MACE SECURITY INTERNATIONAL INC, 10QSB, 1999-08-13

MACE SECURITY INTERNATIONAL INC
10QSB, 1999-08-13
INDUSTRIAL ORGANIC CHEMICALS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-QSB

QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED JUNE 30, 1999 COMMISSION FILE NO. 0-22810

MACE SECURITY INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of incorporation or organization)

03-0311630
(I.R.S. Employer Identification No.)

1000 Crawford Place, Suite 400, Mount Laurel, NJ 08054
(Address of Principal Executive Offices)

Registrant's Telephone No., including area code: (856) 778-2300

160 Benmont Avenue, Bennington, VT 05201
(Former Address of Principal Executive Offices)

Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such report), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ____
---

Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock:

As of August 10, 1999 16,131,339 Shares of Common Stock

================================================================================
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Mace Security International, Inc.

Form 10-QSB
Quarter Ended June 30, 1999

Contents

Page

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets - June 30, 1999
and December 31, 1998 2

Condensed Consolidated Statements of Operations for the three
months ended June 30, 1999 and 1998 4

Condensed Consolidated Statements of Operations for the six
months ended June 30, 1999 and 1998 5

Condensed Consolidated Statement of Stockholders' Equity
for the six months ended June 30, 1999 6

Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 1999 and 1998 7

Notes to Condensed Consolidated Financial Statements 8

Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 13

PART II - OTHER INFORMATION

Item 2 - Changes in Securities 20
Item 4 - Submission of Matters to a Vote of Security Holders 21
Item 5 - Other Information 21
Item 6 - Exhibits and Reports on Form 8-K 23

1
<PAGE>

PART I - FINANCIAL INFORMATION
Item 1 Financial Statements

Mace Security International, Inc.

Condensed Consolidated Balance Sheets
(Unaudited)

<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1999 1998
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents (including escrow of $120,000
in 1999 and $610,800 in 1998) $ 6,060,681 $ 4,183,222
Accounts receivable, less allowance for doubtful
accounts of $28,668 and $64,464 1,098,669 1,271,031
Inventory 1,789,583 1,502,172
Deferred income taxes 715,376 -
Prepaid expenses and other current assets 811,161 285,208
------------- -------------
Total current assets 10,475,470 7,241,633

Property and equipment:
Land 10,035,763 -
Buildings and leasehold improvements 10,360,928 734,421
Machinery and equipment 1,810,536 1,335,284
Furniture and fixtures 132,621 132,621
------------- -------------
Total property and equipment 22,339,848 2,202,326
Accumulated depreciation (1,093,027) (1,123,130)
------------- -------------
21,246,821 1,079,196

Net assets of discontinued operations 244,536 326,835
Excess cost over fair market value of net assets acquired,
net of $22,792 accumulated amortization 4,584,627 -
Other intangible assets, net of $1,006,527 and
$954,810 accumulated amortization 872,210 912,131
Notes receivable from shareholders/officers 46,518 -
Other assets 1,723,892 217,474
------------- -------------
Total assets $39,194,074 $ 9,777,269
============= =============
</TABLE>

2
<PAGE>

<TABLE>
<CAPTION>
June 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1999 1998
----------- -----------
<S> <C> <C>
Current liabilities:
Accounts payable $ 1,242,587 $ 297,553
Accrued expenses and other current liabilities 2,325,464 232,942
Current portion of long-term debt 10,037,909 -
Current portion of capital lease obligations 28,359 -
----------- ----------
Total current liabilities 13,634,319 530,495

Deferred income taxes 1,412,489 -
Long-term debt, net of current portion 932,603 -
Capital lease obligations, net of current portion 5,964 -

Stockholders' equity:
Common stock, $.01 par value:
Authorized shares - 200,000,000
Issued and outstanding shares 9,597,915 and 6,825,000 95,979 68,250
Additional paid-in capital 28,549,066 13,333,191
Accumulated deficit (5,383,958) (4,102,279)
----------- ----------
23,261,087 9,299,162
Less treasury stock at cost - 256,666 common shares (52,388) (52,388)
----------- ----------
Total stockholders' equity 23,208,699 9,246,774
----------- ----------
Total liabilities and stockholders' equity $39,194,074 $ 9,777,269
=========== ==========
</TABLE>

See accompanying notes.

3
<PAGE>

Mace Security International, Inc.

Condensed Consolidated Statements of Operations
(Unaudited)

<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------------
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
Car wash and detailing services $ 1,357,342 $ -
Lube and other automotive services 481,888 -
Fuel and merchandise sales 192,636 -
Security product sales 902,117 691,697
Operating Agreements 449,590 -
----------- -----------
3,383,573 691,697

Cost of revenues:
Car wash and detailing services 872,144 -
Lube and other automotive services 408,114 -
Fuel and merchandise sales 167,562 -
Security product sales 480,310 340,643
----------- -----------
1,928,130 340,643
Selling, general and administrative expenses 855,250 384,233
Depreciation and amortization 136,429 48,397
Restructuring and change in control charges 1,519,000 -
----------- -----------

Operating loss (1,055,236) (81,576)

Interest expense, net (73,426) (30,307)
Other income 36,942 66,893
----------- -----------
Loss from continuing operations before income taxes (1,091,720) (44,990)

Income tax (benefit) expense (350,000) 1,950
----------- -----------

Loss from continuing operations (741,720) (46,940)

Income (loss) from discontinued operations,
net of $0 applicable income taxes 42,301 (375,844)
----------- -----------

Net loss $ (699,419) $ (422,784)
=========== ===========

Basic and diluted loss per share

From continuing operations $ (0.09) $ (0.01)
From discontinued operations - (0.05)
----------- -----------
Total $ (0.09) $ (0.06)
=========== ===========

Weighted average number of shares outstanding 8,067,624 7,081,666
=========== ===========
</TABLE>

See accompanying notes.

4
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Mace Security International, Inc.

Condensed Consolidated Statements of Operations
(Unaudited)

<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------------
1999 1998
--------------------------
<S> <C> <C>
Revenues:
Car wash and detailing services $ 1,357,342 $ -
Lube and other automotive services 481,888 -
Fuel and merchandise sales 192,636 -
Security product sales 1,605,998 1,361,110
Operating Agreements 449,590 -
----------- ----------
4,087,454 1,361,110
Cost of revenues:
Car wash and detailing services 872,144 -
Lube and other automotive services 408,114 -
Fuel and merchandise sales 167,562 -
Security product sales 844,342 700,847
----------- ----------
2,292,162 700,847
Selling, general and administrative expenses 1,569,385 881,585
Depreciation and amortization 223,934 96,794
Restructuring and change in control charges 1,519,000 -
----------- ----------

Operating loss (1,517,027) (318,116)

Interest expense, net (27,294) (54,000)
Other (expense) income (15,604) 88,735
----------- ----------
Loss from continuing operations before income taxes (1,559,925) (283,381)

Income tax (benefit) expense (350,000) 3,900
----------- ----------

Loss from continuing operations (1,209,925) (287,281)

Loss from discontinued operations,
net of $0 applicable income taxes (71,754) (559,091)
----------- ----------

Net loss $(1,281,679) $ (846,372)
=========== ==========
Basic and diluted loss per share:

From continuing operations $ (0.16) $ (0.04)
From discontinued operations (0.01) (0.08)
=========== ==========
Total $ (0.17) $ (0.12)
=========== ==========

Weighted average number of shares outstanding 7,454,292 7,081,666
=========== ==========
</TABLE>

See accompanying notes.

5
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Mace Security International, Inc.

Condensed Consolidated Statement of Stockholders' Equity
(Unaudited)

<TABLE>
<CAPTION>
Additional
Common Paid-in Accumulated Treasury
Stock Capital Deficit Stock Total
-------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1998......................... $ 68,250 $ 13,333,191 $ (4,102,279) $ (52,388) $ 9,246,774

Exercise of common stock
options and warrants...................... 5,182 682,732 687,914

Proceeds from sale of 392,857
shares of common stock.................... 3,929 3,296,071 3,300,000

Common stock issued in
purchase acquisitions..................... 18,618 10,650,072 10,668,690

Effect of variable option vesting on change
in control................................ 587,000 587,000

Net loss.................................... (1,281,679) (1,281,679)
--------- ------------ ------------ ----------- -----------
Balance at June 30, 1999.................... $ 95,979 $ 28,549,066 $ (5,383,958) $ (52,388) $23,208,699
========= ============ ============ =========== ===========
</TABLE>

See accompanying notes.

6
<PAGE>

Mace Security International, Inc.

Condensed Consolidated Statements of Cash Flows
(Unaudited)

<TABLE>
<CAPTION>
Six Months Ended
June 30,
-------------------------
1999 1998
------------ ----------
<S> <C> <C>
Operating activities
Net loss $(1,281,679) $ (846,372)

Adjustments to reconcile net loss
to net cash (used in) provided by operating activities:
Depreciation and amortization 223,934 96,794
Provision for losses on receivables 145,877 26,594
Writedown of assets 99,666 -
Deferred income taxes (360,282) -
Non-cash portion of restructuring and change in
control charges 1,267,000 -

Changes in operating assets and liabilities:
Accounts receivable 50,736 341,110
Inventory (90,290) (69,416)
Accounts payable 9,681 29,971
Accrued expenses 646,691 132,819
Income taxes - 6,086
Prepaid expenses and other current assets (516,424) (125,332)
Discontinued operations 82,299 631,881
Other (1,179,272) (64,313)
----------- ----------
Net cash (used in) provided by operating activities (902,063) 159,822

Investing activities
Acquisition of businesses, net of cash acquired (1,299,908) -
Purchase of property and equipment (184,596) (34,280)
Payments for intangibles (7,546) -
Payments received on notes receivable from shareholder 363,313 -
----------- ----------
Net cash used in investing activities (1,128,737) (34,280)

Financing activities
Payments on revolving line of credit, long-term debt
and capital lease obligations (79,655) (54,882)

Proceeds from issuance of common stock, net of
offering costs 3,987,914 -

Net payments on note payable
to shareholder - (9,984)
----------- ----------
Net cash provided by (used in) financing activities 3,908,259 (64,866)
----------- ----------
Net increase in cash and cash equivalents 1,877,459 60,676
Cash and cash equivalents at beginning of period 4,183,222 1,146,212
----------- ----------
Cash and cash equivalents at end of period $ 6,060,681 $1,206,888
=========== ==========
</TABLE>

See accompanying notes.

7
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Mace Security International, Inc.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include
the accounts of Mace Security International, Inc. and its wholly owned
subsidiaries (the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation. These condensed
consolidated financial statements reflect all adjustments (consisting of normal
recurring accruals), which in the opinion of management, are necessary for a
fair presentation of results of operations for the interim periods presented.
The results of operations for the three and six month periods ended June 30,
1999 are not necessarily indicative of the operating results for the full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These interim financial statements should be
read in conjunction with the audited financial statements and notes contained in
the Company's Annual Report on Form 10-KSB for the year ended December 31, 1998.

2. Significant Accounting Policies

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, Disclosures about Segments of an
Enterprise and Related Information ("Statement 131"). Statement 131 establishes
standards for reporting information about operating segments in annual financial
statements that requires that those enterprises report selected information
about operating segments in the interim financial reports issued to
shareholders. Statement 131 is effective for fiscal years beginning after
December 15, 1997. The Company adopted Statement 131 effective January 1, 1998.

3. Business Combinations

The Company has been a well known producer of less-lethal defense sprays for the
consumer market and a marketer of consumer safety and security products. The
Company has recently undergone a change in control (discussed elsewhere in these
notes), and has implemented a strategic plan to enter the car care industry
through acquisitions of existing and well-managed car care facilities
nationwide.

Since April 1, 1999, the Company has acquired 15 car care facilities through the
acquisition of four separate businesses, including 12 full service facilities,
one self service facility, and two exterior only facilities in Pennsylvania, New
Jersey and Texas. Additionally, the Company is managing under operating
agreements another 37 locations, including 26 full serve and 11 exterior only
facilities in Pennsylvania, New Jersey, Delaware, Texas and Arizona. Also
operating at these facilities are a total of 14 lube and repair centers, 19 fuel
sales operations, and a convenience store. The aggregate of these businesses is
significant to the Company.

The acquisitions completed were accounted for using the purchase method of
accounting. Accordingly, assets acquired and liabilities assumed have been
recorded at their estimated fair values at the dates of acquisition and their
results of operations are included in the accompanying condensed consolidated
statements of operations since the date of acquisition. The excess of purchase
price over the estimated fair market value of identifiable net assets acquired
is being amortized on a straight-line basis over twenty- five years from the
date of acquisition. The purchase price allocations are based on preliminary
estimates as of the acquisition dates and will be finalized within one year from
the date of acquisition.

Acquisitions Accounted for Under the Purchase Method

On May 17, 1999, the Company acquired all of the outstanding stock of Colonial
Full Service Car Wash, Inc. ("Colonial") in exchange for 1,250,991 unregistered
shares of the Company's common stock and the assumption of debt and negative
working capital of approximately $6,734,000. This transaction has been
accounted for using the

8
<PAGE>

purchase method of accounting.

On May 18, 1999, the Company acquired certain assets of Genie Car Wash Inc. of
Austin, Genie Car Care Center, Inc., and Genie Car Service Center, Inc.
(collectively, "Genie"). Consideration under the Agreement consisted of 533,333
unregistered shares of common stock of the Company, $1,000,000 of cash, and the
issuance of a $4,750,000 promissory note. The assets acquired consist of
substantially all of the real estate, equipment, and inventories utilized in the
car wash businesses. This transaction has been accounted for using the purchase
method of accounting.

On June 1, 1999, the Company acquired substantially all of the assets of Gabe's
Plaza Car Wash, Inc. ("Gabe's") in exchange for $210,000 in cash and delivery of
a promissory note for $717,000. The transaction has been accounted for using
the purchase method of accounting.

On June 22, 1999, the Company acquired substantially all of the assets of the
Moorestown Car Wash in exchange for $225,000 and the issuance of 20,930
unregistered shares of common stock of the Company. This transaction has been
accounted for using the purchase method of accounting.

4. Operating Agreements

Currently, the Company is managing several car wash locations under operating
agreements, under which the Company is entitled to all profits generated from
the operation of those locations. These operating agreements generally arise
from pending acquisitions that will be closed pending completion of certain
conditions. The pretax income earned under these operating agreements is
presented in the accompanying statements of operations as revenue from operating
agreements net of all operating expenses.

The results of operations subject to operating agreements in the quarter ended
June 30, 1999 were as follows:

Revenues

Car wash and detailing services $3,959,106

Lube and other automotive services 285,951

Fuel and merchandise sales 509,468
----------
4,754,525

Cost of revenues

Car wash and detailing services 2,643,375

Lube and other automotive services 243,266

Fuel and merchandise sales 431,500
----------
3,318,141

SG&A expenses 376,514

Depreciation and amortization 326,787
----------
Operating income 733,083

Interest expense, net (338,334)

Other income 54,841
----------
Income earned under operating agreements $ 449,590
==========

9
<PAGE>

5. Discontinued Operations

On July 14, 1998, the Company sold substantially all of the assets of its Law
Enforcement division within its security products segment for cash of
$4,985,651. In conjunction with the sale of assets, the Company licensed to the
purchaser the use of Mace(R) and related trademarks and a patent for use by the
purchaser in the Law Enforcement market and received a one-time license fee of
$650,000. The Company retained the cash and customer accounts receivable from
the Law Enforcement division at closing. The Company utilized a portion of the
purchase price, $1,725,202, to pay off all outstanding bank debt to FNB under
its term loan agreements.

A portion of the purchase price, $600,000, was retained by the purchaser in
escrow to secure, among other things, the Company's obligations under the
representations and warranties in the purchase agreement. On January 20, 1999,
$480,000 of the escrow was returned to the Company. The remainder is pending
release upon agreement that no claim exists against the Company for which the
purchaser is entitled to set off against the escrow funds. Notwithstanding the
sale of the Law Enforcement division, the Company continues to fulfill its
obligation under a nonassignable Department of Defense contract which is
expected to be completed in August of 1999. Accordingly, this contract is
included in discontinued operations in the accompanying statements of operations
for the three and six months ending June 30, 1999 and 1998.

In the three months ended September 30, 1998, the Company disposed of two
wholly-owned subsidiaries, MSP, Inc. (a Colorado distributor) and MSP Retail,
Inc. (Colorado retail stores which were operated as Mace Security Centers). The
contracts between the Company and the former owners of the distributorship and
retail stores allowed the Company to put back the shares of MSP, Inc. and MSP
Retail, Inc. to the former owners if certain pre-tax earnings targets were not
met within one year following the Company's acquisition. In both cases, the
aforementioned subsidiaries failed to make their pre-tax earnings targets. The
Company put back the shares of MSP, Inc. to the former owner in exchange for
80,000 shares of the Company that were tendered as consideration in the
acquisition of MSP, Inc. In a modified version of the put with respect to MSP
Retail, Inc., the Company transferred the net assets of MSP Retail, Inc. to a
corporation owned by the former owner in exchange for 176,666 shares of the
Company that were tendered as consideration in the acquisition of MSP Retail,
Inc. Further, both contracts called for repayment of working capital loaned by
the Company to MSP, Inc. and MSP Retail, Inc. The repayment amount as defined
by the contracts is the money loaned by the Company reduced by operating losses
incurred by the respective subsidiaries during the twelve-month period each was
owned by the Company. As a result of the disposition of these subsidiaries, the
Company incurred losses of $67,013 and $47,317 related to MSP, Inc. and MSP
Retail, Inc., respectively.

6. Change in Management

On May 24, 1999, the Company appointed Louis D. Paolino, Jr., Robert M. Kramer
and Gregory M. Krzemien to serve as the Company's President and Chief Executive
Officer, Executive Vice President, Secretary and General Counsel, and Chief
Financial Officer and Treasurer, respectively. Louis D. Paolino, Jr. and
Constantine N. Papadakis also were appointed to the Board of Directors of the
Company to fill the vacancies resulting from the resignations of three
directors.

7. Commitments and Contingencies

As disclosed in the Company's 1994 Form 10-KSB, on January 25, 1994 a suit was
filed by Carmeta Gentles on her own behalf and as a personal representative of
the estate of Robert Gentles in Ontario Court (General Division), Ontario,
Canada, claiming intentional or negligent manufacture and distribution of the
Mark V Mace(R) brand defense spray unit and that its contents contributed to the
suffering and death of Robert Gentles while in the Kingston Penitentiary in
October 1993. The Company was added as a party defendant on February 8, 1995.
The plaintiff seeks five million dollars in damages. The Company forwarded this
suit to its insurance carrier for defense. Based on discussions with the
Company's counsel and insurance carrier, the Company does not anticipate that
this claim will result in the payment of damages in excess of the Company's
insurance coverage.

10
<PAGE>

On July 27, 1998, the Company was added as a defendant in a suit filed in the
state of West Virginia by Susan H. Jackman, et. al. The litigation concerns an
attack on Mrs. Jackman by two dogs and the alleged failure of a "Muzzle(R)"
product distributed by the Company to repel the dogs. The suit claims product
liability and negligence and seeks one million dollars in damages. The Company
forwarded this suit to its insurance carrier for defense. The Company does not
anticipate that this claim will result in the payment of damages in excess of
the Company's insurance coverage.

8. Business Segments Information

The Company currently operates in two separate business segments: (1) the Car
Care segment, supplying complete car care services (including wash, detailing,
lube, and minor repairs), fuel and merchandise sales, and (2) the Security
Products sales segment, producing and marketing defense sprays, and marketing
and retailing consumer safety and security products. The Company commenced its
car care operations during the quarter ended June 30,1999. Prior to the current
quarter, the Company only operated in the Security Products sales segment.
Financial information regarding these two segments is as follows:

------------------------------------------------------
Car Security
Care Products
------------------------------------------------------
(In Thousands)
Three months ended June 30, 1999

Revenues from external customers $ 2,481 $ 902

Intersegment revenues - -

Segment profit $ 412 $(1,111)

Six months ended June 30, 1999

Revenues from external customers $ 2,481 $ 1,606

Intersegment revenues - -

Segment profit $ 412 $(1,694)

Segment assets $32,937 $ 6,257
------------------------------------------------------

9. Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements. Actual results could
differ from those estimates. Such estimates include the Company's estimates of
reserves such as the allowance for doubtful accounts receivable, inventory
valuation allowances, and the Company's estimate of restructuring and change in
control charges.

10.Income Taxes

The Company recorded a tax benefit of $350,000 for the six months ended June 30,
1999. The tax benefit reflects the recording of federal and state taxes at a
rate of 22%. An effective tax rate lower than the federal and state statutory
rate for the six months ended June 30, 1999 is primarily due to the use of net
operating loss carryforwards.

11
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11. Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- ------------------------------
6/30/99 6/30/98 6/30/99 6/30/98
------------ ---------- ----------- ----------
<S> <C> <C> <C> <C>
Numerator:
Loss from continuing operations.......................... $ (741,720) $ (46,940) $(1,209,925) $ (287,281)
Income (loss) from discontinued operations............... 42,301 (375,844) (71,754) (559,091)
------------ ---------- ----------- ----------
Net loss................................................. $ (699,419) $ (422,784) $(1,281,679) $ (846,372)
============ ========== =========== ==========

Denominator:
Denominator for basic and diluted loss
per share - weighted average shares.................... 8,067,624 7,081,666 7,454,292 7,081,666

Basic and diluted loss per share:
From continuing operations............................... $ (0.09) $ (0.01) $ (0.16) $ (0.04)
From discontinued operations............................. - (0.05) (0.01) (0.08)
------------ ---------- ----------- ----------
Total.................................................... $ (0.09) $ (0.06) $ (0.17) $ (0.12)
============ ========== =========== ==========
</TABLE>

The Company has outstanding stock options and warrants. However, because all
periods presented resulted in net losses, the effect of the options and warrants
would be anti-dilutive, thus they have not been presented.

12. Restructuring and Change in Control Charges

In conjunction with the Company's recent change in control, the Company
restructured certain of its security products operations and incurred certain
other change in control related costs. A restructuring and change in control
charge of $1,519,000 was recorded in the second quarter ending June 30, 1999.
Of this charge, $1,267,000 is non-cash in nature consisting of a $218,000 write-
off of certain assets and inventories as a result of management exiting certain
product lines within the Company's security products segment; a $462,000 write-
off of certain deposits and leasehold improvements related to the Company's plan
to abandon a portion of its currently leased facilities in Vermont; and a
$587,000 non-cash compensation charge relating to the vesting of variable
options to certain previous directors of the Company upon the Company's recent
change in control. The remaining charge of approximately $252,000 includes
certain severance costs accrued as well as legal, accounting and other
transaction costs related to the Company's change in control.

13. Subsequent Events

On March 26, 1999, the Company entered into a Merger Agreement with American
Wash Services, Inc. ("AWS"), a car wash company controlled by Mr. Paolino,
pursuant to which AWS was merged with and into a wholly-owned subsidiary of the
Company on July 1, 1999. Mr. Paolino and Red Mountain Holdings, Ltd., AWS's
other shareholder, received in exchange for all of the shares of AWS,
$4,687,500, in cash, and 628,362 unregistered shares of Common Stock, of which
Mr. Paolino received 470,000 shares and Red Mountain received 158,362 shares.
Mr. Paolino and Mr. Kramer received additional consideration in connection with
this merger:

. Mr. Paolino received a warrant to purchase 1,500,000 shares of Common
Stock at a purchase price of $1.375 per share;
. Mr. Paolino received a warrant to purchase 250,000 shares of Common Stock
at a purchase price of $2.50 per share; and
. Mr. Kramer received a warrant to purchase 75,000 shares of Common Stock at
a purchase price of $1.375 per share.

12
<PAGE>

On July 1, the Company acquired substantially all the assets of Stephen Bulboff
and Stephen B. Properties, Inc. (collectively, "Shammy Shine" or "Stephen
Bulboff") in exchange for 1,060,000 unregistered share of common stock of the
Company and cash consideration of $1,900,000. Stephen Bulboff owns and operates
a total of ten exterior only car washes in Pennsylvania, New Jersey and
Delaware. This transaction is expected to be accounted for as a purchase.

On July 9, 1999, the Company acquired all of the outstanding shares of
Innovative Control Systems, Inc. ("ICS"). Approximately 630,000 shares of
unregistered shares of common stock of the Company were issued in exchange for
all of the outstanding shares of ICS. Additionally, the Company assumed
approximately $500,000 of ICS debt. ICS is the premier supplier and developer of
computerized management control systems for the car wash, lube center and
convenience store industries. This transaction is expected to be accounted for
as a pooling of interests.

The Company entered into a Stock Purchase Agreement with Eager Beaver Car Wash,
Inc. ("Eager Beaver") on June 21, 1999 providing for consideration of
approximately 651,400 unregistered shares of common stock of the Company issued
in exchange for all of the outstanding shares of Eager Beaver. Additionally, the
Company will assume approximately $3.8 million of debt. Eager Beaver owns and
operates five full service car washes on the west coast of Florida that provide
a complete line of car care services including washing, waxing, and lubrication
services. This transaction which is expected to close within the quarter ending
September 30, 1999, subject to certain closing conditions, is expected to be
accounted for as a pooling of interests .

Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Disclosure Regarding Forward Looking Statements

This quarterly report includes forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended ("Forward Looking Statements"). All
statements other than statements of historical fact included in this section,
are Forward Looking Statements. Although the Company believes that the
expectations reflected in such Forward Looking Statements are reasonable, it can
give no assurance that such expectations will prove to have been correct.
Generally, these statements relate to business plans or strategies, projected or
anticipated benefits or other consequences of such plans or strategies, number
of acquisitions and projected or anticipated benefits from acquisitions made by
or to be made by the Company, or projections involving anticipated revenues,
earnings, levels of capital expenditures or other aspects of operating results.
All phases of the Company's operations are subject to a number of uncertainties,
risks and other influences, many of which are outside the control of the Company
and any one of which, or a combination of which, could materially affect the
results of the Company's operations and whether Forward Looking Statements made
by the Company ultimately prove to be accurate. Such important factors
("Important Factors") that could cause actual results to differ materially from
the Company's expectations are disclosed in this section and elsewhere in this
report. All subsequent written and oral Forward Looking Statements attributable
to the Company or persons acting on its behalf are expressly qualified in their
entirety by the Important Factors described below that could cause actual
results to differ from the Company's expectations. The forward-looking
statements made herein are only made as of the date of this filing and the
Company undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstances.

Ongoing Capital Requirements. To the extent that internally generated cash is
not sufficient to provide the cash required for future operations, capital
expenditures, acquisitions and debt repayment obligations, the Company will
require additional equity and/or debt financing in order to provide such cash.
The Forward Looking Statements assume that the Company will be able to raise the
capital necessary to finance such requirements at rates that are as good as or
better than those it is currently experiencing. There can be no assurance,
however, that such financing will be available or, if available, will be
available on terms satisfactory to the Company.

Availability of Acquisition Targets. The Company's ongoing acquisition program
is a key element of its expansion strategy. There can be no assurance that the
Company will succeed in locating appropriate acquisition candidates that can be
acquired at price levels that the Company considers appropriate. The Forward
Looking Statements assume that a number of acquisition candidates sufficient to
meet the Company's goals will be available for purchase

13
<PAGE>

and that the Company will be able to complete the acquisitions at prices
comparable to those that the Company has experienced in the past quarter.

Integration. The Company's financial position and results of operations depend
to a large extent on the integration of recently acquired businesses. The
Forward Looking Statements assume that integration of acquired companies will
require from three to six months from the date the acquisition closes. Failure
to achieve effective integration in the anticipated time period could have
adverse effect on the Company's future results of operations.

Economic Conditions. The Company's business is affected by general economic
conditions. The Forward Looking Statements assume that the Company will be able
to achieve internal volume and price growth which are not impacted by an
economic downturn. There can be no assurance that an economic downturn will not
result in a reduction in the volume of business generated at the Company's
operations and/or the price that the Company can charge for its services.

Weather Conditions. Protracted periods of inclement weather adversely affect
the Company's operations by interfering with car washing and detailing. The
Forward Looking Statements assume that such weather conditions will not occur or
that they will be mitigated by the Company's geographic diversification of its
operations.

Dependence on Senior Management. The Company is highly dependent upon its
senior management team. In addition, as the Company continues to grow, its
requirements for operations management with car care industry experience will
also increase. The Forward Looking Statements assume that experienced
management will be available when needed by the Company at compensation levels
that are within the industry norms. The loss of the services of any member of
senior management or the inability to hire experienced operations management
could have a material adverse effect on the Company.

Year 2000 Systems Modifications. The Company expects to be Year 2000 compliant
in a timely manner and expects to have no material exposure with respect to
information technology-related systems. With respect to non-information
technology areas, it is uncertain what risks are associated with the Year 2000
issue and any risks that may be identified could have a material, adverse effect
on the Company's business, financial condition, and results of operations and
cash flows. There can be no assurances that the systems of customers and
vendors on which the Company relies will be converted in a timely manner and
will not have an adverse effect on the Company's systems or operations. The
Forward-Looking Statements assume that there will be no material adverse effect
on the Company's systems or operations related to the Year 2000 issue.

Results of Operations for the Six Months ended June 30, 1999 Compared to the
Six Months Ended June 30, 1998.

Revenues

Car Care Services

The Company owns or operates pursuant to operating agreements full service,
exterior only and self-service car wash locations in New Jersey, Pennsylvania,
Delaware, Texas, and Arizona. The Company earns revenues from washing and
detailing automobiles; performing lubes, minor auto repairs, and state
inspections; selling fuel; and selling merchandise through convenience stores
within the car wash facilities. Revenues generated for the three and six months
ended June 30, 1999 for the car care segment were comprised of approximately 55%
car wash and detailing, 19% lube and other automotive services, 8% fuel and
merchandise, and 18% from operating agreements.

The majority of revenues are collected in the form of cash or credit card
receipts, thus minimizing customer accounts receivable.

14
<PAGE>

Weather can have a significant impact on volume at the individual locations.
However, the Company believes that the geographic diversity of its operating
locations minimizes weather-related influence on its volume.

Security Products

The Company operates its security products segment in two main divisions, the
Consumer Division and the Mace Anti-Crime Bureau Division. The Company's
Consumer Division manufactures and markets personal safety, and home and auto
security products. These products are sold through retail stores, major
discount stores, and at the Company's car care facilities. The Mace Anti-Crime
Bureau Division provides expertise in developing and producing criminal
deterrent systems for government and law enforcement agencies, and financial
institutions.

Cost of Revenues

Car Care Services

Cost of revenues consists primarily of direct labor and related taxes and
benefits, chemicals, wash and detailing supplies, rent, real estate taxes,
utilities, maintenance and repairs of equipment and facilities, as well as the
cost of the fuel and merchandise sold.

Security Products

Cost of revenues consists primarily of costs to manufacture the security
products including direct labor and related taxes and benefits, and raw material
costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of management,
clerical and administrative salaries, professional services, insurance premiums,
and costs relating to marketing and sales.

The Company capitalizes direct incremental costs associated with purchase
acquisitions. Indirect acquisition costs, such as executive salaries, corporate
overhead, public relations, and other corporate services and overhead are
expensed as incurred. The Company also charges as an expense any capitalized
expenditures relating to proposed acquisitions that will not be consummated.

At June 30, 1999, capitalized costs related directly to proposed acquisitions
that were not yet consummated were approximately $270,000. The Company
periodically reviews the future likelihood of these acquisitions and records
appropriate provisions against capitalized costs associated with projects that
are not likely to be completed.

Depreciation and Amortization

Depreciation and amortization consists primarily of depreciation of buildings
and equipment, and amortization of goodwill and other intangible assets.
Buildings and equipment are depreciated over the estimated useful lives of the
assets using the straight line method. Goodwill and other intangibles are
amortized over their useful lives using the straight line method.

Restructuring and Change in Control Charges

15
<PAGE>

approximately $252,000 includes certain severance costs accrued as well as
legal, accounting and other transaction costs related to the Company's change in
control.

Other Income and Expense

Other income and expense includes gains and losses on the sale of equipment,
asset write-downs, and rental income largely from subletting at the Company's
Vermont leased facility.

Taxes

The following table presents the percentage each item in the consolidated
statements of operations bears to total revenues:

<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1999 1998
--------- --------
<S> <C> <C>
Revenues 100.0% 100.0%

Cost of revenues 56.1 51.5

Selling, general and administrative expenses 38.4 64.8

Depreciation and amortization 5.5 7.1

Restructuring and change in control charges 37.2 -
--------- --------
Operating loss (37.2) (23.4)

Interest expense, net (0.6) (3.9)

Other (expense) income (0.4) 6.5
--------- --------
Loss from continuing operations before income taxes (38.2) (20.8)

Income tax (benefit) expense (8.6) 0.3
--------- --------
Loss from continuing operations (29.6) (21.1)

Loss from discontinued operations (1.8) (41.1)
--------- --------
Net loss (31.4)% (62.2)%
========= ========
</TABLE>

Revenues

Car Care Services

Revenues for the six months ended June 30, 1999 totaled $2,481,000, of which
$1,357,000, or 55%, was generated from car wash and detailing, $482,000, or 19%,
from lube and other automotive services, $193,000, or 8%, from fuel and
merchandise sales, and $449,000, or 18%, from income earned under operating
agreements.

Currently, the Company is managing several car wash locations under operating
agreements, under which the Company is entitled to all profits generated from
the operation of those locations. The income earned under these agreements is
shown as revenues net of related operating expenses. Revenue including gross
revenue generated by locations under operating agreements was $6,786,000
consisting of $5,316,000, or 79%, from car wash and detailing, $768,000, or 11%,
from lube and other automotive services, and $702,000, or 10%, from fuel and
merchandise sales.

16
<PAGE>

Because the Company has recently entered the Car Care industry there are no
comparative figures for the six months ended June 30, 1998.

Security Products
-----------------

Revenues for the six months ended June 30, 1999 were $1,606,000 as compared to
$1,361,000 for the six months ended June 30, 1998, an increase of $245,000, or
18%. This increase is primarily attributable to increased sales to the sporting
goods market and major discount stores. This increase was partially offset by
the elimination of sales in the Company's independent Mace retail stores in the
third quarter of 1998.

Cost of Revenues

Car Care Services

Cost of revenues for the six months ended June 30, 1999 were $1,448,000, or 58%
of revenues. However, because income earned under operating agreements is shown
as a net figure in revenue, already reduced by cost of revenues, the cost of
revenue percentage for this segment is better analyzed on a gross method.

With revenues and cost of revenues for locations under operating agreement shown
on a gross basis, total cost of revenues was 70% of revenues for this segment,
with car wash and detailing costs at 66% of respective revenues, lube and other
automotive services costs at 85% of respective revenues, and fuel and
merchandise costs at 85% of respective revenues.

Because the Company has recently entered the Car Care industry there are no
comparative figures for the three months ended June 30, 1998.

Security Products

Cost of revenues for the six months ended June 30, 1999 were $844,000 compared
to $701,000 for the six months ended June 30, 1998. Cost of revenues as a
percentage of revenues for the six months ended June 30, 1999, was 53% as
compared to 52% for the same period in 1998.

Selling, general and administrative expenses for the six months ended June 30,
1999 were $1,569,000 compared to $882,000 for the six months ended June 30,
1998, an increase of $687,000, or 78%. The primary reason for this increase is
the infrastructure established during the three months ended June 30, 1999 in
order to effectively enter the Car Care Industry and execute the Company's
growth strategy. These increased costs included accounting, finance, legal and
administrative costs necessary to integrate the acquisitions consummated. This
increase is partially offset by cost controls placed on previously private
companies and favorable pricing for supplies, insurance, and other indirect
costs due to economies of scale.

Depreciation and amortization totaled $224,000 for the six months ended June 30,
1999 as compared to $97,000 for the same period in 1998. This increase is the
result of entering the Car Care industry, which required a substantial
investment in property and equipment. Additionally, certain acquisitions
resulted in the recording of goodwill, which increased amortization expense.

Taxes

17
<PAGE>

Results of Operations for the Three Months Ended June 30, 1999 Compared to the
Three Months Ended June 30, 1998

Revenues

Car Care Services

Revenues for the three months ended June 30, 1999 totaled $2,481,000, of which
$1,357,000, or 55%, was generated from car washing and detailing, $482,000, or
19%, from lube and other automotive services, $193,000, or 8%, from fuel and
merchandise sales, and $449,000, or 18%, from income earned under operating
agreements.

Currently, the Company is managing several car wash locations under operating
agreements, under which the Company is entitled to all profits generated from
the operation of those locations. The income earned under these agreements is
shown as revenues net of related operating expenses. Revenues including gross
revenue generated by locations under operating agreements was $6,786,000
consisting of $5,316,000, or 79%, from car wash and detailing, $768,000, or 11%,
from lube and other automotive services, and $702,000, or 10%, from fuel and
merchandise sales.

Because the Company has recently entered the Car Care industry there are no
comparative figures for the three months ended June 30, 1998.

Security Products

Revenues for the three months ended June 30, 1999 were $902,000 as compared to
$692,000 for the three months ended June 30, 1998, an increase of $210,000, or
30%. This increase is primarily attributable to increased sales to the sporting
goods market and major discount stores. This increase was partially offset by
the discontinuance of sales in the Company's retail stores in the third quarter
of 1998, as well as promotional discounts given in 1999.

Cost of Revenues

Car Care Services

Cost of revenues for the three months ended June 30, 1999 were $1,448,000, or
58% of revenues. However, because income earned under operating agreements is
shown as a net figure in revenue, already reduced by cost of revenues, the cost
of revenue percentage for this segment is better analyzed on a gross method.

Because the Company has recently entered the Car Care industry there are no
comparative figures for the three months ended June 30, 1998.

Security Products

Cost of revenues for the three months ended June 30, 1999 was 53% as compared to
49% for the same period in 1998. The primary reason for the increase in costs as
a percentage of revenues was the effect on revenues of promotional discounts in
1999.

Selling, general and administrative expenses for the three months ended June 30,
1999 were $855,000 compared to $384,000 for the three months ended June 30,
1998, an increase of $471,000, or 123%. The primary reason for the increase is
the infrastructure established during the three months ended June 30, 1999 in
order to effectively enter the Car Care Industry and execute the Company's
growth strategy. These increased costs included accounting, finance, legal and
administrative costs necessary to integrate the acquisitions consummated. This
increase is partially

18
<PAGE>

offset by cost controls placed on previously private companies and favorable
pricing for supplies, insurance, and other indirect costs due to economies of
scale.

Depreciation and amortization totaled $136,000 for the three months ended June
30, 1999 as compared to $48,000 for the same period in 1998. This increase is
the result of entering the Car Care industry, which required a substantial
investment in property and equipment. Additionally, certain acquisitions
resulted in the recording of goodwill, which increased amortization expense.

Taxes

The Company recorded a tax benefit of $350,000 for the three months ended June
30, 1999. The tax benefit reflects the recording of federal and state taxes at a
rate of 32%. An effective tax rate lower than the federal and state statutory
rate for the three months ended June 30, 1999 is primarily due to the use of net
operating loss carryforwards.

Liquidity and Capital Resources

The Company's business requires substantial amounts of capital, most notably to
pursue the Company's acquisition strategies and for equipment purchases and
upgrades. The Company plans to meet these capital needs from various financing
sources, including borrowings, internally generated funds, and the issuance of
common stock.

As of June 30, 1999, the Company had a working capital deficit of $3.2 million,
including cash and cash equivalents of $6.1 million. For the six months ended
June 30, 1999, net cash used in operations was approximately $902,000, net cash
provided by financing activities was approximately $3.9 million and net cash
used in investing activities was approximately $1.1 million resulting in an
increase in cash and cash equivalents of $1.9 million. Capital expended during
the period included $1.3 million relating to acquisitions and $185,000 for the
purchase of operating equipment and real estate.

The Company's acquisition program and operations to date have required
substantial amounts of working capital, and the Company expects to expend
substantial funds to support its acquisition program and capital needs for
equipment. The Company estimates aggregate capital expenditures, exclusive of
acquisitions of businesses, of approximately $2.0 million for the remainder of
the year ending December 31, 1999. Additionally, on June 30, 1999, the Company's
debt totaled approximately $11.0 million consisting primarily of a $4.75 million
promissory note related to the acquisition of Genie and approximately $4.9
million of debt with Bank One, Texas N.A. ("Bank One") assumed by the Company in
connection with the Colonial acquisition. The company reached an agreement in
principle with the sellers of Genie to extend the repayment of the $4.75 million
promissory note from August 16, 1999 to November 14, 1999. Additionally, the
Bank One debt assumed in the Colonial acquisition matures on January 31, 2000.
Although the Company has initiated discussion regarding restructuring and
extending the Bank One debt, there is no assurance this will occur. The Company
has currently addressed these capital need through the completion of several
private placements of the Company's common stock and the consummation of a Stock
Purchase Agreement. On June 23, 1999, the Company completed its sale of 392,857
shares pursuant to a Stock Purchase and Sale Agreement with the Environmental
Opportunities Fund II, L.P. and the Environmental Opportunities Fund II
(Institutional), L.P. which provided proceeds of $3.3 million. On July 1, 1999,
the Company, pursuant to a Stock Purchase Agreement, sold 3,735,000 shares of
the Company's common stock at a price of $1.375 per share to Louis D. Paolino,
Jr. and certain individuals designated by Mr. Paolino. Also, on July 1, 1999,
the Company consummated a private placement of 1,535,000 shares of its common
stock at $2.00 per share to certain accredited investors designated by Mr.
Paolino. Total additional net proceeds from the July 1, 1999 Stock Purchase
Agreement and the private placement were $8,155,000. The shares sold pursuant to
the above Stock Purchase Agreement and private placement are unregistered and
thus restricted for one year and are subject to certain selling limitations in
the second year. The Company is also actively working with several parties to
raise additional funds including a national commercial lending institution with
respect to securing a revolving credit facility as well as additional equity or
debt placements. No assurance can be given that additional financing will be
available, or if available, that it will be available at acceptable terms.

Seasonality and Inflation

The Company believes that its car washing and detailing operations are adversely
affected by periods of inclement weather. The Company has mitigated and intends
to continue to mitigate the impact of inclement weather through geographic
diversification of its operations.

The Company believes that inflation and changing prices have not had, and are
not expected to have any material adverse effect on its results of operations in
the near future.

19
<PAGE>

Year 2000

Many existing computer programs use only two digits to identify a year in the
date field. These programs were designed and developed at a time when data
storage was expensive, and the impact of the upcoming century change was not
considered. As a result of this dating limitation, many programs, if not
corrected, may fail or may provide inaccurate results at and after the turn of
the century. We use information systems and systems imbedded in some of our
equipment that carry two digit dating and are thus susceptible to partial or
total failure on, before and after December 31, 1999.

To assess and address our internal information systems, we have established a
Year 2000 remediation plan consisting of the following phases:

1. Inventorying our systems and devices, including information technology and
non- information technology systems, that are vulnerable to the Year 2000
problem;
2. Assessing the criticality of our inventoried items;
3. Remediating our non-compliant items; and
4. Testing the corrections we have applied.

We have completed phases 1 and 2 and are in the process of completing phases 3
and 4 with an expected completion date of October 31, 1999. To date, the Company
has spent approximately $25,000 on the remediation plan. The Company does not
anticipate spending more than $150,000 on remediating currently owned internal
information systems. The amount of remediation effort has not been and is not
anticipated to be extensive due to our use of readily available, off-the-shelf
software and hardware products, manufacturers support, and in-house expertise.
All costs related to Year 2000 compliance are expensed as incurred.

Additionally, we are surveying our major suppliers as to their Year 2000
compliance and readiness to ensure that we will not experience any interruption
in service or other adverse effects as a result of their possible non-compliant
computer systems. We will develop contingency plans, if necessary, to address
any third party non-compliance

Although we believe our Year 2000 remediation plan will be adequate to address
the Year 2000 issue, because the Company is continually acquiring new businesses
and locations, it is an on-going process to convert, assess and, if necessary
remediate newly acquired systems. This issue is part of our standard due
diligence when evaluating potential acquisitions so that remedial efforts, if
any, can be evaluated and scheduled.

The Company believes that the combination of our remediation plan, vendor
surveys, due diligence in acquisitions, and contingency plans are adequate to
address internal and third party year 2000 non compliance. However if we fail to
make required remediation efforts, if we do not complete them on time or if our
major suppliers experience year 2000 problems in their own operations, the
advent of the year 2000 could have a material adverse impact on our operations
and financial condition.

PART II
OTHER INFORMATION

Item 2. Changes in Securities

On June 23, 1999, the Company sold 392,857 shares of common stock to the
Environmental Opportunities Fund II, L.P. and the Environmental
Opportunities Fund II (Institutional), L.P. pursuant to a Stock Purchase
and Sale Agreement. The purchase price per share was $8.40 providing
aggregate proceeds of $3.3 million to the Company.

On May 17, 1999, the Company acquired through a subsidiary corporation
the stock of Colonial Full Service Car Wash, Inc. in exchange for
1,006,089 unregistered shares of the Company's common stock, par value
$.01 per share, and the assumption of $6,734,000 of debt. An additional
issuance of the Company's common stock of up to 244,902 shares may be
completed pending resolution of post-closing obligations.

<PAGE>

On May 18, 1999, the Company acquired certain assets of Genie Car Wash,
Inc. of Austin, Genie Car Care Center, Inc. and Genie Car Service Center,
Inc. (collectively "Genie") in exchange for 493,333 unregistered shares
of the Company's common stock, the delivery of a $4,750,000 promissory
note and $1,000,000 cash. An additional issuance of the Company's common
stock of up to 40,000 shares may be completed pending the resolution of
certain post-closing obligations.

On June 22, 1999, the Company acquired the assets of Moorestown Car Wash
in exchange for 20,930 unregistered shares of the Company's common stock,
par value $.01 per share.

Under the private placement and acquisition described above, the Company
has agreed under certain circumstances to register certain of the shares
for the above transactions for resale under the Securities Act of 1933
(the "Act"). The sale of the Shares in the private placement and the
issuance of the Shares in the aforementioned acquisitions were exempt
from the registration provisions of the Act pursuant to Section 4(2) of
the Act and/or Regulation D promulgated under the Act for transactions
not involving a public offering, based on the fact that the private
placement was made to accredited investors who had access to financial
and other relevant data concerning the Company, its financial condition,
business and assets. The securities sold in the private placement and
issued in the acquisitions may not be reoffered or resold absent
registration under the Act or available exemptions from such registration
requirements.

Item 4. Submission of Matters to a Vote of Security Holders

On March 26, 1999 and May 25, 1999, the holders of a majority of the Company's
issued and outstanding shares of Common Stock approved by written consent the
following matters:

1. The approval and adoption of a series of agreements that resulted in
a change of control of the Company and the issuance of greater than
twenty percent (20%) of the outstanding shares of Common Stock of
the Company (see Item 5 of this Form 10-QSB for a description of
these transactions).

2. The approval and adoption of an amendment to the Company's
Certificate of Incorporation to increase the number of authorized
shares of Common Stock from 18,000,000 to 200,000,000 and authorized
shares of Preferred Stock from 2,000,000 to 50,000,000.

3. The approval and adoption of the Company's 1999 Stock Option Plan.

The Nasdaq National Market rules and regulations required the Company to obtain
stockholder approval for matters 1 and 3 above. The Delaware General Corporation
Law required the Company to obtain stockholder approval for the amendment to the
Company's Certificate of Incorporation. In each case, stockholder approval was
obtained pursuant to Section 228 of the Delaware General Corporation Law,
subject to the expiration of twenty (20) days following the mailing of an
information statement to the Company's stockholders under the Exchange Act.

Stockholders of record at the close of business on May 21, 1999 (the "Record
Date") received an Information Statement (dated June 8, 1999) describing the
prior approval and adoption of the foregoing matters. As of the Record Date,
8,791,705 shares of Common Stock were outstanding, which constituted the only
outstanding securities of the Company as of such date. Under the Delaware
General Corporation Law, the holders of a majority of the issued and outstanding
shares of Common Stock on the Record Date was required to approve the foregoing
matters.

5,300,829 shares of Common Stock of the Company voted to approve each of
the foregoing matters, exceeding the 4,395,852 majority vote required for
approval.

Item 5. Other Information

The Company historically has operated its business as a well-known producer of
less-lethal defense sprays for the consumer market and a marketer of consumer
safety and security products.

21
<PAGE>

On March 26, 1999, the Company entered into a series of agreements with Louis D.
Paolino, Jr., the Company's current Chairman, President and Chief Executive
Officer, and certain affiliates of Mr. Paolino, that would result in a change of
control of the Company and the issuance of greater than twenty percent (20%) of
the outstanding shares of Common Stock of the Company.

Prior to the closing of the aforementioned transactions, on May 24, 1999, Mr.
Paolino was appointed as the Company's President and Chief Executive Officer
and, along with Constantine N. Papadakis, was appointed to the Board of
Directors. Also on May 24, 1999, Robert M. Kramer was appointed the Company's
Secretary, Executive Vice President and General Counsel and Gregory M. Krzemien
was appointed the Company's Chief Financial Officer and Treasurer. Mr. Kramer
and Mr. Krzemien are members of Mr. Paolino's management team. Mr. Paolino
immediately implemented a program to acquire car wash facilities, resulting in a
change in the business focus of the Company from personal security products to
the acquisition, operation and consolidation of car wash facilities throughout
the United States.

On July 1, 1999, Mr. Paolino, along with certain of his affiliates, acquired a
majority of the outstanding shares of Common Stock of the Company and thus
acquired control of the Company. The first transaction involved the purchase of
an aggregate of 3,735,000 unregistered shares of Common Stock for $1.375 per
share; 1,935,000 by Mr. Paolino and an aggregate of 1,800,000 by certain members
of his management team and certain other individuals designated by Mr. Paolino.
These purchases were made pursuant to a Stock Purchase Agreement dated March 26,
1999 (as amended) between the Company and Mr. Paolino. Additional related
purchases were also made on July 1, 1999 pursuant to this Stock Purchase
Agreement:

. Mr. Paolino purchased 1,000,000 shares of Common Stock directly
from Jon E. Goodrich, the Company's former President, for $1.375
per share and 100,000 shares of Common Stock directly from each of
two other stockholders of Mace for $1.375 per share;
. Mr. Kramer purchased 50,000 shares of Common Stock directly from
Mr. Goodrich for $1.375 per share; and
. Ten individuals designated by Mr. Paolino purchased an aggregate of
1,850,000 shares of Common Stock for $2.00 per share.

The second transaction involved the merger of American Wash Services, Inc., a
car wash facility company controlled by Mr. Paolino, with and into a wholly-
owned subsidiary of the Company. The merger was completed on July 1, 1999. Mr.
Paolino and Red Mountain Holdings, Ltd., American Wash's other shareholder,
received in exchange for all of the shares of American Wash, $4,687,500, in
cash, and 628,362 unregistered shares of Common Stock, of which Mr. Paolino
received 470,000 shares and Red Mountain received 158,362 shares. Mr. Paolino
and Mr. Kramer received additional consideration in connection with this merger:

. Mr. Paolino received a warrant to purchase 1,500,000 shares of
Common Stock at a purchase price of $1.375 per share;
. Mr. Paolino received a warrant to purchase 250,000 shares of Common
Stock at a purchase price of $2.50 per share (which has
subsequently been assigned); and
. Mr. Kramer received a warrant to purchase 75,000 shares of Common
Stock at a purchase price of $1.375 per share.

In connection with these transactions, the Company's Board of Directors was
restructured. Mr. Paolino was appointed as the Company's Chairman, effective
July 1, 1999. The members of the Board of Directors, other than Mr. Goodrich,
Mr. Paolino and Dr. Papadakis, resigned and were replaced by Mr. Kramer, Matthew
J. Paolino and Rodney R. Proto, effective July 1, 1999.

22
<PAGE>

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits:

3.1 Certificate of Incorporation of Mace Security International,
Inc.

3.2 Certificate of Amendment of Certificate of Incorporation of
Mace Security International, Inc.

*10.75 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. (Exhibit 2.1 to the Company's
Current Report on Form 8-K dated May 17, 1999 (the "May 17,
1999 Form 8-K"))+

*10.76 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. (Exhibit
2.2 to the May 17, 1999 Form 8-K)

*10.77 Assignment dated May 17, 1999 between Mace Security
International, Inc., Mace Anti Crime Bureau, Inc., and American
Wash Services, Inc. (Exhibit 2.3 to the May 17, 1999 Form 8-K)

*10.78 Car Wash Asset Purchase/Sale Agreement dated July 8, 1998
between Genie Car Wash Inc. of Austin, Genie Car Care Center,
Inc., Genie Car Service Center, Inc., and Cornett Limited
Partnership and Millennia Car Wash Group LLC. (Exhibit 2.1 to
the Company's Current Report on Form 8-K dated May 18, 1999
(the "May 18, 1999 Form 8-K"))+

*10.79 First Amendment to Car Wash Asset Purchase/Sale Agreement
effective July 8, 1998 between Genie Car Wash Inc. of Austin,
Genie Car Care Center, Inc., Genie Car Service Center, Inc.,
and Cornett Limited Partnership and Millennia Car Wash Group
LLC (Exhibit 2.2 to the May 18, 1999 Form 8-K)

*10.80 Second Amendment to Car Wash Asset Purchase/Sale Agreement
effective April 29, 1999 between Genie Car Wash Inc. of Austin,
Genie Car Care Center, Inc., Genie Car Service Center, Inc.,
and Cornett Limited Partnership and Millennia Car Wash Group
LLC. (Exhibit 2.3 to the May 18, 1999 Form 8-K)

*10.81 Third Amendment to Car Wash Asset Purchase/Sale Agreement
effective May 17, 1999 between Genie Car Wash Inc. of Austin,
Genie Car Care Center, Inc., Genie Car Service Center, Inc.,
and Cornett Limited Partnership and Millennia Car Wash Group
LLC. (Exhibit 2.4 to the May 18, 1999 Form 8-K)

*10.82 Fourth Amendment to Car Wash Asset Purchase/Sale Agreement
effective May 18, 1999 between Genie Car Wash Inc. of Austin,
Genie Car Care Center, Inc., Genie Car Service Center, Inc.,
and Cornett Limited Partnership and Millennia Car Wash Group
LLC. (Exhibit 2.5 to the May 18, 1999 Form 8-K)

*10.83 Promissory Note in the amount of $4,750,000 by Mace Car Wash-
Arizona, Inc., dated May 18, 1999, payable to Mike W. Cornett
as collecting agent for Genie Car Wash Inc. of Austin, Genie
Car Care Center, Inc., Genie Car Service Center, Inc. and
Cornett Limited Partnership. (Exhibit 2.6 to the May 18, 1999
Form 8-K)

*10.84 Security Agreement dated May 18, 1999 between Mace Car Wash-
Arizona, Inc. and Genie Car Wash Inc. of Austin, Genie Car Care
Center, Inc., Genie Car Service Center, Inc. and Cornet Limited
Partnership. (Exhibit 2.7 to the May 18, 1999 Form 8-K)

23
<PAGE>

*10.85 Agreement of Sale dated as of April 22, 1999 by and among Gabe
Kirikian and Alice Kirikian, Gabe's Plaza Car Wash, Inc. and
Red Mountain Holdings, Ltd. (Exhibit 2.1 to the Company's
Current Report on Form 8-K dated June 1, 1999 (the "June 1,
1999 Form 8-K"))+

*10.86 First Amendment to Agreement of Sale dated as of May 10, 1999
by and among Gabe Kirikian and Alice Kirikian, Gabe's Plaza
Car Wash, Inc. and Red Mountain Holdings, Ltd. (Exhibit 2.2 to
the June 1, 1999 Form 8-K)

*10.87 Assignment dated May 17, 1999 between Mace Security
International, Inc. and Red Mountain Holdings, Inc. (Exhibit
2.3 to the June 1, 1999 Form 8-K)

*10.88 Agreement of Sale dated as of April 23, 1999 by and among
American Wash Services, Inc. and Mario DeBerardinis and
Jennifer DeBerardinis. (Exhibit 2.1 to the Company's Current
Report on Form 8-K dated June 22, 1999 (the "June 22, 1999
Form 8-K"))+

*10.89 Assignment dated June 15, 1999 between Mace Security
International, Inc. and American Wash Services, Inc. (Exhibit
2.2 to the June 22, 1999 Form 8-K)

*10.90 Merger Agreement dated as of March 26, 1999 between Louis D.
Paolino, Jr. and Red Mountain Holding, Ltd. on the one hand,
and Mace Security International, Inc. on the other hand.
(Exhibit 2.1 to the Company's Current Report on Form 8-K dated
July 1, 1999 (the " July 1, 1999 AWS Form 8-K"))+

*10.91 Amendment No. 1 to the Merger Agreement dated as of April 13,
1999. (Exhibit 2.2 to the July 1, 1999 AWS Form 8-K)

*10.92 Amendment No. 2 to the Merger Agreement dated as of May 24,
1999. (Exhibit 2.3 to the July 1, 1999 AWS Form 8-K)

*10.93 The Stock Purchase Agreement dated as of March 26, 1999
between Louis D. Paolino, Jr. and Mace Security International,
Inc. (Exhibit 2.4 to the July 1, 1999 AWS Form 8-K)+

*10.94 Amendment No. 1 to the Stock Purchase Agreement dated as of
April 13, 1999. (Exhibit 2.5 to the July 1, 1999 AWS Form 8-K)

*10.95 Amendment No. 2 to the Stock Purchase Agreement dated as of
May 24, 1999 (Exhibit 2.6 to the July 1, 1999 AWS Form 8-K)

*10.96 The Real Estate and Asset Purchase Agreement dated as of March
8, 1999, among Stephen B. Properties, Inc., Stephen Bulboff,
and American Wash Services, Inc. (Exhibit 2.1 to the Company's
Current Report on Form 8-K dated July 1, 1999 (the " July 1,
1999 Form 8-K"))+

*10.97 Lease Assignment and Assumption Agreement dated July 1, 1999
among Mace Wash, Inc., a wholly-owned subsidiary of Mace
Security International, Inc., Stephen B. Properties, Inc.,
Stephen Bulboff and American Wash Services, Inc. (Exhibit 2.2
to the July 1, 1999)

10.98 Mace Security International, Inc. 1999 Stock Option Plan

10.99 Operating Agreement between Millennia Car Wash, LLC, Excel
Legacy Corporation and G II Ventures, LLC and Mace Car Wash,
Inc.

10.100 Employment Contract between Mace Security International,
Inc. and Louis D. Paolino, Jr.

24
<PAGE>

10.101 Employment Contract between Mace Security International, Inc.
and Michael Fazio.

10.102 Stock Purchase Agreement and Sale Agreement dated June 23, 1999
among Mace Security International, Inc. and the Environmental
Opportunities Fund II, L.P. and Environmental Opportunities
Fund II (Institutional), L.P.

27 Financial Data Schedules (Electronic filed only).
______________________________________________________________________

* Incorporated by reference as indicated to the Company's
Current Reports on Form 8-K.

+ Schedules and other attachments to the indicated exhibit have
been omitted. The Company agrees to furnish supplementally to
the Commission upon request a copy of any omitted schedules
or attachments.

(b) Current Reports on Form 8-K or 8-K/A:

On May 28, 1999, the Company filed a report on Form 8-K dated May 17,
1999, under Item 2 to report the acquisition of the capital stock of
Colonial Full Service Car Wash, Inc. ("Colonial"). Historic financial
statements of Colonial and pro forma financial information of the
Company required under "Item 7: Financial Statements and Exhibits"
were filed on Form 8-K/A on July 30, 1999.

On June 1, 1999, the Company filed a report on Form 8-K dated May 18,
1999, under Item 2 to report the acquisition by its wholly owned
subsidiary Mace Car Wash - Arizona, Inc. of the assets of Genie Car
Wash Inc. of Austin, Genie Car Care Center, Inc., and Genie Car
Service Center, Inc. (collectively "Genie"). Historic combined
financial statements of Genie and pro forma financial information of
the Company required under "Item 7: Financial Statements and Exhibits"
were filed on Form 8-K/A on August 2, 1999.

On June 2, 1999, the Company filed a report on Form 8-K dated May 26,
1999 under Item 4 to report a change in the Company's Certifying
Accountants.

On June 15, 1999, the Company filed a report on Form 8-K dated June 1,
1999 under Item 2 to report the acquisition of Gabe's Plaza Car Wash,
Inc ("Gabe's"). Historic combined financial statements of Gabe's and
pro forma financial information of the Company required under "Item 7:
Financial Statements and Exhibits" are not required to be filed.

On June 18, 1999, the Company filed a report on Form 8-K/A dated May
26, 1999 under Item 4 to file a revised letter from the Company's
prior independent accountants relating to the change in the Company's
Certifying Accountants.

25
<PAGE>

SIGNATURES

In accordance with 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, thereunto duly authorized.

Mace Security International, Inc.

BY: /s/ Louis D. Paolino, Jr.
-----------------------------------------
Louis D. Paolino, Jr., Chairman

BY: /s/ Gregory M. Krzemien
-----------------------------------------
Gregory M. Krzemien, Chief Financial Officer

BY: /s/ Ronald R. Pirollo
-----------------------------------------
Ronald R. Pirollo, Controller (Principal Accounting Officer)

DATE: August 13, 1999

26
<PAGE>

EXHIBIT INDEX

Exhibit No. Description
- ----------- -----------

3.1 Certificate of Incorporation of Mace Security International, Inc.

3.2 Certificate of Amendment of Certificate of Incorporation of Mace
Security International, Inc.

10.98 Mace Security International, Inc. 1999 Stock Option Plan

10.99 Operating Agreement between Millennia Car Wash, LLC, Excel Legacy
Corporation and G II Ventures, LLC and Mace Car Wash, Inc.

10.100 Employment Contract between Mace Security International, Inc. and
Louis D. Paolino, Jr.

10.101 Employment Contract between Mace Security International, Inc. and
Michael Fazio.

<PAGE>

EXHIBIT 3.1

CERTIFICATE OF INCORPORATION

MACE SECURITY INTERNATIONAL, INC.

FIRST: The name of the Corporation is MACE SECURITY INTERNATIONAL, INC.

SECOND: Its registered office in the State of Delaware is to be located
at Hudson, Jones, Jaywork, Williams & Liguori, 225 South State Street, Dover,
Kent County, Delaware 19901, in the City of Dover, County of Kent, State of
Delaware. The registered agent in charge thereof is William S. Hudson, Esquire.
The principal place of business, unless authorized by the Board of Directors of
the corporation, shall be at 160 Benmont Avenue, Bennington County, State of
Vermont.

THIRD: The nature of the business, and the objects and purposes to be
transacted, promoted and carried on, are to do any or all of the things herein
mentioned, or to do any or all of the lawful acts or activities for which
corporations may be organized under the General Corporation Laws of the State of
Delaware as fully and to the same extent as natural persons might or could do.
The specific nature of the business and the object and purpose proposed to be
transacted and/or carried on by the corporation shall be the manufacture and
sale of personal defense products and all other lawful purposes as authorized
and empowered pursuant to the corporation law of the State of Delaware.

IN FURTHERANCE AND NOT IN LIMITATION of the general powers conferred by the
laws of the State of Delaware and the objects and purposes herein set forth, it
is expressly provided that this corporation shall also have the following
powers, viz:

To take, own, hold, deal in, mortgage or otherwise lien, and to lease,
sell, exchange, transfer, or in any manner dispose of and to deal and trade in
goods, wares, merchandise, and property of any and every manner whatever dispose
of real property within or without the State of Delaware, wherever situated.

To manufacture, purchase or acquire in any lawful manner, and to own, hold,
mortgage, pledge, sell, exchange, transfer, or in any manner dispose of and to
deal and trade in goods, wares, merchandise, and property of any and every class
and description, and in any part of the world.

To acquire the goodwill, rights, and property, and to undertake the whole
or any part of the assets or liabilities of any person, firm, association or
corporation; to pay for the same in cash or with stock or bonds of the
corporation, or any part of the property so purchased; to conduct in any lawful
manner the whole or any part of any business to be acquired, and to exercise all
the powers necessary or convenience in and about the conduct and management of
such business.
<PAGE>

To apply for, purchase or in any manner to acquire and to hold, own, use
and operate, and to sell or in any manner dispose of, and to grant licenses or
other rights in respect of, and in any manner deal with any and all rights,
inventions, improvements and process used in connection with or secured under
letters patent or copyrights of the United States or other countries, or
otherwise, and to work, operate or develop the same and to carry on any
business, manufacturing or otherwise, which may be directly or indirectly
effectuate these objects or any of them.

To guarantee, purchase, hold, sell, assign, transfer, mortgage, pledge or
otherwise dispose of the shares of the capital stock of, or any bonds,
securities or evidences for indebtedness created by any other corporation or
corporations of this State or any other State, country, nation or government,
and while owner of said stock may exercise all the rights, powers, and
privileges of ownership, including the right to vote thereon, to the same extent
as natural persons might or could do.

To enter into, make and perform contracts of every kind with any person,
firm, association or corporation, municipality, body, politic, country,
territory, State, government or colony or dependency thereof, and without limit
as to amount to draw, make, accept, endorse, discount, execute, and issue
promissory notes, drafts, bills of exchange, warrants, bonds, debentures and
other negotiable whether or transferable instruments and evidences of
indebtedness whether secured by mortgage or otherwise, as well as to secure the
same by mortgage or otherwise, so far as may be permitted by the laws of the
State of Delaware.

To have offices, conduct its business and promote its objects within and
without the State of Delaware, in other states, the District of Columbia, the
territories and colonies of the United States, and in foreign countries, without
restriction as to the place or amount.

To do any or all of the things herein set forth to the same extent as
natural persons might or could do and in any part of the world, as principals,
agents, contractors, trustees, or otherwise, and either alone or in company with
others.

In general to carry on any other business in connection therewith, whether
manufacturing or otherwise, not forbidden by the laws of the State of Delaware,
and with all the powers conferred upon corporations by the laws of the State of
Delaware.

FOURTH: The amount of the total authorized capital stock of the
Corporation is 20,000,000 shares at a par value of 0.01 each, consisting of
2,000,000 shares of preferred stock and 18,000,000 shares of common stock.

FIFTH: The names and mailing address of the incorporator is as follows:
William S. Hudson, Esquire, 225 South State Street, Dover, DE 19901.

SIXTH: The Directors shall have the power to make and to alter or amend
the By-Laws; to fix the amount to be reserved as working capital, and to
authorize and cause to be executed, mortgages and liens without limit as to the
amount, upon the property and franchise of this Corporation.

-2-
<PAGE>

With the consent in writing, and pursuant to a vote of the holders of a
majority of the capital stock issued and outstanding, the Directors shall have
authority to dispose, in any manner, of the whole property of this Corporation.

The By-Laws shall determine and to what extent the accounts and books of
this Corporation, or any of them, shall be open to the inspection of the stock
holders; and no stockholder shall have any right of inspecting any account, or
book, or document of this Corporation, except as conferred by the law or the By-
Laws or by resolution of the stockholders.

The stockholders and directors shall have power to hold their meetings and
keep the books, documents and papers of the Corporation outside of the State of
Delaware, at such places as may be from time to time designated by the By-Laws
or by resolution of the stockholders or directors, except as otherwise required
by the laws of Delaware.

It is the intention that the objects, purposes and powers specified in the
Third paragraph hereof shall, except where otherwise specified in said
paragraph, be nowise limited or restricted by reference to or inference from the
terms of any other clause or paragraph in this Certificate of Incorporation, but
that the objects, purposes and powers specified in the Third paragraph and in
each of the clauses or paragraphs of this Charter, shall be regarded as
independent objects, purposes and powers.

I, the undersigned, for the purpose of forming a corporation under the laws
of the State of Delaware, do make, file and record this certificate, and do
hereby certify that the facts herein stated are true; and I have accordingly
hereunto set my hand and seal.

SIGNED, SEALED AND DELIVERED
IN THE PRESENCE OF:

/s/ William S. Hudson
- ------------------------------ ------------------------------------
WILLIAM S. HUDSON, Incorporator

Dover, Delaware

-3-

<PAGE>

EXHIBIT 10.102

STOCK PURCHASE AND SALE AGREEMENT

STOCK PURCHASE AND SALE AGREEMENT ("Agreement") dated June 23, 1999
among Mace Security International, a Delaware Corporation ("Seller"), and
Environmental Opportunities Fund II, L.P. and Environmental Opportunities Fund
II (Institutional), L.P. , both Delaware Limited Partnerships ("Purchasers").

W I T N E S E T H:
-----------------

WHEREAS, Seller has common stock with a par value $.0001 per share in
the amount of 392,857 shares available for sale (the "Shares"); and

WHEREAS, Seller wishes to sell, and Purchasers wish to purchase the
Shares for the purchase price and upon the terms and subject to the conditions
described below;

NOW, THEREFORE, in reliance on the representations, warranties and
agreements and subject to the terms and conditions hereinafter set forth, the
parties hereby agree as follows:

1. SALE AND PURCHASE OF SHARES. Upon the execution of this
Agreement, Seller shall sell, deliver and transfer to Purchasers, and Purchasers
shall purchase from Seller in the amounts set forth on Exhibit A hereto, the
Shares free and clear of all liens, encumbrances or claims of any kind.

2. PURCHASE PRICE. In full consideration for the Shares, Purchasers
shall pay to Sellers, a purchase price as follows:

(a) Upon execution of this Agreement, Purchasers shall provide
$3,299,998.80 to Seller by wire transfer or other good funds. Seller shall
deliver to Purchaser certificates evidencing the Shares no latter than three
days after the purchase price of $3,299,998.80 is paid.

3. DELIVERIES OF SELLER. Upon execution of this Agreement, Seller
shall: (i) deliver, or shall cause to be delivered to Purchasers, certificates
representing the Shares, (collectively, the "Certificates"), (ii) deliver a copy
of the resolutions of the Boards of Directors of Seller authorizing the
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein and (iii) execute and deliver such other
documents as Purchasers may reasonable request. The Shares represented by the
Certificates shall be delivered to Purchasers free and clear of all Claims (as
hereinafter defined in Section 4(h)).

4. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller represents,
warrants and agrees that:

(a) Organization and Qualification. Seller is a corporation duly
------------------------------
incorporated and existing in good standing under the laws of the State of
Delaware and has the requisite corporate power to

1
<PAGE>

own its properties and to carry on its business as now being conducted. Seller
and each of its subsidiaries, if any, is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which the nature
of the business conducted or property owned by it makes such qualification
necessary other than those in which the failure so to qualify would not have a
Material Adverse Effect. "Material Adverse Effect", for purposes of this
Agreement, means any adverse effect on the business, operations, properties,
prospects, or financial condition of the entity with respect to which such term
is used and which is material to such entity and other entities controlled by
such entity taken as a whole.

(b) Authorization; Enforcement.
--------------------------

(i) Seller has the requisite corporate power and authority to enter
into and perform this Agreement and to issue the Shares and Registrable
Securities, as hereafter defined, in accordance with the terms hereof, (ii) the
execution and delivery of this Agreement by Seller and the consummation by it of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action, and no further consent or authorization of Seller or its
Board of Directors or stockholders is required, (iii) this Agreement has been
duly executed and delivered by Seller, (iv) this Agreement constitutes a valid
and binding obligation of Seller enforceable against Seller in accordance with
its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of, creditors' rights and
remedies or by other equitable principles of general application) and (v) prior
to the Closing Date, any necessary amendment to Seller's Articles of
Incorporation authorizing Company to issue all of the Shares will be in full
force and effect, enforceable against Seller in accordance with the terms of
such amended Articles of Incorporation.

(c) Issuance of Shares. The issuance of the Shares has been duly authorized
------------------
and, when paid for and issued in accordance with the terms hereof, the Shares
shall be validly issued, fully paid and non-assessable.

(d) No Conflicts. Seller has furnished or made available to the Purchasers
------------
true and correct copies of Seller's Articles of Incorporation as in effect on
the date hereof (the "Articles"), and Seller's By-Laws, as in effect on the date
hereof (the "By-Laws"). The execution, delivery and performance of this
Agreement by Seller and the consummation by Seller of the transactions
contemplated hereby do not and will not (i) result in a violation of Seller's
Articles or By-Laws or (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which Seller or any
of its subsidiaries is a party, or result in a violation of any federal, state,
local or foreign law, rule, regulation, order, judgment or decree (including
Federal and state securities laws and regulations) applicable to Seller or any
of its subsidiaries or by which any property or assets of Seller or any of its
subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect); provided
that, for purposes of such representation as to Federal, state, local or foreign
law,

2
<PAGE>

rule or regulation, no representation is made herein with respect to any of the
same applicable solely to the Purchasers and not to Seller. To the best of
Seller's knowledge, the business of Seller is not being conducted in violation
of any law, ordinance or regulations of any governmental entity, except for
violations which either singly or in the aggregate do not and will not have a
Material Adverse Effect. Seller is not required under Federal, state or local
law, rule or regulation in the United States to obtain any consent,
authorization or order of, or make any filing or registration with, any court or
governmental agency in order for it to execute, deliver or perform any of its
obligations under this Agreement or issue and sell the Shares in accordance with
the terms hereof (other than any SEC, NASD, NASDAQ or state securities filings
which may be required to be made by Seller subsequent to the Closing, and any
registration statement which may be filed pursuant hereto); provided that, for
purposes of the representation made in this sentence, Seller is assuming and
relying upon the accuracy of the relevant representations and agreements of the
Purchasers herein.

(e) SEC Documents, Financial Statements. The Common Stock of Seller is
-----------------------------------
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") and Seller has filed on a timely basis all reports,
schedules, forms, statements and other documents required to be filed by it with
the Securities and Exchange Commission ("SEC") pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to Section
13(a) or 15(d), in addition to one or more registration statements and
amendments thereto heretofore filed by Seller with the SEC under the Securities
Act (all of the foregoing including filings incorporated by reference therein
being referred to herein as the "SEC Documents"). Seller has delivered to the
Purchasers true and complete copies of the SEC Documents except for the exhibits
and incorporated documents. Seller has also delivered to the Purchasers a
Confidential Private Placement Memorandum for the Shares dated June 1999.
Seller has not provided to the Purchasers any information which, according to
applicable law, rule or regulation, should have been disclosed publicly by
Seller but which has not been so disclosed, other than with respect to the
transactions contemplated by this Agreement.

As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Securities Act or the Exchange Act as the
case may be and the rules and regulations of the SEC promulgated thereunder and
other federal, state and local laws, rules and regulations applicable to such
SEC Documents, and neither the Memorandum nor any of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Seller included in the SEC Documents
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC or other
applicable rules and regulations with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved (except (i)
as may be otherwise indicated in such financial statements or the notes thereto
or (ii) in the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly present
in all material respects the financial position of Seller as of the dates
thereof and the results of operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments).

3
<PAGE>

(f) No General Solicitation. Neither Seller, nor any of its affiliates, or,
-----------------------
to the best of its knowledge, any person acting on its or their behalf, has
engaged in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with the offer
or sale of the Shares.

(g) No Integrated Offering. Neither Seller, nor any of its affiliates, nor
----------------------
any person acting on its or their behalf has, directly or indirectly, made any
offers or sales of any of Seller'S securities or solicited any offers to buy any
of such securities, under circumstances that would require registration of the
Shares under the Securities Act.

(h) Ownership of the Shares, Absence of Claims. The Seller has the legal
------------------------------------------
authority to issue the Shares, and the Shares are free and clear of any and all
liens, pledges, security interests, options, encumbrances, charges, agreements
or claims of any kind whatsoever (collectively, the "Claims").

(i) Commission Filings. Purchasers have delivered to Seller current (for
------------------
the quarter ending September 30, 1998) and all historical filings made by Seller
on Forms 8-K, 10-K, 10-Q and Proxy Statements timely filed with the SEC for
fiscal year ending December 31, 1997 (the "Public Reports"). The Public Reports
accurately and completely describe, in all material respects, Seller'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.

(j) Nasdaq Status. The principal market on which the Shares are currently
-------------
traded is Nasdaq National Market. The Seller is party to two agreements ("Change
of Control Agreements") as follows: (i) a Stock Purchase Agreement dated March
26, 1999, as amended, between the Seller and Louis Paolino, Jr., regarding the
purchase of common stock from the Seller by Louis Paolino, Jr. and his designees
and (ii) a Merger Agreement dated March 26, 1999, as amended, between the
Seller, Louis Paolino, Jr., Red Mountain Holdings, Ltd, regarding the merger of
American Wash Services, Inc into a subsidiary of Mace. The Nasdaq Stock Market,
Inc ("Nasdaq") has advised that as a result of the Change of Control Agreements,
Seller will have to meet the minimum financial requirements for initial listing
on Nasdaq, prior to consummating the Change of Control Agreements. Seller
believes that is will meet the required initial listing requirements of Nasdaq
prior to consummation of the Change of Control Agreements. Other then the
requirement to meet the initial listing requirements of the Nasdaq, the Seller
is in conformance with all listing requirements of the Nasdaq Stock Market, Inc.
("Nasdaq"), and has received no notices of non-compliance from Nasdaq in the
twenty-four months prior to the date of this Agreement.

(k) Closing Under Change of Control Agreements. The Seller represents and
-------------------------------------------
warrants that the closings under the Change of Control Agreements will occur.
If for any reason the Change of Control Agreements are terminated before a
closing under them takes place, Purchasers as their sole remedy may require the
Seller to purchase the Shares purchased by each Purchaser from each Purchaser in
exchange for the consideration paid by each Purchaser for the Shares, a total of
$3,299,998.80. Purchasers may exercise their right to have the Seller purchase
the Shares from each

4
<PAGE>

Purchaser within 30 days of being sent a written notice from Seller that the
Change of Control Agreements have been terminated without a closing under the
Change of Control Agreements. Seller agrees to notify Purchasers in writing, if
and when the Change of Control Agreements are canceled without a closing under
the Change of Control Agreements. If Purchasers timely exercise their right to
cause the Seller to purchase the Shares, Seller shall purchase the Shares within
ten (10) days of receiving Purchasers written request that Seller purchase the
Shares.

(l) Capitalization. The authorized capital stock of Seller as set forth in
---------------
its Articles of Incorporation are 20,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock. As of June 23, 1999, 1999, Seller had
outstanding 9,185,058 shares of Common Stock. All of the outstanding shares of
the Common Stock have been validly issued and are full paid and non-assessable.
Except for shares reserved for issuance under the Company's stock option plan,
shares to be issued in contemplation of this Agreement and contracts requiring
Seller to issue additional shares upon the closing of certain acquisitions
currently under agreement, there are no other scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights exchangeable or convertible into, any shares of capital stock of Seller,
or contracts, commitments, understandings or arrangements by which Seller or
options, warrants, scrip, rights to subscribe to, or commitments to purchase or
acquire, any shares, or securities or rights convertible into shares, of capital
stock of Seller.

(m) No Material Adverse Change. Since December 31, 1998 the date of the
--------------------------
most recent annual report of Seller on Form 10KSB has been prepared and filed
with the SEC, a copy of which has been supplied to Purchasers, no event which
had or is likely to have a Material Adverse Effect has occurred or exists with
respect to Seller, except as otherwise disclosed or reflected in press releases
or other SEC Documents prepared through or as of a date subsequent to December
31, 1998.

(n) No Litigation. Except as set forth in SEC Documents or otherwise
-------------
disclosed prior to the date of this Agreement, no litigation or claim (including
those for unpaid taxes) against Seller is pending or, to Seller's knowledge
threatened. Seller believes that any litigation or claims that may currently
exist are in the normal course of business and will not have a Material Adverse
Effect upon Seller or effect the transactions contemplated hereby.

(o) Contravention; Consents and Approvals. No filing, action, consent or
-------------------------------------
approval of any person, entity or governmental body is required by the Seller
for the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby.

5. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Purchasers
represent, warrant and agree that:

(a) Execution and Effect of Agreement. Purchasers have the full
---------------------------------
right, power and authority to enter into and perform this Agreement. This
Agreement has been duly executed and delivered by Purchasers and is a legal,
valid and binding obligation of Purchasers enforceable in accordance with its
terms.

5
<PAGE>

(b) Access to Seller by Purchasers. Purchasers and their
------------------------------
representatives and advisers have had free and full access during normal
business hours to the Seller'S assets, premises, books and records, key
employees and accountants, and have had the opportunity to ask questions and
receive answers about the past performance and current and future prospects of
the Seller'S business and assets.

(c) Purchase for Investment. The Purchasers understands and
-----------------------
represents that: (i) the Purchasers must bear the economic risk of an investment
in the Shares for an indefinite period of time because the Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), or
under any state securities laws and, therefore, cannot be resold unless they are
subsequently registered under the 1933 Act and the pertinent state securities
laws or unless an exemption from such registration is available; (ii) the
Purchasers are purchasing the Shares for investment for the account of the
Purchasers, not for the account of any other person, and not with any present
view toward resale or other "distribution" thereof within the meaning of the
1933 Act; and (iii) the Purchasers agrees not to resell or otherwise dispose of
all or any part of the Shares, except as permitted by law, including, without
limitation, any and all applicable provisions of this Agreement and any
regulations under the 1933 Act.

(d) Risks of Investment. The Purchasers are aware that an investment
-------------------
in the Shares is highly speculative and subject to substantial risks. The
Purchasers are capable of bearing the high degree of economic risk and burdens
of this investment, including the possibility of a complete loss of his
investment and the lack of a public market and limited transferability of the
Shares, which may make the liquidation of this investment impossible for an
indefinite period of time. The financial condition of each of the Purchasers is
such that it is under no present or contemplated future need to dispose of any
of the Shares to satisfy any existing or contemplated undertaking, need or
indebtedness.

(e) Contravention; Consents and Approvals. No filing, action, consent or
-------------------------------------
approval of any person, entity or governmental body is required by the
Purchasers for the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.

6. BROKERS. Each party represents to the other that it has had no
dealings with any broker or finder in connection with the transactions
contemplated by this Agreement. Should any claim be made for a broker'S,
finder'S or similar fee, on account of any actions or dealings by a party or its
agents, such party shall indemnify and hold the other party harmless from and
against any and all liability and expenses, including reasonable attorneys' fees
incurred by reason of any claim made by such broker.

7. FURTHER ASSURANCES. The parties shall cooperate and take such
actions, and execute such other documents, as either may reasonably request in
order to carry out the provisions or purpose of this Agreement, including
without limitation the execution and delivery by Sellers of additional stock
powers duly executed in blank with respect to the Shares. The parties further
agree to execute a Registration Rights Agreement, a Sales Restriction Agreement
and a Warrant Agreement in the form attached hereto and made a part hereof as
Exhibits B, C and D respectively.

6
<PAGE>

8. REGISTRATION RIGHTS.

(a) The Shares delivered at Closing will not be registered under the
Securities and Exchange Act of 1934 ("Act"). Seller shall provide registration
rights pursuant to the Registration Rights Agreement attached hereto as Exhibit
B.

(b) With respect to the Shares, Seller will furnish to the Purchasers
such number of prospectuses, if required, under the Act, including copies of
preliminary prospectuses, prepared in conformity with the requirements of the
Act, and such other documents as the Purchasers may reasonably request in order
to facilitate the public sale or other disposition of the securities to be sold
by the Purchasers.

(c) All expenses incurred in effecting the registrations provided for
in this Section shall be paid by Seller, including, without limitation, all
registration and filing fees, printing expenses, expenses of any audits incident
to or required by any such registration and expenses of complying with the
securities or "blue sky" laws of any jurisdictions.

9. PREEMPTIVE RIGHTS

(a) Seller hereby grants to the Purchasers a first and prior right to
purchase any and all shares of Common Stock, or securities convertible into
Common Stock or containing an option or warrant to purchase Common Stock
("Derivative Securities"), as may hereafter be issued from time to time by
Seller subsequent to the date hereof. For purposes of this Section 9
"Derivative Securities" do not include options or warrants issued alone and not
in combination with another security. Such right shall exist with respect to
all shares of Common Stock and Derivative Securities originally authorized,
shares hereafter authorized, or treasury shares, but shall not exist with
respect to: (i) shares of Common Stock issued by Seller in a firm commitment or
best efforts underwritten offering to the public, (ii) shares of Commons Stock
issued by Seller upon the exercise or conversion of currently outstanding
Derivative Securities, (iii) shares of Common Stock issued by Seller upon the
exercise of stock options or warrants granted to officers, directors,
consultants and employees of Seller, whether or not granted, pursuant to a stock
option plan approved by the stockholders of Seller, (iv) options, warrants or
shares of Common Stock issued by Seller in connection with the acquisition of
the properties, assets, or business of another Person, or (v) options, warrants
or shares of Common Stock issued in connection with bank financing or equipment
leases or similar financing transactions.

(b) The time for exercising the foregoing rights in Section 9(a) may
be established by the Company's Board of Directors but each Purchaser shall have
a minimum of 15 days in which to consider exercising its right.

(c) The foregoing right in Section 9(a) shall terminate on the
earlier of (i) June 30, 2000 or (ii) the date on which the Purchasers have
purchased shares of Common Stock or Derivative Securities with an aggregate
purchase price of $3,100,000.

7
<PAGE>

10. CONDITIONS OF PURCHASERS

The obligations of Purchasers to effect the transaction 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:

(a) Compliance by Seller. The Seller shall have performed and
--------------------
complied with all of the obligations and conditions required by this Agreement
to be performed or complied with by the Seller at or prior to the Closing Date.
All representations and warranties of Seller contained in this Agreement shall
be true and correct at and as of the Closing Date, with the same force and
effect as though made at and as of the Closing Date, except for changes
expressly permitted by this Agreement.

(b) 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 Purchasers to own the Shares, as a result of the transaction
contemplated by this Agreement, might affect such right as to Purchasers or any
affiliate thereof subsequent to the Closing Date and which, in the judgment of
the Purchasers, made in good faith and based upon advice of their counsel, makes
it inadvisable to proceed with the transaction contemplated by this Agreement.

(c) Opinion of Counsel. At the Closing, the Purchasers shall have
------------------
received an opinion of counsel from Robert M. Kramer, Esq. dated the Closing
Date in form and substance reasonably acceptable to the Purchasers and their
counsel and such other opinions, certificates, and documents as the Purchasers
and their counsel shall reasonably require incident to the Closing.

(d) Registration Rights Agreement. The Seller and the Purchasers
-----------------------------
shall have executed and delivered the Registration Rights Agreement, a Sales
Restriction Agreement.

(e) Secretary'S Certificate. The Seller shall have delivered to the
-----------------------
Purchasers a certificate in form and substance reasonably satisfactory to the
Purchasers, executed by the Secretary of the Seller, on behalf of the Seller,
certifying as to the incumbency of signing officers, the Certificate of
Incorporation, ByLaws, good standing, and authorizing resolutions of the Seller.

11. CONDITIONS OF SELLER

The obligations of the Seller to transfer the Shares in accordance with
this Agreement shall be subject to the fulfillment at or prior to the time of
Closing of each of the following conditions:

(a) Compliance by Purchasers. The Purchasers shall have performed and
------------------------
complied with all of the obligations and conditions required by this Agreement
to be performed or complied with by them at or prior to or at the Closing Date.
All representations and warranties of Purchasers contained in this Agreement
shall be true and correct at and as of the Closing Date, with the same force and
effect as though made at and as of the Closing Date, except for changes
expressly permitted by this Agreement.

8
<PAGE>

(b) 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 rights of Seller as a result of the transaction contemplated by this
Agreement, might affect such right as to Seller or any affiliate thereof
subsequent to the Closing Date and which, in the judgment of the Seller, made in
good faith and based upon advice of its counsel, makes it inadvisable to proceed
with the transaction contemplated by this Agreement.

(c) Registration Rights Agreement. The Seller and the Purchasers
-----------------------------
shall have executed and delivered the Registration Rights Agreement, and a Sales
Restriction Agreement.

12. NOTICES. All notices or other communications in connection with
this Agreement shall be in writing and shall be considered given when personally
delivered or when mailed by registered or certified mail, postage prepaid,
return receipt requested, as follows:

If to Seller:

Mace Security International, Inc.
Attn: Robert M. Kramer, Executive Vice President and General Counsel
Suite 400
1000 Crawford Road
Mt., Laurel, New Jersey 08054
609-235-6009
Telecopy: 609-439-1723

If to Purchasers:

Environmental Opportunities Fund II, L.P. and
Environmental Opportunities Fund II (Institutional), L.P.
C/o Sanders Morris Mundy
Attn: Bruce McMaken
600 Travis Suite 3100
Houston, TX 77002
Telecopy: 713-250-4294

13. ENTIRE AGREEMENT. This Agreement, together with the Registration
Rights Agreement and the Stock Sale Restriction Agreement, sets forth the
parties' final and entire agreement with respect to its subject matter and
supersedes any and all prior understandings and agreements. This Agreement may
be amended, supplemented or changed, and any provision hereof may be waived,
only by a written instrument making specific reference to this Agreement signed
by the party against whom enforcement of any such amendment, supplement, change
or waiver is sought.

14. GOVERNING LAW. This Agreement shall be governed by and construed
and

9
<PAGE>

interpreted in accordance with the internal laws of the State of Delaware
(without reference to its rules as to conflicts of law).

15. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which taken
together shall constitute one and the same instrument.

16. FEES AND EXPENSES. Upon Closing, the Seller shall pay the
reasonable fees and disbursements of one counsel to the Purchasers, in
connection with the review of this Agreement, the Registration Rights Agreement,
the Sales Restriction Agreement, and the transaction contemplated hereby and
thereby, and the costs and out-of-pocket expenses of the Purchasers in
connection with its due diligence investigation of the Seller; provided that the
total amount payable to the Purchasers or their counsel and representatives
hereunder shall not exceed $15,000.

17. SURVIVAL OF AGREEMENTS. The representations and warranties,
covenants, and agreements made herein in the Registration Rights Agreement and
the Sales Restriction Agreement, as well as in each certificate delivered to the
Purchasers pursuant hereto, shall survive the Closing and remain in effect so
long as the Purchasers own any of the Shares. The Seller agrees to indemnify
and hold each of the Purchasers harmless from and against and will pay to the
Purchasers the full amount of any loss, damage, liability, cost or expense
(including amounts paid in settlement and reasonable attorneys' fees and
expenses) to each of the Purchasers resulting either directly or indirectly from
any breach of the representations and warranties, covenants, or agreements of
the Seller contained in this Agreement or the Registration Rights Agreement or
the Sales Restriction Agreement or in any certificate delivered to the
Purchasers pursuant hereto or thereto or in connection herewith or therewith.
Each of the Purchasers agrees to indemnify and hold the Seller harmless from and
against and will pay to the Seller the full amount of any loss, damage,
liability, costs, or expense (including amounts paid in settlement and
reasonable attorneys' fees and expenses) to the Seller resulting either directly
or indirectly, from any breach of the representations, warranties, covenants, or
agreements of the Purchasers contained in this Agreement or the Registration
Rights Agreement or in the Sales Restriction Agreement.

18. SEVERABILITY. Each provision of this Agreement shall be treated
as a separate and independent clause, and the unenforceability of any one clause
shall in no way impair the enforceability of any of the other clauses herein.
If one or more of the provisions contained in this Agreement shall for any
reason be held unenforceable, such provision or provisions shall be construed by
the appropriate judicial body by limiting or reducing it or them, so as to be
enforceable to the maximum extant compatible with applicable law, and no other
provision shall be affected by such holding, limitation, or reduction.

10
<PAGE>

IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the date first above written.

SELLER:

/s/ Robert M. Kramer
--------------------
Robert M. Kramer, Exec. Vice President and General
Counsel

PURCHASERS:
Environmental Opportunities Fund II LP
By: Fund II Management Co., LLC, its General Partner,

/s/ Bruce R. McMaken
---------------------
Bruce R. McMaken, Manager

Environmental Opportunities Fund II (Institutional) LP
By: Fund II Management Co., LLC, its General Partner,

/s/ Bruce R. McMaken
--------------------
Bruce R. McMaken, Manager

11
<PAGE>

Exhibit A
---------

Mace Security International, Inc Common Stock
- ---------------------------------------------
<TABLE>
<CAPTION>

Name of Purchaser Price Per Share Number of Shares Total Price
- ------------------------------------------- --------------- ---------------- ------------
<S> <C> <C> <C>
Environmental Opportunities Fund II
(Institutional), L.P. $8.40 per share 308,785 $ 2,593,794
Environmental Opportunities Fund II, L.P. $8.40 per share 84,072 $706,204.80

</TABLE>

<PAGE>

EXHIBIT 10.101

MACE SECURITY INTERNATIONAL, INC.
160 BENMONT AVENUE
BENNINGTON, VERMONT 05201
April 9, 1999
Mr. Michael Fazio
Four Seasons Place, Suite 1101
Boston, Massachusetts 02116

Dear Mr. Fazio:

Mace Security International, Inc. (the "Company"), is pleased to offer to
you ("Employee") employment with the Company as Vice President of Operations -
Northeast Region, subject to the following terms of this letter agreement (the
"Agreement").

1. Term. Subject to the terms and conditions hereinafter set forth,
----
Employee shall be employed for a term commencing on the date hereof and expiring
three (3) years after the date hereof unless such employment is earlier
terminated as provided in Section 7 herein (the "Term"). If this Agreement is
not terminated prior to the expiration of the Term, the Term of the Agreement
shall continue on a month-to-month basis after the expiration of the three-year
Term, until either party to this Agreement notifies the other party in writing
that this Agreement has been terminated. After the initial three-year Term,
either party may terminate this Agreement for any or no reason upon written
notice to the other party.

2. Duties. During the Term, Employee shall devote his best efforts and
------
substantially all of his business time and services to the Company. Employee
shall perform such duties and services as the Officers of the Company shall
request.

3. Salary. Employee hereby agrees to accept as compensation for all
------
services rendered by Employee in any capacity hereunder during the term a salary
computed at the rate of $100,000 per year, payable in accordance with the
Company's normal payroll procedures, commencing on the date of the closing of
the Stock Purchase Agreement pursuant to which Louis Paolino will become
Chairman and Chief Executive Officer of the Company (the "Salary"). The Salary
may be further increased from time to time upon the approval of the Company's
President. The Salary shall be inclusive of all applicable income, social
security and other taxes and charges which are required by law to be withheld by
the Company but shall be in addition to the Benefits (as defined below) and any
severance compensation payable as described below.

4. Benefits. During the Term, Employee shall be entitled to the benefits
--------
(the "Benefits") set forth on Schedule A attached hereto.
----------

5. Stock Options. The Employee shall be granted stock options ("Options")
-------------
exercisable for 125,000 shares of the Company's common stock at a per-share
exercise price equal to the lowest trading price of the stock on the date of
this Agreement. The Options shall vest over the term of this Agreement, one-
sixth of the Options vesting on each six-month anniversary date of this
Agreement's execution. The Options shall be fully vested on the last day of
this Agreement's term.

-1-
<PAGE>

6. Confidential Information and Inventions. Employee agrees that, for a
---------------------------------------
period of twelve (12) months following the expiration or termination of
Employee's employment with the Company pursuant to this Agreement, Employee
shall keep secret and retain in strictest confidence, and shall not use for
Employee's benefit or the benefit of others, directly or indirectly, any
proprietary, confidential or secret matters relating to the Company or any other
entity which may hereafter become an affiliate thereof. In the event that
Employee or any of his representatives becomes legally compelled to disclose any
of the proprietary, confidential or secret information of the Company, Employee
will provide the Company with prompt written notice so that the Company may seek
a protective order or other appropriate remedy. Employee shall disclose
promptly to Company any and all conceptions and ideas for inventions,
improvements, and valuable discoveries, whether patentable or not, which are
conceived or made by Employee solely or jointly with another during the period
of employment or within three months thereafter and which are related to the
business or activities of Company. Employee hereby assigns and agrees to assign
all his interests therein to Company or its nominee and execute all documents
necessary to evidence and perfect the assignment.

7. Termination. Employee's employment hereunder may be terminated during
-----------
the Term as described below.

7.1. Resignation, Death or Disability. In the event of the
--------------------------------
resignation, death or Disability (as defined below) of Employee during the Term,
Employee's employment hereunder shall be terminated and the Company shall pay to
Employee or Employee's executors, legal representatives or administrators, all
accrued and unpaid Salary and Benefits through the date of such termination.
Except as set forth above in this Section 7.1, and except for any salary and
other benefits accrued, vested and unpaid as of the date of his resignation,
death or Disability, the Company shall not be under any further obligation to
the Employee or his heirs or personal representatives after the date of the
Employee's resignation, death or Disability pursuant to this Agreement. A
"Disability" shall be deemed to occur if Employee is unable to perform his
duties and responsibilities hereunder to the full extent required by this
Agreement by reasons of illness, injury or incapacity for a period of more than
45 consecutive days or more than 90 days in the aggregate, during any one-year
period during the Term.

7.2. Termination For Cause. The Company may terminate Employee's
---------------------
employment hereunder at any time for "Cause" upon written notice to Employee.
For purposes of this Agreement, "Cause" shall mean the occurrence of any of the
following: (i) alcohol abuse or use of controlled substances during employment
hours, (ii) except where non-performance is caused by a resignation, Disability
or death, Employee's refusal or inability to competently perform his obligations
under this Agreement, as determined by his supervisors, (iii) other conduct of
Employee involving insubordination toward Employee's supervisors or any Officer
of the Company, (iv) any type of harassment, violence or threat thereof, or
other behavior toward other employees of the Company or toward third parties of
a kind that may tend to result in liability being incurred by the Company toward
such employee or third party, (v) any type of disloyalty to the Company or any
of its affiliates or subsidiaries, (vi) gross negligence or willful misconduct
with respect to the Company or any of its affiliates or subsidiaries, including
without limitation fraud, embezzlement, theft or proven dishonesty in the course
of his employment, or (vii) a conviction of a felony or a misdemeanor involving
moral turpitude or the entering of a plea of guilty or nolo contendere to a
---- ----------
felony. If the Company exercises the right to terminate Employee's employment
with Company for

-2-
<PAGE>

Cause, the Company's obligation to Employee shall be limited solely to the
payment of accrued and unpaid Salary and Benefits through the date of such
termination. The Company shall have such rights and remedies as may be
available to it for any breach by the Employee of this Agreement or otherwise.

7.3. Termination Without Cause. At any time, the Company may
-------------------------
terminate Employee's employment hereunder for a reason not constituting Cause by
giving written notice to Employee ninety (90) days prior to such termination.
If Employee is terminated without Cause, the Employee shall be entitled to
payment of (i) all accrued and unpaid Salary and Benefits through the date of
such termination, and (ii) a lump sum amount equal to six months of his Salary.

8. Noncompetition Covenants. Employee agrees that the noncompetition
------------------------
covenants contained in this Paragraph 8 are a material and substantial part of
this Agreement. Employee covenants that during Employee's employment with
Company and for six months following the termination of Employee's employment
(regardless of the reason for the termination) the Employee shall not, directly
or indirectly, without the prior express written consent of Company: (i)
engage, as an officer, director, shareholder, owner, partner, joint venturer,
agent, or in a managerial capacity, whether as an employee, independent
contractor, consultant, advisor or sales representative, in the car wash
services industry within the United States, or (ii) promote, or assist,
financially or otherwise, any person, firm, partnership, corporation or other
entity whatsoever to do any of the above. The Company will sustain significant
losses and damages, if Employee breaches the covenants in this Paragraph 8.
There is no adequate monetary remedy for the immediate and irreparable damage
that would be caused to Company by Employee's breach of its non-competition
covenants. Employee agrees that, in the event of a breach by him of the
foregoing covenants, such covenants may be enforced by Company by, without
limitation, injunctions and restraining orders.

9. Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the Company and Employee and their respective successors,
executors, administrators, heirs and/or permitted assigns; provided, however,
-------- -------
that neither Employee nor the Company may make any assignments of this Agreement
or any interest herein, by operation of law or otherwise, without the prior
written consent of the other party, except that, without such consent, the
Company may assign this Agreement to any successor to all or substantially all
of its assets and business by means of liquidation, dissolution, merger,
consolidation, transfer of assets, or otherwise.

10. Notice. Any notice or communication required or permitted under this
------
Agreement shall be made in writing and (i) sent by overnight courier, (ii)
mailed by certified or registered mail, return receipt requested or (iii) sent
by telecopier, addressed to the addresses of the parties set forth on page 1
hereof or to such other address as either party may from time to time duly
specify by notice given to the other party in the manner specified above.

11. Entire Agreement; Amendments. This Agreement sets forth the
----------------------------
understanding of the parties hereto relating to the subject matter hereof, and
merges and supersedes all prior and contemporaneous discussions, agreements and
understandings of every nature between the parties hereto relating to the
employment of Employee with the Company. This Agreement may not be changed or
modified, except by an agreement in writing signed by each of the parties
hereto.

-3-
<PAGE>

12. Waiver. Any waiver by either party of any breach of any term or
------
condition in this Agreement shall not operate as a waiver of any other breach of
such term or condition or of any other term or condition, nor shall any failure
to enforce any provision hereof operate as a waiver of such provision or of any
other provision hereof or constitute or be deemed a waiver or release of any
other rights, in law or in equity.

13. Governing Law. Notwithstanding any contrary choice of laws
-------------
principles, this Agreement shall be governed by and construed in accordance with
the substantive laws of the State of New Jersey, applicable to contracts
executed and performed within the State of New Jersey.

14. Severability. Whenever possible, each provision of this Agreement
------------
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

15. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.

Please indicate your acceptance of employment and your agreement to
render services to the Company subject to the terms set forth above by executing
and returning the enclosed copy of this letter.

Sincerely,

MACE SECURITY INTERNATIONAL, INC.

By: /s/ Jon E. Goodrich
----------------------
Jon E. Goodrich, President

Agreed to and Accepted:

/s/ Michael Fazio
- -----------------
Michael Fazio

-4-
<PAGE>

SCHEDULE A

EMPLOYEE BENEFITS

1. Expense Reimbursement. Employee shall be entitled to receive reimbursement
---------------------
from the Company for all reasonable out-of-pocket expenses incurred by Employee
in performing his duties under the Agreement, in accordance with the expense
reimbursement policy established from time to time by the Company, upon
presentation of expense statements or vouchers and such other supporting
information as may be required pursuant to any expense reimbursement policy
adopted by the Company and in force from time to time.

2. Vacation; Sick Leave. Employee shall be entitled to two weeks of paid
--------------------
vacation time in each year of the term of this Agreement, and sick leave in
accordance with such general policies as may be in effect from time to time for
management employees.

3. Other Benefits. Employee shall be entitled, if and to the extent eligible,
--------------
to participate in any group life, hospitalization or disability insurance plan,
health program, pension plan, or similar benefit plan, which may be no less
favorable to Employee than the terms offered to other Employees of the Company
during the Term.

-5-

<PAGE>

EXHIBIT 10.99

OPERATING AGREEMENT
-------------------

This Agreement ("Operating Agreement") is made as of March 31, 1999, by and
between Millennia Car Wash, LLC, a Delaware limited liability company (the
"Company"), Excel Legacy Corporation and G II Ventures, LLC ("Members"), and
Mace Car Wash, Inc., a Delaware corporation (the "Manager").

RECITALS
--------

Company is engaged in the business of owning and operating car wash
facilities throughout the United States. Members are the owners of all of the
outstanding membership interests in Company. Manager is engaged, among other
things, in providing administrative, management consulting, financial, marketing
and operational support services to the car wash industry. Company and Members
have negotiated with American Wash Services, Inc. ("AWS") a Real Estate and
Asset Purchase Agreement (the "Acquisition Agreement") pursuant to which AWS
will buy all of Company's assets ("Assets") at its operating locations. Those
locations are listed on Exhibit A, attached hereto and made part hereof
("Locations").

Company and Manager have agreed that, until Closing under the Acquisition
Agreement, Manager shall operate the car wash businesses at the Locations (the
"Business"), subject and according to the terms of this Operating Agreement.

NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:

1. Appointment of Manager; Relationship of Company and the Manager.
---------------------------------------------------------------
Manager shall provide administrative, management, consulting, marketing and
operational support services to the Company, as hereinafter provided. Manager
shall operate the Locations on its own behalf and for its own benefit and at all
times shall be independent of the Company. The Company shall permit the Assets
to remain in its name to accommodate the Manager. Nothing contained herein
shall be deemed to make or render the Company a partner, co-venturer or other
participant in the business or operations of the Manager, or in any manner to
render Company liable, as principal, surety, guarantor, agent or otherwise for
any of the debts, obligations or liabilities of Manager.

2. Management Services. Manager will provide, supply and render such
-------------------
administrative, management consulting, financial, marketing, and operational
support services as are necessary to operate the Locations and, as more
specifically described below, shall:

(a) Administer, supervise and control all of the finances of the Business,
including payroll, taxes, accounting, bookkeeping, record keeping, managing of
accounts payable, accounts receivable, banking, financial records and reporting
functions as they pertain to the Locations, with the power to make changes
therein, in its sole discretion, and to incorporate such functions into systems
used by Manager.

(b) Select and employ all personnel necessary to operate the Business.

1
<PAGE>

(c) Supervise and control the purchase of all materials and supplies, and
acquire, lease, dispose of and repair equipment and facilities which are
necessary to provide safe and adequate operation of the Locations.

(d) Manage, at Manager's sole discretion, all costs and all of the pricing
for all of the services provided at the Locations.

(e) Commence, defend and control all legal actions, arbitrations,
investigations and proceedings that arise in connection with the Business.

(f) Maintain the Assets in good repair, order and condition, normal and
reasonable wear and tear excepted.

3. Obligations of the Company. Until Closing under the Acquisition
--------------------------
Agreement, the Company shall not, without the Manager's prior written consent:

(a) Do anything to affect or cause any change to any of the Assets or
Locations;

(b) Create or incur any indebtedness or other liability or obligation in
connection with the Assets or Locations;

(c) Enter into, modify, amend, or terminate any lease, agreement, contract
or other commitment in connection with the Business;

(d) Release or create or incur any mortgage, lien or other encumbrance
with respect to the Assets, Business or Locations;

(e) Sell, abandon or otherwise dispose of any of the Assets;

(f) Make any commitment relating to any of the Assets; or

(g) Cancel or waive any claim or right with respect to the Assets or
Business.

The Company shall have no obligations other than those set forth in this
Operating Agreement.

4. Additional Agreements of Company. The Company agrees that at all times
--------------------------------
during the term of this Agreement the Company shall:

(a) Do nothing, and permit nothing to be done (which is within the control
of Company), which will or might cause the Company to operate in an improper or
illegal manner.

(b) Not cause a default in any of the terms, conditions and obligations of
any of the contracts and other agreements of the Company. Notwithstanding the
foregoing, Manager acknowledges that a default, alleged or actual, claimed by
Franchise Mortgage Acceptance Corporation ("FMAC") due to the execution and
performance of this Operating Agreement is a specific exception to this
provision.

2
<PAGE>

(c) To the extent permissible by law, maintain its corporate existence in
good standing, and its licenses and permits in the State of Delaware and all
other states in which it conducts business and comply fully with all laws
respecting its formation, existence, activities and operations.

(d) Allow Manager and the employees, attorneys, accountants and other
representatives of Manager full and free access to the Company's books and
records, and all of the facilities of the Company so long as they relate to the
Assets.

(e) Assist Manager to name itself as an additional named insured under all
policies of insurance and give all notices and present all claims under all
policies of insurance in due and timely fashion. All premiums for insurance
shall be paid by the Manager.

5. Payroll Expenses. Manager shall have the power to fix the compensation
----------------
of all persons employed at the Locations. It is understood that Manager will be
solely responsible for supplying the personnel required to operate the Business
and will be responsible for all compensation to be paid.

6. General and Administrative Activities. To the extent that Manager
-------------------------------------
shall deem it necessary or desirable, Manager shall have the power and authority
to combine and integrate, at its own office (including those of an affiliate),
the "general and administrative" (as such term is used in accounting practice)
activities of the Business, including, but not limited to, all accounting,
bookkeeping, record-keeping, paying, receiving and other fiscal or financial
activities, with those of Manager.

7. Revenues and Compensation. During the term of this Agreement, Manager
-------------------------
will collect all revenues and pay all expenses associated with operating the
Business. Manager will retain any and all profits and incur any and all losses
resulting from operating the Business. Manager shall be entitled to all income
generated from the rendering of services with respect to customers of the
Company on and after Closing under the Acquisition Agreement. Prior to Closing
under the Acquisition Agreement, Manager shall not utilize revenues or other
funds of the Business for any purpose other than expenses of operating the
Business.

8. Equipment. During the term of this Operating Agreement, Manager may
---------
make any commercially reasonable modifications to the equipment used in the
Business it deems necessary.

9. Term of Agreement.
-----------------

(a) The term of this Operating Agreement shall commence on the date of
this Operating Agreement and shall expire on the day of the Closing under the
Acquisition Agreement.

(b) Manager may, at its option, upon ten (10) days' written notice
terminate this Operating Agreement: (i) if Company shall violate any material
provision of this Operating Agreement or the Acquisition Agreement; (ii) if
Company shall violate or be in material breach of any provision, representation,
warranty, covenant or undertaking herein or in the Acquisition Agreement; or
(iii) if Company (a) makes an assignment for the benefit of creditors, (b) is
adjudicated a bankrupt, (c) files or has filed against it any bankruptcy,
reorganization, liquidation or similar petition or any

3
<PAGE>

petition seeking the appointment of a receiver, conservator or other
representative, or (d) proposes a composition arrangement with creditors.

(c) If this Operating Agreement is terminated, Company shall take over the
management and operation of the Business within thirty days of the date of the
termination. As of the date of termination of this Operating Agreement, all
revenue of the Business shall be used exclusively to pay the expenses of
operating the Business. Upon termination of this Operating Agreement, Company
and Manager shall co-operate with each other to insure that the Business is
turned over to and is operated by the Company effective upon thirty days from
the date of this Operating Agreement's termination.

10. Indemnification.
---------------

(a) Manager shall indemnify, defend and hold harmless Company and its
affiliates, their respective members, shareholders, officers, directors,
employees, and agents, against and in respect of any and all losses, claims,
damages, causes of action, actions, obligations, liabilities, deficiencies,
suits, proceedings, actual out-of-pocket obligations and expenses (including
cost of investigation, interest, penalties and reasonable attorneys' fees)
(collectively, "Losses") arising out of or due to the operation of the Business
by Manager, its affiliates, agents, servants and/or employees after the date of
this Operating Agreement.

(b) If Company (the "Indemnitee") receives notice of any claim or the
commencement of any action or proceeding with respect to which Manager is
obligated to provide indemnification (the "Indemnifying Party") pursuant to
subsections A and B of this Section 9, the Indemnitee shall promptly give the
Indemnifying Party notice thereof ("Indemnification Notice"). Such
Indemnification Notice shall be a condition precedent to any liability of the
Indemnifying Party under the provisions for indemnification contained in this
Operating Agreement. Except as provided below, the Indemnifying Party may
compromise, settle or defend, at such Indemnifying Party's own expense and by
such Indemnifying Party's own counsel, any such matter involving the asserted
liability of the Indemnitee. In any event, the Indemnitee, the Indemnifying
Party and the Indemnifying Party's counsel shall cooperate in the compromise of,
or defense against, any such asserted liability. If the Indemnifying Party
provides the Indemnitee a defense to a third party claim at the Indemnifying
Party's cost with a qualified attorney, Indemnitee may participate and/or
monitor the defense with an attorney of the Indemnitee's selection (at the
Indemnitee's own expense). Provided that the Indemnifying Party pays for the
full cost of the settlement of any claim, the Indemnifying Party may settle any
claim without the consent of the Indemnitee. If the Indemnifying Party chooses
to defend any claim, the Indemnitee shall make available to the Indemnifying
Party any books, records or other documents within its control that are
necessary or appropriate for such defense.

11. Additional Provisions.
---------------------

(a) To induce Company into entering this Operating Agreement, AWS and
Manager affirm:

(i) A default declared by FMAC as a result of this Operating Agreement
or any alleged default arising from alleged or actual operation of the
Business by Manager, whether

4
<PAGE>

in the past, present, or future, or any alleged default arising from change
of control of the Company, to Manager whether or not resulting from this
Operating Agreement, shall not relieve AWS of any of its obligations under,
nor permit AWS to renegotiate, rescind, cancel, change, or terminate, the
Acquisition Agreement.

(ii) In the event of an actual or threatened declared default by FMAC,
AWS, Manager and Company shall collectively use their best efforts to
negotiate, compromise, settle, or defend such declarations; and

(iii) The effective settlement date of the Acquisition Agreement was
March 30, 1999.

(b) This Operating Agreement sets forth the entire understanding and
agreement among the parties hereto with reference to the subject matter hereof
and may not be modified, amended, discharged or terminated except by a written
instrument signed by the parties hereto.

(c) This Operating Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to agreements
made, delivered and to be performed within such State.

(d) This Operating Agreement may not be assigned by Company or Manager,
except that Manager may in its sole discretion assign this Operating Agreement
to an affiliate or parent corporation. Upon any assignment Manager shall remain
primarily liable and also jointly and severally liable to Company for
performance of Manager's duties herein.

(e) All of the terms and provisions of this Operating Agreement shall be
binding upon, inure to the benefit of, and be enforceable by each of the parties
hereto and their respective successors and assigns. Except for affiliates of
the Company and Manager and their respective members, shareholders, officers,
directors, employees and agents, no person other than the parties hereto shall
be a third party beneficiary of this Operating Agreement or have any rights
hereunder.

(f) No failure on the part of any party hereto to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other rights, power or remedy.

(g) No publicity release or announcement concerning this Operating
Agreement or the transactions contemplated hereby shall be issued without
advance approval of the form and substance thereof by Company and Manager,
unless otherwise required by a public information filing.

(h) Any notice or other communication required or which may be given
hereunder shall be in writing and either delivered personally to the addressee,
or mailed, certified or registered mail, or sent by a nationally recognized
overnight express courier service, postage or sending charges prepaid, and shall
be deemed given when so delivered personally, or if by certified or registered
mail, four days after the date of mailing, or if by overnight express courier
service, one business day after the date of sending, as follows:

5
<PAGE>

(i) If to Company to:

Millennia Car Wash, LLC
Attention: Eric Ottesen
c/o Excel Legacy Corporation
16955 Via del Campo, Suite 110
San Diego, California 92127

with a copy to:

Lynne M. Geyser, Esq.
P.O. Box 4715
San Clemente, California 92674-4715
Senior General Counsel
Millennia Car Wash, LLC

(ii) If to Manager, to:

President
1000 Crawford Place
Mt. Laurel, New Jersey 08054

With a copy to:

Robert M. Kramer, Esq.
1150 First Avenue, Suite 900
King of Prussia, Pennsylvania 19406

and to such other address or addresses as the Company or Manager, as the case
may be, may designate to the other by notice as set forth above.

(j) Any legal action, suit or proceeding arising out of or relating to
this Operating Agreement or the transactions contemplated hereby may be
instituted in any state or Federal court located in the State of Delaware, and
each party waives any objection which such party may now or hereafter have to
the laying of the venue of any such action, suit or proceeding, and irrevocably
submits to the jurisdiction of any such court in any such action, suit or
proceeding. Any and all service of process and any other notice in any such
action, suit or proceeding shall be effective against any party if given by
registered or certified mail, return receipt requested, or by any other means of
mail which requires a signed receipt, postage prepaid, mailed to such party as
herein provided. Nothing herein contained shall be deemed to affect the right
to any party to service of process in any other manner permitted by law.

(k) If any provision of this Operating Agreement shall be determined by a
court of competent jurisdiction to be invalid or unenforceable, such
determination shall not affect the remaining provisions of this Operating
Agreement, all of which shall remain in full force and effect.

6
<PAGE>

(l) This Operating Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.

(m) The headings in this Operating Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Operating Agreement.

(n) Manager shall name Company as an additional insured on liability
policies and shall provide Company evidence of same within five (5) days of
execution of this Operating Agreement.

IN WITNESS WHEREOF, the parties have executed this Operating Agreement as
of the date first above written.

MANAGER: MACE SECURITY INTERNATIONAL, INC.

By: /s/ Jon Goodrich
-----------------
Jon Goodrich, President

COMPANY: MILLENNIA CAR WASH, LLC

By: /s/ Russell B. Geyser
---------------------
Russell B. Geyser, President

MEMBERS:
EXCEL LEGACY CORPORATION, a Delaware corporation

/s/ Richard B. Muir
- -----------------------
By: Richard B. Muir, Executive Vice President

G II VENTURES, LLC, a California limited liability company
By its Managing Member, RussellB. Muir B. Geyser I, LLC, a California
limited liability company

/s/ Russell B. Geyser
---------------------
By: Russell B. Geyser, Managing Member

Solely in consent to this Operating Agreement and in affirmation
of its obligations and representations in Section 11(a) hereof:
AMERICAN WASH SERVICES, INC.

By: /s/ Robert M. Kramer
--------------------
Robert M. Kramer, Vice President

<PAGE>

EXHIBIT 10.100
--------------

EMPLOYMENT CONTRACT

This Employment Contract ("Agreement") is executed and delivered as of May
24, 1999, by and between Mace Security International, Inc., a Delaware
corporation ("Company"), and Louis D. Paolino, Jr., an individual ("Employee").

RECITALS

The Company conducts diversified businesses, including, without limitation,
personal security device marketing and car wash services operations
("Business"). The Employee is an executive with extensive experience in
corporate management. The Company desires to hire Employee as Chairman and
Chief Executive Officer and the Employee desires to accept the position offered.

The Company has entered into a Stock Purchase Agreement with Employee and
others dated March 26, 1999, pursuant to which Employee will purchase a number
of shares of the common stock of the Company ("Stock Purchase Agreement").

Employee will be employed by Company in a confidential relationship wherein
Employee, in the course of employment with Company, will become familiar with
and aware of information as to the specific manner of doing business and the
customers of Company and its affiliates and the Company's future plans. The
information Employee has and will have knowledge of are trade secrets and
constitute valuable goodwill of Company. Employee recognizes that the business
of Company is dependent upon a number of trade secrets and confidential business
information, including customer lists and customer data. The protection of
these trade secrets is of critical importance to Company. Company will sustain
great loss and damage if, for whatever reason, during the term of this Agreement
or Employee's employment with Company and for a period following the termination
of this Agreement or Employee's employment, Employee should violate the
provisions of paragraph 4 of this Agreement. Further, Employee acknowledges
that any such violation would cause irreparable harm to Company and that Company
would be entitled, without limitation, to injunctive relief to remedy such
violation.

NOW, THEREFORE, in consideration of the mutual promises, terms and
conditions set forth herein and the performance of each, the parties hereby
agree as follows:

1. SERVICES.

(a) Company hereby employs Employee as its Chief Executive Officer, and the
material duties of Employee and Employee's titles and duties may not be changed
without the Employee's consent. Upon consummation of the Merger Agreement
between the Company and American Wash Services, Inc., dated March 26, 1999,
Employee shall be appointed the Chairman of the Company's Board of Directors.

(b) Employee hereby accepts employment upon the terms and conditions
contained in this Agreement. Employee shall faithfully adhere to, execute and
fulfill all directions and policies established by the Board of Directors of the
Company.

D-1
<PAGE>

(c) Employee's employment shall be for a full-time position, except for
Employee's provision of consulting services to U.S. Plastic Lumber Corp. and
serving as a director of U.S. Plastic Lumber Corp. throughout the term of this
Agreement, consent to which is hereby given. Employee shall not, without the
prior written consent of Company, be engaged in any other business activity
pursued for gain, profit or other pecuniary advantage, if such activity
interferes with Employee's duties and responsibilities under this Agreement.
Employee may make personal investments in such form or manner as will neither
require Employee's services in the operation or affairs of the companies or
enterprises in which such investments are made nor violate the terms of
Paragraph 4.

2. COMPENSATION.

(a) For all services to be rendered by Employee to Company, Company shall
pay Employee an initial salary computed and earned ratably over twelve months at
the rate of Three Hundred Fifty Thousand Dollars ($350,000) per year, commencing
on the date hereof, payable in accordance with Company's normal payroll
procedures. The rate of Employee's salary may be adjusted from time to time
during the term of this Agreement, upon the consent of Employee and the Board of
Directors of the Company or the compensation committee thereof.

(b) To the extent that Company, from time to time in its sole discretion,
offers or provides any of the following to its employees, then Employee, on an
equal basis with such other employees, shall be entitled to: (i) participation
in all, if any, life, health, medical, hospital, accident and disability
insurance programs of Company in existence for the benefit of its employees and
for which Employee qualifies; (ii) participation in all, if any, pension,
retirement, profit sharing or stock purchase plans for which Employee qualifies;
and (iii) participation in any other employee benefits which Company accords to
its employees and for which Employee qualifies.

(c) During the term of Employee's employment with Company, Employee shall
be entitled to reimbursement for reasonable business expenses, including
gasoline, incurred on behalf of Company. Reimbursement for business expenses
will be provided to Employee on the same basis and under the same guidelines as
are applicable to all of Company's employees. Employee shall be entitled to the
Employee Benefits set forth in Schedule A attached.

3. TERM. The period of Employee's employment with the Company shall
commence on the date of this Agreement and shall continue for four years
thereafter, unless sooner terminated in accordance with the provisions of this
Agreement ("Term"). After expiration of the Term, Employee's employment shall
continue thereafter on an at-will month-to-month basis, until terminated by
either party to the Agreement.

4. NONCOMPETITION COVENANTS.

(a) Employee agrees that the noncompetition covenants contained in this
Paragraph 4 are a material and substantial part of this Agreement.

(b) Employee covenants that during Employee's employment with Company and
for three months following the termination of Employee's employment (regardless
of the reason for the termination) the Employee shall not, directly or
indirectly, without the prior express written consent of Company, do any of the
things set forth in item (i) through (v) below:

D-2
<PAGE>

(i) engage, as an officer, director, shareholder, owner, partner,
joint venturer, agent, or in a managerial capacity, whether as an employee,
independent contractor, consultant, advisor or sales representative, in the
personal security device industry or in the car wash services industry within
the United States ("the Territory");

(ii) call upon any person who is, at the time of the contact, an
employee of Company or its affiliates, if the purpose and intent of the contact
is to entice such employee away from or out of the employ of Company or its
affiliates;

(iii) call upon any person or entity which is, at the time of the
contact, a customer of the Company or its affiliates for the purpose of
soliciting or selling any of the items or services which are the items or
services offered by the Company or its affiliates;

(iv) disclose the identity of the customers of Company or its
affiliates, whether in existence or proposed, to any person, firm, partnership,
corporation or other entity whatsoever, for any reason or purpose whatsoever;

(v) promote, or assist, financially or otherwise, any person, firm,
partnership, corporation or other entity whatsoever to do any of the above;

For the purposes of this Agreement, the term "affiliates" shall mean one or more
of: (A) each subsidiary of Company, and (B) each other entity under the direct
or indirect control of the Company.

(c) The Company will sustain significant losses and damages, if Employee
breaches the covenants in this Paragraph 4. There is no adequate monetary
remedy for the immediate and irreparable damage that would be caused to Company
by Employee's breach of its non-competition covenants. Employee agrees that, in
the event of a breach by him of the foregoing covenants, such covenants may be
enforced by Company by, without limitation, injunctions and restraining orders.

(d) It is agreed by the parties that the covenants in this Paragraph 4
impose a reasonable restraint on Employee in light of the activities and
business of Company on the date of the execution of this Agreement and the
future plans of Company.

(e) The covenants in this Paragraph 4 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. If any court of competent jurisdiction shall determine that the
scope, time or territorial restrictions set forth are unreasonable, then it is
the intention of the parties that such restrictions be enforced to the fullest
extent which the court deems reasonable, and the Agreement shall thereby be
reformed.

(f) The covenants in this Paragraph 4 shall be construed as independent of
any other provision of this Agreement and the existence of any claim or cause of
action of Employee against Company whether predicated on this Agreement, or
otherwise, shall not constitute a defense to the enforcement by Company of such
covenants. It is specifically agreed that the duration of the noncompetition
covenants stated above shall be computed by excluding from such computation all
time during which Employee is in violation of any provision of this Paragraph 4
and all time during which there is pending in any court of competent
jurisdiction any action (including any appeal from any judgment) brought by any
person, whether or not a party to this Agreement, in which action Company seeks
to enforce the agreements and covenants of Employee or in which any person
contests the validity of such agreements and covenants or their enforceability
or seeks to avoid their performance or enforcement. Provided that, no such
exclusion shall include the period of time within which Employee has ceased
violating this paragraph, whether or

D-3
<PAGE>

not as a result of being in compliance with Court injunction or doing so
voluntarily, and whether or not any action is pending against Employee, and
provided that no such exclusion shall include the time an action is pending, if
the action is finally determined in Employee's favor.

5. CONFIDENTIAL INFORMATION. It is expressly acknowledged by the Employee
that customer lists, orders, current and closed out orders, prospect lists,
documents containing the names or addresses of existing or potential customers,
information regarding the Company's financial condition or business plans, the
methods by which the Company serves its customers or conducts its operations, as
well as other business procedures, are the property of the Company and
constitute confidential information or trade secrets of the Company
("Confidential Information"). Employee agrees to maintain the confidentiality
of the Confidential Information and further agrees that Employee will not,
directly or indirectly, use or disclose Confidential Information to any natural
or legal person, other than authorized employees or agents of the Company,
during the Term or thereafter. All Confidential Information and all
correspondence, reports, charts, products, records, designs, patents, plans,
manuals, "field guides," memoranda, advertising materials, lists and other data
or property collected by or delivered to Employee by or on behalf of Company,
its representatives, customers and government entities (including, without
limitation, customers obtained for Company by Employee), and all other materials
compiled by Employee which pertain to the business of Company shall be and shall
remain the property of Company, shall be subject at all times to its discretion
and control and shall be delivered, together with any and all copies thereof,
promptly to Company upon request at any time and without request upon completion
or other termination of Employee's employment hereunder.

6. INVENTIONS. Employee shall disclose promptly to Company any and all
conceptions and ideas for inventions, improvements, and valuable discoveries,
whether patentable or not, which are conceived or made by Employee solely or
jointly with another during the period of employment or within three months
thereafter and which are related to the business or activities of Company.
Employee hereby assigns and agrees to assign all his interests therein to
Company or its nominee. Whenever requested to do so by Company, Employee shall
execute any and all applications, assignments or other instruments that Company
shall deem necessary to apply for and obtain Letters Patent of the United States
or any foreign country or to otherwise protect Company's interest therein.
These obligations shall continue beyond the termination of employment with
respect to inventions, improvements and valuable discoveries, whether patentable
or not, conceived, made or acquired by Employee during the period of employment,
and shall be binding upon Employee's heirs, assigns, executors, administrators
and other legal representatives.

7. TERMINATION; RIGHTS OF TERMINATION. Employee's employment under this
Agreement may terminated during the term hereof in any one or more of the
following ways:

(a) Automatically upon the death or resignation of Employee, the parties
agreeing that Employee may resign at any time without such resignation
constituting a breach of this Agreement;

(b) By Company upon written notice to Employee upon:

(i) Employee's unsatisfactory performance of his duties or other
obligations under this Agreement, as determined in good faith by the Company
after having given Employee notice of the unsatisfactory performance, including
without limitation, Employee's refusal or inability to competently perform his
obligations under this Agreement, as determined in good faith by the Company,
except where non-performance is caused by disability;

D-4
<PAGE>

(ii) Employee's inability to perform his duties under this Agreement
because of illness or physical or mental disability or other incapacity which
continues for a period of 90 days, either consecutive or cumulative during any
one-year period;

(iii) any type of harassment, violence or threat thereof, or other
behavior toward other employees of the Company or toward third parties of a kind
that may tend to result in liability being incurred by the Company toward such
employee or third party;

(iv) alcohol abuse, use of controlled substances during employment
hours, or a positive test for use of controlled substances; or

(v) gross negligence or willful misconduct with respect to the
Company or any of its affiliates or subsidiaries, including without limitation
fraud, embezzlement, theft or proven dishonesty in the course of employment, or
a conviction of a felony or a misdemeanor involving moral turpitude, or a
finding of adjudication withheld, with imposition of a sentence, to either a
felony or a misdemeanor involving moral turpitude, or the entering of a plea of
guilty or nolo contendere to a felony.
---- ----------

The written notice provided for herein shall state the reason for
Employee's termination.

(c) Upon termination of Employee's employment under this Paragraph 7 for
any reason, Employee shall be entitled to receive Employee's salary accrued
through the date of termination, plus any employee benefits which by their
terms and provisions continue after such termination. In addition, upon
termination of Employee's employment under this Paragraph 7 for any reason other
than pursuant to Paragraph 7(a) or Paragraph 7(b)(ii), Employee shall be
entitled to receive and Company shall pay Employee immediately upon such
termination a termination fee in the amount of Seven Million Dollars
($7,000,000). The parties agree that, if Employee voluntarily resigns within
the first ninety (90) days of this Agreement's term without the Company having
breached this Agreement no termination fee shall be due.

(d) In the event of termination of Employee's employment under this
Agreement for any reason provided in this paragraph 7, or if Employee resigns
prior to the expiration of the term of this Agreement, all rights and
obligations of Company and Employee under this Agreement shall cease
immediately, except that Employee's obligations under this subparagraph and
paragraphs 4, 5, and 6, and the Company's obligations under Paragraph 7(c)
herein shall survive such termination. After such termination Employee shall
have no right to receive any compensation hereunder, except as set forth in
paragraph 7(c).

8. COMPLETE AGREEMENT. This Agreement is the final, complete and
exclusive statement and expression of the agreement between Company and
employee, it being understood that there are no oral representations,
understandings or agreements covering the same subject matter as this Agreement.
This Agreement supersedes, and cannot be varied, contradicted or supplemented by
evidence of any prior or contemporaneous discussions, correspondence, or oral or
written agreements of any kind. This Agreement may be modified, altered or
otherwise amended only by a written instrument executed by both Company and
Employee.

9. NO WAIVER; REMEDIES CUMULATIVE. No waiver by the parties hereto of any
default or breach of any term, condition or covenant of this Agreement shall be
deemed to be a waiver of any subsequent default or breach of the same or any
other term, condition or covenant contained herein. No right, remedy or
election given by any term of this Agreement shall be deemed exclusive but each
shall be cumulative with all other rights, remedies and elections available at
law or in equity.

D-5
<PAGE>

10. ASSIGNMENT; BINDING EFFECT. Employee understands that Employee has
been selected by Company on the basis of Employee's personal qualifications,
experience and skills. Employee agrees, therefore, that he cannot assign all
or any portion of this Agreement. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and Company's successors and assigns.
It is further understood and agreed that Company may be merged or consolidated
with another entity and that any such entity shall automatically succeed to the
rights, powers and duties of Company hereunder.

11. NOTICE. All notices or other communications required or permitted
hereunder shall be in writing and may be given by depositing the same in the
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.

To Company: Chief Executive Officer
1000 Crawford Place
Mount Laurel, New Jersey 08054

To Employee: Louis D. Paolino, Jr.
500 East Mantua Ave.
Wenonah, New Jersey 08090

Notice shall be deemed given and effective the day personally delivered, the day
after being sent by overnight courier and three 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. Either party
may change the address for notice by notifying the other party of such change in
accordance with this paragraph 11.

12. SEVERABILITY; HEADINGS. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in nay way to describe, interpret, define or limit the extent or intent of this
Agreement or of any part hereof.

13. GENDER. The use of the masculine pronoun in this Agreement has been
used for convenience and shall apply to the Employee even where the Employee is
a female.

14. GOVERNING LAW. This Agreement shall in all respects be construed in
accordance with the laws of the State of New Jersey.

15. INSURANCE AND INDEMNIFICATION.

(a) Subject to applicable law, for a period of six (6) years following
completion of the Term, the Company will: (i) indemnify Employee and his heirs
and representatives to the extent provided in the Company's Certificate of
Incorporation in effect on the date of this Agreement and will not amend, reduce
or limit rights of indemnity afforded to them or the ability of the Company to
indemnify them, not hinder, delay or make more difficult the exercise of such
rights of indemnity and (ii) maintain director and officer liability insurance
coverage providing Employee with coverage (1) at least as favorable as the
policies in effect immediately prior to the date hereof covering the Company's
directors and officers or

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<PAGE>

(2) as favorable as is available at a cost to the Company of up to 125% of the
premiums currently being paid by the Company.

(b) If any claim is (or claims are) made against Employee and his heirs
and representatives, including legal counsel, arising from Employee's services
as a director, officer and employee of the Company, within six (6) years from
the expiration of the Term, the provisions of this Paragraph 15 respecting the
Company's Certificate of Incorporation shall continue in effect until the final
disposition of all such claims.

(c) The Company agrees to provide written notice to Employee immediately
upon learning of any claim or threatened claim against Employee by any third
party relating to or arising out of the business of the Company or Employee's
prior service as a director, officer, employee or controlling shareholder of the
Company. The Company further agrees to provide to Employee any complaints and
other relevant documentation related to such claims immediately upon receipt of
such documentation.

(d) Employee agrees that he will cooperate with and assist the Company, as
is reasonably requested by the Company, in its defense of any action or
proceeding against the Company, its directors, officers, employees or affiliates
arising out of or in any way related to any transactions, events or other
matters which occurred during the period of his employment with the Company, to
the extent that such cooperation and assistance will not impair Employee's legal
rights or remedies or increase the likelihood that Employee will incur any
liabilities as a result thereof. This Agreement shall not preclude Employee from
testifying in such action or proceeding. In the event that Employee does
cooperate with and assist the Company in its defenses of such an action or
proceeding, the Company agrees to reimburse Employee for all reasonable expenses
incurred by Employee in providing such assistance.

16. 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.

(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 take, if ordered by the arbitrators in accordance with the

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<PAGE>

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 Company and Employee in connection with the negotiation of
and consummation of this Agreement shall be entitled to represent their
respective party in any and all proceedings under this Paragraph or in any other
proceeding (collectively, "Proceedings"). Company and Employee, 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 undersigned parties have executed this Agreement on
the year and day above written.

MACE SECURITY INTERNATIONAL, INC.

By:/s/ Jon E. Goodrich, Jr.
------------------------------
By: Jon E. Goodrich
Its: President

/s/ Louis D. Paolino, Jr.
---------------------------------
Louis D. Paolino, Jr.

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<PAGE>

EXHIBIT 3.2
-----------
CERTIFICATE OF AMENDMENT

CERTIFICATE OF INCORPORATION

MACE SECURITY INTERNATIONAL, INC.

MACE SECURITY INTERNATIONAL, INC., a corporation organized and existing under
and by virtue of the Delaware General Corporation Law (the "Corporation"), DOES
HEREBY CERTIFY THAT:

FIRST: The Board of Directors of the Corporation has adopted a resolution
proposing and declaring advisable and in the best interests of the Corporation
the following amendment to Article FOURTH of the Certificate of Incorporation of
the Corporation, to read in its entirety as follows (the "Charter Amendment"):

"FOURTH: The aggregate number of shares of stock which the Corporation
shall have authority to issue is 250,000,000, divided into two classes, one
class consisting of 200,000,000 shares of common stock , par value $.01 per
share, and the other class consisting of 50,000,000 shares of preferred
stock, par value $.01 per share."

SECOND: The stockholders of the Corporation, by partial written consent of
stockholders in accordance with Section 228 of the Delaware General Corporation
Law, have adopted and approved the Charter Amendment in accordance with the
provisions of Section 212 of the Delaware General Corporation Law.

THIRD: The Corporation has notified the nonconsenting stockholders of the
Corporation of the approval of the Charter Amendment by partial written consent
in accordance with Section 228 of the Delaware General Corporation Law.

FOURTH: The Charter Amendment has been duly adopted and approved in accordance
with the provisions of Section 242 of the Delaware General Corporation Law.

IN WITNESS WHEREOF, said Mace Security International, Inc. has caused this
Certificate of Amendment of Certificate of Incorporation to be executed by a
duly authorized officer of the Corporation this __th day of June, 1999.

MACE SECURITY INTERNATIONAL, INC.

By: /s/ Louis D. Paolino, Jr.
___________________________________
Louis D. Paolino, Jr.
President and Chief Executive Officer

E-1

<PAGE>

EXHIBIT 10.98
-------------

MACE SECURITY INTERNATIONAL, INC.

1999 STOCK OPTION PLAN
----------------------

Effective Date: March 26, 1999

Approved by Stockholders: May 25, 1999

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MACE SECURITYINTERNATIONAL,INC.
1999 STOCK OPTION PLAN

ARTICLE I

PURPOSE AND EFFECTIVE DATE

/S/ 1.1 Purpose. The purpose of the Plan is to provide incentives, through
the grant of stock options, for selected employees, directors, and consultants
of the Company and Related Corporations to promote the long-term growth and
financial success of the Company and Related Corporations.

/S/ 1.2 Effective Date and Expiration of Plan. The Plan shall be effective
on the date on which it is adopted by the Board. Unless earlier terminated by
the Board pursuant to Section 6.3, the Plan shall terminate on the tenth
anniversary of its Effective Date. No Option shall be granted pursuant to the
plan after its termination date, but Options granted prior to the termination
date may extend beyond that date.

ARTICLE II

DEFINITIONS

The following words and phrases, as used in the Plan, shall have these
meanings:

/S/ 2.1 "Board" means the Board of Directors of the Company.

/S/ 2.2 "Cause" means a good faith determination by the Board that an
Optionee has (i) breached any material term or provision of the Optionee's
employment agreement; (ii) engaged in any type of disloyalty to the Company or a
Related Corporation, including without limitation fraud, embezzlement, theft, or
dishonesty in the course of his employment or service to the Company and Related
Corporations; (iii) been convicted of a felony; (iv) disclosed any proprietary
information of the Company or a Related Corporation without the consent of the
Company or the Related Corporation; or (v) breached the terms of any written
confidentiality agreement or any non-competition agreement with the Company or a
Related Corporation in any material respect.

/S/ 2.3 "Code" means the Internal Revenue Code of 1986, as amended.

/S/ 2.4 "Committee" means the Compensation Committee of the Board which shall
consist of not less than two directors of the Company who shall be appointed by,
and shall serve at the pleasure of, the Board. Each member of the Committee,
while serving as such, shall be deemed to be acting in his or her capacity as a
director of the Company. It is intended that each member of the Committee shall
be an "outside director" within the meaning of Treas. Reg. 1.162-27(e)(3) or any
successor thereto, and shall be a Non-Employee Director. Notwithstanding the
foregoing, if the Committee does not consist solely of two (2) or more Non-
Employee Directors, each Option must be approved by the full Board.

/S/ 2.5 "Company" means Mace Security International, Inc. and its successors
and assigns.

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<PAGE>

/S/ 2.6 "Company Stock" means the common stock of the Company, par value
$0.01 per share.

/S/ 2.7 "Effective Date" means March 26, 1999, the date the Plan is adopted
by the Board.

/S/ 2.8 "Eligible Individual" means an employee, director (who may, but need
not, be an employee), or consultant of the Company or a Related Corporation.

/S/ 2.9 "Fair Market Value" means, as of any specified date, an amount
arrived at by a good faith determination of the Committee and shall be the value
determined under such other method of determining fair market value as shall be
authorized by the Code, or the rules or regulations thereunder, and adopted by
the Committee.

/S/ 2.10 "Incentive Stock Option" means an option within the meaning of
section 422 of the Code.

/S/ 2.11 "Non-Employee Director" means a director who:

(1) Is not currently an officer (as defined in 17 CFR (S)240.16a-1(f))
of, or otherwise currently employed by, the Company or a parent or subsidiary of
the Company within the meaning of 17 CFR (S)240.16b-3(b)(3);

(2) Does not receive compensation, either directly or indirectly, from
the Company or a parent or subsidiary of the Company within the meaning of 17
CFR (S)240.16b-3(b)(3) for services rendered as a consultant or in any other
capacity other than as a director, except for an amount that does not exceed the
dollar amount for which disclosure would be required under 17 CFR (S)229.404(a);

(3) Does not possess an interest in any other transaction for which
disclosure would be required pursuant to 17 CFR (S)229.404(a); and

(4) Is not engaged in a business relationship for which disclosure
would be required pursuant to 17 CFR (S)229.404(b).

/S/ 2.12 "Nonqualified Stock Option" means an option other than an Incentive
Stock Option.

/S/ 2.13 "Option" means either a Nonqualified Stock Option or an Incentive
Stock Option to purchase Company Stock which is granted under the Plan.

/S/ 2.14 "Option Price" means the price at which Company Stock may be
purchased under an Option as provided in Section 5.4.

/S/ 2.15 "Optionee" means an Eligible Individual who receives an Option.

/S/ 2.16 "Personal Representative" means the person or persons who, upon the
death, disability, or incompetency of an Optionee, shall have acquired, by will
or by the laws of descent and distribution or by other legal proceedings, the
right to exercise an Option theretofore granted to such Optionee.

F-3
<PAGE>

/S/ 2.17 "Plan" means the Mace Security International, Inc. 1999 Stock Option
Plan.

/S/ 2.18 "Related Corporation" means either a corporate subsidiary of the
Company, as defined in section 424(f) of the Code, or the corporate parent of
the Company, as defined in section 424(e) of the Code.

/S/ 2.19 "Stock Option Agreement" means an agreement entered into between an
Optionee and the Company under Section 5.3.

ARTICLE III

ADMINISTRATION

/S/ 3.1 Committee to Administer. The Plan shall be administered by the
Committee. The Committee shall have full power and authority to interpret and
administer the Plan, to establish and amend rules and regulations for its
administration, and to make such determinations and interpretations under, or in
connection with, the Plan as it deems necessary or advisable. The Committee's
decisions shall be final and conclusive with respect to the interpretation of
the Plan and any Option made under it. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Option granted under it.

The Committee shall select one of its members as chairman, and shall hold
meetings at such time and places as it may determine. The acts of a majority of
the Committee at a meeting at which a quorum is present, or acts reduced to or
approved in writing by a majority of the members of the Committee, shall be
valid acts of the Committee.

/S/ 3.2 Powers of Committee.

(a) Subject to the provisions of the Plan, the Committee shall have
authority, in its discretion, to determine those Eligible Individuals who shall
receive Options, the time or times when such Options shall be granted, whether
an Incentive Stock Option or a Nonqualified Stock Option shall be granted, and
the number of shares to be subject to each Option.

(b) The Committee shall determine the terms, restrictions, and
provisions of the agreement relating to each Option, including the period over
which the Option shall vest and such terms, restrictions, and provisions as
shall be necessary to cause certain options to qualify as Incentive Stock
Options. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Stock Option Agreement, in
such manner and to the extent the Committee shall determine in order to carry
out the purposes of the Plan.

ARTICLE IV

OPTIONS

/S/ 4.1 Eligibility for Options. An Option may be granted to any Eligible
Individual selected by the Committee. In making this selection and in
determining the form of Option and the number of shares of Company Stock subject
to the Option, the Committee may give consideration to the

F-4
<PAGE>

functions and responsibilities of the respective Eligible Individual, his or her
present and potential contributions to the success of the Company and Related
Corporations, the value of his or her services to the Company and Related
Corporations, and such other factors deemed relevant by the Committee; provided,
however, that Incentive Stock Options shall not be granted to any Eligible
Individual who is not an employee of the Company or a Related Corporation. The
Committee may provide in an Option that said Option may be exercised only if
certain conditions, as determined by the Committee, are fulfilled.

/S/ 4.2 Shares Available Under the Plan. The Company Stock to be offered
under the Plan pursuant to Options may be authorized but unissued shares or
reacquired shares, and the Company may purchase shares required for this
purpose, from time to time, if it deems such purchase to be advisable. Subject
to adjustment under Section 6.2, no more than 15,000,000 shares of Company Stock
shall be issuable upon exercise of Options. Any shares of Company Stock subject
to an Option which for any reason is cancelled or terminated without having been
exercised shall again be available for the granting of Options; provided,
however, that (i) if an Option is cancelled, the cancelled Option is counted
against the maximum number of shares for which Options may be granted to an
employee, and (ii) if the Option Price is reduced after the date of grant, the
transaction is treated as a cancellation of an Option and the grant of a new
Option for purposes of counting the maximum number of shares for which Options
may be granted to an employee.

ARTICLE V

TERMS OF OPTIONS

/S/ 5.1 Grant of Stock Options. The Committee may, from time to time,
subject to the provisions of the Plan and such terms and conditions as the
Committee may prescribe, grant Options to any Eligible Individual, provided that
Incentive Stock Options shall not be awarded to any Eligible Individual who is
not an employee of the Company or a Related Corporation. Grants of Incentive
Stock Options and Nonqualified Stock Options shall be separate and not in
tandem. The granting of an Option shall not be deemed either to entitle the
Eligible Individual to, or to disqualify the Eligible Individual from, any
participation in any other grant of Options under the Plan.

/S/ 5.2 Period of Option. Options shall be vested and exercisable in such
installments and on such dates as the Committee may specify, provided that the
Committee may accelerate the vesting and/or exercise date of any outstanding
Options, in its discretion, if it deems such acceleration to be desirable, and
provided further that no Option shall be exercisable within the first six months
from the date of grant. Any Option shares, the right to the purchase of which
has accrued, may be purchased at any time up to the expiration or termination of
the Option. Subject to Section 5.5(b) (relating to the grant of Incentive Stock
Options to more-than-10% shareholders), the duration of each Option shall not be
more than ten years from the date of grant.

/S/ 5.3 Stock Option Agreement. Each Option shall be evidenced by a Stock
Option Agreement, in such form and containing such provisions not inconsistent
with the provisions of the Plan as the Committee from time to time shall
approve. Each Stock Option Agreement shall specify whether the Option is an
Incentive Stock Option or Nonqualified Stock Option; provided, however, if the
Option is not designated in the Stock Option Agreement as an Incentive Stock
Option or Nonqualified Stock Option, the Option shall constitute an Incentive
Stock Option if it complies with the terms of section 422 of the Code, and
otherwise, it shall constitute a Nonqualified Stock Option.

F-5
<PAGE>

/S/ 5.4 Option Price, Exercise and Payment.

(a) The Option Price of Company Stock under each Option shall be
determined and fixed by the Committee at the time the Option is granted, but,
subject to Section 5.5(b) (relating to the grant of Incentive Stock Options to
more-than-10% shareholders), shall be a price not less than the greater of 100
percent of the Fair Market Value of Company Stock or the par value thereof at
the date such Option is granted.

(b) Options may be exercised from time to time by giving written notice
to the Company, specifying the number of shares to be purchased. No Option may
be exercised for less than 100 shares unless the issue of a lesser number is
enough to exhaust the Option. The notice of exercise shall be accompanied by
payment in full of the Option Price for the shares being purchased.

(c) The Option Price shall be payable in cash or its equivalent, or if
the Committee, in its discretion, so provides in the related Stock Option
Agreement or, in the case of Options which are not Incentive Stock Options, so
determines at or prior to the time of exercise, in whole or in part:

(i) through the transfer to the Company of shares of Company
Stock previously acquired by the Optionee, provided that, unless
otherwise provided in the related Stock Option Agreement, if such
shares of Company Stock were acquired through the exercise of an
Incentive Stock Option and are used to pay the Option Price of an
Incentive Stock Option, such shares have been held by the Optionee for
a period of not less than the holding period described in section
422(a)(1) of the Code on the date of exercise, or if such shares of
Company Stock were acquired through exercise of a Nonqualified Stock
Option or through exercise of an Incentive Stock Option and are used
to pay the Option Price of a Nonqualified Stock Option, such shares
have been held by the Optionee for a period of more than one year on
the date of exercise;

(ii) by delivering a properly executed notice of exercise of
the Option to the Company and a broker, with irrevocable instructions
to the broker promptly to deliver to the Company the amount of sale or
loan proceeds necessary to pay the exercise price of the Option; or

(iii) through the transfer to the Company of any combination of
cash, or its equivalent, and (i) and/or (ii) above.

However, in no event may the Option Price of an Option be paid through the
transfer to the Company of shares of Company Stock newly acquired by the
Optionee upon exercise of such Option.

In the event such Option Price is paid in whole, or in part, with
previously acquired shares of Company Stock, the portion of the Option Price so
paid shall be equal to the value, as of the date of exercise of the Option, of
such shares. The value of such shares shall be equal to the number of such
shares multiplied by the Fair Market Value of such shares on the date of
exercise (or the immediately preceding trading day if the date of exercise is
not a trading day). The Company shall not issue or transfer Company Stock upon
exercise of an Option until the Option Price is fully paid. If the related Stock
Option Agreement so provides, the Optionee may satisfy any amount

F-6
<PAGE>

required to be withheld by the Company under applicable federal, state and/or
local tax laws in effect from time to time, by electing to have the Company
withhold a portion of the shares of Company Stock to be delivered for the
payment of such taxes on such terms and conditions as the Stock Option Agreement
specifies.

/S/ 5.5 Limitations on Incentive Stock Options.

(a) The aggregate Fair Market Value (determined as of the date the
Incentive Stock Option is granted) of the Company Stock with respect to which
Incentive Stock Options are exercisable for the first time by an Optionee during
any calendar year (under this Plan and any other plan of the Company) may not
exceed one hundred thousand dollars ($100,000).

(b) If the Optionee owns more than ten percent (10%) of the total
combined voting power of all shares of stock of the Company or of a Related
Corporation at the time an Incentive Stock Option is granted to him or her, the
Option price for the Incentive Stock Option shall be not less than the greater
of (i) one hundred ten percent (110%) of the Fair Market Value of the optioned
shares of Company Stock on the date the Incentive Stock Option is granted, or
(ii) the par value thereof, and such Incentive Stock Option, by its terms, shall
not be exercisable after the expiration of five (5) years from the date the
Incentive Stock Option is granted.

(d) If an Option intended to be an Incentive Stock Option is granted to
an Eligible Individual and such Option may not be treated in whole or in part as
an Incentive Stock Option pursuant to the limitation in (a) above, such Option
shall be treated as an Incentive Stock Option to the extent it may be so treated
under such limitation, and as a Nonqualified Stock Option as to the remainder.
For purposes of determining whether an Incentive Stock Option would cause such
limitation to be exceeded, Incentive Stock Options shall be taken into account
in the order granted.

/S/ 5.6 Termination of Employment or Service.

(a) If the employment or service as a director or consultant of an
Optionee with the Company and Related Corporations terminates for a reason other
than (i) Cause, (ii) retirement (in the case of an Optionee who is an employee
of the Company or a Related Corporation), (iii) disability (as defined in
section 22(e)(3) of the Code), or (iv) death prior to the expiration date fixed
for his or her Option, such Option may be exercised at any time within three
months after such termination, unless otherwise provided in the related Stock
Option Agreement, to the extent of the number of shares covered by such Option
which were vested and purchasable at the date of such termination, or to any
greater extent permitted by the Committee; provided, however, that an Option
shall not be so exercisable on any date beyond the expiration date of such
Option.

(b) If the employment or service as a director or consultant of an
Optionee with the Company and Related Corporations is terminated by the Company
or a Related Corporation for Cause prior to the expiration date fixed for his or
her Option, such Option shall terminate immediately.

(c) If the employment of an Optionee with the Company and Related
Corporations terminates due to the Optionee's retirement prior to the expiration
date fixed for his or her Option,

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<PAGE>

such Option may be exercised at any time within one year following such
retirement, unless otherwise provided in the related Stock Option Agreement, to
the extent of the number of shares covered by such Option which were vested and
purchasable at the date of such retirement, or to any greater extent permitted
by the Committee; provided, however, that an Option shall not be so exercisable
on any date beyond the expiration date of such Option.

(d) If the employment or service as a director or consultant of an
Optionee with the Company and Related Corporations terminates due to the
Optionee's disability (as defined in section 22(e)(3) of the Code) prior to the
expiration date fixed for his or her Option, such Option may be exercised at any
time within one year after such termination, unless otherwise provided in the
related Stock Option Agreement, to the extent of the number of shares covered by
such Option which were vested and purchasable at the date of such termination,
or to any greater extent permitted by the Committee; provided, however, that an
Option shall not be so exercisable on any date beyond the expiration date of
such Option. In the event of the Optionee's legal disability, such Option may be
so exercised by the Optionee's Personal Representative.

(e) Should an Optionee die either while in the employ or while serving
as a director or consultant of the Company and Related Corporations, or after
termination of such employment or service (other than for Cause), the Option
rights of such deceased Optionee may be exercised by his or her Personal
Representative at any time within one year after the Optionee's death, unless
otherwise provided in the related Stock Option Agreement, to the extent of the
number of shares covered by such Option which were vested and purchasable at the
date of such death, or to any greater extent permitted by the Committee;
provided, however, that an Option shall not be so exercisable on any date beyond
the expiration date of such Option.

/S/ 5.7 Shareholder Rights and Privileges. An Optionee shall have no rights
as a shareholder with respect to any shares of Company Stock covered by an
Option until the issuance of a stock certificate to the Optionee representing
such shares.

ARTICLE VI

MISCELLANEOUS PROVISIONS

/S/ 6.1 Nontransferability. No Option shall be transferable otherwise than
by will or, if the Optionee dies intestate, by the laws of descent and
distribution. All Options shall be exercisable during the Optionee's lifetime
only by such Optionee or his or her Personal Representative. Any transfer
contrary to this Section 6.1 shall nullify the Option. If the Optionee is
married at the time of exercise and if the Optionee so requests at the time of
exercise, the certificate or certificates shall be registered in the name of the
Optionee and the Optionee's spouse, jointly, with right of survivorship.

/S/ 6.2 Adjustments Upon Changes in Stock.

(a) The number of shares of Company Stock which may be issued under the
Plan and the maximum number of shares of Company Stock with respect to which
Options may be granted to any Eligible Individual who is an employee of the
Company or a Related Corporation, as stated in Section 4.2 hereof, and the
number of shares issuable upon exercise of outstanding Options under the Plan(as
well as the Option Price per share under such outstanding Options) shall,
subject to the provisions of section 424(a) of the Code, be adjusted, as maybe
deemed appropriate by the

F-8
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Committee, to reflect any stock dividend, stock split, share combination, or
similar change in the capitalization of the Company.

(b) In the event of a corporate transaction (as that term is described
in section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), each outstanding Option shall be
assumed by the surviving or successor corporation or by a parent or subsidiary
of such corporation; provided, however, that, in the event of a proposed
corporate transaction, the Committee may terminate all or a portion of the
outstanding Options if it determines that such termination is in the best
interests of the Company. If the Committee decides to terminate outstanding
Options, the Committee shall give each Optionee holding an Option to be
terminated not less than seven (7) days' notice prior to any such termination by
reason of such a corporate transaction, and any such Option which is to be so
terminated may be exercised (if and only to the extent that it is then
exercisable) up to, and including the date immediately preceding such
termination. Further, as provided in Section 3.2(c) hereof the Committee, in its
discretion, may accelerate, in whole or in part, the date on which any or all
Options become exercisable.

(c) The Committee also may, in its discretion, change the terms of any
outstanding Option to reflect any such corporate transaction; provided, however,
that the Committee may not change the terms of an outstanding Incentive Stock
Option in a manner that would constitute a "modification" under section 424(h)
of the Code without the consent of the Optionee affected thereby.

/S/ 6.3 Amendment, Suspension, and Termination of Plan.

(a) The Board may suspend or terminate the Plan or any portion thereof
at any time, and may amend the Plan from time to time in any respect whatsoever,
except that the following amendments shall require shareholder approval (given
in the manner set forth in (b) below):

(i) With respect to Options which are Incentive Stock Options,
any amendment which would: (A) increase the number of shares of
Company Stock with respect to which Incentive Stock Options may be
granted under the Plan, except as provided in Section 6.2; (B) change
the class of employees eligible to receive Incentive Stock Options
under the Plan; or (C) extend the termination date of the Plan with
respect to any Incentive Stock Options granted hereunder;

(ii) Any amendment which would require shareholder approval
pursuant to Treas. Reg. (S) 1.162-27(e)(4)(vi) or any successor
thereto, if compliance with Treas. Reg. (S) 1.162-27(e) or any
successor thereto is intended; and

(iii) Any amendment for which shareholder approval is required
under the rules of the exchange or market on which the Common Stock is
listed.

Notwithstanding the foregoing, no such amendment, suspension, or termination
shall alter or impair any outstanding Option without the consent of the Optionee
affected thereby.

(b) The approval of shareholders must comply with all applicable
provisions of the corporate charter, bylaws, and applicable state law
prescribing the method and degree of

F-9
<PAGE>

shareholder approval required for the issuance of corporate stock or options. If
the applicable state law does not prescribe a method and degree of shareholder
approval in such case, the approval of shareholders must be effected - -

(i) By a method and in a degree that would be treated as
adequate under applicable state law in the case of an action
requiring shareholder approval (i.e., an action on which
shareholders would be entitled to vote if the action were taken
at a duly held shareholders' meeting); or

(ii) By a majority of the votes cast (including abstentions, to
the extent abstentions are counted as voting under applicable
state law) in a separate vote at a duly held shareholders'
meeting at which a quorum representing a majority of all
outstanding voting stock is, either in person or by proxy,
present and voting on the plan.

(c) With the consent of the Optionee affected thereby, the Committee may
amend or modify any outstanding Option in any manner to the extent that the
Committee would have had the authority under the Plan initially to grant such
Option as so modified or amended, including without limitation, to change the
date or dates as of which such Option may be exercised.

/S/ 6.4 Nonuniform Determinations. The Committee's determinations under the
Plan, including without limitation, (i) the determination of the Eligible
Individuals to receive Options, (ii) the form, amount, and timing of such
Options, (iii) the terms and provisions of such Options, and (iv) the agreements
evidencing the same, need not be uniform and may be made by it selectively among
Eligible Individuals who receive, or who are eligible to receive, Options under
the Plan, whether or not such Optionees are similarly situated.

/S/ 6.5 General Restriction. Each Option under the Plan shall be subject to
the condition that, if at any time the Committee shall determine that (i) the
listing, registration, or qualification of the shares of Company Stock subject
thereto upon any securities exchange or under any state or federal law, (ii)the
consent or approval of any government or regulatory body, or (iii) an agreement
by the Optionee with respect thereto, is necessary or desirable, then such
Option shall not become exercisable in whole or in part unless such listing,
registration, qualification, consent, approval, or agreement shall have been
effected or obtained free of any conditions not acceptable to the Committee.
Without limiting the generality of the foregoing, each Optionee or his legal
representative or beneficiary may also be required to give satisfactory
assurance that shares purchased upon exercise of an Option are being purchased
for investment and not with a view to distribution, and certificates
representing such shares may be legended accordingly.

/S/ 6.6 No Right To Employment. Neither the action of the Company in
establishing the Plan, nor any action taken by it or by the Board or the
Committee under the Plan, nor any provision of the Plan, shall be construed as
giving to any person the right to be retained in the employ of the Company or
any Related Corporation.

/S/ 6.7 Governing Law. With respect to any Incentive Stock Options granted
pursuant to the Plan and the related Stock Option Agreements, the Plan, such
Incentive Stock Options, and such related Stock Option Agreements shall be
governed by the applicable Code provisions to the maximum extent possible.
Otherwise, the laws of the State of Delaware shall govern the operation

F-10
<PAGE>

of, and the rights of Optionees under, the Plan, Options granted hereunder, and
the related Stock Option Agreements.

/S/ 6.8 Application of Funds. The proceeds received by the Company from the
sale of Company Stock pursuant to Options granted under the Plan shall be used
for general corporate purposes. Any cash received in payment for shares upon
exercise of an Option to purchase Company Stock shall be added to the general
funds of the Company and shall be used for its corporate purposes. Any Company
Stock received in payment for shares upon exercise of an Option to purchase
Company Stock shall become treasury stock.

F-11

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> APR-01-1999 JAN-01-1999
<PERIOD-END> JUN-30-1999 JUN-30-1999
<CASH> 6,061 6,061
<SECURITIES> 0 0
<RECEIVABLES> 1,127 1,127
<ALLOWANCES> 29 29
<INVENTORY> 1,790 1,790
<CURRENT-ASSETS> 10,475 10,475
<PP&E> 22,340 22,340
<DEPRECIATION> 1,093 1,093
<TOTAL-ASSETS> 39,194 39,194
<CURRENT-LIABILITIES> 13,634 13,634
<BONDS> 939 939
0 0
0 0
<COMMON> 96 96
<OTHER-SE> 23,113 23,113
<TOTAL-LIABILITY-AND-EQUITY> 39,194 39,194
<SALES> 1,095 1,799
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<CGS> 648 1,012
<TOTAL-COSTS> 1,928 2,292
<OTHER-EXPENSES> 2,474 3,328
<LOSS-PROVISION> 40 146
<INTEREST-EXPENSE> 73 27
<INCOME-PRETAX> (1,092) (1,560)
<INCOME-TAX> (350) (350)
<INCOME-CONTINUING> (742) (1,210)
<DISCONTINUED> 42 (72)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (699) (1,282)
<EPS-BASIC> (.09) (.17)
<EPS-DILUTED> 0 0

</TABLE>