SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date earliest event reported) February 12, 1997
ECOMAT, Inc.
(exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-21613 13-3865026
(Commission File Number) (IRS Employer Identification
Number)
147 Palmer Avenue, Mamaroneck, NY 10543
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (914) 777-3600
N/A
(Former name or former address, if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On February 12, 1997, pursuant to that certain Asset
Purchase Agreement (the "Purchase Agreement") by and between Clean
Living, Inc. d/b/a The Cleaner Image., a Connecticut corporation
("Clean Living"), and Eco Stu, Inc., a Delaware corporation ("ESI")
and a wholly-owned subsidiary of the Registrant, ESI acquired
substantially all of the assets of Clean Living (the "Clean Living
Assets") for an aggregate purchase price (the "Purchase Price")
consisting of (a)$65,000 and (b) the issuance by the Registrant of
3,000 shares (the "Shares") of the Registrant's common stock,
$.0001 par value ("Common Stock"), to Clean Living. The Purchase
Agreement also provides that beginning on the three month
anniversary of the first day of the calendar month following the
closing (the "Initial Vesting Date") and concluding nine months
after the Initial Vesting Date (the "Final Vesting Date"), Clean
Living shall be entitled to receive up to 3,000 additional shares
of the Registrant's Common Stock (the "Additional Shares"), from
the Registrant at the end of each such three month period (for an
aggregate of 12,000 shares) should the revenue of the Business (as
defined in the Purchase Agreement )meet or exceed $58,500 for that
calendar quarter. A proportionate amount of Additional Shares will
be issuable should the revenue of the Business fail to meet or
exceed $58,500 for any such calendar quarter. If on the Final
Vesting Date the revenue for the Business meets or exceeds $234,000
for the one year period beginning on the first day of the calendar
month following the closing and ending on the Final Vesting Date,
then the Registrant shall issue to Clean Living the remainder of
the 12,000 Additional Shares not previously issued. In addition,
the Purchase Agreement provides that:
(i) If the aggregate value (as calculated in
the Purchase Agreement) of the shares of the Registrant delivered
to Clean Living do not equal or exceed $75,000 (based upon 15,000
shares issued at an assumed value of no less than $5.00 per share)
on the Final Vesting Date, then the Registrant shall issue to Clean
Living the number of shares required to increase the aggregate
value of all such issued shares to $75,000 (the "Adjustment
Shares");
(ii) If the aggregate value of the shares of
the Registrant delivered to Clean Living equals or exceeds $75,000
on the Final Vesting Date, then the Registrant shall be under no
obligation to issue any Adjustment Shares; and
(iii) The $75,000 figure assumes that Clean
Living received 3,000 Shares at the closing and all of the
Additional Shares (12,000). Thus, ESI is responsible to cause the
Registrant to deliver Adjustment Shares if such issued Shares and
Additional Shares are valued at less than $5.00 per share (the
"Guaranteed Value") on the Final Vesting Date. The aggregate
Guaranteed Value of all such shares shall be reduced by such number
of Additional Shares not issued multiplied by $5.00 per share.
Clean Living was in the business of operating a wet-cleaners.
The Clean Living Assets will be used in the operation of the
Registrant's business in the same manner as used by Clean Living.
The Clean Living Assets consist primarily of an aqua clean wet-cleaning
machine and dryer, computerized surfactant pump, customer
list, trademark entitled "The Cleaner Image", supplies, slick rails
and conveyor and good will. In addition to the purchase of the
Clean Living Assets, ESI assumed the obligations under the lease
for the premises in Ridgefield,Connecticut(where the business will
continue to operate) as well as the lease for a van (which will be
used by ESI for delivery service). The source of funds for the
payment of the Purchase Price was from the Registrant's working
capital. The Purchase Price was determined based on Clean Living's
history of revenues, the fair market value of the Clean Living
Assets, the industry as a whole, the prospects of future revenue
from the Clean Living Assets directly and value of the Clean Living
Assets to the Registrant's business.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
No. Document
1 Asset Purchase Agreement dated February 12,
1997, by and between Clean Living, Inc. d/b/a
The Cleaner Image and Eco Stu, Inc.
2 Press Release dated February 13, 1997 by the
Registrant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly authorized and caused the undersigned
to sign this Report on the Registrant's behalf.
ECOMAT, INC.
By: /s/ Diane Weiser
Diane Weiser
President
Dated: February 18, 1997
EXIBIT 1
ASSET PURCHASE AGREEMENT
by and between
ECO STU, INC.
and
CLEAN LIVING, INC. d/b/a
THE CLEANER IMAGE
Dated as of February 12, 1997
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS, PURCHASE OF THE PURCHASED
ASSETS, ASSUMPTION OF ASSUMED LIABILITIES,
PURCHASE PRICE; CLOSING ADJUSTMENTS;
ADDITIONAL SHARES; REGISTRATION RIGHTS..... 1
1.1. Certain Definitions......................... 1
1.2. Purchase of the Assets...................... 5
1.3. Assumption by Buyer of Certain
Liabilities................................. 5
1.4. Non-Assumed Liabilities..................... 5
1.5. Purchase Price for the Assets............... 5
1.6. Allocation of Purchase Price................ 6
1.7. Limitations on Assignment; Further
Assurance................................... 6
1.8. Closing Adjustments......................... 6
1.9. Delivery of Additional Shares............... 7
1.10 Restriction on Transfer..................... 9
1.11 Registration Rights......................... 9
1.12 Free EcoCleaning............................ 10
1.13 Receivables ................................ 10
ARTICLE II - CLOSING................................... 11
2.1. The Closing................................. 11
2.2. Additional Actions to be Taken on
the Closing Date............................ 12
ARTICLE III - REPRESENTATIONS AND WARRANTIES
OF THE SELLER............................ 12
3.1. Organization and Qualification.............. 12
3.2. Subsidiaries and Affiliates................. 12
3.3. Validity and Execution of Agreement......... 12
3.4. No Conflict................................. 13
3.5. Litigation.................................. 13
3.6. The Assets.................................. 14
3.7. Intangible Property......................... 14
3.8. Inventory................................... 15
3.9. Intentionally Omitted....................... 15
3.10. Financial Statements........................ 15
3.11. Undisclosed Liabilities..................... 15
3.12. No Material Adverse Change.................. 16
3.13. Tax Matters................................. 16
3.14. Contracts and Other Agreements.............. 16
3.15. Real Estate................................. 16
3.16. Transactions with Affiliates................ 17
3.17. ERISA....................................... 17
3.18. Employees................................... 17
3.19. Environmental Matters....................... 17
3.20. Insurance................................... 18
3.21. Licenses and Permits........................ 18
3.22. Compliance with Laws........................ 18
3.23. Products.................................... 19
3.24. Intentionally omitted....................... 19
3.25. Shareholders of Seller...................... 19
3.26. Investment Representations.................. 19
3.27. Disclosure.................................. 20
3.28. Survival.................................... 20
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF THE BUYER.............................. 21
4.1. Organization and Qualification.............. 21
4.2. Validity and Execution of Agreement......... 21
4.3. No Conflict................................. 21
4.4. The Shares.................................. 21
4.5. Survival.................................... 22
ARTICLE V - INDEMNIFICATION............................ 22
5.1. Indemnification............................. 22
5.2. Method of Asserting Claims.................. 23
ARTICLE VI - POST-CLOSING COVENANTS OF THE PARTIES..... 25
6.1. Tax Matters................................. 25
6.2. Non-Competition............................. 25
6.3. Confidentiality............................. 26
ARTICLE VIII - MISCELLANEOUS........................... 26
7.1. Sales and Transfer Taxes.................... 26
7.2. Post-Closing Further Assurances............. 27
7.3. Notices..................................... 27
7.4. Publicity................................... 28
7.5. Entire Agreement............................ 28
7.6. Waivers and Amendments...................... 28
7.7. Governing Law............................... 28
7.8. Binding Effect; No Assignment............... 29
7.9. Variations in Pronouns...................... 29
7.10. Counterparts................................ 29
7.11. Exhibits and Schedules...................... 29
7.12. Effect of Disclosure on Schedules........... 29
7.13. Intentionally omitted....................... 29
7.14. Headings.................................... 29
7.15. Severability of Provisions.................. 29
7.16. Brokers..................................... 30
7.17. Change and Use of Name...................... 30
TABLE OF CONTENTS
(Continued)
EXHIBIT A - ASSIGNMENT & ASSUMPTION AGREEMENT
EXHIBIT B - BILL OF SALE
EXHIBIT C - LANDLORD'S CONSENT
EXHIBIT D - FORM OF OPINION OF SELLER'S COUNSEL
SCHEDULES
1.1(a) - Excluded Assets
1.1(b) - Permitted Liens
1.2 - Assets
1.3(b) - Assumed Liabilities
1.6 - Allocation of Purchase Price
3.1 - Jurisdictions of Qualification
3.2 - Affiliates
3.5 - Litigation - Seller
3.7 - Intangible Property
3.11 - Liabilities
3.13 - Tax Matters
3.14 - Material Agreements
3.15 - Real Estate
3.16 - Transactions with Affiliates
3.18 - Employees
3.20 - Insurance
3.21 - Licenses and Permits
3.23 - Products
3.25 - Shareholders of Seller
6.2(b) - Locations of Ecomat Facilities
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated February 12, 1997 by and
between Clean Living, Inc. d/b/a The Cleaner Image, a Connecticut
corporation (the "Seller"), and Eco Stu, Inc., a Delaware
corporation (the "Buyer").
W I T N E S E T H :
WHEREAS, the Seller is engaged in the business of operating a
"wet-cleaning" laundromat and cleaners (the "Business"); and
WHEREAS, the Seller owns certain assets comprising the Assets
(as hereinafter defined) which are related to the conduct of the
Business; and
WHEREAS, the Seller wishes to sell, and the Buyer wishes to
purchase, the Assets, subject to the assumption by the Buyer of
certain liabilities of the Seller comprising the Assumed
Liabilities (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual terms,
conditions and other agreements set forth herein, the Sellers and
the Buyer hereby agree as follows:
ARTICLE I
DEFINITIONS; PURCHASE OF THE PURCHASED ASSETS;
ASSUMPTION OF ASSUMED LIABILITIES;
PURCHASE PRICE; CLOSING ADJUSTMENTS;
ADDITIONAL SHARES; REGISTRATION RIGHTS
1.1. Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context
otherwise requires:
"Affiliate" means, with respect to any Person, any other
Person controlling, controlled by or under common control with such
Person; provided, however, that for purposes of Sections 3.2, 3.16
and 6.2, controlling or controlled shall be deemed to occur if any
Person holds or has the right to vote ten (10%) percent or more of
the voting stock of such other Person.
"Assets" has the meaning specified in Section 1.2.
"Assigned Contracts and Leases" means the unexpired leases
(including without limitation, the leases set forth on Schedule
3.15) and executory contracts (including without limitation,
licenses and purchase orders) set forth on Schedule 3.14, unless
indicated otherwise therein.
"Assignment and Assumption Agreement" means an instrument
substantially in the form of Exhibit A attached hereto.
"Bill of Sale" means an instrument substantially in the form
of Exhibit B attached hereto.
"Business" has the meaning specified in the Recitals.
"Business Day" means any day other than a Saturday, Sunday or
other day on which commercial banks are authorized or required by
law to close in New York City.
"Buyer" has the meaning specified in the introductory
paragraph of this Agreement.
"Claim Notice" has the meaning specified in Section 5.2(a).
"Closing" has the meaning specified in Section 2.1(a).
"Code" has the meaning specified in Section 3.13.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Environmental Law" means any and all present and future
federal, state, local and statutes, laws, regulations, ordinances,
rules, judgments, orders, decrees, permits, grants, franchises,
licenses or agreements relating to (a) the protection of the
environment, health or workers safety; (b) pollution or
environmental contamination; or (c) the use, processing,
distribution, generation, treatment, storage, recycling,
transportation, disposal, handling, Release or threatened or
potential Release of any Material of Environmental Concern.
"Excluded Assets" means those assets of the Seller or an
Affiliate of Seller set forth on Schedule 1.1(a).
"Governmental or Regulatory Body" means any government or
political subdivision thereof, whether federal, state, county,
local or foreign, or any agency, authority or instrumentality of
any such government or political subdivision.
"Indemnified Party" has the meaning specified in Section 5.2.
"Indemnifying Party" has the meaning specified in Section 5.2.
"Intangible Property" has the meaning specified in Section 3.7.
"IRS" means the Internal Revenue Service.
"Landlord's Consent" means an instrument substantially in the
form of Exhibit C attached hereto.
"Leases" has the meaning specified in Section 3.15.
"Liabilities" has the meaning specified in Section 3.11.
"Lien" means any lien, pledge, hypothecation, mortgage,
security interest, claim, lease, charge, option, right of first
refusal, easement, servitude, transfer restriction under any
stockholder or similar agreement, encumbrance or any other
restriction or limitation whatsoever.
"Losses" has the meaning specified in Section 5.1.
"Material Adverse Effect" means any change or changes or
effect or effects that individually or in the aggregate are or may
reasonably be expected to be materially adverse to (a) the business
or the assets, operations, income, prospects or conditions
(financial or otherwise) of the Seller, the Business or the
transactions contemplated by this Agreement or (b) the ability of
the Seller to perform its obligations under this Agreement.
"Material Agreements" has the meaning specified in Section 3.14.
"Non-Assumed Liabilities" has the meaning specified in Section 1.4.
"Permitted Liens" means (a) Liens for taxes not yet due and
(b) the Liens set forth on Schedule 1.1(b).
"Person" means any individual, corporation, partnership, firm,
joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental or Regulatory Body or
other entity.
"Plan" means any plan, fund, program, understanding, policy,
arrangement, contract or commitment, whether qualified or not
qualified for federal income tax purposes, whether formal or
informal, whether for the benefit of a single individual or more
than one individual, which is in the nature of (a) an employee
pension benefit plan (as defined in ERISA section 3(2)) (b) an employee
welfare benefit plan (as defined in ERISA section 3(1)) or (c) an
incentive, deferred compensation, or other benefit arrangement for
employees, former employees, their dependents or their
beneficiaries.
"Product" has the meaning specified in Section 3.23.
"Purchase Price" has the meaning specified in Section 1.5.
"Real Estate Documents" has the meaning specified in Section 3.15.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching,
dumping or disposing into the environment.
"Seller" has the meaning specified in the introductory
paragraph of this Agreement.
"Tax" or "Taxes" mean all taxes, charges, fees, levies or
other assessments imposed by any federal, state, local or foreign
Taxing Authority, including, without limitation, gross income,
gross receipts, income, capital, excise, property (tangible and
intangible), sales, transfer, value added, employment, payroll and
franchise taxes and such terms shall include any interest,
penalties or additions attributable to or imposed on or with
respect to such assessments.
"Tax Authority" has the meaning specified in Section 3.13.
"Tax Return" means any return, report, information return, or
other document (including any related or supporting information)
filed or required to be filed with any federal, state, or local
governmental entity or other authority in connection with the
determination, assessment or collection of any Tax (whether or not
such Tax is imposed on the Seller) or the administration of any
laws, regulations or administrative requirements relating to any
Tax.
1.2 Purchase of the Assets. Subject to the terms and
conditions set forth in this Agreement, the Seller agrees that, on
the Closing Date, the Seller shall sell, transfer, assign, convey
and deliver to the Buyer, and Buyer agrees that, on the Closing
Date, Buyer shall purchase, acquire and accept from the Seller, all
of the assets owned, used and held by the Seller to conduct the
Business, as set forth on Schedule 1.2, other than the Excluded
Assets (the "Assets"), free and clear of all Liens, other than
Permitted Liens.
1.3 Assumption by the Buyer of Certain Liabilities. Subject
to the terms and conditions set forth in this Agreement, Buyer
agrees that, on the Closing Date, Buyer shall assume and thereafter
pay, perform or discharge, as the case may be, the following
obligations and liabilities of the Seller outstanding on the
Closing Date (the "Assumed Liabilities"):
(a) all obligations and liabilities of the Seller arising out
of, or in connection with, the Assigned Contracts and
Leases; and
(b) all liabilities of the Seller reflected on Schedule 1.3
(b) attached hereto.
1.4 Non-Assumed Liabilities. The Buyer shall not assume nor
be responsible for any liabilities or obligations of the Seller or
any of its Affiliates other than the Assumed Liabilities
(the "Non-Assumed Liabilities").
1.5 Purchase Price for the Assets. The consideration for the
Assets shall be the (i) assumption by the Buyer of the Assumed
Liabilities; (ii) the payment by the Buyer to the Seller on the
Closing Date of $65,000 in immediately available funds, and (iii)
the transfer and delivery to the Seller on the Closing Date of
3,000 shares of common stock (the "Shares") of Ecomat, Inc., a
publicly traded company listed on the Nasdaq SmallCap Market
("Ecomat") (collectively, the "Purchase Price").
1.6 Allocation of Purchase Price. The Purchase Price shall
be allocated among the Assets and the non-competition agreement
contained in Section 6.2 in the manner set forth on Schedule 1.6.
Except as required by law, the parties hereby covenant and agree
with each other that none of them will take a position on any Tax
Return, before any Taxing Authority charged with the collection of
any Tax, or in any judicial proceeding, that is in any way
inconsistent with the negotiated allocation set forth on Schedule
1.6.
1.7 Limitations on Assignment; Further Assurance. To the
extent that the assignment of any Assigned Contract and Lease to be
assigned to the Buyer, as provided herein, shall require the
consent of another party thereto, this Agreement shall not
constitute an agreement to assign the same if an attempted
assignment would constitute a breach thereof. To the extent
required, the Seller agrees that it will use all reasonable efforts
to obtain the written consent of all necessary parties to the
assignment of the Buyer of all Assigned Contracts and Leases. If
any such consent is not obtained, the Seller shall use all
reasonable efforts to obtain the same and will cooperate with the
Buyer, as appropriate, in any reasonable arrangement designed by
the Buyer to provide to the Buyer, as appropriate, the benefits
thereunder and the Buyer shall assume all correlative obligations
to effectuate such arrangement.
1.8 Closing Adjustments. (a) The following adjustments shall
be made between the Seller and the Buyer as of 11:59 P.M. of the
day before the Closing Date:
(i) Rents and additional rents or charges (including,
but not limited to, additional rent or charges for real
estate taxes, water charges, insurance and common area
maintenance) payable by or to the Seller pursuant to the
Leases;
(ii) Security deposits, if any, paid by Seller pursuant
to the Leases, except any amount actually transferred by
the Seller prior to the Closing Date to the lessors
pursuant to the Leases;
(iii) Interest, if any, payable with respect to the
Assumed Liabilities;
(iv) Employee wages and benefits as set forth on
Schedule 3.18 relating to employees hired by Buyer; and
(v) Operating income and other operating expenses of
the Business.
(b) The net amount of any closing adjustments in favor of the
Seller shall be paid to the Seller on the Closing Date in
immediately available funds, and the net amount of any closing
adjustments in favor of the Buyer shall be credited against the
cash portion of the Purchase Price at the Closing.
(C) Any errors or omissions in computing closing adjustments
discovered after Closing Date shall be corrected promptly upon
discovery. The obligation of the parties under this Section shall
survive the Closing.
1.9 Delivery of Additional Shares. (a) Beginning on the
three month anniversary of the first day of the calendar month
following the Closing (the "Initial Vesting Date") and concluding
nine months after the Initial Vesting Date (the "Final Vesting
Date"), Seller shall be entitled to receive 3,000 shares of Ecomat,
Inc. common stock, par value $.0001 per share (the "Additional
Shares"), from Buyer at the end of each such three month period
(for an aggregate of 12,000 shares) should the revenue of the
Business meet or exceed $58,500 for that calendar quarter. Should
the revenue of the Business fail to meet or exceed $58,500 for any
such calendar quarter, Seller shall receive a proportionate amount
of such Additional Shares equal to the proportion of the revenue
for such quarter as it relates to the $58,500 figure. Buyer shall
have thirty (30) days following each such three month period to
compute the revenue of the Business for the preceding period.
Within five (5) days following the completion of Buyer's accounting
of the revenues of the Business, the Buyer shall deliver the
Additional Shares earned during such quarter (if any revenue
plateau for such quarter has been met) and its accounting of the
revenues for such quarter of the Business to the Seller. If on the
Final Vesting Date the revenue for the Business meets or exceeds
$234,000 for the one year period beginning on the first day of the
calendar month following the Closing and ending on the Final
Vesting Date, then Ecomat shall issue to Seller the remainder of
the 12,000 Additional Shares not previously issued. The following
additional provisions shall apply:
(i) If the aggregate value of the shares of
Ecomat delivered to Seller pursuant to Section 1.5 and Section
1.9 herein do not equal or exceed $75,000 (based upon 15,000
shares issued at an assumed value of no less than $5.00 per
share) on the Final Vesting Date, then Ecomat shall issue to
Seller the number of shares required to increase the aggregate
value of all such issued shares to $75,000 (the "Adjustment
Shares");
(ii) If the aggregate value of the shares of
Ecomat delivered to Seller pursuant to Section 1.5 and Section
1.9 herein equal or exceed $75,000 on the Final Vesting Date,
then Ecomat shall be under no obligation to issue any
Adjustment Shares; and
(iii) The $75,000 figure referred to in Section
1.9 (a)(i) above assumes that the Seller received 3,000 shares
pursuant to Section 1.5 above and all of the Additional Shares
(12,000) referred to in Section 1.9 (a). Thus, Buyer is
responsible to cause Ecomat to deliver Adjustment Shares if
such issued Shares and Additional Shares are valued at less
than $5.00 per share (the "Guaranteed Value") on the Final
Vesting Date. The aggregate Guaranteed Value of all such
shares shall be reduced by such number of Additional Shares
not issued pursuant to Section 1.9(a) multiplied by $5.00 per
share. For purposes of illustration, if Seller is issued 6,000
Additional Shares in the aggregate, the Guaranteed Value on
the Final Vesting Date shall be $45,000 (which includes the
shares issued pursuant to Section 1.5).
(c) Ecomat shall issue and deliver to the Seller the
Adjustment Shares within forty (40) days after the Final Vesting
Date. The Adjustment Shares shall consist of the same class of
common stock as the Shares issued pursuant to Section 1.5 and
Section 1.9 above. For purposes of this Section 1.9, the value of
the Shares and Additional Shares on the Final Vesting Date shall be
calculated by using the average closing bid price of the common
stock of Ecomat (as reported by the principal exchange on which
such common stock is traded, NASDAQ or the National Quotation
Bureau Incorporated, as the case may be) for the ten (10) trading
days ending three (3) days prior to the Final Vesting Date. The
number of Additional Shares and/or Adjustment Shares shall be
appropriately adjusted to reflect for any stock splits, stock
dividends and similar stock distributions effected by Ecomat with
respect to its shares of Common Stock during the period commencing
on the Closing Date and ending on the Final Vesting Date.
1.10 Restrictions on Transfer. The Shares, the Additional
Shares, and Adjustment Shares may not be sold, transferred,
pledged, hypothecated or otherwise encumbered in any manner until
the second anniversary of the Closing Date with respect to the
Shares and the third anniversary of the Closing Date with respect
to the Additional Shares and Adjustment Shares (the "Restrictive
Periods") other than to the Seller's shareholders ("Permitted
Transferees"). Any purported sale, transfer, pledge, hypothecation
or encumbrance during the Restrictive Periods without the prior
written consent of Buyer shall be null and void.
1.11. Registration Rights. (a) In the event Ecomat shall file
a new registration statement with respect to the public sale of any
of its securities (other than Form S-4, S-8 or comparable
Registration Statement), Ecomat shall each time, notify in writing
the holders of the Shares, Additional Shares and Adjustment Shares
not less than thirty (30) days prior to the proposed date of filing
of such registration statement and include all or a portion of the
Shares, Additional Shares and Adjustment Shares (as provided below)
in such registration statement as may be requested. The Company
will pay all fees and expenses incurred by the Company and such
holder in connection with the preparation and filing of such
document, excluding filing fees relating to the securities being
registered on behalf of Seller and all discounts and commissions
and fees of Seller's counsel. Notwithstanding the above, Ecomat
shall only be required to register a proportion of the Shares,
Additional Shares and Adjustment Shares equal to a fraction, the
numerator of which are the shares being registered by all of the
officers and directors of Ecomat and the denominator of which is
the total number of shares beneficially owned by such officers and
directors as a group.
(b) Anything in this Section 1.11 to the contrary
notwithstanding, in the event that the filing of such registration
statement is in connection with a public offering and the managing
underwriter of the public offering informs Ecomat in writing that
the inclusion of the Shares, Additional Share or Adjustment Shares
in the public offering will result in the inability to effect the
public offering or qualify the public offering in one or more
states which managing underwriter, in its sole discretion deems
necessary for the public offering to proceed, such holder shall
agree to withhold some or all of the Shares, Additional Shares and
Adjustment Shares from registration in accordance with the
instructions of such managing underwriter.
(c) Notwithstanding the provisions of Section 1.10, in the
event that the Seller has complied with Rule 144 promulgated
pursuant to the Securities Act of 1933, as amended, Ecomat agrees
to use of its best efforts to have its attorney issue an
appropriate opinion to its transfer agent.
1.12 Free EcoCleaning. As further payment for the Business,
Buyer agrees to provide Scott Sidell free "EcoCleaning" for himself
and his immediate family living with him for the course of his
life. Such service will only be provided by an Ecomat, Inc. owned
and operated location. This service is to include pick-up and
delivery so long as he resides at his current address located at
156 Deforest Road, Wilton, CT 06897.
1.13 Receivables. Buyer hereby agrees to reimburse Seller for
the net of the receivables collected by Buyer following the Closing
for all customer claim invoices, as inventoried as of the close of
business the day before the Closing (the "Inventory Date"), which
are less than sixty (60) days old as of the Inventory Date. Any
customer claim invoices older than sixty (60) days on the Inventory
Date will be deemed uncollectible and no reimbursement shall be
made by Buyer to Seller for the collection of any such invoices.
ARTICLE II
CLOSING
2.1 The Closing. (a) The consummation of the transactions
contemplated by this Agreement (the "Closing") shall be held at
12:00 p.m. (New York City time) on February 12, 1997 (such date and
time being referred to herein as the "Closing Date") at the offices
of Bernstein & Wasserman, LLP, 950 Third Avenue, New York, NY
10022.
(b) At the Closing, the Seller shall execute and deliver or
cause to be executed and delivered to the Buyer, all documents and
instruments necessary to transfer to the Buyer, all of the right,
title and interest of the Seller in and to the Assets, including,
without limitation:
(i) the Assignment and Assumption Agreement, signed
by the Seller;
(ii) the Bill of Sale and Certificates of Title, as
applicable, signed by the Seller;
(iii) each Landlord's Consent, signed by the Seller
and the respective lessors; and
(iv) Assignment of trademark entitled "The Cleaner
Image".
(v) Assignment of lease for van from Ford Motor
Credit.
(c) At the Closing, the Buyer shall:
(i) execute and deliver to the Seller the
Assignment and Assumption Agreement;
(ii) assume the Assumed Liabilities;
(iii) deliver to the Seller in immediately available
funds the balance of the cash portion of the Purchase
Price as adjusted for the closing adjustments pursuant to
Section 1.5; and
(iv) transfer and deliver the Shares referred to
in Section 1.5 to Seller.
2.2 Additional Actions to be Taken on the Closing Date.
(a) Liens/Consents. The Seller shall have satisfied and
discharged all Liens on the Assets except for Permitted Liens and
provided the Buyer with evidence of such satisfaction and discharge
as well as all necessary consents to transfer or assign the Assets
to Buyer, in form and substance satisfactory to the Buyer.
(b) Legal Opinion. The Buyer shall have received a legal
opinion of legal counsel to the Seller in form attached hereto as
Exhibit D.
(c) Accountant's Opinion. Intentionally Omitted.
(d) Shareholder Consent. The Buyer shall have received a
consent to the transactions contemplated by this agreement signed
by all of the shareholders of Seller, if any.
(e) Bulk Sales Act. Seller agrees to indemnify Buyer from
any Losses incurred by Buyer arising out of or resulting from the
failure of the Seller to comply with Article 6 of the Uniform
Commercial Code of Connecticut.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
The Seller represents and warrants to the Buyer as follows:
3.1 Organization and Qualification. The Seller is a
corporation validly existing and in good standing under the laws of
the State of Connecticut, and has all requisite power and authority
to (a) own, lease and operate its properties and assets as they are
now owned, leased and operated and (b) carry on its business as now
presently conducted and as proposed to be conducted. The Seller is
duly qualified to do business in each jurisdiction in which the
nature of its business or properties makes such qualification
necessary, except where the failure to do so would not have a
Material Adverse Effect. The jurisdictions in which the Seller is
so qualified are set forth on Schedule 3.1.
3.2 Affiliates. Schedule 3.2 sets forth the name and
jurisdiction of organization of Affiliate of the Seller.
3.3. Validity and Execution of Agreement. The Seller has the
full legal right, capacity and power and all requisite authority
and approval required to enter into, execute and deliver this
Agreement and any other agreement or instrument contemplated
hereby, and to perform fully its obligations hereunder and
thereunder. The Board of Directors of the Seller and shareholders
of Seller have approved the transactions contemplated pursuant to
this Agreement and each of the other agreements required to be
entered into pursuant hereto by Seller. This Agreement and such
other agreements and instruments have been duly executed and
delivered by Seller and each constitutes the valid and binding
obligation of Seller enforceable against it in accordance with its
terms.
3.4. No Conflict. Neither the execution and delivery of this
Agreement nor the performance by the Seller of the transactions
contemplated hereby will violate or conflict with (a) any of the
provisions of the Certificate of Incorporation or By-laws of the
Seller; (b) or result in the acceleration of, or entitle any party
to accelerate the maturity or the cancellation of the performance
of any obligation under, or result in the creation or imposition of
any Lien in or upon the Assets or constitute a default (or an event
which might, with the passage of time or the giving of notice, or
both, constitute a default) under any contract, (c) any order,
judgment, regulation or ruling of any Governmental or Regulatory
Body to which the Seller is a party or by which any of its property
or assets may be bound or affected or with any provision of any
law, rule, regulation, order, judgment, or ruling of any
Governmental or Regulatory Body applicable to the Seller.
3.5 Litigation. Except as set forth on Schedule 3.5, there
are no outstanding orders, judgments, injunctions, investigations,
awards or decrees of any court, Governmental or Regulatory Body or
arbitration tribunal by which the Seller, or any of its securities,
assets, properties or business are bound. Except as set forth on
Schedule 3.5, there are no actions, suits, claims, investigations,
legal, administrative or arbitral proceedings pending or, to the
best knowledge of the Seller, threatened (whether or not the
defense thereof or liabilities in respect thereof are covered by
insurance) against or affecting the Seller, or any of its assets or
properties, that, individually or in the aggregate, could, if
determined adversely to the Seller, reasonably be expected to have
a Material Adverse Effect on the Business, nor, to the best
knowledge of the Seller, are there any facts which could reasonably
be expected to give rise to any such action, suit, claim,
investigation or legal, administrative or arbitral proceeding.
3.6 The Assets. The Seller owns outright and has good and
marketable title (except for leasehold interests specifically set
forth on Schedule 3.15) to all of its assets and properties
(tangible and intangible), including, without limitation, all of
the assets and properties (except capitalized leases) reflected on
the Financials (as hereinafter defined), free and clear of any
Lien, other than Permitted Liens. The Assignment and Assumption
Agreement and such other conveyancing documents as shall have been
executed and delivered to the Buyer will convey good and marketable
title to the Assets, free and clear of any Liens, except for
Permitted Liens. The Assets sold pursuant hereto constitute all of
the assets necessary and appropriate for the conduct of the
Business in substantially the same manner as the Business has
heretofore been conducted. The Assets shall be in working order on
the Closing Date.
3.7 Intangible Property. Schedule 3.7 sets forth all
patents, trademarks, service marks, trade names, copyrights, logos
and the like and franchises, all applications for any of the
foregoing, and all permits, grants and licenses or other rights
held or owned by running to or from the Seller relating to any of
the foregoing that are necessary in connection with the Business
(collectively, the "Intangible Property"), true and complete copies
of which have been delivered or made available to the Buyer. To
the best knowledge of the Seller, no patent, invention, trademark,
service mark or trade name of any other Person infringes upon, or
is infringed upon by, any of the Intangible Property and the Seller
has not received any notice of any claim of infringement of any
other Person with respect to any of the Intangible Property or any
process or confidential information of the Seller, and the Seller
does not know, after diligent investigation, of any basis for any
such charge or claim. Except for the Intangible Property, no other
intellectual property or intangible property rights are required
for the Seller to conduct the Business in the ordinary course
consistent with past practice. To the best knowledge of the
Seller, all of the Intangible Property is valid and in good
standing. The Seller has not received any notice or inquiry
indicating, or claiming, that the manufacture, sale or use of any
Product infringes upon the patent or other intellectual property
rights of any other Person. Except as separately identified on
Schedule 3.7, no approval or consent of any person is needed so
that the interest of the Seller in the Intangible Property shall
continue to be in full force and effect and enforceable by the
Buyer following the consummation of the transactions contemplated
hereby.
3.8 Inventory. The inventory of the Seller is or was, prior
to the sale thereof, in good and merchantable condition and
suitable and usable or saleable in the ordinary course of business,
without mark-down or other discount, for the purposes for which
intended. The Seller is not aware of any material adverse
condition affecting the supply of materials available to the
Seller. Except as between the Seller and its distributors pursuant
to certain agreements set forth on Schedule 3.14, the Seller is not
under any material liability or obligations with respect to the
return of inventory or merchandise in possession of wholesalers,
distributors, retailers or other customers.
3.9 Intentionally Omitted.
3.10 Financial Statements. Except as reflected on the
Financials, the balance sheet of the Seller as of December 31, 1996
and the related statements of income for the year then ended,
prepared by Seller, true and complete copies of which have
heretofore been delivered to the Buyer, fairly present the
financial position of the Seller as at such date and for the fiscal
year then ended, in accordance with generally accepted accounting
principles as then in effect ("GAAP") consistently applied for the
period covered thereby (the "Financials"). No Material Adverse
Effect has occurred since December 31, 1996.
3.11 Undisclosed Liabilities. Except as disclosed on Schedule
3.11, the Seller does not have any, direct or indirect,
indebtedness, liability, claim, loss, damage, deficiency,
obligation or responsibility, fixed or unfixed, choate or inchoate,
liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent or otherwise (collectively, the
"Liabilities"), that is not fully and adequately reflected or
reserved against on the Financials or covered in full by insurance.
Except as disclosed on Schedule 3.11, the Seller does not have any
Liabilities, whether or not of a kind required by GAAP to be set
forth on a financial statement, other than (a) Liabilities incurred
since December 31, 1996 in the ordinary course of business (none of
which is a liability for a breach of contract, breach of warranty,
tort or infringement claim or lawsuit), none of which individually
or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect or (b) Liabilities disclosed and
reflected as liabilities on the Financials.
3.12 No Material Adverse Change. Since December 31, 1996,
there has been no material adverse change in the Business,
operations or condition (financial or otherwise) of the Seller, or
in the assets, liabilities, net worth or properties of the Seller,
and the Seller does not know of any such change that is threatened,
or has there been any damage, destruction or loss which could have
a Material Adverse Effect, whether or not covered by insurance.
3.13 Tax Matters. Except as disclosed in Schedule 3.13, (a)
all Tax Returns required to be filed with respect to the Seller
have been duly filed and were in all material respects true,
complete and correct and filed on a timely basis, (b) the Seller
has paid all Taxes that are due, or claimed or asserted by the IRS
or any other taxing authority ("Taxing Authority") to be due from
the Seller for the periods covered by such Tax Returns or Seller
has duly and fully provided reserves adequate to pay all Taxes in
the Financials, (c) the Seller has complied in all material
respects with all applicable laws relating to withholding of Taxes
(including withholding Taxes pursuant to Sections 1441 and 1442 of
the Internal Revenue Service Code of 1986, as amended (the "Code")
and similar provisions under any other applicable laws) and the
payment thereof over to the Taxing Authorities (d) the income Tax
Returns of the Seller has not been audited or examined by any the
Taxing Authority (including the IRS) for any period for which the
applicable statute of limitations period has not yet expired and no
statute of limitations for any such period has been extended.
3.14 Contracts and Other Agreements. Except for Leases
(discussed in Section 3.15 below), Schedule 3.14 sets forth all
written agreements (and, to the best knowledge of the Seller, any
oral agreement) and arrangements to which either the Seller is a
party or by or to which the Seller or any of its assets or
properties are bound or subject (collectively, the "Material
Agreements").
3.15 Real Estate. Schedule 3.15 sets forth a list and
supplies descriptions of (a) all real property owned by the Seller;
(b) all leases, subleases or other agreements (the "Leases") under
which the Seller is lessor or lessee of any real property; (c) all
options held by the Seller or contractual obligations on its
respective part to purchase or acquire any interest in real
property (as set forth on Schedule 3.15) and (d) all options
granted by the Seller or contractual obligations on any such
Persons' part to sell or dispose of any interest in real property
(as set forth on Schedule 3.15) (collectively, the "Real Estate
Documents"). All of the Real Estate Documents, true, correct and
complete copies of which have been delivered or made available to
the Buyer, are in full force and effect and the Seller has not
received any notice of any default thereunder, nor does the Seller
anticipate any such notice of default. Except as separately
identified on Schedule 3.15 and each Landlord's Consent, no
approval or consent of any person is needed for the Real Estate
Documents to continue to be in full force and effect and such
documents will not become unenforceable by the Buyer following the
consummation of the transactions contemplated by this Agreement.
3.16 Transactions with Affiliates. Except as set forth on
Schedule 3.16, no Affiliate of the Seller has: (a) borrowed money
from or loaned money to the Seller which remains outstanding; (b)
any contractual or other claim, express or implied, of any kind
whatsoever against or by any Seller; (c) any interest in any of the
Assets; or (d) engaged in any other transaction with any Seller
(other than employment relationships.
3.17 ERISA. The Seller does not sponsor, maintain, have any
obligation to contribute to, have any liability under, or are
otherwise a party to, any Plan.
3.18 Employees. The Seller is not a party to, and there does
not otherwise exist, any agreements with any labor organization,
collective bargaining or similar agreement with respect to
employees of the Seller. Schedule 3.18 sets forth the name and
current annual salary, including any bonus, if applicable, of all
present employees of the Seller. All health and health related
employee benefits and other costs have been paid or adequately
reserved for on the Financials. The Seller is in compliance in all
material respects with its obligations under all Federal, state,
and local statutes and ordinances, executive orders, regulations
and common law governing its employment practices with respect to
the Seller. To the best knowledge of the Seller, there are no
attempts being made to organize any employees presently employed by
the Seller. Seller acknowledges that Buyer is under no obligation
to employ any of Seller's current employees but may, in it
discretion, do so.
3.19 Environmental Matters. The Seller is not in violation
of, or delinquent in respect to, any Environmental Law which
violation or delinquency would have a Material Adverse Effect and
the Seller has obtained all permits, licenses and other
authorizations required under the Environmental Laws. Schedule 3.21
includes a list of all such permits, licenses and other
authorizations.
3.20 Insurance. Schedule 3.20 sets forth a list and brief
description (specifying the insurer, the policy number or covering
note number with respect to binders and the amount of any
deductible, describing the pending claims if such claims exceed
applicable policy limits, setting forth the aggregate amount paid
out under each such policy through the date hereof and the
aggregate limit, if any, of the insurer's liability thereunder) of
all policies or binders of fire, liability, product liability,
workmen's compensation, vehicular, unemployment and other insurance
held by or on behalf of the Seller. Such policies and binders are
valid and enforceable in accordance with their terms in all
material risks and liabilities to the extent and in respect of
amount, types and risks insured, as are customary in the industry
in which the Seller operates. The Seller is not in default with
respect to any material provision contained in any such policy or
binder and has not failed to give any notice or present any claim
under any such policy or binder in due and timely fashion. Except
for claims disclosed on Schedule 3.20, there are no outstanding
unpaid claims under any such policy or binder which have gone
unpaid for more than forty-five (45) days or as to which the
carrier has disclaimed liability.
3.21 Licenses and Permits. Schedule 3.21 sets forth a list of
the governmental permits, licenses, registrations and other
governmental consents (federal, state and local) which the Seller
has obtained and which are necessary in connection with its
operations and properties, and no others are required. All such
permits, licenses, registrations and consents are in full force and
effect and in good standing, and except as separately identified on
Schedule 3.21, shall continue to be in full force and effect and in
good standing following the consummation of the transactions
contemplated by this Agreement. The Seller has not received any
notice of any claim of revocation or has knowledge of any event
which might give rise to such a claim.
3.22 Compliance with Laws. The Seller has complied in all
respects with all applicable federal, state and local laws,
regulations and ordinances or any requirement of any Governmental
or Regulatory Body, court or arbitrator affecting the Business or
the Assets the failure to comply with which could have a Material
Adverse Effect on the Business or the Assets. Neither the Seller
nor any of its representatives, agents, employees or Affiliates has
made or agreed to make any payment to any Person which would be
unlawful.
3.23 Products. Except as disclosed on Schedule 3.23, there
are no statements, citations or decisions by any Governmental or
Regulatory Body that any product manufactured, marketed,
distributed, sold, leased or serviced at any time by the Seller
("Product") is defective or fails to meet in any material respect
any standards promulgated by any such Governmental or Regulatory
Body. There have been no recalls ordered by any such Governmental
or Regulatory Body with respect to any Product. To the best of
Seller's knowledge, there is no (a) fact relating to any Product
that may impose upon the Seller (or the Buyer upon consummation of
the transactions contemplated hereby) a duty to recall any Product
or a duty to warn customers of a defect in any Product, other than
defects about which the Seller has issued appropriate and adequate
warnings or (b) latent or overt design, manufacturing or other
defect in any Product.
3.24 Intentionally omitted.
3.25 Shareholders of Seller. The names of the shareholders of
Seller and the percentage interest of Seller owned by the
shareholders is set forth on Schedule 3.25.
3.26 Investment Representations. The transfer of the Shares
(including the Additional Shares and the Adjustment Shares) in this
transaction is intended to be a private transaction exempt from
registration under the Securities Act of 1933, as amended (the
"Securities Act"), and is made in reliance upon the representations
set forth below.
(a) Seller is acquiring the Shares for its own account for
investment only and not with a view to, or for sale in connection
with, a distribution of the Shares within the meaning of the
Securities Act and any applicable state securities or blue-sky
laws;
(b) Seller is not a party or subject to or bound by any
contract, undertaking, agreement or arrangement with any person to
sell, transfer or pledge the Shares or any part thereof to any
person, and has no present intention to enter into such a contract,
undertaking, agreement or arrangement (other than a pro rata
distribution of the Shares to its shareholders);
(c) Seller acknowledges to the Buyer that:
(i) The Buyer has advised Seller that the Shares have not
been registered under the Securities Act or under the laws of any
state on the basis that the issuance thereof contemplated by this
Agreement is exempt from such registration;
(ii) The Buyer's reliance on the availability of such
exemption is, in part, based upon the accuracy and truthfulness of
Seller's representations contained herein;
(iii) The Shares cannot be resold without registration or
an exemption under the Securities Act and such state securities
laws, and that certificates representing the Shares will bear a
restrictive legend to such effect;
(iv) Seller has evaluated the merits and risks of
acquiring the Shares and has such knowledge and experience in
financial and business matters and is capable of evaluating the
merits and risks of such acquisition, is aware of and has
considered the financial risks and financial hazards of acquiring
the Shares, and is able to bear the economic risk of acquiring the
Shares, including the possibility of a complete loss with respect
thereto.
3.27 Disclosure. Neither this Agreement, nor any Schedule or
Exhibit to this Agreement contains an untrue statement of a
material fact or omits a material fact necessary to make the
statements contained herein or therein not misleading. All
statements, documents, certificates or other items prepared or
supplied by the Seller with respect to the transactions
contemplated hereby are true, correct and complete and contain no
untrue statement of a material fact or omit a material fact
necessary to make the statements contained therein not misleading.
3.28 Survival. All of the representations and warranties of
the Seller contained herein shall survive the Closing Date until
the date upon which the liability to which any claim relating to
any such representation or warranty is barred by any applicable
statutes of limitations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
4.1 Organization and Qualification. The Buyer is a
corporation validly existing and in good standing under the laws of
the State of Delaware and has all requisite corporate power and
authority to (a) own, lease and operate its properties and assets
as they are now owned, leased and operated and (b) carry on its
business as now presently conducted and is duly qualified to do
business in each jurisdiction in which the nature of its business
or properties makes such qualification necessary.
4.2 Validity and Execution of Agreement. The Buyer has the
full legal right, capacity and power and all requisite corporate
authority and approval required to enter into, execute and deliver
this Agreement and any other agreement or instrument contemplated
hereby, and to perform fully its obligations hereunder and
thereunder. The board of directors of the Buyer has approved the
transactions contemplated by this Agreement and each of the other
agreements required to be entered into pursuant hereto by the
Buyer. This Agreement and such other agreements and instruments
have been duly executed and delivered by the Buyer and each
constitutes the valid and binding obligation of the Buyer
enforceable against it in accordance with its terms.
4.3 No Conflict. Neither the execution and delivery of this
Agreement nor the performance by the Buyer of the transactions
contemplated herein will (a) violate or conflict with any of the
provisions of its Certificate of Incorporation or By-Laws or other
organizational documents; or (b) violate or conflict with any
provision of any law, rule, regulation, order, judgment, decree or
ruling of any court or federal, state or local Governmental or
Regulatory Body applicable to the Buyer.
4.4. The Shares. The Shares: (i) have been validly issued by
Ecomat and are fully paid and non-assessable, (ii) are of a class
of common stock of Ecomat entitled to full voting rights and
unlimited dividend and liquidation rights, (iii) are not redeemable
by Ecomat without the consent of the holder of the Shares and (iv)
are not subject to any preference rights for current or liquidating
dividends attributable to any other shares of stock issued by
Ecomat.
4.5 Survival. All of the representations and warranties of
the Buyer contained herein shall survive the Closing Date until the
date upon which the liability to which any claim relating to any
such representation or warranty is barred by any applicable
statutes of limitations.
ARTICLE V
INDEMNIFICATION
5.1 Indemnification. (a) The Seller agrees to indemnify,
defend and hold harmless the Buyer and its respective directors,
officers, employees, shareholders, and any Affiliates of the
foregoing, and their successors and assigns (collectively, the
"Buyer Group") from and against any and all losses, liabilities
(including punitive or exemplary damages and fines or penalties and
any interest thereon), expenses (including reasonable fees and
disbursements of counsel and expenses of investigation and
defense), claims, Liens or other obligations of any nature
whatsoever (hereinafter individually, a "Loss" and collectively,
"Losses") suffered or incurred by the Buyer Group, which, directly
or indirectly, arise out of, result from or relate to, (i) any
inaccuracy in or any breach of any representation or warranty of
the Seller contained in Article III, (ii) any breach of any
covenant or agreement of the Seller contained in this Agreement or
in any other document contemplated by this Agreement and (iii) for
any claims resulting in Losses arising out of the operation of the
Business prior to the Closing.
(b) The Buyer agrees to indemnify, defend and hold harmless
the Seller and its directors, officers, employees, and
shareholders, and any Affiliates of the foregoing, and their
successors and assigns from and against any and all Losses suffered
or incurred by them which, directly or indirectly, arise out of,
result from or relate to (i) any inaccuracy in or any breach of any
representation or warranty of the Buyer contained in Article IV and
(ii) any breach of any covenant or agreement of the Buyer contained
in this Agreement or in any other document contemplated by this
Agreement.
5.2 Method of Asserting Claims. The party making a claim
under this Article V is referred to as the "Indemnified Party" and
the party against whom such claims are asserted under this Article
V is referred to as the "Indemnifying Party". All claims by any
Indemnified Party under this Article V shall be asserted and
resolved in accordance with the terms and provisions set forth in
Sections 5.2(a)-(c) below:
(a) In the event that any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party
hereunder is asserted against or sought to be collected from such
Indemnified Party by a third party, said Indemnified Party shall
with reasonable promptness notify in writing the Indemnifying Party
of such claim or demand, specifying the nature of the specific
basis for such claim or demand, and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall
not be conclusive of the final amount of such claim and demand; any
such notice, together with any notice given pursuant to Section
5.2(b) hereof, collectively being the "Claim Notice"); provided,
however, that any failure to give such Claim Notice will not be
deemed a waiver of any rights of the Indemnified Party except to
the extent the rights of the Indemnifying Party is actually
prejudiced. The Indemnifying Party, upon request of the
Indemnified Party, shall retain counsel (who shall be reasonably
acceptable to the Indemnified Party) to represent the Indemnified
Party, and shall pay the fees and disbursements of such counsel
with regard thereto, provided, further, that any Indemnified Party
is hereby authorized prior to the date on which it receives written
notice from the Indemnifying Party designating such counsel, to
retain counsel, whose fees and expenses shall be at the expense of
the Indemnifying Party, to file any motion, answer or other
pleading and take such other action which it reasonably shall deem
necessary to protect its interests or those of the Indemnifying
Party until the date on which the Indemnified Party receives such
notice from the Indemnifying Party. After the Indemnifying Party
shall retain such counsel, the Indemnified Party shall have the
right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless
(i) the Indemnifying Party and the Indemnified Party shall have
mutually agreed to the retention of such counsel or (ii) the named
parties of any such proceeding (including any impleaded parties)
include both the Indemnifying Party and the Indemnified Party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests
between them. The Indemnifying Party shall not, in connection with
any proceedings or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one such firm for the
Indemnified Party (except to the extent the Indemnified Party
retained counsel to protect its (or the Indemnifying Party's)
rights prior to the selection of counsel by the Indemnifying
Party). The Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim or
demand which the Indemnifying Party defends. No claim or demand
may be settled by an Indemnifying Party or, where permitted
pursuant to this Agreement, by an Indemnified Party without the
consent of the Indemnified Party in the first case or the consent
of the Indemnifying Party in the second case, which consent shall
not be unreasonably withheld, unless such settlement shall be
accompanied by a complete release of the Indemnified Party in the
first case or the Indemnifying Party in the second case, or, where
permitted pursuant to this Agreement, by an Indemnified Party
without the consent of the Indemnified Party in the first case or
the consent of the Indemnifying Party in the second case.
(b) In the event any Indemnified Party shall have a claim
against any Indemnifying Party hereunder which does not involve a
claim or demand being asserted against or sought to be collected
from it by a third party, the Indemnified Party shall send a Claim
Notice with respect to such claim to the Indemnifying Party. If
the Indemnifying Party does not dispute such claim, the amount of
such claim shall be paid to the Indemnified Party within twenty
(20) days of receipt of the Claim Notice.
(c) So long as any right to indemnification exists pursuant
to this Article V, the affected parties each agree to retain all
books, records, accounts, instruments and documents reasonably
related to the Claim Notice. In each instance, the Indemnified
Party shall have the right to be kept informed by the Indemnifying
Party and its legal counsel with respect to all significant matters
relating to any legal proceedings. Any information or documents
made available to any party hereunder, which information is
designated as confidential by the party providing such information
and which is not otherwise generally available to the public, or
which information is not otherwise lawfully obtained from third
parties or not already within the knowledge of the party to whom
the information is provided (unless otherwise covered by the
confidentiality provisions of any other agreement among the parties
hereto, or any of them), and except as may be required by
applicable law or requested by third party lenders to such party,
shall not be disclosed to any third Person (except for the
representatives of the party being provided with the information,
in which event the party being provided with the information shall
request its representatives not to disclose any such information
which it otherwise required hereunder to be kept confidential).
ARTICLE VI
POST-CLOSING COVENANTS OF THE PARTIES
6.1 Tax Matters. The Seller shall provide to Buyer on demand
such information as shall reasonably be requested by Buyer to
enable Buyer to prepare and file timely Buyer's federal, state and
local income Tax Returns and all forms, schedules and attachments
related thereto.
6.2 Non-Competition. The Seller and Scott Sidell,
individually, and their respective Affiliates (the "Selling Group")
acknowledge that the Business (a) is regional in scope, (b) the
Seller's ownership of the Assets and their operation of the
Business has brought them in close contact with certain
confidential affairs of the Business not readily available to the
public, and (c) the Buyer would not purchase the Assets, but for
the agreements and covenants of the Selling Group contained in this
Section 6.2. The Selling Group shall not, directly or indirectly,
for a period of four (4) years following the Closing Date, (i)
engage in any business similar to the Business within the
Restricted Area (as defined below) other than as a consultant
operating out of his current home residence for any other similar
business that is not located in the Restricted Area, (ii) become
interested in any Person having a business located or operating
within the Restricted Area engaged in activities similar to the
Business as a partner, shareholder, principal, agent, trustee,
consultant, lender or in any other relationship or capacity, except
for investments by the Seller or its Affiliates in securities
traded on a national stock exchange or the over-the-counter market
which do not exceed five (5) percent of the total outstanding
shares of such securities or (iii) take any action outside the
ordinary course of business which could have a Material Adverse
Effect on the Business, the Assets or the Buyer following the
Closing Date. If any court determines that this covenant, or any
part thereof, is unenforceable because of the duration of such
provision or the area covered thereby, such court shall have the
power to reduce the duration or area of such provision and, in its
reduced form, such provision shall then be enforceable and shall be
enforced.
"Restricted Area" shall mean the area within a seven (7) mile
radius of The Cleaner Image, Inc., 457 Main Street, Ridgefield, CT
or Ecomat facilities (as hereinafter defined) owned by the Buyer or
its Affiliates at the locations set forth on Schedule 6.2(b).
"Ecomat facilities" shall mean any operation primarily engaged in
the business of providing EcoCleaning to customers.
6.3 Confidentiality. From and after the Closing Date, the
Seller and its shareholders shall not disclose or furnish to any
other Person, except to the extent required by law or by order of
any court or governmental agency, (a) any information which is not
generally known in the industry relating to any license, process,
technique, or procedure used by the Seller or in connection with
the Business, (b) any information which is not generally known in
the industry relating to the operations or financial status of the
Buyer or the Business which is not specifically a matter of public
record, (c) any trade secrets of the Business or (d) the name,
address or other information relating to any supplier of the
Business.
ARTICLE VII
MISCELLANEOUS
7.1 Sales and Transfer Taxes. All required filings under any
applicable Federal, state, foreign or local sales tax, stamp tax or
similar laws or regulations shall be made in a timely manner by the
Buyer and, at the Closing, Buyer shall deliver to Seller either (a)
proof of the payment of any sales tax assessed pursuant to such
filings or (b) statements of no sales tax due, as the case may be.
The parties agree that any and all transfer, sales or stamp taxes
and any similar taxes or assessments imposed on the transfer of the
Assets and the Assumed Liabilities in accordance with the terms of
this Agreement shall be paid by the Buyer.
7.2 Post-Closing Further Assurances. At any time and from
time to time after the Closing Date at the request of either party,
and without further consideration, the other party will execute and
deliver, or cause the execution and delivery of, such other
instruments of sale, transfer, conveyance, assignment and
confirmation and take or cause to be taken such other action as the
party requesting the same may reasonably deem necessary or
desirable in order to transfer, convey and assign more effectively
to the requesting party all of the property and rights intended to
be conveyed to such party pursuant to the provisions of this
Agreement.
7.3 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be
in writing and shall be given personally, telegraphed, telefaxed,
sent by facsimile transmission or sent by prepaid air courier or
certified, registered or express mail, postage prepaid. Any such
notice shall be deemed to have been given (a) when received, if
delivered in person, telegraphed, telexed, sent by facsimile
transmission and confirmed in writing within three (3) Business
Days thereafter or sent by prepaid air courier or (b) three (3)
Business Days following the mailing thereof, if mailed by certified
first class mail, postage prepaid, return receipt requested, in any
such case as follows (or to such other address or addresses as a
party may have advised the other in the manner provided in this
Section 7.3):
If to Seller, to:
Scott Sidell
156 Deforest Road
Wilton, CT 06897
Telephone Number (203) 761-1418
with copies to:
Moss Sidell, Esq.
20 Park Plaza
Suite 1124
Boston, MA 02116
Telephone Number (617) 426-7100
Telecopier Number (617) 426-5485
If to Buyer to:
147 Palmer Avenue
Mamaroneck, NY 10543-3632
Attn: Diane Weiser
Telephone Number (914) 777-3600
Telecopier Number (914) 777-3502
with copies to:
Bernstein & Wasserman, LLP
950 Third Avenue
New York, NY 10022
Attn: Stuart Neuhauser, Esq.
Telephone Number (212) 826-0730
Telecopier Number (212) 371-4730
7.4 Publicity. No publicity release or announcement
concerning this Agreement or the transactions contemplated hereby
shall be made without advance approval thereof by the Buyer and the
Seller.
7.5 Entire Agreement. This Agreement (including the Exhibits
and Schedules) and the agreements, certificates and other documents
delivered pursuant to this Agreement contain the entire agreement
among the parties with respect to the transactions described
herein, and supersede all prior agreements, written or oral, with
respect thereto.
7.6 Waivers and Amendments. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may
be waived, only by a written instrument signed by the parties
hereto or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver
thereof.
7.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York,
without regard to principles of conflicts of law.
7.8 Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties and their
respective successors, assigns and legal representatives. This
Agreement is not assignable except by operation of law and any
other purported assignment shall be null and void.
7.9 Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require.
7.10 Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.
Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties
hereto.
7.11 Exhibits and Schedules. The Exhibits and Schedules are
a part of this Agreement as if fully set forth herein. All
references herein to Sections, subsections, clauses, Exhibits and
Schedules shall be deemed references to such parts of this
Agreement, unless the context shall otherwise require.
7.12 Effect of Disclosure on Schedules. Any item disclosed on
any Schedule shall only be deemed to be disclosed in connection
with (a) the specific representation and warranty to which such
Schedule is expressly referenced, (b) any specific representation
and warranty which expressly cross-references such Schedule and (c)
any specific representation and warranty to which any other
Schedule to this Agreement is expressly referenced if such other
Schedule expressly cross-references such Schedule.
7.13 Intentionally omitted.
7.14 Headings. The headings in this agreement are for
reference only, and shall not affect the interpretation of this
Agreement.
7.15 Severability of Provisions. If any provision or any
portion of any provision of this Agreement or the application of
such provision or any portion thereof to any Person or
circumstance, shall be held invalid or unenforceable, the remaining
portion of such provision and the remaining provisions of this
Agreement, or the application of such provision or portion of such
provision as is held invalid or unenforceable to persons or
circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby.
7.16 Brokers. Each party hereto represents and warrants that
no broker or finder is entitled to any brokerage or finder's fee or
other commission from such party, based on agreements, arrangements
or undertakings made by such party, in connection with the
transactions contemplated hereby.
7.17 Change and Use of Name. The Seller, within thirty (30)
days from the date hereof, shall deliver to the Buyer evidence of
all filings necessary, in those jurisdictions, if any, in which
the Seller is licensed or qualified to do business to effect a
change of its corporate name to a name which is not confusingly
similar to the name of the Buyer or "The Cleaner Image" and,
thereafter shall refrain from directly or indirectly using any name
or names, corporate or otherwise, which could be confusingly
similar to the name of the Buyer "The Cleaner Image".
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.
With respect to paragraph CLEAN LIVING, INC. d/b/a
6.2 only: THE CLEANER IMAGE
/S/Scott Sidell By:/S/Scott Sidell
Scott Sidell Name: Scott Sidell
Title:Chairman
With respect to paragraphs ECO STU, INC.
1.9,1.11 and 1.12 only:
ECOMAT, INC.
By:/S/Diane Weiser By:/S/Diane Weiser
Name: Diane Weiser Name: Diane Weiser
Title:President Title:President
EXHIBIT A
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated February __, 1997
by and between Clean Living, Inc. d/b/a The Cleaner Image, a
Connecticut corporation (the "Seller"), and Eco Stu, Inc., a
Delaware corporation (the "Buyer").
W I T N E S E T H :
WHEREAS, pursuant to that certain Asset Purchase Agreement
(the "Purchase Agreement") dated even date herewith by and between
the Seller and the Buyer, the Seller has agreed to sell the Assets
(as defined in the Purchase Agreement) to Buyer, subject to the
payment of the Purchase Price; and
WHEREAS, the parties hereto desire to execute this Agreement
to further evidence the assignment by the Seller of the Assets and
the assumption by the Buyer of the Assumed Liabilities.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as
follows:
1. Definitions. Terms used herein and not otherwise defined
herein shall have the meanings provided for in the Purchase
Agreement.
2. Assignment of Assets. The Seller hereby sells,
transfers, conveys, assigns and sets over to the Buyer, its
successors and assigns, the Assets.
3. Assumption of Assumed Liabilities. The Buyer hereby
assumes and undertakes to pay, perform and discharge the Assumed
Liabilities.
4. Attorney-in Fact. The Seller hereby appoints the Buyer,
with full power of substitution, its true and lawful Attorney-in-Fact
in its name, place and stead to take any and all action on
behalf of and in the name of Seller to affirm the rights and
interests of the Buyer in and under the Assigned Contracts and
Leases.
5. Further Assurances. At any time and from time to time
after the date hereof, at the request of the other party, and
without further consideration, each party shall execute and deliver
such other instruments of sale, transfer, conveyance, assignment
and confirmation and take such other action as the other party
reasonably request as necessary or desirable in order more
effectively to transfer, convey and assign to the Buyer the Assets
and to the Seller the Shares.
6. Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of New York,
without regard to principles of conflicts of law.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
CLEAN LIVING, INC. d/b/a
THE CLEANER IMAGE
By:___________________________
Name:
Title:
ECO STU, INC.
By:___________________________
Name:
Title:
EXHIBIT B
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that Clean Living, Inc.
d/b/a The Cleaner Image, a Connecticut corporation ("Seller"), for
and in consideration of the sum of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt of which is hereby
acknowledged by these presents, and pursuant to an Asset Purchase
Agreement dated February , 1997("Purchase Agreement") between
Seller and Eco Stu, Inc., a Delaware corporation ("Buyer") (except
as otherwise provided herein, all capitalized terms contained and
not defined herein shall have herein the respective meanings
ascribed to them in the Purchase Agreement), hereby sells,
transfers, conveys, assigns and delivers unto Buyer all of the
right, title and interest of Seller in and to the Assets.
Seller agrees to cooperate with Buyer in obtaining any
consents or waivers of third parties necessary to transfer to Buyer
all property and rights provided to be transferred to Buyer under
the Purchase Agreement.
TO HAVE AND TO HOLD the Assets unto Buyer, its successors
and assigns, for its use and its use forever.
At any time and from time to time after the date hereof
at the request of Buyer, and without further consideration, Seller
shall execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such other action
as Buyer may reasonably request as necessary or desirable in order
to more effectively transfer, convey and assign to Buyer, and to
confirm Buyer's title to or rights in, all of the Assets, and to
put Buyer in actual possession and operating control thereof.
IN WITNESS WHEREOF, the parties have caused this Bill of Sale
to be executed as of February __, 1997.
CLEAN LIVING, INC. d/b/a
THE CLEANER IMAGE
By:__________________________
Name:
Title:
ACCEPTED THIS ___ DAY
OF FEBRUARY, 1997
ECO STU, INC.
By:__________________________
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK)
On this ___ day of February, 1997, before me, ______________,
personally appeared Scott R. Sidell, known personally to me to be
the Secretary of Clean Living, Inc. d/b/a The Cleaner Image, and
that he, as such officer, is authorized so to do, executed the
foregoing instrument for the purposes therein contained, by signing
the name of the corporations by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official
seal.
__________________________
Notary Public
EXHIBIT C
LANDLORD'S CONSENT
[ See attached Assignment of Lease ]
ASSIGNMENT OF LEASE
This ASSIGNMENT OF LEASE is entered into as of the __ day of
February, 1997, by and between Clean Living, Inc. d/b/a The
Cleaner Image, a Connecticut corporation ("Assignor"), and Eco
Stu, Inc., a Delaware corporation ("Assignee").
BACKGROUND
A. Pursuant to that certain Lease dated May 15, 1995
("Lease"), by and between Assignor, and E.A.L. Associates
("Landlord"), Assignor is the owner of a leasehold interest in
the premises, located at 457 Main Street, Ridgefield, CT (the
"Premises") as more fully described in the Lease, a true, correct
and complete copy of which is attached hereto as Exhibit A and
incorporated herein by reference; and
B. Pursuant to an Asset Purchase Agreement for the
purchase of certain assets of Assignor, dated as of February __,
1997, Assignor has agreed to sell, and Assignee has agreed to
purchase, certain assets of Assignor and to assume certain of the
liabilities of Assignor, including the Lease; and
C. Pursuant to Article(s) 29 of the Lease, Assignor is
required to obtain the prior written consent of Landlord in order
to assign its rights under the Lease (the "Assignment" ); and
D. As a condition of the Closing of the transactions
contemplated by the Asset Purchase Agreement (the "Acquisition"),
Assignor is required to obtain the consent of Landlord to this
Assignment.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, and for other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby covenant and agree as follows:
1. Assignor hereby sells, assigns, transfers and sets over
to Assignee all of Assignor's right, title, interest in and to
Assignor's interest as lessee under the Lease effective as of the
Closing of the Acquisition ("Effective Date").
2. Assignee hereby accepts the aforesaid assignment, and
hereby assumes all of the rights, responsibilities, liabilities
and obligations of Assignor, as lessee, under the terms,
conditions and covenants contained in the Lease, with like force
and effect as if Assignee had executed the Lease in the first
instance, arising as of and after the Effective Date.
3. Assignor shall remain liable only for the observance
and performance of its obligations as lessee under the Lease
arising prior to the Effective Date.
4. Assignor shall be responsible for and shall indemnify
Assignee regarding the observance and performance of all of the
agreements and obligations of Assignor as lessee under the Lease
arising prior to the Effective Date. Assignee shall be
responsible for and shall indemnify Assignor regarding the
observance and performance of all of the agreements and
obligations of Assignor as lessee under the Lease arising on or
after the Effective Date.
5. The parties agree that this Assignment will not be
changed, modified, discharged or terminated orally or in any
manner other than an agreement in writing signed by all of the
parties hereto.
6. The agreements, terms and provision of the Agreement
shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns. The parties shall
execute and deliver such further and additional instruments,
agreements and other documents as may be necessary to evidence or
carry out the provisions of this Assignment.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this Assignment of Lease to be
executed as of the date first above written.
ASSIGNOR: CLEAN LIVING, INC. d/b/a
THE CLEANER IMAGE
By:_________________________
Name:
Title:
ASSIGNEE: ECO STU, INC.
By:
Name:
Title:
CONSENT OF LESSOR
E.A.L. Associates, as Lessor, named in the Lease referred
to in the forgoing Assignment of Lease, hereby consents to this
Assignment, confirms that the provisions of the Lease have been
complied with, releases and discharges Lessee from all
obligations arising on or after the Effective Date, certifies
that (i) the Lease is a valid and enforceable obligation, (ii)
the Lease has not been amended or modified, and (iii) Lessee is
not currently and has not been in default in the performance of
the Lease, and hereby accepts the Assignee as Lessee under said
Lease as of the Effective Date.
LESSOR: E.A.L. Associates
By:___________________________
Name:
Title:
Date: _________________________,1997
EXHIBIT D
FORM OF OPINION OF SELLER'S COUNSEL
[ Attached ]
[Letterhead of Moss Sidell, Esq.]
________ ___, 1997
To the Persons Listed
On Schedule A Attached Hereto
Dear Sirs:
We have acted as counsel for Clean Living, Inc. d/b/a The Cleaner
Image, a Connecticut corporation ("Seller"), in connection with the
execution and delivery of the following documents:
(i) the Asset Purchase Agreement (the "Purchase Agreement")
dated the date hereof by and between Seller and Eco Stu, Inc., a Delaware
corporation ("Buyer");
(ii) the Assignment and Assumption Agreement dated the
date hereof by and between Seller and Buyer ("Assumption Agreement"); and
(iii) the Bill of Sale dated the date hereof executed by
Seller and accepted by Buyer (the "Bill of Sale").
The Purchase Agreement, the Assumption Agreement and the Bill of
Sale are hereinafter collectively referred to as the "Purchase Documents."
This opinion letter is being furnished pursuant to Section 2.2(b)
of the Purchase Agreement. Defined terms appearing herein which are not
otherwise defined in this opinion letter shall have the respective meanings
set forth in the Purchase Agreement.
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of each of the Purchase Documents and also
of such corporate documents and records of Seller and such other records,
documents and certificates as we have deemed necessary or appropriate as
a basis for our opinions set forth herein. In our examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. We have also
assumed that Buyer is in compliance with all of its obligations arising
under the Purchase Documents. As to certain matters of fact, we have
examined and relied upon the representations and warranties
contained in the Purchase Documents and in the certificates delivered in
connection therewith. We have not made any independent investigation or
verification of such facts; nothing, however, has come to our attention that
would cause us to believe that such reliance is not justified.
The Closing pursuant to the Purchase Agreement is being consummated
contemporaneously with the delivery of this opinion letter.
Our opinions, as set forth below, are limited to the Federal laws
of the United States of America and the laws of the State of Connecticut.
Such opinions are also subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws
affecting creditors rights in general. Moreover, the enforceability of the
terms of each the Purchase Documents is subject to general principals of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law), and the availability of specific
performance, injunctive and other forms of equitable relief is subject to
certain tests of equity jurisdiction, equitable defenses and the discretion
of the court before which any proceeding with
respect thereto may be brought.
Based upon and subject to the foregoing, and subject to the
additional qualifications set forth below, we are of the opinion as of the
date hereof that:
1. Seller is a corporation validly existing and in good standing
under the laws of the State of Connecticut, and has the corporate power and
authority to (a) own, lease and operate its properties and assets, including,
without limitation, the Assets, as they are now owned, leased and operated
and (b) carry on its business as now presently conducted or proposed to be
conducted. Seller is qualified to do business in jurisdiction in which
the nature of its business or properties makes such qualification necessary,
except where the failure to do so would not have a Material Adverse Effect.
2. Seller has the full legal right, capacity and corporate power
and all requisite corporate authority and approval required to enter into,
execute and deliver the Purchase Documents and to perform its obligations
thereunder. The shareholders and the board of directors of Seller have
approved the transactions contemplated pursuant to the Purchase
Documents. Each of the Purchase Documents have been duly executed and
delivered by Seller and constitutes the valid and binding obligation of
Seller enforceable against it in accordance with its terms. Except for the
Landlord's Consents, no approval or consent of any Party is required in
connection with the execution and delivery by Seller of the Purchase
Documents and the consummation and performance by Seller of the transactions
contemplated thereby.
3. The execution, delivery and performance of the Purchase
Documents by Seller and consummation of the transactions contemplated
thereby will not violate or conflict with (i) any of the provisions of the
Certificate of Incorporation or By-Laws or other organizational
documents of Seller; (ii) any order, judgment, regulation or ruling of any
Governmental or Regulatory Body to which Seller is a party or by which any
of its property or assets may be bound or affected or with any provision of
any law, rule, regulation, order, judgment or ruling of any
Governmental or Regulatory Body applicable to Seller or (iii) any of the
Assigned Contracts and Leases.
This opinion is being rendered on behalf of Seller pursuant to
Section 2.2(b) of the Purchase Agreement solely for the benefit of the
persons listed on Schedule A attached hereto.
No other person or entity shall be entitled to rely hereon without the
express written consent of this office.
Very truly yours,
Moss Sidell
Schedule A
Ecomat, Inc.
147 Palmer Avenue
Mamaroneck, New York 10543-3632
Eco Stu, Inc.
147 Palmer Avenue
Mamaroneck, New York 10543-3632
SCHEDULE 1.1(a)
Excluded Assets
All assets other than those assets specified on Schedule 1.2
including, but not limited to, computer system and software.
SCHEDULE 1.1(b)
Permitted Liens
None
SCHEDULE 1.2
Assets
Customer list, Trademark, supplies, Aqua Clean Wet Cleaning
Machine and dryer, computerized surfactant pump, slick rails and
conveyor and good will.
SCHEDULE 1.3(b)
Assumed Liabilities
Lease for 457 Main Street and van lease from Ford Motor
Credit.
SCHEDULE 1.6
Allocation of Purchase Price
Aqua Clean Wet Cleaning Machine and dryer,
computerized surfactant pump, slick rails
and conveyor $25,000
Customer List $35,000
Trademark $ 5,000
Non-Compete Provision $15,000
__________
Total $80,000*
* $65,000 cash; $15,000 in shares of Common Stock of Ecomat,
Inc.
SCHEDULE 3.1
Jurisdictions of Qualification
Connecticut
New York
SCHEDULE 3.2
Affiliates
Scott R. Sidell
Linda J. Strempek
SCHEDULE 3.5
Litigation - Sellers
None
SCHEDULE 3.7
Intangible Property
Trademark Application for "The Cleaner Image"
SCHEDULE 3.11
Liabilities
Lease for 457 Main Street, lease for basement of 463 Main
Street (not being assigned to Buyer) and van lease from Ford
Motor Credit.
SCHEDULE 3.13
Tax Matters
None
SCHEDULE 3.14
Material Agreements
None
SCHEDULE 3.15
Real Estate
Lease for 457 Main Street
SCHEDULE 3.16
Transactions With Affiliates
None
SCHEDULE 3.18
Employees
Mark Howath $30,000.00 Kaiser HMO
Joe Horvath $30,000.00
Jeannette Bedini $28,080.00
Ingrid Rojas $15,600.00
Steve Campton $27,800.00
SCHEDULE 3.20
Insurance
See Attached (3 pages)
SCHEDULE 3.21
Licenses and Permits
1. Certificate of Occupancy and Approval. Permit No. 95-A-215.
2. Use Permit from the Town of Ridgefield (Letter dated
5/17/95)
3. Water Permit from the Town of Ridgefield (Letter dated
5/5/95)
SCHEDULE 3.23
Products
None
SCHEDULE 3.25
Shareholders of Seller
Scott R. Sidell 500 shares
Linda J. Strempek 500 shares
SCHEDULE 6.2
LOCATION OF ECOMAT FACILITIES
1. 147 Palmer Avenue
Mamaroneck, NY 10543
2. Colonial Village Shopping Center
1527 Weaver Street
New Rochelle, NY 10801
3. 140 W. 72nd Street
New York, NY 10023
EXIBIT 2
FOR IMMEDIATE RELEASE: CONTACT:
Diane Weiser, President
Ecomat, Inc. (914) 777-3600 X10
ECOMAT PURCHASES THE CLEANER IMAGE
Mamaroneck, NY, February 13, 1997 - Ecomat, Inc. (NASDAQ: ECMT) announced
today that the Company has simultaneously entered into and closed on an
asset purchase agreement pursuant to which it has acquired The Cleaner Image,
the first 100% wet-cleaning facility in New England, founded by
Dr. Scott Sidell in 1995.
Ecomat has developed and utilizes an environmentally sound alternative to
current dry-cleaning methods without the use of the toxic solvent,
perclorolthylene.
Ecomat's President, Diane Weiser stated that "through this acquisition,
Ecomat will expand its customer service base to all of Fairfield County,
Connecticut and Northern Westchester County, NY." Ms. Weiser further stated
that "this acquisition will not only contribute directly to our
profitability, but will enable us to continue our strategy to develop a
network of Company-owned and franchised environmental garment care facilities
on a national basis and puts Ecomat clearly in the forefront of wet-cleaning
production in the United States."