Exhibit 10.1
ASSET PURCHASE AGREEMENT
MACE SECURITY INTERNATIONAL, INC
AND
TWISTED CACTUS ENTERPRISES, LLC
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TABLE OF CONTENTS
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PAGE
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RECITALS....................................................................
1
ARTICLE I REAL PROPERTY AND ASSET TRANSFER;
CLOSING......................... 1
ARTICLE II
TITLE............................................................
8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF
SELLERS...................... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
PURCHASER..................... 17
ARTICLE V ADDITIONAL AGREEMENTS OF
SELLERS................................. 18
ARTICLE VI ADDITIONAL AGREEMENTS OF
PURCHASER.............................. 22
ARTICLE VII CONDITIONS TO PURCHASER'S
OBLIGATIONS.......................... 23
ARTICLE VIII CONDITIONS TO SELLERS'
OBLIGATIONS............................ 24
ARTICLE IX INDEMNIFICATION
................................................ 24
ARTICLE X OTHER
PROVISIONS.................................................
28
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SCHEDULES
1.9(a)(iv) Assignment
Agreement
1.9(a)(v) Lease
Assignment
1.10(a)(i) Bill of
Sale
1.10(a)(iv) Form of Special Warranty Deed
Enclosed in Disclosure Binder
1.3
Car Wash Locations
1.4(c) Equipment
1.4(e) Contractual
Obligations
1.4(f) Permits
1.11(b)
Allocation of Purchase Price
3.3
Summary of Oral Agreements
3.5(b) Exceptions to
governmental compliance
3.5(d) Litigation or
administrative proceedings for environmental violations
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3.5(e) Releases of
"Hazardous Materials" and Environmental Conditions
3.5(g) Proceedings
which would affect use of the Locations
3.7
Changes in the Car Wash Business
3.8
Required Consents
3.12
Pending and Threatened Litigation
3.13
Employee Contracts
3.14
Employee Benefits
Appendix A Defined
Terms
ii
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ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement ("Agreement") is made as of
December 7, 2006
by and among Mace
Security
International, Inc.
("MSI"), Mace Car Wash, Inc
("MCW"), Mace Car
Wash-Arizona, Inc.
("MCWA") and Twisted Cactus Enterpirises,
LLC, an Arizona.
("Twisted Cactus").
For purposes of this
Agreement, Twisted
Cactus is sometimes
referred to as "Purchaser," MCW and MCWA, subsidiaries of
MSI that own the
assets being
sold under this Agreement, are referred to
individually as a "Company" and collectively as the "Companies,"
and MSI and the
Companies are sometimes collectively referred to as "Sellers."
RECITALS
MSI
is the sole shareholder of the Companies. Each of the Companies own
the
car washes listed on Schedule 1.3 attached. For purposes of this Agreement the
car and truck wash
locations listed on
Schedule 1.3
attached are hereafter
referred to individually, as a ("Location") and collectively
the ("Locations").
Nine of the Locations
are situated on parcels of real
property owned by the
Companies (the "Owned Real Property"), and three of the Locations are
situated
on parcels of real property that MCW occupies under valid leasehold interests
(the "Leased
Real Property"). Schedule 1.3 identifies both the Owned Real
Property and the Leased Real Property.
Throughout this
Agreement various Schedules are referenced as being
attached to this
Agreement.
Notwithstanding the
fact that all
Schedules are
referred to as being attached to this Agreement, some of the Schedules are not
attached but instead
appear in a Disclosure
Binder dated December 7, 2006. The
Disclosure Binder is organized under subheadings which correspond
to the various
Schedules described
in this Agreement. For purposes of identification, the
Disclosure Binder has
been identified
by the parties by a written statement
executed by the
parties and appearing as the first page of the Disclosure
Binder.
ARTICLE I
Real Property and Asset Transfer; Closing
Section 1.1
Incorporation of
Recitals. The recitals set forth above
are
incorporated herein by reference and are a part of this
Agreement.
Section 1.2 Place for Closing. The Closing under this Agreement
shall take
place at the offices of First American Title Insurance Company ("Escrow Agent")
located at 2525 East Camelback Road, Suite 300, Phoenix,
AZ or such other
place
as the parties hereto
may agree upon. The
date the Closing
occurs ("Closing
Date") shall be on one hundred twenty days from the date of this
Agreement,
or
such other date that the parties to this Agreement agree to in
writing.
Section 1.3
Agreement to Transfer Assets and Owned Real Property;
Consideration.
(a)
The Companies
shall transfer and MSI shall cause the
Companies to
transfer and deliver
to Purchaser
the Owned Real
Property, their leasehold
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interests in the Leased Real Property and their interests in the Assets for
the
total consideration of Nineteen Million Two Hundred Fifty Thousand
($19,250,000)
Dollars plus the amount set forth in Section 1.3(b) below
("Purchase Price")
on
the Closing Date, payable by wire transfer in United States of
America currency,
to an account as designated by MSI.
(b)
The inventory and cash of the Car Wash Business existing on the
Closing
Day will be conveyed
to the Sellers
("Inventory") as part
of the Assets. The
Purchaser shall pay
Sellers at the Closing Date, in addition to the $19,250,000
set forth in
Section 1.3(a) above, the cost charged the Sellers for the
Inventory from the
third parties that have sold the Inventory to Sellers. The
Inventory categories
being purchased are set forth below. For illustration
purposes only, the Inventory as of October 31, 2006 was as
follows:
a.
Cash,
$8,200.00
b.
Wash Supplies,
$12,651.30
c.
Wash Chemicals
$3,946.68
d.
Lube Supplies
$21,017.14
e. Lobby Merchandise
$45,631.66
f.
Detail Chemicals
$21,493.88
g.
Detail Supplies
$20,848.21
h.
Greeting Cards
$33,107.82
i.
Uniforms
$9,092.58
j.
Towels
$2,853.88
(c)
On or before two (2)
Business Days
following the execution of this
Agreement, Purchaser shall pay the Escrow Agent Five Hundred
Thousand ($500,000)
Dollars ("Deposit")
in United States currency. The Escrow Agent, when it
receives the Deposit
shall confirm to MSI
in writing that the Deposit has been
paid to Escrow Agent.
The Deposit,
while held in Escrow,
shall to the
extent
possible, be invested in U.S. Treasury Bills or other short-term
U.S. Government
securities, repurchase
agreements with a
national banking association for such
securities,
investment-grade
commercial paper or other investment-grade "money
market" investments,
as Purchaser and MSI
jointly direct
Escrow Agent, and
whenever not so
invested shall be held by the Escrow Agent in a separate,
federally-insured,
interest-bearing account with a national banking association
approved by Purchaser
and MSI. The interest
on the Deposit will be paid to the
party to this
Agreement that
receives the Deposit.
The Escrow Agent shall pay
the Deposit to the Purchaser or Sellers, as applicable as set forth
below.
(i) If the Closing
occurs, the Deposit
and the interest earned on it
shall be paid to MSI at the Closing, as part of the Purchase Price set
forth in
Section 1.3(a)and (b) above.
(ii) The Escrow Agent
shall promptly
pay the Deposit to
MSI, if the
Closing does not occur
on or before the
Closing Date and all
conditions
set
forth in Article VII have been satisfied, waived or would have been
satisfied
with the passage of time, or this Agreement is terminated before the Closing
Date by MSI under the
provisions of Section
1.8(d)(ii) or
1.8(d)(iii) of this
Agreement.
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(iii) The Escrow Agent shall promptly pay the Deposit to Purchaser,
if
Closing does not occur on or before the Closing Date, because a condition set
forth in Article VII of this Agreement is not satisfied and has
not been waived
by Purchaser
or this Agreement is terminated before the Closing Date by
Purchaser under the provisions of Section 1.8(d)(ii) or
1.8(d)(iii).
The Escrow Agent by executing this Agreement is agreeing to be
bound only to the
provisions of this Agreement relating to the Deposit. In the event of a dispute
between Sellers and
Purchaser concerning
the Deposit,
the Escrow Agent
shall
hold the Deposit until ordered by a court having jurisdiction to
pay the Deposit
to Sellers, Purchaser or into the Court.
Section 1.4
Description
of Assets. Upon the terms and subject to the
conditions set forth
in this Agreement,
on the Closing Date,
as hereinabove
defined, the Companies shall and MSI shall cause the Companies to
grant, convey,
sell, transfer and
assign to Purchaser all assets of the Companies set forth in
this Section 1.4 which assets are the following: (the
"Assets"):
(a)
The Owned Real
Property (including,
but not limited to,
the land and
all appurtenances,
buildings,
structures,
improvements,
fixtures and other
structures);
(b)
The leasehold
interests in the
Leased Real Property and all interests
in the appurtenances,
buildings, structures,
improvements, fixtures
and other
structures;
(c)
All equipment, computers, software, printers, vending machines,
machinery and parts, vehicles, tools, hoses, brushes,
communication
equipment,
sprinklers, and
security equipment
and similar
items in and at the
Locations
(collectively, the
"Equipment"),
the Equipment in the
car wash tunnels of the
Locations is listed on Schedule 1.4(c);
(d)
The inventory of gasoline in underground storage tanks at the
Locations
and the Inventory, as set forth in Section 1.3(b) above;
(e)
All contractual
rights and obligations of the Companies with its
customers, vendors,
suppliers,
landlords,
tenants and
others, as listed on
Schedule 1.4(e),
excepting only the contracts with Recycled Paper Greetings and
Ecolab, Inc.
that
are not to be assigned to Purchaser ("Contractual
Obligations");
(f)
All permits, licenses,
franchises,
consents and other
approvals from
governments,
governmental agencies (federal, state and local) ("Permits")
held
by the Companies
relating to, used in
or required for the operation of the Car
Wash Business or any of the Assets, all of which are listed on
Schedule 1.4(f),
to the extent such Permits are assignable ;
(g)
All office equipment,
furnishings,
sales and promotional
materials,
catalogues and
advertising
literature,
and all pictures and photographs,
construction and "as-built" drawings, plans and specifications, and
finish plans
in the possession
or control of the Companies, relating to the Car Wash
Business;
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(h)
To the extent owned,
licensed or otherwise available to the Companies,
all intellectual property used in connection with the Car Wash
Business, such as
franchises,
trademarks, trade names, copies of employee lists, copies of
vendor
files, website
domain name of Weiss
Guys Car Wash, copies
of customer lists,
copies of customer
records and information and the right to use the name
of
Weiss Guys (collectively, the "Intellectual Property") and;
(i)
All original
agreements and contracts and title documents relating to
the items set forth in (a) through (h) above.
At
Closing, Sellers shall
convey to Purchaser good and marketable title to
the Assets identified
above under Sections 1.4(c) through 1.4(h) free and clear
of all liens, security
interests claims, all
amounts owed or accrued as of the
Closing, , the
Assumed Liabilities, as defined in this Agreement and the
Permitted Exceptions, as defined in this Agreement.
At
Closing, Sellers shall
convey to Purchaser good and marketable title to
the Owned Real Property, free and clear of any mortgages, collateral
assignments, security
interests, liens, claims, charges or encumbrances without
exception, other than the Permitted Exceptions.
In
accordance with Section 1.4 of this Agreement at Closing, Purchaser
will
be conveyed the
gasoline in
underground storage
tanks at the
Locations.
In
accordance with Section 1.6 and 6.3 of this Agreement, Purchaser after Closing
is obligated to honor, without charge to the customers of the
Locations, the car
wash passes,
coupons and pre-paid gift cards issued by the Companies in
connection with the Car Wash Business. Sellers and Purchaser agree that
for the
purpose of this Agreement the term ("Excess Deferred Revenue") shall mean the
amount, if any, by
which the amount equal to (a) the deferred revenue amount on
the Companies books of account attributable to the customer passes,
coupons, and
gift cards issued in connection with the Car Wash Business at the
Closing Date,
exceeds by more then One Hundred Thousand ($100,000) Dollars the
amount equal to
(b) the inventory
amount on the Companies books of account attributable to the
gasoline in
underground storage
tanks at the Locations on the Closing Date. At
the Closing, Purchaser
shall receive a
purchase price
reduction equal to
the
amount of the Excess Deferred Revenue, if any.
Section 1.5 Excluded
Assets. The parties
agree that the Assets being sold
do not include any cash, accounts receivables, inventory (other
then gasoline in
underground storage
tanks at the Locations), the original financial books and
records of the Companies and insurance polices and insurance reserves relating
to the Car Wash Business. Copies of the financial
books and records of
the Car
Wash Business will be made available by the Sellers,
to Purchaser
both before
and after Closing, for examination, inspection and copying.
Section 1.6 Assumption of Obligations. Purchaser agrees to (i) assume all
rights and obligations
existing as of and
arising after the Closing Date under
the Contractual
Obligations,
and (ii) honor and
accept all customer
passes,
coupons, and gift
cards issued in connection with the Car Wash Business through
the Closing Date and
(iii) assume all
liabilities,
responsibilities
and all
obligations arising
with respect to Applicable Laws, as defined in this
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Agreement relating to Locations ("Assumed Liabilities"). Notwithstanding the
foregoing
definition of
Assumed Liabilities, the Purchaser may seek
indemnification under
the provisions
of Article IX for the
violation of any
representation or
warranty of Sellers under this Agreement regarding the
violation of Applicable Laws at the Locations.
Section 1.7
Non-Assumption of
Liabilities.
Purchaser shall not, by the
execution and
performance
of this Agreement or otherwise, assume, become
responsible for,
or incur any
liability or obligation of any nature of the
Sellers, except for
the Assumed
Liabilities being
assumed under Section 1.6
hereof. By way of illustration, Purchaser shall not assume,
become responsible
for, or incur
any liability for whether legal or equitable, matured or
contingent, known or unknown, foreseen or unforeseen, ordinary or
extraordinary,
patent or latent,
arising out of occurrences prior to the Closing Date
arising
out of or relating to: (a) violation of the requirements of any governmental
authority or of the rights of any third person, relating to the reporting and
payment of federal,
state, or other income Tax Liabilities of Sellers; (b) any
severance pay, or accrued vacation pay obligation or any
other potential claims
that could be brought or alleged by any of the Sellers employees for periods
prior to the Closing Date, or any obligations under any employee benefit plan
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as
amended) or any other
fringe benefit
program maintained or
sponsored by
Sellers or to which any of the Sellers contributes or any
contributions,
benefits or
liabilities
therefore or any liability for the
withdrawal or partial withdrawal from or termination of any such
plan or program
by the Sellers; (c) the interest bearing debts of the Sellers, (d)
any violation
by the Sellers of any federal, state or local antitrust,
racketeering or
trade
practice law, (e)
liabilities or
obligations
of the Sellers for
brokerage or
other commissions
relative to this
Agreement or the transactions contemplated
hereunder, (f) any and
all liability and obligation for commissions and bonuses
listed on Schedule 3.13; and (g) any rights, liabilities or
responsibilities for
any lease agreement that is not listed in Schedule 1.4(e).
Section 1.8 Time For Closing; Damages; and Termination.
(a)
Following execution of
this Agreement,
Purchaser and Sellers shall be
obligated to conclude the Closing by the Closing Date. Neither the Sellers nor
Purchaser shall be
deemed in default
hereunder by reason of
any failure of a
condition precedent to
the obligations of either Sellers or Purchaser hereunder
where such failure has
occurred for reasons beyond the control of the
party
unable to satisfy the condition precedent to the other party's
obligations under
this Agreement.
(b)
If the failure to conclude this transaction is due to the refusal and
failure of Sellers to perform their obligations under this
Agreement,
Purchaser
may elect to seek to enforce this Agreement with an action of specific
performance, or
alternatively,
Purchaser may elect as sole and liquidated
damages the sum of
$500,000, and Purchaser shall be paid the Deposit and
interest thereon. The parties acknowledge that the Purchaser's
actual damages in
the event of a default
by Sellers
are difficult to ascertain and that the
$500,000 (along with return of the Deposit made with interest
thereon) is a fair
approximation of the damages Purchaser is expected to suffer.
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(c)
If the failure to conclude this transaction is due to the refusal and
failure of Purchaser to perform its obligations under this Agreement, Sellers
shall be paid the Deposit and interest thereon, as sole and liquidated
damages.
The parties
acknowledge
that the Sellers actual damages in the event of a
default by Purchaser
are difficult to ascertain and that the Deposit and
interest is a fair approximation of the damages Sellers are
expected to suffer.
(d)
This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing Date:
(i) by mutual written agreement of Purchaser and MSI;
(ii) by MSI,
or by Purchaser in the event Purchaser or the
Sellers, as applicable, makes a material misrepresentation
under this Agreement
or breaches a material covenant or agreement under this Agreement,
and fails to
cure such
misrepresentation or
breach within ten (10)
business days from
the
date of written notice of the existence of such misrepresentation
or breach; or
(iii) by MSI or
Purchaser, if the
Closing does not occur by the
Closing Date or such
other date as may be
agreed to by the
parties hereto in
writing, due to the
non-fulfillment
of a condition
precedent to such
party's
obligation to close as
set forth at Article VII or VIII hereof, as applicable
(through no fault or breach by the terminating party).
All
terminations shall be
exercised by sending the other parties a written
notice of the termination. In the event this Agreement is
terminated as provided
herein, this Agreement
shall become void and be of no further force and effect,
the Deposit paid as set forth in Section 1.3(c), and no party hereto shall have
any further liability
to any other party
hereto, except that
Section 1.3(c),
this Section 1.8,
Article IX, Section
10.1, and Section 10.2 shall survive and
continue in full force and effect, notwithstanding termination. The
termination
of this Agreement shall not limit, waive or prejudice the remedies
available to
the parties,
at law or in equity,
for a breach of this
Agreement,
except as
limited by this Agreement.
Section 1.9 Deliveries by Purchaser.
(a)
At the Closing, Purchaser shall deliver, all duly and properly
executed
(where applicable):
(i) The Purchase Price in United States currency by wire
transfer
to MSI as set forth in Section 1.3(a);
(ii) A copy of the
resolutions
of the requisite members or
managers of Purchaser
authorizing the
execution and delivery of this Agreement
and each other agreement to be executed in connection herewith (the resolutions
and agreements to be executed in connection herewith by Sellers
and/or Purchaser
are referred to in this Agreement collectively, as the "Collateral Documents")
and the consummation of the transactions contemplated herein;
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(iii) Other documents and instruments required by this
Agreement,
if any;
(iv) An Assignment and Assumption Agreement in the form attached
hereto as Schedule 1.9(a)(iv) ("Assignment Agreement"); and
(v) A Lease Assignment
accepting the conveyance of the Companies
to Purchaser of each
leasehold interest in
the Leased Real
Property, general
form and substance, as attached as Schedule 1.9(a)(v) ("Lease
Assignment").
Section 1.10 Deliveries by Sellers.
(a)
At the Closing,
each of the
Sellers shall deliver, all duly and
properly executed (where applicable):
(i) A Bill of Sale for the Assets related to the Locations
owned
by each Seller to be conveyed and assigned, in the form attached as Schedule
1.10(a)(i);
(ii) A certified copy
of resolutions
of the directors of the
Sellers authorizing the execution and delivery of this Agreement
and each of the
Collateral Documents
to be executed in connection herewith by Sellers or either
of them;
(iii) The Certificate
described at Section
7.1, executed by a
corporate officer of MSI;
(iv) Special Warranty
Deeds, conveying to
Purchaser each parcel
of the Owned Real Property, subject only to the Permitted
Exceptions (as defined
below), in the form attached as Schedule 1.10(a)(iv);
(v) The Lease Assignments;
(vi) Physical
possession of all Assets, the Owned Real Property
and the Leased Real Property, subject only to any Contractual
Obligations;
(vii) The Assignment Agreement;
(viii) Customary
title documentation, including, without
limitation, mechanics' lien affidavits; and
(ix) Other documents and instruments required by this Agreement,
if any.
Section 1.11 Transfer Tax, Allocation of Purchase Price and
Pro-Rations.
(a)
Sellers and Purchaser shall each bear or pay sales, transfer taxes and
fees imposed on the conveyance of the Assets by all governments, state, local
and federal in accordance with the provisions of Section 5.1 and
6.1.
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(b)
The parties
agree that the
consideration
for the sale of the
Assets
shall be allocated
among the Assets as set forth on Schedule 1.11(b) attached
hereto. The Sellers
and the Purchaser
acknowledge that the
allocation in such
Schedule, will have
been arrived at based upon their negotiations and shall be
used by them for all purposes, including, but not limited to, federal,
state,
and local Tax and
financial reporting
purposes, and they shall not take any
position inconsistent to the allocation. On the Closing Date, as
applicable, the
Purchaser and the Sellers shall execute Internal Revenue Form 8594 which form
shall be binding on the Purchaser and the Sellers and shall be filed with
the
income tax returns of the Purchaser and the Sellers.
(c)
The charges for the current year's real estate Taxes due with respect
to the Owned Real Property and Leased Real Property, shall be prorated between
the Companies and the
Purchaser based on the
Closing Date, with the
Companies
paying all such Taxes due prior to the Closing Date and the
Purchaser paying all
such Taxes due on and after the Closing Date.
(d)
The charges for water,
electricity, sewer
rental, gas, telephone
and
all other utilities
pertaining to the Locations, shall be prorated between the
Companies and the Purchaser based on the Closing Date, with the
Companies paying
all such charges due prior to the Closing Date and the Purchaser
paying all such
Taxes due on and after the Closing Date.
ARTICLE II
Title and Environmental Inspection
Section 2.1 Real Property. As set forth in the Recitals,
the Companies own
the Owned Real Property. For purposes of this Agreement,
"Owned Real
Property"
shall also include (i) all of the Company's right, title and interest in and to
all easements,
rights-of-way,
privileges and appurtenances thereto, including,
without, limitation,
all water and water
rights, ditch and
ditch rights, all
coal, oil, gas, and other minerals thereon or there under, (ii) all
of Company's
right, title and interest in and to the beds of all streets,
roads, avenues or
highways, open or
proposed, abutting the
Owned Real Property, and (iii) all of
Company's right,
title and interest, if any, in and to any award in
condemnation, or
damages of any kind, to which Company may have become entitled
or may hereafter be entitled, by reason of any exercise of the
power of eminent
domain with
respect to the Owned
Real Property or any
other right,
title or
interest to be sold
hereunder or any part
thereof. Sellers shall convey to
Purchaser at Closing good and marketable title to the Owned Real
Property, free
and clear of any mortgages, collateral assignments,
security interests,
liens,
claims, charges or encumbrances without exception, other than utility easements
and other covenant restrictions, if any, which do not impede the
Location's use
as a car wash or adversely affects the marketability of the Location's title
("Permitted Exceptions").
Section 2.2 Owner's
Title Policy.
MSI has prior to the
execution of this
Agreement delivered to
Purchaser the Current Title Policies for the Locations.
MSI and Purchaser shall order new title commitments ("New Title Commitments")
for the Owned Real Property from the First American Title Insurance
Company (the
"Title Insurer") as
soon as practicable
after the date of this Agreement. MSI
and Purchaser shall
each pay one half of the premium of any title insurance the
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Title Insurer issues. The New Title Commitments shall be dated
after the date of
this Agreement
with respect to each Owned Real Property, and shall be a
commitment of the
Title Insurer
to issue with respect to each Owned Real
Property a standard
coverage ALTA
owners policy of title insurance ("Title
Policy"). If the jurisdiction offers an extended coverage ALTA
owners policy and
a standard owners
policy, and Purchaser
wishes an extended
coverage policy,
Purchaser shall solely pay the additional charge for the extended
coverage. The
Title Policy when issued shall insure title to the Owned Real
Property covered
by the Title Policy to be in fee simple subject only to the Permitted
Exceptions, as defined above. MSI and Purchaser shall cause the
Title Insurer to
deliver to MSI and Purchaser along with the New Title Commitments
copies of all
documents noted as
exceptions in each of the New Title Commitments. Following
the date hereof, Seller shall not create or consent to the creation
of any lien,
encumbrance or other matter affecting title to any of the Owned Real
Property,
without Purchaser's prior written consent.
Section 2.3 Leased Real Property. At Closing, the Leased Real Property
shall be conveyed to Purchaser through separate lease
assignments
executed by
the Companies which is the tenant under each applicable lease. The
form of Lease
Assignment that is
acceptable to both the
Sellers and Purchaser is attached to
this Agreement as Schedule 1.9(a)(vii). Both the Sellers and the
Purchaser shall
cooperate with each other for the purpose of agreeing to make
reasonable changes
to the Lease
Assignment form as are
necessary to obtain the execution of it by
the separate landlords
of the Leased Real
Property. The Sellers
and Purchaser
also agree to use their commercially reasonable efforts, not to include the
payment of money, to
satisfy whatever
reasonable
requirements
the separate
landlords reasonably
request as a condition
of executing a Lease
Assignment.
After the date hereof,
without the prior
written consent of Purchaser, the
leases for the Leased Real Property shall not be amended, renewed,
terminated or
otherwise modified or any new leases executed.
Section 2.4 Survey.
MSI has furnished to Purchaser all of the Current
Surveys. Purchaser, at
its election, or as Purchaser's lenders may require, may
have updates or new surveys made at its expense ("Updated
Surveys"). Within five
days after the
execution of this
Agreement, Purchaser
will order the
Updated
Surveys it requires
and will notify
Sellers in writing of
the Locations
for
which Updated
Surveys have been ordered. Sellers will use commercially
reasonable efforts to
cooperate and aid
Purchaser's surveyor
in preparing the
Updated Surveys
commissioned by
Purchaser. Purchaser
shall use commercially
reasonable efforts
to obtain the commissioned Updated Surveys as soon as
possible.
Section 2.5
Environmental Reports.
MSI has furnished to
Purchaser all of
the Phase 1
Environmental Reports
relating to the
Locations that are in its
possession. Purchaser,
at its election, may have new or additional Phase 1
Environmental Reports
updates made for the
Locations at its expense ("Updated
Phase 1 Reports").
Within five days after the execution of this Agreement,
Purchaser will order
the Updated Phase 1
Reports it requires
and will notify
Sellers in writing of the Locations for which Updated Phase
1 Reports have been
ordered. Sellers will
use commercially
reasonable efforts to cooperate and aid
Purchaser's
environmental
consultant in
preparing the Updated Phase 1 Reports
commissioned by Purchaser. Purchaser shall use commercially
reasonable efforts
to obtain the commissioned Updated Phase 1 Reports as soon as possible.
9
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Purchaser will furnish
MSI with copies of each Updated Phase 1 Report obtained
by it for the Locations within two days after Purchaser receives each Updated
Phase 1 Report.
Section 2.6 Inspections.
(a)
Purchaser shall have the right to examine the title to each of the
Locations. If
during the Title Inspection Period, as hereafter defined,
Purchaser determines
that the Location's title is subject to exceptions or
objections to
title that do not come within the definition of Permitted
Exceptions, as set
forth in Section 2.1 above, Purchaser shall have until the
end of the Title
Inspection Period to
notify MSI in writing
specifying
such
defects that in Purchaser's opinion are not Permitted Exceptions.
MSI shall have
ten (10) days from
receipt of written
notice from Purchaser
within which to
remove said
defects or agree to
have them removed by
Closing, and if MSI is
unsuccessful in removing them within said time, Purchaser shall have the
option
of either:
(i) accepting the title to the Location in its then existing
condition; or (ii)
deleting the Location
from this Agreement whereupon the
Purchase Price will be
reduced by an amount
allocated to the
Location as set
forth on Schedule
1.11(b) All exceptions to title or the surveys to which
Purchaser does not object during the Title Examination Period, or
if objected to
by Purchaser, are
cured by MSI or are subsequently waived by Purchaser shall be
deemed to be within the definition of Permitted Exceptions, as set forth in
Section 2.1. The Title
Inspection Period as
to each Location shall be ten days
after the date that Purchaser receives with respect to the
Location, the last to
be received of (i) the
New Title Commitment
for the Location along with the
documents noted as
exceptions in the New Title Commitment and (ii) the
Updated
Survey for the
Location, provided an Undated Survey was commissioned by
Purchaser within the
time required by Section 2.4 of this Agreement. The Title
Examination Period for
a Location shall be extended for an additional five (5)
business day period with respect to any supplements or updates to any New
Title
Commitment or Updated Survey received by Purchaser prior to the
Closing Date but
Purchaser may only object to facts first revealed by the supplement
or update.
(b)
Purchaser shall have the right to examine the environmental
compliance
condition of each of
the Locations.
If during the Environmental Inspection
Period, as
hereafter defined, Purchaser determines that the Location's
environmental
condition requires
remediation of soil or ground water at a cost
in excess of Five Thousand ($5,000) Dollars, Purchaser shall have until the
end
of the Environmental
Inspection Period to notify MSI in writing specifying such
defects that in
Purchaser's
opinion require remediation in excess of Five
Thousand ($5,000) Dollars. MSI shall have ten (10) days from
receipt of written
notice from Purchaser
within which to cure said defects or
agree to have them
cured by Closing, and
if MSI is unsuccessful in removing them within said time,
Purchaser shall
have the option of either: (i) accepting the title to the
Location in its then
existing environmental
condition;
or (ii) deleting the
Location from this Agreement whereupon the Purchase Price will be
reduced by the
amount allocated
to the Location as set forth on Schedule 1.11(b) The
Environmental
Inspection Period as to each Location shall be fifteen days
after
the date that Purchaser receives with respect to the
Location the Updated Phase
1 Report for the Location, provided an Updated Phase 1 Report
was commissioned
by Purchaser
within the time required by Section 2.5 of this Agreement.
10
<PAGE>
Notwithstanding the
above, Purchaser
accepts the environmental conditions set
forth on Schedule 3.5(d) and the environmental conditions set forth on
Schedule
3.5(d) shall not be objected to by Purchaser.
(c)
Purchaser and Sellers agree that if in accordance with the
operation of
Sections 2.6(a) and 2.6(b) above, three or more Locations are
deleted from this
Agreement or if the
Locations deleted
generated $500,000 or more in earnings
before interest,
taxes, depreciation
and amortization during fiscal year 2005,
either Purchaser or
MSI may cancel this Agreement by sending written notice to
the other party, whereupon the parties shall be released of all further
obligations under this Agreement and the Deposit shall be returned
to Purchaser.
ARTICLE III
Representations and Warranties of Sellers
Whenever the phrase "to Sellers' knowledge" or any equivalent phrase is
used in this
Agreement, the
phrase shall mean the actual knowledge of any
executive corporate officer of MSI. Notwithstanding the foregoing, no
executive
officer of MSI shall be required to undertake any affirmative investigative
action for the purposes of satisfying the preceding sentence. With knowledge
that Purchaser is
relying upon the
representations,
warranties and
covenants
herein contained,
Sellers represent and warrant to Purchaser and make the
following covenants
for Purchaser's
benefit, at and as of
the date hereof and
the date of Closing.
Section 3.1
Organization and Good
Standing. Each of the Sellers is duly
organized, legally
existing and in good standing under the laws of the state of
their organization,
with full power and
authority to own its
properties
and
conduct its business as now being conducted, and has been duly admitted and
is
in good standing
under the laws of each state in which it owns
property or
operates a business.
Section 3.2
Authorization;
Ownership.
The Sellers have by proper
proceedings duly
authorized
the execution,
delivery and
performance of
this
Agreement and each of the Collateral Documents to be entered into
by Sellers and
no other action is
required by law or the
certificate
of incorporation, or
by-laws of any Seller.
This Agreement and the
consummation of the transactions
contemplated hereby
are valid and binding
obligations of Sellers
enforceable
against each Seller in accordance with its terms; provided that (i) enforcement
may be limited by applicable bankruptcy, insolvency,
reorganization,
moratorium
or similar laws of
general application
affecting the rights and remedies of
creditors, and (ii)
enforcement may be subject to general principles of equity,
and the availability of remedies of specific performance and injunctive
relief
may be subject to the
discretion of the court before which any proceeding for
such remedies may be brought. The Sellers own each of the
Assets.
Section 3.3 Contracts,
Permits and Material
Documents.
The Sellers have
made true and correct copies of all of the following available for
inspection by
the Purchaser by providing copies. ("Material Documents") with respect to
the
Business and the Assets: (i) leases for the Leased Real
Property, (ii) leases
11
<PAGE>
under which
any of portion of the Owned Real Property is leased to third
parties, (iii) the
Contractual
Obligations
being assumed by Purchaser at
Closing, (iv) Phase 1
environmental reports for the Locations in the possession
of Sellers,
and (v) with respect to any oral contract, a summary of the
principal terms
thereof as appearing
on Schedule 3.3 to this Agreement. Each
Material Document is in full force and effect and constitutes the
valid, legal,
binding and enforceable obligation of the Sellers (except
as the enforceability
thereof may be limited by any applicable bankruptcy,
reorganization,
insolvency
or other laws affecting creditors' rights generally or by
general principles of
equity). Sellers
are not in breach or default of any material terms or
conditions of the
Material Documents, or to Sellers' knowledge is any third
party in breach or default of any material terms or conditions of any Material
Document. Except for debt that Purchaser will not be assuming, the
Companies are
not a party to, and the Companies' property is not bound by, any
agreement or
instrument which is material to the continued conduct of business
operations of
the Companies, as now
being conducted,
except for the Material Documents, and
except as listed in
Schedule 3.3. Sellers and Purchaser agree to take all
commercially
reasonable action
before the Closing
applicable
to each of the
Material Documents to
obtain any consents or
approvals required so that each
such Material Document may be assigned to Purchaser at the
applicable Closing as
contemplated under this Agreement, excepting those Material Documents
which are
not to be assigned as set forth on Schedule 1.4(e).
Section 3.4 Personal Property; Title to Assets. All items of personal
property at the
Locations and used in the Car Wash
Business, except for the
Excluded Assets used
in the Car Wash
Business, are included
among the Assets
described in Section 1.4 hereof and will be transferred to
Purchaser at Closing.
All items of personal
property and all
buildings and
structures owned by
the
Sellers are being
transferred
"as is" with no
warranty as to condition or
suitability of the
Assets for the current use of the Assets. Each Location and
the personal
property present at the Location is owned by the each of the
Companies, as set forth on Schedule 1.3.
Section 3.5 Real Property.
(a)
MCW has valid
leasehold interests
in each parcel of the Leased Real
Property and the Companies have good, marketable and insurable title to, the
Owned Real Property,
except for the Permitted Exceptions and debt that the
Companies will fully pay at the Closing. Full and complete copies of all of
the
leases applicable to
the Leased Real Property, including all modifications
and
amendments thereof,
have been furnished to Purchaser and identified in Schedule
1.4(e).
(b)
To Sellers' knowledge,
except as set forth in Schedule 3.5(b) attached
hereto and incorporated herein, the Owned Real Property and Leased
Real Property
is currently licensed,
permitted and
authorized
for the operation of
the Car
Wash Business
conducted on it under
all applicable
federal, state and local
statutes, laws,
rules, regulations, orders, permits (including, without
limitation, zoning
restrictions, land use
requirements and environmental laws)
(collectively, the "Applicable Laws"). Except as set forth in
Schedule 3.5(b) or
Schedule 3.5(d) or
3.5(e), Sellers have
not received any written notice of the
material violation
of any Applicable Laws with respect to the Owned Real
Property or the Leased Real Property. To Seller's knowledge except as
set forth
on Schedule 3.5(d) or 3.5(e), no claims have been threatened by any
governmental
12
<PAGE>
agency regarding any
existing, pending or
threatened
investigation,
inquiry,
enforcement action
or litigation related to alleged violations under any
applicable environmental laws, or regarding any claims for remedial
obligations,
response costs or
contribution
under any applicable environmental laws, or
regarding any claims for remedial obligations, response costs or contribution
under any applicable environmental laws.
(c)
The Sellers shall make available upon Purchaser's reasonable request
all engineering,
geologic and other
similar reports,
documentation
and maps
relating to the Owned Real Property and Leased Real Property in the possession
or control of the Sellers their consultants or employed
professional firms.
(d)
Except as set forth in Schedule 3.5(d) attached hereto and
incorporated
herein by reference,
neither Sellers nor the Owned Real Property or Leased Real
Property is currently
involved in any litigation or administrative proceeding
seeking to impose fines, penalties or other liabilities or seeking
injunctive
relief for violation of any Applicable Laws relating to the
environment.
(e)
To Seller's knowledge, no polluting, toxic or hazardous substances
were
improperly used, generated, treated, stored, or disposed of at
the Locations by
Sellers. Except as
listed in Schedule
3.5(e) no notification
of release of a
"hazardous substance",
"hazardous waste",
pollutant or
contaminant
regulated
under the Clean Air Act, 42 U.S.C. 7401 et seq.; the Clean Water Act,
33 U.S.C.
1251 et seq., and the
Water Quality Act of 1987; the Federal Insecticide,
Fungicide, and
Rodenticide Act, 7
U.S.C. 136 et seq.;
the Marine
Protection,
Research, and
Sanctuaries
Act,
33 U.S.C. 1401 et seq., the National
Environmental Policy
Act, 42 U.S.C. 4321 et
seq.; the Noise
Control Act, 42
U.S.C. 4901 et seq.;
the Occupational
Safety and Health Act,
29 U.S.C. 651 et
seq.; the Resource
Conservation
and Recovery Act, 42
U.S.C. 6901 et seq.,
as
amended by the Hazardous and Solid Waste Amendments of 1984; the Safe Drinking
Water Act, 42 U.S.C.
300f et seq.; the
Comprehensive
Environmental
Response
Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq.,
as amended by
the Superfund
Amendments and
Reauthorization Act,
and the Emergency Planning,
and Community Right-to-Know Act; the Toxic Substance Control Act,
15 U.S.C. 2601
et seq.; and the
Atomic Energy Act, 42 U.S.C. 2011 et seq.; all as may be
amended, with
implementing
regulations and
guidelines, or any
state or local
environmental
