SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 17, 1999
(Date of Earliest Event Reported)
MACE SECURITY INTERNATIONAL, INC.
(Exact name of Registrant as Specified in its Charter)
Delaware
(State of Incorporation)
0-22810
(Commission File Number)
03-0311630
(IRS Employer Identification No.)
160 Benmont Avenue, Bennington, Vermont 05201
(Address of Principal Executive Offices)
(802) 447-1503
(Registrant's Telephone Number)
<PAGE>
Item 1 Not Applicable.
Item 2 Acquisition of the Capital Stock of Colonial Full Service Car
Wash, Inc.
On May 17, 1999, Mace Security International, Inc., a Delaware corporation
(the "Company" or "Registrant"), through its wholly owned subsidiary Mace
Anti Crime Bureau, Inc., pursuant to the terms and conditions of the Stock
Purchase Agreement (the "Stock Purchase Agreement") dated February 4, 1999,
as amended April 1, 1999, executed by American Wash Services, Inc. with Gary
Higgins, Rosario Higgins, Rosa Maria Dietrich, Rainer Dietrich, Amy
Schmadeke, Elisa Rauch and Gunter Rauch (collectively, the "Shareholders" or
"Sellers"), and assigned to the Company, acquired all of the outstanding
shares of stock (the "Colonial Shares") of Colonial Full Service Car Wash,
Inc. ("Colonial"). The Seller is not affiliated with Registrant nor with any
of Registrant's subsidiaries. The description of the acquisition transaction
set forth herein is qualified in its entirety by reference to the Stock
Purchase Agreement and subsequent amendment, which are filed herewith as
Exhibits 2.1 and 2.2, respectively. The Company intends to continue the
business of operating a car wash company.
Pursuant to the Stock Purchase Agreement, as amended, Registrant purchased
the Colonial Shares for total consideration of approximately $15,100,000,
including 1,251,000 shares of the Registrant's Common Stock valued at $6.6875
per share and the assumption of debt and negative working capital of
approximately $6,734,000. Approximately 245,000 shares of the Registrant's
Common Stock was "held back" in accordance with the provisions of the Stock
Purchase Agreement. Upon the expiration of the "hold-back" period, assuming
that the Company has no claims against the Shareholders for breaches of
representations and other indemnified claims, the remaining shares will be
issued. The acquisition is accounted for using the "purchase" method of
accounting.
In addition, each of the Shareholders executed non-competition
agreements preventing each of them from competing, directly or indirectly,
with the Company or carrying on the operations of a car wash within certain
geographic areas and for certain predetermined periods.
Items 3-6 Not Applicable.
Item 7 Financial Statements and Exhibits.
(a) Financial Statements of business acquired.
It is impracticable to provide the required financial
statements of Colonial at the time of the filing of this report.
The required financial statements of Colonial Full Service
Car Wash, Inc. will be filed within the time period
required in accordance with applicable regulations and
the Securities and Exchange Act of 1934.
(b) Pro Forma Financial information.
It is impracticable to provide the required pro forma financial
information of Mace Security International, Inc. at the time of the
filing of this report. The pro forma financial information will be
filed within the time period required in accordance with applicable
regulations and the Securities and Exchange Act of 1934.
<PAGE>
(c) Exhibits. The following Exhibits are hereby filed as
part of this Current Report on Form 8-K.
2.1 Stock Purchase Agreement dated as of February 4,
1999, by and between Gary Higgins, Rosario Higgins, Rosa
Maria Dietrich, Rainer Dietrich, Amy Schmadeke, Elisa
Rauch and Gunter Rauch and American Wash Services, Inc.
2.2 Amendment Number One to Stock Purchase Agreement
dated April 1, 1999, between Gary Higgins, Rosario
Higgins, Rosa Maria Dietrich, Rainer Dietrich, Amy
Schmadeke, Elisa Rauch, Gunter Rauch and Steven Sims and
American Wash Services, Inc.
2.3 Assignment dated May 17, 1999 between Mace Security
International, Inc., Mace Anti Crime Bureau, Inc., and
American Wash Services, Inc.
99 Press Release dated May 25, 1999.
Items 8-9. Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: May 28, 1999 MACE SECURITY INTERNATIONAL, INC.
By:/s/ Gregory M. Krzemien
Gregory M. Krzemien
Chief Financial Officer and Treasurer
<PAGE>
STOCK PURCHASE AGREEMENT
BETWEEN
THE SHAREHOLDERS OF
COLONIAL FULL SERVICE CAR WASH, INC.
And
AMERICAN WASH SERVICES, INC.
<PAGE>
TABLE OF CONTENTS
PAGE
RECITALS 1
ARTICLE I ACQUISITION; CLOSING 1
ARTICLE II TITLE INSURANCE 4
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF THE SELLERS 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF THE PURCHASER 18
ARTICLE V ADDITIONAL AGREEMENTS OF SELLERS 18
ARTICLE VI ADDITIONAL AGREEMENTS OF PURCHASER 22
ARTICLE VII CONDITIONS OF PURCHASER 23
ARTICLE VIII CONDITIONS OF SELLERS 24
ARTICLE IX INDEMNIFICATION 25
ARTICLE X OTHER PROVISIONS 28
<PAGE>
SECTION OF DISCLOSURE SCHEDULE
ATTACHED TO THIS AGREEMENT
1.6(c) Purchaser Opinion Letter
1.6(d) Noncompetition Agreement
1.6(e) Registration Rights Agreement
1.7(f) Release
1.7(h) Sellers Opinion Letter
ATTACHED AS PART OF DISCLOSURE BINDER
1.3(a) Company Debt
1.3(b) Stock Allocation
2.1 Real Property Descriptions
2.2 Permitted Exceptions
3.2 Company Share Encumbrances
3.4(a) Office and Other Equipment
3.5 Customer List and Contracts
3.6 Real Property Interests
3.6(a) Exceptions to governmental compliance
3.6(b) Exceptions to lawful use of the Property
3.6(c) Exceptions to conduct in compliance with Applicable laws
3.6(e) Litigation or administrative proceedings for environmental violations
3.6(f) Definition of "Hazardous Materials" and Environmental Conditions
3.6(h) Wetlands
3.6(i) Mechanic's liens
3.6(k) Exceptions to proceedings which would affect use of the Property
3.7(a) List of Company's Leased Personalty and Permitted Encumbrances
3.10 Fiscal Condition of Company
3.11 Tax Deficiencies
3.12 Insurance Policies, etc.
3.13(a) Employment Agreements
3.13(b) Employee Information
3.13(c) Employee Benefit Plans, Funds or Programs
3.14(a) Exceptions to Company's operation in compliance with laws, etc.
3.14(b) Exceptions relating to environmental issues and liability
3.14(d) Notices of Violation
3.14(f) Exceptions to Approvals
3.16 Exceptions to right of Sellers and Company to enter this Agreement
3.17 Transaction Intermediaries
3.19 Investments in Competing Companies
3.22 List of Litigation and Summaries
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of
February 4, 1999, by and between Gary Higgins, Rosario Higgins, Rosa Maria
Dietrich, Rainer Dietrich, Amy Schmadeke, Elisa Rauch and Gunter Rauch
("Shareholders") on the one hand, and American Wash Services, Inc.
("Purchaser") on the other hand. Shareholders may sometimes be referred to as
"Sellers" in this Agreement.
RECITALS
The Shareholders are the owners of all of the outstanding shares of
stock ("Company Shares") of Colonial Full Service Car Wash, Inc. (the
"Company"), which is in the business of operating a car wash company (the
"Business") in or about Arlington, Texas. The Company owns and leases certain
parcels of real property upon which Company conducts a portion of its
operations. Purchaser intends to merge with a subsidiary of a business
corporation which is subject to the requirements of the Securities Exchange
Act of 1934, the stock of which is traded either on the Nasdaq Stock Market,
Inc., or the Nasdaq Small Cap Market ("Successor Corporation").
In accordance with the provisions of this Agreement, Sellers desire
to sell all of the outstanding shares of stock of the Company in exchange for
common stock of Successor Corporation, all on the terms contained herein. The
parties intend that the transactions contemplated hereby be treated as a
"pooling of interests" for accounting purposes.
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 prepared by the
Sellers. 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
Acquisition; 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 Time and Place for Closing. Closing under this Agreement
shall take place within fifteen days of the conditions set forth in Article
VII and Article VIII being satisfied or waived, time being of the essence, at
the offices of Purchaser, 1000 Crawford Place, Suite 400, Mount Laurel, New
Jersey, or such other place as the parties hereto may agree upon. The date
that Closing occurs is referred to hereinafter as the "Closing Date" and the
act of closing as "Closing." The exact Closing Date shall be established by a
written notice sent by Purchaser to Sellers.
<PAGE>
Section 1.3 Stock Purchase; Consideration.
(a) At the Closing, (i) all of the Company Shares shall be delivered
by Shareholders to Purchaser, and (ii) Purchaser shall deliver to Sellers,
subject to adjustment as provided herein in this Section 1.3, a number of
shares of Successor Corporation's common stock ("Consideration Stock") having
a value of $17,958,000 ("Purchase Price"), as adjusted as provided for in
this section below, each share being valued at the closing price of the
common stock on the Nasdaq Stock Market on the trading day which is the fifth
trading day prior to the Closing Date ("Per Share Value"). For purpose of
this Agreement, "Company Debt" shall include long-term debt, including the
current portion of the principal and interest accrued through the Closing
Date, plus the purchase price under any contracts to purchase real estate or
capital assets that will become due and owing within ninety (90) days after
Closing, plus the amount at Closing of any deferred tax liabilities. At the
Closing, Company shall have total Company Debt in the amount set forth on
Schedule 1.3(a) attached. The Purchase Price to be paid in Consideration
Stock at Closing shall be decreased, dollar for dollar, by the amount of the
Company Debt at Closing. The Purchase Price shall also be decreased by the
amount by which the current assets of the Company at Closing are less than
the current liabilities of the Company at Closing, as provided in Section
3.9(c) below. The decrease(s) shall be calculated by valuing the
Consideration Stock at the Per Share Value.
(b) The Consideration Stock shall be allocated between the
Shareholders in the same proportions that the Shareholders own shares in the
Company, as set forth on Schedule 1.3(b).
Section 1.4 Closing. Following execution of this Agreement,
Purchaser and Sellers shall be obligated to conclude the transaction strictly
in accordance with its terms within fifteen (15) days after the conditions of
Closing set forth in Article VII and Article VIII have been satisfied or
waived, time being of the essence. 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 seek to enforce this
Agreement with an action of specific performance, in addition to, and not in
limitation of, any other rights and remedies available to the Purchaser under
this Agreement, or at law or in equity, including, without limitation an
action to recover their actual damages resulting from the default of Sellers.
If the failure to conclude this transaction is due to the refusal and failure
of Purchaser to perform its obligations under this Agreement, Sellers may, in
addition to and not in limitation of any other rights and remedies available
to the Sellers under this Agreement, or at law or in equity, bring legal
action to recover their actual damages resulting from the default of
Purchaser.
Section 1.5 Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing Date:
<PAGE>
(a) by mutual written agreement of Purchaser and the Sellers;
(b) by Purchaser within ninety (90) days after the date of this
Agreement, if Purchaser is not satisfied, in its sole discretion, with the
due diligence it has conducted on the Company;
(c) by Purchaser within fourteen (14) days after the date of this
Agreement if Sellers have not delivered the Disclosure Binder to Purchaser;
(d) by Sellers within fourteen (14) days after the date of this
Agreement if the parties hereto have not agreed upon the terms of employment
contracts to be executed at Closing by which the Company will employ Gary
Higgins and Steve Simms;
(e) by the Sellers, 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
(f) by the Sellers or Purchaser, if the Closing shall not have
occurred by April 1, 1999, 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 and no party hereto shall have any further liability to any
other party hereto, except that this Section 1.5, Article IX, Section 10.1,
Section 10.2 and Section 10.17 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.
Section 1.6 Deliveries by Purchaser. At the Closing, Purchaser
shall deliver, all duly and properly executed (where applicable):
(a) The Consideration Stock due on the Closing Date, as provided in
Section 1.3 above to be delivered to the Sellers;
(b) A copy of the resolutions of the Board of Directors of Purchaser
authorizing the execution and delivery of this Agreement and each other
agreement to be executed in connection herewith (collectively, the
"Collateral Documents") and the consummation of the transactions contemplated
herein;
<PAGE>
(c) A favorable opinion from counsel for Purchaser, dated the day of
the Closing, in form and substance as attached hereto as Schedule 1.6(c);
(d) A noncompetition agreement with Sellers in form and substance as
attached hereto as Schedule 1.6(d) ("Noncompetition Agreement"); and
(e) A registration rights agreement providing for the registration
of the Consideration Stock in form and substance as attached hereto as
Schedule 1.6(e) ("Registration Rights Agreement").
Section 1.7 Deliveries by Sellers. At the Closing, each of the
Sellers, as applicable, shall deliver to Purchaser, all duly executed, the
following:
(a) Duly executed certificates in valid form evidencing all of the
Company Shares owned by each Seller, duly endorsed in blank or accompanied by
duly executed stock powers attached or otherwise executed in the presence of
authorized representatives of Purchaser;
(b) The written resignations of all officers and directors of the
Company as of the time of Closing;
(c) A current certificate of good standing for the Company and
certified charter documents from each applicable jurisdiction of admittance
and incorporation;
(d) A certified copy of resolutions of the directors of the Company
and the Shareholders authorizing the execution and delivery of this Agreement
and each of the Collateral Documents;
(e) The Certificate described at Section 7.1;
(f) A release from each Seller, in a form and substance attached as
Schedule 1.7(f);
(g) The Noncompetition Agreement and the Registration Rights
Agreement;
(h) A favorable opinion from counsel for Purchaser, dated the day of
the Closing, in form and substance as attached hereto as Schedule 1.7(h);
(i) The books and records of the Company, including, without
limitation, all original financial and operating records, the corporate
minute book and seal, the corporate stock ledger, and all title documents;
(j) The Owners Policy, as defined hereinafter; and
(k) Other documents and instruments required by this Agreement, if
any.
<PAGE>
ARTICLE II
Title Insurance
Section 2.1 Owners Title Policy. All parcels of real property used
in the Business, other than a parcel known as Colonial No. 3, Pleasant Ridge
Car Wash, Ft. Worth, Texas ("Higgins Parcel") are owned by the Company. The
Company leases the Higgins Parcel under a lease between the Gary Higgins and
the Company dated January 1, 1996. All parcels of real property owned by the
Company and the Higgins Parcel are listed on Schedule 2.1 ("Company Real
Property"), together with the legal description of each such parcel. The
Company is obligated to purchase the Higgins Parcel pursuant to the terms of
the Higgins Agreement. At Closing, the Company shall own, with respect to the
Company Real Property, an extended coverage owners policy of title insurance
from a title company acceptable to Purchaser (the "Title Company"), dated as
of the Closing Date, in the amount equal to the fair market value of the
Company Real Property. At Closing, the Company shall own, with respect to the
Higgins Parcel, an extended coverage tenant's policy. The title policies
shall include comprehensive, zoning, access, non-imputation and contiguity
endorsements, and shall insure title to the Company Real Property to be in
fee simple in Company (or with respect to the Higgins Parcel, an unencumbered
leasehold interest) subject only to the Permitted Exceptions permitted by
Section 2.2 hereof (the "Owners Policy"). Purchaser shall bear the cost of
the Owners Policy.
Section 2.2 Permitted Exceptions. The Owners Policy shall insure
Company's interest in the Company Real Property to be free and clear of all
encumbrances and exceptions whatsoever except those listed on Schedule 2.2
attached hereto ("Permitted Exceptions"). Schedule 2.2 sets forth all
encumbrances and exceptions by separate parcel of real estate.
Section 2.3 Survey. The Sellers shall furnish Purchaser with a
survey relating to the Company Real Property that is sufficiently current
that the Title Company shall not have included a survey exception in the
Owner's Policy. If a new survey is required, Sellers shall pay the cost of
such survey.
ARTICLE III
Representations and Warranties of the Sellers
With knowledge that Purchaser is relying upon the representations,
warranties and covenants herein contained, Sellers each individually, jointly
and severally represent and warrant to Purchaser and make the following
covenants for Purchaser's benefit. When the phrase "to Sellers' knowledge" or
any equivalent phrase is used in this Agreement, the phrase shall mean the
actual knowledge of any Seller or the information and/or knowledge any Seller
who is or was a director, officer, or employee of the Company would actually
possess had such Seller acted with due diligence in the conduct of his or her
duties as an officer, director or employee.
<PAGE>
Section 3.1 Organization and Standing. The Company is duly
organized, legally existing and in good standing under the laws of the state
of its incorporation, with full power and authority to own its properties and
conduct its business as now being conducted. The Company does not own any
stock or interest in any other corporation, partnership, or other business
organization, other than 100% of the stock of Worth Manufacturing, Inc., a
Texas corporation which has no assets, liabilities, or operations.
Section 3.2 Company Stock. All of the authorized, issued, and
outstanding shares of capital stock and other securities of the Company are
owned by the Shareholders, including without limitation equity securities,
debt securities and options. At Closing, the Shareholders will be the only
owners of the securities of the Company. The Company Shares each Seller owns
and will own at Closing are legally and validly authorized and issued, fully
paid and nonassessable and free and clear of all liens, claims and
encumbrances of every kind and nature and are not subject to any agreement or
instrument relating to the transfer, disposition or voting of such
securities, except as set forth on Schedule 3.2 attached hereto. At Closing,
all of the Company Shares will be conveyed and assigned to Purchaser free and
clear of all liens, claims and encumbrances of every kind. There are no
outstanding rights of any kind to acquire additional shares of any class from
the Company nor has any person claimed any such rights. All of the
outstanding shares of the Company's capital stock have been duly authorized,
issued, and are fully and validly paid and non-assessable.
Section 3.3 Contracts, Permits and Material Documents. The items
listed and included in Schedule 3.3, attached hereto, are all of the
following with respect to the Company ("Material Documents"): (i) leases and
purchase agreements for real property, including the Higgins Agreement, and
leases and purchase agreements for personal property, (ii) licenses, (iii)
franchises, (iv) promissory notes, guarantees, bonds, letters of credit,
mortgages, liens, pledges, and security agreements under which the Company is
bound or under which the Company is a beneficiary, (v) collective bargaining
agreements, (vi) patents, trademarks, trade names, copyrights, trade secrets,
proprietary rights, symbols, service marks, and logos, (vii) all permits,
licenses, consents and other approvals from governments, governmental
agencies (federal, state and local) and/or third parties relating to,
used in or required for the operation of the Company's businesses, and
(viii) other contracts, agreements and instruments not listed on another
Schedule attached to this Agreement (such as the customer contracts listed
on Schedule 3.5) which are binding on the Company or any of its property or
pursuant to which the Company derives any material benefit or has imposed
upon it any material detriment. For purposes of this Section 3.3 a material
benefit or material detriment shall be anything which provides a benefit or
imposes a detriment having a value of $10,000 or more. The Material Documents
listed and included in Schedule 3.3 are organized under subheadings for each
of the different type of documents provided. Neither the Company nor, to
Sellers' knowledge, any person or party to the any of the Material Documents
or bound thereby is in material or knowing default under any of the Material
Documents, and no act or event has occurred which with notice or lapse of
time, or both, would constitute such a default.
<PAGE>
The Company is not a party to, and the Company's property is not bound
by any agreement or instrument which is material to the continued conduct of
its business operations as now being conducted or with respect to which a
default might materially and adversely affect its properties, business
operations, or financial condition of the Company, except as listed in
Schedule 3.3. To the Sellers' knowledge, the documents listed on Schedule 3.3
confer on the Company all rights necessary to enable the Company to conduct
its operations as now being conducted.
Section 3.4 Personal Property. All items of personal property used
in the business operations of the Company are listed on the schedules set
forth below, are owned by the Company by good and marketable title free of
all liens, and are now and at closing will be in good condition, normal wear
and tear excepted, except as noted on the applicable Schedule. Where the
personal property is in different physical locations, the Schedules have been
organized with subheadings which set for the physical locations of the listed
personal property.
(a) All equipment, computers, printers, card readers, vending
machines, appliances, machinery and parts, vehicles, tools, hoses, brushes,
heating, ventilation, air conditioning, plumbing, electrical, drainage, fire
alarm, communications, sprinkler, security and exhaust equipment and their
component parts; auto wash equipment, auto wash conveyor, auto drying
equipment and similar items in Sellers' possession or control, used in
connection with, located in or on, or otherwise pertaining to the Business
(collectively, the "Equipment"), as listed on Schedule 3.4(a);
(b) All of the inventory of retail items, operating supplies, parts
and accessories owned by the Company and used in connection with the
Business;
(c) All office or other equipment, furnishings, supplies, brochures,
sales and promotional materials, catalogues and advertising literature,
business files, customer lists, customer records and information, and all
pictures and photographs, computer programs and software (with applicable
documentation and source codes), construction and "as-built" drawings, plans
and specifications, finish plans and other personal property of every nature
and description in Sellers' possession or control;
(d) All intellectual property used in connection with the Business
or any other Asset, including, without limitation, know-how, trade secrets,
trademarks, trade names, and the exclusive right to use the names under which
any of the Business' locations are currently operated (collectively, the
"Intellectual Property");
(e) All of the accounts receivable, prepaid deposits, cash, goodwill
and all other tangible assets of the Company; and
(f) All books, records, original agreements and contracts and title
documents relating to the items set forth in (a) through (e) above.
<PAGE>
Sellers represent and warrant that, in the aggregate, the personal property
of the Company is sufficient for the Company to carry on its business as
previously conducted, and that the personal property is all in operable
condition, except as noted to the contrary on the applicable schedule.
Section 3.5 Customers. Schedule 3.5 attached hereto lists the name
and address of each customer the Company serves, together with copies of all
customer contracts, and the information supplied thereon is true, correct,
and complete, in all material aspects. Neither the Company nor, to the
Sellers' knowledge, any person or party to the any of the customer contracts
is in material or knowing default under any of the customer contracts, and no
act or event has occurred which with notice or lapse of time, or both, would
constitute such a default. The Company has received no notice that any
material customer intends to not renew any contract or otherwise cease or
curtail doing business with the Company.
Section 3.6 Real Property. All real property the Company has ever
owned, leased or otherwise occupied, had an interest in or operated, other
than the Company Real Property, is listed on Schedule 3.6 attached hereto and
incorporated herein by reference (together with the Company Real Property,
the "Real Property"). The Company has or will have at Closing good,
marketable and insurable title to, or a valid and enforceable leasehold
interest in, all of the Real Property, except for the Permitted Exceptions.
(a) In all material respects, except as set forth in Schedule 3.6(a)
attached hereto and incorporated herein, the Real Property is, and at all
times during operation of the Company's business thereon has been, licensed,
permitted and authorized for the operation of such business under all
applicable federal, state and local statutes, laws, rules, regulations,
orders, permits (including, without limitation, zoning restrictions and land
use requirements) and licenses and all administrative and judicial judgments,
rulings, decisions and orders affecting or otherwise applicable to the
protection of the environment, the Real Property and the conduct of such
business thereon (collectively, the "Applicable Laws").
(b) Except as set forth in Schedule 3.6(b) attached hereto and
incorporated herein by reference, the Real Property is legally usable for its
current uses, and the Real Property can be used by the Purchaser after the
Closing to operate such business as is currently operated, without violating
any Applicable Law or private restriction, and such uses are legal,
conforming uses.
(c) Except as set forth in Schedule 3.6(c) attached hereto and
incorporated herein by reference, all activities and operations conducted on
the Real Property, whether by Sellers or by third parties, are now being
conducted and have always been conducted in compliance with all Applicable
Laws.
<PAGE>
(d) The Sellers and Company shall make available on Purchaser's
reasonable request all engineering, geologic and other similar reports,
documentation and maps relating to the Real Property in the possession or
control of the Shareholders or the Company or its or their consultants or
employed professional firms.
(e) Except as set forth in Schedule 3.6(e) attached hereto and
incorporated herein by reference, neither Sellers nor the Company nor the
Real Property now is or ever has been 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.
(f) There have been no spills, leaks, deposits or other releases
into the environment or onto or under the Real Property of any Hazardous
Materials as defined in Schedule 3.6(f) attached hereto or other material
environmental conditions other than as disclosed on Schedule 3.6(f).
(g) No party, other than the Company, has a present or future right
to possession of all or any part of the Real Property, except for any right
defined in, under or by any of the Permitted Exceptions.
(h) No portion of the Real Property contains any areas that could be
characterized as disturbed, undisturbed or man-made wetlands or as "waters of
the United States" pursuant to any Applicable Laws or the procedural manuals
of the Environmental Protection Agency, U.S. Army Corps of Engineers or any
Texas state agency whether such characterization reflects current conditions
or historic conditions which have been altered without the necessary permits
or approvals, except as listed on Schedule 3.6(h) attached hereto and
incorporated herein by reference.
(i) There are no mechanic's liens affecting the Real Property and no
work has been performed on the Real Property within twelve (12) months of the
date hereof for which a mechanic's lien could be filed, except as set forth
in Schedule 3.6(i) attached hereto and incorporated herein by reference.
(j) There are no levied or pending special assessments affecting all
or any part of the Real Property owed to any governmental entity and none is
threatened.
(k) There are no proceedings or amendments pending and brought by or
threatened by, any third party which would result in a change in the
allowable uses of the Real Property or which would modify the right of the
Company or the Purchaser to use the Real Property for its present uses after
the Closing Date, except as set forth in Schedule 3.6(k) attached hereto and
incorporated herein by reference.
<PAGE>
Section 3.7 Title.
(a) The Assets. The Company has good and marketable title to all
of its assets, both real property and personal property, tangible and
intangible, including, without limitation, all of the assets reflected on the
"Most Recent Balance Sheet" (hereinafter defined), all personal property
currently located on its premises, all cash and accounts receivable set forth
in Schedule 3.9(c) attached hereto, all items of personal property set forth
on the schedules attached hereto, and all trademarks and other intellectual
property used in the Company's business, except in each case, that personal
property which the Company leases, all of which is listed on Schedule 3.7(a)
attached hereto and incorporated herein by reference. All of such assets
are owned by the Company free and clear of any mortgage, pledge, lien,
encumbrance, charge, claim, security agreement, agreement regarding or
restricting transfer or title retention or other security arrangement, except
the items set forth in subparagraphs (i) through (iii) below, and the items
listed on Schedule 3.7(a) ("Permitted Company Assets Encumbrances"). Schedule
3.7(a) identifies all liens by amount and by the document, instrument or law
under which it arises.
(i) Liens imposed by law and incurred in the ordinary
course of business for indebtedness not yet due to carriers, warehousemen,
laborers or materialmen and the like;
(ii) Liens in respect of pledges or deposits under
workmen's compensation laws or similar legislation; and
(iii) Liens for property taxes, assessments, or
governmental charges not yet subject to penalties for nonpayment.
(b) The Real Property. At Closing, the Company will have good,
marketable and insurable title to the Company Real Property free and clear of
any mortgages, pledges, liens, encumbrances, charge, claim, security
agreement or title retention or other security arrangement, except for the
Permitted Exceptions.
Section 3.8 Financial Statements. Prior to Closing, Sellers will
deliver to Purchaser true and correct copies of the following financial
statements of the Company (the "Financial Statements"):
(a) Balance Sheets for the Company as of December 31, 1996, as of
December 31, 1997, and as of December 31, 1998, and statements of income,
cash flow and retained earnings for the same periods, all prepared on an
accrual basis and reviewed by Company's regular accountants.
(b) A balance sheet for the Company as of September 30, 1998 ("Most
Recent Balance Sheet"), and a statement of income, cash flow and retained
earnings for the period ended September 30, 1998 ("Most Recent Income
Statement"), both prepared on an accrual basis by the Company. The Most
Recent Balance Sheet and Most Recent Income Statement are hereafter referred
to as the "Most Recent Financial Statements."
<PAGE>
The Financial Statements have been prepared by the regular
accountants of the Company, in accordance with generally accepted accounting
principles ("GAAP"). All notes and contingent labilities required to be
stated and reflected under GAAP are stated and reflected on the Financial
Statements. Each of the Financial Statements (including all footnotes
thereto) is true, complete and correct in all material respects. The balance
sheets present fairly and accurately the financial condition of the Company
as of the dates indicated thereon and the statements of income present fairly
and accurately on an accrual basis the results of the operations of the
Company for the periods indicated thereon. The Company has not (i) made any
material change in its accounting policies or (ii) effected any prior period
adjustment to, or other restatement of, its financial statements for any
period. The Financial Statements are consistent with the books and records of
the Company (which books and records are correct and complete). Since the
date of the Most Recent Financial Statements, there has not been any material
adverse change in the income, expenses, assets, liabilities or financial
condition of the Company.
Section 3.9 Liabilities; Accounts Receivable; Working Capital;
Revenue.
(a) The Company does not have any liabilities, fixed or contingent,
other than:
(i) liabilities fully reflected in the Most Recent Balance
Sheet, except for liabilities not required to be disclosed therein in
accordance with GAAP;
(ii) accounts payable arising since the date of the Most
Recent Balance Sheet arising during the normal course of business consistent
with past custom and practice; and
(iii) the Company Debt.
(b) All accounts receivable of the Company, less a bad accounts
reserve as set forth on the Most Recent Balance Sheet, are valid accounts
receivable, and will be fully collectible within 120 days of Closing. All
accounts receivable have been generated in the ordinary course of the
Company's business and all services required to be rendered for the accounts
receivable to be due have been rendered. To Sellers' knowledge, there are no
defenses or set-offs to any of the accounts receivable. Shareholder Gary
Higgins is indebted to the Company in the principal amount of approximately
$300,000.00 consisting of a note and an account receivable ("Higgins Debt"),
which shall be paid in full in accordance with its existing terms.
<PAGE>
(c) At Closing, the Company shall have working capital consisting of
current assets in excess of current liabilities in an amount no less than the
greater of $1 or the amount it has had on an historic basis as reflected on
the Financial Statements. It is acknowledged that, for purposes of
determining the Company's working capital at Closing, current assets shall
include cash, cash equivalents, pre-paid expenses, one-half of the value of
inventory existing at Closing, and accounts receivable, but not any portion
of the Higgins Debt, and current liabilities shall include accounts payable,
accrued expenses, and accrued vacation pay, but not the accrued interest on
or current portion of any long-term liabilities. If the working capital of
the Company at Closing is less than $1, the Purchase Price payable in
Consideration Stock at Closing shall be reduced, dollar for dollar, by the
difference between $1 and the actual working capital at Closing. At Closing,
Company shall have no long-term liabilities other than the Company Debt.
Section 3.10 Fiscal Condition of Company. Since the date of the
Most Recent Balance Sheet, except as set forth on Schedule 3.10, there has not
(except as otherwise specifically permitted by this Agreement) been:
(a) Any material change in the financial condition, business
organization or personnel of the Company or in the relationships of the
Company with suppliers, customers or others, other than changes occurring in
the ordinary course of business;
(b) Any disposition by the Company of any of its capital stock or
any grant of any option or right to acquire any of its capital stock, or any
acquisition or retirement by the Company of any of its capital stock or any
declaration or payment of any dividend or other distribution of its capital
stock;
(c) Any sale or other disposition of any asset owned by the Company
(other than the Excluded Assets) at the close of business on the date of the
Most Recent Balance Sheet, or acquired by it since that date, other than in
the ordinary course of business or which individually do not exceed $5,000 or
in the aggregate, do not exceed $10,000;
(d) Any expenditure or commitment by the Company for the acquisition
of any single asset having an acquisition price of $10,000 or more;
(e) Any damage, destruction or loss (whether or not insured)
adversely affecting the property, business or prospects of the Company,
except damage, destruction or loss which does not exceed $10,000 in the
aggregate;
(f) Any bonuses or increases in the compensation payable or to
become payable by the Company to any officer or key employee;
(g) Any loans or advances to the Company other than renewals or
extensions of existing indebtedness; or
(h) Any change in accounting method or practice.
<PAGE>
Section 3.11 Tax Returns. The Company has filed all Federal and
other tax returns for all periods on or before the due date of such return
(as may have been extended by any valid extension of time) and has paid all
taxes due for the periods covered by the said returns. The Company has no
liability for taxes incurred by its operations prior to Closing, except for
taxes for the current fiscal year in an amount not exceeding the reserve
therefor on the Most Recent Balance Sheet. The Company is a Subchapter C
corporation under the Internal Revenue Service Code. Sellers warrant that
they will pay with their own funds any and all federal, state and local taxes
due and payable by the Company with respect to all periods prior to the
Closing, to the extent such taxes exceed the reserves for taxes established
on the Company's Most Recent Balance Sheet, including, without limiting the
generality of the foregoing, all federal, state and local income, sales, use,
payroll, franchise, excise and property taxes. The reserves for all taxes
reflected in the Most Recent Balance Sheet, if any, are adequate to cover all
taxes, interest and penalties in connection therewith that may be assessed
with respect to the property and business operations for the period(s) ending
on the Date of Closing and for all prior periods. The Company has filed, and
will file in a timely manner, all requisite federal, state, local and other
tax returns due for all fiscal periods ended on or before the date hereof and
as of the Closing shall have filed in a timely manner all such returns due
for all periods ended on or before the Closing Date. No federal, state, local
or other tax returns or reports filed by the Company (whether filed prior to,
on, or after the date hereof), will result in any taxes, assessments, fees or
other governmental charges in excess of the amounts reserved for on the Most
Recent Balance Sheet. The Company has duly withheld and collected all taxes
which the Company is required to withhold or collect by law, has paid over to
the proper authorities all such amounts required to be paid, and has in
reserve all amounts so withheld or collected which have not yet been required
to be paid. No taxing authority has asserted any deficiency for any prior tax
period of the Company, and the Sellers are not aware of any facts which would
constitute the basis for the assertion of such a deficiency, except as listed
on Schedule 3.11 attached hereto.
Section 3.12 Policies of Insurance. All insurance policies,
performance bonds, and letters of credit insuring the Company or which the
Company has had issued and which has not expired are listed on Schedule 3.12
attached hereto. Schedule 3.12 includes, the names and addresses of the
beneficiaries, insurers and sureties, policy and bond numbers, types of
coverage or bond, time periods or projects covered and the names and
addresses of all known agents or agencies, issuing banks, and beneficiaries,
with respect to each listed insurance policy, performance bond and letter of
credit. The Company's current insurance policies, performance bonds and
letters of credits are still in force and effect and the premiums thereon are
not delinquent. The Company has not received notification from any insurance
carrier denying or disputing any claim made by the Company or denying or
disputing any coverage for any such claim or denying or disputing the amount
of any claim. The Company does not have any claim against any of its
insurance carriers under any policies insuring it pending or anticipated and
there has been no occurrence of any kind which would give rise to any such
claim.
Section 3.13 Employees, Pensions and, ERISA.
(a) The Company does not have any contract of employment with an
officer or other employee that is not terminable without penalty on notice of
two weeks or less, except as listed on Schedule 3.13(a).
<PAGE>
(b) No employee of the Company is represented by any union. The
name, social security number and current rate of compensation of each of the
Company's employees and department in which each person is employed is listed
on Schedule 3.13(b) attached. There is no pending or threatened dispute
between the Company and any of its employees which might materially and
adversely affect the continuance of any Company's business operations.
(c) Attached hereto made a part hereof and marked Schedule 3.13(c)
lists all employee benefit plans, funds or programs (within the meaning of
the Internal Revenue Code of the United States ("Code") or the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) which are
currently maintained and/or were established or sponsored by the Company
(whether or not they are now terminated) or to which the Company currently
contributes, or has an obligation to contribute in the future, including,
without limitation, employment agreements and any other agreements containing
"golden parachute" provisions ("Plans"), whether or not the Plans are or are
intended to be (i) covered or qualified under the Code, ERISA or any other
applicable law, (ii) written or oral, (iii) funded or unfunded, or (iv)
generally available to all employees of the Company.
(d) The Company has delivered to the Purchaser (i) true and complete
copies of all Plan documents and other instruments relating thereto, (ii)
accurate and complete detailed summaries of all oral Plans, (iii) true and
complete copies of the most recent financial statements with respect to the
Plans, (iv) true and complete copies of all annual reports for any Plan
prepared within the past 5 years, and (v) all filings submitted to and any
correspondence received from any government agency relating to any Plan
within the past 5 years.
(e) Each Plan which is intended to be qualified under Section 401(a)
and exempt from tax under Section 501(a) of the Code has been determined by
the IRS to be so qualified and such determination remains in effect and has
not been revoked. Nothing has occurred since the date of any such
determination which may adversely affect such qualification or exemption, or
result in the imposition of excise taxes or tax on unrelated business income
under the Code or ERISA except as set forth on Schedule 3.13 (e), attached
hereto made a part hereof. No Plan is funded through a trust intended to be
exempt from tax under Section 501(c) of the Code.
(f) No reportable event (as defined in Section 4043 of ERISA or the
regulations thereunder) for which the reporting requirements have not been
fully waived, or accumulated funding deficiency whether or not waived (as
defined in Section 302 of ERISA), or liability to the Pension Benefit
Guaranty Corporation ("PBGC") under Section 4062 of ERISA, nor any prohibited
transaction (as defined in Section 406 of ERISA or Section 4975 of the Code),
has occurred or exists with respect to any Plan. All Plans are in substantial
compliance with all applicable provisions of ERISA and the regulations issued
thereunder, as well as with all other law applicable to such Plans, and, in
all material respects, have been administered, operated and managed in
substantial accordance with the governing documents of the Plan and the
requirements of ERISA. The Company has no unfunded obligations or liabilities
with respect to any Plan and the present value of the benefit liabilities of
each Plan which is a Pension Plan is less than the fair market value of the
assets of such Plan.
<PAGE>
(g) There is no matter, action, audit, suit or claim pending or, to
the best knowledge of Sellers, after due inquiry of the Company, threatened
relating to any Plan, fiduciary of any Plan or assets of any Plan, before any
court, tribunal or government agency.
(h) Each most recent Plan audit report, actuarial report and annual
report, certified by the Plan's actuaries and auditors, as the case may be,
fairly presents the actuarial status and the financial condition of the Plan
as at the date thereof and the results of operations of the Plan for the plan
year reflected therein and, subject to changes in amounts attributable to
investment performance and normal employee turnover, there has been no
material adverse change in the condition of the Plan since the date of the
most recent Form 5500, audited annual financial statement or actuarial
valuation report.
(i) The transaction contemplated herein will not accelerate any
liability under the Plans because of an acceleration of any rights or
benefits to which any employee may be entitled thereunder.
(j) The Company has no obligations with respect to, and makes no
contributions to, any Multi-Employer Pension Plan.
Section 3.14 Legality of Operation. In regard to the Company:
(a) Except as disclosed in Schedule 3.14(a) to this Agreement, and
except as to Environmental Laws, as hereinafter defined, the Company is in
compliance with all Federal, state and local laws, rules and regulations
including, without limitation, the following laws: land use laws; payroll,
employment, labor, or safety laws; or federal, state or local "anti-trust" or
"unfair competition" or "racketeering" laws such as but not limited to the
Sherman Act, Clayton Act, Robinson Patman Act, Federal Trade Commission Act,
or Racketeer Influenced and Corrupt Organization Act ("Law"). Except as
disclosed in Schedule 3.14(a), the Company is in compliance with all permits,
franchises, licenses, and orders that have been issued with respect to the
Laws and are or may be applicable to the Company's property and operations,
including, without limitation, any order, decree or directive of any court or
federal, state, municipal, or other governmental department, commission,
board, bureau, agency or instrumentality wherever located, federal, state and
local permits, orders, franchises and consents. Except as set forth on
Schedule 3.14(a), with respect to any Law, there are no claims, actions,
suits or proceedings pending, or, to the knowledge of the Sellers threatened
against or affecting the Company, at law or in equity, or before or by any
federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, wherever located, which would
result in an adverse change in the financial condition or business of the
Company or which would invalidate this Agreement or any action taken in
connection with this Agreement. Except as disclosed in Schedule 3.14(a), the
Company has received no notification of any past or present failure by the
Company to comply with any Law applicable to it or its assets.
<PAGE>
(b) Except as disclosed in Schedule 3.14(b) to this Agreement, the
Company is in compliance with all Federal, state and local laws, rules and
regulations relating to environmental issues of any kind and/or the receipt,
transport or disposal of any hazardous or non-hazardous waste materials from
any source ("Environmental Law"). Except as disclosed in Schedule 3.14(b),
with respect to any Environmental Law the Company is in compliance with all
permits, licenses, and orders related thereto or issued thereunder with
respect to Environmental Laws, as are or may be applicable to the Company's
property and operations, including, without limitation, any order, decree or
directive of any court or federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality wherever
located. Except as set forth on Schedule 3.14(b) there are no Environmental
Law related claims, actions, suits or proceedings pending, or, to the
knowledge of the Sellers, threatened against or affecting the Company, at law
or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, wherever located, which would result in an adverse change in
the financial condition or business of the Company of $5,000 or more or which
would invalidate this Agreement or any action taken in connection with this
Agreement. Except as set forth on Schedule 3.14(b), the Company has not
transported, stored, treated or disposed, nor has the Company allowed any
third persons, on its behalf, to transport, store, treat or dispose waste to
or at (i) any location other than a site lawfully permitted to receive such
waste for such purpose or, (ii) any location currently designated for
remedial action pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") or any similar federal or state
statute; nor has the Company performed, arranged for or allowed by any method
or procedure such transportation or disposal in contravention of state or
federal laws and regulations or in any other manner which may result in
liability for contamination of the environment; and the Company has not
disposed, nor has the Company knowingly allowed third parties to dispose of
waste upon property owned or leased by the Company other than as permitted
by, and in conformity with, applicable Environmental Law. Except as disclosed
in Schedule 3.14(b), the Company has not received notification of any past or
present failure by the Company to comply with any Environmental Law
applicable to it or its operations or its assets. Without limiting the
generality of the foregoing, the Company has not received any notification
(including requests for information directed to the Company or an owner
thereof) from any governmental agency asserting that the business is or may
be a "potentially responsible person" for a remedial action at a waste
storage, treatment or disposal facility, pursuant to the provisions of
CERCLA, or any similar federal or state statute assigning responsibility for
the costs of investigating or remediating releases of contaminants into the
environment. The Company has not received hazardous waste as defined in the
Resource Conservation and Recovery Act, 42 USCA Section 6901 et seq., or in
any similar federal or state statute.
<PAGE>
(c) No employee, contractor or agent of the Company has, in the
course and scope of employment with the Company, been harmed by exposure to
hazardous materials, as defined under the Laws. No liens with respect to
environmental liability have been imposed against the Company under CERCLA,
any comparable Texas statute or other applicable Law, and no facts or
circumstances exist which would give rise to the same.
(d) Attached hereto as Schedule 3.14(d) is a list of all Notice of
Violations issued to the Company in the past ten years by any federal, state
or local regulatory agency. There are no outstanding or unremedied notices of
violation either from a federal, state or local authority.
(e) No Seller is under investigation by any District Attorney or
similar state or local official or agency or the Justice Department of the
United States of America for the violation of any Laws, including, without
limitation, racketeering, unfair competition, or anti-trust. No facts or
circumstances exist which would cause the Company to be liable for the
violation of any Laws including, without limitation, racketeering, unfair
competition, or anti-trust.
(f) Except as set forth in Schedule 3.14(f), all licenses,
approvals, permits and certificates ("Government Authorizations") needed or
required for the operation of the Company's business are set forth on
Schedule 3.3. All such Government Approvals are in full force and effect, the
Company is in compliance with all such Government Approvals, and all such
Government Approvals have been validly and legally obtained by the Company.
Section 3.15 Corrupt Practices. To the Sellers' knowledge, the
Company has not made, offered or agreed to offer anything of value to any
employees of any customers of the Company for the purpose of attracting
business to the Company or any foreign or domestic governmental official,
political party or candidate for government office or any of their respective
employees or representatives, nor has the Company otherwise taken any action
which would cause it to be in violation of the Foreign Corrupt Practices Act
of 1977, as amended.
Section 3.16 Legal Authority and Compliance. Except as listed in
Schedule 3.16 attached hereto and incorporated herein, each Sellers and the
Company have the right, power, legal capacity and authority to enter into,
and perform their respective obligations under this Agreement, and no
approvals or consents of any other persons are necessary in connection with
the transactions contemplated by this Agreement. The execution, delivery and
performance of this Agreement have been duly authorized by all necessary
action of the directors and shareholders of the Company. The execution,
delivery and performance of this Agreement will not result in a breach of or
constitute a default or result in the loss of any material right or benefit
under:
(a) Any charter, by-law, agreement or other document to which any
Seller or the Company is a party or by which the Company or any of its
property is bound; or
<PAGE>
(b) Any decree, order or rule of any court or governmental authority
which is binding on the Sellers, the Company, or the property of the Company.
Section 3.17 Transaction Intermediaries. Except as listed on
Schedule 3.17, no agent or broker or other person acting pursuant to the
authority of the Company or any of the Sellers is entitled to any commission
or finder's fee in connection with the transactions contemplated by this
Agreement.
Section 3.18 Intellectual Property. To the Sellers' knowledge, the
Company has not infringed and is not now infringing, on any trade name,
trademark, service mark, copyright, trade secret or patent belonging to any
person, firm or corporation ("Intellectual Property") and no one has or is
infringing any Intellectual Property right of the Company.
Section 3.19 Competition. No salaried officer, shareholder or
employee of the Company, nor any spouse, child or other relative of any of
them, has any direct or indirect interest in any competitor of the Company
within the geographical area in which the Company currently conducts
business, or an interest in any supplier or customer of the Company or in any
person from whom or to whom the Company leases any real or personal property,
or in any other person with whom the Company is doing business which interest
adversely or materially affects the business of the Company, excepting only
those investments of not more than five percent of the capital stock of a
business, the stock of which is traded on a national securities exchange or
over-the-counter, where such investments are set forth on Schedule 3.19
attached hereto and incorporated herein by reference.
Section 3.20 Disclosure. Neither the representations and warranties
of the Sellers contained in this Agreement nor any information contained in
any Exhibit or Schedule or other document delivered by the Sellers or the
Company to Purchaser contains any untrue statement of a material fact, or, to
Sellers' knowledge, omits to state any statement of a material fact necessary
to make the statements contained therein or herein not misleading. No
investigation conducted by the Purchaser shall be deemed to limit or vitiate
in any way the effect of the representations and warranties made herein;
however, Purchaser shall disclose to Sellers at or prior to Closing any
representation or warranty which Purchaser shall have found to be untrue or
incorrect.
Section 3.21 Continuation of Legal Status. To Seller's knowledge,
no written agreement between the Company and any third party shall be impaired
or in any way limited by the transactions contemplated by this Agreement.
<PAGE>
Section 3.22 Litigation. All pending or, to Sellers' knowledge,
threatened litigation, administrative or judicial proceedings or
investigations by any governmental agency or officials involving the Company
or its Property or assets, liabilities or the Company Shares, together with a
description of each such proceedings, is set forth on Schedule 3.22 attached.
There is no pending or, to Sellers' knowledge, threatened litigation,
administrative or judicial proceedings or investigation involving the Company
or its Real Property, assets, liabilities or the Company Shares, except as
listed on Schedule 3.22.
Section 3.23 Pooling Requirements. The Sellers do not own any car
wash businesses other than the Company. For the 24-month period ending on the
date of this Agreement, there has been no change of ownership of the Company
Shares. There will be no change in the ownership of the Company Shares from
the date of this Agreement to the Closing Date. During the most recent 24
calendar months prior to the date of this Agreement, the Company has not paid
any dividends or distributions to its shareholder other than dividends and
distributions consistent in amount and kind to the dividends and
distributions paid by the Company during the three-year period immediately
preceding the 24-month period.
ARTICLE IV
Representations and Warranties of Purchaser
Purchaser represents and warrants to the Sellers that the
representations and warranties contained in this Article IV are true on the
date hereof and shall be true on the Closing Date.
Section 4.1 Structure. Purchaser is a corporation duly organized
and legally existing in good standing under the laws of Delaware.
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 the Collateral Documents.
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 Company or against the Sellers for any commission or
finder's fee in connection with the transactions contemplated by this
Agreement.
Section 4.4 Commission Filings. Purchaser will have delivered to
Sellers by the Closing Date current and all historical filings made by
Successor Corporation on Forms 8-K, 10-K, 10-Q and Proxy Statements timely
filed with the Securities and Exchange Commission ("SEC") for fiscal year
ending June 30, 1998 (the "Public Reports"). The Public Reports accurately
and completely describe, in all material respects, Successor Corporation's
financial status, business operations and prospects as of the date of such
filings and as of the date hereof, and do not omit any material fact(s)
necessary to make the information contained in the filings not misleading.
<PAGE>
Section 4.5 Issued Common Stock. The Consideration Stock to be
issued pursuant to this Agreement has been duly authorized and, when issued,
will be validly issued, fully paid and nonassessable.
ARTICLE V
Additional Agreements of Sellers
The Sellers covenant and agree with Purchaser as follows:
Section 5.1 Pooling Restrictions. Purchaser and Sellers have agreed
that a material factor in their execution of this Agreement is that the
transactions contemplated by this Agreement be treated as a "pooling of
interests" for accounting purposes. If for any reason a provision in this
Agreement would prevent the transaction being accounted for as a "pooling of
interests," the parties agree to negotiate in good faith to modify the
Agreement so the transaction can be accounted for as a "pooling of
interests." Notwithstanding any other provision of this Agreement, prior to
the publication and dissemination by Purchaser of consolidated financial
results which include results of combined operations of the Company and
Purchaser for at least 30 days on a consolidated basis following the Closing
Date, Sellers shall not sell or otherwise transfer or dispose of, or in any
way reduce their risk relative to, any shares of the Consideration Stock
received by Sellers (including by way of example and not limitation, engaging
in put, call, short-sale, straddle or similar market transactions). Purchaser
agrees that such consolidated financial results shall be published and
disseminated no later than 135 days after the Closing Date. The Securities
Exchange Commission ("SEC") has issued Accounting Series Release Nos. 130 and
135, as amended (collectively, the "ASRs"), setting forth certain
restrictions applicable to the availability of "pooling-of-interests"
accounting treatment in transactions of the type contemplated by this
Agreement. Sellers therefore covenant and agree with Purchaser to hold the
Consideration Stock and to comply with the ASRs until the requirements of the
ASRs have been met. In addition, the certificates evidencing the
Consideration Stock to be received by Sellers will bear a legend
substantially in the form set forth below:
"The shares represented by this certificate may not be sold,
transferred or assigned, and [Successor Corporation] shall not be
required to give effect to any attempted sale, transfer or
assignment prior to the publication and dissemination of financial
statements by [Successor Corporation], which include the results of
at least 30 days of combined operations of [Successor Corporation],
and the company acquired by [Successor Corporation] for which these
shares are issued. Upon the written request of the holder hereof
directed to [Successor Corporation] the issuer agrees to remove this
restrictive legend (and any stop order places with the transfer
agents) when the requirements of Accounting Series Releases Nos. 130
and 135, as amended, of the Securities Exchange Commission have been
met."
<PAGE>
Section 5.2 Restrictions on Transfer of Unregistered Stock. The
Sellers understand and agree that the following restrictions and limitations
are applicable to the Sellers' purchase and resale or other transfer of the
Consideration Stock, pursuant to the Securities Act of 1933 (the "Act") or
otherwise:
(a) Sellers agree that the Consideration Stock shall not be sold or
otherwise transferred, unless the Consideration Stock is registered under the
Act and state securities laws or is exempt therefrom.
(b) A legend in substantially the following form will be placed on
the certificates evidencing the Consideration Stock to be issued to the
Sellers:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or any state securities
act. These shares have been acquired for investment and may not be
sold, transferred, pledged or hypothecated unless (i) they shall
have been registered under the Securities Act of 1933 and any
applicable states securities act or (ii)[Successor Corporation]
shall have been furnished with an opinion of counsel, reasonably
satisfactory to counsel for [Successor Corporation] that
registration is not required under any such acts."
(c) Stop transfer instructions will be imposed with respect to the
Consideration Stock issued to Sellers pursuant to this Agreement so as to
restrict resale or other transfer thereof except in accordance with the
foregoing provisions of this Agreement.
Section 5.3 Representations as to Private Offering. The
Consideration Stock is being delivered to the Sellers in a private placement
under Section 4.2 of the Act and under Regulation D promulgated under the
Act. To induce Purchaser to issue the Consideration Stock, each Seller
represents and warrants as follows:
(a) Each Seller represents and warrants that he or she is a resident
of Texas or Florida or Germany and is an accredited investor, as that term is
defined in Regulation D under the Act.
(b) Each Seller acknowledges that they have received a copy of the
Public Reports.
(c) The Sellers represent and warrant that the Consideration Stock
is being acquired for their own account without a view to public distribution
or resale and that the Sellers have no contract, undertaking, agreement or
arrangement to sell or otherwise transfer or dispose of Consideration Stock,
or any portion thereof, to any other person.
(d) The Sellers represent and warrant that, in determining to
acquire the Consideration Stock, they have relied solely upon their
independent investigation, including the advice of their legal counsel and
accountants or other financial advisers or purchaser representatives, and
have, during the course of discussions concerning their acquisition of the
Consideration Stock, been offered the opportunity to ask such questions and
inspect such documents concerning Successor Corporation and its business and
affairs as they have requested so as to more fully understand the nature of
the investment and to verify the accuracy of the information supplied.
<PAGE>
(e) THE SELLERS ACKNOWLEDGE THAT THE ACQUISITION OF THE
CONSIDERATION STOCK INVOLVES A HIGH DEGREE OF RISK, and represents and
warrants that they can bear the economic risk of the acquisition of the
Consideration Stock, including the total loss of their investment.
(f) The Sellers represent and warrant that (i) they have adequate
means of providing for their current needs and financial contingencies, (ii)
they have no need for liquidity in this investment, (iii) they have no debts
or other obligations, and cannot reasonably foresee any other circumstances,
that are likely in the future to require them to dispose of the Consideration
Stock, and (iv) all their investments in and commitments to non-liquid
investments are, and after their acquisition of the Consideration Stock will
be reasonable in relation to their net worth and current needs.
(g) The Sellers understand that no federal or state agency has
approved or disapproved the Consideration Stock or made any finding or
determination as to the fairness of the Consideration Stock for investment.
(h) The Sellers understand that the Consideration Stock is being
offered and sold in reliance on specific exemptions from the registration
requirements of federal and state securities laws and that Purchaser is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings set forth herein in order to
determine the applicability of such exemption and the suitability of Sellers
to acquire the Consideration Stock.
Section 5.4 Access to Records and the Real Property. The Sellers
will cause the Company to give to Purchaser and its representatives, experts
and advisors, from and after the date of execution of this Agreement and up
until Closing, full access to all of the properties (including the Real
Property), assets, books, contracts, documents, records, contracts and
customer lists of the Company, and to make available to Purchaser and its
representatives, experts and advisors all additional financial statements of
and all information with respect to the business and affairs of the Company
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 5.4.
Section 5.5 Continuation of Business. The Sellers will operate the
Company until the time of Closing, using prudent business judgment so as to
preserve its business organization intact, to assure, to the extent possible,
the availability to Purchaser of the present key employees of the Company,
and to preserve for Purchaser the relationships of the Company with
suppliers, customers, and others, all to the end that every bona fide effort
be made that the ongoing business of the Company will not be impaired at the
time of Closing.
<PAGE>
Section 5.6 Continuation of Insurance. The Sellers will cause the
Company to keep in existence all policies of insurance insuring the Company
against liability and property damage, fire and other casualty through the
time of Closing.
Section 5.7 Standstill Agreement. Unless and until this Agreement
is terminated without the Closing having taken place, the Shareholders will
not directly or indirectly solicit offers for the Real Property, the Company
Shares or the assets of the Company or for a merger or consolidation
involving the Company, or respond to inquiries from, share information with,
negotiate with or in any way facilitate inquiries or offers from, third
parties who express or who have heretofore expressed an interest in acquiring
the Company by merger, consolidation or other combination or acquiring any of
Company's assets; nor will the Shareholders permit the Company to do any of
the foregoing.
Section 5.8 FIRPTA Certificate. Purchaser and Sellers acknowledge
that the financial provisions of this Agreement are subject to the
requirements of the Foreign Investment in Real Property Tax Act ("FIRPTA"),
and that the Internal Revenue Code ("Code") Sections 1445 and 6039C require
Purchaser in certain circumstances to withhold ten percent (10%) of the
amount realized by the Sellers. Among other circumstances, Purchaser is not
required to withhold said amount if Sellers furnish Purchaser with a
certificate stating the Sellers' U.S. Taxpayer Identification Numbers and
that no Seller is a foreign person within the meaning of the Code. Sellers
agree to provide to Purchaser at Closing such certificate as is reasonably
necessary to insure that such withholding is not required under FIRPTA.
Section 5.9 Consents. Sellers and Purchaser shall cooperate with
each other and use their best efforts to obtain all approvals, authorizations
and consents required to be obtained to consummate the transaction set forth
in this Agreement, including, without limitation, (i) the approval of the
Federal Trade Commission pursuant to the provisions of the Hart-Scott-Rodino
Antitrust Improvement Acts of 1986, and (ii) the approval of every regulatory
agency of federal, state, or local government that may be required in the
opinion of either Purchaser or Sellers.
Section 5.10 Audited Financial Statements. Before and after Closing,
Sellers agree to cooperate with Purchaser to have the Company prepare audited
balance sheets for the Company as of December 31, 1996, December 31, 1997,
and December 31, 1998, and statements of income, cash flow and retained
earnings for the Company for the twelve-month periods ended December 31,
1996, December 31, 1997, and December 31, 1998 ("Historical Financial
Statements"), as rapidly as possible. Sellers' cooperation shall include,
without limitation, the execution of standard representation letters
requested by Purchaser's auditors. Sellers shall prepare a compiled stub
balance sheet and statements of income, cash flow and retained earnings for
the period commencing January 1, 1998, and ending on the last day of the last
calendar quarter ending prior to Closing ("Interim Financial Statements").
The Historical Financial Statements and the Interim Financial Statements
shall be prepared at Purchaser's cost. Sellers shall cause the Company's
usual accountants to cooperate with Purchaser's accountants. Purchaser shall
pay for the reasonable costs of the Company's usual accountants in the
preparation of the Historical Financial Statements and the Interim Financial
Statements.
<PAGE>
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. The Sellers and Company will pay
all expenses incurred by the Sellers and Company (including legal fees) in
connection with the negotiation, execution and performance of this Agreement.
Additionally, the cost of obtaining any required approvals, including the
filing fee under the Hart-Scott-Rodino Antitrust Improvement Acts of 1986
shall be paid one-half by Purchaser and one-half by Sellers.
Section 6.2 Books and Records. From the Closing Date to six years
after the Closing Date, the Purchaser shall allow the Sellers and their
professional advisers access to all business records and files of the Company
pertaining to the operation of the Company prior to the Closing Date which
were delivered to the Purchaser in accordance with this Agreement ("Records")
where the Shareholders or Sellers require access to the Records for the
purpose of preparing their tax returns, responding to any audit or
informational request regarding their tax returns or if required by them for
use in a judicial proceeding in which they are a party. 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 six
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.
ARTICLE VII
Conditions of Purchaser
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 the
Closing:
Section 7.1 Compliance by Sellers. The Sellers and the Company
shall have performed and complied with all of the obligations and conditions
required by this Agreement to be performed or complied with by the Sellers
and Company at or prior to the Closing Date. All representations and
warranties of Sellers contained in this Agreement shall be true and correct
at and as of the Date of Closing, with the same force and effect as though
made at and as of the Date of Closing, except for changes expressly permitted
by this Agreement, and Purchaser shall have received a Certificate duly
executed by each of the Sellers representing and warranting the foregoing.
<PAGE>
Section 7.2 Due Diligence Investigation. As a condition of Closing,
the Purchaser shall be satisfied with the results of the due diligence
investigation it has made concerning the Company and the transactions, as set
forth in this Agreement.
Section 7.3 Litigation Affecting This Transaction. There shall be
no actual or threatened action by or before any court which seeks to restrain,
prohibit or invalidate the transaction contemplated by this Agreement or
which might affect the right of Purchaser to own, operate in its entirety or
control any of the Assets, the Real Property, or the Business or which, as a
result of the transaction contemplated by this Agreement, might affect such
right as to Purchaser or any affiliate thereof subsequent to the Date of
Closing and which, in the judgment of the Board of Directors of Purchaser,
made in good faith and based upon advice of its counsel, makes it inadvisable
to proceed with the transaction contemplated by this Agreement.
Section 7.4 Fiscal Condition of Business. There shall have been no
material adverse change in the results of operations, financial condition or
business of the Company, and the Company shall have not suffered any material
loss or damage or any of its properties or assets, whether or not covered by
insurance, since the date of the Most Recent Balance Sheet.
Section 7.5 Consents. All approvals, authorizations and consents
required to be obtained shall have been obtained, including, without
limitation, (i) the consent of the Federal Trade Commission under the
Hart-Scott-Rodino Antitrust Improvements Act; and (iii) the approval of every
regulatory agency of federal, state, or local government that may be required
in the reasonable opinion of either Purchaser or Sellers. Purchaser shall
have been furnished with appropriate evidence, reasonably satisfactory to
Purchaser and its counsel, of the granting of such approvals, authorizations
and consents.
Section 7.6 Opinion of Counsel. Sellers shall have delivered to the
Purchaser the opinion of counsel, dated the Closing Date, in the form and
substance of Schedule 1.7(i).
Section 7.7 Noncompetition Agreement. The Sellers shall have
executed and delivered to Purchaser the Noncompetition Agreement.
Section 7.8 Pooling Determination. Purchaser shall have received
notification from its regular accountants that the transaction contemplated
herein may be treated for accounting purposes as a "pooling of interests."
Section 7.9 Merger. Purchaser shall have completed its merger into
Successor Corporation.
<PAGE>
ARTICLE VIII
Conditions of Sellers
The obligations of the Sellers 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 conditions:
Section 8.1 Compliance by Purchaser. The Purchaser shall have
performed and complied with all of the obligations and conditions required by
this Agreement to be performed or complied with by it at or 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 Date of Closing,
with the same force and effect as though made at and as of the Date of
Closing, except for changes expressly permitted by this Agreement.
Section 8.2 Litigation Affecting This Transaction. There shall
be no actual or threatened action by or before any court which seeks to
restrain, prohibit or invalidate the transaction contemplated by this
Agreement or which might affect the right of Purchaser to own, operate in its
entirety or control any of the Assets, the Real Property, or the Business or
which, as a result of the transaction contemplated by this Agreement, might
affect such right as to Purchaser or any affiliate thereof subsequent to the
Date of Closing and which, in the judgment of the Sellers, made in good faith
and based upon advice of their counsel, makes it inadvisable to proceed with
the transaction contemplated by this Agreement.
Section 8.3 Merger. Purchaser shall have completed its merger into
Successor Corporation, and the common stock of Successor Corporation shall be
publicly traded on the Nasdaq Stock Market, Inc., or the Nasdaq Small Cap
Market.
Section 8.4 Transaction Priority. Closing under this Agreement
shall constitute the first acquisition of a car wash business by Purchaser
subsequent to its merger with the Successor Corporation.
Section 8.5 Registration Rights Agreement. Purchaser shall have
executed and delivered to Sellers the Registration Rights Agreement.
<PAGE>
ARTICLE IX
Indemnification
Section 9.1 Indemnification by Sellers. Each Seller, jointly and
severally, agrees that it will indemnify, defend, protect and hold harmless
Purchaser and its officers, shareholders, directors, divisions, subdivisions,
affiliates, subsidiaries, parent, agents, employees, legal representatives,
successors and assigns 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 such Seller, foreseen or
unforeseen, ordinary or extraordinary, patent or latent, whether arising out
of occurrences prior to, at, or after the date of this Agreement, from: (a)
any breach of, misrepresentation in, untruth in or inaccuracy in the
representations and warranties by the 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 a Seller made in this Agreement and to be performed by a
Seller before or after the Closing Date; (c) violation of the requirements of
any governmental authority relating to the reporting and payment (to the
extent payment exceeds the amount reserved for in the Most Recent Financial
Statement) of federal, state, local or other income, sales, use, franchise,
excise or property tax liabilities of the Company arising or accrued prior to
the Closing Date; (d) any violation of any federal, state or local
"anti-trust" or "racketeering" or "unfair competition law", including,
without limitation, the Sherman Act, Clayton Act, Robinson Patman Act,
Federal Trade Commission Act, or Racketeer Influenced and Corrupt
Organization Act; and (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.
Section 9.2 Indemnification by Purchaser. Purchaser agrees that it
will indemnify, defend, protect and hold harmless Sellers and their agents,
employees, heirs, 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) incurred by it, 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 and to
be performed by Purchaser before or after the Closing Date; (c) any claim by
a third party that, if true, would mean that a condition for indemnification
set forth in subsections (a), (b), or (c) 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.
<PAGE>
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within ten 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, as applicable, from and against the entirety of any
adverse consequences (which will include, without limitation, all losses,
claims, liens, and attorneys' fees and related expenses) the Indemnified
Party may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the Third Party Claim, (ii) the Indemnifying Party provides
the Indemnified Party with evidence reasonably acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to defend
against the Third Party Claim and fulfill its indemnification obligations
hereunder, (iii) the Third Party Claim involves only monetary damages and
does not seek an injunction or equitable relief, (iv) settlement of, or
adverse judgment with respect to the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a precedential
custom or practice adverse to the continuing business interests of the
Indemnified Party, and (v) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 9.3(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in (but not control) the defense of the Third Party Claim,
(ii) the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (which will not be
unreasonably withheld), and (iii) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified Party
(which will not be unreasonably withheld). In the case of (c)(ii) or (c)(iii)
above, any such consent to judgment or settlement shall include, as an
unconditional term thereof, the release of the Indemnifying Party from all
liability in connection therewith.
(d) If any condition set forth in Section 9.3(b) above is or becomes
unsatisfied, (i) the Indemnified Party may defend against, and consent to the
entry of any judgment or enter into any settlement with respect to, the Third
Party Claim and any matter it may deem appropriate and the Indemnified Party
need not consult with, or obtain any consent from, any Indemnifying Party in
connection therewith, (ii) the Indemnifying Party will reimburse the
Indemnified Party promptly and periodically for the cost of defending against
the Third Party Claim (including reasonable attorneys' fees and expenses),
and (iii) the Indemnifying Party will remain responsible for any adverse
consequences the Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Article IX.
<PAGE>
Section 9.4 Procedure for Non-Third Party Claims. If Purchaser or
any Seller wishes 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 party
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 to 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; (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 thirty (30) 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 forty-five (45) 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 thirty
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 Claim. All of the respective
representations, warranties and obligations of the parties to this Agreement
shall survive consummation of the transactions contemplated by this Agreement
as follows: (i) all representations and warranties pertaining to federal,
state and local taxes, including, without limitation, the representations and
warranties set forth in Section 3.11 shall survive until the expiration of
the applicable statute of limitations on any claim which can be brought
against the Company by tax authorities or governmental agencies or
governmental units and (ii) all representations and warranties other than set
forth in (i) above shall survive until three years from the Closing Date.
Notwithstanding the prior sentence which provides that the representations
and warranties expire after certain stated periods of time, if within the
stated period of time, a notice of a claim for indemnification or
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.
<PAGE>
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.
ARTICLE X
Other Provisions
Section 10.1 Nondisclosure by Sellers. Sellers recognize and
acknowledge that they have in the past, currently have, and in the future
will have certain confidential information of Purchaser such as lists of
customers, operational policies, and pricing and cost policies that are
valuable, special and unique assets of Purchaser. Sellers agree that for a
period of five (5) years from the Closing Date they will not disclose such
confidential information to any person, firm, corporation, association or
other entity for any purpose or reason whatsoever, except to authorized
representatives of Purchaser, unless (i) such information becomes known to
the public generally through no fault of any Seller, (ii) a Seller is
compelled to disclose such information by a governmental entity or pursuant
to a court proceeding, or (iii) the Closing does not take place. In the event
of a breach or threatened breach by any Seller of the provisions of this
Section, Purchaser shall be entitled to an injunction restraining such Seller
from disclosing, in whole or in part, such confidential information. Nothing
herein shall be construed as prohibiting Purchaser from pursuing any other
available remedy for such breach or threatened breach, including, without
limitation, the recovery of damages.
Section 10.2 Nondisclosure by Purchaser. Purchaser recognize and
acknowledges that it has in the past, currently has, and prior to the Closing
Date, will have access to certain confidential information of the Company,
such as lists of customers, operational policies, and pricing and cost
policies that are valuable, special and unique assets of the Company.
Purchaser agree that 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. In the event of a breach or threatened breach by Purchaser of the
provisions of this Section, 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.
<PAGE>
Section 10.3 Assignment; Binding Effect; Amendment. This Agreement
and the rights of the parties hereunder may not be assigned (except by
operation of law) and shall be binding upon and shall inure to the benefit of
the parties hereto, and their respective successors, personal representatives
and assigns. 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, 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. The Agreement
supersedes, and cannot be varied, contradicted or supplemented by evidence of
any prior to contemporaneous discussions, correspondence, or oral or written
agreements of any kind. 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 two or more counterparts, each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.
Section 10.6 Notices. All notices or other communications required
or permitted hereunder shall be in writing and may be given by depositing the
same in United States mail, addressed to the party to be notified, postage
prepaid and registered or certified with return receipt requested, by
overnight courier or by delivering the same in person to such party.
(a) If to Purchaser, addressed to it at:
American Wash Services, Inc.
1000 Crawford Place, Suite 400
Mount Laurel, New Jersey 08054
with a copy to:
Robert M. Kramer & Associates, P.C.
1150 First Avenue, Suite 900
King of Prussia, Pennsylvania 19406
(b) If to Sellers, addressed to them at:
701 West Highlander Boulevard, Suite 520
Arlington, Texas 76015
<PAGE>
Notice shall be deemed given and effective the day personally delivered, the
day after being sent by overnight courier and three business days after the
deposit in the U.S. mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received, if
earlier. Any party may change the address for notice by notifying the other
parties of such change in accordance with this Section 10.6.
Section 10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New Jersey,
without giving effect to any choice or conflict of law provision or rule
(whether of the State of New Jersey or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
New Jersey.
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 of 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 Time of the Essence. Time is of the essence of this
Agreement as well as all dates referred to herein and extensions thereof.
Section 10.10 Captions. The headings of this Agreement are inserted
for convenience only, shall not constitute a part of this Agreement or be
used to construe or interpret any provision hereof.
Section 10.11 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 10.12 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.
<PAGE>
Section 10.13 Extension or Waiver of Performance. Either the Seller
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 Sellers and the
Purchaser.
Section 10.14 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, legal representative and
assigns, nor is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third persons to any party to this
Agreement, nor shall any provisions give any third person any rights of
subrogation or action over or against any party to this Agreement.
Section 10.15 Agreement Not Binding Until Fully Executed. This
Agreement shall not be binding on any party hereto until the Agreement has
been fully executed.
Section 10.16 Publicity. Prior to Closing, except as may be required
by law, no party to this Agreement shall issue any press release or otherwise
make any statement with respect to the transactions contemplated by this
Agreement without the prior consent of the other party, which shall not be
unreasonably withheld.
Section 10.17 Arbitration.
(a) Each and every controversy or claim arising out of or relating
to this Agreement shall be settled by arbitration in Philadelphia,
Pennsylvania, in accordance with the commercial rules (the "Rules") of the
American Arbitration Association then obtaining, and judgment upon the award
rendered in such arbitration shall be final and binding upon the parties and
may be confirmed in any court having jurisdiction thereof. Notwithstanding
the foregoing, this Agreement to arbitrate shall not bar any party from
seeking temporary or provisional remedies in any Court having jurisdiction.
Notice of the demand for arbitration shall be filed in writing with the other
party to this Agreement, which such demand shall set forth in the same degree
of particularity as required for complaints under the Federal Rules of Civil
Procedure the claims to be submitted to arbitration. Additionally, the demand
for arbitration shall be stated with reasonable particularity with respect to
such demand with documents attached as appropriate. In no event shall the
demand for arbitration be made after the date when institution of legal or
equitable proceedings based on such claim, dispute or other matter in
question would be barred by the applicable statutes of limitations.
(b) The arbitrators shall have the authority and jurisdiction to
determine their own jurisdiction and enter any preliminary awards that would
aid and assist the conduct of the arbitration or preserve the parties' rights
with respect to the arbitration as the arbitrators shall deem appropriate in
their discretion. The award of the arbitrators shall be in writing and it
shall specify in detail the issues submitted to arbitration and the award of
the arbitrators with respect to each of the issues so submitted.
<PAGE>
(c) Within sixty (60) days after the commencement of any arbitration
proceeding under this Agreement, each party shall file with the arbitrators
its contemplated discovery plan outlining the desired documents to be
produced, the depositions to be taken, if ordered by the arbitrators in
accordance with the Rules, and any other discovery action sought in the
arbitration proceeding. After a preliminary hearing, the arbitrators shall
fix the scope and content of each party's discovery plan as the arbitrators
deem appropriate. The arbitrators shall have the authority to modify, amend
or change the discovery plans of the parties upon application by either
party, if good cause appears for doing so.
(d) The award pursuant to such arbitration will be final, binding
and conclusive.
(e) Counsel to Sellers and Purchaser in connection with the
negotiation of and consummation of the transactions under this Agreement
shall be entitled to represent their respective party in any and all
proceedings under this Section or in any other proceeding (collectively,
"Proceedings"). Sellers and Purchaser, respectively, waive the right and
agree they shall not seek to disqualify any such counsel in any such
Proceedings for any reason, including but not limited to the fact that such
counsel or any member thereof may be a witness in any such Proceedings or
possess or have learned of information of a confidential or financial nature
of the party whose interests are adverse to the party represented by such
counsel in any such Proceedings.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first above written.
SHAREHOLDERS
WITNESS:
_____________________________ /s/ Gary Higgins
Gary Higgins
WITNESS:
_____________________________ /s/ Rosario Higgins
Rosario Higgins
WITNESS:
_____________________________ /s/ Gunter Rauch
Gunter Rauch
WITNESS:
_____________________________ /s/ Elisa Rauch
Elisa Rauch
WITNESS:
_____________________________ /s/ Rainer Dietrich
Rainer Dietrich
WITNESS:
_____________________________ /s/ Rosa Maria Dietrich
Rosa Maria Dietrich
WITNESS:
_____________________________ /s/ Amy Schmadeke
Amy Schmadeke
PURCHASER
AMERICAN WASH SERVICES, INC.
By: /s/ Robert M. Kramer
Robert M. Kramer, Vice President
<PAGE>
AMENDMENT NUMBER 1 TO
STOCK PURCHASE AGREEMENT
BETWEEN
THE SHAREHOLDERS OF
COLONIAL FULL SERVICE CAR WASH, INC.
And
AMERICAN WASH SERVICES, INC.
<PAGE>
AMENDMENT NUMBER ONE TO STOCK PURCHASE AGREEMENT
This Amendment Number One To Stock Purchase Agreement ("Amendment")
is made as of April 1, 1999, by and between Gary Higgins, Rosario Higgins,
Rosa Maria Dietrich, Rainer Dietrich, Amy Schmadeke, Elisa Rauch Gunter Rauch
and Steven Sims ("Shareholders") on the one hand, and American Wash Services,
Inc. ("Purchaser") on the other hand. Shareholders may sometimes be referred
to as "Sellers" in this Agreement.
RECITALS
The Shareholders (except for Steven Sims) and Purchaser are the
parties to a Stock Purchase Agreement dated February 4, 1999 ("Stock Purchase
Agreement"). The parties hereto have entered into this Amendment to amend and
modify certain provisions of the Stock Purchase Agreement. Steven Sims has
entered into this Amendment to join into the Stock Purchase Agreement as he
became a shareholder in the Company between the date of the Stock Purchase
Agreement and this Amendment.
1. Incorporation of Recitals and Definitions. The recitals set
forth above are incorporated herein by reference and are a part of this
Agreement. Terms capitalized in this Amendment shall have the same meaning as
is given the capitalized term in the Stock Purchase Agreement, unless the
term is specifically defined in this Amendment. The term "Successor
Corporation" shall mean for purposes of the Stock Purchase Agreement and this
Amendment, "Mace Security International, Inc.," a Delaware corporation.
2. Stock Purchase; Consideration.
Section 1.3(a) of the Stock Purchase Agreement is deleted in its
entirety and is replaced by the provisions of Section 1.3(a) below.
Section 1.3(a) At the Closing, (i) all of the Company Shares shall
be delivered by Shareholders to Purchaser, and (ii) Purchaser shall deliver
to Sellers, subject to adjustment as provided herein in this Section 1.3, a
number of shares of Successor Corporation's common stock ("Consideration
Stock") having a value of $15,100,000 ("Purchase Price"), as adjusted as
provided for in this section below, each share being valued at the closing
price of the common stock on the Nasdaq Stock Market on the date of this
Amendment which was $6.6875 per share ("Per Share Value"). For purposes of
this Agreement, "Company Debt" shall include long-term debt, including the
current portion of the principal and interest accrued through the Closing
Date, plus the amount at Closing of any deferred tax liabilities. At the
Closing, Company shall have total Company Debt in the amount set forth on
Schedule 1.3(a) attached. The Purchase Price to be paid in Consideration
Stock at Closing shall be decreased, dollar for dollar, by the amount of the
Company Debt at Closing. The Purchase Price shall also be decreased by the
amount by which the current assets of the Company at Closing are less than
the current liabilities of the Company at Closing, as provided in Section
3.9(c) below. The decrease(s) shall be calculated by valuing the
Consideration Stock at the Per Share Value.
<PAGE>
3. Termination. Section 1.5(d) of the Stock Purchase Agreement is
deleted in its entirety. The parties have agreed upon the terms of employment
contracts to be executed at Closing by which the Company will employ Gary
Higgins and Steven Sims. Section 1.5(f) of the Stock Purchase Agreement is
deleted in its entirety and is replaced by the provisions of Section 1.5(f)
set forth below.
Section 1.5(f) by the Sellers or Purchaser, if the Closing shall not
have occurred by July 1, 1999, 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).
4. Owners Title Policy. Section 2.1 of the Stock Purchase Agreement
is deleted in its entirety and is replaced by the provisions of Section 2.1
set forth below.
Section 2.1 All parcels of real property used in the Business,
including a parcel known as Colonial No. 3, Pleasant Ridge Car Wash, Ft.
Worth, Texas ("Higgins Parcel") are owned by the Company. As of the date of
the Stock Purchase Agreement, the Higgins Parcel was owned by Gary Higgins
and leased to the Company under a lease dated January 1, 1996. Since the date
of the Stock Purchase Agreement, Gary Higgins sold the Higgins Parcel to the
Company in exchange for common stock of the Company. For purposes of the
Stock Purchase Agreement the Higgins Parcel is included in the term ("Company
Real Property") and at Closing the Company shall own with respect to the
Company Real Property, including the Higgins Parcel, an extended coverage
owners policy of title insurance from a title company acceptable to
Purchaser, dated as of the Closing Date, all as set forth in Section 2.1 of
the Stock Purchase Agreement. For purposes of the Stock Purchase Agreement
any mortgage debt on the Higgins Parcel shall be treated as Company Debt.
5. Restrictions on Transfer of Unregistered Stock. The following
Section 5.2(d) is hereby added to the Stock Purchase Agreement.
Section 5.2(d) Each Seller agrees that they shall not sell on the
NASDAQ National Market any Consideration Stock until after the first annual
anniversary of the Closing and thereafter each Seller agrees not to sell on
the NASDAQ National Market more than 50,000 shares of the Consideration Stock
received by them per calendar month.
6. Survival of Claim. Section 9.5 of the Stock Purchase Agreement
is hereby deleted and is replaced by Section 9.5 set forth below.
<PAGE>
Section 9.5 All of the respective representations, warranties and
obligations of the parties to this Agreement shall survive consummation of
the transactions contemplated by this Agreement as follows: (i) all
representations and warranties pertaining to federal, state and local taxes,
including, without limitation, the representations and warranties set forth
in Section 3.11 shall survive until the expiration of the applicable statute
of limitations on any claim which can be brought against the Company by tax
authorities or governmental agencies or governmental units and (ii) all
representations and warranties other than set forth in (i) above shall
survive until one year from the Closing Date. Notwithstanding the prior
sentence which provides that the representations and warranties expire after
certain stated periods of time, if within the stated period of time, a notice
of a claim for indemnification or 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.
7. Shareholder Ownership. Steven Sims by his execution of this
Amendment joins into and becomes obligated under the Stock Purchase Agreement
as fully as though he was a shareholder of the Company on the date of the
Stock Purchase Agreement who executed the Stock Purchase Agreement. The
Shareholders represent and warrant to Purchaser that the common stock of the
Company is owned in the amounts and percentages set forth on Schedule 1.3(b)
attached to this Amendment. The parties hereto agree that Schedule 1.3(b)
attached to the Stock Purchase Agreement is hereby deleted and is replaced by
Schedule 1.3(b) attached.
8. Entire Agreement. The Stock Purchase Agreement as amended by this
Amendment, is the final, complete and exclusive statement and expression of
the agreement among the parties hereto with relation to the subject matter of
the Stock Purchase Agreement and Amendment, it being understood that there
are no oral representations, understandings or agreements covering the same
subject matter as the Stock Purchase Agreement and Amendment. The Amendment
supersedes, and cannot be varied, contradicted or supplemented by evidence of
any prior to contemporaneous discussions, correspondence, or oral or written
agreements of any kind. 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. All terms
of the Stock Purchase Agreement not modified or amended by the Amendment
remain in full force and effect.
9. Counterparts. This Amendment may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original and all
of which together shall constitute but one and the same instrument. This
Amendment may be executed by facsimile transmission and a signature
transmitted by facsimile transmission shall be binding on the party so
executing this Letter.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment on the date
first above written.
SHAREHOLDERS
WITNESS:
_____________________________ /s/ Gary Higgins
Gary Higgins
WITNESS:
_____________________________ /s/ Rosario Higgins
Rosario Higgins
WITNESS:
_____________________________ /s/ Gunter Rauch
Gunter Rauch
WITNESS:
_____________________________ /s/ Elisa Rauch
Elisa Rauch
WITNESS:
_____________________________ /s/ Rainer Dietrich
Rainer Dietrich
WITNESS:
_____________________________ /s/ Rosa Maria Dietrich
Rosa Maria Dietrich
WITNESS:
_____________________________ /s/ Amy Schmadeke
Amy Schmadeke
WITNESS:
_____________________________ /s/ Steven Sims
Steven Sims
PURCHASER
AMERICAN WASH SERVICES, INC.
By: /s/ Robert M. Kramer
Robert M. Kramer, Vice President
<PAGE>
ASSIGNMENT
This Assignment has been entered into this 17th day of May, 1999, by
and between Mace Security International, Inc. ("MSI"), Mace Anti Crime Bureau,
Inc. ("MACB"), and American Wash Services, Inc. ("AWS").
RECITALS
AWS is a party to a Stock Purchase Agreement dated February 4, 1999,
by and between Gary Higgins, Rosario Higgins, Rosa Maria Dietrich, Rainer
Dietrich, Amy Schmadeke, Elisa Rauch and Gunter Rauch, as amended by
Amendment 1 dated April 1, 1999 (collectively, "Stock Purchase Agreement").
AWS wishes to assign to MACB all of its rights and obligations under the
Stock Purchase Agreement and MACB is willing to accept all of AWS's rights
and obligations under the Stock Purchase Agreement. MACB is a wholly owned
subsidiary of MSI.
NOW THEREFORE intending to be legally bound hereby the parties
hereto agree as follows:
1. Assignment. AWS hereby assigns to MSI all of AWS's rights and
obligations under the Stock Purchase Agreement. MSI hereby accepts the
assignment of AWS's rights and obligations under the Stock Purchase
Agreement. MSI hereby indemnifies AWS from and against all claims, damages,
causes of actions, and all expenses, including the costs of litigation and
attorney's fees relating to MACB's performance under the Stock Purchase
Agreement.
2. Commission. MSI and AWS are parties to a Merger Agreement dated
March 26, 1999 ("Merger Agreement"). Louis D. Paolino and MSI are parties to
a Stock Purchase Agreement dated March 26, 1999 ("Paolino Stock Purchase
Agreement"). MSI hereby agrees to pay AWS a commission equal to $1,510,000
payable in good funds ("Commission"), in exchange for the assignment of the
Stock Purchase Agreement, if closing does not take place under the Merger
Agreement or Paolino Stock Purchase Agreement by July 1, 1999 (or such later
date to which the parties extend the closing date under the respective
agreements) for any reason other than the default of AWS under the Merger
Agreement or the default of Louis D. Paolino, Jr. ("Paolino") under the
Paolino Stock Purchase Agreement. The parties agree that, if closing under
the Paolino Stock Purchase Agreement does not occur because MSI does not
fulfill its obligations to sell 1,850,000 shares in a private placement, if
such sale can not be completed due to the unwillingness of Purchasers to
purchase such shares, then no Commission shall be due. The Commission will be
due and payable within ten (10) days after the date that the Commission
becomes due and payable as set forth above.
<PAGE>
IN WITNESS WHEREOF this Assignment has been executed the day and
year above written.
AMERICAN WASH SERVICES, INC.
By: /s/ Robert M. Kramer
Robert M. Kramer, Vice President
MACE SECURITY INTERNATIONAL, INC.
By: /s/ Jon E. Goodrich
Jon E. Goodrich, President
MACE ANTI-CRIME BUREAU, INC.
By: /s/ Jon E. Goodrich
Jon E. Goodrich, President
<PAGE>
Contact: Mace Security International, Inc.
160 Benmont Avenue
Bennington, Vermont 05201
(800) 255-2634
Jon E. Goodrich, President & Chief Executive Officer
Eduardo Nieves, Jr., Corporate Communications Manager
FOR IMMEDIATE RELEASE
MACE SECURITY INTERNATIONAL ACQUIRES TWO CAR WASH CHAINS
BECOMING THE COUNTRY'S FIRST PUBLICLY OWNED CAR WASH CONSOLIDATOR
Bennington, Vermont, May 25, 1999 -- Mace Security International, Inc.
(MSI) (NASDAQ:MACE) today announced that it has acquired Colonial Full
Service Car Wash, Inc. and Genie Car Wash, Inc. and certain of its affiliated
entities, two major Texas-based car wash chains. The closing of these
transactions immediately places MSI in the forefront of the car wash
industry, making it the country's first publicly owned consolidator of car
washes. The addition of Colonial and Genie, which together operate 13 car
washes and generate approximately $16 million in sales annually, plays a
strategic role in MSI's aggressive growth strategy of acquiring car wash
businesses. MSI recently announced it will acquire American Wash Services,
Inc., a company founded by Louis D. Paolino, Jr., which owns and has under
agreement to close on numerous car wash locations.
Jon E. Goodrich, current President and CEO of MSI, said, "We are very
pleased to have quickly established a leadership position among the car wash
consolidators in the United States. These acquisitions give MSI a strong
foothold in the southwestern market for further acquisitions in this
important region." He added, "We are hiring Steve Sims, formerly Chief
Operating Officer of Colonial Full Service Car Wash, Inc., to become Vice
President of the Texas operation and oversee our Texas-based car wash
businesses. Mr. Sims brings market and industry expertise that will be
invaluable to our vision of consolidating full and self-service car wash
chains."
Colonial Full Service Car Wash, Inc. and the Genie Car Washes, which are
located in the Dallas and Fort Worth, Texas and Austin, Texas areas,
respectively, operate car wash and lubrication centers that provide a full
line of car care services including washing, waxing, detailing, gasoline and
lubrication services.
Mace Security International, Inc. is the first publicly-traded company
to focus on the consolidation of the car wash industry. The Company is also a
leading producer of less lethal defense sprays for the consumer market and a
marketer and retailer of consumer safety and security products.
This press release includes statements which may constitute
forward-looking statements made pursuant to the safe harbor provision of the
Private Securities Litigation Reform Act of 1995. This information may
involve risks and uncertainties, including without limitation, risks relating
to the financial outcomes of the planned business and growth strategies, that
could cause actual results to differ materially from the forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are based on reasonable assumptions, such
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those projected.
###
