EXHIBIT 6.26
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is dated this 22nd day of July, 1999,
between Town 'N Country Towing, Inc., ("Seller"), and 1-800-AutoTow, Inc., a
Delaware corporation ("ATOW") and 1-800-AutoTow Gulf Coast East, Inc., ("ATOW
SUB"), a Florida corporation ("Purchasers"). Seller desires to sell to
Purchasers and Purchasers desire to purchase from Seller certain of the Assets
(as defined below) of Seller, upon the terms and conditions set forth below.
Therefore, in consideration of the covenants, representations,
warranties and agreements contained in this Agreement, the receipt and
sufficiency of which are acknowledged, the parties intending to be legally
bound, covenant and agree as follows:
1. Definitions. The following words shall mean, when used in this
Agreement:
(a) "Assets" shall mean all of the rights and assets of the Seller which are
used in or relate to the vehicle towing business of Seller located and operated
at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the "premises"), excluding those
of Town 'N Country Transport, the telephone, fax numbers, server and PC used to
handle Town 'N Country Transport, all cash and accounts receivable, and all real
property of seller. Assets shall include but not be limited to the following:
the goodwill associated with the business, all permits, licenses, agreements and
rights associated with the premises, machinery and equipment, tools and tooling,
inventory including trucks, repair equipment and other related products, office
equipment and supplies, cash registers, furniture and furnishings, telephone and
other communication systems, computer hardware and software systems, all
contracts and agreements made on behalf of Seller pertaining to its business and
books of account, files, ledgers, vendor lists, customer records, operations
manuals, confidential information, papers and records pertaining to its
businesses at the premises. Seller shall retain the right to any vehicles stored
prior to closing, including the proceeds derived from the sale or storage
thereof after closing.
(b) "Closing" shall mean the events which take place for the purpose of the
consummation of this Agreement, the same to occur at the offices of ATOW on or
before July 30, 1999.
2. Sale and Transfer of Assets. Upon the terms and subject to the
conditions set forth in this agreement, Seller agrees to sell, transfer, assign,
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grant, convey and deliver to ATOW SUB, at Closing, free and clear of all
mortgages, liens, security interests, pledges, charges and other encumbrances,
and ATOW SUB agrees to purchase from Seller, at Closing, all of Seller's Assets
pursuant to Section 1(a) above. The parties also expressly agree that the names
"Town 'N Country Towing, Inc.", and "Independent Wrecker Service" shall be
included among the assets sold by Seller to ATOW SUB.
3. Assumption of Liabilities or Obligations. ATOW and ATOW SUB have not
assumed, and are not assuming, any liability or obligation of Seller of any
nature, known or unknown, existing or contingent, including but not limited to
any liabilities or obligations with respect to any employees of Seller other
than as specifically provided in this Agreement. All liabilities of Seller other
than those specified shall continue to be the sole responsibility of Seller,
which shall pay and discharge all of such liabilities as they come due. The
parties shall indemnify and hold each other harmless from and against any loss,
liability, damage, cost or expense with respect to any and all liabilities or
obligations resulting from their ownership or operation of the business.
Seller's indemnification of Purchasers shall include any and all liabilities to
creditors of ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
individually.
4. Payment for the Assets. The Purchasers agree to purchase the assets
of Seller listed in Exhibit A, subject to the terms and conditions of this
Agreement for $975,000.00 The Purchasers will pay the Seller the following for
these assets:
(a) Cash at final Closing, on or before July 30, 1999: $825,000.00
(b) ATOW shall also transfer to Seller Common Stock having a total
value of $150,000.00. The number of shares to be issued shall
be determined by applying a 30% discount to the average
closing price for the five trading days prior to Closing and
the five trading days subsequent to Closing. The shares issued
to the Seller will be restricted as to their sale pursuant to
Rule 144. Necessary documentation to effectuate such issuance
shall be forwarded by ATOW to its transfer agent within ten
(10) days after closing.
(c) The Purchase Price shall be allocated among the Assets by
Seller and ATOW in accordance with attached Exhibit A. Seller
and ATOW agree that they will report the sale of the Assets
for income tax purposes in accordance with the allocations set
forth above and there shall be an allocation of the purchase
price in accordance with generally accepted accounting
principles (GAAP).
(d) Any sales tax, use tax, excise tax, transfer tax, recording
fee or other tax or fee imposed upon the transfer of the
Assets from Seller to ATOW SUB shall be paid by ATOW SUB.
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5. Special Provisions.
(a) Seller shall retain all rights to Town 'N Country Transport,
as well as the server and PC used to handle that business.
Town 'N Country Transport is in the collateral recovery
business and the sale of certain assets of Town 'N Country
Towing, Inc. to 1-800-AutoTow, Inc. shall preclude Town 'N
Country Transport from competing with the company as more
fully set forth in the non-compete agreement to be executed at
closing, which shall not preclude Town 'N Country Transport
from engaging in a collateral recovery business.
Notwithstanding and subject to the foregoing, nothing
contained herein, or in any separate non-compete agreement
shall be construed to prevent a past or present officer,
director or employee of Seller from managing and/or servicing
the Town 'N Country Transport account.
(b) ATOW SUB shall be responsible for the cost of transferring
and/or re-registering the assets conveyed hereunder. Further,
ATOW SUB shall reimburse Seller for the pro-rata unexpired
portion of the vehicle licensing fees and 50% of the
wreckmaster tuition.
(c) Seller will lease the premises located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇., ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, on a month-to-month basis to ATOW SUB
until ATOW SUB can effect a smooth transition. An example of
the Lease Agreement is attached as Exhibit E. The parties
agree that if ATOW SUB determines during the transition period
that the premises located at ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., is
best suited for its operations, the parties will negotiate a
long term lease for the premises. Nothing herein contained
shall preclude Seller from leasing to an unrelated third party
who may avail itself of towing rotation slots if permitted by
the appropriate authorities.
(d) ATOW SUB will enter into a Consulting Agreement Exhibit F with
▇▇▇▇▇ ▇▇▇▇ for a minimum of three (3) months, at $5,000.00 per
month, to begin the day of the final Closing.
(e) Seller shall make all current and prior years financial books
and records available to ATOW SUB upon request during
reasonable business hours.
6. Instruments of Transfer. Seller agrees to execute and deliver to
ATOW such instruments of transfer, assignment and conveyance as shall be
necessary in the judgment of ATOW to vest in ATOW SUB good and marketable title
to the Assets free and clear of all mortgages, liens, security interests,
pledges, charges and other encumbrances.
Such instruments of transfer shall include but not be limited to a ▇▇▇▇ of Sale
in the form of attached Exhibit B.
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7. Representations and Warranties of Seller. Seller represents,
warrants and agrees to and with ATOW SUB as follows:
(a) Seller has all requisite power and all necessary permits,
certificates, contracts, approvals and other authorizations
required by any and all federal, state, city, county or other
municipal bodies to own, lease, use and operate its properties
and to conduct its business in the manner in which such
business is presently conducted.
(b) The execution, delivery and performance of this Agreement have
been duly authorized by the Seller, and Seller has the
complete and unrestricted power and authority, and has taken
all action necessary, to enter into, execute and deliver this
Agreement and to perform all of its obligations hereunder.
(c) Upon execution and delivery of it on the part of Seller and
ATOW SUB, this Agreement shall constitute the valid and
legally binding obligation of Seller enforceable in accordance
with its terms except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting creditors' rights. This Agreement does not violate
any law or regulation and does not conflict with any other
agreement affecting Seller or the Assets.
(d) The representations made in Exhibit C hereto are correct and
accurately reflect the business conducted at the premises. The
Seller understand that the Purchasers are relying on the
accuracy of these representations to evaluate the value of the
assets being acquired on a going concern basis and Seller
warrants that this is a true and accurate statement of the
Seller's financial history and condition. The Seller agrees
that it will pay, settle, or otherwise dispose of all its
liabilities, both current and contingent, in such a manner as
to not damage or diminish the value of the assets being
acquired including, but not limited to trademarks, trademarks,
contracts, and goodwill.
(e) Seller has good and marketable title to all of the Assets,
free and clear of all mortgages, liens, security interests,
pledges, charges or other encumbrances. In the event that any
of Seller' Assets are encumbered, payment of such encumbrances
shall be made by Seller at Closing out of the proceeds
received from the sale of the Assets.
(f) Exhibit D contains a list of all agreements, commitments and
contracts, written or oral, pertaining to the Assets and to
which Seller is a party, which (i) are not terminable on 30
days' notice or less without any obligation of Seller, and
(ii) which are either individually or in the aggregate
material to Seller.
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(g) There is no action, suit, proceeding, inquiry or investigation
at law or in equity, or before any court, arbitrator, public
board or body, pending or threatened against Seller in which
an unfavorable decision, ruling or finding would in any way
adversely affect the transaction contemplated by this
Agreement or the business, assets or financial condition of
Seller.
(h) Seller is not obligated under any contract or agreement or
subject to any charge or other restriction which materially
and adversely affects the business, assets or financial
condition of Seller. Seller is not in violation or default
under any indenture, contract, lease or agreement to which it
is a party or by which the Assets are bound or with respect to
any law, regulation, rule, order, writ, injunction or decree
of any court or any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, nor will the execution, delivery and
performance of this Agreement cause or result in any such
violation or default or result in the creation of any lien,
claim, pledge or encumbrance or any kind upon any of the
Assets of Seller.
(i) Seller has filed all federal, state and local income,
franchise, capital stock, sales or use, excise, property or
other tax returns which are required to be filed by Seller and
has paid all taxes as shown on such returns and on any
assessment received by Seller and all other taxes payable
without requiring the filing of any return. Such tax returns
are correct and complete and Seller has not received any
notice of any proposed tax deficiency.
(j) All of the Assets are adequately insured against loss and all
insurance policies relating to them will be assigned to ATOW
SUB, if ATOW SUB so requests. If such assignment occurs,
Seller shall be reimbursed for any unused premium.
(k) At closing, all tangible Assets of Seller will be in good
order and repair and in good operating condition, reasonable
wear and tear excepted, and suitable for the uses for which
intended. Seller makes no other warranties concerning the
condition or fitness of the tangible assets, express or
implied.
(l) Seller is not subject to any order of any court or
governmental authority or agency, nor is there any legal
action, governmental proceeding or investigation pending or
threatened or known to Seller to compel Seller to make any
material change in the character or location of any of the
assets or that would materially and adversely affect the
assets or which could subject Seller to any fine, forfeiture
or other sanction.
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(m) With respect to the premises, Seller has not engaged in, or
allowed third parties to engage in, any actions, and Seller
has no knowledge of any fact or condition, which would
constitute a violation of the National Environmental Policy
Act of 1969, 42 USCA 4321 et seq., the Resource Conservation
Recovery Act of 1976 (RCRA) 42 USCA 6901 et seq., the
Comprehensive Environmental Response Compensation and
Liability Act (CERCLA) 42 USCA 9601 et seq., or any
regulations promulgated by the United States Environmental
Protection Agency pursuant to those Acts, or any applicable
state or local environmental law, regulation or order. Seller
shall be solely responsible, and ATOW or ATOW SUB shall have
no liability, for any and all liability resulting from such
violation which occurs prior to the Closing, even if the
violations are not discovered until after the date of the
final Closing documents. Any such liability shall include but
not be limited to, any costs, penalties, assessments, expenses
or fees, including reasonable attorneys' fees, incurred by
ATOW or ATOW SUB in connection with bringing the premises into
full compliance with applicable environmental laws, statutes,
ordinances, rules and regulations.
(n) The only persons (including, but not limited to, governmental
authorities and agencies, creditors of Seller, parties to
leases and subleases or any other instruments or agreements to
which Seller is a party or by which it is bound) whose
approval or consent to the execution, delivery and performance
of this Agreement by Seller is legally or contractually
required are specified on attached Exhibit G, and the
approvals and consents of all such persons will be duly
obtained by Closing, or alternatively, waived in writing by
ATOW SUB and obtained by Seller promptly after Closing, in
which event the transfer under this Agreement relating to the
subject matter of such consent shall be deemed to be
conditional on receipt of such consent.
(o) Neither this Agreement nor any Exhibit or financial statement,
certificate or other written material furnished by or on
behalf of Seller contain any untrue statement of a fact or
omits to state a fact necessary in order to make the
statements contained in it not misleading. There is no fact
known to Seller which materially and adversely affects the
business or financial condition of Seller or the assets which
has not been set forth in this Agreement or in any Exhibit, or
financial statement, certificate or other written material
furnished pursuant to it.
(p) The parties agree that the terms and conditions of this
Agreement are highly confidential in nature and both the
Purchasers and Seller agrees not to disclose the terms and
conditions of this Agreement without the written consent of
the other, unless such disclosure is required by law.
Violation of this provision may, at the discretion of the
other party, be cause for termination and the non-disclosing
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party shall be entitled to damages in an amount equal to the
costs of its due diligence including staff, attorney,
accounting, travel, and related expenses. The Seller
recognizes that this non-disclosure provision shall not extend
to regulatory requirements of the Securities and Exchange
Commission or to any filing in connection with a Registration
Statement or other required filing.
(q) Except as contemplated in this Agreement, since the most
recent fiscal year end, the Seller has conducted its business
only in the ordinary course of business and there have not
been any material changes with respect to the Seller. Without
limiting the generality of the foregoing, since that date, the
Seller has not:
(i) sold, assigned, transferred, mortgaged, pledged,
subjected to lien, or entered into any conditional
sale or other title retention agreement with respect
to any of the assets being purchased;
(ii) entered into any agreement with any labor union or
association representing any employee or made any
wage or salary increase or bonus, or increase in any
other direct or indirect compensation or employment
agreement, for any of its officers, directors or
employees.
8. Representations and Warranties of ATOW and ATOW SUB. ATOW and ATOW
SUB represent, warrant and agree as follows:
(a) ATOW and ATOW SUB are corporations duly organized, validly
existing and in good standing under the laws of the State of
Delaware and Florida respectively.
(b) ATOW and ATOW SUB have the power and authority, and have taken
all action necessary to enter into, execute and deliver this
Agreement and to perform all of its obligations under it.
(c) Upon execution and delivery of it on the part of Seller, ATOW
and ATOW SUB, this Agreement shall constitute the valid and
legally binding obligation of ATOW and ATOW SUB, enforceable
in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally. This Agreement
does not violate any law or regulation pertaining to ATOW and
ATOW SUB and does not conflict with any other agreement
affecting ATOW and ATOW SUB.
9. Survival of Representations; Indemnification. The representations,
warranties, covenants and agreements contained in this Agreement shall survive
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Closing, regardless of any investigations made by or on behalf of, or knowledge
of, any of the parties. Seller agrees to indemnify ATOW and ATOW SUB, its
successors and assigns, against, and hold them harmless from and in respect of,
any loss, liability, damage, cost or expense accruing from or resulting by
reason of any falsity or breach of the representations, warranties, covenants or
agreements made or to be performed by Seller pursuant to this Agreement. ATOW
and ATOW SUB agree to indemnify Seller, its successors and assigns, against, and
hold them harmless from and in respect of, any loss, liability, damage, cost or
expense accruing from or resulting by reason of any falsity or breach of the
representations, warranties, covenants or agreements made or to be performed by
ATOW and ATOW SUB pursuant to this Agreement. For the purposes of this
indemnification, ATOW and ATOW SUB shall have the right to recoup any amount
paid to Town 'N Country Towing and Independent Wrecker Service as a result of a
non-assumed claim or liability.
10. Compliance with Bulk Sales. Seller and ATOW SUB agree to waive
compliance with any applicable laws of the State of Florida pertaining to Bulk
Transfers. In consideration of such waiver, and without limiting any provisions
of Section 9, Seller agrees to indemnify and hold harmless ATOW and ATOW SUB
from and against any and all losses, liabilities, claims, damages or expenses,
including attorneys' fees, arising as a result of claims or demands by third
parties against Seller in connection with its operation of its business prior to
Closing.
11. Non-Compete Agreement.
(a) Prohibited Activities. ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall enter into a
non-competition agreement which shall be in the form attached
as Exhibits 11 A. The agreement shall prohibit those
individuals from engaging, directly or indirectly, in the
motor vehicle towing business for a period of five (5) years
from the date of Closing and shall preclude competition within
one hundred (100) miles of the premises as defined herein.
(b) Damages. Because of the difficulty of measuring economic
losses to ATOW or ATOW SUB as a result of a breach of the
foregoing covenant, and because of the immediate and
irreparable damage that could be caused to ATOW and/or ATOW
SUB for which it would have no other adequate remedy, each
individual agrees that the foregoing covenant may be enforced
by ATOW or ATOW SUB, in the event of breach by such
individual, by injunctions and restraining orders.
(c) Reasonable Restraint. It is agreed by the Parties hereto that
the foregoing covenants in this section impose a reasonable
restraint on the individuals in light of the activities and
business of ATOW or ATOW SUB on the date of the execution of
this Agreement and the current plans of ATOW and ATOW SUB.
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It is further agreed by the Parties hereto that, in the event
that any individual shall enter into a business or pursue
other activities not in competition with the ATOW or ATOW SUB
and/or any subsidiary thereof, or similar activities or
business in locations the operation of which, under such
circumstances, does not violate clause Section 11(a), and in
any event such new business, activities or location are not in
violation of this Section 11 or of such individual's
obligations under this Section 11, if any, such individual
shall not be chargeable with a violation of this Section 11 if
ATOW or ATOW SUB shall thereafter enter the same, similar or a
competitive (i) business, (ii) course of activities or (iii)
location, as applicable.
(d) Severability; Reformation. The covenants in this section are
severable and separate, and the unenforceability of any
specific covenant shall not affect the provisions of any other
covenant. Moreover, in the event any court of competent
jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it
is the intention of the Parties that such restrictions be
enforced to the fullest extent which the court deems
reasonable, and the Agreement shall thereby be reformed.
(e) Independent Covenant. All of the covenants in this Section 11
shall be construed as an agreement independent of any other
provision in this Agreement, and the existence of any claim or
cause of action of any individual against the ATOW or ATOW SUB
whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by the ATOW or ATOW
SUB of such covenants. It is specifically agreed that the
period of five (5) years stated at the beginning of this
Section 11, during which the agreements and covenants of each
individual made in this Section 11 shall be effective, shall
be computed by excluding from such computation any time during
which such individual is in violation of any provision of this
Section 11. The covenants contained in this Section 11 shall
not be affected by any breach of any other provision hereof by
any Party hereto. The covenants contained in this Section 11
shall have no effect if the transactions contemplated by this
Agreement are not consummated.
(f) Materiality. ATOW and the individuals hereby agree that this
covenant is a material and substantial part of this
transaction.
12. Miscellaneous.
(a) The parties understand that notwithstanding any other
representation to the contrary, the agreement is subject to
ATOW obtaining financing for this transaction prior to July
30, 1999. Should ATOW not obtain financing for this
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transaction prior to July 30, 1999, this agreement shall be
null and void and except as provided in the Binding Letter of
Intent neither party shall owe any amount to the other, unless
the parties, in writing, agree to extend this agreement.
(b) From and after the date of Closing, Seller shall execute and
deliver to or cause to be executed and delivered to ATOW SUB
any such further instruments of transfer, assignment and
conveyance and shall take such other action as ATOW SUB may
reasonably require to carry out more effectively the sale,
transfer, assignment and conveyance to ATOW SUB of the assets
and to confirm and assure ATOW SUB's title to them.
(c) Each party covenants and agrees that it shall be responsible
for and shall bear its own legal and other costs and expenses
in connection with the negotiation, preparation and execution
of this Agreement, and performance of the transactions
contemplated by it.
(d) Neither party shall assign, in whole or in part, this
Agreement or its rights and obligations under it without the
express prior written consent of the other party.
(e) In the event that any provision of this Agreement shall be
held invalid, illegal or unenforceable under applicable law,
the remainder of this Agreement shall remain valid and
enforceable unless such invalidity, illegality or
unenforceability substantially diminishes the rights and
obligations, taken as a whole, of Seller or ATOW or ATOW SUB.
(f) This Agreement and the Exhibits contain the entire agreement
among the parties with respect to the sale and purchase of the
Assets and supersede all previous written or oral
negotiations, commitments and writings.
(g) This Agreement may be executed in two or more counterparts,
each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
(h) This Agreement may be amended only in writing executed by the
parties affected by such amendment.
(i) This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Florida.
(j) Any controversy or claim arising out of or relating to
this contract, of the breach thereof, shall be settled by
arbitration administered by the American Arbitration
Association (AAA), in the county of Palm Beach, pursuant to
the Commercial Arbitration rules of the AAA, and judgement on
the award rendered by the arbitrator(s) may be entered in any
court of competent jurisdiction within the State of Florida.
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In witness, the parties have caused this Agreement to be duly executed
under seal as of the date written above.
TOWN `N COUNTRY TOWING, INC.
Attest: /s/ ▇. ▇▇▇▇ /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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▇. ▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇
CEO
▇-▇▇▇ ▇▇▇▇▇▇▇ GULF COAST EAST, INC.
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attorney Treasurer
1-800-AUTOTOW, INC.
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Attorney President
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