EXHIBIT 2.1
AGREEMENT OF SALE
THIS AGREEMENT OF SALE (the "Agreement") is made as of April 23, 1999, by
and among Xxxxx XxXxxxxxxxxx and Xxxxxxxx XxXxxxxxxxxx, both residents of New
Jersey ("Sellers"), and American Wash Services, Inc. ("Buyer").
BACKGROUND
A. Sellers own and operate the car wash facility (the "Facility") having
the street address of 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx. Sellers
own the certain parcel of land described in Exhibit A hereto (the "Land"),
together with certain related and appurtenant structures and other improvements
thereon (the "Improvements"), and together with all fixtures, including without
limitation trade fixtures; heating, ventilation, air conditioning, plumbing,
electrical, drainage, fire alarm, communications, sprinkler, security and
exhaust systems and their component parts; pipes, pumps, storage and fuel tanks
and other equipment and improvements affixed to or forming a part of, the
Facility (collectively, the "Fixtures"), and together with all easements,
hereditaments, rights and privileges appurtenant thereto (collectively, the
"Real Estate").
X. Xxxxxxx also own the personal property (collectively, the "Personalty")
to be included in the sale of the business and assets that are located at the
Facility:
(1) All computers, printers, vending machines, tools, hoses, brushes, auto
wash equipment, auto wash conveyor, auto drying equipment, hydraulic lifts, and
similar items in Sellers' possession or control, used in connection with,
located in or on, or otherwise pertaining to the Facility, including without
limitation the items specifically listed in Exhibit B hereto (collectively, the
"Equipment").
(2) All furnishings, supplies, sales and promotional materials, business
files, customer records, computer programs and software (with applicable
documentation and source codes), and any construction or "as-built" plans and
specifications for the Facility in Sellers' possession or control, to the extent
the foregoing are located in or on, or pertain to the operation of, the
Facility.
(3) All Sellers' retail inventory and operating inventory ("Inventory")
pertaining to the operation of the Facility.
X. Xxxxxxx also own the intangible personal property consisting of the
following (collectively, the "Intangible Personal Property"):
(1) All Permits (as defined in Section 4.8 below) pertaining to the
operation of the Facility on the Real Estate;
(2) All intellectual property used in connection with the Facility,
including, without limitation, trademarks, and trade names (collectively, the
"Intellectual Property"); and
(3) Sellers' business and operations pertaining to the operation of the
Facility, and all goodwill associated therewith (collectively, the "Business").
D. The Real Estate, Personalty, Intangible Personal Property and the
Business are sometimes referred to collectively hereinafter as the "Assets."
E. Buyer has entered into a Merger Agreement dated March 26, 1999 ("Merger
Agreement"), upon the closing of which it will merge with a subsidiary of Xxxx
Security International, Inc. ("MSI").
X. Xxxxxxx wish to sell, transfer and convey the Assets to Buyer, which is
prepared to purchase and accept the same from Sellers, all for the purchase
price and on the other terms and conditions hereinafter set forth.
TERMS AND CONDITIONS
In consideration of the mutual covenants and agreements herein contained,
and intending to be legally bound hereby, the parties hereto agree:
1. Sale and Purchase. Sellers hereby agree to sell, transfer and convey
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the Assets to Buyer, and Buyer hereby agrees to purchase and accept the assets
from Sellers, in each case for the purchase price and on and subject to the
other terms and conditions set forth in this Agreement.
1.1 Excluded Assets. Any provision of this Agreement to the contrary
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notwithstanding, the Assets shall not include claims for tax refunds and
corporate records and documents and any other items identified in Exhibit "C"
hereto (collectively, "Excluded Assets").
1.2 Assumption of Liabilities. Buyer shall assume at Closing (as
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hereinafter defined) and discharge all liabilities of Sellers under any of the
following (collectively, the "Assumed Liabilities"): any written purchase order
for Inventory by which Sellers are bound on the Closing Date (as hereinafter
defined), which was made in the ordinary course of business, which was disclosed
to Buyer in writing before Closing, and which is assigned to Buyer pursuant to
this Agreement, to the extent such liabilities relate to performance on or after
the Closing Date and inventory present at the Facility on the Closing Date.
1.3 Excluded Liabilities. Except for the Assumed Liabilities, Buyer shall
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not assume or be liable for any of Sellers' liabilities or obligations
whatsoever.
2. Purchase Price. The aggregate purchase price for the Assets (the
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"Purchase Price") shall be $450,000, which, subject to the terms and conditions
hereinafter set forth, shall be allocated among the Assets as follows: $350,000
to the Real Estate, $75,000 to the Equipment, and $25,000 to goodwill. The
Purchase Price shall be paid to Sellers by Buyer as follows:
2.1 Cash. At the Closing, the Sellers shall transfer and deliver to Buyer
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the Assets as hereinabove defined, and Buyer shall deliver to the Sellers cash
at closing in the amount of $225,000.00 (the "Cash Payment") payable by wire
transfer of good funds to such account as Sellers shall designate.
2.2 MSI Stock. At the Closing, Buyer shall deliver to Sellers a number of
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shares of common stock of MSI ("MSI Stock") having a value of $225,000, each
share being valued at the closing price of the common stock on the Nasdaq Stock
Market on April 23, 1999 ("Per Share Value").
3. Pre-Closing Operation. Buyer and Sellers shall execute an Operating
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Agreement providing for Buyer to operate the Assets and the Facility from the
date of such Operating Agreement until the Closing.
4. Covenants, Representations and Warranties of Sellers. Sellers
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covenant as follows, and represent and warrant to Buyer that the following
statements are true and correct:
4.1 Authority. Sellers have full authority to approve and effect the
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transactions contemplated hereby. No consents of any third party are required
for the execution and performance of this Agreement by Sellers.
4.2 Title to and Condition of Assets. Except as otherwise provided in
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this Section 4, Sellers have and shall convey to Buyer at Closing good and
marketable title to all of the Assets, free and clear of any mortgages,
collateral assignments, security interests, liens, claims, charges or
encumbrances (collectively, "Liens"). Sellers represent and warrant that no
person or entity other than Sellers has any direct or indirect ownership
interest in any Asset. No person or other entity has (1) any right or option to
acquire all or any portion of the Assets, or (2) any tenancy or other interest
or right of occupancy in or with respect to all or any portion of the Real
Estate.
4.2.1 Title to Real Estate. Sellers have good and marketable, fee
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simple title to the Real Estate, and at the time the sale is consummated,
Sellers agree to convey good and marketable, fee simple title to the Real Estate
to Buyer by special warranty deed. "Good and marketable, fee simple title" is
hereby defined as title which is insurable by a Title Company acceptable to
Buyer in its sole discretion ("Title Insurer") at its standard rates on an
extended ALTA Owner Policy, without exception other than exceptions set forth in
Exhibit "E" hereto ("Permitted Exceptions"). There are no leases in effect with
regard to the Real Estate.
4.2.2 Condition of Real Estate. There is no material defect in,
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mechanical failure of or damage to the Improvements, including the roof,
structure, walls, heating, ventilation, air conditioning,
plumbing, electrical, drainage, fire alarm, communications, sprinkler, security
and exhaust systems and their component parts, auto wash equipment, auto wash
conveyor, auto drying equipment, bolts, hydraulic lifts or other improvements on
or forming a part of the Real Estate, except as listed on Exhibit F.
4.2.3 Equipment. All of the Equipment included in the Assets is in
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all material respects in good operating order and usable in the ordinary course
of Sellers' business, and complies in all material respects with all applicable
federal, state and local laws, ordinances, rules and regulations (including
fire, safety, environmental protection and pollution control) and approvals and
consents issued thereunder. The Equipment consists of all equipment used in the
operation and maintenance of the Facility and the Business. A true, complete and
correct list of all Equipment is attached hereto as Exhibit B.
4.3 "FIRPTA". Sellers are not a "foreign person" as defined in Section
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1445(f)(3) of the Internal Revenue Code, and Sellers shall deliver to Buyer an
affidavit to such effect at Closing.
4.4 Inventory. Substantially all of Sellers' Inventory is in good and
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marketable condition and title thereto shall be conveyed to Buyer at Closing
free and clear of any and all Liens other than Permitted Exceptions.
4.5 Personalty. The Personalty includes all the personal property
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required for ownership, operation and maintenance of the Real Estate, the
Facility and the Business, and shall be conveyed to Buyer at Closing free and
clear of any and all Liens other than Permitted Exceptions.
4.6 Permits. There are no permits, franchises, licenses, approvals or
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consents of any Governmental or quasi-governmental authority with jurisdiction
required for the ownership, use or operation of the Business or any other Asset
except as set forth in Exhibit G (collectively, the "Permits").
4.7 Further Matters Relating to Real Estate.
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4.7.1 Zoning. The zoning classification for the Real Estate permits
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the use of the Real Estate for the business currently conducted thereon, and the
Real Estate fully complies with all relevant zoning laws and ordinances
affecting the Real Estate.
4.7.2 No Condemnation. There is no pending condemnation,
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expropriation, eminent domain, or similar proceeding affecting all or any
portion of the Real Estate. No Seller has any knowledge that any such proceeding
is contemplated.
4.7.3 No Violations. Sellers have received no notices of requests,
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violations, orders, claims, citations, penalty assessments, orders,
investigations or proceedings under any housing, building, safety, health,
environmental, fire or zoning ordinances, codes and regulations of the
respective jurisdictions within which the Real Estate is located (together,
"Applicable Laws") or the certificate(s) of occupancy issued for the Real
Estate.
4.7.4 Environmental Matters. No polluting, toxic or hazardous
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substances were used, generated, treated, stored, released, discharged or
disposed of by the businesses conducted on the Real Estate by Sellers or, to the
best of Sellers' knowledge, by others, at any time. No notification of release
of a "hazardous substance", "hazardous waste", pollutant or contaminant
regulated under the Clean Air Act, 42 U.S.C. (S)7401 et seq.; the Clean Water
Act, 33 U.S.C. (S) 1251 et seq., and the Water Quality Act of 1987; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. (S)136 et seq.; the Marine
Protection, Research, and Sanctuaries Act, 33 U.S.C. (S) 1401 et seq., the
National Environmental Policy Act, 42 U.S.C. (S) 4321 et seq.; the Noise Control
Act, 42 U.S.C. (S) 4901 et seq.; the Occupational Safety and Health Act, 29
U.S.C. (S)651 et seq.; the Resource Conservation and Recovery Act, 42 U.S.C.
(S)6901 et seq., as amended by the Hazardous and Solid Waste Amendments of 1984;
the Safe Drinking Water Act, 42 U.S.C. (S)300f et seq.; the Comprehensive
Environmental Response Compensation and Liability Act ("CERCLA"), 42 U.S.C.
(S)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. (S)2601 et seq.; and the Atomic Energy Act, 42 U.S.C.
(S)2011 et seq.; all as may be amended, with implementing regulations and
guidelines, or any state or local environmental law, regulation or ordinance,
has been received by Sellers and, to the best of Sellers' knowledge, none has
been filed as to the Real Estate, and the Real Estate is not listed or formally
proposed for listing on the National Priority List promulgated pursuant to
CERCLA or on any state list of hazardous substance sites requiring investigation
or clean-up. No PCB-contamination, friable asbestos or formaldehyde-based
insulation items are present at the Real Estate.
4.7.5 Utilities. All water, sewer, gas, electric, telephone, and
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other public utilities and all storm water drainage required by law or necessary
for the operation of the Assets are installed, connected and operating in good
condition.
4.7.6 Mechanics' Liens. No work has been performed or is in progress
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at, and no materials have been furnished to, the Real Estate which, though not
presently the subject of, might give rise to, mechanics', material suppliers',
or other liens against the Real Estate or any portion thereof. If any lien for
such work is filed before or after Closing hereunder, Sellers shall promptly
discharge the same at their cost.
4.8 Employees. There are no persons employed or engaged by Sellers in
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connection with the management, operation or maintenance of all or any portion
of the Assets whose employment agreements may not be terminated at will.
Sellers have carried all necessary workers compensation insurance with respect
to all employees, up to the date of Closing, have filed all tax returns and
other required filings and have withheld and paid all amounts required by law to
be withheld or paid in respect thereof. Sellers have received no notice of
violation of any provision of OSHA or any rule or regulation relating to the
health and safety conditions of Sellers' workplace.
4.9 Employee Benefit Plans. Sellers do not maintain any employee pension
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benefit plan or any employee welfare benefit plan, or any bonus, deferred
compensation, stock purchase, stock option, stock warrant or other material
fringe benefits arrangement. Sellers have no liability to, and know of no basis
upon which any liability could be asserted again Sellers by the Pension Benefit
Guaranty Corporation or any other party, under the Employee Retirement Income
Security Act of 1974, as amended from time to time.
4.10 Litigation. There is no action, suit or proceeding pending or, to
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the knowledge of Sellers, threatened against or affecting all or any portion of
the Assets, or relating to or arising out of the ownership, management or
operation of all or any portion of the Assets, or this Agreement or the
transactions contemplated hereby, in any court or before or by any federal,
state, county or municipal department, commission, board, bureau or agency or
other governmental instrumentality, whether or not covered by insurance. If any
such action, suit or proceeding is commenced after the date of Closing and if
the same relates to or arises out of the ownership, management or operation of
the Assets prior to Closing, then Sellers shall cause their insurer to insure
and defend against the same.
4.11 Adequacy of Assets. The Assets located on the Real Estate are all of
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the assets normally used by Sellers in connection with the operation and
maintenance of the Sellers' Business.
5. Covenants, Representations and Warranties of Buyer. Buyer covenants,
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represents and warrants to Sellers as follows:
5.1 Authority. Buyer has taken all corporate action necessary to approve
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and effect the transactions contemplated hereby. Buyer is a duly formed and
validly existing corporation, organized and in good standing under the laws of
its domicile and, to the extent required, is properly qualified to do business
in the jurisdiction where the Real Estate is located.
5.2 Commission Filings. Buyer will have delivered to Sellers by the
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Closing Date current and all historical filings made by MSI on Forms 8-K, 10-K,
10-Q and Proxy Statements timely filed with the Securities and Exchange
Commission ("SEC") for fiscal year ending December 31, 1998 (the "Public
Reports"). The Public Reports accurately and completely describe, in all
material respects, MSI's financial status, business operations and prospects as
of the date of such filings and as of the date hereof, and do not omit any
material fact(s) necessary to make the information contained in the filings not
misleading.
5.3 Issued Common Stock. The MSI Stock to be issued pursuant to this
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Agreement has been duly authorized and, when issued, will be validly issued,
fully paid and nonassessable.
6. Conditions Precedent to Buyer's Obligations. All of Buyer's
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obligations hereunder (including, without limitation, its obligation to purchase
and accept the Assets from Sellers) are expressly conditioned on the
satisfaction at or before the time of Closing hereunder or at or before such
earlier time as may be expressly stated below, of each of the following
conditions (any one or more of which may be waived in writing in whole or in
part by Buyer, at Buyer's option):
6.1 Accuracy of Representations. All of the covenants, representations
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and warranties of Sellers contained in this Agreement shall have been true and
correct when made, and shall be true and correct on the date of Closing with the
same effect as if made on and as of such date. To evidence the foregoing, there
shall be delivered to Buyer at Closing a certificate to that effect, dated the
date of Closing, which certificate shall have the effect of a representation and
warranty of Sellers made on and as of the date of Closing.
6.2 Performance. Sellers shall have performed, observed and complied with
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all covenants, agreements and conditions required by this Agreement to be
performed, observed and complied with on their part prior to or as of Closing
hereunder.
6.3 Material Adverse Change. Between the date hereof and the date of
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Closing, there shall have been no material adverse change in the financial
condition of the Business or the physical condition of the Assets.
6.4 Documents and Deliveries. All instruments and documents required on
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Sellers' part to effect this Agreement and the transactions contemplated hereby,
all as set forth herein generally and particularly in Section 10 hereof, shall
be delivered to Buyer and shall be in form and substance consistent with the
requirements herein and otherwise reasonably satisfactory to Buyer and its
counsel.
6.5 Exhibits, etc. The Exhibits and Schedules to this Agreement and all
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deliveries required to be made to Buyer hereunder shall have been furnished or
made to Buyer and shall be satisfactory to it.
6.6 Merger. Closing shall have occurred under the Merger Agreement.
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7. Conditions Precedent to Sellers' Obligations. All of Sellers'
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obligations hereunder (including, without limitation, its obligation to sell and
convey the assets to Buyer) are expressly conditioned on the satisfaction at or
before the time of Closing hereunder or at or before such earlier time expressly
stated below, of each of the following conditions (any one or more of which may
be waived in writing in whole or in part by Sellers, at Sellers' option):
7.1 Accuracy of Representations. All of the representations and
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warranties of Buyer contained in this Agreement shall have been true and correct
when made, and shall be true and correct on the date of Closing with the same
effect as if made on and as of such date.
7.2 Performance. Buyer shall have performed, observed and complied with
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all covenants, agreements and conditions required by this Agreement to be
performed, observed and complied with on its part prior to or as of Closing
hereunder.
7.3 Documents and Deliveries. All instruments and documents required on
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Buyer's part to effect this Agreement and the transactions contemplated hereby,
all as set forth herein generally and particularly in Section 10 hereof, shall
be delivered to Sellers and shall be in a form and substance consistent with the
requirements herein and otherwise reasonably satisfactory to Sellers and their
counsel.
8. Failure of Conditions.
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8.1 In the event Sellers shall not be able to convey title to the Assets
on the date of Closing in accordance with the provisions of this Agreement for
any reason whatsoever, or if all of the conditions precedent set forth in
Section 6 hereof have not been satisfied in full at or prior to Closing, then
Buyer shall have the following options (the "Termination Options"), exercisable
by written notice to Sellers at or prior to the Closing, or at such earlier date
as may be specified elsewhere in this Agreement, if applicable: (1) Buyer may
terminate this Agreement, in which case the parties shall have no other rights
or obligations hereunder, or (2) Buyer may waive its objections hereunder and
proceed with the transaction pursuant to the remaining terms and conditions of
this Agreement, in which event any such waived objection shall become a
Permitted Exception, provided, however, that in such event the Purchase Price
shall automatically be reduced by the amount of any mortgage, judgment or other
Lien other than a Permitted Exception not removed at or before Closing by
Sellers, together with interest and penalties thereon, if any, and together with
any additional title insurance costs or premiums imposed by Title Insurer by
reason
thereof. Any provision of this Section 8 to the contrary notwithstanding, if
Sellers' inability to convey title or the failure of condition is due to a
breach by Sellers in default of their obligations hereunder, then Buyer's
remedies in respect thereof shall not be limited by the foregoing provisions of
this Section 8 and Buyer shall be permitted to exercise forthwith any right,
power or remedy available to Buyer by law, in equity or by contract.
8.2 In the event Buyer shall not be able to deliver the Purchase Price at
Closing in accordance with Section 10 below, Sellers may terminate this
Agreement, in which case the parties shall have no further rights or obligations
hereunder, except for those which expressly survive any such termination,
provided, however, that in such event Sellers shall be reimbursed by Buyer for
all reasonable title insurance company charges, reasonable survey charges,
reasonable attorneys' fees and other reasonable out-of-pocket costs incurred in
connection with the transactions contemplated by this Agreement.
9. Certain Additional Covenants.
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9.1 Ordinary Course. Between the date of execution of this Agreement and
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the earlier of (i) the date of the Operating Agreement, or (ii) the date of
Closing (the "Operating Transfer Date"), Sellers shall operate the Business in
the ordinary course and manage the Assets in a normal businesslike manner,
consistent with prior practices, making all necessary repairs and replacements
required to keep the Assets in good repair and working order and in
substantially the same condition as the date hereof, including ordering and
maintaining on hand sufficient materials, supplies, equipment, inventory, fuel
and other personal property (including, without limitation, replacements and
replenishment of the Inventory) for the efficient operation and management of
the Assets, through the Operating Transfer Date, in a first class manner.
Sellers shall not execute any new Contract or take any other actions not in the
ordinary course of business without Buyer's prior written consent, which consent
will not be unreasonably withheld, or waive any material right or claim
affecting the Assets. Sellers shall promptly notify Buyer of any change in any
condition with respect to the Assets or of any event or circumstance which makes
any representation or warranty of Sellers to Buyer under this Agreement untrue
or misleading, or any covenant of Buyer under this Agreement incapable or less
likely of being performed.
9.2 Inspection. Upon reasonable prior notice given by Buyer, and to the
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extent it does not materially interfere with the operation of Sellers' Business,
Sellers shall make the records available to Buyer for inspection, copying, and
auditing by Buyer's designated accountants, and shall cooperate with Buyer in
obtaining any and all permits, licenses, authorizations and other governmental
approvals necessary for the operation of the assets as an auto wash and oil and
lube center.
9.3 Due Diligence Period. Buyer shall conduct due diligence upon the
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Assets after the execution of this Agreement. If, within thirty days after the
date of this Agreement (the "Due Diligence Period"), Buyer is not satisfied with
the results of its investigation for any reason, Buyer shall be entitled to
terminate this Agreement, in which case the parties shall have no other rights
or obligations hereunder.
9.4 Title Examination Period. Sellers will contact the title company used
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in Sellers' purchase of the Real Estate to attempt to obtain a re-issue rate on
title searches and examination immediately following execution of this
Agreement. However Buyer shall be responsible for any charges related to said
title examination and if Sellers' previous title company is unable to
accommodate Sellers' request, Buyer will obtain and pay for a title examination
and search from a title company acceptable to it. Buyer shall have ten days to
examine title from last to occur of Buyers' receipt of the following: (i) a
current title commitment with respect to the Real Estate, committing to an
extended coverage owners policy of title insurance from the Title Insurer, in an
amount equal to the fair market value of the Real Property, to include access
and contiguity endorsements, and insuring title to the Real Estate to be in fee
simple subject only to the Permitted Exceptions; (ii) copies of all documents
noted as exceptions in the title commitment; and (iii) a current ALTA survey for
the Real Estate (referred to herein as the "Title Examination Period"). If
Buyer's examination of title reflects exceptions to title other than the
Permitted Exceptions, Buyer shall so notify Sellers in writing specifying such
defects prior to the expiration of the Title Examination Period. Sellers shall
have thirty (30) days from receipt of written notice from Buyer within which to
remove said defects, and if Sellers are unsuccessful in removing them within
said time, Buyer shall have the option of either: (i) accepting the title in its
then existing condition; or (ii) canceling this Agreement, whereupon the parties
shall be released of all further obligations under this Agreement. Sellers agree
that they will use best efforts to correct the defects in title within the time
provided therefor, including the bringing of necessary suits. If such title
defects, if any, are not cured by the date otherwise set for closing but are
cured
within the original or extended cure periods, as applicable, then closing shall
occur within ten (10) days after the title has been cured, provided the other
conditions of this Agreement to closing have been met.
9.5 Restrictions on Transfer of Unregistered Stock. The Sellers
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understand and agree that the following restrictions and limitations are
applicable to the Sellers' purchase and resale or other transfer of the MSI
Stock, pursuant to the Securities Act of 1933 (the "Act") or otherwise:
9.5.1 Sellers agree that the MSI Stock shall not be sold or
otherwise transferred, unless the MSI Stock is registered under the Act and
state securities laws or is exempt therefrom.
9.5.2 A legend in substantially the following form will be placed on
the certificates evidencing the MSI Stock to be issued to the Sellers:
"The securities represented by this certificate have
not been registered under the Securities Act of 1933 or any
state securities act. These shares have been acquired for
investment and may not be sold, transferred, pledged or
hypothecated unless (i) they shall have been registered
under the Securities Act of 1933 and any applicable states
securities act or (ii) Xxxx Security International, Inc.,
shall have been furnished with an opinion of counsel,
reasonably satisfactory to counsel for Xxxx Security
International, Inc., that registration is not required under
any such acts."
9.5.3 Stop transfer instructions will be imposed with respect to the
MSI Stock issued to Sellers pursuant to this Agreement so as to restrict resale
or other transfer thereof except in accordance with the foregoing provisions of
this Agreement.
9.6 Representations as to Private Offering. The MSI Stock is being
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delivered to the Sellers in a private placement under Section 4.2 of the Act and
under Regulation D promulgated under the Act. To induce Purchaser to issue the
MSI Stock, Sellers represent and warrant as follows:
9.6.1 Sellers represent and warrant that they are residents of New
Jersey and are accredited investors, as that term is defined in Regulation D
under the Act.
9.6.2 Sellers acknowledge that they have received a copy of the
Public Reports.
9.6.3 Sellers represent and warrant that the MSI Stock is being
acquired for their own account without a view to public distribution or resale
and that the Sellers have no contract, undertaking, agreement or arrangement to
sell or otherwise transfer or dispose of MSI Stock, or any portion thereof, to
any other person.
9.6.4 The Sellers represent and warrant that, in determining to
acquire the MSI Stock, they have relied solely upon their independent
investigation, including the advice of their legal counsel and accountants or
other financial advisers or purchaser representatives, and have, during the
course of discussions concerning their acquisition of the MSI Stock, been
offered the opportunity to ask such questions and inspect such documents
concerning MSI and its business and affairs as they have requested so as to more
fully understand the nature of the investment and to verify the accuracy of the
information supplied.
9.6.5 THE SELLERS ACKNOWLEDGE THAT THE ACQUISITION OF THE MSI STOCK
INVOLVES A HIGH DEGREE OF RISK, and represent and warrant that they can bear the
economic risk of the acquisition of the MSI Stock, including the total loss of
their investment.
9.6.6 The Sellers represent and warrant that (i) they have adequate
means of providing for their current needs and financial contingencies, (ii)
they have no need for liquidity in this investment, (iii) they have no debts or
other obligations, and cannot reasonably foresee any other circumstances, that
are likely in the future to require them to dispose of the MSI Stock, and (iv)
all their investments in and commitments to non-liquid investments are, and
after their acquisition of the MSI Stock will be reasonable in relation to their
net worth and current needs.
9.6.7 The Sellers understand that no federal or state agency has
approved or disapproved the MSI Stock or made any finding or determination as to
the fairness of the MSI Stock for investment.
9.6.8 The Sellers understand that the MSI Stock is being offered and
sold in reliance on specific exemptions from the registration requirements of
federal and state securities laws and that Purchaser is relying upon the truth
and accuracy of the representations, warranties, agreements, acknowledgments and
understandings set forth herein in order to determine the applicability of such
exemption and the suitability of Sellers to acquire the MSI Stock.
10. Closing; Deliveries.
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10.1 Closing. The Closing under this Agreement (the "Closing") shall be
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held at 10:00 A.M. on the first business day after the date that is seven (7)
days after closing occurs under the Merger Agreement, provided all conditions to
closing, including those set forth in Section 9.3, have been met, at the offices
of Buyer, in Mount Laurel, New Jersey, unless another time, date or place is
agreed to in writing by Sellers and Buyer. If all conditions to closing have
been met except for the condition set forth at Section 6.6 above, this Agreement
may be extended for an additional thirty days upon notice by either party to the
other. If after such extension the Closing shall not have occurred solely
because of the failure of a closing to occur under the Merger Agreement, as set
forth in Section 6.6 above, then either party may terminate this Agreement upon
written notice to the other party, whereupon this Agreement shall become void
and be of no further force and effect and no party hereto shall have any further
liability to any other party.
10.2 Sellers' Deliveries. At Closing, Sellers shall deliver to Buyer the
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following (all in form and substance satisfactory to Buyer and Buyer's counsel)
(sometimes referred to hereinafter, together with this Agreement, the Exhibits
and Schedules hereto and all other certificates, affidavits and documents to be
delivered pursuant to this Agreement by Sellers, collectively as the "Asset
Transfer Documents"):
10.2.1 A Special Warranty Deed to the Real Estate, duly executed and
acknowledged by Sellers and in proper form for recording, conveying fee simple
title to the Real Estate to Buyer.
10.2.2 A warranty xxxx of sale for all of the Personalty and the
Inventory, duly executed and acknowledged by Sellers.
10.2.3 One or more assignments assigning to Buyer all Intangible
Personal Property, including without limitation all Assigned Contracts and
assignable Permits, together with the original of each such Assigned Contract
and Permit.
10.2.4 The originals of all certificates of occupancy and all other
materials identified in the Exhibits hereto and then in Sellers' possession, and
all other records and files relating to the construction, operation and
maintenance of the Assets (all of which Buyer shall make available to Sellers
for a period of three (3) years after Closing).
10.2.5 Such affidavits or letters of indemnity as the Title Insurer
shall require in order to issue, without extra charge, policies of title
insurance for the Real Estate free of any exceptions for unfiled mechanics' or
materialmen's liens for work performed prior to Closing.
10.2.6 Keys to all locks of the Assets.
10.2.7 The certificate required by Section 6.1 hereof.
10.2.8 The Foreign Investors Real Property Tax Act Certification and
Affidavit.
10.2.9 All other instruments and documents reasonably required on
the part of Sellers to effectuate this Agreement and the transactions
contemplated thereby.
10.3 At Closing, Buyer shall deliver to Sellers the following:
10.3.1 The Cash Payment.
10.3.2 The MSI Stock.
11. Apportionments; Taxes; Bulk Sales; Expenses.
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11.1 Apportionments. Except as otherwise specifically provided below, all
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expenses and obligations relating to the operation of the Assets (including,
without limitation, real estate taxes; charges under each lease; payroll and
employee benefits; insurance premiums; security deposits; and management fees)
shall be pro rated between Buyer and Sellers as of midnight of the day preceding
the date of Closing. Whether amounts are allocable for the above purposes for
the period before or after Closing shall be determined in accordance with
generally accepted accounting principles using the accrual method. Sellers
shall be responsible for, and shall pay at Closing, any and all accrued vacation
time, accrued wages and salary, bonuses or other benefits accrued by the
employees of the Facility prior to the Operating Transfer Date.
11.1.1 Taxes. All real estate taxes, charges and assessments
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affecting the Real Estate shall be pro rated on a per diem basis as of midnight
of the day preceding the date of Closing, disregarding any discount or penalty
and on the basis of the fiscal year of the authority levying the same. If any of
the same have not been finally assessed, as of the date of Closing, for the
current fiscal year of the taxing authority, then the same shall be adjusted at
Closing based upon the most recently issued bills therefor, and shall be re-
adjusted immediately when and if final bills are issued; but if on the date of
Closing, the Real Estate shall be affected by any special assessment, then all
unpaid installments of such assessment (including those which are to become due
and payable after Closing) shall be paid and discharged by Sellers prior to or
at Closing.
11.1.2 Utilities. Charges for water, electricity, sewer rental,
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gas, telephone and all other utilities shall be pro rated on a per diem basis as
of midnight of the day preceding the Operating Transfer Date, disregarding any
discount or penalty and on the basis of the fiscal year or billing period of the
authority, utility or other person levying or charging for the same. The charges
therefor shall be adjusted at the Closing on the basis of charges for the prior
period for which bills were issued and shall be further adjusted when the bills
for the current period are issued. Sellers and Buyer shall cooperate to cause
the transfer of the Business's utility accounts and telephone numbers from
Sellers to Buyer.
11.1.3 Insurance Premiums. If Buyer shall elect to accept any
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transferable Insurance Policies, the premiums payable thereon shall be pro rated
on a per diem basis on the terms set forth in this Section 11.1.
11.2 Expenses. Each party will pay all its own expenses incurred in
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connection with this Agreement and the transactions contemplated hereby
including, without limitation, (1) all costs and expenses stated herein to be
borne by a party, and (2) all of their respective accounting, legal and
appraisal fees. Sellers, in addition to their other expenses, shall pay one-
half of all transfer taxes and/or documentary stamps associated with the
transfer and conveyance of the Real Estate; Buyer, in addition to its other
expenses, shall pay (1) one-half of all transfer taxes and/or documentary stamps
associated with the transfer and conveyance of the Real Estate, (ii) the costs
of any surveys prepared at Buyer's request, (iii) all title insurance premiums
associated with the transfer of each Facility, and (iv) all recording charges
for Real Estate transfer documents.
11.3 Bulk Sales. Sellers will be responsible for all taxes, payments,
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compliance and notification required under Section 22(c) of the New Jersey
State Sales and Use Tax Act and Section 15 of the New Jersey Business Personal
Property Tax Act. Any amount required to be held in escrow By the New Jersey
Division of Taxation shall be withheld from the Purchase Price and held by
Xxxxxx X. Xxxxxxxx, Xx., Esq., in his escrow account to protect the interests of
Buyer and the State of New Jersey, until receipt of a letter from the Division
of Taxation authorizing the release of said funds.
12. Damage or Destruction: Condemnation; Insurance.
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12.1 Termination by Buyer. If at any time prior to the date of Closing
--------------------
all or any portion of the Assets are destroyed or damaged as a result of fire or
any other casualty whatsoever and the cost of restoring such damage exceeds 5%
of the Purchase Price, or if all or any portion of the real Estate is condemned
or taken by eminent domain proceedings by any public authority or if a notice of
any such
prospective condemnation or taking is given by any public authority,
then, at the option of Buyer, this Agreement shall terminate and shall be
canceled with no further liability of either party to the other. Sellers shall
give Buyer prompt written notice of any casualty or any actual or threatened
taking.
12.2 No Termination. If there is any partial or total damage or
--------------
destruction or condemnation or taking, as above set forth, and if Buyer elects
not to terminate (or is not permitted to terminate) this Agreement as therein
provided, then (1) in the case of a taking, all condemnation proceeds paid or
payable to Sellers shall belong to Buyer and shall be paid over and assigned to
Buyer at Closing, and Sellers shall further execute all assignments and any
other documents or other instruments as Buyer may reasonably request or as may
be necessary to transfer all interest in all such proceeds to Buyer or to
whomever Buyer shall direct; and (2) in the case of a casualty, Buyer shall have
all rights to any insurance proceeds paid or payable under all insurance
policies maintained by Sellers. Sellers agree to maintain casualty insurance on
the Facility at all times prior to Closing in amounts equal to at least 80% of
the replacement cost under policies with deductibles not exceeding $1,000.
12.3 Dispute Resolution. In the event of a dispute between Sellers and
------------------
Buyer with respect to the cost of restoration under Section 12.1 or 12.2 above,
an architect designated by Sellers and an architect designated by Buyer shall
select an independent architect licensed to practice in the jurisdiction where
the Real Estate is located who shall resolve the dispute. All fees, costs and
expenses of the architect so selected shall be shared equally by Buyer and
Sellers.
13. Defaults Prior to Closing.
-------------------------
13.1 Default by Buyer. If Closing shall not occur by reason of Buyer's
----------------
default under this Agreement, then Sellers may terminate this Agreement and the
parties shall have no further rights or obligations hereunder, except for those
which expressly survive any such termination.
13.2 Default by Sellers. In the event Sellers are in default under this
------------------
Agreement at or prior to Closing and if as a result thereof a Closing hereunder
shall not occur, then Buyer shall be entitled to pursue any rights, powers or
remedies available to Buyer by law, in equity or by contract, including
specifically, but without limitation, the right: (1) to specifically enforce
this Agreement against Sellers; or (2) to terminate and cancel this Agreement,
in which event Sellers shall reimburse Buyer for all reasonable out-of-pocket
costs incurred by Buyer in connection with the transactions contemplated by the
Agreement, and thereupon this Agreement shall terminate and the parties shall be
relieved of all further obligation and liability hereunder.
14. Indemnifications.
----------------
14.1 Indemnity by Sellers. From and after the Closing Date, Sellers shall
--------------------
jointly and severally indemnify, defend and hold harmless Buyer and its
shareholders, directors, officers and employees (collectively, the "Buyer
Indemnified Parties"), from and against and in respect of, and shall on demand
pay to the Buyer Indemnified Parties the full amount of any and all losses
and/or liabilities (including without limitation reasonable attorneys' fees)
suffered or incurred by any Buyer Indemnified Party due to, by reason of, or the
existence of which would constitute: (i) any untrue representation, breach of
warranty or breach or non-fulfillment of any covenant or agreement by Sellers
contained in any Asset Transfer Document; (ii) any Tax unpaid and owing by
Sellers, including without limitation any payroll, unemployment or social
security taxes, and any withholdings in respect thereof, any income, excise,
use, personal property, stock or franchise, use and occupancy, real estate,
business or sales tax, any assessments and impositions and any and all interest
and penalties associated therewith unpaid and owing by Sellers; (iii) any
liability arising out of, relating to or connected with any act or omission in
respect of the Assets accruing prior to the Closing Date; and (iv) any and all
actions, suits, proceedings, claims, demands, assessments, judgments, costs and
expenses, including without limitation, attorneys' fees and expenses, incurred
by any Buyer Indemnified Party incident to any of the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
14.2 Indemnity by Buyer. From and after the Closing Date, Buyer shall
------------------
indemnify, defend and hold harmless Sellers, their heirs, successors and assigns
(collectively, the "Sellers Indemnified Parties"), from and against and in
respect of, and shall on demand pay to the Sellers Indemnified Parties the full
amount of any and all losses and/or liabilities (including without limitation
reasonable attorneys' fees) suffered or incurred by any Sellers Indemnified
Party due to, by reason of, or the existence of which would constitute: (i) any
untrue representation, breach of warranty or breach of non-fulfillment of any
covenant or agreement by Buyer contained in this Agreement; (ii) any liability
arising out of, relating to or connected with any act or omission in respect of
the Assets accruing after the Closing Date; and (iii) any and all actions,
suits, proceedings, claims, demands, assessments, costs and expenses, including
without limitation, attorneys' fees and expenses, incurred by any Sellers
Indemnified Party incident to any of the foregoing or incurred in investigating
or attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
15. Undertakings by Sellers and Buyer. In addition to the obligations
---------------------------------
required to be performed hereunder by Sellers and Buyer at Closing, Sellers and
Buyer each agree to perform such other acts, and to execute, acknowledge and
deliver, prior to, at or subsequent to Closing, such other instruments,
documents and other materials as the other may reasonably request and as shall
be necessary in order to effect the consummation of the transactions
contemplated hereby and to vest title to the assets in Buyer or Buyer's nominee.
16. Tender. Formal tender of an executed deed and purchase money is
------
hereby waived, but nothing herein shall be deemed a waiver of the obligation of
Sellers to execute, acknowledge and deliver the deed or other instruments
referred to in Section 10 or the concurrent obligation of Buyer to pay the Cash
Payment at Closing as provided in Section 2.
17. Notices. All notices and other communications hereunder shall be
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in writing (whether or not a writing is expressly required hereby), and shall be
hand delivered or sent by an express delivery service that keeps written records
of delivery, and shall be deemed to have been given when received or refused by
the respective parties at the below addresses (or at such other address as a
party may hereafter designate for itself by notice to the other party as
required hereby):
17.1 If to Sellers:
000 Xxx Xxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
17.2 If to Buyer:
c/o Xxxxxx X. Xxxxxx & Associates, P.C.
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
18. Brokers. Each party represents to the other that neither has made
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any agreement or taken any action which may cause any broker, agent or person to
become entitled to a brokerage or other fee or commission as a result of the
transactions contemplated by this Agreement; and Sellers and Buyer each hereby
indemnify and shall defend the other from any and all claims, actual or
threatened, for compensation by any third person by reason of such party's
breach of its representation or warranty contained in this Section 18.
19. Miscellaneous.
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19.1 Assignability. Buyer may not assign or transfer any portion or all
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of its rights or obligations under this Agreement to any other individual,
entity or other person other than an entity in which Buyer is a shareholder or
the shareholders of Buyer are shareholders without the consent thereto by
Sellers. Upon any permitted assignment the assignee shall be deemed to be the
Buyer hereunder for all purposes hereof and have all the rights of Buyer
hereunder.
19.2 Governing Law; Parties in Interest. This Agreement shall be governed
----------------------------------
by the laws of the State of New Jersey, and shall bind and inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
successors, assigns and personal representatives.
19.3 Computation of Time. In computing any period of time pursuant to
-------------------
this Agreement, the day of the act or event from which the designated period of
time begins to run will not be included. The last day of the period so computed
will be included, unless it is a Saturday, Sunday or legal holiday in New
Jersey, in which event the period runs until the end of the next day which is
not a Saturday, Sunday or such legal holiday.
19.4 Headings. The headings preceding the text of the paragraphs and
--------
subparagraphs hereof are inserted solely for convenience of reference and shall
not constitute a part of this Agreement, nor shall they affect its meaning,
construction or effect.
19.5 Counterparts. 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.
19.6 Exhibits. All Exhibits which are referred to herein and which are
--------
attached hereto or bound separately and initialed by the parties are expressly
made and constitute a part of this Agreement. To the extent that the form of
any Exhibit intended to be attached hereto has not been completed at the time of
execution of this Agreement, the parties agree to negotiate in good faith to
agree upon the form of such Exhibit within fifteen (15) days after the date
hereof.
19.7 Survival. All covenants, representations, warranties and other
--------
provisions herein shall survive Closing and delivery of the deed to the Real
Estate and delivery of the Assets for a period of three years, notwithstanding
any examination made by or on behalf of the parties hereto and any knowledge,
actual or constructive, which Buyer may have as to the inaccuracy of any
representation or warranty of Sellers.
19.8 Entire Agreement; Amendments. This Agreement and the Exhibits hereto
----------------------------
set forth all of the promises, covenants, agreements, conditions and
undertakings between the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as contained herein. This Agreement may not be changed orally but only
by an agreement in writing, duly executed by or on behalf of the party or
parties against whom enforcement of any waiver, change, modification, consent or
discharge is sought.
20. Covenant Not to Compete. Sellers do hereby agree that for a period
-----------------------
of five (5) years from the date of Closing, within the Township of Moorestown in
the State of New Jersey, they will not directly or indirectly be involved in
owning or operating any auto wash business or other activity in direct or
indirect competition with the business being sold pursuant to this Agreement.
If requested by Buyer, Sellers shall execute and deliver at Closing a covenant
further evidencing their agreement to be bound by the foregoing covenant not to
compete, in form satisfactory to Buyer and its counsel.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.
Sellers:
/s/ Xxxxx XxXxxxxxxxxx
------------------------------
Xxxxx XxXxxxxxxxxx
/s/ Xxxxxxxx XxXxxxxxxxxx
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Xxxxxxxx XxXxxxxxxxxx
BUYER:
AMERICAN WASH SERVICES, INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------
Xxxxxx Xxxxxx, Vice President
