AGREEMENT OF SALE
THIS AGREEMENT OF SALE (the "Agreement") is made as of August 31, 1999, by
and among Cherry Hill Car Wash, Inc.("Company"), 1505 Associates General
Partnership, a New Jersey General Partnership ("Partnership"), Xxxxx Xxxxxxxxxx
and Xxxx Rambler, residents of the state of New Jersey ("Shareholders"), and
Xxxx Car Wash, Inc. ("Buyer"). The Company, the Shareholders and Partnership
are sometimes hereinafter referred to as the "Sellers."
BACKGROUND
A. Company owns and operates the car wash (the "Facility") having the
street address of 0000 Xxxx Xxxxxxx Xxxx, Xxxxxx Xxxx, XX 00000. The
Partnership owns that certain parcel of land the Facility is located upon
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,
communications, sprinkler, security and exhaust systems and their component
parts; pipes, pumps, and other equipment and improvements affixed to or forming
a part of the Land (collectively, the "Fixtures"), and together with all
easements, hereditaments, rights and privileges appurtenant to the land are
hereinafter referred to as ( the "Real Estate").
B. The Company and/or the Partnership also own the personal property
consisting of the following (collectively, the "Personalty"):
(1) All equipment, computers, printers, card readers, cash registers,
scanners, vending machines, appliances, machinery and parts, vehicles, tools,
hoses, brushes, heating, ventilation, air conditioning, refrigeration, plumbing,
electrical, drainage, fire alarm, communications, sprinkler, security and
exhaust equipment and their component parts; auto wash equipment, auto wash
conveyor, auto drying equipment and similar items and all other items of
equipment 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 inventory records 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's possession or
control, to the extent the foregoing are used in connection with, located in or
on the Real Estate, or pertain to the operation of the Facility.
(3) All 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 Contracts (as defined in Section 3.7 below) pertaining to the
operation of the Facility on the Real Estate;
(2) All Permits (as defined in Section 3.6 below) pertaining to the
operation of the Facility on the Real Estate;
(3) All intellectual property used in connection with the Facility,
including, without limitation, trademarks, trade names, and the exclusive right
to use the name " Cherry Hill Car Wash" (collectively, the "Intellectual
Property"); and
(4) Sellers' business and operations pertaining to the operation of the
Facility, and all goodwill associated therewith (collectively, the "Business").
D. The Real Estate, Personalty, and the Facility are sometimes referred
to collectively hereinafter as the "Assets."
E. Buyer is a wholly-owned 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. The Partnership and the Company hereby agree to
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sell, transfer and convey the Assets to Buyer, and Buyer hereby agrees to
purchase and accept the Assets from the Partnership and the Company, 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"): (1) any Assigned Contract
(as hereinafter defined in Section 3.7); (2) individual coupons for discounts on
car wash services at the Facility published or issued by Sellers in the ordinary
course of business which by their terms have not expired as of the Closing date
("Coupons"); (3) coupons issued in booklets for free or discount car wash
services at the Facility sold by Sellers in the ordinary course of business
which by their terms have not expired as of the Closing date ("Coupon
Booklets"); and (4) 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 $2,450,000, which, subject to the terms and
conditions hereinafter set forth, shall be allocated among the Assets as set
forth in Exhibit D hereto, and shall be paid to the Company and the Partnership
by Buyer as follows:
2.1 Cash at Closing. At the Closing, the Sellers shall transfer and
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deliver to Buyer the Assets as hereinabove defined, and Buyer shall deliver to
the Sellers cash at closing in the amount of $1,900,000 (the "Cash Payment")
payable by wire transfer of good funds to such accounts as Sellers shall
designate. The Cash Payment shall be divided between the Company and the
Partnership as set forth in Exhibit D.
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 $550,000, each
share being valued at the closing price of the common stock on the Nasdaq Stock
Market on the date of this Agreement ("Per Share Value"). The MSI Stock shall
be divided between the Company and the Partnership, as set forth in Exhibit D.
3. Covenants, Representations and Warranties of Sellers. Each Seller
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jointly and severally covenants as follows, and represents and warrants to Buyer
that the following statements in this Section 3 are true and correct:
3.1 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 any Seller.
3.2 Title to and Condition of Assets. Except as otherwise provided in
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this Section 3 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"). Each Seller represents and warrants that
no person or entity other than the Company and the Partnership 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.
3.2.1 Title to Real Estate. The Partnership has good and marketable,
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fee simple title to the Real Estate, and at the time the sale is consummated,
The Partnership agrees to convey good and marketable, fee simple title to
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the Real Estate to Buyer by bargain and sale deed, with covenants against
grantors' acts. "Good and marketable, fee simple title" is hereby defined as
title which is insurable by Lawyers Title Insurance Corporation ("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").
3.2.2 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.
3.2.3 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 the Company's business, and to the best of Sellers' knowledge 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.
A true, complete and correct list of all Equipment is attached hereto as Exhibit
B.
3.3 "FIRPTA". No Seller is 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.
3.4 Inventory. Substantially all of the 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.
3.5 Personalty. The Personalty includes all the personal property
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required for ownership, operation and maintenance of the Real Estate and the
Facility, and shall be conveyed to Buyer at Closing free and clear of any and
all Liens other than Permitted Exceptions.
3.6 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").
3.7 Contracts. A current, complete and correct copy of each prepaid
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customer agreement, operating agreement or franchise agreement or lease
currently in effect relating to the Facility or the Real Property or any other
Asset (each, a "Contract") shall be delivered to Buyer. Each of the Contracts
listed in Exhibit H shall be assigned to Buyer at Closing (the "Assigned
Contracts"). Each Contract not an Assigned Contract will terminate as of
Closing, and all parties to such agreements will be notified prior to Closing
that their agreements will be subject to termination as of Closing. Except as
described in Exhibit H, no defaults and no events which with the giving of
notice or the passing of time or both would give rise to a default exist with
respect to the Assigned Contracts.
3.8 Further Matters Relating to Real Estate.
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3.8.1 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, subject to waivers and variances previously granted,
and complies with all conditions to approval previously granted.
3.8.2 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.
3.8.3 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.
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3.8.4 Environmental Matters. No polluting, toxic or hazardous
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substances were improperly 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.
3.8.5 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.
3.8.6 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.
3.9 Employees. All of the employees of the Facility and the Company are
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listed on Exhibit I, together with address, payroll identification number, and
rate of pay. There are no persons employed or engaged by any Seller in
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 any Sellers' workplace.
3.10 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 against, 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.
3.11 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 its insurer to insure and
defend against the same.
3.12 Adequacy of Assets. The Assets located on the Real Estate are all the
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assets normally used by Sellers in connection with the operation and maintenance
of the Sellers' Business.
3.13 Corporate Authority. Sellers have taken all corporate and Partnership
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action necessary to approve and effect the transactions contemplated hereby.
Company 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.
Shareholders own all of the outstanding capital stock of Company.
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3.14 Outstanding Coupons and Coupon Booklets. The total dollar value,
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calculated as the sum of all discounts to regular prices, of all Coupons and
Coupon Booklet included among the Assumed Liabilities under Section 1.2 above
and presented for redemption after the Closing Date shall not exceed $10,000.00,
and Sellers agree to indemnify Buyer pursuant to Section 13.1 hereof to the
extent of any excess.
4. Covenants, Representations and Warranties of Buyer. Buyer covenants,
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represents and warrants to Sellers that the following statement in this Section
4 are true and correct.
4.1 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.
4.2 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 the fiscal year ending December 31, 1998 (the "Public
Reports") and the fiscal quarter ending June 30, 1999. 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.
4.3 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.
5. 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):
5.1 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.
5.2 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 its part prior to or as of Closing
hereunder.
5.3 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.
5.4 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 9 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.
5.5 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.
5.6 Due Diligence. Buyer shall be satisfied in its sole discretion with
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the results of the inspection and title examination conducted by it pursuant to
Sections 8.2 and 8.3.
6. 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 Seller, at Sellers' option):
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6.1 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.
6.2 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.
6.3 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 9 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.
6.4 MSI Authorization. Within ten business days after the date of this
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Agreement, Buyer shall have provided Sellers with such proofs as are reasonably
satisfactory to Sellers and their counsel of the consent of MSI to Buyer's entry
into this Agreement and the transactions contemplated hereby, including the
delivery by Buyer of the MSI Stock.
7. Failure of Conditions.
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7.1 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 5 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 and 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 7 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 7 and Buyer shall be permitted to exercise
forthwith any right, power or remedy available to Buyer by law, in equity or by
contract.
7.2 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, or institute suit for specific performance.
8. Certain Additional Covenants.
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8.1 Ordinary Course. Between the date of execution of this Agreement and
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the date of Closing, Sellers shall operate the Facility 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 date of
Closing, 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.
8.2 Due Diligence Period. Buyer shall conduct due diligence upon the
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Assets after the execution of this Agreement. If, within forty five 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. Upon reasonable prior notice given by Buyer, and to
the 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
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all permits, licenses, authorizations and other governmental approvals necessary
for the operation of the assets as a car wash, gas station and retail store.
8.3 Title Examination Period. At Buyer's expense alone, Sellers shall
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obtain a title commitment from the Title Insurer as soon as reasonably possible
after the date of this Agreement. Buyer shall have thirty days to examine title
from last to occur of the Sellers' delivery to Buyer of the following: (i) a
current title commitments with respect to the Real Property, 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 is 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 it will use its 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.
8.4 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:
8.4.1 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.
8.4.2 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."
8.4.3 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.
8.5 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 Buyer to issue the MSI
Stock, Sellers represent and warrant as follows:
8.5.1 Shareholders 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.
8.5.2 Sellers acknowledge that they have received a copy of the
Public Reports.
8.5.3 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.
8.5.4 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
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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.
8.5.5 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.
8.5.6 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.
8.5.7 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.
8.5.8 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 Buyer 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.
8.6 Standstill Agreement. Until the Closing Date, unless this Agreement
--------------------
is earlier terminated pursuant to the provisions hereof, Sellers will not,
directly or indirectly, solicit offers for the shares or the assets of the
Company or the Partnership or for a merger or consolidation involving the
Company, or respond to inquiries from, share information with, negotiate with or
in any way facilitate inquiries or offers from, third parties who express or who
have heretofore expressed an interest in acquiring the Company or the Assets by
merger, consolidation or other combination or acquiring any of the Company's or
the Partnership's assets.
8.7 Financial Statements. Before and after Closing, Sellers agree to
--------------------
cooperate with Buyer in Buyer's preparation of balance sheets for the Company
and the Partnership as of December 31, 1996, December 31, 1997, and December 31,
1998, and statements of income, cash flow and retained earnings for the Company
for the twelve-month periods ended December 31, 1996, December 31, 1997, and
December 31, 1998 ("Historical Financial Statements"), as rapidly as possible.
Sellers' cooperation shall include, without limitation, the execution of
standard representation letters requested by Buyer's auditors. Sellers shall
prepare a compiled stub balance sheet and statements of income, cash flow and
retained earnings for the period commencing January 1, 1999, and ending on the
last day of the last calendar quarter ending prior to Closing ("Interim
Financial Statements"). The Historical Financial Statements and the Interim
Financial Statements shall be prepared at Buyer's cost. Sellers shall cause the
Company's and the Partnership's usual accountants to cooperate with Buyer's
accountants. Buyer shall pay for the reasonable costs of the Company's and the
Partnership's usual accountants in the preparation of the Historical Financial
Statements and the Interim Financial Statements.
9. Closing; Deliveries.
-------------------
9.1 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 five (5)
days after all conditions to closing, including those set forth in Section 9.3,
have been met, at the offices of Title Insurer, unless another time, date or
place is agreed to in writing by Sellers and Buyer.
9.2 Sellers' Deliveries. At Closing, Sellers shall deliver to Buyer the
-------------------
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 Seller, collectively as the "Asset
Transfer Documents"):
9.2.1 A Bargain and Sale Deed to the Real Estate, duly executed and
acknowledged by the Partnership and in proper form for recording, conveying fee
simple title to the Real Estate to Buyer.
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9.2.2 A warranty xxxx of sale for all of the Personalty and the
Inventory, duly executed and acknowledged by the Company.
9.2.3 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.
9.2.4 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).
9.2.5 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.
9.2.6 Keys to all locks of the Assets.
9.2.7 The certificate required by Section 6.1 hereof.
9.2.8 The Foreign Investors Real Property Tax Act Certification and
Affidavit in the form required by the Title Insurer.
9.2.9 All other instruments and documents reasonably required on the
part of Sellers to effectuate this Agreement and the transactions contemplated
thereby.
9.3 At Closing, Buyer shall deliver to Sellers the following (all in form
and substance satisfactory to Sellers and their counsel):
9.3.1 The Cash Payment.
9.3.2 The MSI Stock.
10. Apportionments; Taxes; Expenses.
-------------------------------
10.1 Apportionments. Except as otherwise specifically provided below, all
--------------
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.
10.1.1 Taxes. All real estate taxes, charges and assessments
-----
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.
10.1.2 Utilities. Charges for water, electricity, sewer rental, gas,
---------
telephone and all other utilities 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 or billing period of the authority,
utility or other person levying or charging for the same. If the consumption of
any of the foregoing is measured by meters, then in lieu of apportionment as
aforesaid Buyer shall, not earlier than the day preceding the date of Closing,
obtain a reading of each such meter and Sellers shall pay all charges thereunder
through the date of the meter readings. If there is no such meter or if the
bills for any of the foregoing have not
9
been issued prior to the date of the Closing, 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.
10.1.3 Insurance Premiums. If Buyer shall elect to accept any
------------------
transferable Insurance Policies, the premiums payable thereon shall be pro rated
on a per diem basis on the terms set forth in this Section 10.1.3.
10.1.4 Charges under Contracts. The unpaid monetary obligations of
-----------------------
Sellers with respect to any of the Contracts shall be pro rated on a per diem
basis on the terms set forth in this Section 10.1.4.
10.2 Expenses. Each party will pay all its own expenses incurred in
--------
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. Seller, in addition to its 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. Damage or Destruction: Condemnation; Insurance.
----------------------------------------------
11.1 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.
11.2 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.
11.3 Dispute Resolution. In the event of a dispute between Sellers and
------------------
Buyer with respect to the cost of restoration under Section 11.1 or 11.2 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.
12. Defaults Prior to Closing.
-------------------------
12.1 Default by Buyer. If Closing shall not occur by reason of Buyer's
----------------
default under this Agreement, then Sellers shall be entitled to pursue any
rights, powers or remedies available to Sellers by law, in equity or by
contract, including specifically, but without limitation, the right to terminate
and cancel this Agreement, in which event Buyer shall reimburse Sellers for all
reasonable out-of-pocket costs incurred by Sellers 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.
12.2 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 Seller, or (2) to terminate and cancel this Agreement, in
which event Sellers shall reimburse
10
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.
13. Indemnifications.
----------------
13.1 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 this agreement or 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; (iv) any Coupon or
Coupon Booklet redemption amount in excess of the amount specified in Section
3.14 above; and (v) 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.
13.2 Indemnity by Buyer. From and after the Closing Date, Buyer shall
------------------
indemnify, defend and hold harmless Sellers, their heirs successors and assigns
(collectively, the "Seller Indemnified Parties"), from and against and in
respect of, and shall on demand pay to the Seller Indemnified Parties the full
amount of any and all losses and/or liabilities (including without limitation
reasonable attorneys' fees) suffered or incurred by any Seller 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; and (ii) any and all actions,
suits, proceedings, claims, demands, assessments, costs and expenses, including
without limitation, attorneys' fees and expenses, incurred by any Seller
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. 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.
15. 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 9 or the concurrent obligation of Buyer to pay the
Purchase Price at Closing as provided in Section 2.
16. Notices. All notices and other communications hereunder shall be 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):
16.1 If to Sellers, or any of them:
Cherry Hill Car Wash, Inc. 1505 Associates General Partnership
0000 X. Xxxxxxx Xxxx P.O. Box 596
Cherry Hill, NJ 08034 Xxxxxx Xxxx, XX 00000
Xxxxx Xxxxxxxxxx Xxxx Rambler
000 Xxxxxxxxxxx Xxxxx 0000 Xxxxxxxx Xxx.
Xxxxxx Xxxx, XX 00000 Xxxxxxx, XX 00000
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16.2 If to Buyer:
Xxxx Car Wash, Inc., Attn.: Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxx Xxxxxx 00000
17. Brokers. Each party represents to the other that neither has made 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 17.
18. Miscellaneous.
-------------
18.1 Assignment. Buyer may assign or transfer any portion or all of its
----------
rights or obligations under this Agreement to any entity in which Buyer is a
shareholder or of which MSI is also the ultimate parent corporation thereof
without the consent thereto by Sellers. Upon any such assignment the assignee
shall be deemed to be the Buyer hereunder for all purposes hereof and have all
the rights of Buyer hereunder.
18.2 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.
18.3 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.
18.4 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.
18.5 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.
18.6 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.
18.7 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 one year, 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.
18.8 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.
19. Covenant Not to Compete. Sellers do hereby agree that for a period of
-----------------------
five (5) years from the date of Closing, within a radius of three (3) miles from
the Facility location, they will not directly or indirectly be involved in
owning or operating any car wash, convenience store or retail gasoline business
or other activity in direct or indirect competition with the business being sold
pursuant to this Agreement. This restriction shall not apply to the operation by
12
Shareholder Xxxxx Xxxxxxxxxx of the car wash on Haddonfield Road in Cherry Hill,
New Jersey, presently doing business as The Wave. 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:
CHERRY HILL CAR WASH, INC.
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------------
Xxxxx Xxxxxxxxxx, President
1505 ASSOCIATES GENERAL PARTNERSHIP
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------------
Xxxxx Xxxxxxxxxx, General Partner
By: /s/ Xxxx Rambler
----------------------------------
Xxxx Rambler, General Partner
SHAREHOLDER:
/s/ Xxxxx Xxxxxxxxxx
---------------------------------------
Xxxxx Xxxxxxxxxx
SHAREHOLDER:
/s/ Xxxx Rambler
---------------------------------------
Xxxx Rambler
BUYER
XXXX CAR WASH, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: /s/ Xxxxxx Xxxxxx
----------------------------------
Title: Executive VP & Secretary
---------------------------------
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