EXHIBIT 6.23
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is dated this 28th day of July, 1999,
between ▇▇▇▇▇ Towing, Inc., a Florida corporation, ("SELLER"), and
1-800-AutoTow, Inc., a Delaware corporation (ATOW) and 1-800-AutoTow Florida,
Inc a Florida corporation (ATOW SUB) the ("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, whether real, personal or mixed,
tangible or intangible, which are used in or relate
to the vehicle towing business of SELLER located and
operated at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇ (the "premises"), excluding cash and accounts
receivable, and including but not 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.
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(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,
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 agrees to purchase from SELLER, at Closing, all of SELLER's Assets,
except those Assets excluded above. The parties also expressly agree that the
names "▇▇▇▇▇ Towing" shall be an asset transferred by SELLER to ATOW SUB.
3. Assumption of Liabilities or Obligations. ATOW or 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. SELLER
agrees to indemnify and hold ATOW an ATOW SUB harmless from and against any
loss, liability, damage, cost or expense in respect of any liabilities or
obligations which have not been specifically assumed by ATOW or ATOW SUB
pursuant to this Agreement.
4. Payment for the Assets.
(a) The purchase price for the Assets shall be
$1,885,000. The Company will pay the Seller the
following for these assets:
(b) Cash at final Closing: $1,260,000.
(c) A promissory note ("Note") attached as Exhibit B, at
8 % interest, for $695,000. Interest will be due
quarterly with the first payment due March 31, 2000.
Principal will be paid in full by July 31, 2001.
Seller shall have the option, with 30 days notice
prior to a principal payment to convert the Note
Principal into common stock of 1-800-ATOW at a
conversion price of $2.00/share.
(d) 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 in
Exhibit A.
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(e) 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.
5. Subordinated Provisions.
(a) SELLER's obligation shall be subject to its ability
to assume its identical form or in such form as is
acceptable to ATOW.
(b) ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ shall enter into a
non-compete agreement with ATOW similar in substance
and form to that contained in paragraph 13 herein,
the formation of which shall serve as a condition
precedent to the purchase by ATOW of the assets of
SELLER.
6. Asset Value. Upon completion of due diligence, should ATOW determine
the fair market value of an asset detailed in Exhibit A is less than the listed
value, the parties agree to negotiate in good faith to establish a fair value.
If the parties are unable to arrive at an agreement as to the value of any
specific asset, ATOW reserves the right to exclude that asset from the assets
being purchased and reduce the purchase price by an amount equal to the
estimated fair market value listed on Exhibit A. In the event the total of such
excluded assets equals or exceeds 10% of the total assets listed on Exhibit A,
ATOW shall be exempt from having to honor any agreement to purchase the assets
of Seller.
7. Cooperation. Seller agrees to cooperate fully with ATOW in
completing its due diligence including, but not limited to the following:
(a) obtaining and/or assigning all cotracts, permits,
regulatory clearances, federal, state or local
licenses and approvals. At the option of ATOW, it may
elect to close this transaction prior to completing
all such assignments and approvals. In the event that
ATOW elects to do so, Seller agrees to undertake good
faith efforts to assist ATOW in obtaining such
assignments, licenses or approvals.
8. Instruments of Transfer. SELLER agrees to execute and deliver
to ATOW SUB 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 E and a lease agreement Exhibit C
for the premises at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
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9. Representations and Warranties of SELLER. SELLER represents,
warrants and agrees to and with ATOW as follows:
(a) SELLER has been duly organized, is validly existing
and in good standing under the laws of the State of
Florida.
(b) 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.
(c) 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.
(d) Upon execution and delivery of it on the part of
SELLER and ATOW, 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.
(e) The representations made in Exhibit G hereto are
correct and accurately reflect the business conducted
at the premises. The SELLER understands that the ATOW
is 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, contracts, and goodwill.
(f) 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's
Assets are encumbered, payment of such encumbrances
shall be made by SELLERs at Closing out of the
proceeds received from the sale of the Assets.
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(g) Exhibit H 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.
(h) 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.
(i) 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.
(j) 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.
(k) 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.
(l) All tangible Assets of SELLER are in good order and
repair and in good operating condition, reasonable
wear and tear excepted, and suitable for the uses for
which intended.
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(m) 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.
(n) 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, 42 USCA, Section
4321 et seq., the Resource Conservation Recovery Act
(RCRA) 42 USCA, Section 6901 et seq., the
Comprehensive Environmental Response Compensation and
Liability Act (CERCLA) 42 USCA, Section 6911 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 and any of its affiliates 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 any of its affiliates in
connection with bringing the premises into full
compliance with applicable environmental laws,
statutes, ordinances, rules and regulations.
(o) 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 I, and the
approvals and consents of all such persons will be
duly obtained by Closing, or alternatively, waived in
writing by ATOW 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.
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(p) 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.
(q) The parties agree that the terms and conditions of
this Agreement are highly confidential in nature and
both ATOW and SELLER agree 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 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.
(r) 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;
(iii) borrowed any money or incurred any
liability, other than in the ordinary course
of business;
(iv) mortgaged, pledged or subjected to lien any
of its assets or entered into any
conditional sale or other title retention
agreement with respect to any of its real or
personal property;
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(v) sold, assigned or transferred any of its
assets, except for sales in the ordinary
course of business;
(vi) or made any capital expenditures or
commitments in excess of $5,000.00,
individually or $15,000 in the aggregate
without written approval from ATOW.
(s) Seller acknowledges that each certificate
representing 1-800-AutoTow's Common Stock acquired
pursuant to this Agreement shall bear the following
restrictive legend:
THE SECURITIES REPRESENTED BY THE CERTIFICATE (THE "SHARES")
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE SOLD
OR OFFERED FOR SALE OR OTHERWISE DISTRIBUTED WITHOUT ONE OF
THE FOLLOWING:
(i) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SHARES UNDER THE SECURITIES ACT, OR
(ii) AN OPINION OF COUNSEL, SATISFACTORY TO THE
CORPORATION, THAT SUCH REGISTRATION IS NOT
REQUIRED AS TO SAID SALE, OFFER OR DISTRIBUTION.
Seller's further acknowledge that they are acquiring
1-800-AutoTow Common Stock for their own account and not with
a view to its distribution within the meaning of Section 2(11)
of the Securities Act. Sellers are "accredited investors" as
such term is defined in Rule 501(a) under the Securities Act.
(t) Seller represents that it is currently
contracting with the Department of
Transportation ("DOT") for service along
Interstate 95. Seller represents that it has
discussed this sale of assets with a DOT
representative who has acknowledged that the
contract will remain in full force and effect
after the sale of assets subject to the terms
and conditions of that contract.
10. Representations and Warranties of ATOW AND ATOW SUB. ATOW and ATOW
SUB represent, warrant and agree as follows:
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(a) ATOW and ATOW SUB are corporations duly organized,
validly existing and in good standing under the laws
of the State of Delaware and the State of 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 their obligations under it.
(c) Upon execution and delivery of it on the part of
SELLER to ATOW, 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 or ATOW SUB.
(d) ATOW and ATOW SUB hereby assume all liability,
beginning August 1, 1999, under the leases and
subleases with respect to the premises (subject to
the provisions of Section 6), and ATOW and ATOW SUB
shall indemnify and hold harmless SELLER and any of
its officers, directors and shareholders who
personally guaranteed the performance of SELLER under
them.
11. Survival of Representations; Indemnification. The representations,
warranties, covenants and agreements contained in this Agreement shall survive
Closing, regardless of any investigations made by or on behalf of, or knowledge
of, any of the parties. SELLER agrees to indemnify ATOW and its affiliates, 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 agrees 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/or ATOW SUB shall have the right to recoup any amount
paid to ▇▇▇▇▇ Towing, Inc., as a result of a non-assumed claim or liability.
12. Compliance with Bulk Sales. SELLER and Purchasers 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 8, SELLER agrees to indemnify and hold harmless Purchasers from and
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against, and allow Purchasers to set off against amounts due to SELLER, any and
all losses, liabilities, claims, damages or expenses, including attorneys' fees,
arising as a result of claims or demands by third parties against SELLERS in
connection with its operation of its business prior to Closing.
13. Non-Compete Agreement.
(a) Prohibited Activities. ▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ shall enter into a non-competition agreement
which shall be in the form attached as Exhibit 13 A.
(b) Damages. Because of the difficulty of measuring
economic losses to ATOW as a result of a breach of
the foregoing covenant, and because of the immediate
and irreparable damage that could be caused to ATOW
for which it would have no other adequate remedy,
each individual agrees that the foregoing covenant
may be enforced by ATOW, 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 on the
date of the execution of this Agreement and the
current plans of ATOW; but it is also the intent of
ATOW, and the Individuals that such covenants be
construed and enforced in accordance with the
changing activities and business of ATOW throughout
the term of this covenant.
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 and/or any subsidiary
thereof, or similar activities or business in
locations the operation of which, under such
circumstances, does not violate clause Section 13(a),
and in any event such new business, activities or
location are not in violation of this Section 13 or
of such individual's obligations under this Section
13, if any, such individual shall not be chargeable
with a violation of this Section 13 if ATOW 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
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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 13 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 whether predicated on
this Agreement or otherwise, shall not constitute a
defense to the enforcement by the ATOW of such
covenants. It is specifically agreed that the period
of five (5) years stated at the beginning of this
Section 13, during which the agreements and covenants
of each individual made in this Section 13 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 13. The
covenants contained in this Section 13 shall not be
affected by any breach of any other provision hereof
by any Party hereto. The covenants contained in this
Section 13 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.
14. 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 on or before July 30, 1999, this
agreement shall be null and void and neither party
shall owe any amount to the other, and the
non-refundable deposit, referenced in Section 4(b)
shall remain with the Seller, 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.
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(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 Purchasers.
(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 its Miami,
Florida branch office, under its Commercial
Arbitration rules, and judgement on the award
rendered by the arbitrator(s) may be entered in any
court of competent jurisdiction within the State of
Florida.
(k) Seller shall make available all current and prior
years financial statements of Seller to ATOW SUB upon
request during normal business hours.
In witness, the parties have caused this Agreement to be duly executed
under seal as of the date written above.
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▇▇▇▇▇ Towing, Inc.
Attest: /s/ ▇▇▇ ▇. ▇▇▇▇▇ /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------- ---------------------
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇-▇▇▇ ▇▇▇▇▇▇▇ FLORIDA, INC.
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇.▇. ▇▇▇▇▇▇▇
---------------- ---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
President
1-800-AUTOTOW, INC.
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ /s/ ▇.▇. ▇▇▇▇▇▇▇
---------------- ---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇
▇▇. Vice President, COO
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