Exhibit 10.1
ASSET PURCHASE AGREEMENT
XXXX SECURITY INTERNATIONAL, INC
AND
CW ACQUISITION, LLC
TABLE OF CONTENTS
PAGE
RECITALS..................................................................... 1
ARTICLE I REAL PROPERTY AND ASSET TRANSFER; CLOSING.......................... 1
ARTICLE II TITLE............................................................. 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS....................... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER...................... 17
ARTICLE V ADDITIONAL AGREEMENTS OF SELLERS.................................. 18
ARTICLE VI ADDITIONAL AGREEMENTS OF PURCHASER............................... 22
ARTICLE VII CONDITIONS TO PURCHASER'S OBLIGATIONS........................... 23
ARTICLE VIII CONDITIONS TO SELLERS' OBLIGATIONS............................. 24
ARTICLE IX INDEMNIFICATION ................................................. 24
ARTICLE X OTHER PROVISIONS.................................................. 28
SCHEDULES
1.9(a)(iii) Promissory Note
1.9(a)(vi) Assignment Agreement
1.9(a)(vii) Lease Assignment
1.10(a)(i) Xxxx of Sale
1.10(a)(iv) Form of Special Warranty Deed
Enclosed in Disclosure Binder
1.3 Car Wash Locations
1.4(c) Equipment
1.4(e) Contractual Obligations
1.4(f) Permits
1.11(b) Allocation of Purchase Price
3.3 Summary of Oral Agreements
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3.5(b) Exceptions to governmental compliance
3.5(d) Litigation or administrative proceedings
for environmental violations
3.5(e) Releases of "Hazardous Materials" and Environmental Conditions
3.5(g) Proceedings which would affect use of the Locations
3.7 Changes in the Car Wash Business
3.8 Required Consents
3.12 Pending and Threatened Litigation
3.13 Employee Contracts
3.14 Employee Benefits
Appendix A Defined Terms
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of February 28,
2006, by and among Xxxx Security International, Inc. ("MSI"), Xxxx Car Wash, Inc
("MCW"), Xxxx Car Wash-Arizona, Inc. ("MCWA") and CW Acquisition, LLC ("CW").
For purposes of this Agreement, CW Acquisition, LLC is sometimes referred to as
"Purchaser," MCW and MCWA, subsidiaries of MSI that own the assets being sold
under this Agreement, are referred to individually as a "Company" and
collectively as the "Companies," and MSI and the Companies are sometimes
collectively referred to as "Sellers."
RECITALS
MSI is the sole shareholder of the Companies. Each of the Companies own
the car washes listed on Schedule 1.3 attached. For purposes of this Agreement
the car and truck wash locations listed on Schedule 1.3 attached are hereafter
referred to individually, as a ("Location") and collectively the ("Locations").
Nine of the Locations are situated on parcels of real property owned by the
Companies (the "Owned Real Property"), and three of the Locations are situated
on parcels of real property that MCW occupies under valid leasehold interests
(the "Leased Real Property"). Schedule 1.3 identifies both the Owned Real
Property and the Leased Real Property.
Throughout this Agreement various Schedules are referenced as being
attached to this Agreement. Notwithstanding the fact that all Schedules are
referred to as being attached to this Agreement, some of the Schedules are not
attached but instead appear in a Disclosure Binder dated February 28, 2006. The
Disclosure Binder is organized under subheadings which correspond to the various
Schedules described in this Agreement. For purposes of identification, the
Disclosure Binder has been identified by the parties by a written statement
executed by the parties and appearing as the first page of the Disclosure
Binder.
ARTICLE I
Real Property and Asset Transfer; Closing
Section 1.1 Incorporation of Recitals. The recitals set forth above are
incorporated herein by reference and are a part of this Agreement.
Section 1.2 Place for Closing. The Closing under this Agreement shall
take place at the offices of Sellers, 0000 Xxxxxxxx Xxxxx, Xxxxx Xxxxxx, Xxx
Xxxxxx, or such other place as the parties hereto may agree upon. The date that
Closing occurs is referred to hereinafter as the "Closing Date", and the act of
closing as the "Closing." The Closing Date shall take place on the last day of a
month.
Section 1.3 Agreement to Transfer Assets and Owned Real Property;
Consideration.
(a) The Companies shall transfer and MSI shall cause the Companies to
transfer and deliver to Purchaser the Owned Real Property, their leasehold
interests in the Leased Real Property and their interests in the Assets for the
total consideration of $19,500,000 (Nineteen Million Five Hundred Thousand
Dollars) ("Purchase Price"), payable as follows:
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(i) $200,000 ("Deposit") shall be delivered to United Escrow
Co., as escrow agent ("Escrow Agent") within two (2) days of the execution of
this Agreement. The Deposit and all interest earned thereon shall be applied and
paid as set forth in Section 1.3(b) below.
(ii) Eighteen Million Three Hundred Thousand ($18,300,000)
shall be delivered to MSI on the Closing Date payable at Closing by wire
transfer in United States of America currency, to an account as designated by
MSI;
(iii) Purchaser shall deliver a promissory note to MSI in the
amount of One Million Dollars ($1,000,000) in the form of the note attached as
Schedule 1.9(a)(iii) ("Promissory Note"). The provisions of the Promissory Note
as set forth on Schedule 1.9(a)(iii) are (a) a term of three years, (b) an
interest rate of seven and a half percent per annum, (c) payments of Two Hundred
Fifty Thousand Dollars on the twelfth (12) and twenty fourth (24) month
anniversary dates of the Promissory Note's date of issuance to be applied to
accrued interest and then principal, and (d) a final payment of all accrued
interest and principal being due and payable on the thirty six (36) month of the
Promissory Note's date of issuance. The Promissory note shall be secured by a
Second Deed of Trust on the Cypress Car Wash located at 0000 Xxxxxxx Xxxxxx,
Xxxxxxx, XX 00000 ("Cypress Second Deed of Trust"). The Cypress Second Deed of
Trust shall be junior to a first deed of trust having a principal balance of no
more then $450,000. The first deed of trust on the Cypress Car Wash may be
refinanced from time to time in an amount no greater then $450,000. The
Promissory Note shall also be secured by a third deed of trust on the Locations
junior to a first and second deed of trust having a total principal balance of
no more then $ $17,250,000 .
(b) On or before two (2) Business Days following the execution of this
Agreement, Purchaser shall pay the Escrow Agent the Deposit in United States
currency. The Deposit and the interest earned on it shall be paid to MSI at
Closing. The Escrow Agent, when it receives the Deposit shall confirm to MSI in
writing that the Deposit has been paid to Escrow Agent. The Deposit, while held
in Escrow, shall to the extent possible, be invested in U.S. Treasury Bills or
other short-term U.S. Government securities, repurchase agreements with a
national banking association for such securities, investment-grade commercial
paper or other investment-grade "money market" investments, as Purchaser and MSI
jointly direct Escrow Agent, and whenever not so invested shall be held by the
Escrow Agent in a separate, federally-insured, interest-bearing account with a
national banking association approved by Purchaser and MSI. If Closing does not
occur because a condition set forth in Article VII of this Agreement is not
satisfied or waived by Purchaser or if Purchaser terminates this Agreement
pursuant to the express termination right set forth in Section 7.1, the Escrow
Agent shall return the Deposit to Purchaser. If Closing does not occur due to
the default of Purchaser and all conditions set forth in Article VII have been
satisfied, waived or would have been satisfied with the passage of time, the
Escrow Agent shall pay the Deposit to MSI. The interest on the Deposit will be
paid to the party to this Agreement that receives the Deposit. The Escrow Agent
by executing this Agreement is agreeing to be bound only to the provisions of
this Agreement relating to the Deposit. In the event of a dispute between
Sellers and Purchaser concerning the Deposit, the Escrow Agent shall hold the
Deposit until ordered by a court having jurisdiction to pay the Deposit to
Sellers, Purchaser or into the Court.
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(c) In accordance with Section 1.4 of this Agreement at Closing,
Purchaser will be conveyed the gasoline in underground storage tanks at the
Locations. In accordance with Section 1.6 and 6.3 of this Agreement, Purchaser
after Closing is obligated to honor, without charge to the customers of the
Locations, the car wash passes, coupons and pre-paid gift cards issued by the
Companies in connection with the Car Wash Business. Sellers and Purchaser agree
that for the purpose of this Agreement the term ("Excess Deferred Revenue")
shall mean the amount, if any, by which the amount equal to (a) the deferred
revenue amount on the Companies books of account attributable to the customer
passes, coupons, and gift cards issued in connection with the Car Wash Business
at the Closing Date, exceeds by more then One Hundred Thousand ($100,000)
Dollars the amount equal to (b) the inventory amount on the Companies books of
account attributable to the gasoline in underground storage tanks at the
Locations on the Closing Date. At the Closing, Purchaser shall receive a
purchase price reduction equal to the amount of the Excess Deferred Revenue, if
any.
Section 1.4 Description of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, as hereinabove
defined, the Companies shall and MSI shall cause the Companies to grant, convey,
sell, transfer and assign to Purchaser all assets of the Companies set forth in
this Section 1.4 which assets are the following: (the "Assets"):
(a) The Owned Real Property (including, but not limited to, the land
and all appurtenances, buildings, structures, improvements, fixtures and other
structures);
(b) The leasehold interests in the Leased Real Property and all
interests in the appurtenances, buildings, structures, improvements, fixtures
and other structures;
(c) All equipment, computers, software, printers, vending machines,
machinery and parts, vehicles, tools, hoses, brushes, communication equipment,
sprinklers, and security equipment and similar items in and at the Locations
(collectively, the "Equipment"), the Equipment in the car wash tunnels of the
Locations is listed on Schedule 1.4(c);
(d) The inventory of gasoline in underground storage tanks at the
Locations;
(e) All contractual rights and obligations of the Companies with its
customers, vendors, suppliers, landlords, tenants and others, as listed on
Schedule 1.4(e), excepting only the contracts with Recycled Paper Greetings and
Ecolab, Inc. that are not to be assigned to Purchaser ("Contractual
Obligations");
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(f) All permits, licenses, franchises, consents and other approvals
from governments, governmental agencies (federal, state and local) ("Permits")
held by the Companies relating to, used in or required for the operation of the
Car Wash Business or any of the Assets, all of which are listed on Schedule
1.4(f), to the extent such Permits are assignable ;
(g) All office equipment, furnishings, sales and promotional materials,
catalogues and advertising literature, and all pictures and photographs,
construction and "as-built" drawings, plans and specifications, and finish plans
in the possession or control of the Companies, relating to the Car Wash
Business;
(h) To the extent owned, licensed or otherwise available to the
Companies, all intellectual property used in connection with the Car Wash
Business, such as franchises, trademarks, trade names, copies of employee lists,
copies of vendor files, website domain name of Xxxxx Guys Car Wash, copies of
customer lists, copies of customer records and information and the right to use
the name of Xxxxx Guys (collectively, the "Intellectual Property") and;
(i) All original agreements and contracts and title documents relating
to the items set forth in (a) through (h) above.
At Closing, Sellers shall convey to Purchaser good and marketable title
to the Assets identified above under Sections 1.4(c) through 1.4(h) free and
clear of all liens, security interests claims, all amounts owed or accrued as of
the Closing, except for the current year's Taxes (as prorated pursuant to this
Agreement), the Assumed Liabilities, as defined in this Agreement and the
Permitted Exceptions, as defined in this Agreement.
At Closing, Sellers shall convey to Purchaser good and marketable title
to the Owned Real Property, free and clear of any mortgages, collateral
assignments, security interests, liens, claims, charges or encumbrances without
exception, other than the Permitted Exceptions.
Section 1.5 Excluded Assets. The parties agree that the Assets being
sold do not include any cash, accounts receivables, inventory (other then
gasoline in underground storage tanks at the Locations), the original financial
books and records of the Companies and insurance polices and insurance reserves
relating to the Car Wash Business. Copies of the financial books and records of
the Car Wash Business will be made available by the Sellers, to Purchaser both
before and after Closing, for examination, inspection and copying.
Section 1.6 Assumption of Obligations. Purchaser agrees to (i) assume
all rights and obligations existing as of and arising after the Closing Date
under the Contractual Obligations, and (ii) honor and accept all customer
passes, coupons, and gift cards issued in connection with the Car Wash Business
through the Closing Date and (iii) assume all liabilities, responsibilities and
all obligations arising with respect to Applicable Laws, as defined in this
Agreement relating to Locations ("Assumed Liabilities"). Notwithstanding the
foregoing definition of Assumed Liabilities, the Purchaser may seek
indemnification under the provisions of Article IX for the violation of any
representation or warranty of Sellers under this Agreement regarding the
violation of Applicable Laws at the Locations.
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Section 1.7 Non-Assumption of Liabilities. Purchaser shall not, by the
execution and performance of this Agreement or otherwise, assume, become
responsible for, or incur any liability or obligation of any nature of the
Sellers, except for the Assumed Liabilities being assumed under Section 1.6
hereof. By way of illustration, Purchaser shall not assume, become responsible
for, or incur any liability for whether legal or equitable, matured or
contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary,
patent or latent, arising out of occurrences prior to the Closing Date arising
out of or relating to: (a) violation of the requirements of any governmental
authority or of the rights of any third person, relating to the reporting and
payment of federal, state, or other income Tax Liabilities of Sellers; (b) any
severance pay, or accrued vacation pay obligation or any other potential claims
that could be brought or alleged by any of the Sellers employees for periods
prior to the Closing Date, or any obligations under any employee benefit plan
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended) or any other fringe benefit program maintained or
sponsored by Sellers or to which any of the Sellers contributes or any
contributions, benefits or liabilities therefore or any liability for the
withdrawal or partial withdrawal from or termination of any such plan or program
by the Sellers; (c) the interest bearing debts of the Sellers, (d) any violation
by the Sellers of any federal, state or local antitrust, racketeering or trade
practice law, (e) liabilities or obligations of the Sellers for brokerage or
other commissions relative to this Agreement or the transactions contemplated
hereunder, (f) any and all liability and obligation for commissions and bonuses
listed on Schedule 3.13; and (g) any rights, liabilities or responsibilities for
any lease agreement that is not listed in Schedule 1.4(e).
Section 1.8 Time For Closing; Termination. Following execution of this
Agreement, provided that (i) Purchaser does not exercise its termination right
pursuant to Section 7.1 or (ii) Seller does not exercise its termination right
pursuant to Section 7.1, Purchaser and Sellers shall be obligated to conclude
the Closing on the last business day of the month of the month in which the
conditions of Closing set forth in Article VII and Article VIII have been
satisfied or waived. If the failure to conclude this transaction is due to the
refusal and failure of Sellers to perform their obligations under this
Agreement, Purchaser may elect to seek to enforce this Agreement with an action
of specific performance, or alternatively, Purchaser may elect as sole and
liquidated damages the sum of $200,000, and Purchaser shall be paid the Deposit
and interest thereon. The parties acknowledge that the Purchaser's actual
damages in the event of a default by Sellers are difficult to ascertain and that
the $200,000 (along with return of the Deposit made with interest thereon) is a
fair approximation of the damages Purchaser is expected to suffer. In the case
of a default by Purchaser, Sellers shall be paid the Deposit and interest
thereon, as sole and liquidated damages. The parties acknowledge that the
Sellers actual damages in the event of a default by Purchaser are difficult to
ascertain and that the Deposit and interest is a fair approximation of the
damages Sellers are expected to suffer. Neither the Sellers nor Purchaser shall
be deemed in default hereunder by reason of any failure of a condition precedent
to the obligations of either Sellers or Purchaser hereunder where such failure
has occurred for reasons beyond the control of the party unable to satisfy the
condition precedent to the other party's obligations under this Agreement.
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This Agreement and the transactions contemplated hereby may be
terminated at any time: prior to the Closing Date:
(a) by mutual written agreement of Purchaser and MSI;
(b) by MSI, or by Purchaser in the event Purchaser or the Sellers, as
applicable, makes a material misrepresentation under this Agreement or breaches
a material covenant or agreement under this Agreement, and fails to cure such
misrepresentation or breach within ten (10) business days from the date of
written notice of the existence of such misrepresentation or breach; or
(c) by MSI or Purchaser, if the Closing does not occur by June 15,
2006, or such other date as may be agreed to by the parties hereto in writing,
due to the non-fulfillment of a condition precedent to such party's obligation
to close as set forth at Article VII or VIII hereof, as applicable (through no
fault or breach by the terminating party).
All terminations shall be exercised by sending the other parties a
written notice of the termination. In the event this Agreement is terminated as
provided herein, this Agreement shall become void and be of no further force and
effect, the Deposit paid as set forth in Section 1.3(b), and no party hereto
shall have any further liability to any other party hereto, except that Section
1.3(b), this Section 1.8, Article IX, Section 10.1, and Section 10.2 shall
survive and continue in full force and effect, notwithstanding termination. The
termination of this Agreement shall not limit, waive or prejudice the remedies
available to the parties, at law or in equity, for a breach of this Agreement,
except as limited by this Agreement.
Section 1.9 Deliveries by Purchaser.
(a) At the Closing, Purchaser shall deliver, all duly and properly
executed (where applicable):
(i) The cash portion of the Purchase Price in United States
currency by wire transfer to the Escrow Agent and MSI as set forth in Section
1.3(a)(ii);
(ii) An executed second deed of trust securing the payment of
the Promissory Note with the Cypress Car Wash located at 0000 Xxxxxxx Xxxxxx,
Xxxxxxx, XX 00000, subordinate to a first mortgage of no more then $450,000 and
having a form and content reasonably acceptable to MSI;
(iii) An executed third deed of trust securing the payment of
the Promissory Note with the Locations, subordinate to a first deed of trust in
the approximate amount of $3,500,000 and a second deed of trust in the
approximate amount of $13,650,000 ,having a total combined principal amount of
no more then $17,250,000 and having a form and content reasonably acceptable to
MSI and reasonably acceptable to the lenders that hold the deeds of trust
superior to the third deed of trust;
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(iv) A copy of the resolutions of the requisite members or
managers of Purchaser authorizing the execution and delivery of this Agreement
and each other agreement to be executed in connection herewith (the resolutions
and agreements to be executed in connection herewith by Sellers and/or Purchaser
are referred to in this Agreement collectively, as the "Collateral Documents")
and the consummation of the transactions contemplated herein;
(v) Other documents and instruments required by this
Agreement, if any;
(vi) An Assignment and Assumption Agreement in form and
substance as attached hereto as Schedule 1.9(a)(vi) ("Assignment Agreement");
and
(vii) A Lease Assignment accepting the conveyance of the
Companies to Purchaser of each leasehold interest in the Leased Real Property,
general form and substance, as attached as Schedule 1.9(a)(vii) ("Lease
Assignment").
Section 1.10 Deliveries by Sellers.
(a) At the Closing, each of the Sellers shall deliver, all duly and
properly executed (where applicable):
(i) A Xxxx of Sale for the Assets related to the Locations
owned by each Seller to be conveyed and assigned, in the form attached as
Schedule 1.10(a)(i);
(ii) A certified copy of resolutions of the directors of the
Sellers authorizing the execution and delivery of this Agreement and each of the
Collateral Documents to be executed in connection herewith by Sellers or either
of them;
(iii) The Certificate described at Section 7.1, executed by a
corporate officer of MSI;
(iv) Special Warranty Deeds, conveying to Purchaser each
parcel of the Owned Real Property, subject only to the Permitted Exceptions (as
defined below), in the form attached as Schedule 1.10(a)(iv);
(v) The Lease Assignments;
(vi) Physical possession of all Assets, the Owned Real
Property and the Leased Real Property, subject only to any Contractual
Obligations;
(vii) The Assignment Agreement;
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(viii) Customary title documentation, including, without
limitation, mechanics' lien affidavits; and
(ix) Other documents and instruments required by this
Agreement, if any.
Section 1.11 Transfer Tax, Allocation of Purchase Price and
Pro-Rations.
(a) Sellers and Purchaser shall each bear or pay sales, transfer taxes
and fees imposed on the conveyance of the Assets by all governments, state,
local and federal in accordance with the provisions of Section 5.1 and 6.1.
(b) The parties agree that the consideration for the sale of the Assets
shall be allocated among the Assets as set forth on Schedule 1.11(b) attached
hereto. The Sellers and the Purchaser acknowledge that the allocation in such
Schedule, will have been arrived at based upon their negotiations and shall be
used by them for all purposes, including, but not limited to, federal, state,
and local Tax and financial reporting purposes, and they shall not take any
position inconsistent to the allocation. On the Closing Date, as applicable, the
Purchaser and the Sellers shall execute Internal Revenue Form 8594 which form
shall be binding on the Purchaser and the Sellers and shall be filed with the
income tax returns of the Purchaser and the Sellers.
(c) The charges for the current year's real estate Taxes due with
respect to the Owned Real Property and Leased Real Property, shall be prorated
between the Companies and the Purchaser based on the Closing Date, with the
Companies paying all such Taxes due prior to the Closing Date and the Purchaser
paying all such Taxes due on and after the Closing Date.
(d) The charges for water, electricity, sewer rental, gas, telephone
and all other utilities pertaining to the Locations, shall be prorated between
the Companies and the Purchaser based on the Closing Date, with the Companies
paying all such charges due prior to the Closing Date and the Purchaser paying
all such Taxes due on and after the Closing Date.
ARTICLE II
Title and Environmental Inspection
Section 2.1 Real Property. As set forth in the Recitals, the Companies
own the Owned Real Property. For purposes of this Agreement, "Owned Real
Property" shall also include (i) all of the Company's right, title and interest
in and to all easements, rights-of-way, privileges and appurtenances thereto,
including, without, limitation, all water and water rights, ditch and ditch
rights, all coal, oil, gas, and other minerals thereon or there under, (ii) all
of Company's right, title and interest in and to the beds of all streets, roads,
avenues or highways, open or proposed, abutting the Owned Real Property, and
(iii) all of Company's right, title and interest, if any, in and to any award in
condemnation, or damages of any kind, to which Company may have become entitled
or may hereafter be entitled, by reason of any exercise of the power of eminent
domain with respect to the Owned Real Property or any other right, title or
interest to be sold hereunder or any part thereof. Sellers shall convey to
Purchaser at Closing good and marketable title to the Owned Real Property, free
and clear of any mortgages, collateral assignments, security interests, liens,
claims, charges or encumbrances without exception, other than utility easements
and other covenant restrictions, if any, which do not impede the Location's use
as a car wash or adversely affects the marketability of the Location's title
("Permitted Exceptions").
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Section 2.2 Owner's Title Policy. MSI has prior to the execution of
this Agreement delivered to Purchaser the Current Title Policies for the
Locations. MSI and Purchaser shall order new title commitments ("New Title
Commitments") for the Owned Real Property from a title insurer acceptable to
both MSI and the Purchaser (the "Title Insurer") as soon as practicable after
the date of this Agreement. MSI and Purchaser shall each pay one half of the
premium of any title insurance the Title Insurer issues. The New Title
Commitments shall be dated after the date of this Agreement with respect to each
Owned Real Property, and shall be a commitment of the Title Insurer to issue
with respect to each Owned Real Property a standard coverage ALTA owners policy
of title insurance ("Title Policy"). If the jurisdiction offers an extended
coverage ALTA owners policy and a standard owners policy, and Purchaser wishes
an extended coverage policy, Purchaser shall solely pay the additional charge
for the extended coverage. The Title Policy when issued shall insure title to
the Owned Real Property covered by the Title Policy to be in fee simple subject
only to the Permitted Exceptions, as defined above. MSI and Purchaser shall
cause the Title Insurer to deliver to MSI and Purchaser along with the New Title
Commitments copies of all documents noted as exceptions in each of the New Title
Commitments. Following the date hereof, Seller shall not create or consent to
the creation of any lien, encumbrance or other matter affecting title to any of
the Owned Real Property, without Purchaser's prior written consent.
Section 2.3 Leased Real Property. At Closing, the Leased Real Property
shall be conveyed to Purchaser through separate lease assignments executed by
the Companies which is the tenant under each applicable lease. The form of Lease
Assignment that is acceptable to both the Sellers and Purchaser is attached to
this Agreement as Schedule 1.9(a)(vii). Both the Sellers and the Purchaser shall
cooperate with each other for the purpose of agreeing to make reasonable changes
to the Lease Assignment form as are necessary to obtain the execution of it by
the separate landlords of the Leased Real Property. The Sellers and Purchaser
also agree to use their commercially reasonable efforts, not to include the
payment of money, to satisfy whatever reasonable requirements the separate
landlords reasonably request as a condition of executing a Lease Assignment.
After the date hereof, without the prior written consent of Purchaser, the
leases for the Leased Real Property shall not be amended, renewed, terminated or
otherwise modified or any new leases executed.
Section 2.4 Survey. MSI has furnished to Purchaser all of the Current
Surveys. Purchaser, at its election, or as Purchaser's lenders may require, may
have updates or new surveys made at its expense ("Updated Surveys"). Within five
days after the execution of this Agreement, Purchaser will order the Updated
Surveys it requires and will notify Sellers in writing of the Locations for
which Updated Surveys have been ordered. Sellers will use commercially
reasonable efforts to cooperate and aid Purchaser's surveyor in preparing the
Updated Surveys commissioned by Purchaser. Purchaser shall use commercially
reasonable efforts to obtain the commissioned Updated Surveys as soon as
possible.
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Section 2.5 Environmental Reports. MSI has furnished to Purchaser all
of the Phase 1 Environmental Reports relating to the Locations that are in its
possession. Purchaser, at its election, may have new or additional Phase 1
Environmental Reports updates made for the Locations at its expense ("Updated
Phase 1 Reports"). Within five days after the execution of this Agreement,
Purchaser will order the Updated Phase 1 Reports it requires and will notify
Sellers in writing of the Locations for which Updated Phase 1 Reports have been
ordered. Sellers will use commercially reasonable efforts to cooperate and aid
Purchaser's environmental consultant in preparing the Updated Phase 1 Reports
commissioned by Purchaser. Purchaser shall use commercially reasonable efforts
to obtain the commissioned Updated Phase 1 Reports as soon as possible.
Purchaser will furnish MSI with copies of each Updated Phase 1 Report obtained
by it for the Locations within two days after Purchaser receives each Updated
Phase 1 Report. Section 2.6 Inspections.
(a) Purchaser shall have the right to examine the title to each of the
Locations. If during the Title Inspection Period, as hereafter defined,
Purchaser determines that the Location's title is subject to exceptions or
objections to title that do not come within the definition of Permitted
Exceptions, as set forth in Section 2.1 above, Purchaser shall have until the
end of the Title Inspection Period to notify MSI in writing specifying such
defects that in Purchaser's opinion are not Permitted Exceptions. MSI shall have
thirty (30) days from receipt of written notice from Purchaser within which to
remove said defects or agree to have them removed by Closing, and if MSI is
unsuccessful in removing them within said time, Purchaser shall have the option
of either: (i) accepting the title to the Location in its then existing
condition; or (ii) deleting the Location from this Agreement whereupon the
Purchase Price will be reduced by an amount allocated to the Location as set
forth on Schedule 1.11(b) All exceptions to title or the surveys to which
Purchaser does not object during the Title Examination Period, or if objected to
by Purchaser, are cured by MSI or are subsequently waived by Purchaser shall be
deemed to be within the definition of Permitted Exceptions, as set forth in
Section 2.1. The Title Inspection Period as to each Location shall be fifteen
days after the date that Purchaser receives with respect to the Location, the
last to be received of (i) the New Title Commitment for the Location along with
the documents noted as exceptions in the New Title Commitment and (ii) the
Updated Survey for the Location, provided an Undated Survey was commissioned by
Purchaser within the time required by Section 2.4 of this Agreement. The Title
Examination Period for a Location shall be extended for an additional five (5)
business day period with respect to any supplements or updates to any New Title
Commitment or Updated Survey received by Purchaser prior to the Closing Date but
Purchaser may only object to facts first revealed by the supplement or update.
(b) Purchaser shall have the right to examine the environmental
compliance condition of each of the Locations. If during the Environmental
Inspection Period, as hereafter defined, Purchaser determines that the
Location's environmental condition requires remediation of soil or ground water
at a cost in excess of Five Thousand ($5,000) Dollars, Purchaser shall have
until the end of the Environmental Inspection Period to notify MSI in writing
specifying such defects that in Purchaser's opinion require remediation in
excess of Five Thousand ($5,000) Dollars. MSI shall have thirty (30) days from
receipt of written notice from Purchaser within which to cure said defects or
agree to have them cured by Closing, and if MSI is unsuccessful in removing them
within said time, Purchaser shall have the option of either: (i) accepting the
title to the Location in its then existing environmental condition; or (ii)
deleting the Location from this Agreement whereupon the Purchase Price will be
reduced by the amount allocated to the Location as set forth on Schedule 1.11(b)
The Environmental Inspection Period as to each Location shall be fifteen days
after the date that Purchaser receives with respect to the Location the Updated
Phase 1 Report for the Location, provided an Updated Phase 1 Report was
commissioned by Purchaser within the time required by Section 2.5 of this
Agreement. Notwithstanding the above, Purchaser accepts the environmental
conditions set forth on Schedule 3.5(d) and the environmental conditions set
forth on Schedule 3.5(d) shall not be objected to by Purchaser.
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(c) Purchaser and Sellers agree that if in accordance with the
operation of Sections 2.6(a) and 2.6(b) above, three or more Locations are
deleted from this Agreement or if the Locations deleted generated $500,000 or
more in earnings before interest, taxes, depreciation and amortization during
fiscal year 2005, either Purchaser or MSI may cancel this Agreement by sending
written notice to the other party, whereupon the parties shall be released of
all further obligations under this Agreement and the Deposit shall be returned
to Purchaser.
ARTICLE III
Representations and Warranties of Sellers
Whenever the phrase "to Sellers' knowledge" or any equivalent phrase is
used in this Agreement, the phrase shall mean the actual knowledge of the
executive corporate officers of MSI. Notwithstanding the foregoing, no executive
officer of MSI shall be required to undertake any affirmative investigative
action for the purposes of satisfying the preceding sentence. With knowledge
that Purchaser is relying upon the representations, warranties and covenants
herein contained, Sellers represent and warrant to Purchaser and make the
following covenants for Purchaser's benefit, at and as of the date hereof and
the date of Closing.
Section 3.1 Organization and Good Standing. Each of the Sellers is duly
organized, legally existing and in good standing under the laws of the state of
their organization, with full power and authority to own its properties and
conduct its business as now being conducted, and has been duly admitted and is
in good standing under the laws of each state in which it owns property or
operates a business.
Section 3.2 Authorization; Ownership. The Sellers have by proper
proceedings duly authorized the execution, delivery and performance of this
Agreement and each of the Collateral Documents to be entered into by Sellers and
no other action is required by law or the certificate of incorporation, or
by-laws of any Seller. This Agreement and the consummation of the transactions
contemplated hereby are valid and binding obligations of Sellers enforceable
against each Seller in accordance with its terms; provided that (i) enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws of general application affecting the rights and remedies of
creditors, and (ii) enforcement may be subject to general principles of equity,
and the availability of remedies of specific performance and injunctive relief
may be subject to the discretion of the court before which any proceeding for
such remedies may be brought. The Sellers own each of the Assets.
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Section 3.3 Contracts, Permits and Material Documents. The Sellers have
made true and correct copies of all of the following available for inspection by
the Purchaser by providing copies. ("Material Documents") with respect to the
Business and the Assets: (i) leases for the Leased Real Property, (ii) leases
under which any of portion of the Owned Real Property is leased to third
parties, (iii) the Contractual Obligations being assumed by Purchaser at
Closing, (iv) Phase 1 environmental reports for the Locations in the possession
of Sellers, and (v) with respect to any oral contract, a summary of the
principal terms thereof as appearing on Schedule 3.3 to this Agreement. Each
Material Document is in full force and effect and constitutes the valid, legal,
binding and enforceable obligation of the Sellers (except as the enforceability
thereof may be limited by any applicable bankruptcy, reorganization, insolvency
or other laws affecting creditors' rights generally or by general principles of
equity). Sellers are not in breach or default of any material terms or
conditions of the Material Documents, or to Sellers' knowledge is any third
party in breach or default of any material terms or conditions of any Material
Document. Except for debt that Purchaser will not be assuming, the Companies are
not a party to, and the Companies' property is not bound by, any agreement or
instrument which is material to the continued conduct of business operations of
the Companies, as now being conducted, except for the Material Documents, and
except as listed in Schedule 3.3. Sellers and Purchaser agree to take all
commercially reasonable action before the Closing applicable to each of the
Material Documents to obtain any consents or approvals required so that each
such Material Document may be assigned to Purchaser at the applicable Closing as
contemplated under this Agreement, excepting those Material Documents which are
not to be assigned as set forth on Schedule 1.4(e).
Section 3.4 Personal Property; Title to Assets. All items of personal
property at the Locations and used in the Car Wash Business, except for the
Excluded Assets used in the Car Wash Business, are included among the Assets
described in Section 1.4 hereof and will be transferred to Purchaser at Closing.
All items of personal property and all buildings and structures owned by the
Sellers are being transferred "as is" with no warranty as to condition or
suitability of the Assets for the current use of the Assets. Each Location and
the personal property present at the Location is owned by the each of the
Companies, as set forth on Schedule 1.3.
Section 3.5 Real Property.
(a) MCW has valid leasehold interests in each parcel of the Leased Real
Property and the Companies have good, marketable and insurable title to, the
Owned Real Property, except for the Permitted Exceptions and debt that the
Companies will fully pay at the Closing. Full and complete copies of all of the
leases applicable to the Leased Real Property, including all modifications and
amendments thereof, have been furnished to Purchaser and identified in Schedule
1.4(e).
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(b) To Sellers' knowledge, except as set forth in Schedule 3.5(b)
attached hereto and incorporated herein, the Owned Real Property and Leased Real
Property is currently licensed, permitted and authorized for the operation of
the Car Wash Business conducted on it under all applicable federal, state and
local statutes, laws, rules, regulations, orders, permits (including, without
limitation, zoning restrictions, land use requirements and environmental laws)
(collectively, the "Applicable Laws"). Except as set forth in Schedule 3.5(b) or
Schedule 3.5(d) or 3.5(e), Sellers have not received any written notice of the
material violation of any Applicable Laws with respect to the Owned Real
Property or the Leased Real Property. To Seller's knowledge except as set forth
on Schedule 3.5(d) or 3.5(e), no claims have been threatened by any governmental
agency regarding any existing, pending or threatened investigation, inquiry,
enforcement action or litigation related to alleged violations under any
applicable environmental laws, or regarding any claims for remedial obligations,
response costs or contribution under any applicable environmental laws, or
regarding any claims for remedial obligations, response costs or contribution
under any applicable environmental laws.
(c) The Sellers shall make available upon Purchaser's reasonable
request all engineering, geologic and other similar reports, documentation and
maps relating to the Owned Real Property and Leased Real Property in the
possession or control of the Sellers their consultants or employed professional
firms.
(d) Except as set forth in Schedule 3.5(d) attached hereto and
incorporated herein by reference, neither Sellers nor the Owned Real Property or
Leased Real Property is currently involved in any litigation or administrative
proceeding seeking to impose fines, penalties or other liabilities or seeking
injunctive relief for violation of any Applicable Laws relating to the
environment.
(e) To Seller's knowledge, no polluting, toxic or hazardous substances
were improperly used, generated, treated, stored, or disposed of at the
Locations by Sellers. Except as listed in Schedule 3.5(e) no notification of
release of a "hazardous substance", "hazardous waste", pollutant or contaminant
regulated under the Clean Air Act, 42 U.S.C. 7401 et seq.; the Clean Water Act,
33 U.S.C. 1251 et seq., and the Water Quality Act of 1987; the Federal
Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. 136 et seq.; the Marine
Protection, Research, and Sanctuaries Act, 33 U.S.C. 1401 et seq., the National
Environmental Policy Act, 42 U.S.C. 4321 et seq.; the Noise Control Act, 42
U.S.C. 4901 et seq.; the Occupational Safety and Health Act, 29 U.S.C. 651 et
seq.; the Resource Conservation and Recovery Act, 42 U.S.C. 6901 et seq., as
amended by the Hazardous and Solid Waste Amendments of 1984; the Safe Drinking
Water Act, 42 U.S.C. 300f et seq.; the Comprehensive Environmental Response
Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601 et seq., as amended by
the Superfund Amendments and Reauthorization Act, and the Emergency Planning,
and Community Right-to-Know Act; the Toxic Substance Control Act, 15 U.S.C. 2601
et seq.; and the Atomic Energy Act, 42 U.S.C. 2011 et seq.; all as may be
amended, with implementing regulations and guidelines, or any state or local
environmental law, regulation or ordinance, has been received by the Sellers.
Except as listed in Schedule 3.5(e), the Owned Real Property and Leased Real
Property 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.
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(f) To Sellers' knowledge, there are no levied special assessments
affecting all or any part of the Owned Real Property owed to any governmental
entity.
(g) There are no proceedings or amendments pending, or to Sellers'
knowledge threatened by any third party, which would result in a change in the
allowable uses of the Owned Real Property or Leased Real Property, except as set
forth in Schedule 3.5(g) attached hereto and incorporated herein by reference.
Section 3.6 Financial Statements. True and correct copies of the
Historical Financial Statements are on file at the Xxxxx web site of the
Securities and Exchange Commission. True and correct copies of the operating
records of the Car Wash Businesses have been provided to Purchaser. The
Historical Financials (a) were prepared in accordance with GAAP applied on a
consistent basis (except as may be indicated therein or in the notes or
schedules thereto), and (b) fairly present the financial position of MSI as of
the dates specified and the results of operations in all material respects of
the Company for the periods covered thereby. Since the date of the Historical
Financials to the date of this Agreement, there have been no material adverse
changes in the financial condition, assets, liabilities, results of operation of
the Car Wash Business.
Section 3.7 Changes. Except as set forth on Schedule 3.7, since the
date of the Historical Financials. to the date of this Agreement's execution,
the Sellers have conducted the Car Wash Business in the in the Ordinary Course
of the Business and there have not been:
(a) any sale, lease, transfer or assignment of assets of the
Car Wash Business other than in the Ordinary Course of the Business;
(b) any entry into or amendment, modification or waiver of any
material terms of any contract or required permit involving or likely to involve
payment in excess of $20,000;
(c) any default under, or violation, acceleration,
termination, modification or cancellation of, any contract or required permit,
other then in the Ordinary Course of the Business;
(d) any creation or imposition of any encumbrance upon any of
the assets or properties of the Car Wash Businesses;
(e) any capital expenditure (or series of related capital
expenditures) relating to the Car Wash Businesses involving more than $25,000
individually other then in the Ordinary Course of the Business;
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(f) any material increase in prompt payment or pre-payment
rebates, most favored pricing or other price protections or similar programs, or
other material change in the sales, pricing, cash management, billing, payment,
collection or cancellation policies or practices of the Car Wash Business;
(g) any material delay or postponement of accounts payable or
any other liabilities of the Businesses outside the Ordinary Course of the
Business;
(h) any grant of any license or sublicense of any material
rights or material modification of any rights under or with respect to, or
settlement regarding any infringement, misappropriation or alleged infringement
or misappropriation of rights in any of the Intellectual Property of the Car
Wash Business outside of the Ordinary Course of the Business;
(i) any cancellation, compromise, waiver or release of any
right or claim (or series of rights and claims) in excess of $5,000 in the
aggregate or any affirmative act by the Companies to accelerate claims, outside
of the Ordinary Course of the Business;
(j) any entry into or termination of employment contracts or
collective bargaining agreements written or oral, to the extent relating to the
Car Wash Business, or material modifications of the terms of any existing
employment contract or collective bargaining agreement relating to the Car Wash
Business; or
(k) any commitment with respect to any of the foregoing.
Section 3.8 Legal Authority and Compliance. The Sellers have the right,
power, legal capacity and authority to enter into, and perform their respective
obligations under this Agreement, and, except as set forth in Schedule 3.8, no
approvals or consents of any other persons or entities are necessary in
connection with the transactions contemplated by this Agreement. The execution,
delivery and performance of this Agreement has been duly authorized by the board
of directors of the Sellers. The execution and performance of this Agreement
will not result in a material breach of or constitute a material default or
result in the loss of any material right or benefit under:
(a) Any charter, by-law, agreement or other document to which the
Sellers are a party or by which the Sellers or any of their properties are
bound; or
(b) Any decree, order or rule of any court or governmental authority
which is binding on the Sellers on any property of the Sellers.
Section 3.9 Transaction Intermediaries. No agent or broker or other
person acting pursuant to the authority of any Seller is entitled to any
commission or finder's fee in connection with the transactions contemplated by
this Agreement, except for any Xxxx Xxxxx commission or fee, for which Sellers
shall indemnify Purchaser.
Section 3.10 Intellectual Property. To Sellers knowledge, the Companies
are not now infringing on any Intellectual Property belonging to any person,
firm or corporation, and to the knowledge of the Sellers, no one has infringed
or is infringing any Intellectual Property right of the Companies.
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Section 3.11 Disclosure. The representations and warranties of the
Sellers contained in this Article III or in any Exhibit or Schedule or other
document delivered by the Sellers pursuant hereto, do not contain any untrue
statement of a material fact, or omit any statement of a material fact necessary
to make the statements contained not misleading. If, prior to Closing, the
Sellers become aware of any factual change, inaccuracy, misrepresentation or
omission in any of the Schedules, they shall immediately advise Purchaser in
writing of the factual change inaccuracy, misrepresentation or omission and
Sellers shall have the right, subject to the provisions of Section 10.14, to
update the Disclosure Binder accordingly.
Section 3.12 Litigation. All material pending or, to Sellers'
knowledge, material threatened litigation, administrative or judicial
proceedings or investigations by any governmental agency or officials involving
the Companies, the Owned Real Property, the Leased Real Property, or the Assets
that could have a Material Adverse Effect, together with a description of each
such proceeding, is set forth on Schedule 3.12 attached.
Section 3.13 Employees. Within five (5) days after the execution of
this Agreement, the Companies shall supply the Purchaser a true and correct list
of their employees and independent contractors as appearing from their records
for the most recent date the information can be printed from a computer file.
The list shall contain the information kept by the Companies in their computer
records. After the date of this Agreement, Purchaser may inspect the employment
files of the Companies' employees and files of independent contractors. There
are no written employment agreements which will affect the Purchaser after the
Closing Date other than as listed on Schedule 3.13. Further, other than as
listed on Schedule 3.13, to Sellers knowledge, there are no employment cases or
administrative proceedings currently pending against the Companies, or to
Sellers' knowledge, threatened, with respect to any employees. Except as may be
determined from the employment records of the Companies, none of such employees
are on maternity leave or absent on grounds of disability or other long term
leave of absence or have given notice to terminate their employment. All Persons
with whom the Companies have engaged as independent contractors are properly
classified as independent contractors for Tax purposes. The Companies are not
subject to any collective bargaining agreement. No unresolved unfair labor
practice charge has been brought against the Companies with respect to the
operation of the Car Wash Business, and there has been no work stoppage or
strike by their employees. To Sellers knowledge, the Companies have complied
with all applicable laws relating to the employment of labor, including, without
limitation, those relating to wages, hours and collective bargaining. No audits,
investigative or other administrative proceedings or court proceedings are
presently pending or, to Sellers' knowledge, threatened, with regard to any
obligation of the Companies as an employer.
Section 3.14 Employee Benefits Matters. Schedule 3.14 lists each
Employee Benefit Plan that Seller maintains or to which Seller contributes. With
respect thereto, (i) each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) has been maintained, funded and administered in
accordance with the terms of such Employee Benefit Plan and complies in form and
in operation in all respects with the applicable requirements of ERISA and the
Code; and (iii) no action or investigation with respect to the administration or
the investment of the assets of any such Employee Benefit Plan (other than
routine claims for benefits) is pending.
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Section 3.15 Insurance. Seller has made available to Purchaser for
examination true and complete copies of all liability, property, workers'
compensation and other insurance policies currently in effect that insure the
Car Wash Businesses, the employees of the Businesses or the Assets. Each such
insurance policy is valid and binding and in full force and effect, all premiums
currently due thereunder have been paid and the Companies have not received any
notice of cancellation or termination in respect of any such policy or is in
default thereunder. The Sellers have no knowledge of any notice or request from
any insurance company requesting the performance of any work or alteration with
respect to the Assets. The Sellers have not received notice from any insurance
company concerning, nor are there, to Sellers' knowledge, any defects or
inadequacies in the Assets, which, if not corrected, would result in the
termination of insurance coverage or increase its cost.
Section 3.16 Tax Returns; Taxes. The Sellers have filed, will timely
file or has filed for extension requests for all federal, state and local Tax
Returns and Tax reports required by such authorities to be filed by the Sellers
pertaining to the Car Wash Business. The Sellers have paid all Taxes,
assessments, governmental charges, penalties, interest and fines due or claimed
to be due by any federal, state or local authority. There is no pending Tax
examination or audit of, nor any, suit, or claim asserted or, to Seller's
knowledge, threatened against the Sellers by any federal, state or local
authority pertaining to the Car Wash Business; and the Sellers have not been
granted any extension of the limitation period applicable to any Tax claims.
ARTICLE IV
Representations and Warranties of Purchaser
With knowledge that Sellers are relying upon the representations,
warranties and covenants herein contained, the Purchaser represents and warrants
to Sellers and makes the following covenants for the Sellers' benefit, at and as
of the date hereof and the date of Closing.
Section 4.1 Organization and Good Standing. The Purchaser is duly
organized and legally existing in good standing under the laws of the state of
Arizona.
Section 4.2 Authorization to Proceed with this Agreement. Purchaser has
by proper corporate proceedings duly authorized the execution, delivery and
performance of this Agreement and each other agreement contemplated to be
entered into and no other corporate action is required by law or the Articles of
Organization or by-laws of Purchaser. Purchaser has the right, power, legal
capacity and authority to enter into, and perform its obligations under this
Agreement, and neither the execution nor performance of this Agreement will
result in a material breach of or constitute a material default or result in the
loss of any material right or benefit under:
20
(a) Any charter, by-law, agreement or other document to which Purchaser
is a party or by which Purchaser or any of its property is bound; or
(b) Any decree, order or rule of any court or governmental authority
which is binding on Purchaser or on any property of the Purchaser.
Section 4.3 Absence of Intermediaries. No agent, broker, or other
person acting pursuant to Purchaser's authority will be entitled to make any
claim against the Sellers for any commission or finder's fee in connection with
the transactions contemplated by this Agreement.
ARTICLE V
Additional Agreements of Sellers
The parties hereto covenant and agree with the other, as applicable, as
follows:
Section 5.1 Payment of Expenses. MSI will pay all expenses (including
legal fees) incurred by it in connection with the negotiation, execution and
performance of this Agreement. MSI, in addition to its other expenses, shall pay
at Closing (i) one-half of all premiums for a standard Title Policy on the Owned
Real Estate, (ii) one-half of all transfer taxes, excise fees, documentary
stamps and recording fees associated with the transfer and conveyance of the
Owned Real Property, the Leased Real Property, and the Assets, and (iii)
one-half of all closing, escrow and other fees charged by the Escrow Agent. At
Closing MSI will also reimburse Purchaser one half the actual cost of any
Updated Phase 1 Reports for the Locations purchased by Purchaser up to a maximum
total amount of Thirty Thousand ($30,000) Dollars. Sellers shall also pay their
portion of removing the underground gasoline storage tank at Location 14 as set
forth in Section 5.6 below.
Section 5.2 Access to Records. The Sellers will give Purchaser and its
representatives, from the date hereof until eighteen (18) months after the
Closing Date, full access during normal business hours upon reasonable notice to
all of the properties, books, contracts, customer lists, documents and records
of the Sellers not delivered to Purchaser at Closing that pertain to the Owned
Real Property, Leased Real Property and the Assets, and to make available to
Purchaser and its representatives, experts and advisers all additional financial
information of and with respect to the Car Wash Business, Owned Real Property,
Leased Real Property and the Assets that Purchaser may reasonably request.
Purchaser and its representatives shall have the right to copy any information
or documentation the Purchaser is entitled to inspect under this Section 5.2. In
the event that this transaction is not consummated for any reason, all documents
and due diligence materials provided to Purchaser by Sellers shall be returned
to MSI, and all documents and due diligence materials provided to Sellers by
Purchaser shall be returned to Purchaser.
Section 5.3 Continuation of Business. The Sellers will operate the Car
Wash Business until the Closing in the Ordinary Course of the Business, so as to
preserve its value intact, and to preserve for Purchaser the relationships of
the Company with suppliers, customers, and others. If any of the Owned Real
Property or Leased Real Property is damaged or destroyed, the Sellers will (i)
repair or replace the damaged or destroyed property or (ii) assign to Purchaser
the insurance payment received or to be received with respect to the destruction
and Purchaser shall receive a credit against the purchase price in the amount of
any the deductible relating to the damage or destruction under the respective
insurance policies.
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Section 5.4 Continuation of Insurance. The Companies shall keep in
existence all policies of insurance insuring the Owned Real Property, Leased
Real Property and the Assets and the operation thereof against liability and
property damage, fire and other casualty through the Closing, consistent with
the policies currently in effect.
Section 5.5 Standstill Agreement. Until the Closing Date, unless and
until this Agreement is earlier terminated pursuant to the provisions hereof,
Sellers will not, directly or indirectly solicit offers for the Car Wash
Business, Owned Real Property, Leased Real Property or the Assets.
Section 5.6 Location 14, 0000 X. 00xx Xxx., Xxxxxxx, Xx.. Schedule
3.5(b), 3.5(d) and 3.5(e) discloses that the landlord of Location 14 has taken
the position that MCW is obligated to remove the underground storage tanks at
Location 14. Sellers agree that prior to Closing it shall cause the underground
storage tanks at Location 14 to be removed in accordance with Applicable Law.
Sellers and Purchasers agree that they shall share the cost of removing the
underground storage tanks at Location 14 in accordance with Applicable Law, as
follows: Sellers and Purchaser shall each pay one-half of the cost; however, if
the total cost exceeds Forty Thousand ($40,000) Dollars, Sellers shall pay the
entire amount in excess of Forty Thousand ($40,000) Dollars.
Section 5.7 Employment of Employees of the Businesses. The Sellers have
provided Purchaser with information on the employees of the Car Wash Business
(collectively, the "Employees"). Upon the reasonable request of Purchaser, the
Companies shall provide an updated list of Employees to Purchaser. The Purchaser
may but is not required to offer the Employees employment beginning as of the
Closing Date, on such terms and provisions as Purchaser determines at its sole
discretion.
Section 5.8 WARN Act. The Sellers shall be responsible for providing
all notices to the Employees required by the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), 29 U.S.C. ss. 2101 et seq. Any liability
resulting from the WARN Act shall not be an Assumed Liability.
Section 5.9 Regulatory and Other Authorizations; Notices and Consents.
(a) Sellers and Purchaser shall cooperate with each other and use their
respective commercially reasonable efforts to obtain all approvals,
authorizations and consents required to be obtained to consummate the
transaction set forth in this Agreement, including, without limitation, the
approval of every regulatory agency of federal, state, or local government that
may be required in the opinion of either Purchaser or Sellers. Further, if
Purchaser in its reasonable discretion deems Sellers' assistance to be useful,
and at Purchaser's request, Sellers will assist and cooperate with Purchaser
(such assistance excludes hiring of third parties, the expenditure of money or
the assumption of any obligations) to obtain any approvals, authorizations and
consents required to be obtained to allow Purchaser to operate any of the car
wash businesses (and other related revenue generating sources including
petroleum sales, where applicable) in substantially the same manner as currently
being operated by Sellers, including, without limitation, the approval of any
regulatory agency of federal, state, or local government that are required.
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(b) Notwithstanding anything to the contrary set forth in this
Agreement or in any ancillary agreements, nothing contained in this Agreement or
in any of the Collateral Documents shall be construed as, or constitute, an
attempt, agreement or other undertaking to transfer or assign to Purchaser any
asset, property or right that would otherwise constitute an Asset, but that by
its terms is not transferable or assignable to Purchaser pursuant to this
Agreement without the consent, waiver, approval, authorization, qualification or
other order of one or more third parties and such consent, waiver, approval,
authorization, qualification or other order is not obtained prior to or
subsequent to the Closing (each, a "Non-Transferable Asset").
(c) From and after the Closing and, with respect to each
Non-Transferable Asset, until the earlier to occur, if ever, of (i) such time as
such Non-Transferable Asset shall be properly and lawfully transferred or
assigned to Purchaser pursuant hereto and or (ii) such time as the material
benefits intended to be transferred or assigned to Purchaser pursuant hereto
have been procured by alternative means pursuant to Section 5.9(d), (A) such
Non-Transferable Asset shall be held by Sellers in trust exclusively for the
benefit of Purchaser, and (B) Sellers shall cooperate in any good faith,
reasonable arrangement designed to provide or cause to be provided for Purchaser
the material benefits intended to be transferred or assigned to Purchaser under
such Non-Transferable Asset and, in furtherance thereof, to the extent permitted
under the terms of such Non-Transferable Asset and under applicable law (1)
Purchaser shall perform and discharge all of the liabilities of Sellers under
the terms of such Non-Transferable Asset in effect as of the Closing and (2)
Sellers shall use commercially reasonable efforts to provide or cause to be
provided to Purchaser all of the benefits of Sellers under the terms of such
Non-Transferable Asset in effect as of the Closing, including, but not limited
to, promptly paying to Purchaser any monies received by Sellers from and after
the Closing under such Non-Transferable Asset.
(d) In the event that Sellers is unable to obtain any consent from a
third Person, as requested by Purchaser, under any Non-Transferable Asset after
the Closing Date through the use of commercially reasonable efforts, Purchaser
shall be entitled, but not required, to procure the material rights and benefits
of Sellers under the terms of such Non-Transferable Asset in effect as of the
Closing by alternative means, including, without limitation, by entering into
new Contracts with third parties or otherwise; provided, however, that in the
event that Purchaser shall exercise its rights under this Section 5.9(d) in
respect of any Non-Transferable Asset, the obligations of Sellers under Section
5.9(c) in respect of such Non-Transferable Asset shall thereupon cease and
expire.
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(e) Seller and Purchaser agree that if they are not able to obtain the
consent of a landlord to a Lease Assignment, Closing shall still take place and
the provisions of this Section 5.9(e) shall govern. As to any Leased Real
Property for which the landlord will not consent to a Lease Assignment, MCW will
not assign the applicable Lease to Purchaser at Closing but will instead hire
Purchaser to manage the Leased Real Property under a Management Contract
acceptable to MCW and Purchaser. The Management Contract shall provide the
following in addition to any other terms agreed upon by Purchaser and MCW: (a)
Purchaser shall pay all costs and expenses of operating the Location, including
payments due under the applicable lease, (b) Purchaser shall retain all revenue
generated from the Location, (c) the Management Contract may be terminated only,
if Purchaser defaults under the lease of the Location or under the provisions of
the Management Contract or fails to pay the Promissory Note when due, and (d)
Purchaser shall indemnify MCW from and any and all costs and expenses, including
legal fees and court costs related, or attributable to the Location and the
lease for the Location.
Section 5.10 No Solicitation or Negotiation.
(a) From and after the execution and delivery of this Agreement until
the earlier to occur of the Closing or termination of this Agreement pursuant to
its terms, MSI shall not, nor will it authorize or permit any of its directors,
officers or other employees, controlled Affiliates or any investment banker,
attorney or other advisor, representative or agent retained by it to, directly
or indirectly, (i) solicit, initiate, encourage or induce the making, submission
of a transaction (whether in the form of a merger, consolidation, asset sale or
other form of transaction) for the acquisition of any Locations or the Car Wash
Business (an "Acquisition Transaction") by any Person other than Purchaser, (ii)
participate or engage in any discussions or negotiations with any such Person
regarding an Acquisition Transaction, (iii) furnish to any such Person any
information relating to the Companies or the Assets, or afford access to the
business, properties, assets, books or records of the Companies to any such
Person that has made or could reasonably be expected to make an Acquisition
Transaction, or (iv) take any other action intended to assist or facilitate any
inquiries or the making of any proposal that constitutes, or could reasonably be
expected to lead to, an Acquisition Transaction, (v) approve, endorse or
recommend an Acquisition Transaction, or (vi) enter into any letter of intent or
similar agreement contemplating or otherwise relating to an Acquisition
Transaction.
Section 5.11 Sellers Covenant Not to Compete.
(a) In partial consideration of the payment of the Purchase Price,
Sellers covenant and agree that for a period of one year commencing upon the
Closing Date, Sellers shall not, directly or indirectly, (i) engage in, carry
on, manage, operate, perform or control the management or operation of a car
wash in any portion of the territories in which Car Wash Business is presently
located (the "Restricted Territory"), or (ii) own any equity interest in any
Person that is engaged in, carries on, manages, operates, performs or controls
the management or operations of car wash or truck wash in the Restricted
Territory. Notwithstanding the foregoing provision of Section 5.11(a), Sellers
may engage in, carry on, manage, operate, perform or control the management or
operation of any Location that Purchaser does not acquire under this Agreement.
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(b) Purchaser and Sellers acknowledge and agree that compliance with
the covenants contained in this Section 5.11 is necessary to protect Purchaser
and that a breach of any such covenant would result in irreparable and
continuing damage for which there would be no adequate remedy at law. Sellers
agree that in the event of any adjudicated breach of such covenant, Purchaser
shall be entitled to injunctive relief and to such other and further relief as
is proper under the circumstances. If any court of competent jurisdiction
determines any of the foregoing covenants to be unenforceable with respect to
the term thereof or the scope of the subject matter or geography covered
thereby, then such covenant shall nonetheless be enforceable by such court
against Sellers or other relevant Person upon such shorter term or within such
lesser scope as may be determined by the court to be reasonable and enforceable.
(c) Sellers further covenant and agrees that, without the prior written
consent of Purchaser, Sellers will not, for a period of one year commencing upon
the Closing Date, solicit for employment, as an employee, officer, agent,
consultant, advisor, or in any other capacity whatsoever, any then-current
employee of the Car Wash Business or any person who has been an employee of the
Car Wash Business at any time within the six month period preceding such time.
As used herein, "solicit" means contact or communicate in any manner whatsoever,
including, but not limited to, contacts or communications by or through
intermediaries, agents, contractors, representatives, or other parties, provided
that nothing herein shall be construed to prohibit Sellers from (i) placing
advertisements for employment that are aimed at the public at large in any
newspaper, trade magazine, or other periodical in general circulation, or (ii)
responding to any unsolicited inquiry by any Purchaser employee concerning
employment.
ARTICLE VI
Additional Agreements of Purchaser
Section 6.1 Payment of Expenses. Purchaser will pay all expenses
(including legal fees) incurred by it in connection with the negotiation,
execution and performance of this Agreement. Purchaser, in addition to its other
expenses, shall pay one-half of all premiums for a standard Title Policy on the
Owned Real Estate, and all of the additional premium required for an extended
Title Policy (ii) one-half of all transfer taxes, excise fees, documentary
stamps and recording fees associated with the transfer and conveyance of the
Owned Real Property, the Leased Real Property, and the Assets, (iii) the costs
of any survey updates or environmental reports prepared at Purchaser's request,
(iii) one-half of all closing, escrow and other fees charged by the Escrow
Agent, and (iv) the application fees for any governmental approvals it considers
to be required under Sections 5.7 and 7.1(c). Purchaser shall also pay their
portion of removing the underground gasoline storage tank at Location 14 as set
forth in Section 5.6 above.
Section 6.2 Books and Records. From the Closing Date to eighteen months
after the Closing Date, the Purchaser shall allow the Sellers and their
professional advisers access to all business records and files of the Car Wash
Business and Companies pertaining to the operation of the Car Wash Business
which were delivered to the Purchaser in accordance with this Agreement
("Records"). Access to the records shall be during normal working hours at the
location where such Records are stored. The Sellers shall have the right, at
their own expense, to make copies of any Records provided, however, that any
such access or copying shall be had or done in such a manner so as not to
interfere unreasonably with the normal conduct of the Purchaser's business. For
a period of eighteen years after the Closing Date, the Purchaser shall not
dispose of or destroy any material Records without first providing written
notice to the Sellers at least 30 days prior to the proposed date of such
disposition or destruction.
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Section 6.3 Passes, Coupons, Gift Cards. After Closing the Purchaser
shall honor, without charge to the customers of the Car Wash Business, the car
wash passes, coupons and pre-paid gift cards issued by the Companies in
connection with the Car Wash Business.
Section 6.4 Accounts Receivable of the Companies. The Seller has
accounts receivables generated by the Car Wash Business prior to Closing
("Accounts Receivable"). Seller has not conveyed the Accounts Receivable to
Purchaser. Purchaser agrees that if it receives any payments on the Accounts
Receivable, it shall promptly remit the payments to MSI. Purchaser further
agrees to aid MSI in the collection of the Accounts Receivable by providing
updated information on current customers of Purchaser who are also account
debtors on the Accounts Receivable and by encouraging its current customers to
pay any Accounts Receivable they owe. Seller is not obligated to institute any
type of legal or collection procedure.
ARTICLE VII
Conditions to Purchaser's Obligations
Section 7.1 Conditions of Closing. The obligations of Purchaser to
effect the transactions contemplated by this Agreement shall be subject to the
fulfillment at or prior to the time of Closing of each of the following items
which are conditions to Closing. Purchaser in its sole discretion may waive any
of the following conditions by written notice to MSI of Purchaser's decision to
waive such condition to the Closing, referring specifically to this Agreement
and the condition being waived.
(a) The Sellers shall have performed and complied with all material
obligations and conditions required by this Agreement to be performed or
complied with by Sellers prior to or at the Closing Date. All representations
and warranties of Sellers contained in this Agreement shall be true and correct
at and as of the Closing Date, with the same force and effect as though made at
and as of the Closing Date, except for changes expressly permitted by this
Agreement, and Purchaser shall have received a Certificate duly executed by an
executive officer of MSI, on behalf of MSI, to the foregoing. Any failure of a
representation and warranty to be true and correct in any material respect at
and as of the Closing Date, shall be deemed a failure of this condition
precedent.
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(b) There shall be no actual or threatened action by or before any
court or governmental agency which seeks to restrain, prohibit or invalidate the
transaction contemplated by this Agreement.
(c) If required, the consent of the Federal Trade Commission under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1986, as amended, shall have
been obtained. Purchaser shall have been furnished with appropriate evidence,
reasonably satisfactory to Purchaser and its counsel, of the granting of such
approvals, authorizations and consents.
(d) The leases for the Leased Real Property shall be in full force and
effect and not amended or modified after the date of this Agreement, there are
no existing defaults or events which with the giving of notice or passing of
time, or both, would give rise to a default under the lease, that tenant has not
assigned, sublet or otherwise transferred any interest in and to the lease. In
the event any landlord fails to consent to assign a lease of any Leased Real
Property, Closing shall still take place as stated in Section 5.9(e).
(e) No event that could reasonably be expected to have a Material
Adverse Effect shall have occurred.
ARTICLE VIII
Conditions to Sellers' Obligations
Section 8.1 Conditions of Closing The obligations of the Sellers to
transfer the Assets, the Owned Real Property and the Leased Real Property in
accordance with this Agreement shall be subject to the fulfillment at or prior
to the time of Closing of each of the following conditions:
(a) The Purchaser shall have delivered to MSI the Purchase Price, the
Promissory Note and the deeds of trust securing the Promissory Note in
accordance with Section 1.3.
(b) The Purchaser shall have performed and complied with all material
obligations and conditions required by this Agreement to be performed or
complied with by Purchaser prior to or at the Closing Date. All representations
and warranties of Purchaser contained in this Agreement shall be true and
correct at and as of the Closing Date, with the same force and effect as though
made at and as of the Closing, except for changes expressly permitted by this
Agreement.
(c) There shall be no actual or threatened action by or before any
court or governmental agency which seeks to restrain, prohibit or invalidate the
transaction contemplated by this Agreement.
(d) If required, the consent of the Federal Trade Commission under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1986, as amended, shall have
been obtained. Purchaser shall have been furnished with appropriate evidence,
reasonably satisfactory to Purchaser and its counsel, of the granting of such
approvals, authorizations and consents.
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ARTICLE IX
Indemnification
Section 9.1 Indemnification by Sellers. Sellers each agree that they
will each indemnify, defend, protect and hold harmless Purchaser and its
officers, shareholders, directors, divisions, subdivisions, affiliates,
subsidiaries, parent, agents, employees, legal representatives, successors and
assigns, as applicable, from and against all claims, damages, actions, suits,
proceedings, demands, assessments, adjustments, penalties, costs and expenses
whatsoever (including specifically, but without limitation, reasonable
attorneys' fees and expenses of investigation) whether equitable or legal,
matured or contingent, known or unknown to Sellers, foreseen or unforeseen,
ordinary or extraordinary, patent or latent, whether arising out of occurrences
prior to, at, or after the date of this Agreement, as a result of or incident
to: (a) any breach of, misrepresentation, untruth or inaccuracy in the
representations and warranties by Sellers, set forth in this Agreement or in the
Schedules attached to this Agreement or in the Collateral Documents; (b)
nonfulfillment or nonperformance of any agreement, covenant or condition on the
part of Sellers made in this Agreement or in the Collateral Documents and to be
performed by Sellers before or after the Closing Date; (c) the imposition upon,
claim against or payment by Purchaser of any liability or obligation of Sellers
other than the Assumed Liabilities; (d) violation of the requirements of any
governmental authority relating to the reporting and payment of federal, state,
or other income tax of Sellers arising or accrued prior to the Closing Date; (e)
any claim by a third party that, if true, would mean that a condition for
indemnification set forth in subsections (a), (b), (c) or (d) of this Section
9.1 of this Agreement has occurred; and (f) any claim or action brought against
Purchaser or any of its officers or directors as a result of any action brought
on behalf of any shareholder of MSI.;
Section 9.2 Indemnification by Purchaser. Purchaser agrees that it will
indemnify, defend, protect and hold harmless Sellers and their officers,
members, directors, divisions, subdivisions, affiliates, subsidiaries, parents,
agents, employees, legal representatives, successors and assigns, as applicable,
from and against all claims, damages, actions, suits, proceedings, demands,
assessments, adjustments, penalties, costs and expenses whatsoever (including
specifically, but without limitation, reasonable attorneys' fees and expenses of
investigation) whether equitable or legal, matured or contingent, known or
unknown to the Purchaser, foreseen or unforeseen, ordinary or extraordinary,
patent or latent, whether arising out of occurrences prior to, at, or after the
date of this Agreement, as a result of or incident to: (a) any breach of,
misrepresentation in, untruth in or inaccuracy in the representations and
warranties of Purchaser set forth in this Agreement or in the Schedules attached
to this Agreement or in the Collateral Documents; (b) nonfulfillment or
nonperformance of any agreement, covenant or condition on the part of Purchaser
made in this Agreement or in the Collateral Documents and to be performed by
Purchaser before or after the Closing Date; (c) the imposition upon, claim
against, or payment by the Company or Sellers of any of the Assumed Liabilities
because of the Purchaser's failure to pay the Assumed Liabilities or for any
other reason; (d) violation of the requirements of any governmental authority
relating to the reporting and payment of federal, state, local or other income,
sales, use, franchise, excise, payroll or property Tax Liabilities of the
Purchaser accrued after the Closing Date, including, without limitation,
liabilities arising from or related to any failure to comply with laws relating
to bulk transfers or bulk sales with respect to the transactions contemplated by
this Agreement; and (f) any claim by a third party that, if true, would mean
that a condition for indemnification set forth in subsections (a), (b), (c), (d)
or (e) of this Section 9.2 has occurred.
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Section 9.3 Procedure for Indemnification with Respect to Third Party
Claims.
(a) If any third party shall notify a party to this Agreement (the
"Indemnified Party") with respect to any matter (a "Third Party Claim") that may
give rise to a claim for indemnification against any other party to this
Agreement (the "Indemnifying Party") under this Article IX, then the Indemnified
Party shall promptly notify each Indemnifying Party thereof in writing;
provided, however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the Indemnifying
Party is thereby prejudiced. Such notice shall state the amount of the claim and
the relevant details thereof.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as the Indemnifying
Party notifies the Indemnified Party in writing within thirty (30) business days
after the Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party, pursuant to the
provisions of Article IX.
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 9.3(b) above, (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in (but not control) the defense of the Third Party Claim, (ii) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (which will not be unreasonably withheld), and
(iii) the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (which will not be unreasonably
withheld). In the case of (c)(ii) or (c)(iii) above, any such consent to
judgment or settlement shall include, as an unconditional term thereof, the
release of the Indemnifying Party from all liability in connection therewith.
(d) If any condition set forth in Section 9.3(b) above is or becomes
unsatisfied, (i) the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the Third
Party Claim and any matter it may deem appropriate and the Indemnified Party
need not consult with, or obtain any consent from, any Indemnifying Party in
connection therewith, (ii) the Indemnifying Party will reimburse the Indemnified
Party promptly and periodically for the cost of defending against the Third
Party Claim (including reasonable attorneys' fees and expenses), and (iii) the
Indemnifying Party will remain responsible for any adverse consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest extent provided in
this Article IX.
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Section 9.4 Procedure for Non-Third Party Claims. If Purchaser or
Sellers wish to make a claim for indemnity under Section 9.1 or Section 9.2, as
applicable, and the claim does not arise out of a third party notification which
makes the provisions of Section 9.3 applicable, the party desiring
indemnification ("Indemnified Party") shall deliver to the parties from which
indemnification is sought ("Indemnifying Party") a written demand for
indemnification ("Indemnification Demand"). The Indemnification Demand shall
state: (a) the amount of losses, damages or expenses which the Indemnified Party
has incurred or has suffered or is expected to incur or suffer to which the
Indemnified Party is entitled to indemnification pursuant to Section 9.1 or
Section 9.2, as applicable; and (b) the nature of the event or occurrence which
entitles the Indemnified Party to receive payment under Section 9.1 or Section
9.2, as applicable. If the Indemnifying Party wishes to object to an
Indemnification Demand, the Indemnifying Party must send written notice to the
Indemnified Party stating the objections and the grounds for the objections
("Indemnification Objection"). If no Indemnification Objection is sent within
forty-five (45) days after the Indemnification Demand is sent, the Indemnifying
Party shall be deemed to have acknowledged the correctness of the claim or
claims specified in the Indemnification Demand and shall pay the full amount
claimed in the Indemnification Demand within sixty (60) days of the day the
Indemnification Demand is dated. If for any reason the Indemnifying Party does
not pay the amounts claimed in the Indemnification Demand, within sixty days of
the Indemnification Demand's date, the Indemnified Party may institute legal
proceedings to enforce payment of the indemnification claim contained in the
Indemnification Demand and any other claim for indemnification that the
Indemnified Party may have.
Section 9.5 Survival of Claims.
(a) All of the respective representations, warranties and obligations
of the parties to this Agreement shall survive consummation of the transactions
contemplated by this Agreement for eighteen months from the Closing Date and
shall thereafter expire and be of no force and effect; provided, however, that
the representations and warranties in Sections 1.6, 3.1, 3.2, 3.15, 3.17, 4.1
and 4.2 shall survive four years from the Closing Date.
(b) Notwithstanding the provisions of Section 9.5(a) above, which
provide that representations, warranties and obligations expire after certain
stated periods of time, if within the stated period of time, an Indemnification
Demand is given, or a suit or action based upon representation or warranty is
commenced, the Indemnified Party shall not be precluded from pursuing such claim
or action, or from recovering from the Indemnifying Party (whether through the
courts or otherwise) on the claim or action, by reason of the expiration of the
representation or warranty.
Section 9.6 Prompt Payment. In the event that any party is required to
make any payment under this Article IX, such party shall promptly pay the
Indemnifying Party the amount so determined. If there should be a dispute as to
the amount or manner of determination of any indemnity obligation owed under
this Article IX, the Indemnifying Party shall, nevertheless, pay when due such
portion, if any, of the obligation as shall not be subject to dispute. The
portion in dispute shall be paid upon a final and non-appealable resolution of
such dispute. Upon the payment in full of any claim, the Indemnifying Party
shall be subrogated to the rights of the Indemnified Party against any person
with respect to the subject matter of such claim.
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Section 9.7 Limitation of Liability. Notwithstanding anything in this
Agreement to the contrary, the liability and obligations of Sellers for the
indemnification set forth in Section 9.1, shall be limited to Five Million Eight
Hundred Thousand Dollars ($5,800,000). Such limitation shall not apply to any
liabilities and obligations excluded from the Assets pursuant to Section 1.7
hereof.
Section 9.8 Casualty and Condemnation.
(a) The risk of loss or damage to the Assets until the day of closing
is retained by Seller. If any damage occurs to the Assets prior to closing,
Purchaser proceed to closing and, if not repaired by Seller prior to Closing,
deduct from the Purchase Price the amount which will be required to repair such
damage less the insurance proceeds turned over to Purchaser under the provisions
of Section 5.2.
(b) If any eminent domain or condemnation proceeding pertaining to all
or any portion of the Locations is threatened or commenced prior to closing
(including, but not limited to those listed on Schedule 3.5(g)), there shall be
no disposition or settlement thereof without the prior written consent of
Purchaser, and Purchaser at its sole option shall proceed to Closing and the
proceeds to be received by Seller from such condemnation or eminent domain
proceeding shall be turned over or assigned to Purchaser. Seller shall make no
settlement of, nor enter into any agreements relating to, eminent domain or
condemnation proceedings following execution of this Agreement, without
Purchaser's consent.
ARTICLE X
Other Provisions
Section 10.1 Nondisclosure by Purchaser. Purchaser recognizes and
acknowledges that it has in the past, currently has, and prior to the Closing
Date, will have access to certain confidential information of Sellers, such as
lists of customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of the Sellers. Purchaser agrees that, for a
period of one (1) year from the date hereof, it will not utilize such
information in the business or operation of Purchaser, or any of its affiliates
or disclose such confidential information to any person, firm, corporation,
association, or other entity for any purpose or reason whatsoever, unless (i)
such information becomes known to the public generally through no fault of
Purchaser or any of its affiliates, (ii) Purchaser is compelled to disclose such
information by a governmental entity or pursuant to a court proceeding, or (iii)
Closing takes place (provided, however, that after Closing Purchaser will abide
by any legally binding contractual duties of non-disclosure owed to third
parties from whom assets were purchased by the Company). In the event of a
breach or threatened breach by Purchaser of the provisions of this Section 10.1,
Sellers shall be entitled to an injunction restraining Purchaser from utilizing
or disclosing, in whole or in part, such confidential information. Nothing
contained herein shall be construed as prohibiting Sellers from pursuing any
other available remedy for such breach or threatened breach, including, without
limitation, the recovery of damages.
Section 10.3 Assignment; Binding Effect; Amendment. This Agreement and
the rights and obligations of the parties hereunder may not be assigned and
shall be binding upon and shall inure to the benefit of the parties hereto, the
successors of Purchaser and the Sellers. This Agreement, upon execution and
delivery, constitutes a valid and binding agreement of the parties hereto
enforceable in accordance with its terms and may be modified or amended only by
a written instrument executed by all parties hereto.
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Section 10.4 Entire Agreement. This Agreement is the final, complete
and exclusive statement and expression of the agreement among the parties hereto
with relation to the subject matter of this Agreement, it being understood that
there are no oral representations, understandings or agreements covering the
same subject matter as the Agreement, except for the Confidentiality Agreement
executed by Cali West Holdings, LLC in favor of MSI ("Confidentiality
Agreement"). The Agreement supersedes, and cannot be varied, contradicted or
supplemented by evidence of any prior or contemporaneous discussions, prior
correspondence, oral agreements or written agreements of any kind, except for
the Confidentiality Agreement which shall remain in full force and effect. The
parties to this Agreement have relied on their own advisors for all legal,
accounting, Tax or other advice whatsoever with respect to the Agreement and the
transactions contemplated hereby.
Section 10.5 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
Section 10.6 Notices. All notices or other communications required or
permitted hereunder shall be in writing and may be given by depositing the same
in United States mail, addressed to the party to be notified, postage prepaid
and registered or certified with return receipt requested, by overnight courier
or by delivering the same in person to such party. "Overnight Courier" shall be
deemed for purposes of this Section 10.6 to include, without limitation, the
Express Mail service of the U.S. Postal Service.
(a) If to Sellers, addressed to them at:
General Counsel
Xxxx Security International, Inc.
0000 Xxxxxxxx Xxxxx
Xx. Xxxxxx, XX 00000
with a copy to:
Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx Xxxxx Xxxxxxx & Ingersoll, LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-00.
(b) If to Purchaser, addressed to it at:
0000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Fax 000-000-0000
(c) If to Escrow Agent, addressed to it at: 0000 Xxxxxxxx
Xxxx, Xxxxx 000 Xxx Xxxxxxx, XX 00000
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Notice shall be deemed given and effective on the earliest of the day personally
delivered, or one business day after being sent by Overnight Courier, or three
business days after the deposit in the U.S. mail of a writing addressed as above
and sent first class mail, certified, return receipt requested, or when actually
received, if earlier. Any party may change the address for notice by notifying
the other parties of such change in accordance with this Section 10.6.
Section 10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware, without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware. Issues that
relate to the Owned Real Property and Leased Real Property and would be governed
by local law shall be governed by the law of the jurisdiction in which the Owned
Real Property or Leased Real Property is located.
Section 10.8 No Waiver. No delay of, or omission in, the exercise of
any right, power or remedy accruing to any party as a result of any breach or
default by any other party under this Agreement shall impair any such right,
power or remedy, nor shall it be construed as a waiver of or acquiescence in any
such breach or default, or in any similar breach or default occurring later; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach of default occurring before or after that waiver.
Section 10.9 Captions. The headings of this Agreement are inserted for
convenience only, and shall not constitute a part of this Agreement or be used
to construe or interpret any provision hereof.
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Section 10.10 Severability. In case any provision of this Agreement
shall be invalid, illegal or unenforceable, it shall, to the extent possible, be
modified in such manner as to be valid, legal and enforceable but so as most
nearly to retain the intent of the parties. If such modification is not
possible, such provision shall be severed from this Agreement. In either case
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected or impaired thereby.
Section 10.11 Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute shall be deemed to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word
"including" means included, without limitation.
Section 10.12 Extension or Waiver of Performance. Either Sellers or
Purchaser may extend the time for or waive the performance of any of the
obligations of the other, waive any inaccuracies in the representations or
warranties by the other, or waive compliance by the other with any of the
covenants or conditions contained in this Agreement, provided that any such
extension or waiver shall be in writing and signed by the party granting or
approving such extension or waiver.
Section 10.13 Liabilities of Third Parties. Nothing in this Agreement,
whether expressed or implied, is intended to confer any rights or remedies under
or by reason of this Agreement on any persons other than the parties to it and
their respective successors, heirs, legal representative and assigns, nor is
anything in this Agreement intended to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement, nor shall any
provisions give any third person any rights of subrogation or action over or
against any party to this Agreement.
Section 10.14 Disclosure on Schedules. The parties to this Agreement
shall have the obligation to supplement or amend the Schedules being delivered
concurrently with the execution of this Agreement and attached hereto or
incorporated herein with respect to any matter hereafter arising or discovered
which, if existing or known at the date of this Agreement, would have been
required to be set forth or described in the Schedules. The obligations of the
parties to amend or supplement the Schedules shall terminate on the consummation
of the transaction contemplated by this Agreement at the Closing, or on the date
of termination of this Agreement if Closing does not occur.
Section 10.16 Further Assurances and Cooperation. From time to time at
the request of a party to this Agreement and without further consideration, the
other party will execute and deliver such documents and take such action as may
reasonably be requested in order to consummate more effectively the transactions
contemplated by this Agreement. Purchaser hereby agrees that in connection with
any exemption from any Tax otherwise payable in respect of a bulk transfer of
assets that Sellers wish to obtain, upon Sellers' request, Purchaser will
provide to Sellers the appropriate form issued by the appropriate State Division
of Taxation. Purchaser and Sellers agree to use good faith efforts to structure
and implement the transactions contemplated by this Agreement in a tax-efficient
manner.
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Section 10.17 No Third Party Beneficiaries. This Agreement shall be
binding upon and inure solely to the benefit of the parties hereto and their
permitted assigns and nothing herein, express or implied, is intended to or
shall confer upon any other Person, including, without limitation, any union or
any employee or former employee of Sellers, any legal or equitable right,
benefit or remedy of any nature whatsoever, including, without limitation, any
rights of employment for any specified period, under or by reason of this
Agreement.
Section 10.18 Computation of Time. Any time period specified in this
Agreement which would otherwise end on a non-Business Day shall automatically be
extended to the immediately following Business Day.
[The balance of this page intentionally left blank.]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
PURCHASER:
CW Acquisition, LLC
By: /s/ Xxxxxxxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxxxxxxx X. Xxxxx
Title: Operating Manager
SELLERS:
Xxxx Security International, Inc.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: Executive Vice-President
Xxxx Car Wash, Inc.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Executive Vice-President
Xxxx Car Wash-Arizona, Inc.
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxx Xxxxxx
Title: Executive Vice-President
ESCROW AGENT
United Escrow Co.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: President
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Appendix A
Defined Terms
Through out the Agreement certain capitalized terms are defined. In
addition to the definitions that are throughout the Agreement, the terms set
forth in this Appendix A have the meanings given them for purposes of the
Agreement.
"Acquisition Transaction" is defined in Section 5.12 of the Agreement.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
when used with respect to any specified Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Applicable Laws" means applicable federal, state and local statutes,
laws, rules, regulations, orders, permits (including, without limitation, zoning
restrictions, land use requirements and environmental laws).
"Assets" is defined Section 1.4 of the Agreement.
"Assumed Liabilities" are defined in Section 1.6 of the Agreement.
"Business Day" means a day other than Saturday, Sunday or other day
when commercial banks in the State of Delaware are authorized or required by law
to close.
"Car Wash Business" means the car wash business and related services
offered by the Companies at the Locations.
"Closing" is defined in Section 1.2 of the Agreement.
"Closing Date" is defined in Section 1.2 of the Agreement.
"Companies" mean Xxxx Car Wash, Inc and Xxxx Car Wash-Arizona, Inc., a
"Company" means one of the Companies.
"Current Surveys" means the most recent existing surveys of the Owned
Real Property which Sellers have access to.
"Current Title Policies" means the most recent existing title policy of
the Owned Real Property to which Sellers have access.
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"Deposit" means the Two Hundred Thousand Dollars ("$200,000) that
Purchaser is to deposit with Escrow Agent as set forth in Section 1.3(a)(i) of
the Agreement.
"Employee Benefit Plan" means any employee benefit plan or compensation
plan, agreement or arrangement covering present or former employees of the
Companies (including those within the meaning of ERISA Section 3(3)), stock
purchase plan, stock option plan, fringe benefit plan, change in control plan,
severance plan, bonus plan, pension plan and any other deferred compensation
agreement or plan or funding arrangement.
"Encumbrance" means any lien, pledge, option, charge, easement,
security interest, right-of-way or similar restriction or encumbrance.
"Escrow" means the Deposit.
"Escrow Agent" means United Escrow Company.
"Historical Financials" means the consolidated balance sheet and
statements of income and cash flows of the for the Car and Truck Wash Business
Segment as of and for the year ended December 31, 2005 as filed with the
Securities and Exchange Commission under the requirements of the Securities and
Exchange Act of 1934.
"Leased Real Property" means the Locations that are leased by the
Companies as identified on Schedule 1.3 of the Agreement.
"Locations" means the car wash locations listed on Schedule 1.3 of the
Agreement.
"Material Adverse Effect" means any material adverse change in, or
material adverse effect on the business, assets, operations, value or other
financial condition of the Car Wash Business such that the earnings before
interest taxes depreciation and amortization of the Car Wash Business can
reasonably expected to be $2,000,000 or less for the twelve months following the
Closing Date.
"MSI" means Xxxx Security International, Inc., a Delaware Corporation.
"Ordinary Course of the Business" means a manner generally consistent
with past business practices as evidenced by historical events, trends and
customary approach.
"Owned Real Property" means the real property owned by the Companies as
identified on Schedule 1.3 of the Agreement.
"Permitted Exceptions" is defined in Section 2.1 of the Agreement.
"Person" means any individual, partnership, corporation, association,
joint stock company, trust, joint venture, unincorporated organization or
governmental entity (or any department, agency or political subdivision
thereof).
"Promissory Note" means the note attached as Schedule 1.9(a)(ii).
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"Purchaser" is defined in the first paragraph of the Agreement.
"Purchase Price" is defined in Section 1.3 of the Agreement.
"Sellers" mean MSI and the Companies.
"Tax" means any federal, state, local or foreign income, gross
receipts, license, excise, severance, stamp, occupation, premium, windfall
profits, capital gain, intangible, custom duties, capital stock, franchise,
foreign withholding, unemployment, disability, transfer, value added,
registration, alternative or add on minimum, or estimated tax, including any
interest, penalties or additions to taxes in respect of the foregoing, whether
disputed or not, and any obligation to indemnify, assume or succeed to the
liability of any other Person in respect of the foregoing, and the term "Tax
Liability" shall mean any liability (whether known or unknown, whether absolute
or contingent, whether liquidated or unliquidated, and whether due or to become
due) with respect to Taxes.
"Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
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