EXHIBIT 6.28
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is dated this 28th day of July, 1999,
between A-Ace Towing, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("Sellers"),
and 1-800- AutoTow, Inc., a Delaware Corporation ("ATOW") and 1-800-AutoTow Gulf
Coast S.W. ("ATOW SUB"), a Texas Corporation ("Purchasers"). Sellers desire to
sell to Purchasers and Purchasers desire to purchase from Sellers certain of the
Assets (as defined below) of Sellers, 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
Sellers, whether real, personal or mixed, tangible or
intangible, which are used in or relate to the vehicle towing
business of Sellers 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
towing business, trucks, 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 Sellers
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 and the name "A-Ace Towing.
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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 July 28, 1999.
2. Sale and Transfer of Assets. Upon the terms and subject to the
conditions set forth in this agreement, Sellers agree 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 SUB agrees to purchase from Sellers, at Closing, all of Sellers'
Assets, except those Assets excluded above. The parties also expressly agree
that the name A-Ace Towing shall be an asset transferred by Sellers to ATOW SUB.
3. Assumption of Liabilities or Obligations. ATOW SUB has not assumed,
and is not assuming, any liability or obligation of Sellers of any nature, known
or unknown, existing or contingent, including but not limited to any liabilities
or obligations with respect to any employees of Sellers other than as
specifically provided in this Agreement. All liabilities of Sellers shall
continue to be the sole responsibility of Sellers, which shall pay and discharge
all of such liabilities as they come due. Sellers agree to indemnify and hold
ATOW and ATOW SUB harmless from and against any loss, liability, damage, cost or
expense in respect of any liabilities or obligations.
4. Payment for the Assets.
(a) The purchase price for the Assets shall be $845,000.
(b) The purchase price paid at closing shall be: $362,000 and a
promissory note, attached as Exhibit B, in the amount of
$200,000 at 8% interest. Interest is payable quarterly with
the principal due on or before April 1, 2000.
(c) ATOW shall also transfer to Sellers at closing ATOW Common
Stock in an amount equal to $283,000.00 dollars at the average
closing stock price for the five (5) trading days prior to the
Closing and the five (5) trading days subsequent to the
Closing less a thirty percent discount. The shares issued to
the seller will be restricted as to their sale subject to Rule
144.
(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 Sellers to ATOW shall be paid by ATOW SUB.
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5. Instruments of Transfer. Sellers agree 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 except as specifically set forth in
Exhibit A subject to the provisions of (2) above. Such instruments of transfer
shall include but not be limited to a ▇▇▇▇ of Sale in the form of attached
Exhibit D, a lease agreement (Exhibit E) for the premises and a vehicle service
contract for maintenance and repair (Exhibit F). Further, ATOW and ATOW SUB
agree that ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall be employed by ATOW SUB pursuant to an
employment agreement attached hereto as Exhibit G.
6. Asset Value. Upon completion of due diligence, should ATOW determine
the fair market value of an asset detailed in Exhibit C 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 C. In the event the total of such
excluded assets equals or exceeds 10% of the total assets listed on Exhibit C,
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) Communicating with all creditors in writing or otherwise to
verify the nature and extent of their liabilities; and
(b) obtaining and/or assigning all contracts, 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 approval.
8. Representations and Warranties of Sellers. Sellers represent,
warrant and agree to and with ATOW and ATOW SUB as follows:
(a) Sellers have 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 Sellers, and Sellers have 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.
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(c) Upon execution and delivery of it on the part of Sellers and
ATOW and ATOW SUB, this Agreement shall constitute the valid
and legally binding obligation of Sellers 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 Sellers or the Assets.
(d) The representations made in Exhibit H hereto are correct and
accurately reflect the business conducted at the premises. The
Sellers 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 Sellers
warrant that this is a true and accurate statement of the
Sellers' financial history and condition. The Sellers agree
that they will pay, settle, or otherwise dispose of all their
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) Sellers have 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 Sellers' 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.
(f) Exhibit I contains a list of all agreements, commitments and
contracts, written or oral, pertaining to the Assets and to
which Sellers are a party, which (i) are not terminable on 30
days' notice or less without any obligation of Sellers, and
(ii) which are either individually or in the aggregate
material to Sellers.
(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 Sellers 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
Sellers.
(h) Sellers are 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 Sellers. Sellers are 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 Sellers.
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(i) Sellers have 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 Sellers
and has paid all taxes as shown on such returns and on any
assessment received by Sellers and all other taxes payable
without requiring the filing of any return. Such tax returns
are correct and complete and Sellers have 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.
(k) All tangible Assets of Sellers are in good order and repair
and in good operating condition, reasonable wear and tear
excepted, and suitable for the uses for which intended.
(l) Sellers are 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 Sellers to compel Sellers 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 Sellers to any fine, forfeiture
or other sanction.
(m) With respect to the premises, Sellers have not engaged in, or
allowed third parties to engage in, any actions, and Sellers
have 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. Sellers
shall be solely responsible, and ATOW and 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 and 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 Sellers, parties to
leases and subleases or any other instruments or agreements to
which Sellers are a party or by which it is bound) whose
approval or consent to the execution, delivery and performance
of this Agreement by Sellers is legally or contractually
required are specified on attached Exhibit J, and the
approvals and consents of all such persons will be duly
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obtained by Closing, or alternatively, waived in writing by
ATOW SUB and obtained by Sellers 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 Sellers 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 Sellers which materially and adversely affects the
business or financial condition of Sellers 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 Sellers 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 Sellers
recognize 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 Sellers have conducted their
business only in the ordinary course of business and there
have not been any material changes with respect to the
Sellers. Without limiting the generality of the foregoing,
since that date, the Sellers have 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.
9. Seller acknowledges that each certificate representing
1-800-AutoTow's Common Stock acquired pursuant to this Agreement shall bear the
following restrictive legend:
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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.
10. 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 Texas 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 Sellers, 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.
(d) ATOW SUB hereby assume all liability, on the first day after
the Closing, under the leases and subleases with respect to
the premises (subject to the provisions of Section 6), and
ATOW SUB shall indemnify and hold harmless Sellers and any of
their officers, directors and shareholders who personally
guaranteed the performance of Sellers 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. Sellers agree to indemnify ATOW and ATOW SUB, its
successors and assigns, against, and hold them harmless from and in respect of,
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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 Sellers pursuant to this Agreement. ATOW
and ATOW SUB agree to indemnify Sellers, their 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 ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ as a result of a
non-assumed claim or liability.
12. Compliance with Bulk Sales. Sellers and ATOW SUB agree to waive
compliance with any applicable laws of the State of Texas pertaining to Bulk
Transfers. In consideration of such waiver, and without limiting any provisions
of Section 8, Sellers agree to indemnify and hold harmless ATOW and/or ATOW SUB
from and against, and allow ATOW and/or ATOW SUB to set off against amounts due
to Sellers, 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. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ shall enter into a
non-competition agreement which shall be in the form attached
as Exhibit 12 A.
(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; but
it is also the intent of ATOW, ATOW SUB and the Individuals
that such covenants be construed and enforced in accordance
with the changing activities and business of ATOW and ATOW SUB
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 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 12(a), and in
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any event such new business, activities or location are not in
violation of this Section 12 or of such individual's
obligations under this Section 12, if any, such individual
shall not be chargeable with a violation of this Section 12 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 12
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 ATOW or ATOW SUB
whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by 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 10,
during which the agreements and covenants of each individual
made in this Section 12 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
12. The covenants contained in this Section 12 shall not be
affected by any breach of any other provision hereof by any
Party hereto, except that upon ATOW or ATOW SUB admission in
writing, or a final judicial determination which is not the
subject of appeal or further appeal by ATOW or ATOW SUB, that
either ATOW or ATOW SUB has materially breached ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇'▇ Employment Agreement (if applicable), and ATOW or
ATOW SUB failure to cure such material breach within 30 days
of such admission or final judicial determination, whichever
is applicable, then the covenants contained in this Section 12
with respect to ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ will expire. The
covenants contained in this Section 12 shall have no effect if
the transactions contemplated by this Agreement are not
consummated.
(f) Materiality. ATOW and ATOW SUB 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 for this
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transaction prior to July 30, 1999, this agreement shall be
null and void and neither party shall owe any amount to the
other, unless the parties, in writing, agree to extend this
agreement.
(b) Seller shall make all current and prior years financial books
and records available to ATOW SUB upon request during
reasonable business hours.
(c) From and after the date of Closing, Sellers 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.
(d) 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.
(e) 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.
(f) 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 Sellers or ATOW or ATOW SUB.
(g) 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.
(h) 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.
(i) This Agreement may be amended only in writing executed by the
parties affected by such amendment.
(j) This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Florida.
(k) Any controversy or claim arising out of or relating to this
contract, or 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.
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In witness, the parties have caused this Agreement to be duly executed
under seal as of the date written above.
Attest: /s/ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Seller
Attest: /s/ ▇. ▇▇▇▇▇▇▇▇▇ By: /s/ ▇. ▇▇▇▇▇▇▇▇
----------------- ----------------------
▇. ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Seller
▇-▇▇▇ ▇▇▇▇▇▇▇ GULF COAST S. W., INC.
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇
President
1-800-AUTOTOW, INC.
Attest: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇. ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇
▇▇. V.P./COO
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