Exhibit 10.1
ASSET PURCHASE AGREEMENT
XXXX SECURITY INTERNATIONAL, INC
AND
TWISTED CACTUS ENTERPRISES, LLC
TABLE OF CONTENTS
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PAGE
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RECITALS.................................................................... 1
ARTICLE I REAL PROPERTY AND ASSET TRANSFER; CLOSING......................... 1
ARTICLE II TITLE............................................................ 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS...................... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER..................... 17
ARTICLE V ADDITIONAL AGREEMENTS OF SELLERS................................. 18
ARTICLE VI ADDITIONAL AGREEMENTS OF PURCHASER.............................. 22
ARTICLE VII CONDITIONS TO PURCHASER'S OBLIGATIONS.......................... 23
ARTICLE VIII CONDITIONS TO SELLERS' OBLIGATIONS............................ 24
ARTICLE IX INDEMNIFICATION ................................................ 24
ARTICLE X OTHER PROVISIONS................................................. 28
SCHEDULES
1.9(a)(iv) Assignment Agreement
1.9(a)(v) 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
3.5(b) Exceptions to governmental compliance
3.5(d) Litigation or administrative proceedings for environmental violations
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3.5(e) Releases of "Hazardous Materials" and Environmental Conditions
3.5(g) Proceedings which would affect use of the Locations
3.7 Changes in the Car Wash Business
3.8 Required Consents
3.12 Pending and Threatened Litigation
3.13 Employee Contracts
3.14 Employee Benefits
Appendix A Defined Terms
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of December 7, 2006
by and among Xxxx Security International, Inc. ("MSI"), Xxxx Car Wash, Inc
("MCW"), Xxxx Car Wash-Arizona, Inc. ("MCWA") and Twisted Cactus Enterpirises,
LLC, an Arizona. ("Twisted Cactus"). For purposes of this Agreement, Twisted
Cactus is sometimes referred to as "Purchaser," MCW and MCWA, subsidiaries of
MSI that own the assets being sold under this Agreement, are referred to
individually as a "Company" and collectively as the "Companies," and MSI and the
Companies are sometimes collectively referred to as "Sellers."
RECITALS
MSI is the sole shareholder of the Companies. Each of the Companies own the
car washes listed on Schedule 1.3 attached. For purposes of this Agreement the
car and truck wash locations listed on Schedule 1.3 attached are hereafter
referred to individually, as a ("Location") and collectively the ("Locations").
Nine of the Locations are situated on parcels of real property owned by the
Companies (the "Owned Real Property"), and three of the Locations are situated
on parcels of real property that MCW occupies under valid leasehold interests
(the "Leased Real Property"). Schedule 1.3 identifies both the Owned Real
Property and the Leased Real Property.
Throughout this Agreement various Schedules are referenced as being
attached to this Agreement. Notwithstanding the fact that all Schedules are
referred to as being attached to this Agreement, some of the Schedules are not
attached but instead appear in a Disclosure Binder dated December 7, 2006. The
Disclosure Binder is organized under subheadings which correspond to the various
Schedules described in this Agreement. For purposes of identification, the
Disclosure Binder has been identified by the parties by a written statement
executed by the parties and appearing as the first page of the Disclosure
Binder.
ARTICLE I
Real Property and Asset Transfer; Closing
Section 1.1 Incorporation of Recitals. The recitals set forth above are
incorporated herein by reference and are a part of this Agreement.
Section 1.2 Place for Closing. The Closing under this Agreement shall take
place at the offices of First American Title Insurance Company ("Escrow Agent")
located at 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, XX or such other place
as the parties hereto may agree upon. The date the Closing occurs ("Closing
Date") shall be on one hundred twenty days from the date of this Agreement, or
such other date that the parties to this Agreement agree to in writing.
Section 1.3 Agreement to Transfer Assets and Owned Real Property;
Consideration.
(a) The Companies shall transfer and MSI shall cause the Companies to
transfer and deliver to Purchaser the Owned Real Property, their leasehold
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interests in the Leased Real Property and their interests in the Assets for the
total consideration of Nineteen Million Two Hundred Fifty Thousand ($19,250,000)
Dollars plus the amount set forth in Section 1.3(b) below ("Purchase Price") on
the Closing Date, payable by wire transfer in United States of America currency,
to an account as designated by MSI.
(b) The inventory and cash of the Car Wash Business existing on the Closing
Day will be conveyed to the Sellers ("Inventory") as part of the Assets. The
Purchaser shall pay Sellers at the Closing Date, in addition to the $19,250,000
set forth in Section 1.3(a) above, the cost charged the Sellers for the
Inventory from the third parties that have sold the Inventory to Sellers. The
Inventory categories being purchased are set forth below. For illustration
purposes only, the Inventory as of October 31, 2006 was as follows:
a. Cash, $8,200.00
b. Wash Supplies, $12,651.30
c. Wash Chemicals $3,946.68
d. Lube Supplies $21,017.14
e. Lobby Merchandise $45,631.66
f. Detail Chemicals $21,493.88
g. Detail Supplies $20,848.21
h. Greeting Cards $33,107.82
i. Uniforms $9,092.58
j. Towels $2,853.88
(c) On or before two (2) Business Days following the execution of this
Agreement, Purchaser shall pay the Escrow Agent Five Hundred Thousand ($500,000)
Dollars ("Deposit") in United States currency. The Escrow Agent, when it
receives the Deposit shall confirm to MSI in writing that the Deposit has been
paid to Escrow Agent. The Deposit, while held in Escrow, shall to the extent
possible, be invested in U.S. Treasury Bills or other short-term U.S. Government
securities, repurchase agreements with a national banking association for such
securities, investment-grade commercial paper or other investment-grade "money
market" investments, as Purchaser and MSI jointly direct Escrow Agent, and
whenever not so invested shall be held by the Escrow Agent in a separate,
federally-insured, interest-bearing account with a national banking association
approved by Purchaser and MSI. The interest on the Deposit will be paid to the
party to this Agreement that receives the Deposit. The Escrow Agent shall pay
the Deposit to the Purchaser or Sellers, as applicable as set forth below.
(i) If the Closing occurs, the Deposit and the interest earned on it
shall be paid to MSI at the Closing, as part of the Purchase Price set forth in
Section 1.3(a)and (b) above.
(ii) The Escrow Agent shall promptly pay the Deposit to MSI, if the
Closing does not occur on or before the Closing Date and all conditions set
forth in Article VII have been satisfied, waived or would have been satisfied
with the passage of time, or this Agreement is terminated before the Closing
Date by MSI under the provisions of Section 1.8(d)(ii) or 1.8(d)(iii) of this
Agreement.
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(iii) The Escrow Agent shall promptly pay the Deposit to Purchaser, if
Closing does not occur on or before the Closing Date, because a condition set
forth in Article VII of this Agreement is not satisfied and has not been waived
by Purchaser or this Agreement is terminated before the Closing Date by
Purchaser under the provisions of Section 1.8(d)(ii) or 1.8(d)(iii).
The Escrow Agent by executing this Agreement is agreeing to be bound only to the
provisions of this Agreement relating to the Deposit. In the event of a dispute
between Sellers and Purchaser concerning the Deposit, the Escrow Agent shall
hold the Deposit until ordered by a court having jurisdiction to pay the Deposit
to Sellers, Purchaser or into the Court.
Section 1.4 Description of Assets. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, as hereinabove
defined, the Companies shall and MSI shall cause the Companies to grant, convey,
sell, transfer and assign to Purchaser all assets of the Companies set forth in
this Section 1.4 which assets are the following: (the "Assets"):
(a) The Owned Real Property (including, but not limited to, the land and
all appurtenances, buildings, structures, improvements, fixtures and other
structures);
(b) The leasehold interests in the Leased Real Property and all interests
in the appurtenances, buildings, structures, improvements, fixtures and other
structures;
(c) All equipment, computers, software, printers, vending machines,
machinery and parts, vehicles, tools, hoses, brushes, communication equipment,
sprinklers, and security equipment and similar items in and at the Locations
(collectively, the "Equipment"), the Equipment in the car wash tunnels of the
Locations is listed on Schedule 1.4(c);
(d) The inventory of gasoline in underground storage tanks at the Locations
and the Inventory, as set forth in Section 1.3(b) above;
(e) All contractual rights and obligations of the Companies with its
customers, vendors, suppliers, landlords, tenants and others, as listed on
Schedule 1.4(e), excepting only the contracts with Recycled Paper Greetings and
Ecolab, Inc. that are not to be assigned to Purchaser ("Contractual
Obligations");
(f) All permits, licenses, franchises, consents and other approvals from
governments, governmental agencies (federal, state and local) ("Permits") held
by the Companies relating to, used in or required for the operation of the Car
Wash Business or any of the Assets, all of which are listed on Schedule 1.4(f),
to the extent such Permits are assignable ;
(g) All office equipment, furnishings, sales and promotional materials,
catalogues and advertising literature, and all pictures and photographs,
construction and "as-built" drawings, plans and specifications, and finish plans
in the possession or control of the Companies, relating to the Car Wash
Business;
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(h) To the extent owned, licensed or otherwise available to the Companies,
all intellectual property used in connection with the Car Wash Business, such as
franchises, trademarks, trade names, copies of employee lists, copies of vendor
files, website domain name of 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, , the Assumed Liabilities, as defined in this Agreement and the
Permitted Exceptions, as defined in this Agreement.
At Closing, Sellers shall convey to Purchaser good and marketable title to
the Owned Real Property, free and clear of any mortgages, collateral
assignments, security interests, liens, claims, charges or encumbrances without
exception, other than the Permitted Exceptions.
In accordance with Section 1.4 of this Agreement at Closing, Purchaser will
be conveyed the gasoline in underground storage tanks at the Locations. In
accordance with Section 1.6 and 6.3 of this Agreement, Purchaser after Closing
is obligated to honor, without charge to the customers of the Locations, the car
wash passes, coupons and pre-paid gift cards issued by the Companies in
connection with the Car Wash Business. Sellers and Purchaser agree that for the
purpose of this Agreement the term ("Excess Deferred Revenue") shall mean the
amount, if any, by which the amount equal to (a) the deferred revenue amount on
the Companies books of account attributable to the customer passes, coupons, and
gift cards issued in connection with the Car Wash Business at the Closing Date,
exceeds by more then One Hundred Thousand ($100,000) Dollars the amount equal to
(b) the inventory amount on the Companies books of account attributable to the
gasoline in underground storage tanks at the Locations on the Closing Date. At
the Closing, Purchaser shall receive a purchase price reduction equal to the
amount of the Excess Deferred Revenue, if any.
Section 1.5 Excluded Assets. The parties agree that the Assets being sold
do not include any cash, accounts receivables, inventory (other then gasoline in
underground storage tanks at the Locations), the original financial books and
records of the Companies and insurance polices and insurance reserves relating
to the Car Wash Business. Copies of the financial books and records of the Car
Wash Business will be made available by the Sellers, to Purchaser both before
and after Closing, for examination, inspection and copying.
Section 1.6 Assumption of Obligations. Purchaser agrees to (i) assume all
rights and obligations existing as of and arising after the Closing Date under
the Contractual Obligations, and (ii) honor and accept all customer passes,
coupons, and gift cards issued in connection with the Car Wash Business through
the Closing Date and (iii) assume all liabilities, responsibilities and all
obligations arising with respect to Applicable Laws, as defined in this
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Agreement relating to Locations ("Assumed Liabilities"). Notwithstanding the
foregoing definition of Assumed Liabilities, the Purchaser may seek
indemnification under the provisions of Article IX for the violation of any
representation or warranty of Sellers under this Agreement regarding the
violation of Applicable Laws at the Locations.
Section 1.7 Non-Assumption of Liabilities. Purchaser shall not, by the
execution and performance of this Agreement or otherwise, assume, become
responsible for, or incur any liability or obligation of any nature of the
Sellers, except for the Assumed Liabilities being assumed under Section 1.6
hereof. By way of illustration, Purchaser shall not assume, become responsible
for, or incur any liability for whether legal or equitable, matured or
contingent, known or unknown, foreseen or unforeseen, ordinary or extraordinary,
patent or latent, arising out of occurrences prior to the Closing Date arising
out of or relating to: (a) violation of the requirements of any governmental
authority or of the rights of any third person, relating to the reporting and
payment of federal, state, or other income Tax Liabilities of Sellers; (b) any
severance pay, or accrued vacation pay obligation or any other potential claims
that could be brought or alleged by any of the Sellers employees for periods
prior to the Closing Date, or any obligations under any employee benefit plan
(within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended) or any other fringe benefit program maintained or
sponsored by Sellers or to which any of the Sellers contributes or any
contributions, benefits or liabilities therefore or any liability for the
withdrawal or partial withdrawal from or termination of any such plan or program
by the Sellers; (c) the interest bearing debts of the Sellers, (d) any violation
by the Sellers of any federal, state or local antitrust, racketeering or trade
practice law, (e) liabilities or obligations of the Sellers for brokerage or
other commissions relative to this Agreement or the transactions contemplated
hereunder, (f) any and all liability and obligation for commissions and bonuses
listed on Schedule 3.13; and (g) any rights, liabilities or responsibilities for
any lease agreement that is not listed in Schedule 1.4(e).
Section 1.8 Time For Closing; Damages; and Termination.
(a) Following execution of this Agreement, Purchaser and Sellers shall be
obligated to conclude the Closing by the Closing Date. Neither the Sellers nor
Purchaser shall be deemed in default hereunder by reason of any failure of a
condition precedent to the obligations of either Sellers or Purchaser hereunder
where such failure has occurred for reasons beyond the control of the party
unable to satisfy the condition precedent to the other party's obligations under
this Agreement.
(b) If the failure to conclude this transaction is due to the refusal and
failure of Sellers to perform their obligations under this Agreement, Purchaser
may elect to seek to enforce this Agreement with an action of specific
performance, or alternatively, Purchaser may elect as sole and liquidated
damages the sum of $500,000, and Purchaser shall be paid the Deposit and
interest thereon. The parties acknowledge that the Purchaser's actual damages in
the event of a default by Sellers are difficult to ascertain and that the
$500,000 (along with return of the Deposit made with interest thereon) is a fair
approximation of the damages Purchaser is expected to suffer.
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(c) If the failure to conclude this transaction is due to the refusal and
failure of Purchaser to perform its obligations under this Agreement, Sellers
shall be paid the Deposit and interest thereon, as sole and liquidated damages.
The parties acknowledge that the Sellers actual damages in the event of a
default by Purchaser are difficult to ascertain and that the Deposit and
interest is a fair approximation of the damages Sellers are expected to suffer.
(d) This Agreement and the transactions contemplated hereby may be
terminated at any time prior to the Closing Date:
(i) by mutual written agreement of Purchaser and MSI;
(ii) by MSI, or by Purchaser in the event Purchaser or the
Sellers, as applicable, makes a material misrepresentation under this Agreement
or breaches a material covenant or agreement under this Agreement, and fails to
cure such misrepresentation or breach within ten (10) business days from the
date of written notice of the existence of such misrepresentation or breach; or
(iii) by MSI or Purchaser, if the Closing does not occur by the
Closing Date or such other date as may be agreed to by the parties hereto in
writing, due to the non-fulfillment of a condition precedent to such party's
obligation to close as set forth at Article VII or VIII hereof, as applicable
(through no fault or breach by the terminating party).
All terminations shall be exercised by sending the other parties a written
notice of the termination. In the event this Agreement is terminated as provided
herein, this Agreement shall become void and be of no further force and effect,
the Deposit paid as set forth in Section 1.3(c), and no party hereto shall have
any further liability to any other party hereto, except that Section 1.3(c),
this Section 1.8, Article IX, Section 10.1, and Section 10.2 shall survive and
continue in full force and effect, notwithstanding termination. The termination
of this Agreement shall not limit, waive or prejudice the remedies available to
the parties, at law or in equity, for a breach of this Agreement, except as
limited by this Agreement.
Section 1.9 Deliveries by Purchaser.
(a) At the Closing, Purchaser shall deliver, all duly and properly executed
(where applicable):
(i) The Purchase Price in United States currency by wire transfer
to MSI as set forth in Section 1.3(a);
(ii) A copy of the resolutions of the requisite members or
managers of Purchaser authorizing the execution and delivery of this Agreement
and each other agreement to be executed in connection herewith (the resolutions
and agreements to be executed in connection herewith by Sellers and/or Purchaser
are referred to in this Agreement collectively, as the "Collateral Documents")
and the consummation of the transactions contemplated herein;
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(iii) Other documents and instruments required by this Agreement,
if any;
(iv) An Assignment and Assumption Agreement in the form attached
hereto as Schedule 1.9(a)(iv) ("Assignment Agreement"); and
(v) A Lease Assignment accepting the conveyance of the Companies
to Purchaser of each leasehold interest in the Leased Real Property, general
form and substance, as attached as Schedule 1.9(a)(v) ("Lease Assignment").
Section 1.10 Deliveries by Sellers.
(a) At the Closing, each of the Sellers shall deliver, all duly and
properly executed (where applicable):
(i) A 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;
(viii) Customary title documentation, including, without
limitation, mechanics' lien affidavits; and
(ix) Other documents and instruments required by this Agreement,
if any.
Section 1.11 Transfer Tax, Allocation of Purchase Price and Pro-Rations.
(a) Sellers and Purchaser shall each bear or pay sales, transfer taxes and
fees imposed on the conveyance of the Assets by all governments, state, local
and federal in accordance with the provisions of Section 5.1 and 6.1.
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(b) The parties agree that the consideration for the sale of the Assets
shall be allocated among the Assets as set forth on Schedule 1.11(b) attached
hereto. The Sellers and the Purchaser acknowledge that the allocation in such
Schedule, will have been arrived at based upon their negotiations and shall be
used by them for all purposes, including, but not limited to, federal, state,
and local Tax and financial reporting purposes, and they shall not take any
position inconsistent to the allocation. On the Closing Date, as applicable, the
Purchaser and the Sellers shall execute Internal Revenue Form 8594 which form
shall be binding on the Purchaser and the Sellers and shall be filed with the
income tax returns of the Purchaser and the Sellers.
(c) The charges for the current year's real estate Taxes due with respect
to the Owned Real Property and Leased Real Property, shall be prorated between
the Companies and the Purchaser based on the Closing Date, with the Companies
paying all such Taxes due prior to the Closing Date and the Purchaser paying all
such Taxes due on and after the Closing Date.
(d) The charges for water, electricity, sewer rental, gas, telephone and
all other utilities pertaining to the Locations, shall be prorated between the
Companies and the Purchaser based on the Closing Date, with the Companies paying
all such charges due prior to the Closing Date and the Purchaser paying all such
Taxes due on and after the Closing Date.
ARTICLE II
Title and Environmental Inspection
Section 2.1 Real Property. As set forth in the Recitals, the Companies own
the Owned Real Property. For purposes of this Agreement, "Owned Real Property"
shall also include (i) all of the Company's right, title and interest in and to
all easements, rights-of-way, privileges and appurtenances thereto, including,
without, limitation, all water and water rights, ditch and ditch rights, all
coal, oil, gas, and other minerals thereon or there under, (ii) all of Company's
right, title and interest in and to the beds of all streets, roads, avenues or
highways, open or proposed, abutting the Owned Real Property, and (iii) all of
Company's right, title and interest, if any, in and to any award in
condemnation, or damages of any kind, to which Company may have become entitled
or may hereafter be entitled, by reason of any exercise of the power of eminent
domain with respect to the Owned Real Property or any other right, title or
interest to be sold hereunder or any part thereof. Sellers shall convey to
Purchaser at Closing good and marketable title to the Owned Real Property, free
and clear of any mortgages, collateral assignments, security interests, liens,
claims, charges or encumbrances without exception, other than utility easements
and other covenant restrictions, if any, which do not impede the Location's use
as a car wash or adversely affects the marketability of the Location's title
("Permitted Exceptions").
Section 2.2 Owner's Title Policy. MSI has prior to the execution of this
Agreement delivered to Purchaser the Current Title Policies for the Locations.
MSI and Purchaser shall order new title commitments ("New Title Commitments")
for the Owned Real Property from the First American Title Insurance Company (the
"Title Insurer") as soon as practicable after the date of this Agreement. MSI
and Purchaser shall each pay one half of the premium of any title insurance the
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Title Insurer issues. The New Title Commitments shall be dated after the date of
this Agreement with respect to each Owned Real Property, and shall be a
commitment of the Title Insurer to issue with respect to each Owned Real
Property a standard coverage ALTA owners policy of title insurance ("Title
Policy"). If the jurisdiction offers an extended coverage ALTA owners policy and
a standard owners policy, and Purchaser wishes an extended coverage policy,
Purchaser shall solely pay the additional charge for the extended coverage. The
Title Policy when issued shall insure title to the Owned Real Property covered
by the Title Policy to be in fee simple subject only to the Permitted
Exceptions, as defined above. MSI and Purchaser shall cause the Title Insurer to
deliver to MSI and Purchaser along with the New Title Commitments copies of all
documents noted as exceptions in each of the New Title Commitments. Following
the date hereof, Seller shall not create or consent to the creation of any lien,
encumbrance or other matter affecting title to any of the Owned Real Property,
without Purchaser's prior written consent.
Section 2.3 Leased Real Property. At Closing, the Leased Real Property
shall be conveyed to Purchaser through separate lease assignments executed by
the Companies which is the tenant under each applicable lease. The form of Lease
Assignment that is acceptable to both the Sellers and Purchaser is attached to
this Agreement as Schedule 1.9(a)(vii). Both the Sellers and the Purchaser shall
cooperate with each other for the purpose of agreeing to make reasonable changes
to the Lease Assignment form as are necessary to obtain the execution of it by
the separate landlords of the Leased Real Property. The Sellers and Purchaser
also agree to use their commercially reasonable efforts, not to include the
payment of money, to satisfy whatever reasonable requirements the separate
landlords reasonably request as a condition of executing a Lease Assignment.
After the date hereof, without the prior written consent of Purchaser, the
leases for the Leased Real Property shall not be amended, renewed, terminated or
otherwise modified or any new leases executed.
Section 2.4 Survey. MSI has furnished to Purchaser all of the Current
Surveys. Purchaser, at its election, or as Purchaser's lenders may require, may
have updates or new surveys made at its expense ("Updated Surveys"). Within five
days after the execution of this Agreement, Purchaser will order the Updated
Surveys it requires and will notify Sellers in writing of the Locations for
which Updated Surveys have been ordered. Sellers will use commercially
reasonable efforts to cooperate and aid Purchaser's surveyor in preparing the
Updated Surveys commissioned by Purchaser. Purchaser shall use commercially
reasonable efforts to obtain the commissioned Updated Surveys as soon as
possible.
Section 2.5 Environmental Reports. MSI has furnished to Purchaser all of
the Phase 1 Environmental Reports relating to the Locations that are in its
possession. Purchaser, at its election, may have new or additional Phase 1
Environmental Reports updates made for the Locations at its expense ("Updated
Phase 1 Reports"). Within five days after the execution of this Agreement,
Purchaser will order the Updated Phase 1 Reports it requires and will notify
Sellers in writing of the Locations for which Updated Phase 1 Reports have been
ordered. Sellers will use commercially reasonable efforts to cooperate and aid
Purchaser's environmental consultant in preparing the Updated Phase 1 Reports
commissioned by Purchaser. Purchaser shall use commercially reasonable efforts
to obtain the commissioned Updated Phase 1 Reports as soon as possible.
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Purchaser will furnish MSI with copies of each Updated Phase 1 Report obtained
by it for the Locations within two days after Purchaser receives each Updated
Phase 1 Report.
Section 2.6 Inspections.
(a) Purchaser shall have the right to examine the title to each of the
Locations. If during the Title Inspection Period, as hereafter defined,
Purchaser determines that the Location's title is subject to exceptions or
objections to title that do not come within the definition of Permitted
Exceptions, as set forth in Section 2.1 above, Purchaser shall have until the
end of the Title Inspection Period to notify MSI in writing specifying such
defects that in Purchaser's opinion are not Permitted Exceptions. MSI shall have
ten (10) days from receipt of written notice from Purchaser within which to
remove said defects or agree to have them removed by Closing, and if MSI is
unsuccessful in removing them within said time, Purchaser shall have the option
of either: (i) accepting the title to the Location in its then existing
condition; or (ii) deleting the Location from this Agreement whereupon the
Purchase Price will be reduced by an amount allocated to the Location as set
forth on Schedule 1.11(b) All exceptions to title or the surveys to which
Purchaser does not object during the Title Examination Period, or if objected to
by Purchaser, are cured by MSI or are subsequently waived by Purchaser shall be
deemed to be within the definition of Permitted Exceptions, as set forth in
Section 2.1. The Title Inspection Period as to each Location shall be ten days
after the date that Purchaser receives with respect to the Location, the last to
be received of (i) the New Title Commitment for the Location along with the
documents noted as exceptions in the New Title Commitment and (ii) the Updated
Survey for the Location, provided an Undated Survey was commissioned by
Purchaser within the time required by Section 2.4 of this Agreement. The Title
Examination Period for a Location shall be extended for an additional five (5)
business day period with respect to any supplements or updates to any New Title
Commitment or Updated Survey received by Purchaser prior to the Closing Date but
Purchaser may only object to facts first revealed by the supplement or update.
(b) Purchaser shall have the right to examine the environmental compliance
condition of each of the Locations. If during the Environmental Inspection
Period, as hereafter defined, Purchaser determines that the Location's
environmental condition requires remediation of soil or ground water at a cost
in excess of Five Thousand ($5,000) Dollars, Purchaser shall have until the end
of the Environmental Inspection Period to notify MSI in writing specifying such
defects that in Purchaser's opinion require remediation in excess of Five
Thousand ($5,000) Dollars. MSI shall have ten (10) days from receipt of written
notice from Purchaser within which to cure said defects or agree to have them
cured by Closing, and if MSI is unsuccessful in removing them within said time,
Purchaser shall have the option of either: (i) accepting the title to the
Location in its then existing environmental condition; or (ii) deleting the
Location from this Agreement whereupon the Purchase Price will be reduced by the
amount allocated to the Location as set forth on Schedule 1.11(b) The
Environmental Inspection Period as to each Location shall be fifteen days after
the date that Purchaser receives with respect to the Location the Updated Phase
1 Report for the Location, provided an Updated Phase 1 Report was commissioned
by Purchaser within the time required by Section 2.5 of this Agreement.
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Notwithstanding the above, Purchaser accepts the environmental conditions set
forth on Schedule 3.5(d) and the environmental conditions set forth on Schedule
3.5(d) shall not be objected to by Purchaser.
(c) Purchaser and Sellers agree that if in accordance with the operation of
Sections 2.6(a) and 2.6(b) above, three or more Locations are deleted from this
Agreement or if the Locations deleted generated $500,000 or more in earnings
before interest, taxes, depreciation and amortization during fiscal year 2005,
either Purchaser or MSI may cancel this Agreement by sending written notice to
the other party, whereupon the parties shall be released of all further
obligations under this Agreement and the Deposit shall be returned to Purchaser.
ARTICLE III
Representations and Warranties of Sellers
Whenever the phrase "to Sellers' knowledge" or any equivalent phrase is
used in this Agreement, the phrase shall mean the actual knowledge of any
executive corporate officer of MSI. Notwithstanding the foregoing, no executive
officer of MSI shall be required to undertake any affirmative investigative
action for the purposes of satisfying the preceding sentence. With knowledge
that Purchaser is relying upon the representations, warranties and covenants
herein contained, Sellers represent and warrant to Purchaser and make the
following covenants for Purchaser's benefit, at and as of the date hereof and
the date of Closing.
Section 3.1 Organization and Good Standing. Each of the Sellers is duly
organized, legally existing and in good standing under the laws of the state of
their organization, with full power and authority to own its properties and
conduct its business as now being conducted, and has been duly admitted and is
in good standing under the laws of each state in which it owns property or
operates a business.
Section 3.2 Authorization; Ownership. The Sellers have by proper
proceedings duly authorized the execution, delivery and performance of this
Agreement and each of the Collateral Documents to be entered into by Sellers and
no other action is required by law or the certificate of incorporation, or
by-laws of any Seller. This Agreement and the consummation of the transactions
contemplated hereby are valid and binding obligations of Sellers enforceable
against each Seller in accordance with its terms; provided that (i) enforcement
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws of general application affecting the rights and remedies of
creditors, and (ii) enforcement may be subject to general principles of equity,
and the availability of remedies of specific performance and injunctive relief
may be subject to the discretion of the court before which any proceeding for
such remedies may be brought. The Sellers own each of the Assets.
Section 3.3 Contracts, Permits and Material Documents. The Sellers have
made true and correct copies of all of the following available for inspection by
the Purchaser by providing copies. ("Material Documents") with respect to the
Business and the Assets: (i) leases for the Leased Real Property, (ii) leases
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under which any of portion of the Owned Real Property is leased to third
parties, (iii) the Contractual Obligations being assumed by Purchaser at
Closing, (iv) Phase 1 environmental reports for the Locations in the possession
of Sellers, and (v) with respect to any oral contract, a summary of the
principal terms thereof as appearing on Schedule 3.3 to this Agreement. Each
Material Document is in full force and effect and constitutes the valid, legal,
binding and enforceable obligation of the Sellers (except as the enforceability
thereof may be limited by any applicable bankruptcy, reorganization, insolvency
or other laws affecting creditors' rights generally or by general principles of
equity). Sellers are not in breach or default of any material terms or
conditions of the Material Documents, or to Sellers' knowledge is any third
party in breach or default of any material terms or conditions of any Material
Document. Except for debt that Purchaser will not be assuming, the Companies are
not a party to, and the Companies' property is not bound by, any agreement or
instrument which is material to the continued conduct of business operations of
the Companies, as now being conducted, except for the Material Documents, and
except as listed in Schedule 3.3. Sellers and Purchaser agree to take all
commercially reasonable action before the Closing applicable to each of the
Material Documents to obtain any consents or approvals required so that each
such Material Document may be assigned to Purchaser at the applicable Closing as
contemplated under this Agreement, excepting those Material Documents which are
not to be assigned as set forth on Schedule 1.4(e).
Section 3.4 Personal Property; Title to Assets. All items of personal
property at the Locations and used in the Car Wash Business, except for the
Excluded Assets used in the Car Wash Business, are included among the Assets
described in Section 1.4 hereof and will be transferred to Purchaser at Closing.
All items of personal property and all buildings and structures owned by the
Sellers are being transferred "as is" with no warranty as to condition or
suitability of the Assets for the current use of the Assets. Each Location and
the personal property present at the Location is owned by the each of the
Companies, as set forth on Schedule 1.3.
Section 3.5 Real Property.
(a) MCW has valid leasehold interests in each parcel of the Leased Real
Property and the Companies have good, marketable and insurable title to, the
Owned Real Property, except for the Permitted Exceptions and debt that the
Companies will fully pay at the Closing. Full and complete copies of all of the
leases applicable to the Leased Real Property, including all modifications and
amendments thereof, have been furnished to Purchaser and identified in Schedule
1.4(e).
(b) To Sellers' knowledge, except as set forth in Schedule 3.5(b) attached
hereto and incorporated herein, the Owned Real Property and Leased Real Property
is currently licensed, permitted and authorized for the operation of the Car
Wash Business conducted on it under all applicable federal, state and local
statutes, laws, rules, regulations, orders, permits (including, without
limitation, zoning restrictions, land use requirements and environmental laws)
(collectively, the "Applicable Laws"). Except as set forth in Schedule 3.5(b) or
Schedule 3.5(d) or 3.5(e), Sellers have not received any written notice of the
material violation of any Applicable Laws with respect to the Owned Real
Property or the Leased Real Property. To Seller's knowledge except as set forth
on Schedule 3.5(d) or 3.5(e), no claims have been threatened by any governmental
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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.
(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.
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Section 3.6 Financial Statements. True and correct copies of the Historical
Financial Statements of MSI 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 Car Wash Businesses
operating records supplied to Purchaser are correct in all material respects for
the periods of the operating records. 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;
(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;
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(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 have 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.
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.
15
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.
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
16
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:
(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.
17
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.
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.
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.
18
Section 5.6 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
shall offer at will employment to the Employees 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 not be responsible for providing
the notices to the Employees required by the Worker Adjustment and Retraining
Notification Act (the "WARN Act"), 29 U.S.C. ss. 2101 et seq. as Purchaser will
be offering employment to the Employees.
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.
(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 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
19
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.
(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
20
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.
(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.
21
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).
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.
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.
22
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.
(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:
23
(a) The Purchaser shall have delivered to MSI the Purchase Price 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.
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.;
24
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 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.
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
25
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.
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.
26
(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.
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
Dollars ($5,000,000).
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.
27
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.
Section 10.4 Entire Agreement. This Agreement (including the Schedules) 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 Xxxxxxx Xxxxxxx 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.
28
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:
Xxxxx Xxxxxxxxx
0000 X. Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
With a copy to
Xxxxxx Xxxx, Esquire
Xxxxxxxxx Traurig
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
(c) If to Escrow Agent, addressed to it at:
Camelback Esplande III
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000-0000
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
29
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 Arizona, without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Arizona or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Arizona.
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.
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
30
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. No such amendment
shall relieve any party from its indemnity obligations relating to a Schedule
prior to its amendment.
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.
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.]
31
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
PURCHASER:
TWISTED CACTUS LLC
By: /s/ Xxxx Xxxxxxx
----------------
Name: Xxxx Xxxxxxx
------------
Title: Owner
-----
SELLERS:
Xxxx Security International, Inc.
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
Xxxx Car Wash, Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
----------------
Title: Vice President
--------------
Xxxx Car Wash-Arizona, Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
----------------
Title: Vice President
--------------
ESCROW AGENT
First American Title Insurance Company
By: /s/ Xxxxxx Xxxxxx
-----------------
Name: Xxxxxx Xxxxxx
-------------
Title: Escrow Agent
------------
32
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 5.10 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 the acts and deliveries set forth in Sections 1.9 and 1.10 of
this 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 to which Sellers have access.
"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 Three Hundred Thousand Dollars ("$500,000) that
Purchaser is to deposit with Escrow Agent as set forth in Section 1.3(c) 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 First American Title Insurance Company , 0000 Xxxx
Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000-0000.
"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" mean 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).
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"Promissory Note" means the note attached as Schedule 1.9(a)(ii).
"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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