assets. Seller’s
warranty of title under such deeds shall extend back to the date of acquisition of the Real
Property by Seller and any predecessor-in-interest that is or was affiliated with SCI Parent,
Alderwoods Parent or The Loewen Group, Inc., but not before. Both Seller and Buyer shall execute
and deliver such other documents and pay such expenses as called for by this Agreement or which are
usual and customary and which are necessary to close the transaction provided for herein. Seller
shall take all such steps as may be reasonably required to put Buyer in actual possession and
control of the Assets and the Business as of the Closing.

ARTICLE III

Representations and Warranties by Seller

     Seller hereby represents and warrants to Buyer as follows:

     Section 3.1.  Organization; Standing; Authorization; Capacity.

     (a) Seller is a corporation duly organized, validly existing and in good standing under the
laws of the State of California, with all requisite corporate power and authority to own and to
conduct the Business as it is now being conducted. By the 15th day after the later of
(i) the date of this Agreement or (ii) the Alderwoods Merger Closing Date (the “Approval Date”),
the execution, delivery and performance of this Agreement by Seller shall have been duly and
effectively authorized by the board of directors of Seller, and no further action or other
authorization or consent is required. Seller shall take all commercially reasonable actions
necessary to obtain such board authorization by the Approval Date, and shall provide written
evidence thereof to Buyer by the Approval Date. This Agreement has been duly executed and
delivered by Seller, and subject to the contemplated board authorization referenced above,

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constitutes the valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms.

     (b) Neither the execution or delivery of this Agreement by Seller nor consummation of the
transactions contemplated hereby will result in a breach, violation or default by Seller of or
under any judgment, decree, mortgage, agreement, indenture or other instrument or agreement, rule,
regulation or statute applicable to Seller or to which Seller is a party or by which Seller, the
Business or any of the Assets are bound.

     Section 3.2. Financial Information. The income and expense statements for
each business location comprising the Business for the twelve months ended December 31, 2003, 2004
and 2005, and for the six months ended June 30, 2006, as well as the reports of cemetery acreage,
space sales (units) and property inventory at the Business, copies of all of which are provided
hereto as a part of Exhibit C, fairly present and accurately reflect in all material respects the
results of operations of each such location for the periods then ended and the acreage, units and
inventory of the Business as of the dates shown on such reports. However, such income and expense
statements historically have been prepared for in house use only, and not for publication, and do
not include inter-company items, adjustments and other items required in statements prepared in
accordance with generally accepted accounting principles. Expenses for merchandise and other items
reflected in the income and expense statements may be less than those available to Buyer for the
same items. Except to the extent disclosed in this Agreement and such financial statements, there
is no liability or obligation (whether accrued, absolute, contingent or otherwise) which is or
might become an obligation of or Lien against any Business or any of the Assets.

     Section 3.3. Tax Matters.

     (a) Seller has (separately, or as a part of a consolidated group) filed all federal, state and
local income, sales, ad valorem, intangible, franchise tax and employee benefit plan
returns/reports which are required to be filed by it with respect to the Business as of the
Effective Time, and has reported all taxable income and loss, and paid all taxes required to be
paid or taxes due pursuant to any assessment received by Seller, including both penalties and
interest.

     (b) Seller has properly withheld from employees’ compensation all taxes required to be
withheld by it and has timely remitted all such withholdings to the proper taxing authorities.

     (c) All amounts received by Seller on sales by the Business which are required under
applicable state law to be trusted have been deposited in trust, and all federal, state and local

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income tax returns and information returns required to be filed concerning such trusts and the
income from such trusts have been filed.

     Section 3.4. Rights of Third Parties. Other than as disclosed in Schedule 5
to Exhibit A to this Agreement or included within the Permitted Encumbrances (as provided for in
Section 7.2 of this Agreement), no third party has any lease, license, easement, or agreement or
other right, recorded or unrecorded, arising by law or otherwise, giving such third party any right
or interest to use, occupy or possess any real or personal property of Seller included in the
Assets.

     Section 3.5. Title to Assets. Seller has good and marketable title to all of
the Assets, subject to no Lien, except for Permitted Encumbrances. All assets, rights and
properties presently used in the conduct of the Business are owned or validly leased by Seller and
are included within the Assets (except for the Excluded Assets described in Section 1.2). The
Seller is in actual possession and control of all properties owned or leased by it which are
presently used in the conduct of the Business.

     Section 3.6. Description of Properties, Contracts and Personnel Data. On or
before the third business day preceding the Closing Date, the following Schedules to Exhibit A to
this Agreement shall be delivered by Seller to Buyer on a compact disk, which delivery shall
constitute Seller’s certification that such Schedules, which shall thereupon be incorporated herein
by reference, conform to the requirements of this Agreement. Each such Schedule shall set forth
true and complete information as to the matters described below, all as of the date of such
delivery, unless otherwise indicated thereon (but in no event shall any information be as of a date
more than sixty (60) days prior to the Closing Date). Items appropriately disclosed on one
Schedule (or Exhibit) need not also be disclosed on any other Schedule (or Exhibit), provided,
however, that the relevance or applicability of disclosure as to each other Schedule is reasonably
apparent; and by way of example, any reference to “lease” in regard to vehicles on Schedule 3 to
Exhibit A shall not mean that Buyer is thereby assuming or taking subject to any such lease
obligations.

     (a) Real Property – Schedule 1 to Exhibit A. A legal description of all real property
included in the Assets and a copy of each real property lease included in the Assets.

     (b) Equipment, Machinery, Furniture, Etc. – Schedule 2 to Exhibit A. A list of all
major items of equipment, machinery, furniture and fixtures, whether owned or leased, included in
the Assets.

     (c) Automobile Equipment – Schedule 3 to Exhibit A. A list of all automobiles,
trucks, and other vehicles included in the Assets.

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     (d) Merchandise Inventory – Schedule 4 to Exhibit A. A description of the merchandise
inventory included in the Assets.

     (e) Contracts – Schedule 5 to Exhibit A. A list of all contracts, agreements and
commitments of Seller or the Business included in the Assets, including without limitation lease
agreements covering items described in these Schedules and all outstanding no-compete, employment,
consulting, confidentiality and other similar agreements with current and former employees,
consultants and owners, as well as the Business’s cemetery rules and regulations (if not otherwise
obtained by [as confirmed by Buyer in writing] or delivered by Seller to Buyer prior to Closing),
all as amended and then in effect, which list includes copies of all such documents. Contracts for
interment rights and funeral and/or cemetery merchandise or services will not be included in this
Schedule.

     (f) Personnel – Schedule 6 to Exhibit A. A list of the names, position, date of hire
and current annual salary or hourly salary rate for each employee of the Business.

     (g) Preneed Insurance Policies – Schedule 7 to Exhibit A. A list of all insurance
policies used to fund Preneed Agreements, including (where available) policy number, insured and
owner names, issue date, face amount of insurance, and other data normally included in Seller’s
internal records in a compilation of insurance policies.

     (h) Preneed Trust Funds – Schedule 8 to Exhibit A. A list of all uninsured Preneed
Agreements included in the Assets, including contract number and/or customer name, sale date,
contract price and other data normally included in Seller’s internal records in a compilation of
Preneed Agreements. Also, the trust liability (or similar) report for each trust account relating
to the Business, indicating the location of each and the amount held in trust, with detail (where
available) of principal, income or earnings, withdrawals and outstanding balance, and whether or
not included in a commingled trust; copies of the trust agreements, as amended and currently in
effect (for only those trusts which will be continued, and not replaced or substituted for, by
Buyer); and copies of the most recent date available bank statements or other periodic report of
the Trustee for each trust, and the audit or other reports furnished to or prepared by the state
regulatory agency which oversees such trusts.

     (i) Accounts Receivable – Schedule 9 to Exhibit A. A list of all accounts and notes
receivable included in the Assets.

     Section 3.7. Litigation. Except as disclosed to the Buyer in Schedule 10 to
Exhibit A (if any exists) and except for any Decision and Order issued by the Federal Trade
Commission (“FTC”) in connection with the Alderwoods Transaction (“Decision and Order”), there are
no

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claims, actions, suits, proceedings or investigations pending or, to the knowledge of the
Seller, threatened against or affecting the Seller (with respect to the operation of the Business)
or any of the Assets, at law or in equity or before or by any court, governmental body or
arbitration panel, except for any such claim, action, suit, proceeding or investigation which would
not, individually or in the aggregate, have an adverse effect on the business, operations or (in
Seller’s reasonable judgment) prospects of the Business (taken as a whole) or any substantial
portion of the Assets, or which would prevent the carrying out of this Agreement, declare unlawful
the transactions contemplated by this Agreement, cause such transactions to be rescinded, or
require Buyer to divest itself of the Assets or the Business.

     Section 3.8. Court Orders and Decrees. Except as disclosed to the Buyer in
Schedule 10 to Exhibit A and except for any Decision and Order, there is not outstanding or, to the
knowledge of Seller, threatened any order, writ, injunction or decree of any court, governmental
agency or arbitration tribunal against or affecting Seller, relating to the Assets or the Business.

     Section 3.9. Trade Names. Seller has the legal right and title to use the
Trade Names in all trade areas in which the Business conducts business. To Seller’s knowledge,
neither the Trade Names (as they are used in the trade areas in which the Business conducts
business) nor any other intellectual property included in the Assets infringes upon the
intellectual property rights of any other person, and no other person is infringing upon the Trade
Names (as they are used in the trade areas in which the Business conducts business) or other
intellectual property rights included in the Assets.

     Section 3.10. Contracts and Leases. All contracts, agreements, leases and
commitments included in the Assets are in good standing and in full force and effect, valid and
enforceable in accordance with their respective terms, and neither the Seller, nor, to the
knowledge of the Seller, any of the other parties thereto (but specifically excluding
customer/purchaser obligations under Preneed Agreements), are in default thereunder or breach
thereof.

     Section 3.11. Preneed and Trust Accounts. All funds received by the Business
under or in connection with Preneed Agreements, as well as all funds designated for endowment or
perpetual care, have been deposited on a timely basis in appropriate accounts and/or insurance
contracts to the extent required by applicable laws and regulations and have been administered and
reported in accordance with the terms of agreements with the purchasers, under applicable trust
agreements, and as required by applicable laws and regulations. All Preneed Agreements and
endowment or perpetual care obligations are funded by trust or insurance products; no preneed
liability is covered by bond, letter of credit or other similar credit support.

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     Section 3.12. Licenses and Continuation of the Business. Seller and all
personnel at the Business who are engaged in licensed activity are in possession of all licenses,
permits, certificates of occupancy and authorizations which under all applicable laws, regulations,
rules and ordinances are necessary to enable Seller to own and operate the Business as the same is
now being conducted, and all of the same are in full force and effect.

     Section 3.13. Compliance with Laws. The Business is currently being (and
until the Closing will be) operated in compliance with all federal, state, municipal and other
statutes, rules, ordinances and regulations applicable to the Business and the Assets, except for
any such noncompliance which would not, individually or in the aggregate, have a material adverse
effect on the condition, business, operations or (in Seller’s reasonable judgment) prospects of the
Business or any substantial portion of the Assets.

     Section 3.14. Environmental Matters. The Business is presently being operated
in compliance in all material respects with all applicable federal, state, and local environmental
statutes and regulations, and to Seller’s knowledge, there is no existing regulatory requirement
with a future compliance date that will require material operational changes or material capital
expenditures at the facilities of the Business. Since the date that the Business was acquired by
Seller or its predecessor affiliated with SCI Parent or Alderwoods Parent (the “Acquisition Date”),
no “hazardous substance,” as that term is defined in the federal Comprehensive Environmental
Response, Compensation and Liability Act, no petroleum or petroleum products and no “solid waste,”
as that term is defined in the Federal Resource Conservation and Recovery Act, has been leaked,
spilled, deposited or otherwise released, on the Real Property. Any such substances that have been
generated or used on or about the Real Property since the Acquisition Date have been used, managed
and disposed of in accordance with all environmental laws.

     Section 3.15. Accounts Receivable. At Closing the accounts receivable to be
included within the Assets will be valid and legally enforceable obligations of the account parties
whose names are listed in the books and records of the Business, legally (but not necessarily
financially) collectible in accordance with their terms, subject to bankruptcy, insolvency,
moratorium, or other similar laws affecting creditors’ rights generally.

     Section 3.16. Absence of Changes or Events. Since June 30, 2006, the Business
has been operated in the ordinary course and, without limiting the generality of the foregoing,
there has not been:

     (a) any material adverse change in the condition, operations, properties or (in Seller’s
reasonable judgment) prospects of the Business, taken as a whole;

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     (b) any material damage, destruction or losses against the Business or any waiver of any
rights of material value to the Business, taken as a whole;

     (c) any claim or liability for any material damages for any actual or alleged negligence or
other tort or breach of contract against or affecting the Business; or

     (d) any transaction or event entered into or affecting the Business other than in the ordinary
course of the business.

     Section 3.17. Full Disclosure. The representations and warranties made by the
Seller hereunder or in any Schedules or certificates furnished to the Buyer pursuant hereto, do not
and will not contain any untrue statement of a material fact.

     Section 3.18. Transfer of Assets. On the Closing Date, Seller will convey to
Buyer all of the assets that Seller is required to transfer to Buyer pursuant to any Decision and
Order, and Seller shall have obtained all approvals and consents necessary to make such transfer.

     Section 3.19. No Other Representations or Warranties. Except as expressly
stated in this Agreement, Seller makes no other representation or warranty of any kind whatsoever.

ARTICLE IV

Representations and Warranties of Buyer

     Buyer hereby represents and warrants to Seller as follows:

     Section 4.1.  Authority.

     (a) Buyer is a corporation duly organized, validly existing and in good standing under the
laws of the State of Texas, duly qualified to transact business as a foreign corporation within the
State of California, and with all requisite corporate power and authority to own and conduct the
Business as it is now being conducted. By the Approval Date, the execution, delivery and
performance of this Agreement by Buyer shall have been duly authorized and consented to by the
board of directors of Buyer and no other or additional consent or authorization is required by law.
Buyer shall take all commercially reasonable actions necessary to obtain such board authorization
by the Approval Date, and shall provide written evidence thereof to Seller by the Approval Date.
The Closing of the transaction contemplated by this Agreement will not result in a breach,
violation or default by Buyer of or under any judgment, decree, mortgage, agreement, indenture or
other instrument applicable to Buyer.

     (b) This Agreement has been duly executed and delivered by Buyer, and subject to the
contemplated board authorization referenced above, constitutes the valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.

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     Section 4.2. Adequacy. Buyer acknowledges that the Assets and the
intellectual property to be transferred pursuant to this Agreement will enable Buyer to operate the
Business and that no other assets are needed from Seller to do so.

     Section 4.3. No Other Representations or Warranties. Except as expressly
stated in this Agreement, Buyer makes no other representation or warranty of any kind whatsoever.

ARTICLE V

Covenants

     Section 5.1. Buyer’s Access to Website. Prior to the Closing, Seller shall
electronically post online all, or nearly all, of the contents of Exhibit A and Exhibit C to this
Agreement at https://dre103606.bmcgroup.com/Login.aspx?
ReturnUrl=%2fDefault.aspx (the “Website”)
in order to permit Buyer to timely conduct its due diligence of the Business. Seller will
periodically update such Exhibits and Schedules to this Agreement as updated information is
available and will post all of such Exhibits and Schedules and updates thereto on the Website. The
final versions of such Exhibits and Schedules, as they exist on the Closing Date, will be delivered
by Seller to Buyer at least three business days prior to Closing as contemplated in Section 3.6
above, and the same shall supersede any disclosures made on the Website.

     Section 5.2. Access to Business. From and after the date of this Agreement,
Seller will give Buyer and its representatives full and free access to all on-site properties,
books and records of the Business and to its personnel, so that Buyer may have full opportunity to
make such investigation as it shall desire to make of the affairs of the Business and the Assets,
provided that such investigation shall not unreasonably interfere with the operations of the
Business. Such access shall include the opportunity to interview employees of the Business and to
inspect the personnel files and other documentation relating to any such employee, to the extent
permissible under applicable laws.

     Section 5.3. Conduct of Business Pending Closing. From and after the date of
this Agreement and pending the Closing and except as otherwise permitted by this Agreement or as
consented to by Buyer in writing, Seller covenants that:

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

     (b) Seller shall preserve its business organization intact and use commercially reasonable
efforts to maintain for the Business the goodwill of suppliers, customers and others having
business relations with the Business; and

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     (c) Seller shall not (i) commit any act or permit the occurrence of any event or the existence
of any condition of the type described in Section 3.16; (ii) alter, amend, cancel or modify in any
respect any of the contracts, leases and commitments included in the Assets, or the standard form
of, and terms and conditions applicable to, Preneed Agreements; (iii) sell or otherwise dispose of
any of the assets required to be described on Schedule 2 or 3 of Exhibit A; (iv) hire, fire,
reassign or make any other change in key personnel of the Business; or (v) take any other action
which would cause any of the representations and warranties by the Seller in this Agreement 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 such representations and warranties had been made on the Closing Date.

     Section 5.4. Reasonable Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use reasonable efforts, to take, or cause to be
taken, all reasonable actions, and to do, or cause to be done, all things necessary and appropriate
to satisfy all conditions of and to consummate the transaction contemplated by this Agreement,
including cooperating with the other parties to this Agreement and obtaining any necessary third
party and governmental consents and approvals.

     Section 5.5. Further Assurances. From time to time after the Closing, at the
request of Buyer, and without further consideration, but at no out-of-pocket cost to Seller, Seller
will execute and deliver such additional instruments and will take such other actions as Buyer
reasonably may require to convey, assign, transfer and deliver the Assets and the Business and
otherwise carry out the terms of this Agreement.

     Section 5.6. Buyer’s Trustee and Preneed Trust Funds. Prior to Closing, Buyer
shall secure all licenses, permits and other governmental authorizations and approvals required by
the State of California as a prerequisite to Buyer selling Preneed Agreements or accepting funds
paid by customers toward Preneed Agreements with the Business. Buyer shall, prior to Closing,
select and designate a trustee or trustees (“Buyer’s Trustee”) that is qualified under state law to
receive all bank, trust or other funds or accounts, excluding insurance premium payments,
containing amounts that have been received by the Seller pursuant to preneed agreements for funeral
or cemetery merchandise and/or services (“Preneed Trust Funds”) or which are being held as
endowment care trust funds (“Endowment Care Funds”). As soon as practicable after the Closing, all
Preneed Trust Funds and Endowment Care Funds shall be transferred for safekeeping to Buyer’s
Trustee, and Buyer agrees that it shall be Buyer’s responsibility to ensure that all such funds
will be held, administered and withdrawn only in accordance with state and

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federal law. All Preneed Trust Funds and Endowment Care Funds shall be transferred to Buyer’s
Trustee in cash, and to the extent that the same are currently held or invested other than in cash,
it shall be Seller’s responsibility to issue such instructions and take such other action so that
the same is reduced to cash by the time required for transfer as provided above. The parties
further agree that after the Closing and prior to the transfer to Buyer’s Trustee of the Preneed
Trust Funds and the Endowment Care Funds, Seller and Seller’s trustee shall have the right to
continue to administer all such Funds including making deposits and withdrawals and to receive all
reports and communications from Seller’s trustee all as if the sale provided for in this Agreement
had not closed. Should Buyer fail to designate a qualified Trustee or to otherwise accept the
transfer of the Preneed Trust Funds within the later of six (6) months from and after the Closing
Date or thirty (30) days after Seller has provided Buyer notice that Seller is prepared to transfer
the Preneed Trust Funds (“Notice Period”), Seller may continue to administer the Preneed Trust
Funds and Buyer shall pay to Seller $150.00 as an administration fee for each day that Seller
continues to administer the Preneed Trust Funds after the Notice Period. Should Buyer designate a
qualified Trustee which is prepared to accept such transfer within six (6) months following
Closing, and if Seller has not caused the Preneed Trust Funds or Endowment Care Funds to be
transferred prior to expiration of such six (6) month period, Seller shall pay to Buyer a fee of
$150.00 for each day after expiration of such six (6) month period until transfer has occurred.

     Section 5.7. Post Closing Trust Fund Distributions. The parties agree that if
as of the Closing Date, Seller has earned or is entitled to receive funds from either the Preneed
Trust Funds or the Endowment Care Funds being transferred to Buyer’s Trustee pursuant to Section
5.6 above which have not been paid to Seller as of the Closing Date, the parties will work together
to obtain for Seller all such funds, allowing Seller reasonable access to the books and records of
the Business and the preparation and execution by Buyer of any forms, reports or similar
documentation necessary or appropriate for such purpose. Likewise, if as of the Closing Date, the
Preneed Trust Funds or Endowment Care Funds are not funded as required by law or additional amounts
are legally required to be funded in connection with the liquidation of non-cash holdings as
described in Section 5.6, it shall be Seller’s responsibility to fund such additional amounts.

     Section 5.8. Transfer of Data and Systems; Post Closing Access. Upon or
within 90 days following Closing, Seller shall be entitled to obtain and/or retain any financial or
other non-customer information pertaining to the Business as Seller shall desire, provided that
Seller shall not disclose any such information or use it in competition against the Business. At
the Closing,

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the parties shall arrange for and coordinate the transfer of all customer data and information
related to the Business from Seller’s systems (whether located at the Business, at Seller’s
corporate office, or elsewhere) to Buyer’s systems, in a form of electronic media, either on HMIS
or converted into such other format as shall be reasonably acceptable to the Buyer, but without
cost to the Seller. In addition, for such 90 day period, Buyer shall provide and allow Seller
reasonable access to the facilities in which the Business is conducted and the Real Property as
reasonably necessary to collect and remove any other Excluded Assets. Any such access shall be
conducted under the supervision of a Buyer representative.

     Section 5.9. Post Closing Transfers. Immediately after the Closing, Buyer
shall cause financial responsibility for all utilities, internet services, facsimile numbers,
cellular telephone numbers, standard telephone numbers and listings, and any other third party
services (“Third Party Services”) used in the Business to be transferred to the Buyer. Should
financial responsibility for Third Party Services fail to be transferred within thirty (30) days
after the Closing Date, Seller may terminate those Third Party Services without liability of any
kind to Buyer.

     Section 5.10. Accounts Receivable. The parties anticipate that subsequent to
the Closing, Buyer may receive payments of accounts and notes receivable that are not included in
the Assets pursuant to Section 1.2(b). Buyer shall notify Seller upon receipt of any such
payments, and Seller shall notify Buyer in case Seller receives any payments on notes or accounts
receivable that are included in the Assets or other payments that are for Buyer’s account, and the
parties shall establish a procedure for the delivery of all such payments to proper party. Each
party will account to the other party as to any such collections received by it.

     Section 5.11. Customer Records; Trade Names. Seller represents that as of
Closing it has not provided to any other person any customer information included in the books and
records sold to Buyer hereunder, and it shall not use any information used or obtained by it prior
to Closing for the purpose of soliciting any customers of the Business. Following the Closing, for
so long as Buyer and its successors and assigns is using the Trade Names in whole or in part in the
Business, Seller shall not cause or permit it or its affiliates to use or advertise any Trade Name
(or any other names or logos deceptively similar thereto) in any trade areas in which the Business
is currently doing business.

     Section 5.12. Employment Matters. On the Closing Date, the Buyer may (but
shall not be required to) offer employment to each employee of the Business. The employees so
offered employment who accept shall, as of the Effective Time, cease to be employees of the Seller
and

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thereupon become employees of the Buyer. Seller shall be responsible for satisfying all
claims, if any, of such employees as to accrued vacation, health benefits, workers compensation
claims, termination and severance benefits, withdrawal liability and vested rights under any
pension, profit sharing or other employee benefit plans of Seller or its affiliate, all arising and
accrued prior to and through the day immediately preceding the Effective Time, and in no event
shall the Buyer have any liability or responsibility in respect thereof.

     Section 5.13. Certain Transitional Matters. Following the Closing, Seller
shall make available the reasonable use of its staff and employees who are familiar with the
Business to answer questions and provide information to enable Buyer to integrate the operations,
facilities and personnel included with the Business with the other funeral and cemetery operations
of Buyer and its affiliates. In addition, Buyer may have, for a period of up to 45 days following
the Closing, the use of the Seller’s standard preneed contract forms currently in effect and being
used in the Business (“Preneed Contract Forms”), until such time (within such 45-day period) as
Buyer obtains applicable regulatory approval for the use of Buyer’s own preneed contract forms, as
well as the use of the Seller’s sales presentation materials currently in effect and being used in
the Business (“Sales Presentation Materials”), until such time (within such 45-day period) as Buyer
trains the sales counselors at the Business in the use of Buyer’s own sales presentation materials.
The consent to the limited-term use of the Preneed Contract Forms and Sales Presentation Materials
(collectively, “Seller Materials”) constitutes a non-transferable license only and does not
constitute any conveyance of any proprietary interest therein to Buyer. Any proprietary rights in
the Seller Materials do not constitute a portion of the “Assets” within the meaning hereof. Buyer
will continue to have the right to retain copies of all preneed contracts entered into before the
Closing and during the 45-day period referred to above. The Seller Materials may be used only for
the limited purposes described herein and only at the Business. Buyer shall clearly delete all
references to Seller in connection with their usage of the Seller Materials, including (without
limitation) its corporate or other proprietary names and logos. Seller makes no representation or
warranty regarding the sufficiency or legality of or otherwise regarding Buyer’s use of the Seller
Materials. The foregoing reservation does not, however, affect the representations of Seller
contained herein with respect to any Seller Materials used prior to the Closing.

     Section 5.14. Due Diligence Review. The parties acknowledge that Buyer shall
not have had the full opportunity to complete its due diligence review of the Business and the
Assets by the time this Agreement has been executed and delivered. Buyer’s determination of the

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Purchase Price hereunder is based upon the accuracy of the representations and warranties
contained herein as well as the absence of any fact, event or change in the Assets, operations,
financial condition or prospects of the Business which, in the course of Buyer’s due diligence
review, could have a material adverse effect on the value thereof to the Buyer. Buyer’s due
diligence review specifically includes, but is not limited to, the state of the relationship
between the Business and its employees, client families and former owners and the extent to which
Buyer is able to obtain at or prior to Closing satisfactory arrangements with key employees and
former owners regarding the continuation of their relationships (if any) with the Business. If,
prior to Closing, Buyer determines from its due diligence review that any such fact, event or
change has come to its attention, it will bring the same to Seller’s attention. In such event, or
if Seller updates the Schedules pursuant to Section 3.6, then the parties will negotiate in good
faith concerning any proposed adjustment to the Purchase Price or the other terms and conditions
set forth herein. If the parties have not reached agreement as to the foregoing within ten
business days thereafter (but in no event past the Outside Closing Date), then Buyer may terminate
this Agreement upon written notice to Seller, but unless Buyer otherwise has a right to terminate
under Section 9.1(c)(ii) through (vii) below, it shall nevertheless be required to thereupon pay
the Break-Up Fee contemplated in Section 9.1(d) below. Buyer shall be deemed to have waived this
Section 5.14 if it elects to close the transactions hereunder without Seller’s agreement to any
such adjustment.

     Section 5.15. No Shop. For so long as this Agreement remains in effect,
Seller shall not enter into any agreements or commitments, or further 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 the possible sale or other
disposition of all or any substantial portion of the assets and business of the Business, other
than with the Buyer.

     Section 5.16. No Solicitation.

     (a) For a period of two (2) years after the Closing Date, neither the Seller nor any of its
affiliates shall solicit to employ any individual who is, as of the date of this Agreement, an
employee of the Business, unless such employee is not hired by Buyer upon Closing or such
employee’s employment is terminated by Buyer after the Closing; provided, however, that nothing in
this Section 5.16(a) shall prohibit the Seller or its affiliates from (i) publishing a general
solicitation of employment in any newspaper, magazine, trade publication or other media not
targeted specifically at employees of the Business, or (ii) hiring an employee of the Business

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who applies for employment with Seller, so long as such employee was not solicited by Seller,
or its affiliates, in violation of this Section.

     (b) For a period of one year after the Closing Date, neither the Buyer nor any of its
affiliates shall solicit to employ any individual who is, as of the date of this Agreement, an
employee of the Seller or any of its affiliates at any location(s) within a fifty (50) mile radius
of the location of the Business, other than employees whose work primarily relates to the Business,
unless such employee’s employment is terminated by the Seller; provided, however, that nothing in
this Section 5.16(b) shall prohibit the Buyer or its affiliates from (i) publishing a general
solicitation of employment in any newspaper, magazine, trade publication or other media not
targeted specifically at Seller’s employees, or (ii) hiring an employee of Seller or one of its
affiliates who applies for employment with Buyer, so long as such employee was not solicited by
Buyer in violation of this Section.

     (c) Both Buyer and Seller agree that upon the breach or threatened breach of the provisions of
this Section, the remedies at law of the party threatened or subjected to such breach will be
inadequate, and that the party threatened by or subjected to such breach shall be entitled to an
injunction or injunctions to prevent such breaches and to enforce specifically the provisions
hereof, in addition to any other remedy to which that party may be entitled at law or equity.

     Section 5.17. New Funeral Home Construction. Seller is in the process of
constructing a new funeral home (“New Home”) on the Real Property. Seller has advised Buyer that
Seller expects that construction of the New Home will be completed on or before December 31, 2006.
Upon execution of this Agreement, to the extent not already included in the Schedules to this
Agreement, Seller shall provide to Buyer copies of all construction contracts, plans,
specifications and other materials and documents associated with construction of the New Home
(“Construction Documents”). Notwithstanding the timing of the Closing hereunder, Seller shall
remain responsible for completion of construction of the New Home in accordance with the applicable
Construction Documents, and shall use such diligence as it would have were it retaining ownership
of the Business to cause all architects, contractors, design firms, project managers and other
third parties under privity to Seller with respect to the construction of the New Home to complete
their work in a timely and proper fashion. Buyer shall allow representatives of Seller such
reasonable access to the Real Property as may be reasonably necessary for Seller to exercise its
responsibilities under this Section. Following completion of construction of the New Home, Seller
shall transfer to and allow assumption by Buyer of all applicable Construction Documents, including
any warranties given thereunder. Seller shall

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cause and direct all architects, contractors, design firms, project managers and other third
parties in privity to Seller with respect to the construction of the New Home to look solely to
Seller for all fees, costs, reimbursements and other amounts payable in connection with the
construction project (all of which Seller agrees to pay, and against which to indemnify Buyer,
including any mechanics and materialmen’s liens arising therefrom) . Seller represents that there
has not been since June 30, 2006, and covenants and agrees that there shall not be between the date
hereof and the date that construction is complete, any material changes or alterations to the
Construction Documents, or otherwise to the plans for and/or the construction of the New Home. For
purposes hereof, construction of the New Home shall not be considered complete until all of the
following shall have occurred: (i) a final Certificate of Occupancy has been issued by the
building department or equivalent arm of the local or municipal governmental agency having
jurisdiction over the New Home; (ii) all work to be performed pursuant to the Construction
Documents has been completed to the extent that Buyer may use and occupy the New Home in the normal
conduct of the Business, specifically including (but not limited to) the finishing of all
structural elements, walls, ceilings, flooring, ventilation, heating, air cooling, water, plumbing,
lighting and electric power facilities; (iii) the New Home shall have been rendered in new and
unblemished condition, except for those minor items constituting punch list items to be submitted
to contractors which do not materially interfere with Buyer’s normal use and occupancy of the New
Home or necessary access to facilities, such punch list to specify the anticipated completion date
of each item shown thereon; and (iv) there shall have been installed in the New Home all furniture,
fixtures and other furnishings required for the normal use and occupancy of the New Home for its
intended purpose and as originally planned for the New Home.

     Section 5.18. Restrictive Covenants. Seller acknowledges that Buyer would not
be willing to acquire the Assets hereunder without assurances that the Business will be protected
from unfair competition. For this reason, Seller has agreed, for itself and on behalf of SCI
Parent, Alderwoods Parent and their respective affiliates (collectively, “SCI Entities”), that:

     (a) No SCI Entity shall, directly or indirectly, for itself or as agent on behalf of any other
person, for a period commencing on the Closing Date and ending five years thereafter (as extended
for the period in which any SCI is in material violation of this covenant), anywhere within the
Restricted Market Area (as defined below), open, construct, acquire, operate, manage, consult with
or be involved in the management of any Death Care Business (as defined below).

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     (b) For purposes of the foregoing, the “Restricted Market Area” means a five-mile radius
surrounding the Business. The foregoing reference to “Restricted Market Area” is not, however,
intended to restrict or qualify any other reference to “market area” in this Agreement.

     (c) A “Death Care Business” includes a funeral home, mortuary, cemetery, crematory,
columbarium, mausoleum or other similar business engaged in the handling and final disposition of
human remains.

     (d) 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.

     (e) Buyer shall be entitled to specific performance hereof or injunctive relief or both, by
temporary or permanent injunction or such other appropriate judicial remedy, writ or order as may
be entered into by a court of competent jurisdiction, in case of any actual or threatened breach of
the foregoing covenants, in addition to any damages that the Buyer may be legally entitled to
recover.

     Section 5.19. Regulatory Cooperation. Each of the parties shall assist and
cooperate with one another to effect promptly the transactions contemplated by this Agreement.
Buyer shall as promptly as practicable use its commercially reasonable efforts to (i) prepare and
furnish all necessary applications, information and documentation (including furnishing all
information requested by the FTC), and take all other actions that may be necessary to demonstrate
to the FTC that Buyer is an acceptable purchaser of the Assets, and that Buyer will effectively
compete using the Assets; and (ii) obtain FTC approval of Buyer as an acceptable purchaser of the
Assets and assist in causing the FTC Decision and Order issued in connection with the Alderwoods
Transaction to become final without modification. Without limiting the generality of the
foregoing, Buyer shall do whatever is reasonably necessary, proper or advisable to assist and
cooperate with Seller in obtaining necessary consents, approvals or orders necessary to consummate
the transactions contemplated by this Agreement. Subject to such cooperation by Buyer, Seller
agrees to file its petition with the FTC for approval of the transactions hereunder by no later
than December 22, 2006.

     Section 5.20. Decision and Order. Seller hereby grants to Buyer any of the
rights that it is required to grant to Buyer pursuant to any Decision and Order. Seller agrees to
keep Buyer reasonably informed as to the progress of its negotiations concerning the Decision and
Order,

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and to promptly advise Buyer of any material developments, insofar as the same involves the
Business, the Assets or Buyer, and to promptly provide a copy thereof to Buyer once signed.

     Section 5.21. Unique Preneed Merchandise. If any Preneed Agreements call for
the delivery of products not available to Buyer because of exclusivity arrangements with Seller or
its affiliates, Seller will make arrangements with Buyer to enable Buyer to purchase that
merchandise, either from Seller or directly from Seller’s vendor, to enable Buyer to fulfill those
Preneed Agreements, at prevailing commercial prices and terms.

ARTICLE VI

Conditions to Respective Obligations of Buyer and Seller

     The respective obligations of each of Buyer and Seller under this Agreement are subject to the
conditions that:

     Section 6.1. Representations and Warranties True When Made and At Closing.
All of the representations and warranties of the other party shall be true and correct in all
material respects on and as of the date of this Agreement and the Closing Date (unless made as of
another designated date).

     Section 6.2. Performance of Obligations. The obligations of the other party
hereto shall have been discharged in all material respects prior to or on the Closing Date.

     Section 6.3. Closing Certificates. Each party hereby agrees that it shall
deliver to the other party a written instrument signed by an officer of the other party certifying
that the conditions specified in Sections 6.1 and 6.2, as to such party, have been satisfied, and
delivery of such certificate by each party shall be a condition to other party’s obligations
hereunder.

     Section 6.4. Board Approvals.

     (a) The transactions contemplated by this Agreement shall have been approved by the Board of
Directors of Seller.

     (b) The transaction contemplated by this Agreement shall have been approved by the Board of
Directors of the Buyer.

     Section 6.5. Third Party Consents and Governmental Approvals. Each party
shall have received such evidence as it shall have determined is reasonably necessary or
appropriate to the effect that all consents, approvals and authorizations have been obtained in
order to consummate the transactions described herein, including without limitation the consent of
any landlords, lessors or other parties to contracts and commitments included in the Assets, and of
all governmental authorities having jurisdiction, including but not limited to, the approval of the

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FTC, pursuant to any Decision and Order and/or any other decree or order it may issue
specifically with regard to the transaction contemplated hereby (collectively, the “Regulatory
Approvals”), to the extent required at or prior to Closing. The parties shall use commercially
reasonable efforts to timely obtain all such consents, approvals and authorizations. For purposes
hereof, the FTC Decision and Order and/or any other decree or order which may be issued by the FTC
regarding the transaction hereunder specifically shall not be deemed to have been “obtained” until
after it has become final, including expiration of any applicable comment periods.

ARTICLE VII

Additional Conditions Precedent to Obligations of Buyer

     All obligations of Buyer which are to be discharged under this Agreement at the Closing are
subject to the performance at or prior to the Closing of all agreements contained herein which are
to be performed by Seller at or prior to the Closing, and to the following additional conditions
(unless expressly waived in writing by Buyer at any time prior to the Closing).

     Section 7.1. No Material Adverse Change. There shall not have occurred any
material damage to or destruction of any of the buildings and improvements at the Business, nor any
other event or occurrence that individually or in the aggregate could reasonably be expected to
have a material adverse effect on the condition, business, operations or (in Buyer’s reasonable
judgment) prospects of the Business or any substantial portion of the Assets, or which would
prevent the carrying out of this Agreement.

     Section 7.2. Title to Real Estate. Seller shall obtain and provide to Buyer,
one-half at Buyer’s expense and one-half at Seller’s expense, a commitment for title insurance
(collectively, “Title Commitments”) in the amount allocated to Real Property as shown on Exhibit B,
from Commerce Title Company, or another title company acceptable to Buyer (the “Title Company”),
showing title to each parcel of owned Real Property to be good, marketable and vested in Seller,
and describing all Liens (including easements, rights-of-way, reservations, restrictions,
outstanding mineral interests and other matters affecting the Real Property or the title thereto).
Buyer may further obtain, at its own expense and if it so chooses, an ALTA survey (collectively
“Survey”) prepared by a licensed surveyor approved by Buyer and acceptable to the Title Company,
with respect to each parcel of Real Property, which shall be sufficient for the Title Company to
delete the survey exception contained in the Title Commitments, save and except for the phrase
“shortages in area,” and otherwise be in form and content reasonably acceptable to

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Buyer. Buyer shall have ten (10) business days from receipt of the Title Commitments and
Surveys within which to notify Seller and the Title Company in writing of its objections to the
matters affecting the Real Property and the title thereto reflected in the Title Commitments
(“Title Objections”), other than as to Permitted Encumbrances. “Permitted Encumbrances” shall mean
(i) encroachments, protrusions, boundary line discrepancies, easements, covenants, rights-of-way
and other encumbrances or restrictions which do not, individually or in the aggregate, materially
restrict or interfere with the use of the Real Property as the same is currently being used, or (as
to any acreage described as “undeveloped acres” on the Cemetery Acreage Report described in Section
3.2 above) contemplated to be used as developed cemetery property, (ii) Liens for real property
taxes not yet due or payable, (iii) any matters shown on the Title Commitments not objected to by
Buyer as provided for above or, if objected to by Buyer, later waived by Buyer as provided for
below and (iv) Liens that are created, suffered or assumed by Buyer. Seller shall have thirty (30)
days after receipt of the Title Objections (but in no event after the fifth business day preceding
Closing) to cure such objections, during which period the Closing will be postponed if necessary
(but in no event past the Outside Closing Date). Seller shall not unreasonably withhold its
consent to any request from the Title Company or the Buyer concerning Title Objections. Upon cure
of the Title Objections, the parties shall perform this Agreement according to its terms. If such
Title Objections are not cured to Buyer’s reasonable satisfaction within such fifteen (15) day
period, Buyer shall have the option either (a) to terminate this Agreement, or (b) to waive any
Title Objection, and, in such event, proceed to close this Agreement and the transaction provided
for herein.

     At Closing or soon thereafter as practicable, the Title Company shall issue, one-half at
Buyer’s expense and one-half at Seller’s expense, its title insurance policy consistent with its
previous Title Commitments approved by Buyer.

     Section 7.3. Inspections. Prior to Closing, Buyer shall have the right, at
Buyer’s expense, to obtain such inspections of the Real Property or any portion thereof as it deems
appropriate including, but not limited to:

     (a) Inspections of the buildings, the roofs, heating, ventilating, and air conditioning
systems, and electrical and plumbing systems and otherwise associated with the buildings’ condition
and compliance with OSHA, ADA and other applicable rules and regulations; and

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     (b) Inspections for the purpose of performing a Phase One environmental assessment and such
other inspections and assessments (including Phase Two environmental assessments) the necessity for
which is reasonably indicated in the Phase One assessment.

     If as a result of such inspections any matter is discovered that materially reduces the value
of the Business taken as a whole, Buyer shall have the right to object to such finding prior to
Closing. Any such matter discovered as a result of such inspections and not objected to by Buyer
shall be deemed to be accepted by Buyer and Buyer shall have no further right to object thereto or
assert a claim against Seller as a result thereof. For a period of thirty (30) days following
receipt of any objection by Buyer (but in no event after the fifth business day preceding Closing),
Seller shall have the option but not the obligation to cure any of the above described matters
objected to by Buyer, during which period the Closing will be postponed if necessary (but in no
event past the Outside Closing Date). If Buyer’s objections are not cured within such thirty (30)
day period, Buyer shall have the option either (a) to not close this Agreement, or (b) to waive
Buyer’s objections, and, in such event, proceed to close this Agreement and the transaction
provided for herein.

ARTICLE VIII

Survival of Representations, Warranties and Covenants; Indemnification

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

     Section 8.2. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants of the parties made in this Agreement shall survive the
Closing and any investigation by the parties with respect thereto, and shall continue in full force
and effect thereafter as follows:

     (a) The representations and warranties set out in Sections 3.1, 3.5 (first sentence only), 4.1
and 10.4, for a period extending until 30 days following expiration of the statute of limitations
pertaining to written agreements in the State of Texas (including any suspensions, tollings or
extensions thereof and application of the discovery rule);

     (b) The representations and warranties set forth in Section 3.14, for a period extending until
30 days following expiration of the statute of limitations under applicable federal and state
environmental laws (including any suspensions, tollings or extensions thereof and application of
the discovery rule);

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     (c) All other representations and warranties made in this Agreement, for a period of two (2)
years after the Closing Date; and

     (d) All covenants and agreements made in this Agreement, including without limitation those
set forth in Sections 1.4 and 1.5, for the period specified in this Agreement, or if no period is
specified, then for a period equal to the statute of limitations pertaining to written agreements
in the State of Texas (including any suspensions, tollings or extensions thereof and application of
the discovery rule).

     (e) No representation, warranty, covenant or agreement shall expire as to which a claim has
been submitted in writing to the party against which recourse is sought hereunder prior to the time
called for expiration as provided above.

     (f) No representation or warranty of Seller under Article III shall survive the Closing as to
which the Seller demonstrates by a preponderance of the evidence was actually known to be
materially untrue as of the Closing Date by a person identified on Exhibit E. No representation or
warranty of Buyer under Article IV shall survive the Closing as to which the Buyer demonstrates by
a preponderance of the evidence was actually known to be materially untrue as of the Closing Date
by a person identified on Exhibit F.

     Section 8.3. Indemnification by Seller.

     (a) Seller agrees to indemnify and hold Buyer, its affiliates, officers, directors and
employees, and their respective successors and assigns, harmless from all damages, liabilities,
obligations, claims, adverse results, losses or expenses (including, without limitation, interest
and penalties, reasonable attorneys’ fees and expenses, any one such item being herein called a
“Loss” and all such items being herein collectively called “Losses”) suffered or paid, directly or
indirectly, as a result of or arising out of:

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

     (ii) any breach of warranty or inaccurate or erroneous representation made by the
Seller herein; and

     (iii) the failure of the Seller to fully pay and discharge as and when same are due all
obligations, liabilities and/or duties relating to or arising from the Business other than
the Assumed Liabilities.

     (b) The Seller shall reimburse the Buyer an amount satisfactory to compensate the Buyer for
any Loss arising from an event or circumstance to which the foregoing indemnities

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relate. Provided, however, Buyer acknowledges that the afore-described indemnification
responsibilities of the Seller hereunder shall be, notwithstanding the prior terms hereof, limited
as follows:

     (i) In order to avoid double recovery by Buyer, Seller will be entitled to receive as a
credit against the amount owed to the Buyer under the foregoing indemnification provisions
an amount (if any) equal to the net proceeds actually received by Buyer under any insurance
policy for a Loss for which the Seller agreed to indemnify the Buyer under this Section 8.3;
provided, however, that if Buyer has the right to receive insurance proceeds in respect of
such an indemnifiable claim but has not actually received those proceeds at the time an
indemnity payment is due from Seller hereunder, Seller shall be obligated to pay the full
amount of Losses to Buyer in accordance with this Agreement, and upon Buyer’s receipt of
such insurance proceeds, then to the extent that such proceeds serve to reduce Losses
actually paid by Seller in accordance with this subparagraph (i), Buyer shall remit the
amount thereof to Seller.

     (ii) Buyer shall have no claim for indemnification hereunder until the total amount of
all Losses which would otherwise be subject to indemnification hereunder exceeds $90,000,
and then only to the extent of such excess; and in no event shall the aggregate amount of
all Losses subject to indemnification under this Section 8.3 exceed 100% of the Purchase
Price; provided, however, that the foregoing limitations shall in no event apply to any
claims arising out of or in connection with Section 1.5, 8.3(a)(ii) (insofar as it relates
to Section 5.17) or 8.3(a)(iii) hereof.

     (iii) the indemnification obligations of the Seller hereunder shall be exclusive remedy
of the Buyer with respect to any matter subject to indemnification hereunder.

     Section 8.4. Indemnification by Buyer.

     (a) Buyer agrees to indemnify and hold Seller, Seller’s successors and assigns, harmless from
all Losses suffered or paid, directly or indirectly, as a result of or arising out of:

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

     (ii) any breach of warranty or inaccurate or erroneous representation made by the Buyer
herein; and

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     (iii) the failure of the Buyer to fully pay and discharge as and when same are due the
Assumed Liabilities; and

     (iv) obligations, liabilities and/or duties relating to or arising from Buyer’s
ownership and operation of the Business from and after the Effective Time (except as to any
matter as to which Seller is obligated to provide indemnification hereunder).

     (b) The Buyer shall reimburse the Seller an amount satisfactory to compensate the Seller for
any Loss arising from an event or circumstance to which the foregoing indemnities relate.
Provided, however, Seller acknowledges that the afore-described indemnification responsibilities of
the Buyer hereunder shall be, notwithstanding the prior terms hereof, limited as follows:

     (i) in no event shall the aggregate amount of all Losses subject to indemnification
under this Section 8.4 exceed 100% of the Purchase Price; provided, however, that the
foregoing limitations shall in no event apply to any claims arising out of or in connection
with Section 1.4 or 8.4(a)(iii) hereof; and

     (ii) the indemnification obligations of the Buyer hereunder shall be exclusive remedy
of the Seller with respect to any matter subject to indemnification hereunder.

     Section 8.5. Assertion of Claims. No claim shall be brought by any Indemnitee
(as defined below) against any Indemnitor (as defined below) under this Article VIII, and no
Indemnitee shall be entitled to receive any payment with respect thereto, unless the Indemnitee
gives the Indemnitor written notice of the existence of any such claim, specifying in reasonable
detail the basis therefor, prior to the expiration of the applicable time period set forth in
Section 8.2 above. Except as set forth in this Article VIII, if the Indemnitee and Indemnitor fail
to reach a mutually acceptable resolution of such claim within thirty (30) days after the giving of
such notice, the Indemnitee shall have the right to commence legal proceedings for the enforcement
of their rights pursuant to Section 8.6 hereof.

     Section 8.6. Dispute Resolution.

     (a) Any and all disputes among the parties to this Agreement (defined for the purpose of this
provision to include their principals, agents and/or affiliates) arising out of or in connection
with the negotiation, execution, interpretation, performance or nonperformance of this Agreement
and the transaction contemplated herein shall be solely and finally settled by arbitration, which
shall be conducted in Houston, Texas by a single arbitrator selected by the

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parties. The arbitrator shall be a lawyer familiar with business transactions of the type
contemplated in this Agreement who shall not have been previously employed or affiliated with any
of the parties hereto. If the parties fail to agree on the arbitrator within thirty (30) days of
the date one of them invokes this arbitration provision, either party may apply to the American
Arbitration Association to make the appointment.

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

     (c) The arbitrator shall decide the issues submitted (i) in accordance with the provisions and
commercial purposes of this Agreement, and (ii) with all substantive questions of law determined
under the laws of the State of Texas (without regard to its principles of conflicts of laws). The
arbitrator shall promptly hear and determine (after giving the parties due notice and a reasonable
opportunity to be heard) the issues submitted and shall render a decision in writing within sixty
(60) days after the appointment of the arbitrator.

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

     (e) Judgment on the award of the arbitrator may be entered in any court having jurisdiction
over the party against which enforcement of the award is being sought and the parties hereby
irrevocably consent to the jurisdiction of any such court for the purpose of enforcing any such
award. The arbitrator shall divide all costs (other than fees and expenses of counsel) incurred in
conducting the arbitration in the final award in accordance with what the arbitrator deems just and
equitable under the circumstances.

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

     Section 8.7. Defense of Claims.

     (a) If any claim or action by a third party arises after the Closing Date for which an
Indemnitor is liable under the terms of this Agreement, then the Indemnitee shall notify the
Indemnitor promptly after such claim or action arises and is known to the Indemnitee (provided no
failure or delay in providing such notice shall impair Indemnitee’s right or Indemnitor’s

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obligations hereunder except to the extent such failure or delay has materially prejudiced
Indemnitor’s ability to defend such claim or action), and, provided Indemnitor in writing accepts
responsibility for indemnity hereunder, shall give the Indemnitor a reasonable opportunity: (i) to
take part in any examination of any books and records; (ii) to conduct any proceedings or
negotiations in connection therewith and necessary or appropriate to defend the Indemnitee; (iii)
to take all other required steps or proceedings to settle or defend any such claim or action; and
(iv) to employ counsel to contest any such claim or action in the name of the Indemnitee or
otherwise. If the Indemnitor wishes to assume the defense of such claim or action, it shall give
written notice to the Indemnitee and within 10 days thereafter, Indemnitee shall permit, and
Indemnitor shall thereafter assume, the defense of any such claim or liability, through counsel
reasonably satisfactory to the Indemnitee; provided that the Indemnitee may participate in such
defense (including involvement in strategic decisions, including but not limited to public
relations issues) at its own expense. Any such settlement by Indemnitor shall require Indemnitee’s
prior written consent (which shall not be unreasonably withheld), unless Indemnitee is being
released in accordance with such settlement, such settlement involves only the payment of money,
and Indemnitor has assumed sole responsibility for such payment. In addition, Indemnitee’s consent
shall be required if such settlement would not require all adverse parties to maintain the
confidentiality of such settlement and to refrain from making any public statements in connection
therewith.

     (b) If the Indemnitor shall not assume the defense of any such claim or action, the Indemnitee
may defend against any such claim or action in such manner as it may deem appropriate (provided
that the Indemnitor may participate in such defense at its own expense); provided, however, that
the Indemnitee may not settle such claim or action, without the prior written consent of the
Indemnitor. If no settlement of such claim or action is made, the Indemnitor, jointly and
severally, shall satisfy any judgment rendered with respect to such claim or in such action, before
the Indemnitee is required to do so, and pay all expenses, legal or otherwise, including attorneys’
fees and costs reasonably and necessarily incurred by the Indemnitee in the defense of such claim
or action.

     Section 8.8. Insurance Cooperation. The parties shall cooperate with each
other to maximize the availability of insurance coverage under the policies maintained by Seller
immediately preceding the Closing Date for claims or actions by third parties which may be subject
to indemnification pursuant to Sections 8.3 and 8.4, and, if the insurance carrier for such
policies agrees to defend such claim, such defense shall be tendered to such insurance carrier and

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the rights of the parties between themselves regarding the assumption and control of such
defense shall be subject to the reasonable requirements of such insurance carrier.

     Section 8.9. Definitions.

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

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

ARTICLE IX

Termination

     Section 9.1. Termination of Agreement. The parties may terminate this
Agreement only as provided below:

     (a) Mutual Consent. The Buyer and the Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;

     (b) Termination by Seller. The Seller may terminate this Agreement prior to Closing by
delivering written notice of termination to Buyer, if:

     (i) the approval of the board of directors of Seller required by Section 6.4(a) is not
obtained on or before the Approval Date, and has still not been obtained on or before
delivery of such termination notice;

     (ii) the approval of the board of directors of Buyer required by Section 6.4(b) is not
obtained on or before the Approval Date, and Seller has not received notice of such board
approval as required in Section 4.1(a) on or before delivery of such termination notice;

     (iii) if any Regulatory Approvals required by Section 6.5 are not obtained on or before
February 28, 2007, so long as Seller has expended commercially reasonable efforts to obtain
such approvals;

     (iv) if at any time the Buyer is in material breach of any of its representations,
warranties or obligations under this Agreement, which breach has not been cured (if capable
of being cured) within thirty (30) calendar days after the Seller has given written notice
of such material breach to Buyer (but in no event past the fifth business day preceding the
Outside Closing Date);

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     (v) if Buyer has failed by December 15, 2006 to secure adequate financing to consummate
the transactions set forth in this Agreement, provided that Buyer may demonstrate adequate
financing by having available to it or its affiliates in cash, liquid investments or
availability under its line of credit an amount not less than the Purchase Price;

     (vi) if the FTC conditions its approval of this Agreement or the transaction
contemplated hereby in a manner that has a material adverse effect on the benefits that
Seller expects to derive from the transaction contemplated by this Agreement, or the FTC
staff advises the parties that Buyer is not an acceptable purchaser of the Assets or that
the Agreement is not acceptable, and despite the parties’ good faith efforts to modify such
agreement, negotiations with the FTC staff have terminated without a mutually acceptable
resolution; or

     (vii) if for any other reason, the Closing shall not have occurred on or before March
15, 2007.

     (c) Termination by Buyer. The Buyer may terminate this Agreement prior to Closing by
delivering written notice of termination to Seller:

     (i) if the approval of the board of directors of Buyer required by Section 6.4(b) is
not obtained on or before the Approval Date, and has still not been obtained on or before
delivery of such termination notice;

     (ii) if the approval of the board of directors of Seller required by Section 6.4(a) is
not obtained on or before the Approval Date, and Buyer has not received notice of such board
approval as required in Section 3.1 on or before delivery of such termination notice;

     (iii) if any Regulatory Approvals required by Section 6.5 are not obtained on or before
February 28, 2007, so long as Buyer has expended commercially reasonable efforts to obtain
such approvals;

     (iv) if at any time the Seller is in material breach of any of its representations,
warranties or obligations under this Agreement, which breach has not been cured (if capable
of being cured) within thirty (30) calendar days after the Buyer has given written notice of
such material breach to Buyer (but in no event past the fifth business day preceding the
Outside Closing Date);

     (v) under Section 7.2 hereof;

     (vi) under Section 7.3 hereof; or

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     (vii) if at any time the Schedules to Exhibit A hereto (as they exist on the Website
and/or in the compact disk to be delivered at Closing as contemplated in Section 3.6) are
different from the information that was contained on the Website (according to a written
document control list delivered by Seller to Buyer as of 5:00 p.m. CST on the business day
immediately preceding on the date of this Agreement, which shall include all documents on
the Website to which Buyer has access) to such an extent that the difference would (in the
reasonable judgment of a third party) have a material adverse effect on the value of the
Business and the Assets to be purchased hereunder.

     (d) Break-Up Fee. In the event that this Agreement terminates for any reason other
than (I) a termination by the parties in accordance with Section 9.1(a), (II) a termination by
Seller in accordance with Section 9.1(b)(i), Section 9.1(b)(iii) or Section 9.1(b)(vi), or (III) a
termination by Buyer in accordance with Section 9.1(c)(ii), Section 9.1(c)(iii), Section
9.1(c)(iv), Section 9.1(c)(v), Section 9.1(c)(vi) or Section 9.1(c)(vii), Buyer shall be obligated
to pay Seller a break-up fee equal to ten percent (10%) of the Purchase Price (the “Break-Up Fee”).
The parties agree that the Break-Up fee is reasonable in that it reimburses Seller for its costs
in connection with the proposed transaction and compensates Seller for lost opportunity costs
associated with the pursuit of the proposed transaction. The Break-Up Fee shall be the sole
recourse and remedy against Buyer for any failure for Closing to occur hereunder as specified in
this Section 9.1, including but not limited to any such failure constituting or caused by any
breach hereof by Buyer.

     (e) Effect of Termination. In the event of a termination of this Agreement pursuant
to Section 9.1(a)-(c) above, this Agreement shall forthwith become void and have no effect, without
liability on the part of any party or its affiliates, directors, officers or stockholders, except
that (i) Buyer’s obligation to pay the Break-Up Fee solely under the circumstances described in
Section 9.1(d), and (ii) Sections 8.6, 10.1, 10.2, 10.3, 10.4 and 10.5 hereof, shall survive such
termination.

ARTICLE X

Miscellaneous

     Section 10.1. Notices. All notices provided for hereunder shall be in writing
and shall be deemed to be given:

     (a) When delivered to the individual, or to an officer of the party, to which the notice is
directed;

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     (b) Three (3) days after the same has been deposited in the United States mail, sent Certified
or Registered mail with Return Receipt Requested, postage prepaid and addressed as provided in this
Section; or

     (c) When delivered by a generally recognized overnight delivery service (including United
States Express Mail), with receipt acknowledged and with all charges prepaid by the sender
addressed as provided in this Section. Notices shall be directed as follows:

	 	(1)	 	if to SCI Funeral Services (with notices being sent to SCI
Funeral Services only before the Alderwoods Merger Closing Date), to:

President

SCI Funeral Services, Inc.

1929 Allen Parkway

Houston, Texas 77019

with a copy to:

General Counsel

Service Corporation International

1929 Allen Parkway

Houston, Texas 77019

	 	(2)	 	if to Seller (with notices being sent to Seller only on and
after the Alderwoods Merger Closing Date), to:

President

Alderwoods Group (California), Inc.

1929 Allen Parkway

Houston, Texas 77019

with a copy to:

General Counsel

Service Corporation International

1929 Allen Parkway

Houston, Texas 77019

	 	(3)	 	if to Buyer, to:

Carriage Cemetery Services, Inc.

3040 Post Oak Blvd, Suite 300

Houston, Texas 77056

Attn: President

with a copy to:

Thompson & Knight, LLP

333 Clay, Suite 3300

Houston, Texas 77002

Attn: W. Christopher Schaeper

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or at such other place or places or to such other person or persons as shall be designated by like
notice by any party hereto.

     Section 10.2. Expenses. Each party hereto shall pay its own expenses,
including without limitation, fees and expenses of its agents, representatives, counsel, auditors,
and accountants incidental to the preparation and carrying out of this Agreement.

     Section 10.3. Attorney’s Fees. In the event of any controversy, claim or
dispute between or among any of the parties hereto arising out of or relating to this Agreement, or
any default or breach or alleged default or breach hereof, the prevailing party shall be entitled
to be reimbursed by the other party for its reasonable attorney’s fees and costs associated
therewith.

     Section 10.4. Brokers. Buyer warrants that it has not engaged the services of
a broker in connection with the transactions described in this Agreement. Buyer agrees to
indemnify Seller against any claim by any third person for any commission, brokerage or finder’s
fee or other payments based upon any alleged agreement or understanding between such third party
and Buyer, whether expressed or implied. Seller warrants that it has not engaged the services of a
broker in connection with the transactions described in this Agreement, other than Johnson
Consulting Agreement, the fees and expenses of which shall be solely Seller’s responsibility.
Seller agrees to indemnify Buyer against any claim by Johnson Consulting Group or any other person
for any commission, brokerage or finder’s fee or any other payment based upon any alleged agreement
or understanding between such third person and Seller, whether expressed or implied.

     Section 10.5. Publicity. The parties shall consult with each other prior to
issuing any press release or any written public statement with respect to this Agreement or the
transactions contemplated hereby, and shall not issue any such press release or public statement
prior to such consultation.

     Section 10.6. Parties in Interest. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and permitted assigns.
This Agreement shall not be assigned by any party hereto without the prior written consent of the
other parties. Notwithstanding the foregoing, (i) prior to Closing, Buyer may designate one or
more of its affiliates to acquire all or any portion of the Business, provided that any such
assignee shall assume any Assumed Liabilities applicable to the portion of the Business being so
purchased, and (ii) following the Closing, Buyer (or such affiliate) may assign all or any portion

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of this Agreement, including its rights and interests in the representations, warranties,
covenants and indemnities hereunder, without the consent of the Seller to a successor-in-interest
in all or any portion of the Business (whether by merger, sale of assets or otherwise); provided
that in either such event, Buyer shall not thereby be relieved of its obligations hereunder.
Nothing in this Agreement, expressed or implied, is intended to confer upon any third person any
rights or remedies under or by reason of this Agreement.

     Section 10.7. Entire Agreement; Amendment. This Agreement together with the
other agreements and the Decision and Order provided for herein embody the whole agreement of the
parties. There are no promises, terms, conditions, or obligations other than those contained
herein. All previous negotiations between the parties, either verbal or written, not herein
contained are hereby withdrawn and annulled. This Agreement shall supersede all previous
communications, representations, or agreements, either verbal or written, between the parties
hereto. Exhibits A and C (and the Schedules in Exhibit A) shall be provided and, if applicable,
updated in the manner described in Sections 3.6 and 5.1. Exhibits B, D, E and F shall be mutually
agreed upon in writing by the parties on or before the fifth business day before the Closing Date,
whereupon they shall be incorporated into this Agreement. This Agreement may not be amended except
by an instrument in writing signed on behalf of each party hereto.

     Section 10.8. Captions; Counterparts. The section and subsection headings
contained in this Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

     Section 10.9. Tax Identification Numbers. Buyer’s Federal Tax Identification
Number is 76-0592642. Seller’s Federal Tax Identification Number is 94-2268419.

     Section 10.10. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Texas.

(Remainder of Page Intentionally Left Blank)

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     IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this Agreement on the
date first above written.

	 	 	 	 	 	 	 	 	 	 	 
	Buyer:	 	 	 	SCI Funeral Services:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	CARRIAGE CEMETERY SERVICES, INC.	 	 	 	SCI FUNERAL SERVICES, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Melvin C. Payne
	 	 	 	By:
	 	/s/ Curtis G. Briggs	 	 
	 

	 	 

MELVIN C. PAYNE, Chairman and Chief Executive Officer
	 	 
	 	 	 	 

CURTIS G. BRIGGS, President
	 	 

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JOINDER OF SELLER

     ALDERWOODS GROUP (CALIFORNIA), INC. hereby joins in this Agreement to confirm its assumption
of the obligations of “Seller” in accordance with the terms of “Terms of Contingency” Section set
forth above.

	 	 	 	 	 	 	 
	 	 	Seller:	 	 
	 
	 	 	 	 	 	 
	 	 	ALDERWOODS GROUP (CALIFORNIA), INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By: /s/ Curtis G. Briggs
 

	 	 
	 

	 	Date:
	 	November 30, 2006	 	 

GUARANTY

     SCI CALIFORNIA FUNERAL SERVICES, INC., for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, hereby joins in the execution of this Agreement to
evidence its unconditional and irrevocable guaranty of the obligations of the Seller in this
Agreement.

	 	 	 	 	 	 	 
	 	 	Guarantor:	 	 
	 
	 	 	 	 	 	 
	 	 	SCI CALIFORNIA FUNERAL
SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By: /s/ Curtis G. Briggs 
	 	 
	 

	 	Date:
	 	 

November 30, 2006
	 	 

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