EXHIBIT 10.16
ASSET PURCHASE AGREEMENT
This Agreement is made as of this 31st day of March, 1992, by and among
HERITAGE CREMATION SERVICES, INC. ("SELLER"); JOSEPH ESTEPHAN and ELIE ESTEPHAN
("collectively Estephan") and EMANUEL WEINTRAUB or Nominee ("BUYER") and is made
with reference to the following facts:
1. SELLER is a California corporation, duly incorporated and validly
existing and in good standing under California law.
2. ESTEPHAN are the sole directors, officers and shareholders of SELLER.
3. SELLER wishes to sell and BUYER wishes to buy certain equipment and
certain tights of SELLER.
4. BUYER additionally wishes to obtain the nonexclusive consulting
services of JOSEPH ESTEPHAN and to obtain ESTEPHAN's agreement not to compete
with BUYER.
WHEREFORE, the parties agree as follows:
1. Closing Defined. As used herein, the term "Closing" shall be defined as
the last day of the month in which each of the following events has occurred:
(1) a new retort has been manufactured and placed in the Leased Premises (as
defined in paragraph 3, infra); (2) one refrigerated box has been moved from
BUYER's Gardena facility to the eased Premises; (3) all licenses and permits
necessary to operate a crematory from the Leased Premises have been obtained;
and (4) the new retort is functioning according to standard requirements.
2. Property Sold. At the Closing, SELLER shall sell, transfer and deliver
to BUYER, all right, title and interest in and to that equipment set forth in
Exhibit "A" attached hereto and incorporated by reference.
3. Leasehold Interest Assigned. At the Closing, SELLER shall transfer and
assign all of its tight, title and interest in and to that Lease Agreement
relating to that certain real property located at 3223 East Pico Boulevard, Los
Angeles, California ("Leased Premises") attached hereto as Exhibit "B" and
incorporated herein by reference. BUYER shall assume all obligations under said
Lease.
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4. Permits And Licenses Assigned. At the Closing, SELLER shall transfer and
assign to BUYER all of its right, title and interest in and to all permits and
licenses necessary to operate a crematorium from the Leased Premises.
5. Assignment Of Rights In And To The Name "Heritage Cremation Services.
Inc.". At the Closing, SELLER shall transfer and assign to BUYER all of its
right, title and interest in and to the name "Heritage Cremation Services, Inc."
6. Purchase Price. BUYER shall pay to SELLER for the equipment and rights
identified in paragraphs 1-5, inclusive, above:
(a) One Hundred Fifty Thousand Dollars ($150,000) payable as follows:
(1) Fifty Thousand Dollars ($50,000.00) on or before thirty days
after Closing;
(2) Fifty Thousand Dollars ($50,000.00) on or before one hundred
eighty (180) days after Closing;
(3) Fifty Thousand Dollars ($50,000.00) on or before three
hundred sixty-five (365) days after Closing; and
(b) For a period of ten years after Closing, compensation based on the
number of cremations performed by BUYER at the Leased Premises to be calculated
as follows: $10 for every cremation performed at the Leased Premises for any
Neptune Society; $15 for every cremation performed at the Leased Premises for
any other individual or entity. Said monies shall be paid to SELLER for any
given month on or before the 15th day of the month following the performing of
the cremations.
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Notwithstanding the foregoing, in the event the conditions set forth infra in
paragraph 10 have not been fulfilled at the time any of the foregoing sums would
otherwise be due and payable to SELLER, said sums shall be placed by BUYER into
a trust account and released to SELLER only at such time as when the conditions
have been fulfilled.
7. Services of Joseph Estephan. For a period of one year after Closing,
Joseph Estephan will serve as a non-exclusive consultant to BUYER. Joseph
Estephan shall devote sufficient time in his capacity as a consultant to train a
manager for the crematory and other personnel of BUYER as shall be designated by
BUYER and under BUYER's supervision. As compensation for said consulting
services, Joseph Estephan shall receive compensation in the amount of Five
Thousand Dollars ($5,000) monthly for twelve months. Joseph Estephan will devote
at least sixty (60) hours per month as a consultant for BUYER.
8. Non-competition Agreement. For a period of three (3) years after
Closing, ESTEPHAN agree that they will not, directly or indirectly, hold more
than a five percent (5%) ownership interest in any crematory or work for a
crematory (other than for BUYER) in any capacity in Los Angeles County, Ventura
County and/or Orange County. The parties agree that, given the nature of the
cremation industry, these counties represent counties in which ESTEPHAN could
potentially be in direct competition with BUYER if they were to engage in the
cremation business. The parties expressly acknowledge that the restrictions set
forth in this paragraph are reasonable both as to duration and territory and
will not have the effect of preventing ESTEPHAN from pursuing their profession.
ESTEPHAN's agreement not to compete is a material inducement to BUYER's entering
into this Agreement.
9. No Assumption Of Obligations By BUYER. With the sole exception of that
Lease Agreement attached hereto as Exhibit "B", BUYER is not assuming any
liability or obligation of SELLER, either directly or indirectly, expressly or
impliedly.
10. Conditions To BUYER's Obligations. BUYER's obligations under this
Agreement are expressly conditioned on the following conditions being satisfied
in full:
(a) Angelus Metal Finishing and Polishing Co., Inc. consents in
writing to an addendum of the Lease Agreement in the form
attached hereto as Exhibit "C",
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(b) All necessary governmental and regulatory bodies consent in
writing to the transfer of all permits and licenses necessary for
BUYER to operate a crematory from the Leased Premises, without
the imposition of any additional material obligations on BUYER
other than those obligations of SELLER previously disclosed to
BUYER.
If the foregoing conditions have not been fulfilled on or before December
31, 1992, BUYER shall have the option to void this Agreement.
11. Representations by SELLER. SELLER represents and warrants to BUYER, and
this Agreement is made in reliance on, each and all of the following:
(a) SELLER is a California corporation, duly incorporated and validly
existing and in good standing under California law.
(b) SELLER has the full power and authority to enter into this
Agreement and nothing set forth herein or any obligation
undertaken by SELLER herein shall be violative of any law or
statute.
(c) From the date of this Agreement and continuing through and as of
Closing, none of the equipment identified in Exhibit "A" is
subject to any liens or encumbrances of any kind or nature
whether consensual or by operation of law and SELLER has good and
marketable title to each of said assets.
(d) SELLER is not now a party to any litigation whether in a court,
arbitration, tribunal or before any governmental agency. SELLER
has previously been a party to litigation but said litigation has
been terminated and SELLER has no judgment against it of any
kind. Further, SELLER has no outstanding obligation to anyone as
the result of said litigation or any other litigation.
(e) SELLER does not have any claims or demands asserted or made
against it and knows of no basis on which any claim or demand may
be made against it. As the sole exception to the foregoing
representation, SELLER has disclosed to BUYER the existence of a
potential claim
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against it by the Hammond family. SELLER has represented to BUYER
that, if this claim is asserted, the claim will be covered by
SELLER's existing insurance policy and the limits of SELLER's
existing insurance policy are sufficient to cover the claim
(including all defense costs) in its entirety.
(f) SELLER does not have any judgments entered against it.
(g) SELLER has duly filed all federal, state and local tax returns
and documents required to be filed and has paid all federal,
state and local taxes on a timely basis. SELLER has not received
any delinquency or assessment notices from any taxing authority
and neither SELLER nor any property of SELLER is subject to any
state or federal tax liens.
(h) BUYER will enjoy ownership of those assets identified in Exhibit
"A" free and clear of any claims, liens or demands of SELLER or
SELLER's creditors.
SELLER hereby indemnifies and holds BUYER harmless against any claim,
demand, cause of action, judgment, damages or costs (including reasonable
attorney's fees) arising out of any breach or threatened breach of the aforesaid
warranties and representations.
12. SELLER's Right To Audit. SELLER shall have the right to audit BUYER's
case log at BUYER's place of business during normal business hours upon
reasonable notice to BUYER. Said right to audit may not be exercised by SELLER
more frequently than once every six months.
13. BUYER's Undertaking. BUYER covenants to use its best effort to obtain,
not later than 90 days after Closing ("Neptune Agreement Deadline"), a binding
agreement with The Neptune Society of Los Angeles, Ltd. ("Neptune-L.A.") that
provides, in part, that Neptune-L.A. will provide BUYER with the lesser of 100
cases per month or 50% of Neptune-L.A.'s total number of cremation cases for any
given month for at least ten years after Closing. In the event such agreement is
not obtained by BUYER, SELLER shall have the option for a period of thirty (30)
days after the Neptune Agreement Deadline within which to serve written notice
voiding this Agreement.
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14. BUYER's Reimbursement Of SELLER's Expenses. BUYER agrees to reimburse
SELLER for those expenses incurred by SELLER on BUYER's behalf in contemplation
of this Agreement, as set forth in Exhibit "1)". BUYER further agrees to
reimburse SELLER for any additional expenses incurred by SELLER on BUYER's
behalf provided that SELLER receives BUYER's written authorization prior to
incurring said expense. BUYER agrees to advance the deposit for the new retort
to be ordered and installed in the Leased Premises, as well as to pay the cost
of installation and related expenses with respect to the new retort.
15. Voiding Of Agreement By BUYER. In the event this Agreement is voided by
either BUYER or SELLER pursuant to the provisions of paragraph 10 or 13,
respectively, any sums paid by BUYER to SELLER under paragraphs 6(a), 6(b) and
14 shall be immediately returned to BUYER and, conditioned on BUYER's receipt of
said funds, BUYER shall immediately reassign and transfer to SELLER all right,
title and interest in and to that Equipment set forth in Exhibit "A", that Lease
Agreement attached hereto as Exhibit "B", and all permits and licenses assigned
to BUYER. Additionally, SELLER shall purchase from BUYER, at BUYER's actual
cost, the new retort purchased by BUYER in contemplation of this Agreement, as
well as any other equipment or inventory purchased by BUYER in contemplation of
or in furtherance of this Agreement. Notwithstanding the foregoing, in the event
this Agreement is voided, BUYER shall retain all income earned in operating a
crematory on the Leased Premises from the time of Closing through the time the
Agreement is voided and Joseph Estephan shall retain all monies paid to him as a
non-exclusive consultant to BUYER under paragraph 7 hereof from the time of
Closing through the time the Agreement is voided.
16. Survival of SELLER's Representations Warranties and Indemnity. The
representations, warranties and covenants of SELLER herein shall remain in full
force regardless of any investigation or approval by BUYER and shall survive
Closing.
17. Assignment. This Agreement shall be binding upon, inure to the benefit
of, and be enforceable by the heirs, administrators, executors, and assigns of
SELLER and of BUYER.
18. Further Documents. Each party agrees to execute any further documents
reasonably necessary to effectuate the purpose of this Agreement.
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19. This Agreement shall be governed by the laws of the State of
California.
20. Entire Agreement. This Agreement contains the entire agreement of the
parties hereto, and supersedes any prior written or oral agreements between them
concerning the subject matter contained herein. There are no representations,
agreements, arrangements, or understandings, oral or written, between and among
the parties hereto, which are not fully expressed herein. This Agreement may not
be modified except by an instrument in writing signed by both parties.
IN WITNESS WHEREOF, this Agreement has been executed by the parties in Los
Angeles, California.
HERITAGE CREMATION SERVICES, INC.
DATED: March 31, 1992 BY: /s/ Joseph Estephan
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JOSEPH ESTEPHAN, its President
DATED: March 31, 1992 BY: /s/ Joseph Estephan
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JOSEPH ESTEPHAN
DATED: March 31, 1992 BY: /s/ Elie Estephan
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ELIE ESTEPHAN
DATED: March 31, 1992 BY: /s/ Emanuel Weintraub
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EMANUEL WEINTRAUB
