EXHIBIT 10.99
OPERATING AGREEMENT
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This Agreement ("Operating Agreement") is made as of March 31, 1999, by and
between Millennia Car Wash, LLC, a Delaware limited liability company (the
"Company"), Excel Legacy Corporation and G II Ventures, LLC ("Members"), and
Mace Car Wash, Inc., a Delaware corporation (the "Manager").
RECITALS
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Company is engaged in the business of owning and operating car wash
facilities throughout the United States. Members are the owners of all of the
outstanding membership interests in Company. Manager is engaged, among other
things, in providing administrative, management consulting, financial, marketing
and operational support services to the car wash industry. Company and Members
have negotiated with American Wash Services, Inc. ("AWS") a Real Estate and
Asset Purchase Agreement (the "Acquisition Agreement") pursuant to which AWS
will buy all of Company's assets ("Assets") at its operating locations. Those
locations are listed on Exhibit A, attached hereto and made part hereof
("Locations").
Company and Manager have agreed that, until Closing under the Acquisition
Agreement, Manager shall operate the car wash businesses at the Locations (the
"Business"), subject and according to the terms of this Operating Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein, and intending to be legally
bound hereby, the parties hereto hereby agree as follows:
1. Appointment of Manager; Relationship of Company and the Manager.
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Manager shall provide administrative, management, consulting, marketing and
operational support services to the Company, as hereinafter provided. Manager
shall operate the Locations on its own behalf and for its own benefit and at all
times shall be independent of the Company. The Company shall permit the Assets
to remain in its name to accommodate the Manager. Nothing contained herein
shall be deemed to make or render the Company a partner, co-venturer or other
participant in the business or operations of the Manager, or in any manner to
render Company liable, as principal, surety, guarantor, agent or otherwise for
any of the debts, obligations or liabilities of Manager.
2. Management Services. Manager will provide, supply and render such
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administrative, management consulting, financial, marketing, and operational
support services as are necessary to operate the Locations and, as more
specifically described below, shall:
(a) Administer, supervise and control all of the finances of the Business,
including payroll, taxes, accounting, bookkeeping, record keeping, managing of
accounts payable, accounts receivable, banking, financial records and reporting
functions as they pertain to the Locations, with the power to make changes
therein, in its sole discretion, and to incorporate such functions into systems
used by Manager.
(b) Select and employ all personnel necessary to operate the Business.
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(c) Supervise and control the purchase of all materials and supplies, and
acquire, lease, dispose of and repair equipment and facilities which are
necessary to provide safe and adequate operation of the Locations.
(d) Manage, at Manager's sole discretion, all costs and all of the pricing
for all of the services provided at the Locations.
(e) Commence, defend and control all legal actions, arbitrations,
investigations and proceedings that arise in connection with the Business.
(f) Maintain the Assets in good repair, order and condition, normal and
reasonable wear and tear excepted.
3. Obligations of the Company. Until Closing under the Acquisition
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Agreement, the Company shall not, without the Manager's prior written consent:
(a) Do anything to affect or cause any change to any of the Assets or
Locations;
(b) Create or incur any indebtedness or other liability or obligation in
connection with the Assets or Locations;
(c) Enter into, modify, amend, or terminate any lease, agreement, contract
or other commitment in connection with the Business;
(d) Release or create or incur any mortgage, lien or other encumbrance
with respect to the Assets, Business or Locations;
(e) Sell, abandon or otherwise dispose of any of the Assets;
(f) Make any commitment relating to any of the Assets; or
(g) Cancel or waive any claim or right with respect to the Assets or
Business.
The Company shall have no obligations other than those set forth in this
Operating Agreement.
4. Additional Agreements of Company. The Company agrees that at all times
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during the term of this Agreement the Company shall:
(a) Do nothing, and permit nothing to be done (which is within the control
of Company), which will or might cause the Company to operate in an improper or
illegal manner.
(b) Not cause a default in any of the terms, conditions and obligations of
any of the contracts and other agreements of the Company. Notwithstanding the
foregoing, Manager acknowledges that a default, alleged or actual, claimed by
Franchise Mortgage Acceptance Corporation ("FMAC") due to the execution and
performance of this Operating Agreement is a specific exception to this
provision.
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(c) To the extent permissible by law, maintain its corporate existence in
good standing, and its licenses and permits in the State of Delaware and all
other states in which it conducts business and comply fully with all laws
respecting its formation, existence, activities and operations.
(d) Allow Manager and the employees, attorneys, accountants and other
representatives of Manager full and free access to the Company's books and
records, and all of the facilities of the Company so long as they relate to the
Assets.
(e) Assist Manager to name itself as an additional named insured under all
policies of insurance and give all notices and present all claims under all
policies of insurance in due and timely fashion. All premiums for insurance
shall be paid by the Manager.
5. Payroll Expenses. Manager shall have the power to fix the compensation
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of all persons employed at the Locations. It is understood that Manager will be
solely responsible for supplying the personnel required to operate the Business
and will be responsible for all compensation to be paid.
6. General and Administrative Activities. To the extent that Manager
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shall deem it necessary or desirable, Manager shall have the power and authority
to combine and integrate, at its own office (including those of an affiliate),
the "general and administrative" (as such term is used in accounting practice)
activities of the Business, including, but not limited to, all accounting,
bookkeeping, record-keeping, paying, receiving and other fiscal or financial
activities, with those of Manager.
7. Revenues and Compensation. During the term of this Agreement, Manager
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will collect all revenues and pay all expenses associated with operating the
Business. Manager will retain any and all profits and incur any and all losses
resulting from operating the Business. Manager shall be entitled to all income
generated from the rendering of services with respect to customers of the
Company on and after Closing under the Acquisition Agreement. Prior to Closing
under the Acquisition Agreement, Manager shall not utilize revenues or other
funds of the Business for any purpose other than expenses of operating the
Business.
8. Equipment. During the term of this Operating Agreement, Manager may
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make any commercially reasonable modifications to the equipment used in the
Business it deems necessary.
9. Term of Agreement.
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(a) The term of this Operating Agreement shall commence on the date of
this Operating Agreement and shall expire on the day of the Closing under the
Acquisition Agreement.
(b) Manager may, at its option, upon ten (10) days' written notice
terminate this Operating Agreement: (i) if Company shall violate any material
provision of this Operating Agreement or the Acquisition Agreement; (ii) if
Company shall violate or be in material breach of any provision, representation,
warranty, covenant or undertaking herein or in the Acquisition Agreement; or
(iii) if Company (a) makes an assignment for the benefit of creditors, (b) is
adjudicated a bankrupt, (c) files or has filed against it any bankruptcy,
reorganization, liquidation or similar petition or any
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petition seeking the appointment of a receiver, conservator or other
representative, or (d) proposes a composition arrangement with creditors.
(c) If this Operating Agreement is terminated, Company shall take over the
management and operation of the Business within thirty days of the date of the
termination. As of the date of termination of this Operating Agreement, all
revenue of the Business shall be used exclusively to pay the expenses of
operating the Business. Upon termination of this Operating Agreement, Company
and Manager shall co-operate with each other to insure that the Business is
turned over to and is operated by the Company effective upon thirty days from
the date of this Operating Agreement's termination.
10. Indemnification.
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(a) Manager shall indemnify, defend and hold harmless Company and its
affiliates, their respective members, shareholders, officers, directors,
employees, and agents, against and in respect of any and all losses, claims,
damages, causes of action, actions, obligations, liabilities, deficiencies,
suits, proceedings, actual out-of-pocket obligations and expenses (including
cost of investigation, interest, penalties and reasonable attorneys' fees)
(collectively, "Losses") arising out of or due to the operation of the Business
by Manager, its affiliates, agents, servants and/or employees after the date of
this Operating Agreement.
(b) If Company (the "Indemnitee") receives notice of any claim or the
commencement of any action or proceeding with respect to which Manager is
obligated to provide indemnification (the "Indemnifying Party") pursuant to
subsections A and B of this Section 9, the Indemnitee shall promptly give the
Indemnifying Party notice thereof ("Indemnification Notice"). Such
Indemnification Notice shall be a condition precedent to any liability of the
Indemnifying Party under the provisions for indemnification contained in this
Operating Agreement. Except as provided below, the Indemnifying Party may
compromise, settle or defend, at such Indemnifying Party's own expense and by
such Indemnifying Party's own counsel, any such matter involving the asserted
liability of the Indemnitee. In any event, the Indemnitee, the Indemnifying
Party and the Indemnifying Party's counsel shall cooperate in the compromise of,
or defense against, any such asserted liability. If the Indemnifying Party
provides the Indemnitee a defense to a third party claim at the Indemnifying
Party's cost with a qualified attorney, Indemnitee may participate and/or
monitor the defense with an attorney of the Indemnitee's selection (at the
Indemnitee's own expense). Provided that the Indemnifying Party pays for the
full cost of the settlement of any claim, the Indemnifying Party may settle any
claim without the consent of the Indemnitee. If the Indemnifying Party chooses
to defend any claim, the Indemnitee shall make available to the Indemnifying
Party any books, records or other documents within its control that are
necessary or appropriate for such defense.
11. Additional Provisions.
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(a) To induce Company into entering this Operating Agreement, AWS and
Manager affirm:
(i) A default declared by FMAC as a result of this Operating Agreement
or any alleged default arising from alleged or actual operation of the
Business by Manager, whether
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in the past, present, or future, or any alleged default arising from change
of control of the Company, to Manager whether or not resulting from this
Operating Agreement, shall not relieve AWS of any of its obligations under,
nor permit AWS to renegotiate, rescind, cancel, change, or terminate, the
Acquisition Agreement.
(ii) In the event of an actual or threatened declared default by FMAC,
AWS, Manager and Company shall collectively use their best efforts to
negotiate, compromise, settle, or defend such declarations; and
(iii) The effective settlement date of the Acquisition Agreement was
March 30, 1999.
(b) This Operating Agreement sets forth the entire understanding and
agreement among the parties hereto with reference to the subject matter hereof
and may not be modified, amended, discharged or terminated except by a written
instrument signed by the parties hereto.
(c) This Operating Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware applicable to agreements
made, delivered and to be performed within such State.
(d) This Operating Agreement may not be assigned by Company or Manager,
except that Manager may in its sole discretion assign this Operating Agreement
to an affiliate or parent corporation. Upon any assignment Manager shall remain
primarily liable and also jointly and severally liable to Company for
performance of Manager's duties herein.
(e) All of the terms and provisions of this Operating Agreement shall be
binding upon, inure to the benefit of, and be enforceable by each of the parties
hereto and their respective successors and assigns. Except for affiliates of
the Company and Manager and their respective members, shareholders, officers,
directors, employees and agents, no person other than the parties hereto shall
be a third party beneficiary of this Operating Agreement or have any rights
hereunder.
(f) No failure on the part of any party hereto to exercise, and no delay
in exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other rights, power or remedy.
(g) No publicity release or announcement concerning this Operating
Agreement or the transactions contemplated hereby shall be issued without
advance approval of the form and substance thereof by Company and Manager,
unless otherwise required by a public information filing.
(h) Any notice or other communication required or which may be given
hereunder shall be in writing and either delivered personally to the addressee,
or mailed, certified or registered mail, or sent by a nationally recognized
overnight express courier service, postage or sending charges prepaid, and shall
be deemed given when so delivered personally, or if by certified or registered
mail, four days after the date of mailing, or if by overnight express courier
service, one business day after the date of sending, as follows:
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(i) If to Company to:
Millennia Car Wash, LLC
Attention: Eric Ottesen
c/o Excel Legacy Corporation
16955 Via del Campo, Suite 110
San Diego, California 92127
with a copy to:
Lynne M. Geyser, Esq.
P.O. Box 4715
San Clemente, California 92674-4715
Senior General Counsel
Millennia Car Wash, LLC
(ii) If to Manager, to:
President
1000 Crawford Place
Mt. Laurel, New Jersey 08054
With a copy to:
Robert M. Kramer, Esq.
1150 First Avenue, Suite 900
King of Prussia, Pennsylvania 19406
and to such other address or addresses as the Company or Manager, as the case
may be, may designate to the other by notice as set forth above.
(j) Any legal action, suit or proceeding arising out of or relating to
this Operating Agreement or the transactions contemplated hereby may be
instituted in any state or Federal court located in the State of Delaware, and
each party waives any objection which such party may now or hereafter have to
the laying of the venue of any such action, suit or proceeding, and irrevocably
submits to the jurisdiction of any such court in any such action, suit or
proceeding. Any and all service of process and any other notice in any such
action, suit or proceeding shall be effective against any party if given by
registered or certified mail, return receipt requested, or by any other means of
mail which requires a signed receipt, postage prepaid, mailed to such party as
herein provided. Nothing herein contained shall be deemed to affect the right
to any party to service of process in any other manner permitted by law.
(k) If any provision of this Operating Agreement shall be determined by a
court of competent jurisdiction to be invalid or unenforceable, such
determination shall not affect the remaining provisions of this Operating
Agreement, all of which shall remain in full force and effect.
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(l) This Operating Agreement may be executed in one or more counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
(m) The headings in this Operating Agreement are for reference purposes
only and shall not in any way affect the meaning or interpretation of this
Operating Agreement.
(n) Manager shall name Company as an additional insured on liability
policies and shall provide Company evidence of same within five (5) days of
execution of this Operating Agreement.
IN WITNESS WHEREOF, the parties have executed this Operating Agreement as
of the date first above written.
MANAGER: MACE SECURITY INTERNATIONAL, INC.
By: /s/ Jon Goodrich
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Jon Goodrich, President
COMPANY: MILLENNIA CAR WASH, LLC
By: /s/ Russell B. Geyser
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Russell B. Geyser, President
MEMBERS:
EXCEL LEGACY CORPORATION, a Delaware corporation
/s/ Richard B. Muir
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By: Richard B. Muir, Executive Vice President
G II VENTURES, LLC, a California limited liability company
By its Managing Member, RussellB. Muir B. Geyser I, LLC, a California
limited liability company
/s/ Russell B. Geyser
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By: Russell B. Geyser, Managing Member
Solely in consent to this Operating Agreement and in affirmation
of its obligations and representations in Section 11(a) hereof:
AMERICAN WASH SERVICES, INC.
By: /s/ Robert M. Kramer
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Robert M. Kramer, Vice President
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