| Item 1.01 | Entry Into a Material Definitive Agreement. |
On November 6, 2020, StoneMor Oregon LLC, StoneMor Oregon Subsidiary LLC and StoneMor Washington, Inc. (collectively, the “Sellers”), wholly-owned indirect subsidiaries of StoneMor Inc. (the “Company”), entered into an Asset Sale Agreement (the “Sale Agreement”) with Clearstone Memorial Partners, LLC (the “Buyer”) to sell substantially all of the Company’s assets in Oregon and Washington, consisting of nine cemeteries, ten funeral establishments and four crematories (the “Assets”). In consideration for the transfer of the Assets pursuant to the Sale Agreement, the Buyer agreed to pay the Sellers a net cash purchase price of $6.2 million, subject to certain adjustments.
The closing of the transactions contemplated by the Sale Agreement is subject to the satisfaction of customary closing conditions, including obtaining all necessary regulatory approvals. The Sale Agreement also includes various representations, warranties, covenants, indemnification and other provisions which are customary for transactions of this nature. The Company anticipates that the transaction will close on or before December 31, 2020.
As previously reported, the Company is a party to a Nomination and Director Voting Agreement dated as of September 17, 2018 (as amended on February 4, 2019 and June 27, 2019, the “DVA”) with Axar Capital Management, LP, certain funds and managed accounts for which it serves as investment manager and its general partner, Axar GP, LLC (collectively, the “Axar Entities”), StoneMor GP Holdings LLC and Robert B. Hellman, Jr., as trustee under the Voting and Investment Trust Agreement for the benefit of American Cemeteries Infrastructure Investors LLC (“ACII” and, collectively with StoneMor GP Holdings LLC, the “ACII Entities”). Under the DVA, and subject to certain limitations, each of ACII and the Axar Entities (a) have the option to designate a specified number of nominees to the Company’s Board of Directors (the “Board”) and (b) are prohibited from taking certain actions during the period specified therein (the “Standstill Period”). On November 3, 2020, the Axar Entities, ACII and the Company entered into the Third Amendment to the DVA (the “Third Amendment”) which clarified that (a) the Standstill Period would not expire as to the ACII Entities when the Axar Entities no longer have the right to nominate any directors or no longer have any of their nominees serving as directors or 30 days after the directors nominated by the Axar Entities delivered notice of immediate resignation from the Board, (b) the Standstill Period would not expire as to the Axar Entities when the ACII Entities no longer have the right to nominate a director or no longer have a nominee serving as a director or 30 days after the director nominated by the ACII Entities delivered notice of immediate resignation from the Board and (c) the resignations of the directors described in Item 5.02 of this Current Report on Form 8-K would not terminate the Standstill Period as to any party.
The foregoing summary is not intended to be complete and is qualified in its entirety by reference to the Sale Agreement and the Third Amendment, copies of which are filed as Exhibit 2.1 and Exhibit 2.2, respectively, to this current Report on Form 8-K and are incorporated by reference herein.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On November 3, 2020, Sierra View Memorial Park, StoneMor California Subsidiary, Inc. and StoneMor California, Inc., all of which are indirect wholly-owned subsidiaries of the Company, completed the previously announced sale of all of the Company’s remaining California properties, consisting of five cemeteries, six funeral establishments and four crematories, pursuant to the terms of an Asset Sale Agreement (the “Yeatman Agreement”) with certain entities owned by John Yeatman and Guy Saxton for a net cash purchase price of $7.1 million, subject to certain adjustments. The Company intends to use $5.7 million of the estimated net proceeds from such sale to redeem an additional $5.6 million of principal amount of its 9.875%/11.500% Senior Secured PIK Toggle Notes due 2024 in accordance with the terms of the indenture governing such notes.
The foregoing description of the Yeatman Agreement, and the transactions contemplated thereby, does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Yeatman Agreement, a copy of which was included as Exhibit 2.2 to the Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission on March 20, 2020 and is incorporated herein by reference.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
As described below in Item 5.07 of this Current Report on Form 8-K, at the Company’s Annual Meeting of Stockholders held on November 5, 2020 (the “Annual Meeting”), the stockholders of the Company approved amendments to the Company’s Certificate of Incorporation to effectuate
