Form DEFA14A LMP Automotive Holdings,

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): August 5, 2022

 

LMP Automotive Holdings, Inc.

(Exact name of registrant as specified in its charter)

  

Delaware		333-236260		82-3829328
(State or other jurisdiction		(Commission File Number)		(I.R.S. Employer
of incorporation)				Identification No.)

 

500 East Broward Blvd., Suite 1900, Ft. Lauderdale, Florida		33394
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (954) 895-0352

 

N/A

Former name or former address, if changed since last report

 

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value per share		LMPX		NASDAQ Capital Market

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☒	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

On August 5, 2022, LMP Automotive Holdings, Inc. and its subsidiaries (collectively, the “Company”), entered into multiple Asset Purchase Agreements (collectively, the “Agreements”) by and between subsidiaries of the Company and subsidiaries of Atlantic Coast Automotive, Inc. (the “Buyer”). Under the terms of the Agreements, the Company will sell its Kia dealerships in Port Charlotte, FL, Cape Coral, FL and Beckley, WV, its Subaru dealership in Beckley, WW, its Chevrolet dealership in Beckley, WV and its General Motors dealership in Beckley, WV and associated real estate holdings, where applicable, to subsidiaries of the Buyer (the “Atlantic Sale”) and receive aggregate cash proceeds of $133.0 million (the “Purchase Price”). The Atlantic Sale constitutes a sale of substantially all of the Company’s assets to the Buyer and will be effective on a date that is no later than October 31, 2022 (the “Closing Date Deadline”).

 

Currently, the Company anticipates the closing of the Atlantic Sale will occur in October of this year, subject to the terms of the Agreements and numerous conditions precedent to Closing including but not limited to regulatory approval including under the Hart-Scott Rodino Antitrust Act. The actual timing may vary materially based on various factors including the approval by holders of a majority of the issued and outstanding common stock and the receipt and satisfaction of other closing conditions listed in the Agreements.

 

 The Agreements, among other things, provide for the following:

 

	●	The Company will sell all of its right, title and interest in the Assets, as that term is defined in the Agreements, to the Buyer.

	●	The Purchase Price for the Assets to be sold to the Buyer is $133.0 million in the aggregate.

	●	The Agreements may be terminated at any time before the completion of the Atlantic Sale by (i) mutual written consent of the parties, (ii) by the Company or the Buyer if there has been a breach by a party of its representations, warranties or covenants that is not timely cured within days of notice to the counterparty, (iii) by either party in the event the counterparty’s conditions precedent to closing are not satisfied before October 31, 2022, or (iv) by either party in the event the closing of the Atlantic Sale has not occurred by the Closing Date Deadline.

	●	The Company and the Buyer have generally agreed to mutual indemnification for certain losses incurred in connection with the transactions contemplated by the Agreements and its ancillary documents.

	●	In connection with the Agreements, the parties thereto will enter into an escrow agreement pursuant to which $2.5 million of the proceeds from the Atlantic Sale will be held in escrow for the purpose of settling potential post-closing claims under the indemnification provisions of the agreements. One-half of the funds will be released from escrow on August 1, 2023 and the remaining funds will be released on August 1, 2024.

	●	In the event that the Company fails to obtain the approvals necessary to consummate the transaction, the Buyer will be entitled to receive from the Buyer a breakup fee equal to the reasonable costs and expenses incurred by the Buyer in connection with the Atlantic Sale.

	●	The Atlantic Sale is also conditioned on numerous third party consents and regulatory approvals.

●

The Atlantic Sale is subject to standard closing conditions and covenants.

        

In connection with the Atlantic Sale, as well as the previously announced sale of the Company’s Jeep Dodge Ram Dealership in White Plains, New York for a purchase price of $15.8 million, the Company intends to hold a Special Meeting of Stockholders (the “Special Meeting”) pursuant to which it will ask its stockholders to approve a plan of liquidation pursuant to which the Company will sell substantially all of its assets, wind up and terminate the business of the Company, and distribute its remaining assets (the “Plan of Liquidation”) in accordance with the terms of the Plan of Liquidation. The date and time of the Special Meeting will be announced at a later date.

 

The Agreements contain representations, warranties and covenants by the parties and other factual information about the Company, the Buyer and their respective businesses or operations. The representations, warranties covenants and other factual statements: (i) have been made solely for the benefit of the other party or parties to such agreements and amendments; (ii) were made only as of the date of such agreements and amendments or such other date(s) as expressly set forth in such agreements or amendments and are subject to more recent developments, which may not be fully reflected in our public disclosure; (iii) may have been subject to qualifications with respect to materiality, knowledge and other matters, which qualifications modify, qualify and create exceptions to the representations, warranties and covenants in the agreements or amendments; (iv) may be qualified by disclosures made to such other party or parties in connection with signing such agreements or amendments, which disclosures contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants in such agreements or amendments; (v) have been made to reflect the allocation of risk among the parties to such agreements or amendments rather than establishing matters as facts; and (vi) may apply materiality standards different from what may be viewed as material to investors. Accordingly, these representations, warranties, covenants, and statements of fact should not be relied upon by investors as they may not describe the Company’s actual state of affairs as of August 5, 2022 or as of the date of filing this Current Report on Form 8-K.

 

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

 

Interim CFO Appointment

 

On August 5, 2022, the Company’s Board of Directors appointed Sam Tawfik, in addition to his role as Chief Executive Officer, as the Company’s interim Chief Financial Officer. In connection with the additional responsibility, Mr. Tawfik’s annual base compensation will be increased by $360,000, which amount is equal to the base annual compensation paid to the Company’s previous Chief Financial Officer. Mr. Tawfik’s annual base compensation will now be $660,000. Mr. Tawfik was not granted any additional options to purchase the Company’s common stock in connection with this increase in compensation.

 

Liquidation Bonus to COO

 

On August 5, 2022, in connection with the Atlantic Sale, the Company’s Board of Directors approved a modification to the compensation of Richard Aldahan, the Company’s Chief Operating Officer. In addition to his annual base compensation of $300,000, Mr. Aldahan will now be eligible to receive upon (i) the consummation of the sales of each of the Company’s dealerships, (ii) the completion of the financial accounting for the fiscal year ended December 31, 2022 and (iii) the completion of any necessary administrative or managerial tasks associated with the liquidation of the Company, a one-time bonus payment of $400,000 (the “Liquidation Bonus”).

 

Item 8.01 Other Events

 

Liquidation of the Company

 

As soon as practicable after the Closing Date, the Company, after satisfaction of all debt and other third party obligations, intends to pay a liquidating distribution to the holders of its outstanding common stock. Thereafter, the Company will be dissolved in accordance with the laws of the State of Delaware.

 

Press Release

 

On August 5, 2022 the Company issued a press release regarding the entry into the Agreements, a copy of which is attached as an Exhibit to this Current Report.

 

Item 9.01 Financial Statements and Exhibits.

 

Pursuant to the rules and regulations of the SEC, the Company has filed the Agreements and the press release as Exhibits 10.1, 10.2, 10.3, 10.4, 10.5, 10.6, 10.7, 10.8, 10.9 and 99.1, respectively, to this Current Report on Form 8-K.

 

Exhibit No.		Description of Exhibit
10.1		Dealership Purchase Agreement (LMP Port Charlotte) *
10.2		Dealership Purchase Agreement (LMP Cape Coral) *
10.3		Dealership Purchase Agreement (LMP Beckley HK) *
10.4		Dealership Purchase Agreement (LMP Beckley HS) *
10.5		Dealership Purchase Agreement (LMP Beckley KCC) *
10.6		Dealership Purchase Agreement (LMP Beckley BAM) *
10.7		Real Estate Purchase and Sale Agreement (LMP Beckley KCC and LMP Beckley BAM) *
10.8		Real Estate Purchase and Sale Agreement (LMP Port Charlotte) *
10.9		Real Estate Purchase and Sale Agreement (LMP Cape Coral) *
99.1		Press Release dated August 5, 2022
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

* Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The registrant hereby undertakes to furnish copies of any of the omitted schedules upon request by the U.S. Securities and Exchange Commission (“SEC”).

 

 

FORWARD-LOOKING STATEMENTS:

 

This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. Such statements include, but are not limited to, any statements relating to our expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “can,” “could,” “may,” “should,” “would,” will,” the negatives thereof and other words and terms of similar meanings. These forward-looking statements are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company or any successor entity of the transaction and include statements concerning the expected timing of closing the transaction. Many factors could cause actual future events to differ materially from the forward-looking statements in this Current Report on Form 8-K, including but not limited to: (i) the risk that the transaction may not be completed in a timely manner or at all, (ii) the failure to satisfy the conditions to the consummation of the Atlantic Sale, (iii) the occurrence of any event, change or other circumstance that could give rise to the termination of the Agreements, (iv) the effect of the announcement or pendency of the transaction on the Company’s business relationships, operating results and business generally, and (v) risks that the transaction disrupts current plans and operations of the Company. There is no assurance that any forward-looking statements will materialize. You are cautioned not to place undue reliance on forward-looking statements, which reflect expectations only as of this date. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as required by law.

 

Additional Information and Where to Find It

 

A full description of the terms of the Atlantic Sale and the plan of liquidation will be provided in proxy statement to be filed with the Securities and Exchange Commission (“SEC”) by the Company that will include a proxy statement with respect to the stockholder meeting of the Company to vote on a plan of liquidation. The Company urges investors, stockholders and other interested persons to read, when available, the preliminary proxy statement, as well as other documents filed with the SEC, because these documents will contain important information about the Company, the Atlantic Sale and the plan of liquidation. The definitive proxy statement will be mailed to stockholders of the Company as of a record date to be established for voting on the plan of liquidation. Once available, stockholders will also be able to obtain a copy of the proxy statement, and other documents filed with the SEC without charge by directing a request to: 500 East Broward Boulevard, Suite 1900 Fort Lauderdale, FL 33394, or via email at [email protected]. The preliminary and definitive proxy statement can also be obtained, without charge, at the SEC’s website (www.sec.gov).

 

No Offer or Solicitation

 

This Current Report on Form 8-K does not constitute an offer or invitation for the sale or purchase of securities, assets or the business described herein or a commitment to the Company, nor is it a solicitation of any vote, consent or approval in any jurisdiction pursuant to or in connection with the Atlantic Sale, the plan of liquidation or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.

 

Participants in Solicitation

 

The Company, and its respective directors and executive officers, may be deemed participants in the solicitation of proxies of the Company’s stockholders in respect of the plan of liquidation. Information about the directors and executive officers of the Company is set forth in the Company’s filings with the SEC. Additional information regarding the identity of all potential participants in the solicitation of proxies to the Company’s stockholders in connection with the Atlantic Sale and plan of liquidation and other matters to be voted upon at the special meeting, and their direct and indirect interests, by security holdings or otherwise, will be included in the definitive proxy statement, when it becomes available.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	LMP AUTOMOTIVE HOLDINGS, INC.
August 10, 2022	By:	/s/ Sam Tawfik
	Name:	Sam Tawfik
	Title:	Chief Executive Officer

 

 

4

Exhibit 10.1

 

Execution Version

 

DEALERSHIP ASSET PURCHASE AGREEMENT

 

This DEALERSHIP ASSET PURCHASE AGREEMENT (this “Agreement”) is effective as of August 5, 2022 (the “Effective Date”), by and among Port Charlotte AFL K, LLC, a Florida limited liability company (“Buyer”), LMP Port Charlotte KOPC, LLC, a Florida limited liability company” (the “Seller”), and LMP Automotive Holdings, Inc., a Delaware corporation (“LMP”), and together with Seller and Buyer, each a “Party” and, collectively, the “Parties”).

 

RECITALS:

 

WHEREAS, Seller owns, controls and operates a Kia automotive dealership (the “Dealership”), and all ancillary business related thereto (the “Business”) located at 202 Tamiami Trail, Port Charlotte, Florida (the “Premises”) under agreements with Kia Motors America, Inc. (the “Manufacturer”);

 

WHEREAS, LMP owns and operates through various affiliates, six (6) automotive dealerships, including the Seller, (the collectively, the “Subject LMP Dealerships”), and certain real property (the “Real Property”), which are the subject of that certain letter of intent with an affiliate of Buyer, dated June 11, 2022, for the purchase of substantially all of the assets of the Subject LMP Dealerships (the “LOI”), including the sale and transfer substantially all of the Dealership’s assets (as more particularly described in Section 2 below, but excluding the Excluded Assets defined below, collectively, the “Assets”);

 

WHEREAS, simultaneously with the consummation of this Agreement, Port Charlotte AFL RE, LLC , a Florida limited liability company and Buyer (collectively the “Real Property Purchaser”) will jointly purchase and acquire the real property of the Premises from LMP Automotive Holdings, LLC, a Florida limited liability company (“Real Property Seller”) in accordance with that certain Real Property Purchase and Sale Agreement for the purchase and sale of the real property underlying the Premises (the “Real Property Purchase and Sale Agreement”);

 

WHEREAS, the LOI sets forth that there is no due diligence period with respect to the Dealership and the Assets once this Agreement is executed;

 

WHEREAS, the Buyer desires to purchase the Assets and Seller desires to sell and transfer the Assets on the terms and conditions hereinafter set forth (the “Transaction”).

 

NOW, THEREFORE, in consideration for the mutual promises contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged by each Party, the Parties as follows:

 

1. Closing Date and Purchase Price.

 

(a) Closing Date. Subject to the terms and conditions set forth in this Agreement, the consummation of the transactions contemplated hereby (the “Closing”) shall take place no later than within (15) business days of the receipt of the latest to occur of: (i) all applicable manufacturers’ approvals in accordance with Section 7(a) in connection with the purchase and sale of all of the Subject LMP Dealerships and (ii) all required entity approvals from the boards of directors and shareholders of LMP, and the manager of sellers of the Subject LMP Dealerships as well as the manager of the sellers of the real estate properties underlying the LMP Dealerships being sold are obtained in connection with authorizing the contemplated Transaction and the transactions involving the Subject LMP Dealerships. The date of the Closing is referred to herein as the “Closing Date.” The Closing shall be deemed to be effective as of the opening of business on the Closing Date. The “Closing Date Deadline” means October 31, 2022; provided, however, that if, as of the fifteenth (15^th) day prior to such date, all of the manufacturers’ approvals have not been obtained, or if all applicable waiting periods pursuant to the HSR Act have not expired or terminated, or if the Florida Department of Revenue has not provided a Clearance Letter to Seller, the Closing Date Deadline will automatically be extended for thirty (30) days, time being of the essence. It is agreed that the closings for all of the Subject LMP Dealerships may occur in separated groups with the same manufacturer and/or by geographical regions. It is acknowledged that the actual Closing and funding for this transaction make take 1 or 2 business days.

 

 

(b) Purchase Price & Broker. The purchase price for the Assets described in Section 2(e) below is $21,449,500.00 in connection with the purchase of goodwill and FF&E (the “Goodwill Purchase Price”) plus additional purchase price for parts, work in progress (“WIP”), and New Vehicles, Used Vehicles and Pre-Owned Vehicles (collectively, the “Vehicle Inventories”) calculated as described below (the “Additional Purchase Price,” with the Goodwill Purchase Price, collectively the “Purchase Price”). The parties agree that the FF&E portion of the Goodwill Purchase Price includes the price for Seller’s vehicles used in its business operations which are listed in the FF&E schedules to its financial statements. The Additional Purchase Price will be calculated as follows:

 

(i) The purchase price for Dealership’s new, undamaged and untitled 2021, 2022 and subsequent year Manufacturer vehicles, including demonstrators and loaners, (the “New Vehicles”) is an amount equal to the actual Manufacturer’s original invoice; plus Seller’s direct out-of-pocket cost of dealer-installed optional parts and accessories theretofore installed upon New Vehicles; less all applicable dealer hold-backs paid to Seller; less fifty percent of all credits, and allowances for order assistance, floor plan assistance, Kia retailer support, and dealer advertising support; less “prep” expenses for New Vehicles which have not yet been prepared for sale; less the cost to repair any damage and less the replacement cost of any parts or equipment removed. Notwithstanding the foregoing, the purchase price of New Vehicles shall not include or be increased for rust proofing, undercoating, scotch-guarding, non-Manufacturer alarm systems, interrupt systems, theft protection devices and similar dealer additions. The purchase price of New Vehicles with more than 600 miles but less than 4,000 miles will be reduced by $0.60 per mile. New Vehicles with 4,000 or more miles will be valued as a Used Vehicle (defined below). For purposes of this Agreement, a vehicle will be considered damaged if it has more than six hundred and fifty dollars ($650.00) of repairs that are needed or previously performed on the vehicle.

 

(ii) The purchase price for pre-owned, company (other than those scheduled as FF&E), service, and rental vehicles (the “Pre-Owned Vehicles” or “Used Vehicles”) shall be priced for each such vehicle at the lower of: (i) the pricing of a New Vehicle set forth above, or (ii) MMR adjusted as per CR rating, as set forth on Schedule 1(b)(ii) hereto.

 

(iii) Buyer shall purchase all vehicles other than the New Vehicles in Seller’s vehicle inventory at CR based MMR (collectively, the “Used Vehicles”; provided, however, if the purchase price for a Pre-owned Vehicle or Used Vehicle cannot be agreed upon, such vehicle shall be retained by Seller and be an Excluded Asset and provided further that Buyer shall have no obligation to purchase any damaged vehicle or vehicle that has salvage status, a branded title, or was in an accident.

 

(iv) The purchase price for all obsolete parts shall be equal to 50% of Seller’s cost of such obsolete parts with a cap of $10,000 and non-obsolete parts inventory shall be equal to manufacturer cost (less all applicable rebates and discounts). For purposes of clarity, any obsolete parts in excess of $10,000 shall be transferred to Buyer at Closing. Obsolete parts means (i) any of new OEM parts not listed in any of the manufacturer’s most recent price books; (ii) any vehicle parts or accessories that, at Closing, are not returnable to the supplier from whom they were originally purchased for a full refund less any normal restocking charge; or (iii) any vehicle part or accessory that, as of the Closing Date, has been in Seller’s parts inventory over 365 days.

 

(c) Earnest Money Deposit. Within three (3) business days after the Effective date Buyer shall deliver to Escrow Agent $1,072,475 (five percent of the Goodwill Purchase Price) as earnest money (the “Deposit”) to be held in trust by Greenberg Traurig, PA, as Escrow Agent for and on behalf of the Parties pursuant to this Agreement. On the Closing Date, if the Closing occurs, the Deposit will be applied to the Purchase Price. The Deposit is non-refundable except if (i) Manufacturer fails to approve the Transaction; or (ii) as per Sections 11(a)(i), (ii), (iv), (v) or (vi).

 

(d) Hart-Scott-Rodino Act. Filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) may be required. If filing or notice or other action is required under the HSR Act with respect to the transactions outlined herein, then Buyer shall effect such filing or notice and Buyer and Seller shall each pay for 50% of the filing fees required by the HSR Act . Buyer and Seller shall each be responsible for their own attorney fees incurred to effect such filing. Seller shall cooperate fully with Buyer in said action and promptly provide all requisite information.

 

 

2. Dealership Assets. Subject to the terms and conditions contained in this Agreement, upon the consummation of the transactions contemplated by this Agreement (the “Closing”, and the date thereof, the “Closing Date”), Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Assets as set forth on Schedule 2 and as more generally described below in this Section 2. A mutually agreed to form of Bill of Sale, attached as Exhibit A hereto, executed and delivered by the Parties on the Closing Date (the “Bill of Sale”) will contain a list of all of the Assets sold to Buyer as set forth on Schedule 2.

 

(a) Vehicles. Subject to Section 1:

 

(i) Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s New Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date.

 

(ii) Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s Used Vehicles and Pre-Owned Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date (but subject to the provisions of Section 1 (b) (iii)). Prior to Closing, Seller shall (i) disclose to Buyer any and all facts known to Seller concerning each Used Vehicle and Pre-Owned Vehicle that Seller would be legally obligated to disclose to a retail purchaser of a Used Vehicle including, but not limited to, known damage, known usage history, frame and flood damage, salvage status, open recalls, and warranty eligibility; (ii) provide Buyer with legal odometer statements for each Used and Pre-Owned Vehicle; and (iii) provide free and clear title for each of the Used Vehicles and Pre-Owned Vehicles. At least 10 days prior to Closing, Seller shall provide Buyer with its then current Used Vehicle and Pre-Owned vehicle inventory along with Seller’s asking price for each such vehicle.

 

(b) Parts; Accessories & Other Inventories.

 

(i) Inventory & Returnable. A physical inventory of Seller’s parts and accessories will be taken in the presence of a representative of Buyer and Seller by an inventory service chosen by Buyer and reasonably acceptable to Seller, the cost of which will be borne by the Buyer and Seller splitting the cost on a 50/50 basis (the “Inventory”). The Inventory will classify parts and accessories as “returnable” or “non-returnable”. The terms “returnable parts” and “returnable accessories” means only those new undamaged replacement parts and new undamaged accessories for Manufacturer vehicles which are listed (coded) in the latest current Master Parts Price List Suggested List Prices and Dealer Prices (or other applicable similar Manufacturer price lists, with supplements or the equivalent in effect as of the Inventory date, the “Master Price List”), as returnable to the Manufacturer at not less than the purchase price reflected in the Master Price List and are within the limits of returnable parts established by the Manufacturer from time to time. Buyer shall purchase from Seller, and Seller shall sell to Buyer, all of Seller’s returnable parts and returnable accessories for an amount equal to the price listed in the Master Price List (less all applicable rebates and discounts). At Closing the total Parts and Miscellaneous Inventory that are in their original packaging, current and returnable and with sales in the 12 months prior to closing for an amount equal to the Manufacturer prices as reflected in the most recent pricing catalogs less all discounts and allowances. Seller will assign Sellers’ parts return rights to Buyer at Closing.

 

(ii) Nonreturnable. All parts and accessories not coded as returnable in the Master Price List are “nonreturnable” and shall be considered an obsolete part. The purchase price for the nonreturnable parts and accessories, non-Manufacturer, “jobber” or “NPN” parts and accessories will be considered as and sold as obsolete parts pursuant to Section 1 (b)(iv).

 

(iii) Return Rights, etc. Upon Closing, Seller will be deemed to have automatically assigned, and Seller shall assign to Buyer, Seller’s parts return rights without any further action (but Seller shall take any further action requested by Buyer or required by the Manufacturer to implement such assignment of rights). At the request of Buyer, Seller shall use its best efforts to assist Buyer in effecting any parts return offered by the Manufacturer (including, if necessary, applying for parts return in Seller’s name), and Seller shall promptly pay over to Buyer any monies received from the Manufacturer related thereto. Buyer may deduct from the consideration to be paid to Seller at the Closing Seller’s parts account outstanding balance with the Manufacturer and to pay such balance directly to the Manufacturer for Seller’s account. Buyer is not obligated to purchase old, opened, obsolete, superseded, incomplete, or damaged parts or accessories or any parts, accessories or sheet metal with no sales in the twelve (12) months prior to Closing. Buyer will not be obligated to purchase more than one year’s supply of any part or accessory (based on trailing one -year historical sales). Miscellaneous Supplies shall be purchased as provided for in subsection (d) below. The purchase price for all other parts not addressed in this Section or Section 1 will equal the value thereof as mutually agreed between Buyer and Seller provided, however, if the purchase price for such assets cannot be agreed upon, such assets shall be retained by Seller and be an Excluded Asset. If any parts and accessories or other inventories or goods that Buyer is not obligated to purchase hereunder are not removed from the Real Property within ten (10) days after the Closing Date, such property will automatically become Assets transferred to Buyer pursuant to the Bill of Sale without additional consideration.

 

 

(c) Intellectual Property. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s telephone and data numbers, website addresses and domain names (owned or registered by or on behalf of the Dealership, ), e-mail addresses, classified telephone and internet advertising, prospect data, customer sales, lease, finance and service records (both hard copy and electronic format (including deal jackets), for no additional cost to Buyer), Seller’s workman’s compensation and unemployment rating in the State of Florida, all lawfully transferable licenses and permits of the Dealership or Seller, Dealership Intellectual Property (defined below), leasehold improvements and fixtures, unused internal and customer repair order forms, customer lists and marketing materials and catalogues, retail buyer’s order forms, office and shop supplies, shop reference manuals, parts reference catalogs, all books and records necessary for the continued operation of the Dealership (including training and promotional materials, employee records of employees hired by Buyer, P.O. boxes, third party warranties in Seller’s favor and all licenses and rights to use all software ( other than Vision AST software and other than DMS systems not assumed by Buyer) on or used in connection with any personal computer or other computing device used in connection with the Dealership, etc.), parts sales tickets, unused purchase order forms and all other forms and Seller’s goodwill and going concern value relating to the Dealership. “Dealership Intellectual Property” means any rights or ownership of the Dealership or Seller to all (i) patents, patent applications, patent disclosures and improvements, (ii) trademarks, trade, service marks, trade dress, and logos (excluding trade names, service marks, trade dress and logos, (iii) copyrights and registrations and applications for registration thereof, (iv) computer software, data and documentation, (v) trade secrets; and (vi) social media, directory assistance, reputation management and e-commerce sites and accounts (including E-Bay, Facebook, Instagram, Twitter, yelp!, Dealer Rater, Edmunds and Google programs).

 

(d) Other Assets. Gas, oil, grease, nuts and bolts (“Miscellaneous Supplies”) shall be purchased by Buyer with the value thereof being equal to the Dealership’s cost of such items (established by invoice or such other documentation reasonably requested by Buyer), less any incentives received, or rebates received with respect thereto. Work in Process shall be purchased by Buyer as provided for in Section 3 (c).

 

(e) Buyer agrees to buy all of Seller’s body shop inventories of unopened and not expired containers of paint (base and tints), quantities of paint in spray booths and machinery that can be accurately determined, new and unused dry supplies, and new and unused sheet metal, if any (“Body Shop Inventories”). The purchase price for Body Shop Inventories shall be Seller’s cost in such inventories.

 

(f) Excluded Assets & Name License. Notwithstanding anything in this Agreement to the contrary, the following assets are not being sold pursuant to this Agreement: (i) all cash and cash equivalents, wherever located and in whatever form (unless “petty cash” is noted on the Closing Memorandum or Closing Statement); (ii) promissory notes and other evidences of indebtedness; (iii) all insurance policies; (iv) accounts receivable; (v) any claims or causes of action of Seller against third parties; (vi) tax credits and claims for tax refunds; (vii) securities, voting or otherwise in any entity; (viii) any rights in connection with and any assets of any employee benefit plan of Seller; (ix) the minute books and capital stock records of Seller, (x) all employment contracts, relating to any employees of Seller or Seller’s operations, (xi) any contract to which Seller is a party that is not an Assigned Contract, and (xii) any vehicle or parts that are not included in the purchased Assets; (collectively, the “Excluded Assets”). Seller shall remove all vehicles that are Excluded Assets from the Premises within ten (10) days following the Closing.

 

 

(g) Excluded Liabilities. Notwithstanding anything contained herein to the contrary, Buyer shall not assume, or cause to be assumed, or be deemed to have assumed or caused to have assumed or be liable or responsible for any liabilities or obligations (whether known or unknown, fixed, absolute, matured, unmatured, accrued or contingent, now existing or arising after the date hereof) of Seller or any of its Affiliates (other than the liabilities expressly assumed in this Agreement) including, but not limited to, the following obligations and liabilities of Seller and its Affiliates (such obligations and liabilities not assumed hereunder, the “Excluded Liabilities”):

 

(i) any liabilities or obligations relating to any current or former employee or independent contractor of Seller or any of its Affiliates (whether or not such employee is hired by Buyer following the Closing) and labor matters relating to any such current or former employee or independent contractor including any liabilities or obligations arising out of or relating to any employee-related matter, employee-related payment obligation, collective bargaining contract, labor negotiation, severance cost, pension plan, profit sharing plan, deferred compensation plan, accrued holiday benefit, accrued bonus, salary, bonus plan, phantom stock award, stock option or purchase plan, employment contract, consulting contract, any Employee Benefit Plan or any entitlements arising as a result of or in connection with the consummation of the Purchase;

 

(ii) any Taxes, interest, and penalties (i) attributable to the purchased Assets or the Business with respect to any Pre-Closing Period or (ii) imposed on Seller or any of its Affiliates;

 

(iii) any liabilities or obligations related to the Excluded Assets;

 

(iv) any liabilities or obligations arising out of or relating to indebtedness of Seller or any of its Affiliates;

 

(v) any liabilities or obligations arising out of or relating to any contract which is not an Assigned Contract;

 

(vi) other than in connection with the operation of the Business after the Closing Date, any liabilities or obligations arising out of operations prior to the Closing Date, and /or relating to any real property owned, leased, occupied or controlled by Seller;

 

(vii) any Seller Transaction Expenses; and

 

(viii) any liabilities or obligations arising from product liability claims for which the injury or loss giving rise thereto (not just the delivery of the notice of such claims) occurs prior to the Closing Date, including specifically all losses caused by or arising out of any alleged design, manufacture, assembly, installation, use or sale of any products manufactured by the Factory or the Business prior to the Closing Date, whether the commencement of any related litigation, arbitration, investigation, proceeding or claim occurs before or after the Closing Date

 

Seller shall satisfy all Excluded Liabilities that are an obligation of Seller promptly when due.

 

 

3. Prorations & Assigned Contracts.

 

(a) Prepaid Expenses & Prorations. Current personal property [and real property] taxes will be prorated and adjusted between Buyer and Seller as of the Closing Date based on the number of days in the year to which the taxes relate that each party occupies the property. If current tax bills are unavailable on the Closing Date, the prior year’s tax bills will be used for proration purposes and taxes will be re-prorated between Buyer and Seller when the current year’s tax bills are received. Any amounts owed by either Party with respect to such re-proration will be paid to the other Party within ten (10) days after the determination of such re-proration. All operating expenses (other than prepaid expenses) of the Dealership for the month of Closing will be prorated and adjusted between Buyer and Seller as of the Closing Date based on a thirty (30) day month. To the extent possible, the Parties shall cause all utility meters to be read on the day preceding the Closing Date. Unless the applicable utility terminates billing on Seller’s account as of the Closing Date, utilities payable by Seller (or Buyer, to the extent applicable) for the Dealership Property, including, but not limited to electricity, gas and water and sewer, shall be prorated as of the Closing Date. The adjustment therefor shall be made on the basis of the most recently historical data/billings therefor and shall be subject to final reconciliation based upon actual charges after receipt of a final bill by Seller. Buyer will make its own arrangements for any security deposits required by any utility company, and Seller will cancel and retain any deposits previously furnished. Buyer shall receive a credit against the Purchase Price for the cost to replace any missing special tools required by the Manufacturer’s most recent catalogue.

 

(b) Within sixty (60) days after the Closing Date, the Parties shall make an adjustment to the Purchase Price to reflect any customary adjustments, additions and deletions necessary to properly reflect the categorization and/or amount of the Assets in accordance with this Agreement. In the event the Purchase Price is adjusted, the appropriate party shall effect a wire transfer of immediately available funds to the other party for the appropriate amount within five (5) days after the determination of the adjustment.

 

(c) Customer Deposits & Work in Process. Upon Closing, Seller shall transfer to Buyer all customer deposits for incomplete orders taken by Seller in the ordinary course of business. Seller shall retain all escheatable deposits, including but not limited to security deposit on any real property lease, if applicable. At the Closing, Seller shall furnish Buyer with a list of such deposits (including “we owes”, due bills, etc.), setting forth, as to each, the name and address of the customer, any goods or services owed to the customer and the amount of the deposit, and Seller shall deliver to Buyer all documents in Seller’s possession reflecting such deposits, we owes, due bills, etc. Seller shall credit Buyer for all we owes/due bills on the Closing Date. The Bill of Sale or Closing Statement will contain a list and description of such customer transactions (and Work in Process, as detailed below). Seller shall credit Buyer the actual cost to complete all due bills. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s pending service orders written by Seller in the ordinary course of business for an amount equal to Seller’s actual cost for parts and labor for any such orders which have been supplied by Seller which are in process at the opening of business on the Closing Date (“Work in Process”). Seller shall not receive the revenue from such Work in Process. Buyer may reject (and Seller shall retain) all Work in Process where (i) the Work in Process was not placed in the normal course of business; (ii) Seller does not possess an order signed by the customer authorizing such service, the vehicle isn’t at the Real Property on the Closing Date or such order has been open for longer than thirty (30) days prior to the Closing Date; (iii) the Work in Process does not provide for a profit to Buyer; or (iv) the Work in Process does not provide for cash or commercially reasonable credit terms on delivery of the vehicle.

 

(d) Assigned Contracts. As of the Closing Date, Seller shall assign, and Buyer shall assume Seller’s contractual obligations, which Buyer has agreed to assume, listed on Schedule 3(d) hereto on the Closing Date (collectively, “Assigned Contracts”). The term “Assigned Contracts” excludes obligations and liabilities arising or accruing by the Closing Date or by reason of any breach or alleged breach by Seller, regardless of when such obligation or liability is asserted. Seller shall arrange for assignment of the Assigned Contracts at Seller’s cost. Buyer is not assuming any liabilities or obligations of Seller other than the Assigned Contracts or agree to pay, discharge or perform any liabilities or obligations arising out of any breach by Seller (other than with respect to a breach by Buyer) of any Assigned Contract.

 

 

4. Deliveries.

 

(a) At Closing, Buyer shall deliver to Seller (or to Escrow Agent (as defined in the Real Property Purchase and Sale Agreement) for further disbursement to Seller) the following:

 

(i) the Purchase Price in immediately available funds, of which $2,500,000 (the “Holdback Amount”) shall be delivered to the Indemnity Escrow Agent (if not previously delivered) to hold under the Indemnity Escrow Agreement and the balance shall be delivered to Seller at Closing.

 

(ii) A copy of resolutions duly adopted by Buyer’s Manager authorizing and approving Buyer’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the secretary or manager of Buyer, as true and in full force as of the Closing Date.

 

(iii) A certificate executed by an authorized member, manager, or officer of Buyer certifying that, as of the Closing Date, all of the representations and warranties of Buyer are true and correct in all material respects and that each and every covenant and agreement to be performed by Buyer prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv) A certificate of existence in good standing for Buyer from the State of its formation dated within fourteen (14) days of the Closing Date.

 

(v) Assignment and assumption of the Assigned Contracts , together with consents to the assignments where noted on Schedule 3 (d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Buyer.

 

(vi) The Indemnity Escrow Agreement executed by Buyer and Buyer’s Affiliates as named therein.

 

(b) At Closing, Seller shall deliver to Buyer (or to Escrow Agent on behalf of Buyer), at Seller’s sole cost and expense, such bills of sale, endorsements, assignments, and other good and sufficient instruments of conveyance and transfer as provided for herein, and any other instruments in form and substance reasonably acceptable to Buyer as shall be necessary to vest effective in Buyer all right, title, and interest in and to the Assets, free and clear of all Encumbrances (except as provided herein), including without limitation, the following:

 

(i) Duly executed Bill of Sale with respect to the Assets in the form and substance of Exhibit “A” attached hereto and incorporated herein by this reference (the “Bill of Sale”), and an Assignment of Trademarks, URLs and Telephone Numbers.

 

(ii) Fully and properly executed transfers of MCOs, titles, or such instruments of title and other documents required to properly transfer Seller’ right, title and interest in and to the New Vehicles and Used Vehicles , and any other titled Assets to Buyer.

 

(iii) A certificate executed by an authorized member, manager, or officer of Seller certifying that, as of the Closing Date, all of the representations and warranties of Seller are true and correct in all material respects and that each and every covenant and agreement to be performed by such Seller prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv) A certificate of existence in good standing for Seller from the State of its formation dated within fourteen (14) days of the Closing Date.

 

 

(v) A copy of resolutions duly adopted by each of Seller and LMP for the Necessary Seller Approvals authorizing and approving such Seller’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the manager of each Seller, as true and in full force as of the Closing Date.

 

(vi) A Clearance Letter from the Florida Department of Revenue showing that Seller owes no amounts.

 

(vii) Seller shall deliver customary payoff and termination letters from the holders of any liens or Encumbrances reflecting the payoff amount required for the release of liens on the Closing.

 

(viii) Seller will provide evidence of Seller’ voluntary termination of its dealer agreements with the Manufacturer as it relates to the Dealership.

 

(ix) The License Use Agreement executed by Seller attached as Exhibit “B”.

 

(x) The Indemnity Escrow Agreement executed by Seller, and Seller’s Affiliates as named therein, and the escrow agent thereunder.

 

(xi) Assignment and assumption of the Assigned Contracts, together with consents to the assignments where noted on Schedule 3(d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Seller.

 

Such other instruments and documents as Buyer may reasonably consider necessary to effect the transactions contemplated herein

 

5. Seller’s Representations & Warranties. Seller and LMP jointly, and severally , represent and warrant to Buyer on the Effective Date and the Closing Date as follows:

 

(a) Formation. Seller is duly formed, validly existing, and in good standing under the laws of its organization and is duly qualified to transact business in the state in which the Dealership is located.

 

(b) Authority. Subject to the Necessary Seller Approvals, Seller (i) has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby, and (ii) has taken all entity action necessary to authorize its execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereunder. For purposes of this Agreement, the “Necessary Seller Approvals” shall mean the consent of: Seller’s Board of Managers; LMP Automotive Holdings, LLC as the majority member of Seller; the Board of Directors of LMP; and the shareholders of LMP required to approve and authorize this Agreement and Transaction.

 

(c) Conflicts. The execution and delivery of this Agreement by Seller and the performance by Seller of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any nation or government, or any state, regional, local or other political subdivision thereof (“Governmental Authority”).

 

 

(d) Assets. Seller is the owner of, and has good and valid title to, all of the Assets except any liens described on Schedule 5(d) (which shall be satisfied at Closing). To the Knowledge of Seller, there are no special assessments against any of the Assets. All of the fixtures and equipment used in the Business are in operating condition, ordinary wear and tear excepted, and are adequate and suitable for the purposes for which they are presently being used.

 

(e) Financial Statements. The Seller has delivered to Buyer the Financial Statements. Subject to the adjustment for Inventory as set for in Section 2 above, the Financial Statements are materially true, complete, and accurate. “Financial Statements” means Seller’s internally prepared, un-audited adjusted dealer income statements reflecting zero debt on the Dealership, substantially in the form required by Manufacturer, for the fiscal year ended December 31, 2021, and each of the completed months thereafter through the Closing Date, The Financial Statements are prepared in accordance with recognized industry standards and the Manufacturer’s guidelines and fairly present the financial condition of Seller’s business and the results of operations of Seller’s business, in all material respects, at the dates and for the periods covered by such financial statements and related materials. In connection with this representation of Seller regarding its financial statements, Buyer acknowledges Seller’s financial statements include expenses for a management fee to LMP, and exclude interest on Seller’s capital loan.

 

(f) Compliance. The Dealership complies in all material respects with, and the Dealership has been conducted in all material respects in compliance with, all laws, rules and regulations (including all worker safety, applicable zoning and other laws, ordinances, regulations and building codes (collectively, the “Laws”). The Seller is not under investigation with respect to violations of any such Laws. To Seller’s Knowledge, Seller is not in material default of any its material agreements with third parties.

 

(g) Litigation. There are no actions, suits, claims, investigations or other proceedings pending with respect to Seller, and, to the Seller’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Seller that could affect the ability to convey the Purchased Assets conveyed pursuant to this Agreement.

 

(h) Good Title. Seller is the owner of, and has, good and marketable title to all of the Assets (including intangible assets such as websites and domain names); all of the Assets will be transferred to Buyer free and clear of all liens and encumbrances; and all of the Assets to be sold under the terms of this Agreement are, or on the Closing Date will be, in good operating condition and repair. Seller did not obtain any funds under the Paycheck Protection Program.

 

(i) Licenses. Except as would not have a materially adverse effect on the Buyer, Seller has maintained all licenses and permits and has filed all registrations, reports and other documents required by local, state and federal authorities and regulating bodies in connection with the Dealership. None of the permits or licenses used by Seller in the operation of the Dealership has been terminated or revoked and to Seller’s Knowledge, no violations have been recorded regarding such licenses or permits, and no proceeding is pending or threatened seeking the revocation or limitation of any of them.

 

(j) Assigned Leases and Contracts. To the Knowledge of Seller, each of the Assigned Leases and material contracts are valid, legal and binding and is in full force and effect. Seller has made all payments due under each of the Assigned Leases and any material contract through the date hereof. To the Knowledge of Seller, no event or condition has occurred and is continuing which, with or without the lapse of time or giving of notice, constitutes, or would ripen into or become, a breach of or default under an Assigned Leases and assigned material contract by the Seller, or, to the Seller’s Knowledge, by any other party thereto, in any term, covenant or condition of each Assigned Lease and assigned material contract.

 

(k) Intellectual Property Rights. Except as set forth in Section 2c above, the Seller either owns or is otherwise entitled to use (under a license or otherwise) all Proprietary Rights necessary to conduct the business of the Business as presently conducted. For purposes of this Agreement, “Proprietary Rights” means all (i) trademarks, service marks, trade dress, logos, trade names and entity names and registrations and applications for registration thereof, (ii) copyrights and registrations and applications for registration thereof, (iii) mask works and registrations and applications for registration thereof, (iv) computer software data and documentation, (v) trade secrets and confidential business information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information), (vi) other proprietary rights or any intellectual property, and (vii) copies and tangible embodiments thereof (in whatever form or medium).

 

 

(l) Taxes. Seller has duly filed all foreign, federal, state, county and local income, excise, sales, property, withholding, unemployment, social security, franchise, license, information returns and other tax returns and reports, or appropriate and permitted extensions thereto, required to be filed by it with respect to the Dealership or the Real Property. Each such return is true, correct, and complete in all material respects, and Seller has paid all taxes, assessments, amounts, interest and penalties due to applicable Governmental Authority. Seller has no liability for any taxes, assessments, amounts, interest or penalties of any nature whatsoever other than those for which Seller has created sufficient reserves or made other adequate provision. No governmental authority is now asserting or threatening to assert any deficiency or assessment for additional taxes, interest, penalties or fines with respect to Seller, or the Dealership.

 

(m) Employment Matters. Except as set forth on Schedule 5(m), Seller has no oral or written collective bargaining or organized labor contracts, employment agreements, bonus, deferred compensation, profit sharing, welfare or health benefit, or retirement plan or arrangement, whether or not legally binding, nor is Seller currently paying any pension, deferred compensation or retirement allowance to anyone. Seller has no contract for the future employment of any person. Seller is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them or amounts required to be reimbursed to such employees. Seller has no knowledge that any Seller employee intends to terminate his or her employment. Seller has complied in all material respects with the applicable requirements for its employee medical and benefit plans, if any, as set forth in the Internal Revenue Code of 1986, as amended (the “Code”), and the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder (“ERISA”), including Section 4980B of the Code (as well as its predecessor provision, Section 162(k) of the Code) and Sections 601 through 608, inclusive, of ERISA, which provisions are hereinafter referred to collectively as “COBRA”. There have not been any unfair labor practice complaints or work stoppages (within the past thirty-six (36) months) and there are no present or, to Seller’s Knowledge, threatened walkout, strike or labor disturbance involving any of Seller’s employees working primarily at the Dealership. The Seller has taken the required actions under Applicable Law to confirm the identity and work status eligibility of its Employees. The Seller has not received any written notice of any inspection or investigation relating to their alleged noncompliance with or violation of IRCA, nor has or otherwise penalized for any failure to comply with IRCA or for any willful violation of any other immigration law, rule or regulation.

 

(n) Brokers. Except for Broker, no broker, investment banker, financial advisor, consultant or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with this Agreement based upon arrangements made by or on behalf of the Seller. The sole broker’s commission or finder’s fee payable as a result of the closing of the transaction contemplated herein shall be paid by Seller at Closing to Bank of America Securities, Inc. (“Broker”) in accordance with the separate agreements between Seller and Broker. No person other than Broker is entitled to any commission in connection with the transactions contemplated by this Agreement.

 

(o) Prohibited Persons. Neither Seller nor any members of the Seller: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

(p) Solvency. Immediately after the Closing Date, and after giving effect to the sale of the Purchased Assets and the other transactions contemplated by this Agreement, Seller will be solvent (in that both the fair value of its assets will not be less than the sum of its known debts, provided however, immediately after Closing, the Seller and LMP anticipate paying such known debts in full and dissolving the Seller.

 

(q) In-house Warranty Work. Except as provided in Schedule 5(q) , Seller is not obligated to provide to any customers or third parties any coupons, pre-paid parts, accessories, services or in-house warranties which may result in a liability of the same to Buyer after the Closing. Except as reflected in Schedule 5(q), Seller has no agreement or understanding with any customer or third party to return or refund any portions of any amounts paid for any extended warranty or service contract or otherwise pay any amounts to customers who elect not to or do not make claims under such contracts, but if such an obligation exists, Seller shall pay all amounts owed.

 

 

(r) Option Agreements. Except with respect to the Manufacturer and as provided on Schedule 5(r), there are no options, right of first refusals, or similar agreements in connection with the Assets.

 

As used in this Agreement, the phrases “Knowledge of Seller” or “Seller’s Knowledge” means the actual knowledge of Seller’s officers, the Seller’s LLC company managers, the officers of LMP, the Board of Directors of LMP, the Dealership’s general managers, Sam Tawfik, and Richard Aldahan.

 

6. Buyer’s Warranties & Representations. Buyer represents and warrants to Seller on the Effective Date and the Closing Date as follows:

 

(a) Formation. Buyer is a Florida limited liability company. Buyer will be an entity duly formed and validly existing with authority to conduct business in Florida on the Closing Date.

 

(b) Authority. Buyer has the requisite legal power and authority to execute and deliver this Agreement, to perform the obligations of Buyer hereunder, and to consummate the transactions contemplated hereby, all of which have been duly authorized and approved by all necessary entity action and for which no consent of any person or governmental authority is required for Buyer which has not been obtained (except as provided for in this Agreement for consents to be obtained and filings made before Closing), and no filing with or other notification to any person or governmental authority is required which has not been properly completed (except as provided for in this Agreement for consents to be obtained and filings made before Closing). This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms, subject only to the application of debtor relief laws and general equitable principles.

 

(c) Brokers or Finders. The Buyer has not incurred and will not incur any liability to any broker, finder or agent for any fees, commissions or similar compensation with respect to the transactions contemplated herein.

 

(d) Conflicts. The execution and delivery of this Agreement by Buyer and the performance by Buyer of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not (i) contravene any provision of its organizational or governing documents, (ii) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any Governmental Authority or of any arbitration award which is either applicable to, binding upon or enforceable against it, (iii) require the consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except the HSR filing, or as otherwise provided for herein.

 

(e) Litigation. There are no actions, suits, claims, investigations or other proceedings pending and, to the Buyer’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Buyer that could affect the Seller’s ability to convey the Purchased Assets to Buyer conveyed pursuant to this Agreement.

 

(f) [Reserved].

 

(g) Sufficiency of Funds.

 

(i) Buyer or its affiliates have sufficient funds or access to sufficient funds to make payment of the Purchase Price and consummate the transactions contemplated herein;

 

(ii) Immediately after the Closing Date, and after giving effect to the purchase of the Purchased Assets and the other transactions contemplated by this Agreement, Buyer (i) will be solvent (in that both the fair value of its assets will not be less than the sum of its debts and that the present fair saleable value of its assets will not be less than the amount required to pay its debts as they become absolute and matured); (ii) will have adequate capital with which to engage in its business; and (iii) will not have incurred debts beyond its ability to pay as they become absolute and matured.

 

(h) Prohibited Persons. Neither Buyer nor any members or principals of the Buyer: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

 

7. Conditions to Obligations of Buyer. The obligation of Buyer to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or express written waiver by Buyer) prior to or at the Closing, of all of the following conditions:

 

(a) Manufacturer Approval. Manufacturer has issued to Buyer a new Dealership Sales and Service Agreement, or commitment therefor, on terms and conditions acceptable to Buyer in its sole discretion, approving Buyer’s board of directors and other designees, permitting Buyer to operate the Dealership at the Real Property as Seller has operated it in the past.

 

(b) HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction .

 

(c) Seller has obtained a Clearance letter from Florida Dept. of Revenue showing that no amounts are owing.

 

(d) Closing Statement. Buyer has agreed to the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(e) Consents. Seller has obtained all consents required for the Lease Assignments and contract assignments being assumed by Buyer.

 

(f) Seller Performance. Seller has performed in all material respects all of its obligations hereunder to be performed prior to or at Closing and each of Seller’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(g) Purchase of the Premises. The consummation of the transactions contemplated under the Real Estate Purchase and Sale Agreement shall occur simultaneously.

 

(h) No Litigation. No proceeding with Seller as a Party, shall be pending before any court or other Governmental Authority, wherein an unfavorable injunction, judgement, order, decree, ruling, or charge would (1) restrain, enjoin, prohibit or prevent consummation of this transaction or any other transaction contemplated by this Agreement, or (2) cause the transaction to be rescinded following consummation.

 

(i) Buyer shall have received all of the documents, certificates and resolutions described in Section 4.2(b), in form and substance reasonably satisfactory to Purchaser.

 

(j) Adverse Change. Since the Effective Date, no Material Adverse Change shall have occurred. “Material Adverse Change” means any change, event or occurrence that individually or in the aggregate (taking into account all other such changes, events or occurrences) has had, or would be reasonably likely to have, a material adverse effect upon the assets, business, operations, financial condition or prospects of Seller, but shall not include any event or circumstance or change arising out of or attributable to general economic or political conditions, conditions generally affecting the motor vehicle industry (including supply chain problems), or the COVID-19 pandemic.

 

(k) Necessary Seller Approvals. Seller has obtained the Necessary Seller Approvals.

 

(l) Termination of Options and Minority Rights. Each of the agreements listed on Schedule 5(r) shall have been either terminated, waived, or Seller shall have been released and received a waiver from such minority member from any option or similar obligations thereunder, and the minority member and its principal(s) shall have agreed to a noncompetition provision of at least two (2) years with a seventy-five (75) mile radius of the Dealership.

 

(m) Agreements Not To Compete. Seller, LMP, Sam Tawfik and Richard Aldahan, as officers of LMP, shall have executed an Agreement Not to Compete substantially in the form attached hereto as Exhibit D.

 

 

8. Conditions to Seller’s Obligations. Seller’s obligation to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or written waiver by Seller), prior to or at the Closing, of all of the following conditions:

 

(a) Purchase Price Payment. Buyer paid Seller the aggregate Purchase Price for the Assets.

 

(b) Buyer Performance. Buyer performed in all material respects all of its obligations hereunder to be performed prior to or at Closing each of Buyer’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(c) Purchase of the Premises. The consummation of the transactions contemplated under the Real Estate Purchase and Sale Agreement shall occur simultaneously.

 

(d) HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction.

 

(e) Necessary Seller Approvals. The receipt, of the Necessary Seller Approvals.

 

(f) Closing Statement. Buyer executed and delivered the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(g) Seller shall have received all of the documents, certificates and resolutions described in Section 4.2(a), in form and substance reasonably satisfactory to Seller.

 

9. Pre- &Post-Closing Covenants. (a) Pre-Closing. Promptly upon the execution of this Agreement, Seller shall notify the Manufacturer regarding the transactions contemplated by this Agreement. Buyer (or its affiliate) shall promptly apply to the Manufacturer for the issuance of a contractual right to operate an automobile dealership upon the Premises. The Parties shall use commercially reasonable best efforts to obtain Manufacturer approval as soon as possible. Seller shall promptly provide the requisite information, documents and access necessary to prepare for Closing and ensure a seamless operational transfer of the Assets. Effective as of the Closing, Seller shall terminate its Dealer Sales and Service Agreements with the Manufacturer relative to the Dealership location and execute and deliver all of the Manufacturer’s customary documents and promptly remove Manufacturer’s intellectual property from all publicly visible Excluded Assets in every form and medium (i.e., retained internet sites, signs, etc.). Seller shall fully cooperate with Buyer, and take all reasonable steps to assist Buyer, in Buyer’s efforts to obtain its own similar Dealer Sales and Service Agreements with the Manufacturer. All actions to be taken at the Closing pursuant to this Agreement will be deemed to have occurred simultaneously, and no action, document or transaction will be deemed to have been taken, delivered or effected, until all such actions, documents and transactions have been taken, delivered or effected. Promptly after the Closing, Seller shall transfer to Buyer certificates of title or origin for all vehicles and all of its registration lists, owner follow-up lists and service files on hand as of the Closing, provided that such lists and files relate to the Assets. If Seller presents assets for purchase post-Closing that would have otherwise been Assets, then such assets may be purchased at a mutually agreed to price or otherwise retained by Seller.  Buyer is not required to submit an offer.  This does not apply to in-transit vehicles from the Manufacturer. Buyer shall retain and safeguard the pre-Closing customer paper deal jackets retained by Buyer in accordance with law, and, until Buyer destroys such records in accordance with company policy in effect from time to time, Seller shall have reasonable access to Seller’s pre-Closing customer records (e.g., paper deal jackets) and any records related to Assigned Contracts after the Closing for any legitimate purpose, such as (by way of example and not by limitation) for resolving customer inquiries.

 

(b) Dealership Operations Pending Closing. Pending Closing, Seller shall continue to operate the Dealership in substantially the same manner as it has been operated by Seller in the past and Seller shall: (i) use commercially reasonable efforts to maintain working relationships with all suppliers, customers, employees and others having contact with the Dealership and bring all payables current as of the Closing Date; (ii) maintain current insurance policies in full force and effect; (iii) exercise reasonable diligence in safeguarding and maintaining the confidentiality of all books, reports and data pertaining to the Dealership, including use its commercially reasonable best efforts to ensure that Seller’s sales and service records remain adequately protected; failure to do so is a material breach of this Agreement; (iv) not grant increases in salary, pay or other employment related benefits to any officers or employees of the Dealership, except in the ordinary course of business; (v) not conduct any liquidation, close-out or going out of business sale or, (vi) attempt to order and restock inventory sold; (vii) intentionally omitted; (viii) not enter into any contract or agreement which is not terminable without penalty on not more than 30 days’ notice and which provides for payment by the Dealership, except those in the ordinary course of business; and (ix) not take or permit any action which would result in Seller’s representations or warranties becoming incorrect or untrue in any material respect.

 

 

(c) Employee Matters.

 

(i) Seller shall terminate or take all appropriate action in connection with pension, profit sharing and health and welfare benefit plans, if any, that are applicable to Seller and/or Seller’s employees (“Plans”), prior to or at Closing, so that Buyer will have no responsibility or liability or obligation of any nature under Plans to any person, firm or corporation whatsoever. If any applicable law provides that Buyer is or will be liable for any liability or obligation under any Plan despite Seller’s contractual liability for such liability or obligation hereunder, and Seller fail to pay or perform such liability or obligation within five (5) days after Buyer’s written demand, then in addition to any other remedies available, such amounts may be set off from time to time from any amount Buyer (or its affiliate) owes Seller (or its affiliate). Seller (including all employers, whether or not incorporated, that are treated together with Seller as a single employer within the meaning of Section 414 of the Code or, where appropriate, Seller’s health and welfare benefit plans that are “group health plans” will retain liability for and will pay when due all benefits (including all liabilities and obligations for or arising from any “COBRA” health care continuation coverage required to be provided under Section 4980B of the Code and Sections 601-608 of ERISA) attributable as of the Closing Date to “covered employees” or “qualified beneficiaries” entitled to “continuation coverage” (as those terms are defined in Section 4980B of the Code) regardless of when services were rendered or expenses incurred. By Closing, Seller shall pay all wages due Seller’s employees as of the Closing Date. At Closing, Buyer shall assume Seller’s obligations for payment of unused vacation, paid time off, holiday pay, sick pay and other similar compensation accrued to those employees of Seller which are retained by Buyer, and Buyer shall receive a credit against the Purchase Price for such amounts. Buyer shall be responsible to satisfy such amounts to the former employees of Seller to the extent of the credit received provided, however Buyer shall not be liable for any such amounts that are disputed or in excess of the credit given at the Closing and Seller and LMP shall defend and hold Buyer harmless for such disputed amounts. Seller shall terminate its employees on the Closing Date. Provided the Closing takes place, Buyer may, but is not obligated to, employ Seller’s employees who are willing to accept the offered employment with Buyer, and Buyer will give due regard to such employees’ benefits from their prior employer, so long as such employees meet all eligibility requirements, including any probationary period; provided that, notwithstanding anything in this Agreement to the contrary, Buyer shall hire on an at-will basis enough of Seller’s employees (each selected by Buyer in its sole and absolute discretion) so that Buyer and Seller will be in compliance with the provisions of the Workers Adjustment and Retraining Notification Act, 29 U.S.C. §2101-2109, if applicable. The foregoing does not grant to any of Seller’s individual employees a right of employment by Buyer.

 

(ii) Subject to the approval and cooperation of Seller’s applicable health insurance plans and policies, Buyer shall have the right to cause Seller to continue its health insurance plans (including the related ancillary insurance benefits such as dental, vision, short term disability) for the employees of Seller that Buyer retains for the month of the Closing and the month following the Closing. In such case, the applicable premiums shall be prorated based upon the number of days allocable to Seller prior to Closing Date and Buyer following the Closing Date.

 

(d) Seller’s Receivables. Following the Closing, upon the receipt of accounts receivable of the Seller, Buyer will remit checks thereof directly to the Seller at its principal office on a weekly basis. Buyer shall accept payment of Seller’s accounts receivable and Manufacturer warranty payments arising out of the operation of the Dealership prior to Closing for a period of 180 days. Buyer shall turn over to Seller on the last day of each calendar month during said period all of the monies it received as cleared funds so accepted on said accounts receivable during the previous calendar month. Buyer is not obligated to accept payments of such accounts receivable after such 180-day period, but if Buyer does so then Buyer will promptly pay the same over to Seller. Buyer is only obligated to accept payment during such period, not to attempt to enforce payment. No adjustment will be made in any of such accounts receivable without Seller’s permission. Seller reserves the right to pursue legal remedies of collection upon default by the customer with respect to any receivables owed to Seller. Buyer shall have no obligation to pursue or otherwise actively work to collect any of such Seller receivables or Manufacturer warranty payments. At the end of said 180-day period, Buyer shall no longer be obligated to accept payments of such accounts receivable. If Buyer does accept payment of any of Seller’s accounts receivable after expiration of the 180-day period, Buyer shall hold same in trust for Seller and promptly pay same over to Seller. It is understood that Buyer’s responsibility, so far as such collection is concerned, is only to accept monies paid on Seller’s accounts receivable and shall not include any obligation to ascertain the correct amount of any accounts receivable. Upon reasonable notice to Buyer, Buyer shall provide Seller with access to records relating to Seller’s operation of the Dealership, but Seller and LMP agree that they shall have no right to utilize the employees of Buyer to provide accounting or other bookkeeping services to themselves.

 

 

(e) Manufacturer Payments. The Parties shall use their commercially reasonable efforts to ensure that (i) amounts due to Seller but collected by Buyer (e.g., Manufacturer receivables, Manufacturer credits relating to items such as warranty claims or other claims, credit card payments, etc.) arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Seller promptly; (ii) amounts due to Buyer but collected by Seller arising out of or in connection with the operation of the Dealership on or following the Closing or as provided in this Agreement will be paid over to Buyer promptly; (iii) amounts paid by Seller but owed by Buyer as a result of Manufacturer erroneously billing Seller for items arising out of or in connection with the operation of the Dealership following Closing will be paid over to Seller promptly; and (iv) amounts paid by Buyer but owed by Seller (e.g., any finance contract chargebacks, insurance (e.g. credit life, accident and health, extended warranty, etc.) chargebacks, or repossessions and all rebates to Seller’s customers of premiums for credit life insurance, credit accident and health insurance, mechanical insurance coverage and GAP insurance) as a result of Manufacturer or any third party erroneously billing Buyer for items arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Buyer promptly. This section survives Closing indefinitely. If there are vehicles in-transit on the Closing Date (whether or not they are physically present) that have not been funded by Seller’s floor plan lender and the Parties do not know whether they will be paid for by Buyer’s floor plan lender or Seller’s floor plan lender, then the Parties may separately schedule those vehicles, Buyer will buy them but not pay for them, and, if such vehicles are funded by Seller’s floor plan lender, then Seller shall notify Buyer and Buyer shall promptly pay Seller’s floor plan lender such amounts. Any other payments related to such vehicles misdirected by the Manufacturer will be redistributed as contemplated by this Section 9(e). Buyer with any needed cooperation of Seller shall undertake all accounting, bookkeeping and reconciliation as necessary under this section and shall make all payments as necessary. On a monthly basis, Buyer shall present Seller with a reconciliation and the amount owed by Buyer or by Seller (if any) and the parties shall pay any amounts owing to the other within ten (10) business days.

 

(f) Dealing and Non-Circumvent. In order to induce Buyer to enter into this Agreement, during the period commencing on the Effective Date until the Closing Date (or earlier termination of this Agreement), Seller and LMP will not and will cause each of its stockholders, managers, directors, officers, agents, advisors and other representatives to not, directly or indirectly, through affiliates or otherwise, (i) enter into any sale, lease, pledge or other disposition of all or any significant part of the purchased Assets, or any agreement for the sale of any capital stock or other equity securities of Seller, or agreement relating to a merger, consolidation or other acquisition proposal involving Seller or its member with any other party, or any transaction similar to the foregoing in format or purpose, with any party other than Purchaser; or (ii) enter into any transaction (A) with a total cumulative and aggregate value in excess of One Hundred Fifty Thousand Dollars ($150,000), or (B) outside of the ordinary course of business of Seller consistent with past practice in contemplation of any transaction described above with any party other than Buyer; or (iii) encourage, solicit, provide information to or negotiate with any party, other than Buyer, to do any of the foregoing.

 

(g) License Use. The Parties acknowledge that the State of Florida Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles may be experiencing delays in the processing of motor vehicle dealer licenses. The Seller hereby agrees that the Buyer may use the Seller’s licenses required under the laws of the State of Florida to operate the Business for a period of not more than 30 days after the Closing Date (and the Seller shall maintain all such licenses during such period). As a material inducement to the Seller to permit the Purchaser’s use of such licenses: (a) Buyer agrees that it will use best efforts to obtain its own licenses with the State of Florida as promptly as practicable , and (b) Buyer hereby agrees to indemnify and hold Seller, its respective affiliates, and their respective owners, managers, members, controlling persons, directors, officers, and employees (collectively, the “Seller Indemnified Parties”) harmless from and against any cost or liability, including reasonable attorneys’ fees, incurred by any Seller Indemnified Party in connection with or as a result of the Buyer’s use of the Seller’s licenses. Upon the Effective Date, the Seller will provide Buyer with a copy of the Seller’s DMV and other state and county regulatory licenses. Buyer agrees to add the Seller to its general liability insurance coverage as an additional insured during the term of the License Use Agreement. To effect the Purchaser’s use of the Seller’s license as contemplated hereby, the Seller agrees at the Closing to enter into a license use and indemnification agreement sufficient to satisfy applicable law for such license use in the form of Exhibit B hereto (the “License Use Agreement”).

 

 

10. Access.

 

(a) Upon receipt of Manufacturer’s approval to transfer the Dealership to Buyer, Buyer may set up Buyer’s computer system parallel to Seller’s computer systems for the Dealership, provided, however, Seller’s systems shall not be turned off until the Closing Date. Following the Effective Date, Buyer’s Information Technology personnel may access the Dealership for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve) to facilitate any applicable transfer purchased Assets.

 

(b) Seller shall permit representatives of Buyer to have access to and to examine the records, properties and assets associated with the Assets and the Real Property, provided, however, all access hereunder shall be subject to this Agreement and the provisions of the Real Property Purchase Agreement. Any access by Buyer shall be at times determined by Sellers and Buyer and in a manner so as not to interfere with the normal business operations of Seller .

 

(c) Buyer’s Information Technology personnel may have certain access to the Dealership (no login access) for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve). Following receipt of Manufacturer approval for transfer of the Dealership to Buyer, Seller shall contact its providers for DMS, CRM, and any other third-party data servicers, and execute all necessary documents to effectuate the transfer all intangible data Assets to Buyer’s DMS system on the Closing Date. Buyer shall be solely responsible for any and all costs associated with effectuating the transfer of all intangible data Assets to Buyers DMS system.

 

11. Default & Termination. Notwithstanding any provision in this Section 11 to the contrary, no Party may terminate this Agreement due to the breach of another Party if the first Party is in material breach of this Agreement.

 

(a) Termination. The Parties may exercise their respective rights of termination by the delivery of written notice of termination to the other Party at any time prior to the completion of the Closing. This Agreement and the transactions contemplated hereby may be terminated on or before the Closing Date as follows:

 

(i) By the mutual written agreement of the Parties;

 

(ii) By Buyer if a breach of any material provision of this Agreement has been committed by Seller and such breach has not been either (A) cured within ten (10) days after written notice to Seller, or (B) waived in writing by Buyer;

 

(iii) By Seller if a breach of any material provision of this Agreement has been committed by Buyer and such breach has not been either (A) cured within ten (10) days after written notice to Buyer, or (B) waived in writing by Seller;

 

(iv) By Seller if Seller’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(v) By Buyer if Buyer’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(vi) By Seller or Buyer, if the Closing has not occurred by the Closing Date Deadline.

 

Unless this Agreement is terminated by Seller under the provisions of Section 11(a)(iii), Buyer shall be entitled to receive a return of the Deposit upon a termination.

 

 

(b) Buyer’s Default. If prior to Closing Buyer breaches this Agreement and fails to cure as provided above, then Seller’s sole right and exclusive remedy will be to terminate this Agreement by giving written notice thereof to Buyer and then Seller may take the Deposit as liquidated damages in full settlement of all claims, remedies or causes of actions against Buyer under this Agreement, including the remedy of specific performance and other forms of equitable relief. It is impossible to estimate more precisely the damages which might be suffered by Seller upon Buyer’s default. Seller’s retention of the Deposit is intended not as a penalty, but as full liquidated damages.

 

(c) Seller Default. If prior to Closing, if Seller breaches this Agreement and fails to cure as provided above, then Buyer may exercise any and all rights and remedies available to it at law or in equity, including (i) an action in equity against Seller (pursuant to which Buyer is not obligated to post a bond or prove special damages or irreparable injury) for the specific performance by Seller of the terms and provisions of this Agreement and disgorgement of profits from the date of the Closing Date Deadline until receipt of any applicable remedy at law or equity in the Buyer’s favor; and (ii) the right to terminate this Agreement by giving written notice of such termination to Seller and receive a full refund of the Deposit without prejudice to any of Buyer’s rights or remedies including an action for direct damages, but not consequential damages.

 

(d) Cross Default. Any default by the Real Property Purchaser under the Real Property Purchase and Sale Agreement shall be a default by Buyer under this Agreement and a default by Buyer under this Agreement shall be a default by the Real Property Purchaser under the Real Property Purchase and Sale Agreement. Any default by the Real Property Seller under the Real Property Purchase and Sale Agreement shall be a default by Seller under this Agreement and a default by Seller under this Agreement shall be a default by the Real Property Seller under the Real Property Purchase and Sale Agreement. The terms of the Real Property Purchase and Sale Agreement are incorporated herein by reference.

 

(e) Breakup Fee. If this Agreement is terminated by any Party hereto due to the failure of Seller or LMP to obtain the Necessary Seller Approvals prior to the Closing Date Deadline, regardless of the reason for such failure, then Buyer shall be entitled to receive from Seller and LMP, and Seller and LMP shall be obligated to pay Buyer within 3 business days following receipt of an invoice from Buyer, a fee (the “Breakup Fee”) equal to the reasonable costs and fees expended or incurred by Buyer and Port Charlotte AFL RE, LLC for the transactions contemplated herein and under the Real Property Purchase and Sale Agreement.

 

12. Survival and Indemnification.

 

(a) Representations and Warranties Survive Closing. It is the express intention and agreement of the parties that all representations and warranties made by the parties in this Agreement shall survive the Closing for a period of twenty-four (24) months. Thereafter, all representations and warranties made by the parties in this Agreement shall terminate and no action may be had on them (excepting claims made during the Survival Period may continue to be pursued). All covenants and agreements of the parties shall survive the Closing in accordance with their terms.

 

(b) Buyer’s Obligation to Indemnify. Following the Closing, Buyer will indemnify and hold Seller, its affiliates, managers, member, and officers harmless from and against any and all liability, loss, damage, or deficiency (collectively, “Losses”) resulting from: (i) any misrepresentation, breach of warranty, or non-fulfillment of any agreement on the part of Buyer under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument furnished or to be furnished by Buyer in connection with the transactions contemplated by this Agreement; (iii) the ownership, management and operations of the Dealership or the Assets from and after the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Buyer; (v) the Assigned Contracts, and; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity.

 

 

(c) Seller’s Obligation to Indemnify. Following the Closing, Seller and LMP (jointly and severally with Seller) will indemnify and hold Buyer, its affiliates, managers, members, officers, and directors harmless from and against any and all Losses resulting from: (i) any misrepresentation, default, breach of warranty or non-fulfillment of any agreement on the part of Seller or LMP under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument or to be furnished by Seller or LMP in connection with the transactions contemplated by this Agreement; (iii) the ownership, management, and operations of the Dealership or the Assets prior to the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Seller; (v) the Excluded Liabilities; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity, and (vii) any audits, including warranty audits, for sales, service and business operations of Seller arising or accruing prior the Closing Date.

 

(d) Limitations. No claim may be made for indemnification in respect of a breach of a representation or warranty unless notice of such claim is delivered in writing prior to the expiration of the survival of the representation or warranty that is the subject of such claim. Each party shall have the right to bring an action against the other on the breach of a representation or warranty hereunder, but only if the party bringing the action for breach gives written notice of such breach to the other party before the end of the Survival Period. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Buyer’s Group Global Losses exceeds $50,000; provided, however, that the foregoing limitation shall not apply to any Loss with respect to intentional misconduct or fraud. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(b) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Seller’s Group Global Losses exceeds $50,000. Notwithstanding anything in this Agreement to the contrary, the Seller and LMP shall not have any liability whatsoever under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss of any amount by which the Losses payable by the Seller and LMP shall, individually or in the aggregate, exceed Seller’s Group Global Cap of $2,500,000. For the purposes of applying the foregoing liability limitations, amounts paid by Seller, LMP and Seller’s affiliates shall be aggregated. Notwithstanding anything in this Agreement to the contrary, the foregoing limitation on liability shall not apply to any Losses arising or resulting from intentional misconduct or fraud of the Seller, or LMP or their affiliates. For purposes of this Agreement, “Buyer’s Group Global Losses” shall mean the cumulative Losses of Buyer and Buyer’s affiliates who purchase any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Seller or Seller’s affiliates. For purposes of this Agreement, “Seller’s Group Global Losses” shall mean the cumulative Losses of Seller and Seller’s affiliates who sell any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Buyer or Buyer’s affiliates. For purposes of this Agreement, “Seller’s Group Global Cap” shall mean the cumulative liability of LMP, Seller and Seller’s affiliates for Losses to Buyer and Buyer’s affiliates (excluding Losses arising or resulting from intentional misconduct or fraud) under their Dealership Asset Purchase Agreements for any of the Subject LMP Dealerships.

 

(e) Matters Involving Third Parties.

 

(i) To be entitled to such indemnification, the party claiming indemnification (“Indemnified Party”) will give the other party (“Indemnifying Party”) prompt written notice of the assertion by a third party of any claim with respect to which the Indemnified Party might bring a claim for indemnification hereunder (“Third Party Claim”), and in all events must have supplied such notice to the Indemnifying Party within the applicable period for defense of such claim; provided, however, that the failure to give prompt written notice as prescribed above will not preclude indemnification so long as such failure does not prejudice the Indemnifying Party’s defense against such claim.

 

 

(ii) The Indemnifying Party will be entitled, at its own expense, to participate in the defense of such action, proceeding or claim, and, if (i) the action, proceeding or claim involved seeks (and continues to seek) solely monetary damages, environmental remediation or relates to any liability for taxes, (ii) the Indemnifying Party confirms, in writing, its obligation hereunder to indemnify and hold harmless the Indemnified Party with respect to such damages in their entirety, and (iii) the Indemnifying Party, in the reasonable judgment of the Indemnified Party, will be able to satisfy any adverse judgment as a result of its indemnification obligation with respect to such action, proceeding or claim, then the Indemnifying Party will be entitled to assume and control such defense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval will not be unreasonably withheld or delayed. The Indemnified Party will be entitled to participate therein after such assumption, the costs of such participation following such assumption to be at its own expense. Upon assuming such defense, the Indemnifying Party will have full rights to enter into any monetary compromise or settlement which is dispositive of the matters involved; provided, that such settlement is paid in full by the Indemnifying Party and will not have any direct or indirect adverse effect upon the Indemnified Party.

 

(iii) With respect to any action, proceeding or claim as to which (i) the Indemnifying Party does not have the right to assume the defense or (ii) the Indemnifying Party will not have exercised its right to assume the defense, the Indemnified Party will assume and control the defense of and contest such action, proceeding or claim with counsel chosen by it and approved by the Indemnifying Party, which approval will not be unreasonably withheld or delayed. The Indemnifying Party will be entitled to participate in the defense of such action, proceeding or claim, the cost of such participation to be at its own expense. The Indemnifying Party will be obligated to pay the reasonable attorneys’ fees and expenses of the Indemnified Party. The Indemnified Party may not settle such action, proceeding or claim without the prior written consent of the Indemnifying Party, which will not be unreasonably withheld.

 

(iv) Both the Indemnifying Party and the Indemnified Party will cooperate fully with one another in connection with the defense, compromise or settlement of any such action, proceeding or claim, including, without limitation, by making available to the other all pertinent information and witnesses within its control.

 

(f) Procedures for Indemnification - Other Claims. A claim for indemnification relating to a breach of a warranty or representation for any matter not involving a Third-Party Claim must be asserted by notice to the Indemnifying Party by the Indemnified Party on or before the expiration of the Survival Period. The Indemnifying Party will have the obligation to eliminate or mitigate its indemnification obligation under this Agreement by affecting a cure of any breach of this Agreement not related to any Third-Party Claim (including any document, certificate, instrument or agreement to be executed and/or delivered under this Agreement), if susceptible of cure, within thirty (30) days after any such notice. The Indemnifying Party will pay any uncured indemnification claim and any claim that is not capable of cure that is undisputed promptly after such notice and failure to cure. The Indemnifying Party will promptly pay any other indemnification claim upon resolution by an agreement with the Indemnified Party or upon a final, non-appealable order of a court of competent jurisdiction. All claims for indemnification as to a breach of a representation or warranty will survive as to any claim or demand made on or before the expiration of the Survival Period until such claim or demand is fully paid or otherwise resolved by the parties hereto in writing or by a court of competent jurisdiction.

 

(g) Seller’s Security for Indemnification Claims. To secure the indemnity obligations of Seller and LMP under this Section 12. for claims made by Buyer and claims of Buyer’s affiliates for indemnification under their Dealership Asset Purchase Agreements and underlying Real Estate Purchase Agreements with Seller’s affiliates within 24 months of the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith; the Parties and their affiliates who sell and purchase any of the Subject LMP Dealerships shall enter into an Indemnity Escrow Agreement with Greenberg Traurig, PA, as the “Indemnity Escrow Agent”. Seller and Seller’s affiliates shall fund the Holdback Amount under the Indemnity Escrow Agreement in full upon the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith. The form of the Indemnity Escrow Agreement is attached as Exhibit C .

 

 

(i) Subject to the limitations set forth in this Section 12, all payments by the Seller or LMP to Buyer pursuant to this Section 12 shall be satisfied first from the Indemnity Escrow Funds (to the extent the Indemnity Escrow Funds are sufficient, and then, subject to the limitations herein, the Seller and or LMP shall pay any excess due hereunder directly) and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Indemnity Escrow Agent to make the applicable payments.

 

(ii) On the first year anniversary following the Closing Date, an amount equal to 50% of the total Indemnity Escrow Funds originally funded to the Indemnity Escrow Agent minus  the amount of claims paid by the Indemnity Escrow Agent, and minus the aggregate outstanding  amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date shall be released to the Seller, LMP and or Seller’s affiliates on such date (if such number is positive), and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

(iii) On the second year anniversary following the Closing Date, an amount equal to the balance of the Indemnity Escrow Funds minus the aggregate outstanding  amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date (any such claim, a “Remaining Indemnity Claim”) shall be released to the Seller, LMP and or Seller’s affiliates on such date, and the Buyer and the Seller shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.  Following the final resolution of any Remaining Indemnity Claim, if the Indemnity Escrow Funds exceed the aggregate amount, if any, which any of Buyer or Buyer’s affiliates has claimed under Section 12 or under any of their Dealership Asset Purchase Agreements with respect to Remaining Indemnity Claims that remain unresolved, the excess Indemnity Escrow Funds shall be released to the Seller, Seller’s affiliates or LMP on such date, and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

13. Miscellaneous.

 

(a) Transaction & Enforcement Costs. Each Party shall bear its own costs and expenses, including legal and accounting fees, incurred in connection with this Agreement and the transactions contemplated hereby, and shall pay such costs and expenses whether or not the Closing occurs. Notwithstanding the foregoing, in the event of any litigation between or among the Parties to enforce any provisions or rights hereunder, the unsuccessful Party, as determined by a final judgment, shall pay to the successful Party therein all costs and expenses of such Party (and any of such Party’s agents, such as attorneys or accountants) expressly including, but not limited to, reasonable attorneys’ fees and court costs incurred therein by such successful Party, which costs, expenses and attorneys’ fees will be included in and as a part of any judgment rendered in such litigation.

 

(b) Confidentiality. Each Party and its representatives shall hold in strict confidence all data and information obtained in connection with this transaction, including all financial and other information of or related to the Dealership and the terms of this Agreement, and shall not directly or indirectly at any time reveal, report, publish, disclose or transfer to any person any of such data and information or utilize any of such data or information for any purpose; provided, however, each Party may disclose information to Manufacturer and legal, tax, accounting advisors, lenders and potential lenders and other parties deemed by a Party to be necessary or appropriate in connection with the transactions described herein, provided that such persons acknowledge that they too are bound by the confidentiality provisions contained herein. Notwithstanding any contrary provision herein, Buyer may notify governmental organizations (e.g., the Security and Exchange Commission, the FTC, if applicable) of this Agreement and the transactions contemplated hereby by filing an unredacted copy of this Agreement. The Parties may not otherwise announce the transactions contemplated hereby which may identify the Seller, the Buyer, and the Dealership to the general public without the consent of the other. Further, notwithstanding any contrary provision herein, Buyer may apply for licenses, tax applications, qualifications, and fictitious name registrations required for its business operations and the parties may disclose this transaction to obtain the necessary consents related to contract assumptions and the Necessary Seller Approvals.

 

 

(c) Relationship & Authority. Each Party is acting as an independent contractor. Each Party is responsible for all taxes relating to its operation, including payroll taxes for its employees and nothing in this Agreement is intended to create a relationship, express or implied, of employer-employee or partnership or joint venture between or among any Party. Each individual executing this Agreement on behalf of a Party individually represents and warrants that such Party is validly existing, that such execution has been duly authorized, that the terms of the instrument will be binding upon the Party, and that such individual is duly authorized to execute this Agreement on behalf of such Party.

 

(d) Notices. All notices and other communications provided for hereunder will be in writing, unless otherwise specified, and will be deemed to have been duly given if delivered personally, via e-mail, via Federal Express or other nationally recognized courier, to the addresses on the signature pages hereof or at such other addresses as a Party may designate from time to time in writing. Notices will be effective upon receipt by the Party or refusal to accept delivery. Notices on behalf of either Party may be given by the attorneys representing such Party.

 

(e) Integration; Amendments & Time. This Agreement contains the entire understanding between the Parties and supersede any prior understanding and/or oral agreements between them respecting the subject matter of this Agreement. Any modification or amendment of this Agreement will be in writing and executed by Seller and Buyer. Time is of the essence in this Agreement. If the last day to perform under a provision of this Agreement or the final day of any period (e.g., the Closing Date Deadline) falls on a Saturday, Sunday, or legal holiday, then such performance deadline or period is automatically extended through the next day which is not a Saturday, Sunday, or legal holiday.

 

(f) Interpretation & Administration. The words “include”, “includes”, “included”, “including” and “such as” do not limit the preceding words or terms and are deemed to be followed by the words “without limitation”. The Parties have a duty of good faith and fair dealing. All captions and headings contained in this Agreement are for convenience of reference only and will not be construed to limit or extend the terms or conditions of this Agreement. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. All terms defined in this Agreement in their singular or plural forms, have correlative meanings when used herein in their plural or singular forms, respectively. Each Party and its counsel have reviewed this Agreement and the rule of construction that any ambiguities are to be resolved against the drafter will not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits hereto. Except as expressly provided herein (e.g., “industry standard depreciation” or “as reflected on Manufacturer’s statement”), all accounting matters required or contemplated by this Agreement will be in accordance with generally accepted accounting principles. This Agreement may be executed in one or more counterparts and delivered by e-mail or facsimile, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement will be binding upon and inure to the benefit of the Parties, their successors and assigns. Buyer may assign or otherwise transfer all of Buyer’s rights, obligations and benefits hereunder to any entity owned or controlled by, or under common control with, Buyer without Seller’s consent. The invalidity of any one or more phrases, sentences, clauses, paragraphs, or sections of this Agreement will not affect the remaining portions of this Agreement. No failure or delay by any Party to enforce any right specified herein will operate as a waiver of such right, nor will any single partial exercise of a right preclude any further or later enforcement of the right. A business day shall mean Monday through Friday, excluding federal and national holidays or State of Florida holidays. The term “material” shall mean an amount which would involve an expenditure, liability or damages in excess of $50,000.00.

 

(g) Further Assurances. At the request of Seller and at Seller’s expense, Buyer shall cooperate in the preparation by Seller of all filings to be made by Seller with the Securities and Exchange Commission including any periodic filings and any filing with respect to a registered offering of its securities by Seller and the closing of the offering registered thereby. Upon a party’s request at any time, the other party shall take any act, including executing and delivering any document, necessary or advisable to otherwise to carry out the provisions of this Agreement.

 

 

(h) Escrow Agent. Escrow Agent’s duties pursuant to this Agreement are purely ministerial in nature, and the Escrow Agent shall incur no liability whatsoever except for its willful misconduct or gross negligence, so long as the Escrow Agent is acting in good faith. The Parties hereby release the Escrow Agent from any liability for any error of judgment or for any act done or omitted to be done by the Escrow Agent in the good faith performance of its duties hereunder and do each hereby indemnify the Escrow Agent against, and shall hold, save, and defend the Escrow Agent harmless from, any costs, liabilities, and expenses incurred by the Escrow Agent in serving as Escrow Agent hereunder and in faithfully discharging its duties and obligations hereunder. The Escrow Agent is acting as a stakeholder only with respect to the Deposit. If there is any dispute as to whether the Escrow Agent is obligated to deliver the Deposit or as to whom the Deposit is to be delivered, the Escrow Agent may refuse to make any delivery and may continue to hold the Deposit until receipt by the Escrow Agent of an authorization in writing, signed by Seller and Buyer, directing the disposition of the Deposit, or, in the absence of such written authorization, the Escrow Agent may hold the Deposit until a final non appealable determination of the rights of the Parties in an appropriate judicial proceeding. If such written authorization is not given, or a proceeding for such determination is not begun, within thirty (30) days after notice to the Escrow Agent of such dispute, the Escrow Agent may bring an appropriate action or proceeding for leave to deposit the Deposit in a court of competent jurisdiction pending such determination. The Escrow Agent shall be reimbursed for all costs and expenses of such action or proceeding, including reasonable attorneys’ fees and disbursements, by the Party determined not to be entitled to the Deposit. Upon making delivery of the Deposit in any of the manners herein provided, the Escrow Agent shall have no further liability or obligation hereunder. The Escrow Agent shall execute the Escrow Receipt attached hereto in order to confirm that it has received the Deposit and is holding the same on deposit in accordance with the provisions hereof.

 

(i) Applicable Law & Venue. This Agreement will be governed by and construed and enforced in accordance with the internal laws and judicial decisions of the State of Florida without regard to conflict of law provisions thereof. Any litigation, action or proceeding arising out of or relating to this Agreement will be held exclusively in any state or Federal court in Broward County, Florida. Each Party waives any objection which it might have now or hereafter to the venue of any such litigation, action or proceeding, submits to the sole and exclusive jurisdiction of any such court and waives any claim or defense of inconvenient forum. Each Party consents to service of process at such Party’s address as provided herein (and updated in writing from time to time).

 

(j) Waiver of Jury Trial. Each party hereto hereby acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.

 

(k) Real Estate Agreement. The execution and delivery of this Agreement is contingent upon the concurrent and simultaneous execution and delivery of the Real Property Purchase and Sale Agreement.

 

[Remainder of Page Blank]

 

 

IN WITNESS WHEREOF, the Parties executed and delivered this Agreement as of the Effective Date.

 

LMP Port Charlotte KOPC, LLC, a Florida limited liability company			Port Charlotte AFL K, LLC, a Florida limited liability company
By:	/s/ Sam Tawfik		By:	/s/ Ali Ahmed
	Sam Tawfik, Authorized Signatory			Name: Ali Ahmed
LMP Automotive Holdings, Inc, a Delaware corporation				Title: Manager Notice Address for Buyer: Attn: Ali Ahmed 5875 NW 163rd Street Suite 104 Miami Lakes, FL 33014 Email: [email protected]
By:	/s/ Sam Tawfik
	Sam Tawfik, CEO
Notice Address for Seller and LMP:   LMP Port Charlotte KOPC, LLC 500 East Broward Boulevard, Suite 1900 Fort Lauderdale, FL 33394 Attn: Sam Tawfik, Chief Executive Officer   With a Copy To:   Greenberg Traurig, PA Attn: Bruce C. Rosetto 777 S. Flagler Rive Suite 300 East West Palm Beach, FL 33401 Email: [email protected]			With a copy to:   Greenspoon Marder LLP Attn: David Weisman 200 East Broward Blvd. Suite 1800 Fort Lauderdale, FL 33301 Email: [email protected] Greenspoon Marder LLP Attn: Greg Blodig 200 East Broward Blvd. Suite 1800 Fort Lauderdale, FL 33301 Email: [email protected]

 

 

Schedule 1(b)(ii) – Purchase Price for PreOwned, Service and Rental Vehicles

 

 

 

 

 

 

 

Schedule 2 – List of Assets

 

Inventory of new vehicles, used vehicles, parts and accessories will be inventoried and attached at or near Closing.

 

Seller’s FF&E is listed on Schedule 2(b).

 

 

 

Schedule 2(b) – FF&E

 

 

 

 

 

 

 

 

Schedule 3(d) – Assigned Contracts

 

 

 

 

 

 

 

 

Schedule 5(d) – Liens

 

 

 

 

 

 

 

Schedule 5(m) – Employment Matters

 

 

 

 

 

 

 

 

Schedule 5(q) – In-House Warranties

 

 

 

 

 

 

Schedule 5(r) – Option Agreements

 

 

 

 

 

 

ESCROW RECEIPT

 

Dealership Asset Purchase Agreement

 

Escrow Agent agrees to be bound by the Dealership Asset Purchase Agreement and acknowledges receipt of:

 

☐ A. Executed copies of the Dealership Asset Purchase Agreement on July __, 2022;

 

☐ B. Deposit in the amount of $__________ on July __, 2022.

 

Escrow Agent:

 

By:
Name & Title:

 

Escrow Agent acknowledges having reviewed this Dealership Asset Purchase Agreement and will be bound by those provisions.

 

 

 

Exhibit 10.2

 

Execution Version

 

DEALERSHIP ASSET PURCHASE AGREEMENT

 

This DEALERSHIP ASSET PURCHASE AGREEMENT (this “Agreement”) is effective as of August 5, 2022 (the “Effective Date”), by and among Cape Coral AFL K, LLC, a Florida limited liability company (“Buyer”), LMP Cape Coral KOCC, LLC, a Florida limited liability company (the “Seller”), and LMP Automotive Holdings, Inc., a Delaware corporation (“LMP”), and together with Seller and Buyer, each a “Party” and, collectively, the “Parties”).

 

RECITALS:

 

WHEREAS, Seller owns, controls and operates a Kia automotive dealership (the “Dealership”), and all ancillary business related thereto (the “Business”) located at 404 NE Pine Island Rd, Cape Coral, FL 33909 (the “Premises”) under agreements with Kia Motors America, Inc. (the “Manufacturer”);

 

WHEREAS, LMP owns and operates through various affiliates, six (6) automotive dealerships, including the Seller, (the collectively, the “Subject LMP Dealerships”), and certain real property (the “Real Property”), which are the subject of that certain letter of intent with an affiliate of Buyer, dated June 11, 2022, for the purchase of substantially all of the assets of the Subject LMP Dealerships (the “LOI”), including the sale and transfer substantially all of the Dealership’s assets (as more particularly described in Section 2 below, but excluding the Excluded Assets defined below, collectively, the “Assets”);

 

WHEREAS, simultaneously with the consummation of this Agreement, Cape Coral AFL RE, LLC, a Florida limited liability company and Buyer (collectively the “Real Property Purchaser”) will jointly purchase and acquire the real property of the Premises from LMP Automotive Holdings, LLC, a Florida limited liability company (“Real Property Seller”) in accordance with that certain Real Property Purchase and Sale Agreement for the purchase and sale of the real property underlying the Premises (the “Real Property Purchase and Sale Agreement”);

 

WHEREAS, the LOI sets forth that there is no due diligence period with respect to the Dealership and the Assets once this Agreement is executed;

 

WHEREAS, the Buyer desires to purchase the Assets and Seller desires to sell and transfer the Assets on the terms and conditions hereinafter set forth (the “Transaction”).

 

NOW, THEREFORE, in consideration for the mutual promises contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged by each Party, the Parties as follows:

 

1.  Closing Date and Purchase Price.

 

(a) Closing Date. Subject to the terms and conditions set forth in this Agreement, the consummation of the transactions contemplated hereby (the “Closing”) shall take place no later than within (15) business days of the receipt of the latest to occur of: (i) all applicable manufacturers’ approvals in accordance with Section 7(a) in connection with the purchase and sale of all of the Subject LMP Dealerships and (ii) all required entity approvals from the boards of directors and shareholders of LMP, and the manager of sellers of the Subject LMP Dealerships as well as the manager of the sellers of the real estate properties underlying the LMP Dealerships being sold are obtained in connection with authorizing the contemplated Transaction and the transactions involving the Subject LMP Dealerships. The date of the Closing is referred to herein as the “Closing Date.” The Closing shall be deemed to be effective as of the opening of business on the Closing Date. The “Closing Date Deadline” means October 31, 2022; provided, however, that if, as of the fifteenth (15^th) day prior to such date, all of the manufacturers’ approvals have not been obtained, or if all applicable waiting periods pursuant to the HSR Act have not expired or terminated, or if the Florida Department of Revenue has not provided a Clearance Letter to Seller, the Closing Date Deadline will automatically be extended for thirty (30) days, time being of the essence. It is agreed that the closings for all of the Subject LMP Dealerships may occur in separated groups with the same manufacturer and/or by geographical regions. It is acknowledged that the actual Closing and funding for this transaction make take 1 or 2 business days.

 

 

(b)  Purchase Price & Broker. The purchase price for the Assets described in Section 2(e) below is $35,400,420 in connection with the purchase of goodwill and FF&E (the “Goodwill Purchase Price”) plus additional purchase price for parts, work in progress (“WIP”), and New Vehicles, Used Vehicles and Pre-Owned Vehicles (collectively, the “Vehicle Inventories”) calculated as described below (the “Additional Purchase Price,” with the Goodwill Purchase Price, collectively the “Purchase Price”). The parties agree that the FF&E portion of the Goodwill Purchase Price includes the price for Seller’s vehicles used in its business operations which are listed in the FF&E schedules to its financial statements. The Additional Purchase Price will be calculated as follows:

 

(i) The purchase price for Dealership’s new, undamaged and untitled 2021, 2022 and subsequent year Manufacturer vehicles, including demonstrators and loaners, (the “New Vehicles”) is an amount equal to the actual Manufacturer’s original invoice; plus Seller’s direct out-of-pocket cost of dealer-installed optional parts and accessories theretofore installed upon New Vehicles; less all applicable dealer hold-backs paid to Seller; less fifty percent of all credits, and allowances for order assistance, floor plan assistance, Kia retailer support, and dealer advertising support; less “prep” expenses for New Vehicles which have not yet been prepared for sale; less the cost to repair any damage and less the replacement cost of any parts or equipment removed. Notwithstanding the foregoing, the purchase price of New Vehicles shall not include or be increased for rust proofing, undercoating, scotch-guarding, non-Manufacturer alarm systems, interrupt systems, theft protection devices and similar dealer additions. The purchase price of New Vehicles with more than 600 miles but less than 4,000 miles will be reduced by $0.60 per mile. New Vehicles with 4,000 or more miles will be valued as a Used Vehicle (defined below). For purposes of this Agreement, a vehicle will be considered damaged if it has more than six hundred and fifty dollars ($650.00) of repairs that are needed or previously performed on the vehicle.

 

(ii) The purchase price for pre-owned, company (other than those scheduled as FF&E), service, and rental vehicles (the “Pre-Owned Vehicles” or “Used Vehicles”) shall be priced for each such vehicle at the lower of: (i) the pricing of a New Vehicle set forth above, or (ii) MMR adjusted as per CR rating, as set forth on Schedule 1(b)(ii) hereto.

 

(iii) Buyer shall purchase all vehicles other than the New Vehicles in Seller’s vehicle inventory at CR based MMR (collectively, the “Used Vehicles”; provided, however, if the purchase price for a Pre-owned Vehicle or Used Vehicle cannot be agreed upon, such vehicle shall be retained by Seller and be an Excluded Asset and provided further that Buyer shall have no obligation to purchase any damaged vehicle or vehicle that has salvage status, a branded title, or was in an accident.

 

 

(iv) The purchase price for all obsolete parts shall be equal to 50% of Seller’s cost of such obsolete parts with a cap of $10,000 and non-obsolete parts inventory shall be equal to manufacturer cost (less all applicable rebates and discounts). For purposes of clarity, any obsolete parts in excess of $10,000 shall be transferred to Buyer at Closing. Obsolete parts means (i) any of new OEM parts not listed in any of the manufacturer’s most recent price books; (ii) any vehicle parts or accessories that, at Closing, are not returnable to the supplier from whom they were originally purchased for a full refund less any normal restocking charge; or (iii) any vehicle part or accessory that, as of the Closing Date, has been in Seller’s parts inventory over 365 days.

 

(c)  Earnest Money Deposit. Within three (3) business days after the Effective date Buyer shall deliver to Escrow Agent $1,770,021 (five percent of the Goodwill Purchase Price) as earnest money (the “Deposit”) to be held in trust by Greenberg Traurig, PA, as Escrow Agent for and on behalf of the Parties pursuant to this Agreement. On the Closing Date, if the Closing occurs, the Deposit will be applied to the Purchase Price. The Deposit is non-refundable except if (i) Manufacturer fails to approve the Transaction; or (ii) as per Sections 11(a)(i), (ii), (iv), (v) or (vi).

 

(d)  Hart-Scott-Rodino Act. Filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) may be required. If filing or notice or other action is required under the HSR Act with respect to the transactions outlined herein, then Buyer shall effect such filing or notice and Buyer and Seller shall each pay for 50% of the filing fees required by the HSR Act . Buyer and Seller shall each be responsible for their own attorney fees incurred to effect such filing. Seller shall cooperate fully with Buyer in said action and promptly provide all requisite information.

 

2.  Dealership Assets. Subject to the terms and conditions contained in this Agreement, upon the consummation of the transactions contemplated by this Agreement (the “Closing”, and the date thereof, the “Closing Date”), Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Assets as set forth on Schedule 2 and as more generally described below in this Section 2. A mutually agreed to form of Bill of Sale, attached as Exhibit A hereto, executed and delivered by the Parties on the Closing Date (the “Bill of Sale”) will contain a list of all of the Assets sold to Buyer as set forth on Schedule 2.

 

(a)  Vehicles. Subject to Section 1:

 

(i) Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s New Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date.

 

 

(ii) Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s Used Vehicles and Pre-Owned Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date (but subject to the provisions of Section 1 (b) (iii)). Prior to Closing, Seller shall (i) disclose to Buyer any and all facts known to Seller concerning each Used Vehicle and Pre-Owned Vehicle that Seller would be legally obligated to disclose to a retail purchaser of a Used Vehicle including, but not limited to, known damage, known usage history, frame and flood damage, salvage status, open recalls, and warranty eligibility; (ii) provide Buyer with legal odometer statements for each Used and Pre-Owned Vehicle; and (iii) provide free and clear title for each of the Used Vehicles and Pre-Owned Vehicles. At least 10 days prior to Closing, Seller shall provide Buyer with its then current Used Vehicle and Pre-Owned vehicle inventory along with Seller’s asking price for each such vehicle.

 

(b)  Parts; Accessories & Other Inventories.

 

(i) Inventory & Returnable. A physical inventory of Seller’s parts and accessories will be taken in the presence of a representative of Buyer and Seller by an inventory service chosen by Buyer and reasonably acceptable to Seller, the cost of which will be borne by the Buyer and Seller splitting the cost on a 50/50 basis (the “Inventory”). The Inventory will classify parts and accessories as “returnable” or “non-returnable”. The terms “returnable parts” and “returnable accessories” means only those new undamaged replacement parts and new undamaged accessories for Manufacturer vehicles which are listed (coded) in the latest current Master Parts Price List Suggested List Prices and Dealer Prices (or other applicable similar Manufacturer price lists, with supplements or the equivalent in effect as of the Inventory date, the “Master Price List”), as returnable to the Manufacturer at not less than the purchase price reflected in the Master Price List and are within the limits of returnable parts established by the Manufacturer from time to time. Buyer shall purchase from Seller, and Seller shall sell to Buyer, all of Seller’s returnable parts and returnable accessories for an amount equal to the price listed in the Master Price List (less all applicable rebates and discounts). At Closing the total Parts and Miscellaneous Inventory that are in their original packaging, current and returnable and with sales in the 12 months prior to closing for an amount equal to the Manufacturer prices as reflected in the most recent pricing catalogs less all discounts and allowances. Seller will assign Sellers’ parts return rights to Buyer at Closing.

 

(ii) Nonreturnable. All parts and accessories not coded as returnable in the Master Price List are “nonreturnable” and shall be considered an obsolete part. The purchase price for the nonreturnable parts and accessories, non-Manufacturer, “jobber” or “NPN” parts and accessories will be considered as and sold as obsolete parts pursuant to Section 1 (b)(iv).

 

(iii) Return Rights, etc. Upon Closing, Seller will be deemed to have automatically assigned, and Seller shall assign to Buyer, Seller’s parts return rights without any further action (but Seller shall take any further action requested by Buyer or required by the Manufacturer to implement such assignment of rights). At the request of Buyer, Seller shall use its best efforts to assist Buyer in effecting any parts return offered by the Manufacturer (including, if necessary, applying for parts return in Seller’s name), and Seller shall promptly pay over to Buyer any monies received from the Manufacturer related thereto. Buyer may deduct from the consideration to be paid to Seller at the Closing Seller’s parts account outstanding balance with the Manufacturer and to pay such balance directly to the Manufacturer for Seller’s account. Buyer is not obligated to purchase old, opened, obsolete, superseded, incomplete, or damaged parts or accessories or any parts, accessories or sheet metal with no sales in the twelve (12) months prior to Closing. Buyer will not be obligated to purchase more than one year’s supply of any part or accessory (based on trailing one-year historical sales). Miscellaneous Supplies shall be purchased as provided for in subsection (d) below. The purchase price for all other parts not addressed in this Section or Section 1 will equal the value thereof as mutually agreed between Buyer and Seller provided, however, if the purchase price for such assets cannot be agreed upon, such assets shall be retained by Seller and be an Excluded Asset. If any parts and accessories or other inventories or goods that Buyer is not obligated to purchase hereunder are not removed from the Real Property within ten (10) days after the Closing Date, such property will automatically become Assets transferred to Buyer pursuant to the Bill of Sale without additional consideration.

 

 

(c)  Intellectual Property. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s telephone and data numbers, website addresses and domain names (owned or registered by or on behalf of the Dealership, ), e-mail addresses, classified telephone and internet advertising, prospect data, customer sales, lease, finance and service records (both hard copy and electronic format (including deal jackets), for no additional cost to Buyer), Seller’s workman’s compensation and unemployment rating in the State of Florida, all lawfully transferable licenses and permits of the Dealership or Seller, Dealership Intellectual Property (defined below), leasehold improvements and fixtures, unused internal and customer repair order forms, customer lists and marketing materials and catalogues, retail buyer’s order forms, office and shop supplies, shop reference manuals, parts reference catalogs, all books and records necessary for the continued operation of the Dealership (including training and promotional materials, employee records of employees hired by Buyer, P.O. boxes, third party warranties in Seller’s favor and all licenses and rights to use all software ( other than Vision AST software and other than DMS systems not assumed by Buyer) on or used in connection with any personal computer or other computing device used in connection with the Dealership, etc.), parts sales tickets, unused purchase order forms and all other forms and Seller’s goodwill and going concern value relating to the Dealership. “Dealership Intellectual Property” means any rights or ownership of the Dealership or Seller to all (i) patents, patent applications, patent disclosures and improvements, (ii) trademarks, trade, service marks, trade dress, and logos (excluding trade names, service marks, trade dress and logos, (iii) copyrights and registrations and applications for registration thereof, (iv) computer software, data and documentation, (v) trade secrets; and (vi) social media, directory assistance, reputation management and e-commerce sites and accounts (including E-Bay, Facebook, Instagram, Twitter, yelp!, Dealer Rater, Edmunds and Google programs).

 

(d)  Other Assets. Gas, oil, grease, nuts and bolts (“Miscellaneous Supplies”) shall be purchased by Buyer with the value thereof being equal to the Dealership’s cost of such items (established by invoice or such other documentation reasonably requested by Buyer), less any incentives received, or rebates received with respect thereto. Work in Process shall be purchased by Buyer as provided for in Section 3 (c).

 

(e)  Buyer agrees to buy all of Seller’s body shop inventories of unopened and not expired containers of paint (base and tints), quantities of paint in spray booths and machinery that can be accurately determined, new and unused dry supplies, and new and unused sheet metal, if any (“Body Shop Inventories”). The purchase price for Body Shop Inventories shall be Seller’s cost in such inventories.

 

 

(f) Excluded Assets & Name License. Notwithstanding anything in this Agreement to the contrary, the following assets are not being sold pursuant to this Agreement: (i) all cash and cash equivalents, wherever located and in whatever form (unless “petty cash” is noted on the Closing Memorandum or Closing Statement); (ii) promissory notes and other evidences of indebtedness; (iii) all insurance policies; (iv) accounts receivable; (v) any claims or causes of action of Seller against third parties; (vi) tax credits and claims for tax refunds; (vii) securities, voting or otherwise in any entity; (viii) any rights in connection with and any assets of any employee benefit plan of Seller; (ix) the minute books and capital stock records of Seller, (x) all employment contracts, relating to any employees of Seller or Seller’s operations, (xi) any contract to which Seller is a party that is not an Assigned Contract, and (xii) any vehicle or parts that are not included in the purchased Assets; (collectively, the “Excluded Assets”). Seller shall remove all vehicles that are Excluded Assets from the Premises within ten (10) days following the Closing.

 

(g) Excluded Liabilities. Notwithstanding anything contained herein to the contrary, Buyer shall not assume, or cause to be assumed, or be deemed to have assumed or caused to have assumed or be liable or responsible for any liabilities or obligations (whether known or unknown, fixed, absolute, matured, unmatured, accrued or contingent, now existing or arising after the date hereof) of Seller or any of its Affiliates (other than the liabilities expressly assumed in this Agreement) including, but not limited to, the following obligations and liabilities of Seller and its Affiliates (such obligations and liabilities not assumed hereunder, the “Excluded Liabilities”):

 

(i) any liabilities or obligations relating to any current or former employee or independent contractor of Seller or any of its Affiliates (whether or not such employee is hired by Buyer following the Closing) and labor matters relating to any such current or former employee or independent contractor including any liabilities or obligations arising out of or relating to any employee-related matter, employee-related payment obligation, collective bargaining contract, labor negotiation, severance cost, pension plan, profit sharing plan, deferred compensation plan, accrued holiday benefit, accrued bonus, salary, bonus plan, phantom stock award, stock option or purchase plan, employment contract, consulting contract, any Employee Benefit Plan or any entitlements arising as a result of or in connection with the consummation of the Purchase;

 

(ii) any Taxes, interest, and penalties (i) attributable to the purchased Assets or the Business with respect to any Pre-Closing Period or (ii) imposed on Seller or any of its Affiliates;

 

(iii) any liabilities or obligations related to the Excluded Assets;

 

(iv) any liabilities or obligations arising out of or relating to indebtedness of Seller or any of its Affiliates;

 

(v)  any liabilities or obligations arising out of or relating to any contract which is not an Assigned Contract;

 

(vi) other than in connection with the operation of the Business after the Closing Date, any liabilities or obligations arising out of operations prior to the Closing Date, and /or relating to any real property owned, leased, occupied or controlled by Seller;

 

(vii) any Seller Transaction Expenses; and

 

 

(viii) any liabilities or obligations arising from product liability claims for which the injury or loss giving rise thereto (not just the delivery of the notice of such claims) occurs prior to the Closing Date, including specifically all losses caused by or arising out of any alleged design, manufacture, assembly, installation, use or sale of any products manufactured by the Factory or the Business prior to the Closing Date, whether the commencement of any related litigation, arbitration, investigation, proceeding or claim occurs before or after the Closing Date

 

Seller shall satisfy all Excluded Liabilities that are an obligation of Seller promptly when due.

 

3.  Prorations & Assigned Contracts.

 

(a)  Prepaid Expenses & Prorations. Current personal property [and real property] taxes will be prorated and adjusted between Buyer and Seller as of the Closing Date based on the number of days in the year to which the taxes relate that each party occupies the property. If current tax bills are unavailable on the Closing Date, the prior year’s tax bills will be used for proration purposes and taxes will be re-prorated between Buyer and Seller when the current year’s tax bills are received. Any amounts owed by either Party with respect to such re-proration will be paid to the other Party within ten (10) days after the determination of such re-proration. All operating expenses (other than prepaid expenses) of the Dealership for the month of Closing will be prorated and adjusted between Buyer and Seller as of the Closing Date based on a thirty (30) day month. To the extent possible, the Parties shall cause all utility meters to be read on the day preceding the Closing Date. Unless the applicable utility terminates billing on Seller’s account as of the Closing Date, utilities payable by Seller (or Buyer, to the extent applicable) for the Dealership Property, including, but not limited to electricity, gas and water and sewer, shall be prorated as of the Closing Date. The adjustment therefor shall be made on the basis of the most recently historical data/billings therefor and shall be subject to final reconciliation based upon actual charges after receipt of a final bill by Seller. Buyer will make its own arrangements for any security deposits required by any utility company, and Seller will cancel and retain any deposits previously furnished. Buyer shall receive a credit against the Purchase Price for the cost to replace any missing special tools required by the Manufacturer’s most recent catalogue.

 

(b)  Within sixty (60) days after the Closing Date, the Parties shall make an adjustment to the Purchase Price to reflect any customary adjustments, additions and deletions necessary to properly reflect the categorization and/or amount of the Assets in accordance with this Agreement. In the event the Purchase Price is adjusted, the appropriate party shall effect a wire transfer of immediately available funds to the other party for the appropriate amount within five (5) days after the determination of the adjustment.

 

 

(c)  Customer Deposits & Work in Process. Upon Closing, Seller shall transfer to Buyer all customer deposits for incomplete orders taken by Seller in the ordinary course of business. Seller shall retain all escheatable deposits, including but not limited to security deposit on any real property lease, if applicable. At the Closing, Seller shall furnish Buyer with a list of such deposits (including “we owes”, due bills, etc.), setting forth, as to each, the name and address of the customer, any goods or services owed to the customer and the amount of the deposit, and Seller shall deliver to Buyer all documents in Seller’s possession reflecting such deposits, we owes, due bills, etc. Seller shall credit Buyer for all we owes/due bills on the Closing Date. The Bill of Sale or Closing Statement will contain a list and description of such customer transactions (and Work in Process, as detailed below). Seller shall credit Buyer the actual cost to complete all due bills. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s pending service orders written by Seller in the ordinary course of business for an amount equal to Seller’s actual cost for parts and labor for any such orders which have been supplied by Seller which are in process at the opening of business on the Closing Date (“Work in Process”). Seller shall not receive the revenue from such Work in Process. Buyer may reject (and Seller shall retain) all Work in Process where (i) the Work in Process was not placed in the normal course of business; (ii) Seller does not possess an order signed by the customer authorizing such service, the vehicle isn’t at the Real Property on the Closing Date or such order has been open for longer than thirty (30) days prior to the Closing Date; (iii) the Work in Process does not provide for a profit to Buyer; or (iv) the Work in Process does not provide for cash or commercially reasonable credit terms on delivery of the vehicle.

 

(d)  Assigned Contracts. As of the Closing Date, Seller shall assign, and Buyer shall assume Seller’s contractual obligations, which Buyer has agreed to assume, listed on Schedule 3(d) hereto on the Closing Date (collectively, “Assigned Contracts”). The term “Assigned Contracts” excludes obligations and liabilities arising or accruing by the Closing Date or by reason of any breach or alleged breach by Seller, regardless of when such obligation or liability is asserted. Seller shall arrange for assignment of the Assigned Contracts at Seller’s cost. Buyer is not assuming any liabilities or obligations of Seller other than the Assigned Contracts or agree to pay, discharge or perform any liabilities or obligations arising out of any breach by Seller (other than with respect to a breach by Buyer) of any Assigned Contract.

 

4.  Deliveries.

 

(a)  At Closing, Buyer shall deliver to Seller (or to Escrow Agent (as defined in the Real Property Purchase and Sale Agreement) for further disbursement to Seller) the following:

 

(i) the Purchase Price in immediately available funds, of which $2,500,000 (the “Holdback Amount”) shall be delivered to the Indemnity Escrow Agent (if not previously delivered) to hold under the Indemnity Escrow Agreement and the balance shall be delivered to Seller at Closing.

 

(ii) A copy of resolutions duly adopted by Buyer’s Manager authorizing and approving Buyer’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the secretary or manager of Buyer, as true and in full force as of the Closing Date.

 

(iii) A certificate executed by an authorized member, manager, or officer of Buyer certifying that, as of the Closing Date, all of the representations and warranties of Buyer are true and correct in all material respects and that each and every covenant and agreement to be performed by Buyer prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv) A certificate of existence in good standing for Buyer from the State of its formation dated within fourteen (14) days of the Closing Date.

 

 

(v)  Assignment and assumption of the Assigned Contracts , together with consents to the assignments where noted on Schedule 3 (d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Buyer.

 

(vi) The Indemnity Escrow Agreement executed by Buyer and Buyer’s Affiliates as named therein.

 

(b)  At Closing, Seller shall deliver to Buyer (or to Escrow Agent on behalf of Buyer), at Seller’s sole cost and expense, such bills of sale, endorsements, assignments, and other good and sufficient instruments of conveyance and transfer as provided for herein, and any other instruments in form and substance reasonably acceptable to Buyer as shall be necessary to vest effective in Buyer all right, title, and interest in and to the Assets, free and clear of all Encumbrances (except as provided herein), including without limitation, the following:

 

(i) Duly executed Bill of Sale with respect to the Assets in the form and substance of Exhibit “A” attached hereto and incorporated herein by this reference (the “Bill of Sale”), and an Assignment of Trademarks, URLs and Telephone Numbers.

 

(ii) Fully and properly executed transfers of MCOs, titles, or such instruments of title and other documents required to properly transfer Seller’ right, title and interest in and to the New Vehicles and Used Vehicles , and any other titled Assets to Buyer.

 

(iii) A certificate executed by an authorized member, manager, or officer of Seller certifying that, as of the Closing Date, all of the representations and warranties of Seller are true and correct in all material respects and that each and every covenant and agreement to be performed by such Seller prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv) A certificate of existence in good standing for Seller from the State of its formation dated within fourteen (14) days of the Closing Date.

 

(v)  A copy of resolutions duly adopted by each of Seller and LMP for the Necessary Seller Approvals authorizing and approving such Seller’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the manager of each Seller, as true and in full force as of the Closing Date.

 

(vi) A Clearance Letter from the Florida Department of Revenue showing that Seller owes no amounts.

 

(vii) Seller shall deliver customary payoff and termination letters from the holders of any liens or Encumbrances reflecting the payoff amount required for the release of liens on the Closing.

 

(viii) Seller will provide evidence of Seller’ voluntary termination of its dealer agreements with the Manufacturer as it relates to the Dealership.

 

 

(ix) The License Use Agreement executed by Seller attached as Exhibit “B”.

 

(x)  The Indemnity Escrow Agreement executed by Seller, and Seller’s Affiliates as named therein, and the escrow agent thereunder.

 

(xi) Assignment and assumption of the Assigned Contracts, together with consents to the assignments where noted on Schedule 3(d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Seller.

 

Such other instruments and documents as Buyer may reasonably consider necessary to effect the transactions contemplated herein

 

5.  Seller’s Representations & Warranties. Seller and LMP jointly, and severally , represent and warrant to Buyer on the Effective Date and the Closing Date as follows:

 

(a)  Formation. Seller is duly formed, validly existing, and in good standing under the laws of its organization and is duly qualified to transact business in the state in which the Dealership is located.

 

(b)  Authority. Subject to the Necessary Seller Approvals, Seller (i) has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby, and (ii) has taken all entity action necessary to authorize its execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereunder. For purposes of this Agreement, the “Necessary Seller Approvals” shall mean the consent of: Seller’s Board of Managers; LMP Automotive Holdings, LLC as the majority member of Seller; the Board of Directors of LMP; and the shareholders of LMP required to approve and authorize this Agreement and Transaction.

 

(c)  Conflicts. The execution and delivery of this Agreement by Seller and the performance by Seller of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any nation or government, or any state, regional, local or other political subdivision thereof (“Governmental Authority”).

 

(d)  Assets. Seller is the owner of, and has good and valid title to, all of the Assets except any liens described on Schedule 5(d) (which shall be satisfied at Closing). To the Knowledge of Seller, there are no special assessments against any of the Assets. All of the fixtures and equipment used in the Business are in operating condition, ordinary wear and tear excepted, and are adequate and suitable for the purposes for which they are presently being used.

 

 

(e)  Financial Statements. The Seller has delivered to Buyer the Financial Statements. Subject to the adjustment for Inventory as set for in Section 2 above, the Financial Statements are materially true, complete, and accurate. “Financial Statements” means Seller’s internally prepared, un-audited adjusted dealer income statements reflecting zero debt on the Dealership, substantially in the form required by Manufacturer, for the fiscal year ended December 31, 2021, and each of the completed months thereafter through the Closing Date, The Financial Statements are prepared in accordance with recognized industry standards and the Manufacturer’s guidelines and fairly present the financial condition of Seller’s business and the results of operations of Seller’s business, in all material respects, at the dates and for the periods covered by such financial statements and related materials. In connection with this representation of Seller regarding its financial statements, Buyer acknowledges Seller’s financial statements include expenses for a management fee to LMP, and exclude interest on Seller’s capital loan.

 

(f) Compliance. The Dealership complies in all material respects with, and the Dealership has been conducted in all material respects in compliance with, all laws, rules and regulations (including all worker safety, applicable zoning and other laws, ordinances, regulations and building codes (collectively, the “Laws”). The Seller is not under investigation with respect to violations of any such Laws. To Seller’s Knowledge, Seller is not in material default of any its material agreements with third parties.

 

(g)  Litigation. There are no actions, suits, claims, investigations or other proceedings pending with respect to Seller, and, to the Seller’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Seller that could affect the ability to convey the Purchased Assets conveyed pursuant to this Agreement.

 

(h)  Good Title. Seller is the owner of, and has, good and marketable title to all of the Assets (including intangible assets such as websites and domain names); all of the Assets will be transferred to Buyer free and clear of all liens and encumbrances; and all of the Assets to be sold under the terms of this Agreement are, or on the Closing Date will be, in good operating condition and repair. Seller did not obtain any funds under the Paycheck Protection Program.

 

(i) Licenses. Except as would not have a materially adverse effect on the Buyer, Seller has maintained all licenses and permits and has filed all registrations, reports and other documents required by local, state and federal authorities and regulating bodies in connection with the Dealership. None of the permits or licenses used by Seller in the operation of the Dealership has been terminated or revoked and to Seller’s Knowledge, no violations have been recorded regarding such licenses or permits, and no proceeding is pending or threatened seeking the revocation or limitation of any of them.

 

(j) Assigned Leases and Contracts. To the Knowledge of Seller, each of the Assigned Leases and material contracts are valid, legal and binding and is in full force and effect. Seller has made all payments due under each of the Assigned Leases and any material contract through the date hereof. To the Knowledge of Seller, no event or condition has occurred and is continuing which, with or without the lapse of time or giving of notice, constitutes, or would ripen into or become, a breach of or default under an Assigned Leases and assigned material contract by the Seller, or, to the Seller’s Knowledge, by any other party thereto, in any term, covenant or condition of each Assigned Lease and assigned material contract.

 

 

(k)  Intellectual Property Rights. Except as set forth in Section 2c above, the Seller either owns or is otherwise entitled to use (under a license or otherwise) all Proprietary Rights necessary to conduct the business of the Business as presently conducted. For purposes of this Agreement, “Proprietary Rights” means all (i) trademarks, service marks, trade dress, logos, trade names and entity names and registrations and applications for registration thereof, (ii) copyrights and registrations and applications for registration thereof, (iii) mask works and registrations and applications for registration thereof, (iv) computer software data and documentation, (v) trade secrets and confidential business information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information), (vi) other proprietary rights or any intellectual property, and (vii) copies and tangible embodiments thereof (in whatever form or medium).

 

(l) Taxes. Seller has duly filed all foreign, federal, state, county and local income, excise, sales, property, withholding, unemployment, social security, franchise, license, information returns and other tax returns and reports, or appropriate and permitted extensions thereto, required to be filed by it with respect to the Dealership or the Real Property. Each such return is true, correct, and complete in all material respects, and Seller has paid all taxes, assessments, amounts, interest and penalties due to applicable Governmental Authority. Seller has no liability for any taxes, assessments, amounts, interest or penalties of any nature whatsoever other than those for which Seller has created sufficient reserves or made other adequate provision. No governmental authority is now asserting or threatening to assert any deficiency or assessment for additional taxes, interest, penalties or fines with respect to Seller, or the Dealership.

 

(m) Employment Matters. Except as set forth on Schedule 5(m), Seller has no oral or written collective bargaining or organized labor contracts, employment agreements, bonus, deferred compensation, profit sharing, welfare or health benefit, or retirement plan or arrangement, whether or not legally binding, nor is Seller currently paying any pension, deferred compensation or retirement allowance to anyone. Seller has no contract for the future employment of any person. Seller is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them or amounts required to be reimbursed to such employees. Seller has no knowledge that any Seller employee intends to terminate his or her employment. Seller has complied in all material respects with the applicable requirements for its employee medical and benefit plans, if any, as set forth in the Internal Revenue Code of 1986, as amended (the “Code”), and the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder (“ERISA”), including Section 4980B of the Code (as well as its predecessor provision, Section 162(k) of the Code) and Sections 601 through 608, inclusive, of ERISA, which provisions are hereinafter referred to collectively as “COBRA”. There have not been any unfair labor practice complaints or work stoppages (within the past thirty-six (36) months) and there are no present or, to Seller’s Knowledge, threatened walkout, strike or labor disturbance involving any of Seller’s employees working primarily at the Dealership. The Seller has taken the required actions under Applicable Law to confirm the identity and work status eligibility of its Employees. The Seller has not received any written notice of any inspection or investigation relating to their alleged noncompliance with or violation of IRCA, nor has or otherwise penalized for any failure to comply with IRCA or for any willful violation of any other immigration law, rule or regulation.

 

 

(n)  Brokers. Except for Broker, no broker, investment banker, financial advisor, consultant or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with this Agreement based upon arrangements made by or on behalf of the Seller. The sole broker’s commission or finder’s fee payable as a result of the closing of the transaction contemplated herein shall be paid by Seller at Closing to Bank of America Securities, Inc. (“Broker”) in accordance with the separate agreements between Seller and Broker. No person other than Broker is entitled to any commission in connection with the transactions contemplated by this Agreement.

 

(o)  Prohibited Persons. Neither Seller nor any members of the Seller: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

(p)  Solvency. Immediately after the Closing Date, and after giving effect to the sale of the Purchased Assets and the other transactions contemplated by this Agreement, Seller will be solvent (in that both the fair value of its assets will not be less than the sum of its known debts, provided however, immediately after Closing, the Seller and LMP anticipate paying such known debts in full and dissolving the Seller.

 

(q)  In-house Warranty Work. Except as provided in Schedule 5(q) , Seller is not obligated to provide to any customers or third parties any coupons, pre-paid parts, accessories, services or in-house warranties which may result in a liability of the same to Buyer after the Closing. Except as reflected in Schedule 5(q), Seller has no agreement or understanding with any customer or third party to return or refund any portions of any amounts paid for any extended warranty or service contract or otherwise pay any amounts to customers who elect not to or do not make claims under such contracts, but if such an obligation exists, Seller shall pay all amounts owed.

 

(r) Option Agreements. Except with respect to the Manufacturer and as provided on Schedule 5(r), there are no options, right of first refusals, or similar agreements in connection with the Assets.

 

As used in this Agreement, the phrases “Knowledge of Seller” or “Seller’s Knowledge” means the actual knowledge of Seller’s officers, the Seller’s LLC company managers, the officers of LMP, the Board of Directors of LMP, the Dealership’s general managers, Sam Tawfik, and Richard Aldahan.

 

6.  Buyer’s Warranties & Representations. Buyer represents and warrants to Seller on the Effective Date and the Closing Date as follows:

 

(a)  Formation. Buyer is a Florida limited liability company. Buyer will be an entity duly formed and validly existing with authority to conduct business in Florida on the Closing Date.

 

 

(b)  Authority. Buyer has the requisite legal power and authority to execute and deliver this Agreement, to perform the obligations of Buyer hereunder, and to consummate the transactions contemplated hereby, all of which have been duly authorized and approved by all necessary entity action and for which no consent of any person or governmental authority is required for Buyer which has not been obtained (except as provided for in this Agreement for consents to be obtained and filings made before Closing), and no filing with or other notification to any person or governmental authority is required which has not been properly completed (except as provided for in this Agreement for consents to be obtained and filings made before Closing). This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms, subject only to the application of debtor relief laws and general equitable principles.

 

(c)  Brokers or Finders. The Buyer has not incurred and will not incur any liability to any broker, finder or agent for any fees, commissions or similar compensation with respect to the transactions contemplated herein.

 

(d)  Conflicts. The execution and delivery of this Agreement by Buyer and the performance by Buyer of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not (i) contravene any provision of its organizational or governing documents, (ii) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any Governmental Authority or of any arbitration award which is either applicable to, binding upon or enforceable against it, (iii) require the consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except the HSR filing, or as otherwise provided for herein.

 

(e)  Litigation. There are no actions, suits, claims, investigations or other proceedings pending and, to the Buyer’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Buyer that could affect the Seller’s ability to convey the Purchased Assets to Buyer conveyed pursuant to this Agreement.

 

(f) [Reserved].

 

(g)  Sufficiency of Funds.

 

(i) Buyer or its affiliates have sufficient funds or access to sufficient funds to make payment of the Purchase Price and consummate the transactions contemplated herein;

 

(ii) Immediately after the Closing Date, and after giving effect to the purchase of the Purchased Assets and the other transactions contemplated by this Agreement, Buyer (i) will be solvent (in that both the fair value of its assets will not be less than the sum of its debts and that the present fair saleable value of its assets will not be less than the amount required to pay its debts as they become absolute and matured); (ii) will have adequate capital with which to engage in its business; and (iii) will not have incurred debts beyond its ability to pay as they become absolute and matured.

 

(h)  Prohibited Persons. Neither Buyer nor any members or principals of the Buyer: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

 

7.  Conditions to Obligations of Buyer. The obligation of Buyer to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or express written waiver by Buyer) prior to or at the Closing, of all of the following conditions:

 

(a)  Manufacturer Approval. Manufacturer has issued to Buyer a new Dealership Sales and Service Agreement, or commitment therefor, on terms and conditions acceptable to Buyer in its sole discretion, approving Buyer’s board of directors and other designees, permitting Buyer to operate the Dealership at the Real Property as Seller has operated it in the past.

 

(b)  HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction .

 

(c)  Seller has obtained a Clearance letter from Florida Dept. of Revenue showing that no amounts are owing.

 

(d)  Closing Statement. Buyer has agreed to the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(e)  Consents. Seller has obtained all consents required for the Lease Assignments and contract assignments being assumed by Buyer.

 

(f) Seller Performance. Seller has performed in all material respects all of its obligations hereunder to be performed prior to or at Closing and each of Seller’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(g)  Purchase of the Premises. The consummation of the transactions contemplated under the Real Estate Purchase and Sale Agreement shall occur simultaneously.

 

(h)  No Litigation. No proceeding with Seller as a Party, shall be pending before any court or other Governmental Authority, wherein an unfavorable injunction, judgement, order, decree, ruling, or charge would (1) restrain, enjoin, prohibit or prevent consummation of this transaction or any other transaction contemplated by this Agreement, or (2) cause the transaction to be rescinded following consummation.

 

(i) Buyer shall have received all of the documents, certificates and resolutions described in Section 4.2(b), in form and substance reasonably satisfactory to Purchaser.

 

(j) Adverse Change. Since the Effective Date, no Material Adverse Change shall have occurred. “Material Adverse Change” means any change, event or occurrence that individually or in the aggregate (taking into account all other such changes, events or occurrences) has had, or would be reasonably likely to have, a material adverse effect upon the assets, business, operations, financial condition or prospects of Seller, but shall not include any event or circumstance or change arising out of or attributable to general economic or political conditions, conditions generally affecting the motor vehicle industry (including supply chain problems), or the COVID-19 pandemic.

 

 

(k)  Necessary Seller Approvals. Seller has obtained the Necessary Seller Approvals.

 

(l) Termination of Options and Minority Rights. Each of the agreements listed on Schedule 5(r) shall have been either terminated, waived, or Seller shall have been released and received a waiver from such minority member from any option or similar obligations thereunder, and the minority member and its principal(s) shall have agreed to a noncompetition provision of at least two (2) years with a seventy-five (75) mile radius of the Dealership.

 

(m) Agreements Not To Compete. Seller, LMP, Sam Tawfik and Richard Aldahan, as officers of LMP, shall have executed an Agreement Not to Compete substantially in the form attached hereto as Exhibit D.

 

8.  Conditions to Seller’s Obligations. Seller’s obligation to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or written waiver by Seller), prior to or at the Closing, of all of the following conditions:

 

(a)  Purchase Price Payment. Buyer paid Seller the aggregate Purchase Price for the Assets.

 

(b)  Buyer Performance. Buyer performed in all material respects all of its obligations hereunder to be performed prior to or at Closing each of Buyer’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(c)  Purchase of the Premises. The consummation of the transactions contemplated under the Real Estate Purchase and Sale Agreement shall occur simultaneously.

 

(d)  HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction.

 

(e)  Necessary Seller Approvals. The receipt, of the Necessary Seller Approvals.

 

(f) Closing Statement. Buyer executed and delivered the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(g)  Seller shall have received all of the documents, certificates and resolutions described in Section 4.2(a), in form and substance reasonably satisfactory to Seller.

 

 

9.  Pre- & Post-Closing Covenants.

 

(a)  Pre-Closing. Promptly upon the execution of this Agreement, Seller shall notify the Manufacturer regarding the transactions contemplated by this Agreement. Buyer (or its affiliate) shall promptly apply to the Manufacturer for the issuance of a contractual right to operate an automobile dealership upon the Premises. The Parties shall use commercially reasonable best efforts to obtain Manufacturer approval as soon as possible. Seller shall promptly provide the requisite information, documents and access necessary to prepare for Closing and ensure a seamless operational transfer of the Assets. Effective as of the Closing, Seller shall terminate its Dealer Sales and Service Agreements with the Manufacturer relative to the Dealership location and execute and deliver all of the Manufacturer’s customary documents and promptly remove Manufacturer’s intellectual property from all publicly visible Excluded Assets in every form and medium (i.e., retained internet sites, signs, etc.). Seller shall fully cooperate with Buyer, and take all reasonable steps to assist Buyer, in Buyer’s efforts to obtain its own similar Dealer Sales and Service Agreements with the Manufacturer. All actions to be taken at the Closing pursuant to this Agreement will be deemed to have occurred simultaneously, and no action, document or transaction will be deemed to have been taken, delivered or effected, until all such actions, documents and transactions have been taken, delivered or effected. Promptly after the Closing, Seller shall transfer to Buyer certificates of title or origin for all vehicles and all of its registration lists, owner follow-up lists and service files on hand as of the Closing, provided that such lists and files relate to the Assets. If Seller presents assets for purchase post-Closing that would have otherwise been Assets, then such assets may be purchased at a mutually agreed to price or otherwise retained by Seller. Buyer is not required to submit an offer. This does not apply to in-transit vehicles from the Manufacturer. Buyer shall retain and safeguard the pre-Closing customer paper deal jackets retained by Buyer in accordance with law, and, until Buyer destroys such records in accordance with company policy in effect from time to time, Seller shall have reasonable access to Seller’s pre-Closing customer records (e.g., paper deal jackets) and any records related to Assigned Contracts after the Closing for any legitimate purpose, such as (by way of example and not by limitation) for resolving customer inquiries.

 

(b)  Dealership Operations Pending Closing. Pending Closing, Seller shall continue to operate the Dealership in substantially the same manner as it has been operated by Seller in the past and Seller shall: (i) use commercially reasonable efforts to maintain working relationships with all suppliers, customers, employees and others having contact with the Dealership and bring all payables current as of the Closing Date; (ii) maintain current insurance policies in full force and effect; (iii) exercise reasonable diligence in safeguarding and maintaining the confidentiality of all books, reports and data pertaining to the Dealership, including use its commercially reasonable best efforts to ensure that Seller’s sales and service records remain adequately protected; failure to do so is a material breach of this Agreement; (iv) not grant increases in salary, pay or other employment related benefits to any officers or employees of the Dealership, except in the ordinary course of business; (v) not conduct any liquidation, close-out or going out of business sale or, (vi) attempt to order and restock inventory sold; (vii) intentionally omitted; (viii) not enter into any contract or agreement which is not terminable without penalty on not more than 30 days’ notice and which provides for payment by the Dealership, except those in the ordinary course of business; and (ix) not take or permit any action which would result in Seller’s representations or warranties becoming incorrect or untrue in any material respect.

 

 

(c)  Employee Matters.

 

(i) Seller shall terminate or take all appropriate action in connection with pension, profit sharing and health and welfare benefit plans, if any, that are applicable to Seller and/or Seller’s employees (“Plans”), prior to or at Closing, so that Buyer will have no responsibility or liability or obligation of any nature under Plans to any person, firm or corporation whatsoever. If any applicable law provides that Buyer is or will be liable for any liability or obligation under any Plan despite Seller’s contractual liability for such liability or obligation hereunder, and Seller fail to pay or perform such liability or obligation within five (5) days after Buyer’s written demand, then in addition to any other remedies available, such amounts may be set off from time to time from any amount Buyer (or its affiliate) owes Seller (or its affiliate). Seller (including all employers, whether or not incorporated, that are treated together with Seller as a single employer within the meaning of Section 414 of the Code or, where appropriate, Seller’s health and welfare benefit plans that are “group health plans” will retain liability for and will pay when due all benefits (including all liabilities and obligations for or arising from any “COBRA” health care continuation coverage required to be provided under Section 4980B of the Code and Sections 601-608 of ERISA) attributable as of the Closing Date to “covered employees” or “qualified beneficiaries” entitled to “continuation coverage” (as those terms are defined in Section 4980B of the Code) regardless of when services were rendered or expenses incurred. By Closing, Seller shall pay all wages due Seller’s employees as of the Closing Date. At Closing, Buyer shall assume Seller’s obligations for payment of unused vacation, paid time off, holiday pay, sick pay and other similar compensation accrued to those employees of Seller which are retained by Buyer, and Buyer shall receive a credit against the Purchase Price for such amounts. Buyer shall be responsible to satisfy such amounts to the former employees of Seller to the extent of the credit received provided, however Buyer shall not be liable for any such amounts that are disputed or in excess of the credit given at the Closing and Seller and LMP shall defend and hold Buyer harmless for such disputed amounts. Seller shall terminate its employees on the Closing Date. Provided the Closing takes place, Buyer may, but is not obligated to, employ Seller’s employees who are willing to accept the offered employment with Buyer, and Buyer will give due regard to such employees’ benefits from their prior employer, so long as such employees meet all eligibility requirements, including any probationary period; provided that, notwithstanding anything in this Agreement to the contrary, Buyer shall hire on an at-will basis enough of Seller’s employees (each selected by Buyer in its sole and absolute discretion) so that Buyer and Seller will be in compliance with the provisions of the Workers Adjustment and Retraining Notification Act, 29 U.S.C. §2101-2109, if applicable. The foregoing does not grant to any of Seller’s individual employees a right of employment by Buyer.

 

(ii) Subject to the approval and cooperation of Seller’s applicable health insurance plans and policies, Buyer shall have the right to cause Seller to continue its health insurance plans (including the related ancillary insurance benefits such as dental, vision, short term disability) for the employees of Seller that Buyer retains for the month of the Closing and the month following the Closing. In such case, the applicable premiums shall be prorated based upon the number of days allocable to Seller prior to Closing Date and Buyer following the Closing Date.

 

 

(d)  Seller’s Receivables. Following the Closing, upon the receipt of accounts receivable of the Seller, Buyer will remit checks thereof directly to the Seller at its principal office on a weekly basis. Buyer shall accept payment of Seller’s accounts receivable and Manufacturer warranty payments arising out of the operation of the Dealership prior to Closing for a period of 180 days. Buyer shall turn over to Seller on the last day of each calendar month during said period all of the monies it received as cleared funds so accepted on said accounts receivable during the previous calendar month. Buyer is not obligated to accept payments of such accounts receivable after such 180-day period, but if Buyer does so then Buyer will promptly pay the same over to Seller. Buyer is only obligated to accept payment during such period, not to attempt to enforce payment. No adjustment will be made in any of such accounts receivable without Seller’s permission. Seller reserves the right to pursue legal remedies of collection upon default by the customer with respect to any receivables owed to Seller. Buyer shall have no obligation to pursue or otherwise actively work to collect any of such Seller receivables or Manufacturer warranty payments. At the end of said 180-day period, Buyer shall no longer be obligated to accept payments of such accounts receivable. If Buyer does accept payment of any of Seller’s accounts receivable after expiration of the 180-day period, Buyer shall hold same in trust for Seller and promptly pay same over to Seller. It is understood that Buyer’s responsibility, so far as such collection is concerned, is only to accept monies paid on Seller’s accounts receivable and shall not include any obligation to ascertain the correct amount of any accounts receivable. Upon reasonable notice to Buyer, Buyer shall provide Seller with access to records relating to Seller’s operation of the Dealership, but Seller and LMP agree that they shall have no right to utilize the employees of Buyer to provide accounting or other bookkeeping services to themselves.

 

(e)  Manufacturer Payments. The Parties shall use their commercially reasonable efforts to ensure that (i) amounts due to Seller but collected by Buyer (e.g., Manufacturer receivables, Manufacturer credits relating to items such as warranty claims or other claims, credit card payments, etc.) arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Seller promptly; (ii) amounts due to Buyer but collected by Seller arising out of or in connection with the operation of the Dealership on or following the Closing or as provided in this Agreement will be paid over to Buyer promptly; (iii) amounts paid by Seller but owed by Buyer as a result of Manufacturer erroneously billing Seller for items arising out of or in connection with the operation of the Dealership following Closing will be paid over to Seller promptly; and (iv) amounts paid by Buyer but owed by Seller (e.g., any finance contract chargebacks, insurance (e.g. credit life, accident and health, extended warranty, etc.) chargebacks, or repossessions and all rebates to Seller’s customers of premiums for credit life insurance, credit accident and health insurance, mechanical insurance coverage and GAP insurance) as a result of Manufacturer or any third party erroneously billing Buyer for items arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Buyer promptly. This section survives Closing indefinitely. If there are vehicles in-transit on the Closing Date (whether or not they are physically present) that have not been funded by Seller’s floor plan lender and the Parties do not know whether they will be paid for by Buyer’s floor plan lender or Seller’s floor plan lender, then the Parties may separately schedule those vehicles, Buyer will buy them but not pay for them, and, if such vehicles are funded by Seller’s floor plan lender, then Seller shall notify Buyer and Buyer shall promptly pay Seller’s floor plan lender such amounts. Any other payments related to such vehicles misdirected by the Manufacturer will be redistributed as contemplated by this Section 9(e). Buyer with any needed cooperation of Seller shall undertake all accounting, bookkeeping and reconciliation as necessary under this section and shall make all payments as necessary. On a monthly basis, Buyer shall present Seller with a reconciliation and the amount owed by Buyer or by Seller (if any) and the parties shall pay any amounts owing to the other within ten (10) business days.

 

 

(f) Dealing and Non-Circumvent. In order to induce Buyer to enter into this Agreement, during the period commencing on the Effective Date until the Closing Date (or earlier termination of this Agreement), Seller and LMP will not and will cause each of its stockholders, managers, directors, officers, agents, advisors and other representatives to not, directly or indirectly, through affiliates or otherwise, (i) enter into any sale, lease, pledge or other disposition of all or any significant part of the purchased Assets, or any agreement for the sale of any capital stock or other equity securities of Seller, or agreement relating to a merger, consolidation or other acquisition proposal involving Seller or its member with any other party, or any transaction similar to the foregoing in format or purpose, with any party other than Purchaser; or (ii) enter into any transaction (A) with a total cumulative and aggregate value in excess of One Hundred Fifty Thousand Dollars ($150,000), or (B) outside of the ordinary course of business of Seller consistent with past practice in contemplation of any transaction described above with any party other than Buyer; or (iii) encourage, solicit, provide information to or negotiate with any party, other than Buyer, to do any of the foregoing.

 

(g)  License Use. The Parties acknowledge that the State of Florida Department of Highway Safety and Motor Vehicles, Division of Motor Vehicles may be experiencing delays in the processing of motor vehicle dealer licenses. The Seller hereby agrees that the Buyer may use the Seller’s licenses required under the laws of the State of Florida to operate the Business for a period of not more than 30 days after the Closing Date (and the Seller shall maintain all such licenses during such period). As a material inducement to the Seller to permit the Purchaser’s use of such licenses: (a) Buyer agrees that it will use best efforts to obtain its own licenses with the State of Florida as promptly as practicable , and (b) Buyer hereby agrees to indemnify and hold Seller, its respective affiliates, and their respective owners, managers, members, controlling persons, directors, officers, and employees (collectively, the “Seller Indemnified Parties”) harmless from and against any cost or liability, including reasonable attorneys’ fees, incurred by any Seller Indemnified Party in connection with or as a result of the Buyer’s use of the Seller’s licenses. Upon the Effective Date, the Seller will provide Buyer with a copy of the Seller’s DMV and other state and county regulatory licenses. Buyer agrees to add the Seller to its general liability insurance coverage as an additional insured during the term of the License Use Agreement. To effect the Purchaser’s use of the Seller’s license as contemplated hereby, the Seller agrees at the Closing to enter into a license use and indemnification agreement sufficient to satisfy applicable law for such license use in the form of Exhibit B hereto (the “License Use Agreement”).

 

10. Access.

 

(a)  Upon receipt of Manufacturer’s approval to transfer the Dealership to Buyer, Buyer may set up Buyer’s computer system parallel to Seller’s computer systems for the Dealership, provided, however, Seller’s systems shall not be turned off until the Closing Date. Following the Effective Date, Buyer’s Information Technology personnel may access the Dealership for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve) to facilitate any applicable transfer purchased Assets.

 

(b)  Seller shall permit representatives of Buyer to have access to and to examine the records, properties and assets associated with the Assets and the Real Property, provided, however, all access hereunder shall be subject to this Agreement and the provisions of the Real Property Purchase Agreement. Any access by Buyer shall be at times determined by Sellers and Buyer and in a manner so as not to interfere with the normal business operations of Seller.

 

 

(c)  Buyer’s Information Technology personnel may have certain access to the Dealership (no login access) for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve). Following receipt of Manufacturer approval for transfer of the Dealership to Buyer, Seller shall contact its providers for DMS, CRM, and any other third-party data servicers, and execute all necessary documents to effectuate the transfer all intangible data Assets to Buyer’s DMS system on the Closing Date. Buyer shall be solely responsible for any and all costs associated with effectuating the transfer of all intangible data Assets to Buyers DMS system.

 

11. Default & Termination. Notwithstanding any provision in this Section 11 to the contrary, no Party may terminate this Agreement due to the breach of another Party if the first Party is in material breach of this Agreement.

 

(a)  Termination. The Parties may exercise their respective rights of termination by the delivery of written notice of termination to the other Party at any time prior to the completion of the Closing. This Agreement and the transactions contemplated hereby may be terminated on or before the Closing Date as follows:

 

(i) By the mutual written agreement of the Parties;

 

(ii) By Buyer if a breach of any material provision of this Agreement has been committed by Seller and such breach has not been either (A) cured within ten (10) days after written notice to Seller, or (B) waived in writing by Buyer;

 

(iii) By Seller if a breach of any material provision of this Agreement has been committed by Buyer and such breach has not been either (A) cured within ten (10) days after written notice to Buyer, or (B) waived in writing by Seller;

 

(iv) By Seller if Seller’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(v)  By Buyer if Buyer’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(vi) By Seller or Buyer, if the Closing has not occurred by the Closing Date Deadline.

 

Unless this Agreement is terminated by Seller under the provisions of Section 11(a)(iii), Buyer shall be entitled to receive a return of the Deposit upon a termination.

 

(b)  Buyer’s Default. If prior to Closing Buyer breaches this Agreement and fails to cure as provided above, then Seller’s sole right and exclusive remedy will be to terminate this Agreement by giving written notice thereof to Buyer and then Seller may take the Deposit as liquidated damages in full settlement of all claims, remedies or causes of actions against Buyer under this Agreement, including the remedy of specific performance and other forms of equitable relief. It is impossible to estimate more precisely the damages which might be suffered by Seller upon Buyer’s default. Seller’s retention of the Deposit is intended not as a penalty, but as full liquidated damages.

 

 

(c)  Seller Default. If prior to Closing, if Seller breaches this Agreement and fails to cure as provided above, then Buyer may exercise any and all rights and remedies available to it at law or in equity, including (i) an action in equity against Seller (pursuant to which Buyer is not obligated to post a bond or prove special damages or irreparable injury) for the specific performance by Seller of the terms and provisions of this Agreement and disgorgement of profits from the date of the Closing Date Deadline until receipt of any applicable remedy at law or equity in the Buyer’s favor; and (ii) the right to terminate this Agreement by giving written notice of such termination to Seller and receive a full refund of the Deposit without prejudice to any of Buyer’s rights or remedies including an action for direct damages, but not consequential damages.

 

(d)  Cross Default. Any default by the Real Property Purchaser under the Real Property Purchase and Sale Agreement shall be a default by Buyer under this Agreement and a default by Buyer under this Agreement shall be a default by the Real Property Purchaser under the Real Property Purchase and Sale Agreement. Any default by the Real Property Seller under the Real Property Purchase and Sale Agreement shall be a default by Seller under this Agreement and a default by Seller under this Agreement shall be a default by the Real Property Seller under the Real Property Purchase and Sale Agreement. The terms of the Real Property Purchase and Sale Agreement are incorporated herein by reference.

 

(e)  Breakup Fee. If this Agreement is terminated by any Party hereto due to the failure of Seller or LMP to obtain the Necessary Seller Approvals prior to the Closing Date Deadline, regardless of the reason for such failure, then Buyer shall be entitled to receive from Seller and LMP, and Seller and LMP shall be obligated to pay Buyer within 3 business days following receipt of an invoice from Buyer, a fee (the “Breakup Fee”) equal to the reasonable costs and fees expended or incurred by Buyer and Cape Coral AFL RE, LLC for the transactions contemplated herein and under the Real Property Purchase and Sale Agreement.

 

12. Survival and Indemnification.

 

(a)  Representations and Warranties Survive Closing. It is the express intention and agreement of the parties that all representations and warranties made by the parties in this Agreement shall survive the Closing for a period of twenty-four (24) months. Thereafter, all representations and warranties made by the parties in this Agreement shall terminate and no action may be had on them (excepting claims made during the Survival Period may continue to be pursued). All covenants and agreements of the parties shall survive the Closing in accordance with their terms.

 

(b)  Buyer’s Obligation to Indemnify. Following the Closing, Buyer will indemnify and hold Seller, its affiliates, managers, member, and officers harmless from and against any and all liability, loss, damage, or deficiency (collectively, “Losses”) resulting from: (i) any misrepresentation, breach of warranty, or non-fulfillment of any agreement on the part of Buyer under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument furnished or to be furnished by Buyer in connection with the transactions contemplated by this Agreement; (iii) the ownership, management and operations of the Dealership or the Assets from and after the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Buyer; (v) the Assigned Contracts, and; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity.

 

 

(c)  Seller’s Obligation to Indemnify. Following the Closing, Seller and LMP (jointly and severally with Seller) will indemnify and hold Buyer, its affiliates, managers, members, officers, and directors harmless from and against any and all Losses resulting from: (i) any misrepresentation, default, breach of warranty or non-fulfillment of any agreement on the part of Seller or LMP under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument or to be furnished by Seller or LMP in connection with the transactions contemplated by this Agreement; (iii) the ownership, management, and operations of the Dealership or the Assets prior to the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Seller; (v) the Excluded Liabilities; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity, and (vii) any audits, including warranty audits, for sales, service and business operations of Seller arising or accruing prior the Closing Date.

 

(d)  Limitations. No claim may be made for indemnification in respect of a breach of a representation or warranty unless notice of such claim is delivered in writing prior to the expiration of the survival of the representation or warranty that is the subject of such claim. Each party shall have the right to bring an action against the other on the breach of a representation or warranty hereunder, but only if the party bringing the action for breach gives written notice of such breach to the other party before the end of the Survival Period. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Buyer’s Group Global Losses exceeds $50,000; provided, however, that the foregoing limitation shall not apply to any Loss with respect to intentional misconduct or fraud. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(b) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Seller’s Group Global Losses exceeds $50,000. Notwithstanding anything in this Agreement to the contrary, the Seller and LMP shall not have any liability whatsoever under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss of any amount by which the Losses payable by the Seller and LMP shall, individually or in the aggregate, exceed Seller’s Group Global Cap of $2,500,000. For the purposes of applying the foregoing liability limitations, amounts paid by Seller, LMP and Seller’s affiliates shall be aggregated. Notwithstanding anything in this Agreement to the contrary, the foregoing limitation on liability shall not apply to any Losses arising or resulting from intentional misconduct or fraud of the Seller, or LMP or their affiliates. For purposes of this Agreement, “Buyer’s Group Global Losses” shall mean the cumulative Losses of Buyer and Buyer’s affiliates who purchase any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Seller or Seller’s affiliates. For purposes of this Agreement, “Seller’s Group Global Losses” shall mean the cumulative Losses of Seller and Seller’s affiliates who sell any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Buyer or Buyer’s affiliates. For purposes of this Agreement, “Seller’s Group Global Cap” shall mean the cumulative liability of LMP, Seller and Seller’s affiliates for Losses to Buyer and Buyer’s affiliates (excluding Losses arising or resulting from intentional misconduct or fraud) under their Dealership Asset Purchase Agreements for any of the Subject LMP Dealerships.

 

 

(e)  Matters Involving Third Parties.

 

(i) To be entitled to such indemnification, the party claiming indemnification (“Indemnified Party”) will give the other party (“Indemnifying Party”) prompt written notice of the assertion by a third party of any claim with respect to which the Indemnified Party might bring a claim for indemnification hereunder (“Third Party Claim”), and in all events must have supplied such notice to the Indemnifying Party within the applicable period for defense of such claim; provided, however, that the failure to give prompt written notice as prescribed above will not preclude indemnification so long as such failure does not prejudice the Indemnifying Party’s defense against such claim.

 

(ii) The Indemnifying Party will be entitled, at its own expense, to participate in the defense of such action, proceeding or claim, and, if (i) the action, proceeding or claim involved seeks (and continues to seek) solely monetary damages, environmental remediation or relates to any liability for taxes, (ii) the Indemnifying Party confirms, in writing, its obligation hereunder to indemnify and hold harmless the Indemnified Party with respect to such damages in their entirety, and (iii) the Indemnifying Party, in the reasonable judgment of the Indemnified Party, will be able to satisfy any adverse judgment as a result of its indemnification obligation with respect to such action, proceeding or claim, then the Indemnifying Party will be entitled to assume and control such defense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval will not be unreasonably withheld or delayed. The Indemnified Party will be entitled to participate therein after such assumption, the costs of such participation following such assumption to be at its own expense. Upon assuming such defense, the Indemnifying Party will have full rights to enter into any monetary compromise or settlement which is dispositive of the matters involved; provided, that such settlement is paid in full by the Indemnifying Party and will not have any direct or indirect adverse effect upon the Indemnified Party.

 

(iii) With respect to any action, proceeding or claim as to which (i) the Indemnifying Party does not have the right to assume the defense or (ii) the Indemnifying Party will not have exercised its right to assume the defense, the Indemnified Party will assume and control the defense of and contest such action, proceeding or claim with counsel chosen by it and approved by the Indemnifying Party, which approval will not be unreasonably withheld or delayed. The Indemnifying Party will be entitled to participate in the defense of such action, proceeding or claim, the cost of such participation to be at its own expense. The Indemnifying Party will be obligated to pay the reasonable attorneys’ fees and expenses of the Indemnified Party. The Indemnified Party may not settle such action, proceeding or claim without the prior written consent of the Indemnifying Party, which will not be unreasonably withheld.

 

 

(iv) Both the Indemnifying Party and the Indemnified Party will cooperate fully with one another in connection with the defense, compromise or settlement of any such action, proceeding or claim, including, without limitation, by making available to the other all pertinent information and witnesses within its control.

 

(f) Procedures for Indemnification - Other Claims. A claim for indemnification relating to a breach of a warranty or representation for any matter not involving a Third-Party Claim must be asserted by notice to the Indemnifying Party by the Indemnified Party on or before the expiration of the Survival Period. The Indemnifying Party will have the obligation to eliminate or mitigate its indemnification obligation under this Agreement by affecting a cure of any breach of this Agreement not related to any Third-Party Claim (including any document, certificate, instrument or agreement to be executed and/or delivered under this Agreement), if susceptible of cure, within thirty (30) days after any such notice. The Indemnifying Party will pay any uncured indemnification claim and any claim that is not capable of cure that is undisputed promptly after such notice and failure to cure. The Indemnifying Party will promptly pay any other indemnification claim upon resolution by an agreement with the Indemnified Party or upon a final, non-appealable order of a court of competent jurisdiction. All claims for indemnification as to a breach of a representation or warranty will survive as to any claim or demand made on or before the expiration of the Survival Period until such claim or demand is fully paid or otherwise resolved by the parties hereto in writing or by a court of competent jurisdiction.

 

(g)  Seller’s Security for Indemnification Claims. To secure the indemnity obligations of Seller and LMP under this Section 12. for claims made by Buyer and claims of Buyer’s affiliates for indemnification under their Dealership Asset Purchase Agreements and underlying Real Estate Purchase Agreements with Seller’s affiliates within 24 months of the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith; the Parties and their affiliates who sell and purchase any of the Subject LMP Dealerships shall enter into an Indemnity Escrow Agreement with Greenberg Traurig, PA, as the “Indemnity Escrow Agent”. Seller and Seller’s affiliates shall fund the Holdback Amount under the Indemnity Escrow Agreement in full upon the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith. The form of the Indemnity Escrow Agreement is attached as Exhibit C .

 

(i) Subject to the limitations set forth in this Section 12, all payments by the Seller or LMP to Buyer pursuant to this Section 12 shall be satisfied first from the Indemnity Escrow Funds (to the extent the Indemnity Escrow Funds are sufficient, and then, subject to the limitations herein, the Seller and or LMP shall pay any excess due hereunder directly) and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Indemnity Escrow Agent to make the applicable payments.

 

(ii) On the first year anniversary following the Closing Date, an amount equal to 50% of the total Indemnity Escrow Funds originally funded to the Indemnity Escrow Agent minus the amount of claims paid by the Indemnity Escrow Agent, and minus the aggregate outstanding amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date shall be released to the Seller, LMP and or Seller’s affiliates on such date (if such number is positive), and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

 

(iii) On the second year anniversary following the Closing Date, an amount equal to the balance of the Indemnity Escrow Funds minus the aggregate outstanding amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date (any such claim, a “Remaining Indemnity Claim”) shall be released to the Seller, LMP and or Seller’s affiliates on such date, and the Buyer and the Seller shall execute the necessary documents instructing the Escrow Agent to make the applicable payment. Following the final resolution of any Remaining Indemnity Claim, if the Indemnity Escrow Funds exceed the aggregate amount, if any, which any of Buyer or Buyer’s affiliates has claimed under Section 12 or under any of their Dealership Asset Purchase Agreements with respect to Remaining Indemnity Claims that remain unresolved, the excess Indemnity Escrow Funds shall be released to the Seller, Seller’s affiliates or LMP on such date, and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

13. Miscellaneous.

 

(a)  Transaction & Enforcement Costs. Each Party shall bear its own costs and expenses, including legal and accounting fees, incurred in connection with this Agreement and the transactions contemplated hereby, and shall pay such costs and expenses whether or not the Closing occurs. Notwithstanding the foregoing, in the event of any litigation between or among the Parties to enforce any provisions or rights hereunder, the unsuccessful Party, as determined by a final judgment, shall pay to the successful Party therein all costs and expenses of such Party (and any of such Party’s agents, such as attorneys or accountants) expressly including, but not limited to, reasonable attorneys’ fees and court costs incurred therein by such successful Party, which costs, expenses and attorneys’ fees will be included in and as a part of any judgment rendered in such litigation.

 

(b)  Confidentiality. Each Party and its representatives shall hold in strict confidence all data and information obtained in connection with this transaction, including all financial and other information of or related to the Dealership and the terms of this Agreement, and shall not directly or indirectly at any time reveal, report, publish, disclose or transfer to any person any of such data and information or utilize any of such data or information for any purpose; provided, however, each Party may disclose information to Manufacturer and legal, tax, accounting advisors, lenders and potential lenders and other parties deemed by a Party to be necessary or appropriate in connection with the transactions described herein, provided that such persons acknowledge that they too are bound by the confidentiality provisions contained herein. Notwithstanding any contrary provision herein, Buyer may notify governmental organizations (e.g., the Security and Exchange Commission, the FTC, if applicable) of this Agreement and the transactions contemplated hereby by filing an unredacted copy of this Agreement. The Parties may not otherwise announce the transactions contemplated hereby which may identify the Seller, the Buyer, and the Dealership to the general public without the consent of the other. Further, notwithstanding any contrary provision herein, Buyer may apply for licenses, tax applications, qualifications, and fictitious name registrations required for its business operations and the parties may disclose this transaction to obtain the necessary consents related to contract assumptions and the Necessary Seller Approvals.

 

 

(c)  Relationship & Authority. Each Party is acting as an independent contractor. Each Party is responsible for all taxes relating to its operation, including payroll taxes for its employees and nothing in this Agreement is intended to create a relationship, express or implied, of employer-employee or partnership or joint venture between or among any Party. Each individual executing this Agreement on behalf of a Party individually represents and warrants that such Party is validly existing, that such execution has been duly authorized, that the terms of the instrument will be binding upon the Party, and that such individual is duly authorized to execute this Agreement on behalf of such Party.

 

(d)  Notices. All notices and other communications provided for hereunder will be in writing, unless otherwise specified, and will be deemed to have been duly given if delivered personally, via e-mail, via Federal Express or other nationally recognized courier, to the addresses on the signature pages hereof or at such other addresses as a Party may designate from time to time in writing. Notices will be effective upon receipt by the Party or refusal to accept delivery. Notices on behalf of either Party may be given by the attorneys representing such Party.

 

(e)  Integration; Amendments & Time. This Agreement contains the entire understanding between the Parties and supersede any prior understanding and/or oral agreements between them respecting the subject matter of this Agreement. Any modification or amendment of this Agreement will be in writing and executed by Seller and Buyer. Time is of the essence in this Agreement. If the last day to perform under a provision of this Agreement or the final day of any period (e.g., the Closing Date Deadline) falls on a Saturday, Sunday, or legal holiday, then such performance deadline or period is automatically extended through the next day which is not a Saturday, Sunday, or legal holiday.

 

(f) Interpretation & Administration. The words “include”, “includes”, “included”, “including” and “such as” do not limit the preceding words or terms and are deemed to be followed by the words “without limitation”. The Parties have a duty of good faith and fair dealing. All captions and headings contained in this Agreement are for convenience of reference only and will not be construed to limit or extend the terms or conditions of this Agreement. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. All terms defined in this Agreement in their singular or plural forms, have correlative meanings when used herein in their plural or singular forms, respectively. Each Party and its counsel have reviewed this Agreement and the rule of construction that any ambiguities are to be resolved against the drafter will not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits hereto. Except as expressly provided herein (e.g., “industry standard depreciation” or “as reflected on Manufacturer’s statement”), all accounting matters required or contemplated by this Agreement will be in accordance with generally accepted accounting principles. This Agreement may be executed in one or more counterparts and delivered by e-mail or facsimile, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement will be binding upon and inure to the benefit of the Parties, their successors and assigns. Buyer may assign or otherwise transfer all of Buyer’s rights, obligations and benefits hereunder to any entity owned or controlled by, or under common control with, Buyer without Seller’s consent. The invalidity of any one or more phrases, sentences, clauses, paragraphs, or sections of this Agreement will not affect the remaining portions of this Agreement. No failure or delay by any Party to enforce any right specified herein will operate as a waiver of such right, nor will any single partial exercise of a right preclude any further or later enforcement of the right. A business day shall mean Monday through Friday, excluding federal and national holidays or State of Florida holidays. The term “material” shall mean an amount which would involve an expenditure, liability or damages in excess of $50,000.00.

 

 

(g)  Further Assurances. At the request of Seller and at Seller’s expense, Buyer shall cooperate in the preparation by Seller of all filings to be made by Seller with the Securities and Exchange Commission including any periodic filings and any filing with respect to a registered offering of its securities by Seller and the closing of the offering registered thereby. Upon a party’s request at any time, the other party shall take any act, including executing and delivering any document, necessary or advisable to otherwise to carry out the provisions of this Agreement.

 

(h)  Escrow Agent. Escrow Agent’s duties pursuant to this Agreement are purely ministerial in nature, and the Escrow Agent shall incur no liability whatsoever except for its willful misconduct or gross negligence, so long as the Escrow Agent is acting in good faith. The Parties hereby release the Escrow Agent from any liability for any error of judgment or for any act done or omitted to be done by the Escrow Agent in the good faith performance of its duties hereunder and do each hereby indemnify the Escrow Agent against, and shall hold, save, and defend the Escrow Agent harmless from, any costs, liabilities, and expenses incurred by the Escrow Agent in serving as Escrow Agent hereunder and in faithfully discharging its duties and obligations hereunder. The Escrow Agent is acting as a stakeholder only with respect to the Deposit. If there is any dispute as to whether the Escrow Agent is obligated to deliver the Deposit or as to whom the Deposit is to be delivered, the Escrow Agent may refuse to make any delivery and may continue to hold the Deposit until receipt by the Escrow Agent of an authorization in writing, signed by Seller and Buyer, directing the disposition of the Deposit, or, in the absence of such written authorization, the Escrow Agent may hold the Deposit until a final non appealable determination of the rights of the Parties in an appropriate judicial proceeding. If such written authorization is not given, or a proceeding for such determination is not begun, within thirty (30) days after notice to the Escrow Agent of such dispute, the Escrow Agent may bring an appropriate action or proceeding for leave to deposit the Deposit in a court of competent jurisdiction pending such determination. The Escrow Agent shall be reimbursed for all costs and expenses of such action or proceeding, including reasonable attorneys’ fees and disbursements, by the Party determined not to be entitled to the Deposit. Upon making delivery of the Deposit in any of the manners herein provided, the Escrow Agent shall have no further liability or obligation hereunder. The Escrow Agent shall execute the Escrow Receipt attached hereto in order to confirm that it has received the Deposit and is holding the same on deposit in accordance with the provisions hereof.

 

(i) Applicable Law & Venue. This Agreement will be governed by and construed and enforced in accordance with the internal laws and judicial decisions of the State of Florida without regard to conflict of law provisions thereof. Any litigation, action or proceeding arising out of or relating to this Agreement will be held exclusively in any state or Federal court in Broward County, Florida. Each Party waives any objection which it might have now or hereafter to the venue of any such litigation, action or proceeding, submits to the sole and exclusive jurisdiction of any such court and waives any claim or defense of inconvenient forum. Each Party consents to service of process at such Party’s address as provided herein (and updated in writing from time to time).

 

(j) Waiver of Jury Trial. Each party hereto hereby acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.

 

(k)  Real Estate Agreement. The execution and delivery of this Agreement is contingent upon the concurrent and simultaneous execution and delivery of the Real Property Purchase and Sale Agreement.

 

[Remainder of Page Blank]

 

 

IN WITNESS WHEREOF, the Parties executed and delivered this Agreement as of the Effective Date.

 

LMP Cape Coral KOCC, LLC, a Florida limited liability company			Cape Coral AFL K, LLC, a Florida limited liability company
By:	/s/ Sam Tawfik		By:	/s/ Ali Ahmed
	Sam Tawfik, Authorized Signatory			Name: Ali Ahmed
LMP Automotive Holdings, Inc, a Delaware corporation				Title: Manager Notice Address for Buyer: Attn: Ali Ahmed 5875 NW 163rd Street Suite 104 Miami Lakes, FL 33014 Email: [email protected]
By:	/s/ Sam Tawfik
	Sam Tawfik, CEO
Notice Address for Seller and LMP:   LMP Cape Coral KOCC, LLC 500 East Broward Boulevard, Suite 1900 Fort Lauderdale, FL 33394 Attn: Sam Tawfik, Chief Executive Officer   With a Copy To:   Greenberg Traurig, PA Attn: Bruce C. Rosetto 777 S. Flagler Rive Suite 300 East West Palm Beach, FL 33401 Email: [email protected]			With a copy to:   Greenspoon Marder LLP Attn: David Weisman 200 East Broward Blvd. Suite 1800 Fort Lauderdale, FL 33301 Email: [email protected] Greenspoon Marder LLP Attn: Greg Blodig 200 East Broward Blvd. Suite 1800 Fort Lauderdale, FL 33301 Email: [email protected]

 

 

Schedule 1(b)(ii) – Purchase Price for PreOwned, Service and Rental Vehicles

  

 

 

 

Schedule 2 – List of Assets

 

Inventory of new vehicles, used vehicles, parts and accessories will be inventoried and attached at or near Closing.

 

Seller’s FF&E is listed on Schedule 2(b).

 

 

Schedule 2(b) – FF&E

  

 

 

 

Schedule 3(d) – Assigned Contracts

 

 

 

 

 

Schedule 5(d) – Liens

 

 

 

 

Schedule 5(q) – In-House Warranties

 

 

 

 

 

 

Schedule 5(m) – Employment Matters

 

 

 

 

 

 

 

ESCROW RECEIPT

 

Dealership Asset Purchase Agreement

 

Escrow Agent agrees to be bound by the Dealership Asset Purchase Agreement and acknowledges receipt of:

 

☐

A.

Executed copies of the Dealership Asset Purchase Agreement on August __, 2022;

 

☐

B.

Deposit in the amount of $__________ on August __, 2022.

 

Escrow Agent:
By:
Name & Title:

 

Escrow Agent acknowledges having reviewed this Dealership Asset Purchase Agreement and will be bound by those provisions.

 

 

37

Exhibit 10.3

 

Execution Version

 

DEALERSHIP ASSET PURCHASE AGREEMENT

 

This DEALERSHIP ASSET PURCHASE AGREEMENT (this “Agreement”) is effective as of August 5, 2022 (the “Effective Date”), by and among Hope AWV K, LLC, a Florida limited liability company (“Buyer”), LMP Beckley HK, LLC, a West Virginia limited liability company (the “Seller”), a wholly owned subsidiary of LMP Beckley 002 Holdings, LLC, a West Virginia limited liability company, and LMP Automotive Holdings, Inc., a Delaware corporation (“LMP”), and together with Seller and Buyer, each a “Party” and, collectively, the “Parties”).

 

RECITALS:

 

WHEREAS, Seller owns, controls and operates a Kia automotive dealership (the “Dealership”), and all ancillary business related thereto (the “Business”) located at 111 Midtown Ave, Mt Hope, WV 25880 (the “Premises”) under agreements with Kia Motors America, Inc. (the “Manufacturer”);

 

WHEREAS, LMP owns and operates through various affiliates, six (6) automotive dealerships, including the Seller, (the collectively, the “Subject LMP Dealerships”), and certain real property (the “Real Property”), which are the subject of that certain letter of intent with an affiliate of Buyer, dated June 11, 2022, for the purchase of substantially all of the assets of the Subject LMP Dealerships (the “LOI”), including the sale and transfer substantially all of the Dealership’s assets (as more particularly described in Section 2 below, but excluding the Excluded Assets defined below, collectively, the “Assets”);

 

WHEREAS, the LOI sets forth that there is no due diligence period with respect to the Dealership and the Assets once this Agreement is executed;

 

WHEREAS, the Buyer desires to purchase the Assets and Seller desires to sell and transfer the Assets on the terms and conditions hereinafter set forth (the “Transaction”).

 

NOW, THEREFORE, in consideration for the mutual promises contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged by each Party, the Parties as follows:

 

1. Closing Date and Purchase Price.

 

(a) Closing Date. Subject to the terms and conditions set forth in this Agreement, the consummation of the transactions contemplated hereby (the “Closing”) shall take place no later than within (15) business days of the receipt of the latest to occur of: (i) all applicable manufacturers’ approvals in accordance with Section 7(a) in connection with the purchase and sale of all of the Subject LMP Dealerships and (ii) all required entity approvals from the boards of directors and shareholders of LMP, and the manager of sellers of the Subject LMP Dealerships as well as the manager of the sellers of the real estate properties underlying the LMP Dealerships being sold are obtained in connection with authorizing the contemplated Transaction and the transactions involving the Subject LMP Dealerships. The date of the Closing is referred to herein as the “Closing Date.” The Closing shall be deemed to be effective as of the opening of business on the Closing Date. The “Closing Date Deadline” means October 31, 2022; provided, however, that if, as of the fifteenth (15^th) day prior to such date, all of the manufacturers’ approvals have not been obtained, or if all applicable waiting periods pursuant to the HSR Act have not expired or terminated, the Closing Date Deadline will automatically be extended for thirty (30) days, time being of the essence. It is agreed that the closings for all of the Subject LMP Dealerships may occur in separated groups with the same manufacturer and/or by geographical regions. It is acknowledged that the actual Closing and funding for this transaction make take 1 or 2 business days.

 

 

(b) Purchase Price & Broker. The purchase price for the Assets described in Section 2(e) below is $4,188,344 in connection with the purchase of goodwill and FF&E (the “Goodwill Purchase Price”) plus additional purchase price for parts, work in progress (“WIP”), and New Vehicles, Used Vehicles and Pre-Owned Vehicles (collectively, the “Vehicle Inventories”) calculated as described below (the “Additional Purchase Price,” with the Goodwill Purchase Price, collectively the “Purchase Price”). The parties agree that the FF&E portion of the Goodwill Purchase Price includes the price for Seller’s vehicles used in its business operations which are listed in the FF&E schedules to its financial statements. The Additional Purchase Price will be calculated as follows:

 

(i) The purchase price for Dealership’s new, undamaged and untitled 2021, 2022 and subsequent year Manufacturer vehicles, including demonstrators and loaners, (the “New Vehicles”) is an amount equal to the actual Manufacturer’s original invoice; plus Seller’s direct out-of-pocket cost of dealer-installed optional parts and accessories theretofore installed upon New Vehicles; less all applicable dealer hold-backs paid to Seller; less fifty percent of all credits, and allowances for order assistance, floor plan assistance, Kia retailer support, and dealer advertising support; less “prep” expenses for New Vehicles which have not yet been prepared for sale; less the cost to repair any damage and less the replacement cost of any parts or equipment removed. Notwithstanding the foregoing, the purchase price of New Vehicles shall not include or be increased for rust proofing, undercoating, scotch-guarding, non-Manufacturer alarm systems, interrupt systems, theft protection devices and similar dealer additions. The purchase price of New Vehicles with more than 600 miles but less than 4,000 miles will be reduced by $0.60 per mile. New Vehicles with 4,000 or more miles will be valued as a Used Vehicle (defined below). For purposes of this Agreement, a vehicle will be considered damaged if it has more than six hundred and fifty dollars ($650.00) of repairs that are needed or previously performed on the vehicle.

 

(ii) The purchase price for pre-owned, company (other than those scheduled as FF&E), service, and rental vehicles (the “Pre-Owned Vehicles” or “Used Vehicles”) shall be priced for each such vehicle at the lower of: (i) the pricing of a New Vehicle set forth above, or (ii) MMR adjusted as per CR rating, as set forth on Schedule 1(b)(ii) hereto.

 

(iii) Buyer shall purchase all vehicles other than the New Vehicles in Seller’s vehicle inventory at CR based MMR (collectively, the “Used Vehicles”; provided, however, if the purchase price for a Pre-owned Vehicle or Used Vehicle cannot be agreed upon, such vehicle shall be retained by Seller and be an Excluded Asset and provided further that Buyer shall have no obligation to purchase any damaged vehicle or vehicle that has salvage status, a branded title, or was in an accident.

 

(iv) The purchase price for all obsolete parts shall be equal to 50% of Seller’s cost of such obsolete parts with a cap of $10,000 and non-obsolete parts inventory shall be equal to manufacturer cost (less all applicable rebates and discounts). For purposes of clarity, any obsolete parts in excess of $10,000 shall be transferred to Buyer at Closing. Obsolete parts means (i) any of new OEM parts not listed in any of the manufacturer’s most recent price books; (ii) any vehicle parts or accessories that, at Closing, are not returnable to the supplier from whom they were originally purchased for a full refund less any normal restocking charge; or (iii) any vehicle part or accessory that, as of the Closing Date, has been in Seller’s parts inventory over 365 days.

 

 

(c) Earnest Money Deposit. Within three (3) business days after the Effective date Buyer shall deliver to Escrow Agent $209,417.20 (five percent of the Goodwill Purchase Price) as earnest money (the “Deposit”) to be held in trust by Greenberg Traurig, PA, as Escrow Agent for and on behalf of the Parties pursuant to this Agreement. On the Closing Date, if the Closing occurs, the Deposit will be applied to the Purchase Price. The Deposit is non-refundable except if (i) Manufacturer fails to approve the Transaction; or (ii) as per Sections 11(a)(i), (ii), (iv), (v) or (vi).

 

(d) Hart-Scott-Rodino Act. Filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) may be required. If filing or notice or other action is required under the HSR Act with respect to the transactions outlined herein, then Buyer shall effect such filing or notice and Buyer and Seller shall each pay for 50% of the filing fees required by the HSR Act . Buyer and Seller shall each be responsible for their own attorney fees incurred to effect such filing. Seller shall cooperate fully with Buyer in said action and promptly provide all requisite information.

 

2. Dealership Assets. Subject to the terms and conditions contained in this Agreement, upon the consummation of the transactions contemplated by this Agreement (the “Closing”, and the date thereof, the “Closing Date”), Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Assets as set forth on Schedule 2 and as more generally described below in this Section 2. A mutually agreed to form of Bill of Sale, attached as Exhibit A hereto, executed and delivered by the Parties on the Closing Date (the “Bill of Sale”) will contain a list of all of the Assets sold to Buyer as set forth on Schedule 2.

 

(a) Vehicles. Subject to Section 1:

 

(i) Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s New Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date.

 

(ii) Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s Used Vehicles and Pre-Owned Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date (but subject to the provisions of Section 1 (b) (iii)). Prior to Closing, Seller shall (i) disclose to Buyer any and all facts known to Seller concerning each Used Vehicle and Pre-Owned Vehicle that Seller would be legally obligated to disclose to a retail purchaser of a Used Vehicle including, but not limited to, known damage, known usage history, frame and flood damage, salvage status, open recalls, and warranty eligibility; (ii) provide Buyer with legal odometer statements for each Used and Pre-Owned Vehicle; and (iii) provide free and clear title for each of the Used Vehicles and Pre-Owned Vehicles. At least 10 days prior to Closing, Seller shall provide Buyer with its then current Used Vehicle and Pre-Owned vehicle inventory along with Seller’s asking price for each such vehicle.

 

 

(b) Parts; Accessories & Other Inventories.

 

(i) Inventory & Returnable. A physical inventory of Seller’s parts and accessories will be taken in the presence of a representative of Buyer and Seller by an inventory service chosen by Buyer and reasonably acceptable to Seller, the cost of which will be borne by the Buyer and Seller splitting the cost on a 50/50 basis (the “Inventory”). The Inventory will classify parts and accessories as “returnable” or “non-returnable”. The terms “returnable parts” and “returnable accessories” means only those new undamaged replacement parts and new undamaged accessories for Manufacturer vehicles which are listed (coded) in the latest current Master Parts Price List Suggested List Prices and Dealer Prices (or other applicable similar Manufacturer price lists, with supplements or the equivalent in effect as of the Inventory date, the “Master Price List”), as returnable to the Manufacturer at not less than the purchase price reflected in the Master Price List and are within the limits of returnable parts established by the Manufacturer from time to time. Buyer shall purchase from Seller, and Seller shall sell to Buyer, all of Seller’s returnable parts and returnable accessories for an amount equal to the price listed in the Master Price List (less all applicable rebates and discounts). At Closing the total Parts and Miscellaneous Inventory that are in their original packaging, current and returnable and with sales in the 12 months prior to closing for an amount equal to the Manufacturer prices as reflected in the most recent pricing catalogs less all discounts and allowances. Seller will assign Sellers’ parts return rights to Buyer at Closing.

 

(ii) Nonreturnable. All parts and accessories not coded as returnable in the Master Price List are “nonreturnable” and shall be considered an obsolete part. The purchase price for the nonreturnable parts and accessories, non-Manufacturer, “jobber” or “NPN” parts and accessories will be considered as and sold as obsolete parts pursuant to Section 1 (b)(iv).

 

(iii) Return Rights, etc. Upon Closing, Seller will be deemed to have automatically assigned, and Seller shall assign to Buyer, Seller’s parts return rights without any further action (but Seller shall take any further action requested by Buyer or required by the Manufacturer to implement such assignment of rights). At the request of Buyer, Seller shall use its best efforts to assist Buyer in effecting any parts return offered by the Manufacturer (including, if necessary, applying for parts return in Seller’s name), and Seller shall promptly pay over to Buyer any monies received from the Manufacturer related thereto. Buyer may deduct from the consideration to be paid to Seller at the Closing Seller’s parts account outstanding balance with the Manufacturer and to pay such balance directly to the Manufacturer for Seller’s account. Buyer is not obligated to purchase old, opened, obsolete, superseded, incomplete, or damaged parts or accessories or any parts, accessories or sheet metal with no sales in the twelve (12) months prior to Closing. Buyer will not be obligated to purchase more than one year’s supply of any part or accessory (based on trailing one-year historical sales). Miscellaneous Supplies shall be purchased as provided for in subsection (d) below. The purchase price for all other parts not addressed in this Section or Section 1 will equal the value thereof as mutually agreed between Buyer and Seller provided, however, if the purchase price for such assets cannot be agreed upon, such assets shall be retained by Seller and be an Excluded Asset. If any parts and accessories or other inventories or goods that Buyer is not obligated to purchase hereunder are not removed from the Real Property within ten (10) days after the Closing Date, such property will automatically become Assets transferred to Buyer pursuant to the Bill of Sale without additional consideration.

 

 

(c) Intellectual Property. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s telephone and data numbers, website addresses and domain names (owned or registered by or on behalf of the Dealership, ), e-mail addresses, classified telephone and internet advertising, prospect data, customer sales, lease, finance and service records (both hard copy and electronic format (including deal jackets), for no additional cost to Buyer), Seller’s workman’s compensation and unemployment rating in the State of West Virginia, all lawfully transferable licenses and permits of the Dealership or Seller, Dealership Intellectual Property (defined below), leasehold improvements and fixtures, unused internal and customer repair order forms, customer lists and marketing materials and catalogues, retail buyer’s order forms, office and shop supplies, shop reference manuals, parts reference catalogs, all books and records necessary for the continued operation of the Dealership (including training and promotional materials, employee records of employees hired by Buyer, P.O. boxes, third party warranties in Seller’s favor and all licenses and rights to use all software ( other than Vision AST software and other than DMS systems not assumed by Buyer) on or used in connection with any personal computer or other computing device used in connection with the Dealership, etc.), parts sales tickets, unused purchase order forms and all other forms and Seller’s goodwill and going concern value relating to the Dealership. “Dealership Intellectual Property” means any rights or ownership of the Dealership or Seller to all (i) patents, patent applications, patent disclosures and improvements, (ii) trademarks, trade, service marks, trade dress, and logos (excluding trade names, service marks, trade dress and logos, (iii) copyrights and registrations and applications for registration thereof, (iv) computer software, data and documentation, (v) trade secrets; and (vi) social media, directory assistance, reputation management and e-commerce sites and accounts (including E-Bay, Facebook, Instagram, Twitter, yelp!, Dealer Rater, Edmunds and Google programs).

 

(d) Other Assets. Gas, oil, grease, nuts and bolts (“Miscellaneous Supplies”) shall be purchased by Buyer with the value thereof being equal to the Dealership’s cost of such items (established by invoice or such other documentation reasonably requested by Buyer), less any incentives received, or rebates received with respect thereto. Work in Process shall be purchased by Buyer as provided for in Section 3 (c).

 

(e) Buyer agrees to buy all of Seller’s body shop inventories of unopened and not expired containers of paint (base and tints), quantities of paint in spray booths and machinery that can be accurately determined, new and unused dry supplies, and new and unused sheet metal, if any (“Body Shop Inventories”). The purchase price for Body Shop Inventories shall be Seller’s cost in such inventories.

 

(f)   Excluded Assets & Name License. Notwithstanding anything in this Agreement to the contrary, the following assets are not being sold pursuant to this Agreement: (i) all cash and cash equivalents, wherever located and in whatever form (unless “petty cash” is noted on the Closing Memorandum or Closing Statement); (ii) promissory notes and other evidences of indebtedness; (iii) all insurance policies; (iv) accounts receivable; (v) any claims or causes of action of Seller against third parties; (vi) tax credits and claims for tax refunds; (vii) securities, voting or otherwise in any entity; (viii) any rights in connection with and any assets of any employee benefit plan of Seller; (ix) the minute books and capital stock records of Seller, (x) all employment contracts, relating to any employees of Seller or Seller’s operations, (xi) any contract to which Seller is a party that is not an Assigned Contract, and (xii) any vehicle or parts that are not included in the purchased Assets; (collectively, the “Excluded Assets”). Seller shall remove all vehicles that are Excluded Assets from the Premises within ten (10) days following the Closing.

 

 

(g) Excluded Liabilities. Notwithstanding anything contained herein to the contrary, Buyer shall not assume, or cause to be assumed, or be deemed to have assumed or caused to have assumed or be liable or responsible for any liabilities or obligations (whether known or unknown, fixed, absolute, matured, unmatured, accrued or contingent, now existing or arising after the date hereof) of Seller or any of its Affiliates (other than the liabilities expressly assumed in this Agreement) including, but not limited to, the following obligations and liabilities of Seller and its Affiliates (such obligations and liabilities not assumed hereunder, the “Excluded Liabilities”):

 

(i) any liabilities or obligations relating to any current or former employee or independent contractor of Seller or any of its Affiliates (whether or not such employee is hired by Buyer following the Closing) and labor matters relating to any such current or former employee or independent contractor including any liabilities or obligations arising out of or relating to any employee-related matter, employee-related payment obligation, collective bargaining contract, labor negotiation, severance cost, pension plan, profit sharing plan, deferred compensation plan, accrued holiday benefit, accrued bonus, salary, bonus plan, phantom stock award, stock option or purchase plan, employment contract, consulting contract, any Employee Benefit Plan or any entitlements arising as a result of or in connection with the consummation of the Purchase;

 

(ii) any Taxes, interest, and penalties (i) attributable to the purchased Assets or the Business with respect to any Pre-Closing Period or (ii) imposed on Seller or any of its Affiliates;

 

(iii) any liabilities or obligations related to the Excluded Assets;

 

(iv) any liabilities or obligations arising out of or relating to indebtedness of Seller or any of its Affiliates;

 

(v) any liabilities or obligations arising out of or relating to any contract which is not an Assigned Contract;

 

(vi) other than in connection with the operation of the Business after the Closing Date, any liabilities or obligations arising out of operations prior to the Closing Date, and /or relating to any real property owned, leased, occupied or controlled by Seller;

 

(vii)   any Seller Transaction Expenses; and

 

(viii)   any liabilities or obligations arising from product liability claims for which the injury or loss giving rise thereto (not just the delivery of the notice of such claims) occurs prior to the Closing Date, including specifically all losses caused by or arising out of any alleged design, manufacture, assembly, installation, use or sale of any products manufactured by the Factory or the Business prior to the Closing Date, whether the commencement of any related litigation, arbitration, investigation, proceeding or claim occurs before or after the Closing Date Seller shall satisfy all Excluded Liabilities that are an obligation of Seller promptly when due.

 

 

3. Prorations & Assigned Contracts.

 

(a) Prepaid Expenses & Prorations. Current personal property taxes will be prorated and adjusted between Buyer and Seller as of the Closing Date based on the number of days in the year to which the taxes relate that each party occupies the property. If current tax bills are unavailable on the Closing Date, the prior year’s tax bills will be used for proration purposes and taxes will be re-prorated between Buyer and Seller when the current year’s tax bills are received. Any amounts owed by either Party with respect to such re-proration will be paid to the other Party within ten (10) days after the determination of such re-proration. All operating expenses (other than prepaid expenses) of the Dealership for the month of Closing will be prorated and adjusted between Buyer and Seller as of the Closing Date based on a thirty (30) day month. To the extent possible, the Parties shall cause all utility meters to be read on the day preceding the Closing Date. Unless the applicable utility terminates billing on Seller’s account as of the Closing Date, utilities payable by Seller (or Buyer, to the extent applicable) for the Dealership Property, including, but not limited to electricity, gas and water and sewer, shall be prorated as of the Closing Date. The adjustment therefor shall be made on the basis of the most recently historical data/billings therefor and shall be subject to final reconciliation based upon actual charges after receipt of a final bill by Seller. Buyer will make its own arrangements for any security deposits required by any utility company, and Seller will cancel and retain any deposits previously furnished. Buyer shall receive a credit against the Purchase Price for the cost to replace any missing special tools required by the Manufacturer’s most recent catalogue.

 

(b) Within sixty (60) days after the Closing Date, the Parties shall make an adjustment to the Purchase Price to reflect any customary adjustments, additions and deletions necessary to properly reflect the categorization and/or amount of the Assets in accordance with this Agreement. In the event the Purchase Price is adjusted, the appropriate party shall effect a wire transfer of immediately available funds to the other party for the appropriate amount within five (5) days after the determination of the adjustment.

 

(c) Customer Deposits & Work in Process. Upon Closing, Seller shall transfer to Buyer all customer deposits for incomplete orders taken by Seller in the ordinary course of business. Seller shall retain all escheatable deposits, including but not limited to security deposit on any real property lease, if applicable. At the Closing, Seller shall furnish Buyer with a list of such deposits (including “we owes”, due bills, etc.), setting forth, as to each, the name and address of the customer, any goods or services owed to the customer and the amount of the deposit, and Seller shall deliver to Buyer all documents in Seller’s possession reflecting such deposits, we owes, due bills, etc. Seller shall credit Buyer for all we owes/due bills on the Closing Date. The Bill of Sale or Closing Statement will contain a list and description of such customer transactions (and Work in Process, as detailed below). Seller shall credit Buyer the actual cost to complete all due bills. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s pending service orders written by Seller in the ordinary course of business for an amount equal to Seller’s actual cost for parts and labor for any such orders which have been supplied by Seller which are in process at the opening of business on the Closing Date (“Work in Process”). Seller shall not receive the revenue from such Work in Process. Buyer may reject (and Seller shall retain) all Work in Process where (i) the Work in Process was not placed in the normal course of business; (ii) Seller does not possess an order signed by the customer authorizing such service, the vehicle isn’t at the Real Property on the Closing Date or such order has been open for longer than thirty (30) days prior to the Closing Date; (iii) the Work in Process does not provide for a profit to Buyer; or (iv) the Work in Process does not provide for cash or commercially reasonable credit terms on delivery of the vehicle.

 

 

(d) Assigned Contracts. As of the Closing Date, Seller shall assign, and Buyer shall assume Seller’s contractual obligations, which Buyer has agreed to assume, listed on Schedule 3(d) hereto on the Closing Date (collectively, “Assigned Contracts”). The term “Assigned Contracts” excludes obligations and liabilities arising or accruing by the Closing Date or by reason of any breach or alleged breach by Seller, regardless of when such obligation or liability is asserted. Seller shall arrange for assignment of the Assigned Contracts at Seller’s cost. Buyer is not assuming any liabilities or obligations of Seller other than the Assigned Contracts or agree to pay, discharge or perform any liabilities or obligations arising out of any breach by Seller (other than with respect to a breach by Buyer) of any Assigned Contract.

 

4. Deliveries.

 

(a) At Closing, Buyer shall deliver to Seller the following:

 

(i) the Purchase Price in immediately available funds, of which $2,500,000 (the “Holdback Amount”) shall be delivered to the Indemnity Escrow Agent (if not previously delivered) to hold under the Indemnity Escrow Agreement and the balance shall be delivered to Seller at Closing.

 

(ii) A copy of resolutions duly adopted by Buyer’s Manager authorizing and approving Buyer’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the secretary or manager of Buyer, as true and in full force as of the Closing Date.

 

(iii) A certificate executed by an authorized member, manager, or officer of Buyer certifying that, as of the Closing Date, all of the representations and warranties of Buyer are true and correct in all material respects and that each and every covenant and agreement to be performed by Buyer prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv) A certificate of existence in good standing for Buyer from the State of its formation dated within fourteen (14) days of the Closing Date.

 

 

(v) Assignment and assumption of the Assigned Contracts , together with consents to the assignments where noted on Schedule 3 (d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Buyer.

 

(vi) The Indemnity Escrow Agreement executed by Buyer and Buyer’s Affiliates as named therein.

 

(b) At Closing, Seller shall deliver to Buyer (or to Escrow Agent on behalf of Buyer), at Seller’s sole cost and expense, such bills of sale, endorsements, assignments, and other good and sufficient instruments of conveyance and transfer as provided for herein, and any other instruments in form and substance reasonably acceptable to Buyer as shall be necessary to vest effective in Buyer all right, title, and interest in and to the Assets, free and clear of all Encumbrances (except as provided herein), including without limitation, the following:

 

(i) Duly executed Bill of Sale with respect to the Assets in the form and substance of Exhibit “A” attached hereto and incorporated herein by this reference (the “Bill of Sale”), and an Assignment of Trademarks, URLs and Telephone Numbers.

 

(ii) Fully and properly executed transfers of MCOs, titles, or such instruments of title and other documents required to properly transfer Seller’ right, title and interest in and to the New Vehicles and Used Vehicles , and any other titled Assets to Buyer.

 

(iii) A certificate executed by an authorized member, manager, or officer of Seller certifying that, as of the Closing Date, all of the representations and warranties of Seller are true and correct in all material respects and that each and every covenant and agreement to be performed by such Seller prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv) A certificate of existence in good standing for Seller from the State of its formation dated within fourteen (14) days of the Closing Date.

 

(v) A copy of resolutions duly adopted by each of Seller and LMP for the Necessary Seller Approvals authorizing and approving such Seller’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the manager of each Seller, as true and in full force as of the Closing Date.

 

(vi) Intentionally Omitted.

 

(vii)   Seller shall deliver customary payoff and termination letters from the holders of any liens or Encumbrances reflecting the payoff amount required for the release of liens on the Closing.

 

(viii)   Seller will provide evidence of Seller’ voluntary termination of its dealer agreements with the Manufacturer as it relates to the Dealership.

 

 

(ix) The License Use Agreement executed by Seller attached as Exhibit “B”.

 

(x) The Indemnity Escrow Agreement executed by Seller, and Seller’s Affiliates as named therein, and the escrow agent thereunder.

 

(xi) Assignment and assumption of the Assigned Contracts, together with consents to the assignments where noted on Schedule 3(d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Seller.

 

Such other instruments and documents as Buyer may reasonably consider necessary to effect the transactions contemplated herein

 

5. Seller’s Representations & Warranties. Seller and LMP jointly, and severally , represent and warrant to Buyer on the Effective Date and the Closing Date as follows:

 

(a) Formation. Seller is duly formed, validly existing, and in good standing under the laws of its organization and is duly qualified to transact business in the state in which the Dealership is located.

 

(b) Authority. Subject to the Necessary Seller Approvals, Seller (i) has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby, and (ii) has taken all entity action necessary to authorize its execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereunder. For purposes of this Agreement, the “Necessary Seller Approvals” shall mean the consent of: Seller’s Board of Managers; LMP Automotive Holdings, LLC as the majority member of Seller; the Board of Directors of LMP; and the shareholders of LMP required to approve and authorize this Agreement and Transaction.

 

(c) Conflicts. The execution and delivery of this Agreement by Seller and the performance by Seller of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any nation or government, or any state, regional, local or other political subdivision thereof (“Governmental Authority”).

 

(d) Assets. Seller is the owner of, and has good and valid title to, all of the Assets except any liens described on Schedule 5(d) (which shall be satisfied at Closing). To the Knowledge of Seller, there are no special assessments against any of the Assets. All of the fixtures and equipment used in the Business are in operating condition, ordinary wear and tear excepted, and are adequate and suitable for the purposes for which they are presently being used.

 

(e) Financial Statements. The Seller has delivered to Buyer the Financial Statements. Subject to the adjustment for Inventory as set for in Section 2 above, the Financial Statements are materially true, complete, and accurate. “Financial Statements” means Seller’s internally prepared, un-audited adjusted dealer income statements reflecting zero debt on the Dealership, substantially in the form required by Manufacturer, for the fiscal year ended December 31, 2021, and each of the completed months thereafter through the Closing Date, The Financial Statements are prepared in accordance with recognized industry standards and the Manufacturer’s guidelines and fairly present the financial condition of Seller’s business and the results of operations of Seller’s business, in all material respects, at the dates and for the periods covered by such financial statements and related materials. In connection with this representation of Seller regarding its financial statements, Buyer acknowledges Seller’s financial statements include expenses for a management fee to LMP, and exclude interest on Seller’s capital loan.

 

 

(f)   Compliance. The Dealership complies in all material respects with, and the Dealership has been conducted in all material respects in compliance with, all laws, rules and regulations (including all worker safety, applicable zoning and other laws, ordinances, regulations and building codes (collectively, the “Laws”). The Seller is not under investigation with respect to violations of any such Laws. To Seller’s Knowledge, Seller is not in material default of any its material agreements with third parties.

 

(g) Litigation. There are no actions, suits, claims, investigations or other proceedings pending with respect to Seller, and, to the Seller’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Seller that could affect the ability to convey the Purchased Assets conveyed pursuant to this Agreement.

 

(h) Good Title. Seller is the owner of, and has, good and marketable title to all of the Assets (including intangible assets such as websites and domain names); all of the Assets will be transferred to Buyer free and clear of all liens and encumbrances; and all of the Assets to be sold under the terms of this Agreement are, or on the Closing Date will be, in good operating condition and repair. Seller did not obtain any funds under the Paycheck Protection Program.

 

(i) Licenses. Except as would not have a materially adverse effect on the Buyer, Seller has maintained all licenses and permits and has filed all registrations, reports and other documents required by local, state and federal authorities and regulating bodies in connection with the Dealership. None of the permits or licenses used by Seller in the operation of the Dealership has been terminated or revoked and to Seller’s Knowledge, no violations have been recorded regarding such licenses or permits, and no proceeding is pending or threatened seeking the revocation or limitation of any of them.

 

(j) Assigned Leases and Contracts. To the Knowledge of Seller, each of the Assigned Leases and material contracts are valid, legal and binding and is in full force and effect. Seller has made all payments due under each of the Assigned Leases and any material contract through the date hereof. To the Knowledge of Seller, no event or condition has occurred and is continuing which, with or without the lapse of time or giving of notice, constitutes, or would ripen into or become, a breach of or default under an Assigned Leases and assigned material contract by the Seller, or, to the Seller’s Knowledge, by any other party thereto, in any term, covenant or condition of each Assigned Lease and assigned material contract.

 

(k) Intellectual Property Rights. Except as set forth in Section 2c above, the Seller either owns or is otherwise entitled to use (under a license or otherwise) all Proprietary Rights necessary to conduct the business of the Business as presently conducted. For purposes of this Agreement, “Proprietary Rights” means all (i) trademarks, service marks, trade dress, logos, trade names and entity names and registrations and applications for registration thereof, (ii) copyrights and registrations and applications for registration thereof, (iii) mask works and registrations and applications for registration thereof, (iv) computer software data and documentation, (v) trade secrets and confidential business information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information), (vi) other proprietary rights or any intellectual property, and (vii) copies and tangible embodiments thereof (in whatever form or medium).

 

 

(l) Taxes. Seller has duly filed all foreign, federal, state, county and local income, excise, sales, property, withholding, unemployment, social security, franchise, license, information returns and other tax returns and reports, or appropriate and permitted extensions thereto, required to be filed by it with respect to the Dealership or the Real Property. Each such return is true, correct, and complete in all material respects, and Seller has paid all taxes, assessments, amounts, interest and penalties due to applicable Governmental Authority. Seller has no liability for any taxes, assessments, amounts, interest or penalties of any nature whatsoever other than those for which Seller has created sufficient reserves or made other adequate provision. No governmental authority is now asserting or threatening to assert any deficiency or assessment for additional taxes, interest, penalties or fines with respect to Seller, or the Dealership.

 

(m) Employment Matters. Except as set forth on Schedule 5(m), Seller has no oral or written collective bargaining or organized labor contracts, employment agreements, bonus, deferred compensation, profit sharing, welfare or health benefit, or retirement plan or arrangement, whether or not legally binding, nor is Seller currently paying any pension, deferred compensation or retirement allowance to anyone. Seller has no contract for the future employment of any person. Seller is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them or amounts required to be reimbursed to such employees. Seller has no knowledge that any Seller employee intends to terminate his or her employment. Seller has complied in all material respects with the applicable requirements for its employee medical and benefit plans, if any, as set forth in the Internal Revenue Code of 1986, as amended (the “Code”), and the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder (“ERISA”), including Section 4980B of the Code (as well as its predecessor provision, Section 162(k) of the Code) and Sections 601 through 608, inclusive, of ERISA, which provisions are hereinafter referred to collectively as “COBRA”. There have not been any unfair labor practice complaints or work stoppages (within the past thirty-six (36) months) and there are no present or, to Seller’s Knowledge, threatened walkout, strike or labor disturbance involving any of Seller’s employees working primarily at the Dealership. The Seller has taken the required actions under Applicable Law to confirm the identity and work status eligibility of its Employees. The Seller has not received any written notice of any inspection or investigation relating to their alleged noncompliance with or violation of IRCA, nor has or otherwise penalized for any failure to comply with IRCA or for any willful violation of any other immigration law, rule or regulation.

 

(n) Brokers. Except for Broker, no broker, investment banker, financial advisor, consultant or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with this Agreement based upon arrangements made by or on behalf of the Seller. The sole broker’s commission or finder’s fee payable as a result of the closing of the transaction contemplated herein shall be paid by Seller at Closing to Bank of America Securities, Inc. (“Broker”) in accordance with the separate agreements between Seller and Broker. No person other than Broker is entitled to any commission in connection with the transactions contemplated by this Agreement.

 

 

(o) Prohibited Persons. Neither Seller nor any members of the Seller: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

(p) Solvency. Immediately after the Closing Date, and after giving effect to the sale of the Purchased Assets and the other transactions contemplated by this Agreement, Seller will be solvent (in that both the fair value of its assets will not be less than the sum of its known debts, provided however, immediately after Closing, the Seller and LMP anticipate paying such known debts in full and dissolving the Seller.

 

(q) In-house Warranty Work. Except as provided in Schedule 5(q) , Seller is not obligated to provide to any customers or third parties any coupons, pre-paid parts, accessories, services or in-house warranties which may result in a liability of the same to Buyer after the Closing. Except as reflected in Schedule 5(q), Seller has no agreement or understanding with any customer or third party to return or refund any portions of any amounts paid for any extended warranty or service contract or otherwise pay any amounts to customers who elect not to or do not make claims under such contracts, but if such an obligation exists, Seller shall pay all amounts owed.

 

(r)   Option Agreements. Except with respect to the Manufacturer and as provided on Schedule 5(r), there are no options, right of first refusals, or similar agreements in connection with the Assets.

 

As used in this Agreement, the phrases “Knowledge of Seller” or “Seller’s Knowledge” means the actual knowledge of Seller’s officers, the Seller’s LLC company managers, the officers of LMP, the Board of Directors of LMP, the Dealership’s general managers, Sam Tawfik, and Richard Aldahan.

 

6. Buyer’s Warranties & Representations. Buyer represents and warrants to Seller on the Effective Date and the Closing Date as follows:

 

(a) Formation. Buyer is a Florida limited liability company. Buyer will be an entity duly formed and validly existing with authority to conduct business in West Virginia on the Closing Date.

 

 

(b) Authority. Buyer has the requisite legal power and authority to execute and deliver this Agreement, to perform the obligations of Buyer hereunder, and to consummate the transactions contemplated hereby, all of which have been duly authorized and approved by all necessary entity action and for which no consent of any person or governmental authority is required for Buyer which has not been obtained (except as provided for in this Agreement for consents to be obtained and filings made before Closing), and no filing with or other notification to any person or governmental authority is required which has not been properly completed (except as provided for in this Agreement for consents to be obtained and filings made before Closing). This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms, subject only to the application of debtor relief laws and general equitable principles.

 

(c) Brokers or Finders. The Buyer has not incurred and will not incur any liability to any broker, finder or agent for any fees, commissions or similar compensation with respect to the transactions contemplated herein.

 

(d) Conflicts. The execution and delivery of this Agreement by Buyer and the performance by Buyer of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not (i) contravene any provision of its organizational or governing documents, (ii) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any Governmental Authority or of any arbitration award which is either applicable to, binding upon or enforceable against it, (iii) require the consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except the HSR filing, or as otherwise provided for herein.

 

(e) Litigation. There are no actions, suits, claims, investigations or other proceedings pending and, to the Buyer’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Buyer that could affect the Seller’s ability to convey the Purchased Assets to Buyer conveyed pursuant to this Agreement.

 

(f)   [Reserved].

 

(g) Sufficiency of Funds.

 

(i) Buyer or its affiliates have sufficient funds or access to sufficient funds to make payment of the Purchase Price and consummate the transactions contemplated herein;

 

(ii) Immediately after the Closing Date, and after giving effect to the purchase of the Purchased Assets and the other transactions contemplated by this Agreement, Buyer (i) will be solvent (in that both the fair value of its assets will not be less than the sum of its debts and that the present fair saleable value of its assets will not be less than the amount required to pay its debts as they become absolute and matured); (ii) will have adequate capital with which to engage in its business; and (iii) will not have incurred debts beyond its ability to pay as they become absolute and matured.

 

(h) Prohibited Persons. Neither Buyer nor any members or principals of the Buyer: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

 

7. Conditions to Obligations of Buyer. The obligation of Buyer to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or express written waiver by Buyer) prior to or at the Closing, of all of the following conditions:

 

(a) Manufacturer Approval. Manufacturer has issued to Buyer a new Dealership Sales and Service Agreement, or commitment therefor, on terms and conditions acceptable to Buyer in its sole discretion, approving Buyer’s board of directors and other designees, permitting Buyer to operate the Dealership at the Real Property as Seller has operated it in the past.

 

(b) HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction .

 

(c) Intentionally Omitted.

 

(d) Closing Statement. Buyer has agreed to the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(e) Consents. Seller has obtained all consents required for the Lease Assignments and contract assignments being assumed by Buyer.

 

(f)   Seller Performance. Seller has performed in all material respects all of its obligations hereunder to be performed prior to or at Closing and each of Seller’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(g) [reserved].

 

(h) No Litigation. No proceeding with Seller as a Party, shall be pending before any court or other Governmental Authority, wherein an unfavorable injunction, judgement, order, decree, ruling, or charge would (1) restrain, enjoin, prohibit or prevent consummation of this transaction or any other transaction contemplated by this Agreement, or (2) cause the transaction to be rescinded following consummation.

 

(i) Buyer shall have received all of the documents, certificates and resolutions described in Section 4.2(b), in form and substance reasonably satisfactory to Purchaser.

 

(j) Adverse Change. Since the Effective Date, no Material Adverse Change shall have occurred. “Material Adverse Change” means any change, event or occurrence that individually or in the aggregate (taking into account all other such changes, events or occurrences) has had, or would be reasonably likely to have, a material adverse effect upon the assets, business, operations, financial condition or prospects of Seller, but shall not include any event or circumstance or change arising out of or attributable to general economic or political conditions, conditions generally affecting the motor vehicle industry (including supply chain problems), or the COVID-19 pandemic.

 

 

(k) Necessary Seller Approvals. Seller has obtained the Necessary Seller Approvals.

 

(l) Termination of Options and Minority Rights. Each of the agreements listed on Schedule 5(r) shall have been either terminated, waived, or Seller shall have been released and received a waiver from such minority member from any option or similar obligations thereunder, and the minority member and its principal(s) shall have agreed to a noncompetition provision of at least two (2) years with a seventy-five (75) mile radius of the Dealership.

 

(m) Agreements Not To Compete. Seller, LMP, Sam Tawfik and Richard Aldahan, as officers of LMP, shall have executed an Agreement Not to Compete substantially in the form attached hereto as Exhibit D.

 

(n) The Purchaser’s obligation to close is further conditioned upon:

 

(i)  The receipt by Buyer or its affiliates of a fully executed Real Estate Purchase Agreement, materially in the same form as the other REPAs with The MEG Rental Corporation (“Landlord”) for the real property currently leased for the operation of the Kia store at 111 Midtown Avenue, Mt. Hope West Virginia 25880 and which is situated described in the exhibits to the Lease between Seller and Landlord (the “Leased Land”) for a purchase price not to exceed the appraised value of the Leased Land; and

 

(ii)  The simultaneous closing and conveyance of good and marketable title to the Leased Land at the same time as the closing of the Assets.

 

(iii)  Termination of the Lease upon Buyer or its affiliates purchase of the Leased Land.

 

8. Conditions to Seller’s Obligations. Seller’s obligation to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or written waiver by Seller), prior to or at the Closing, of all of the following conditions:

 

(a) Purchase Price Payment. Buyer paid Seller the aggregate Purchase Price for the Assets.

 

(b) Buyer Performance. Buyer performed in all material respects all of its obligations hereunder to be performed prior to or at Closing each of Buyer’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

 

(c) [reserved].

 

(d) HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction.

 

(e) Necessary Seller Approvals. The receipt, of the Necessary Seller Approvals.

 

(f)   Closing Statement. Buyer executed and delivered the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(g) Seller shall have received all of the documents, certificates and resolutions described in Section 4.2(a), in form and substance reasonably satisfactory to Seller.

 

(h) Rights of First Offer. Except with respect to the Manufacturer, any minority member of the Seller, or any minority member of the subsidiaries thereof (including but not limited to the dealer operators), there are no rights of first refusal or similar rights granted with respect to the Assets that would prevent the consummation of this transaction.

 

9. Pre- & Post-Closing Covenants.

 

(a) Pre-Closing. Promptly upon the execution of this Agreement, Seller shall notify the Manufacturer regarding the transactions contemplated by this Agreement. Buyer (or its affiliate) shall promptly apply to the Manufacturer for the issuance of a contractual right to operate an automobile dealership upon the Premises. The Parties shall use commercially reasonable best efforts to obtain Manufacturer approval as soon as possible. Seller shall promptly provide the requisite information, documents and access necessary to prepare for Closing and ensure a seamless operational transfer of the Assets. Effective as of the Closing, Seller shall terminate its Dealer Sales and Service Agreements with the Manufacturer relative to the Dealership location and execute and deliver all of the Manufacturer’s customary documents and promptly remove Manufacturer’s intellectual property from all publicly visible Excluded Assets in every form and medium (i.e., retained internet sites, signs, etc.). Seller shall fully cooperate with Buyer, and take all reasonable steps to assist Buyer, in Buyer’s efforts to obtain its own similar Dealer Sales and Service Agreements with the Manufacturer. All actions to be taken at the Closing pursuant to this Agreement will be deemed to have occurred simultaneously, and no action, document or transaction will be deemed to have been taken, delivered or effected, until all such actions, documents and transactions have been taken, delivered or effected. Promptly after the Closing, Seller shall transfer to Buyer certificates of title or origin for all vehicles and all of its registration lists, owner follow-up lists and service files on hand as of the Closing, provided that such lists and files relate to the Assets. If Seller presents assets for purchase post-Closing that would have otherwise been Assets, then such assets may be purchased at a mutually agreed to price or otherwise retained by Seller.  Buyer is not required to submit an offer.  This does not apply to in-transit vehicles from the Manufacturer. Buyer shall retain and safeguard the pre-Closing customer paper deal jackets retained by Buyer in accordance with law, and, until Buyer destroys such records in accordance with company policy in effect from time to time, Seller shall have reasonable access to Seller’s pre-Closing customer records (e.g., paper deal jackets) and any records related to Assigned Contracts after the Closing for any legitimate purpose, such as (by way of example and not by limitation) for resolving customer inquiries.

 

 

(b) Dealership Operations Pending Closing. Pending Closing, Seller shall continue to operate the Dealership in substantially the same manner as it has been operated by Seller in the past and Seller shall: (i) use commercially reasonable efforts to maintain working relationships with all suppliers, customers, employees and others having contact with the Dealership and bring all payables current as of the Closing Date; (ii) maintain current insurance policies in full force and effect; (iii) exercise reasonable diligence in safeguarding and maintaining the confidentiality of all books, reports and data pertaining to the Dealership, including use its commercially reasonable best efforts to ensure that Seller’s sales and service records remain adequately protected; failure to do so is a material breach of this Agreement; (iv) not grant increases in salary, pay or other employment related benefits to any officers or employees of the Dealership, except in the ordinary course of business; (v) not conduct any liquidation, close-out or going out of business sale or, (vi) attempt to order and restock inventory sold; (vii) intentionally omitted; (viii) not enter into any contract or agreement which is not terminable without penalty on not more than 30 days’ notice and which provides for payment by the Dealership, except those in the ordinary course of business; and (ix) not take or permit any action which would result in Seller’s representations or warranties becoming incorrect or untrue in any material respect.

 

(c) Employee Matters.

 

(i) Seller shall terminate or take all appropriate action in connection with pension, profit sharing and health and welfare benefit plans, if any, that are applicable to Seller and/or Seller’s employees (“Plans”), prior to or at Closing, so that Buyer will have no responsibility or liability or obligation of any nature under Plans to any person, firm or corporation whatsoever. If any applicable law provides that Buyer is or will be liable for any liability or obligation under any Plan despite Seller’s contractual liability for such liability or obligation hereunder, and Seller fail to pay or perform such liability or obligation within five (5) days after Buyer’s written demand, then in addition to any other remedies available, such amounts may be set off from time to time from any amount Buyer (or its affiliate) owes Seller (or its affiliate). Seller (including all employers, whether or not incorporated, that are treated together with Seller as a single employer within the meaning of Section 414 of the Code or, where appropriate, Seller’s health and welfare benefit plans that are “group health plans” will retain liability for and will pay when due all benefits (including all liabilities and obligations for or arising from any “COBRA” health care continuation coverage required to be provided under Section 4980B of the Code and Sections 601-608 of ERISA) attributable as of the Closing Date to “covered employees” or “qualified beneficiaries” entitled to “continuation coverage” (as those terms are defined in Section 4980B of the Code) regardless of when services were rendered or expenses incurred. By Closing, Seller shall pay all wages due Seller’s employees as of the Closing Date. At Closing, Buyer shall assume Seller’s obligations for payment of unused vacation, paid time off, holiday pay, sick pay and other similar compensation accrued to those employees of Seller which are retained by Buyer, and Buyer shall receive a credit against the Purchase Price for such amounts. Buyer shall be responsible to satisfy such amounts to the former employees of Seller to the extent of the credit received provided, however Buyer shall not be liable for any such amounts that are disputed or in excess of the credit given at the Closing and Seller and LMP shall defend and hold Buyer harmless for such disputed amounts. Seller shall terminate its employees on the Closing Date. Provided the Closing takes place, Buyer may, but is not obligated to, employ Seller’s employees who are willing to accept the offered employment with Buyer, and Buyer will give due regard to such employees’ benefits from their prior employer, so long as such employees meet all eligibility requirements, including any probationary period; provided that, notwithstanding anything in this Agreement to the contrary, Buyer shall hire on an at-will basis enough of Seller’s employees (each selected by Buyer in its sole and absolute discretion) so that Buyer and Seller will be in compliance with the provisions of the Workers Adjustment and Retraining Notification Act, 29 U.S.C. §2101-2109, if applicable. The foregoing does not grant to any of Seller’s individual employees a right of employment by Buyer.

 

 

(ii) Subject to the approval and cooperation of Seller’s applicable health insurance plans and policies, Buyer shall have the right to cause Seller to continue its health insurance plans (including the related ancillary insurance benefits such as dental, vision, short term disability) for the employees of Seller that Buyer retains for the month of the Closing and the month following the Closing. In such case, the applicable premiums shall be prorated based upon the number of days allocable to Seller prior to Closing Date and Buyer following the Closing Date.

 

(d) Seller’s Receivables. Following the Closing, upon the receipt of accounts receivable of the Seller, Buyer will remit checks thereof directly to the Seller at its principal office on a weekly basis. Buyer shall accept payment of Seller’s accounts receivable and Manufacturer warranty payments arising out of the operation of the Dealership prior to Closing for a period of 180 days. Buyer shall turn over to Seller on the last day of each calendar month during said period all of the monies it received as cleared funds so accepted on said accounts receivable during the previous calendar month. Buyer is not obligated to accept payments of such accounts receivable after such 180-day period, but if Buyer does so then Buyer will promptly pay the same over to Seller. Buyer is only obligated to accept payment during such period, not to attempt to enforce payment. No adjustment will be made in any of such accounts receivable without Seller’s permission. Seller reserves the right to pursue legal remedies of collection upon default by the customer with respect to any receivables owed to Seller. Buyer shall have no obligation to pursue or otherwise actively work to collect any of such Seller receivables or Manufacturer warranty payments. At the end of said 180-day period, Buyer shall no longer be obligated to accept payments of such accounts receivable. If Buyer does accept payment of any of Seller’s accounts receivable after expiration of the 180-day period, Buyer shall hold same in trust for Seller and promptly pay same over to Seller. It is understood that Buyer’s responsibility, so far as such collection is concerned, is only to accept monies paid on Seller’s accounts receivable and shall not include any obligation to ascertain the correct amount of any accounts receivable. Upon reasonable notice to Buyer, Buyer shall provide Seller with access to records relating to Seller’s operation of the Dealership, but Seller and LMP agree that they shall have no right to utilize the employees of Buyer to provide accounting or other bookkeeping services to themselves.

 

(e) Manufacturer Payments. The Parties shall use their commercially reasonable efforts to ensure that (i) amounts due to Seller but collected by Buyer (e.g., Manufacturer receivables, Manufacturer credits relating to items such as warranty claims or other claims, credit card payments, etc.) arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Seller promptly; (ii) amounts due to Buyer but collected by Seller arising out of or in connection with the operation of the Dealership on or following the Closing or as provided in this Agreement will be paid over to Buyer promptly; (iii) amounts paid by Seller but owed by Buyer as a result of Manufacturer erroneously billing Seller for items arising out of or in connection with the operation of the Dealership following Closing will be paid over to Seller promptly; and (iv) amounts paid by Buyer but owed by Seller (e.g., any finance contract chargebacks, insurance (e.g. credit life, accident and health, extended warranty, etc.) chargebacks, or repossessions and all rebates to Seller’s customers of premiums for credit life insurance, credit accident and health insurance, mechanical insurance coverage and GAP insurance) as a result of Manufacturer or any third party erroneously billing Buyer for items arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Buyer promptly. This section survives Closing indefinitely. If there are vehicles in-transit on the Closing Date (whether or not they are physically present) that have not been funded by Seller’s floor plan lender and the Parties do not know whether they will be paid for by Buyer’s floor plan lender or Seller’s floor plan lender, then the Parties may separately schedule those vehicles, Buyer will buy them but not pay for them, and, if such vehicles are funded by Seller’s floor plan lender, then Seller shall notify Buyer and Buyer shall promptly pay Seller’s floor plan lender such amounts. Any other payments related to such vehicles misdirected by the Manufacturer will be redistributed as contemplated by this Section 9(e). Buyer with any needed cooperation of Seller shall undertake all accounting, bookkeeping and reconciliation as necessary under this section and shall make all payments as necessary. On a monthly basis, Buyer shall present Seller with a reconciliation and the amount owed by Buyer or by Seller (if any) and the parties shall pay any amounts owing to the other within ten (10) business days.

 

 

(f)   Dealing and Non-Circumvent. In order to induce Buyer to enter into this Agreement, during the period commencing on the Effective Date until the Closing Date (or earlier termination of this Agreement), Seller and LMP will not and will cause each of its stockholders, managers, directors, officers, agents, advisors and other representatives to not, directly or indirectly, through affiliates or otherwise, (i) enter into any sale, lease, pledge or other disposition of all or any significant part of the purchased Assets, or any agreement for the sale of any capital stock or other equity securities of Seller, or agreement relating to a merger, consolidation or other acquisition proposal involving Seller or its member with any other party, or any transaction similar to the foregoing in format or purpose, with any party other than Purchaser; or (ii) enter into any transaction (A) with a total cumulative and aggregate value in excess of One Hundred Fifty Thousand Dollars ($150,000), or (B) outside of the ordinary course of business of Seller consistent with past practice in contemplation of any transaction described above with any party other than Buyer; or (iii) encourage, solicit, provide information to or negotiate with any party, other than Buyer, to do any of the foregoing.

 

(g) License Use. The Parties acknowledge that the West Virginia Division of Motor Vehicles may be experiencing delays in the processing of motor vehicle dealer licenses. The Seller hereby agrees that the Buyer may use the Seller’s licenses required under the laws of the State of West Virginia to operate the Business for a period of not more than 60days after the Closing Date (and the Seller shall maintain all such licenses during such period). As a material inducement to the Seller to permit the Purchaser’s use of such licenses: (a) Buyer agrees that it will use best efforts to obtain its own licenses with the State of West Virginia as promptly as practicable , and (b) Buyer hereby agrees to indemnify and hold Seller, its respective affiliates, and their respective owners, managers, members, controlling persons, directors, officers, and employees (collectively, the “Seller Indemnified Parties”) harmless from and against any cost or liability, including reasonable attorneys’ fees, incurred by any Seller Indemnified Party in connection with or as a result of the Buyer’s use of the Seller’s licenses. Upon the Effective Date, the Seller will provide Buyer with a copy of the Seller’s DMV and other state and county regulatory licenses. Buyer agrees to add the Seller to its general liability insurance coverage as an additional insured during the term of the License Use Agreement. To effect the Purchaser’s use of the Seller’s license as contemplated hereby, the Seller agrees at the Closing to enter into a license use and indemnification agreement sufficient to satisfy applicable law for such license use in the form of Exhibit B hereto (the “License Use Agreement”).

 

10. Access.

 

(a) Upon receipt of Manufacturer’s approval to transfer the Dealership to Buyer, Buyer may set up Buyer’s computer system parallel to Seller’s computer systems for the Dealership, provided, however, Seller’s systems shall not be turned off until the Closing Date. Following the Effective Date, Buyer’s Information Technology personnel may access the Dealership for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve) to facilitate any applicable transfer purchased Assets.

 

(b) Seller shall permit representatives of Buyer to have access to and to examine the records, properties and assets associated with the Assets and the Real Property, provided, however, all access hereunder shall be subject to this Agreement. Any access by Buyer shall be at times determined by Sellers and Buyer and in a manner so as not to interfere with the normal business operations of Seller .

 

(c) Buyer’s Information Technology personnel may have certain access to the Dealership (no login access) for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve). Following receipt of Manufacturer approval for transfer of the Dealership to Buyer, Seller shall contact its providers for DMS, CRM, and any other third-party data servicers, and execute all necessary documents to effectuate the transfer all intangible data Assets to Buyer’s DMS system on the Closing Date. Buyer shall be solely responsible for any and all costs associated with effectuating the transfer of all intangible data Assets to Buyers DMS system.

 

 

11. Default & Termination. Notwithstanding any provision in this Section 11 to the contrary, no Party may terminate this Agreement due to the breach of another Party if the first Party is in material breach of this Agreement.

 

(a) Termination. The Parties may exercise their respective rights of termination by the delivery of written notice of termination to the other Party at any time prior to the completion of the Closing. This Agreement and the transactions contemplated hereby may be terminated on or before the Closing Date as follows:

 

(i) By the mutual written agreement of the Parties;

 

(ii) By Buyer if a breach of any material provision of this Agreement has been committed by Seller and such breach has not been either (A) cured within ten (10) days after written notice to Seller, or (B) waived in writing by Buyer;

 

(iii) By Seller if a breach of any material provision of this Agreement has been committed by Buyer and such breach has not been either (A) cured within ten (10) days after written notice to Buyer, or (B) waived in writing by Seller;

 

(iv) By Seller if Seller’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(v) By Buyer if Buyer’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(vi) By Seller or Buyer, if the Closing has not occurred by the Closing Date Deadline.

 

Unless this Agreement is terminated by Seller under the provisions of Section 11(a)(iii), Buyer shall be entitled to receive a return of the Deposit upon a termination.

 

(b) Buyer’s Default. If prior to Closing Buyer breaches this Agreement and fails to cure as provided above, then Seller’s sole right and exclusive remedy will be to terminate this Agreement by giving written notice thereof to Buyer and then Seller may take the Deposit as liquidated damages in full settlement of all claims, remedies or causes of actions against Buyer under this Agreement, including the remedy of specific performance and other forms of equitable relief. It is impossible to estimate more precisely the damages which might be suffered by Seller upon Buyer’s default. Seller’s retention of the Deposit is intended not as a penalty, but as full liquidated damages.

 

(c) Seller Default. If prior to Closing, if Seller breaches this Agreement and fails to cure as provided above, then Buyer may exercise any and all rights and remedies available to it at law or in equity, including (i) an action in equity against Seller (pursuant to which Buyer is not obligated to post a bond or prove special damages or irreparable injury) for the specific performance by Seller of the terms and provisions of this Agreement and disgorgement of profits from the date of the Closing Date Deadline until receipt of any applicable remedy at law or equity in the Buyer’s favor; and (ii) the right to terminate this Agreement by giving written notice of such termination to Seller and receive a full refund of the Deposit without prejudice to any of Buyer’s rights or remedies including an action for direct damages, but not consequential damages.

 

(d) [reserved].

 

(e) Breakup Fee. If this Agreement is terminated by any Party hereto due to the failure of Seller or LMP to obtain the Necessary Seller Approvals prior to the Closing Date Deadline, regardless of the reason for such failure, then Buyer shall be entitled to receive from Seller and LMP, and Seller and LMP shall be obligated to pay Buyer within 3 business days following receipt of an invoice from Buyer, a fee (the “Breakup Fee”) equal to the reasonable costs and fees expended or incurred by Buyer for the transactions contemplated herein and in connection with the purchase of the Leased Land.

 

 

12. Survival and Indemnification.

 

(a) Representations and Warranties Survive Closing. It is the express intention and agreement of the parties that all representations and warranties made by the parties in this Agreement shall survive the Closing for a period of twenty-four (24) months. Thereafter, all representations and warranties made by the parties in this Agreement shall terminate and no action may be had on them (excepting claims made during the Survival Period may continue to be pursued). All covenants and agreements of the parties shall survive the Closing in accordance with their terms.

 

(b) Buyer’s Obligation to Indemnify. Following the Closing, Buyer will indemnify and hold Seller, its affiliates, managers, member, and officers harmless from and against any and all liability, loss, damage, or deficiency (collectively, “Losses”) resulting from: (i) any misrepresentation, breach of warranty, or non-fulfillment of any agreement on the part of Buyer under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument furnished or to be furnished by Buyer in connection with the transactions contemplated by this Agreement; (iii) the ownership, management and operations of the Dealership or the Assets from and after the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Buyer; (v) the Assigned Contracts, and; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity.

 

(c) Seller’s Obligation to Indemnify. Following the Closing, Seller and LMP (jointly and severally with Seller) will indemnify and hold Buyer, its affiliates, managers, members, officers, and directors harmless from and against any and all Losses resulting from: (i) any misrepresentation, default, breach of warranty or non-fulfillment of any agreement on the part of Seller or LMP under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument or to be furnished by Seller or LMP in connection with the transactions contemplated by this Agreement; (iii) the ownership, management, and operations of the Dealership or the Assets prior to the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Seller; (v) the Excluded Liabilities; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity, and (vii) any audits, including warranty audits, for sales, service and business operations of Seller arising or accruing prior the Closing Date.

 

(d) Limitations. No claim may be made for indemnification in respect of a breach of a representation or warranty unless notice of such claim is delivered in writing prior to the expiration of the survival of the representation or warranty that is the subject of such claim. Each party shall have the right to bring an action against the other on the breach of a representation or warranty hereunder, but only if the party bringing the action for breach gives written notice of such breach to the other party before the end of the Survival Period. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Buyer’s Group Global Losses exceeds $50,000; provided, however, that the foregoing limitation shall not apply to any Loss with respect to intentional misconduct or fraud. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(b) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Seller’s Group Global Losses exceeds $50,000. Notwithstanding anything in this Agreement to the contrary, the Seller and LMP shall not have any liability whatsoever under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss of any amount by which the Losses payable by the Seller and LMP shall, individually or in the aggregate, exceed Seller’s Group Global Cap of $2,500,000. For the purposes of applying the foregoing liability limitations, amounts paid by Seller, LMP and Seller’s affiliates shall be aggregated. Notwithstanding anything in this Agreement to the contrary, the foregoing limitation on liability shall not apply to any Losses arising or resulting from intentional misconduct or fraud of the Seller, or LMP or their affiliates. For purposes of this Agreement, “Buyer’s Group Global Losses” shall mean the cumulative Losses of Buyer and Buyer’s affiliates who purchase any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Seller or Seller’s affiliates. For purposes of this Agreement, “Seller’s Group Global Losses” shall mean the cumulative Losses of Seller and Seller’s affiliates who sell any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Buyer or Buyer’s affiliates. For purposes of this Agreement, “Seller’s Group Global Cap” shall mean the cumulative liability of LMP, Seller and Seller’s affiliates for Losses to Buyer and Buyer’s affiliates (excluding Losses arising or resulting from intentional misconduct or fraud) under their Dealership Asset Purchase Agreements for any of the Subject LMP Dealerships.

 

 

(e) Matters Involving Third Parties.

 

(i) To be entitled to such indemnification, the party claiming indemnification (“Indemnified Party”) will give the other party (“Indemnifying Party”) prompt written notice of the assertion by a third party of any claim with respect to which the Indemnified Party might bring a claim for indemnification hereunder (“Third Party Claim”), and in all events must have supplied such notice to the Indemnifying Party within the applicable period for defense of such claim; provided, however, that the failure to give prompt written notice as prescribed above will not preclude indemnification so long as such failure does not prejudice the Indemnifying Party’s defense against such claim.

 

(ii) The Indemnifying Party will be entitled, at its own expense, to participate in the defense of such action, proceeding or claim, and, if (i) the action, proceeding or claim involved seeks (and continues to seek) solely monetary damages, environmental remediation or relates to any liability for taxes, (ii) the Indemnifying Party confirms, in writing, its obligation hereunder to indemnify and hold harmless the Indemnified Party with respect to such damages in their entirety, and (iii) the Indemnifying Party, in the reasonable judgment of the Indemnified Party, will be able to satisfy any adverse judgment as a result of its indemnification obligation with respect to such action, proceeding or claim, then the Indemnifying Party will be entitled to assume and control such defense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval will not be unreasonably withheld or delayed. The Indemnified Party will be entitled to participate therein after such assumption, the costs of such participation following such assumption to be at its own expense. Upon assuming such defense, the Indemnifying Party will have full rights to enter into any monetary compromise or settlement which is dispositive of the matters involved; provided, that such settlement is paid in full by the Indemnifying Party and will not have any direct or indirect adverse effect upon the Indemnified Party.

 

(iii) With respect to any action, proceeding or claim as to which (i) the Indemnifying Party does not have the right to assume the defense or (ii) the Indemnifying Party will not have exercised its right to assume the defense, the Indemnified Party will assume and control the defense of and contest such action, proceeding or claim with counsel chosen by it and approved by the Indemnifying Party, which approval will not be unreasonably withheld or delayed. The Indemnifying Party will be entitled to participate in the defense of such action, proceeding or claim, the cost of such participation to be at its own expense. The Indemnifying Party will be obligated to pay the reasonable attorneys’ fees and expenses of the Indemnified Party. The Indemnified Party may not settle such action, proceeding or claim without the prior written consent of the Indemnifying Party, which will not be unreasonably withheld.

 

(iv) Both the Indemnifying Party and the Indemnified Party will cooperate fully with one another in connection with the defense, compromise or settlement of any such action, proceeding or claim, including, without limitation, by making available to the other all pertinent information and witnesses within its control.

 

(f)   Procedures for Indemnification - Other Claims. A claim for indemnification relating to a breach of a warranty or representation for any matter not involving a Third-Party Claim must be asserted by notice to the Indemnifying Party by the Indemnified Party on or before the expiration of the Survival Period. The Indemnifying Party will have the obligation to eliminate or mitigate its indemnification obligation under this Agreement by affecting a cure of any breach of this Agreement not related to any Third-Party Claim (including any document, certificate, instrument or agreement to be executed and/or delivered under this Agreement), if susceptible of cure, within thirty (30) days after any such notice. The Indemnifying Party will pay any uncured indemnification claim and any claim that is not capable of cure that is undisputed promptly after such notice and failure to cure. The Indemnifying Party will promptly pay any other indemnification claim upon resolution by an agreement with the Indemnified Party or upon a final, non-appealable order of a court of competent jurisdiction. All claims for indemnification as to a breach of a representation or warranty will survive as to any claim or demand made on or before the expiration of the Survival Period until such claim or demand is fully paid or otherwise resolved by the parties hereto in writing or by a court of competent jurisdiction.

 

 

(g) Seller’s Security for Indemnification Claims. To secure the indemnity obligations of Seller and LMP under this Section 12. for claims made by Buyer and claims of Buyer’s affiliates for indemnification under their Dealership Asset Purchase Agreements and underlying Real Estate Purchase Agreements with Seller’s affiliates within 24 months of the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith; the Parties and their affiliates who sell and purchase any of the Subject LMP Dealerships shall enter into an Indemnity Escrow Agreement with Greenberg Traurig, PA, as the “Indemnity Escrow Agent”. Seller and Seller’s affiliates shall fund the Holdback Amount under the Indemnity Escrow Agreement in full upon the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith. The form of the Indemnity Escrow Agreement is attached as Exhibit C .

 

(i) Subject to the limitations set forth in this Section 12, all payments by the Seller or LMP to Buyer pursuant to this Section 12 shall be satisfied first from the Indemnity Escrow Funds (to the extent the Indemnity Escrow Funds are sufficient, and then, subject to the limitations herein, the Seller and or LMP shall pay any excess due hereunder directly) and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Indemnity Escrow Agent to make the applicable payments.

 

(ii) On the first year anniversary following the Closing Date, an amount equal to 50% of the total Indemnity Escrow Funds originally funded to the Indemnity Escrow Agent minus  the amount of claims paid by the Indemnity Escrow Agent, and minus the aggregate outstanding  amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date shall be released to the Seller, LMP and or Seller’s affiliates on such date (if such number is positive), and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

(iii) On the second year anniversary following the Closing Date, an amount equal to the balance of the Indemnity Escrow Funds minus the aggregate outstanding  amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date (any such claim, a “Remaining Indemnity Claim”) shall be released to the Seller, LMP and or Seller’s affiliates on such date, and the Buyer and the Seller shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.  Following the final resolution of any Remaining Indemnity Claim, if the Indemnity Escrow Funds exceed the aggregate amount, if any, which any of Buyer or Buyer’s affiliates has claimed under Section 12 or under any of their Dealership Asset Purchase Agreements with respect to Remaining Indemnity Claims that remain unresolved, the excess Indemnity Escrow Funds shall be released to the Seller, Seller’s affiliates or LMP on such date, and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

13. Miscellaneous.

 

(a) Transaction & Enforcement Costs. Each Party shall bear its own costs and expenses, including legal and accounting fees, incurred in connection with this Agreement and the transactions contemplated hereby, and shall pay such costs and expenses whether or not the Closing occurs. Notwithstanding the foregoing, in the event of any litigation between or among the Parties to enforce any provisions or rights hereunder, the unsuccessful Party, as determined by a final judgment, shall pay to the successful Party therein all costs and expenses of such Party (and any of such Party’s agents, such as attorneys or accountants) expressly including, but not limited to, reasonable attorneys’ fees and court costs incurred therein by such successful Party, which costs, expenses and attorneys’ fees will be included in and as a part of any judgment rendered in such litigation.

 

 

(b) Confidentiality. Each Party and its representatives shall hold in strict confidence all data and information obtained in connection with this transaction, including all financial and other information of or related to the Dealership and the terms of this Agreement, and shall not directly or indirectly at any time reveal, report, publish, disclose or transfer to any person any of such data and information or utilize any of such data or information for any purpose; provided, however, each Party may disclose information to Manufacturer and legal, tax, accounting advisors, lenders and potential lenders and other parties deemed by a Party to be necessary or appropriate in connection with the transactions described herein, provided that such persons acknowledge that they too are bound by the confidentiality provisions contained herein. Notwithstanding any contrary provision herein, Buyer may notify governmental organizations (e.g., the Security and Exchange Commission, the FTC, if applicable) of this Agreement and the transactions contemplated hereby by filing an unredacted copy of this Agreement. The Parties may not otherwise announce the transactions contemplated hereby which may identify the Seller, the Buyer, and the Dealership to the general public without the consent of the other. Further, notwithstanding any contrary provision herein, Buyer may apply for licenses, tax applications, qualifications, and fictitious name registrations required for its business operations and the parties may disclose this transaction to obtain the necessary consents related to contract assumptions and the Necessary Seller Approvals.

 

(c) Relationship & Authority. Each Party is acting as an independent contractor. Each Party is responsible for all taxes relating to its operation, including payroll taxes for its employees and nothing in this Agreement is intended to create a relationship, express or implied, of employer-employee or partnership or joint venture between or among any Party. Each individual executing this Agreement on behalf of a Party individually represents and warrants that such Party is validly existing, that such execution has been duly authorized, that the terms of the instrument will be binding upon the Party, and that such individual is duly authorized to execute this Agreement on behalf of such Party.

 

(d) Notices. All notices and other communications provided for hereunder will be in writing, unless otherwise specified, and will be deemed to have been duly given if delivered personally, via e-mail, via Federal Express or other nationally recognized courier, to the addresses on the signature pages hereof or at such other addresses as a Party may designate from time to time in writing. Notices will be effective upon receipt by the Party or refusal to accept delivery. Notices on behalf of either Party may be given by the attorneys representing such Party.

 

(e) Integration; Amendments & Time. This Agreement contains the entire understanding between the Parties and supersede any prior understanding and/or oral agreements between them respecting the subject matter of this Agreement. Any modification or amendment of this Agreement will be in writing and executed by Seller and Buyer. Time is of the essence in this Agreement. If the last day to perform under a provision of this Agreement or the final day of any period (e.g., the Closing Date Deadline) falls on a Saturday, Sunday, or legal holiday, then such performance deadline or period is automatically extended through the next day which is not a Saturday, Sunday, or legal holiday.

 

 

(f)   Interpretation & Administration. The words “include”, “includes”, “included”, “including” and “such as” do not limit the preceding words or terms and are deemed to be followed by the words “without limitation”. The Parties have a duty of good faith and fair dealing. All captions and headings contained in this Agreement are for convenience of reference only and will not be construed to limit or extend the terms or conditions of this Agreement. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. All terms defined in this Agreement in their singular or plural forms, have correlative meanings when used herein in their plural or singular forms, respectively. Each Party and its counsel have reviewed this Agreement and the rule of construction that any ambiguities are to be resolved against the drafter will not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits hereto. Except as expressly provided herein (e.g., “industry standard depreciation” or “as reflected on Manufacturer’s statement”), all accounting matters required or contemplated by this Agreement will be in accordance with generally accepted accounting principles. This Agreement may be executed in one or more counterparts and delivered by e-mail or facsimile, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement will be binding upon and inure to the benefit of the Parties, their successors and assigns. Buyer may assign or otherwise transfer all of Buyer’s rights, obligations and benefits hereunder to any entity owned or controlled by, or under common control with, Buyer without Seller’s consent. The invalidity of any one or more phrases, sentences, clauses, paragraphs, or sections of this Agreement will not affect the remaining portions of this Agreement. No failure or delay by any Party to enforce any right specified herein will operate as a waiver of such right, nor will any single partial exercise of a right preclude any further or later enforcement of the right. A business day shall mean Monday through Friday, excluding federal and national holidays or State of Florida holidays. The term “material” shall mean an amount which would involve an expenditure, liability or damages in excess of $50,000.00.

 

(g) Further Assurances. At the request of Seller and at Seller’s expense, Buyer shall cooperate in the preparation by Seller of all filings to be made by Seller with the Securities and Exchange Commission including any periodic filings and any filing with respect to a registered offering of its securities by Seller and the closing of the offering registered thereby. Upon a party’s request at any time, the other party shall take any act, including executing and delivering any document, necessary or advisable to otherwise to carry out the provisions of this Agreement.

 

(h) Escrow Agent. Escrow Agent’s duties pursuant to this Agreement are purely ministerial in nature, and the Escrow Agent shall incur no liability whatsoever except for its willful misconduct or gross negligence, so long as the Escrow Agent is acting in good faith. The Parties hereby release the Escrow Agent from any liability for any error of judgment or for any act done or omitted to be done by the Escrow Agent in the good faith performance of its duties hereunder and do each hereby indemnify the Escrow Agent against, and shall hold, save, and defend the Escrow Agent harmless from, any costs, liabilities, and expenses incurred by the Escrow Agent in serving as Escrow Agent hereunder and in faithfully discharging its duties and obligations hereunder. The Escrow Agent is acting as a stakeholder only with respect to the Deposit. If there is any dispute as to whether the Escrow Agent is obligated to deliver the Deposit or as to whom the Deposit is to be delivered, the Escrow Agent may refuse to make any delivery and may continue to hold the Deposit until receipt by the Escrow Agent of an authorization in writing, signed by Seller and Buyer, directing the disposition of the Deposit, or, in the absence of such written authorization, the Escrow Agent may hold the Deposit until a final non appealable determination of the rights of the Parties in an appropriate judicial proceeding. If such written authorization is not given, or a proceeding for such determination is not begun, within thirty (30) days after notice to the Escrow Agent of such dispute, the Escrow Agent may bring an appropriate action or proceeding for leave to deposit the Deposit in a court of competent jurisdiction pending such determination. The Escrow Agent shall be reimbursed for all costs and expenses of such action or proceeding, including reasonable attorneys’ fees and disbursements, by the Party determined not to be entitled to the Deposit. Upon making delivery of the Deposit in any of the manners herein provided, the Escrow Agent shall have no further liability or obligation hereunder. The Escrow Agent shall execute the Escrow Receipt attached hereto in order to confirm that it has received the Deposit and is holding the same on deposit in accordance with the provisions hereof.

 

 

(i) Applicable Law & Venue. This Agreement will be governed by and construed and enforced in accordance with the internal laws and judicial decisions of the State of Florida without regard to conflict of law provisions thereof. Any litigation, action or proceeding arising out of or relating to this Agreement will be held exclusively in any state or Federal court in Broward County, Florida. Each Party waives any objection which it might have now or hereafter to the venue of any such litigation, action or proceeding, submits to the sole and exclusive jurisdiction of any such court and waives any claim or defense of inconvenient forum. Each Party consents to service of process at such Party’s address as provided herein (and updated in writing from time to time).

 

(j) Waiver of Jury Trial. Each party hereto hereby acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.

 

(k) [reserved].

 

[Remainder of Page Blank]

 

 

IN WITNESS WHEREOF, the Parties executed and delivered this Agreement as of the Effective Date.

 

LMP Beckley HK, LLC, a West Virginia limited liability company			Hope AWV K, LLC, a Florida limited liability company
By:	/s/ Sam Tawfik		By:	/s/ Ali Ahmed
	Sam Tawfik, Authorized Signatory			Name: Ali Ahmed  Title: Manager Notice Address for Buyer:  Attn: Ali Ahmed  5875 NW 163rd Street  Suite 104  Miami Lakes, FL 33014  Email: [email protected]
LMP Beckley 002 Holdings, LLC, a West Virginia limited liability company
By:	/s/ Sam Tawfik
	Sam Tawfik, Authorized Signatory

 

LMP Automotive Holdings, Inc, a Delaware corporation			With a copy to:
By:	/s/ Sam Tawfik		Greenspoon Marder LLP
	Sam Tawfik, CEO		Attn: David Weisman
			200 East Broward Blvd.
Notice Address for Seller and LMP:			Suite 1800
			Fort Lauderdale, FL 33301
LMP Beckley HK, LLC			Email: [email protected]
500 East Broward Boulevard, Suite 1900			Greenspoon Marder LLP
Fort Lauderdale, FL 33394			Attn: Greg Blodig
Attn: Sam Tawfik, Chief Executive Officer			200 East Broward Blvd.
			Suite 1800
With a Copy To:			Fort Lauderdale, FL 33301
			Email: [email protected]
Greenberg Traurig, PA  Attn: Bruce C. Rosetto  777 S. Flagler Rive Suite 300 East West Palm Beach, FL 33401   Email: [email protected]

 

 

Schedule 1(b)(ii) – Purchase Price for PreOwned, Service and Rental Vehicles

 

 

 

 

Schedule 2 – List of Assets

 

Inventory of new vehicles, used vehicles, parts and accessories will be inventoried and attached at or near Closing.

 

Seller’s FF&E is listed on Schedule 2(b).

 

 

Schedule 2(b) – FF&E

 

 

 

 

Schedule 3(d) – Assigned Contracts

 

Leases to be added.

 

 

Schedule 5(d) – Liens

 

 

 

 

Schedule 5(q) – In-House Warranties

 

 

 

 

Schedule 5(m) – Employment Matters

 

 

 

 

ESCROW RECEIPT

 

Dealership Asset Purchase Agreement

 

Escrow Agent agrees to be bound by the Dealership Asset Purchase Agreement and acknowledges receipt of:

 

☐

A.

Executed copies of the Dealership Asset Purchase Agreement on August __, 2022;

 

☐

B.

Deposit in the amount of $__________ on August __, 2022.

 

Escrow Agent:
By:
Name & Title:

 

Escrow Agent acknowledges having reviewed this Dealership Asset Purchase Agreement and will be bound by those provisions.

 

 

36

Exhibit 10.4

 

Execution Version

 

DEALERSHIP ASSET PURCHASE AGREEMENT

 

This DEALERSHIP ASSET PURCHASE AGREEMENT (this “Agreement”) is effective as of August 5, 2022 (the “Effective Date”), by and among Hope AWV S, LLC, a Florida limited liability company (“Buyer”), LMP Beckley HS, LLC, a West Virginia limited liability company (the “Seller”), a wholly owned subsidiary of LMP Beckley 002 Holdings, LLC, a West Virginia limited liability company, and LMP Automotive Holdings, Inc., a Delaware corporation (“LMP”), and together with Seller and Buyer, each a “Party” and, collectively, the “Parties”).

 

RECITALS:

 

WHEREAS, Seller owns, controls and operates a Subaru automotive dealership (the “Dealership”), and all ancillary business related thereto (the “Business”) located at 117 Midtown Ave, Mt Hope, WV 25880 (the “Premises”) under agreements with Subaru of America, Inc. (the “Manufacturer”);

 

WHEREAS, LMP owns and operates through various affiliates, six (6) automotive dealerships, including the Seller, (the collectively, the “Subject LMP Dealerships”), and certain real property (the “Real Property”), which are the subject of that certain letter of intent with an affiliate of Buyer, dated June 11, 2022, for the purchase of substantially all of the assets of the Subject LMP Dealerships (the “LOI”), including the sale and transfer substantially all of the Dealership’s assets (as more particularly described in Section 2 below, but excluding the Excluded Assets defined below, collectively, the “Assets”);

 

WHEREAS, the LOI sets forth that there is no due diligence period with respect to the Dealership and the Assets once this Agreement is executed;

 

WHEREAS, the Buyer desires to purchase the Assets and Seller desires to sell and transfer the Assets on the terms and conditions hereinafter set forth (the “Transaction”).

 

NOW, THEREFORE, in consideration for the mutual promises contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged by each Party, the Parties as follows:

 

1.  Closing Date and Purchase Price.

 

(a) Closing Date. Subject to the terms and conditions set forth in this Agreement, the consummation of the transactions contemplated hereby (the “Closing”) shall take place no later than within (15) business days of the receipt of the latest to occur of: (i) all applicable manufacturers’ approvals in accordance with Section 7(a) in connection with the purchase and sale of all of the Subject LMP Dealerships and (ii) all required entity approvals from the boards of directors and shareholders of LMP, and the manager of sellers of the Subject LMP Dealerships as well as the manager of the sellers of the real estate properties underlying the LMP Dealerships being sold are obtained in connection with authorizing the contemplated Transaction and the transactions involving the Subject LMP Dealerships. The date of the Closing is referred to herein as the “Closing Date.” The Closing shall be deemed to be effective as of the opening of business on the Closing Date. The “Closing Date Deadline” means October 31, 2022; provided, however, that if, as of the fifteenth (15^th) day prior to such date, all of the manufacturers’ approvals have not been obtained, or if all applicable waiting periods pursuant to the HSR Act have not expired or terminated, the Closing Date Deadline will automatically be extended for thirty (30) days, time being of the essence. It is agreed that the closings for all of the Subject LMP Dealerships may occur in separated groups with the same manufacturer and/or by geographical regions. It is acknowledged that the actual Closing and funding for this transaction make take 1 or 2 business days.

 

 

(b)  Purchase Price & Broker. The purchase price for the Assets described in Section 2(e) below is $4,334,806 in connection with the purchase of goodwill and FF&E (the “Goodwill Purchase Price”) plus additional purchase price for parts, work in progress (“WIP”), and New Vehicles, Used Vehicles and Pre-Owned Vehicles (collectively, the “Vehicle Inventories”) calculated as described below (the “Additional Purchase Price,” with the Goodwill Purchase Price, collectively the “Purchase Price”). The parties agree that the FF&E portion of the Goodwill Purchase Price includes the price for Seller’s vehicles used in its business operations which are listed in the FF&E schedules to its financial statements. The Additional Purchase Price will be calculated as follows:

 

(i)  The purchase price for Dealership’s new, undamaged and untitled 2021, 2022 and subsequent year Manufacturer vehicles, including demonstrators and loaners, (the “New Vehicles”) is an amount equal to the actual Manufacturer’s original invoice; plus Seller’s direct out-of-pocket cost of dealer-installed optional parts and accessories theretofore installed upon New Vehicles; less all applicable dealer hold-backs paid to Seller; less fifty percent of all credits, and allowances for floor plan assistance, Marketing Allowance, and Subaru Advertising Funds; less “prep” expenses for New Vehicles which have not yet been prepared for sale; less the cost to repair any damage and less the replacement cost of any parts or equipment removed. Notwithstanding the foregoing, the purchase price of New Vehicles shall not include or be increased for rust proofing, undercoating, scotch-guarding, non-Manufacturer alarm systems, interrupt systems, theft protection devices and similar dealer additions. The purchase price of New Vehicles with more than 600 miles but less than 4,000 miles will be reduced by $0.60 per mile. New Vehicles with 4,000 or more miles will be valued as a Used Vehicle (defined below). For purposes of this Agreement, a vehicle will be considered damaged if it has more than six hundred and fifty dollars ($650.00) of repairs that are needed or previously performed on the vehicle.

 

(ii)  The purchase price for pre-owned, company (other than those scheduled as FF&E), service, and rental vehicles (the “Pre-Owned Vehicles” or “Used Vehicles”) shall be priced for each such vehicle at the lower of: (i) the pricing of a New Vehicle set forth above, or (ii) MMR adjusted as per CR rating, as set forth on Schedule 1(b)(ii) hereto.

 

(iii)  Buyer shall purchase all vehicles other than the New Vehicles in Seller’s vehicle inventory at CR based MMR (collectively, the “Used Vehicles”; provided, however, if the purchase price for a Pre-owned Vehicle or Used Vehicle cannot be agreed upon, such vehicle shall be retained by Seller and be an Excluded Asset and provided further that Buyer shall have no obligation to purchase any damaged vehicle or vehicle that has salvage status, a branded title, or was in an accident.

 

(iv)  The purchase price for all obsolete parts shall be equal to 50% of Seller’s cost of such obsolete parts with a cap of $10,000 and non-obsolete parts inventory shall be equal to manufacturer cost (less all applicable rebates and discounts). For purposes of clarity, any obsolete parts in excess of $10,000 shall be transferred to Buyer at Closing. Obsolete parts means (i) any of new OEM parts not listed in any of the manufacturer’s most recent price books; (ii) any vehicle parts or accessories that, at Closing, are not returnable to the supplier from whom they were originally purchased for a full refund less any normal restocking charge; or (iii) any vehicle part or accessory that, as of the Closing Date, has been in Seller’s parts inventory over 365 days.

 

(c)  Earnest Money Deposit. Within three (3) business days after the Effective date Buyer shall deliver to Escrow Agent $216,740.30 (five percent of the Goodwill Purchase Price) as earnest money (the “Deposit”) to be held in trust by Greenberg Traurig, PA, as Escrow Agent for and on behalf of the Parties pursuant to this Agreement. On the Closing Date, if the Closing occurs, the Deposit will be applied to the Purchase Price. The Deposit is non-refundable except if (i) Manufacturer fails to approve the Transaction; or (ii) as per Sections 11(a)(i), (ii), (iv), (v) or (vi).

 

(d)  Hart-Scott-Rodino Act. Filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) may be required. If filing or notice or other action is required under the HSR Act with respect to the transactions outlined herein, then Buyer shall effect such filing or notice and Buyer and Seller shall each pay for 50% of the filing fees required by the HSR Act . Buyer and Seller shall each be responsible for their own attorney fees incurred to effect such filing. Seller shall cooperate fully with Buyer in said action and promptly provide all requisite information.

 

 

2.  Dealership Assets. Subject to the terms and conditions contained in this Agreement, upon the consummation of the transactions contemplated by this Agreement (the “Closing”, and the date thereof, the “Closing Date”), Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Assets as set forth on Schedule 2 and as more generally described below in this Section 2. A mutually agreed to form of Bill of Sale, attached as Exhibit A hereto, executed and delivered by the Parties on the Closing Date (the “Bill of Sale”) will contain a list of all of the Assets sold to Buyer as set forth on Schedule 2.

 

(a)  Vehicles. Subject to Section 1:

 

(i)  Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s New Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date.

 

(ii)  Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s Used Vehicles and Pre-Owned Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date (but subject to the provisions of Section 1 (b) (iii)). Prior to Closing, Seller shall (i) disclose to Buyer any and all facts known to Seller concerning each Used Vehicle and Pre-Owned Vehicle that Seller would be legally obligated to disclose to a retail purchaser of a Used Vehicle including, but not limited to, known damage, known usage history, frame and flood damage, salvage status, open recalls, and warranty eligibility; (ii) provide Buyer with legal odometer statements for each Used and Pre-Owned Vehicle; and (iii) provide free and clear title for each of the Used Vehicles and Pre-Owned Vehicles. At least 10 days prior to Closing, Seller shall provide Buyer with its then current Used Vehicle and Pre-Owned vehicle inventory along with Seller’s asking price for each such vehicle.

 

(b)  Parts; Accessories & Other Inventories.

 

(i) Inventory & Returnable. A physical inventory of Seller’s parts and accessories will be taken in the presence of a representative of Buyer and Seller by an inventory service chosen by Buyer and reasonably acceptable to Seller, the cost of which will be borne by the Buyer and Seller splitting the cost on a 50/50 basis (the “Inventory”). The Inventory will classify parts and accessories as “returnable” or “non-returnable”. The terms “returnable parts” and “returnable accessories” means only those new undamaged replacement parts and new undamaged accessories for Manufacturer vehicles which are listed (coded) in the latest current Master Parts Price List Suggested List Prices and Dealer Prices (or other applicable similar Manufacturer price lists, with supplements or the equivalent in effect as of the Inventory date, the “Master Price List”), as returnable to the Manufacturer at not less than the purchase price reflected in the Master Price List and are within the limits of returnable parts established by the Manufacturer from time to time. Buyer shall purchase from Seller, and Seller shall sell to Buyer, all of Seller’s returnable parts and returnable accessories for an amount equal to the price listed in the Master Price List (less all applicable rebates and discounts). At Closing the total Parts and Miscellaneous Inventory that are in their original packaging, current and returnable and with sales in the 12 months prior to closing for an amount equal to the Manufacturer prices as reflected in the most recent pricing catalogs less all discounts and allowances. Seller will assign Sellers’ parts return rights to Buyer at Closing.

 

(ii) Nonreturnable. All parts and accessories not coded as returnable in the Master Price List are “nonreturnable” and shall be considered an obsolete part. The purchase price for the nonreturnable parts and accessories, non-Manufacturer, “jobber” or “NPN” parts and accessories will be considered as and sold as obsolete parts pursuant to Section 1 (b)(iv).

 

(iii)  Return Rights, etc. Upon Closing, Seller will be deemed to have automatically assigned, and Seller shall assign to Buyer, Seller’s parts return rights without any further action (but Seller shall take any further action requested by Buyer or required by the Manufacturer to implement such assignment of rights). At the request of Buyer, Seller shall use its best efforts to assist Buyer in effecting any parts return offered by the Manufacturer (including, if necessary, applying for parts return in Seller’s name), and Seller shall promptly pay over to Buyer any monies received from the Manufacturer related thereto. Buyer may deduct from the consideration to be paid to Seller at the Closing Seller’s parts account outstanding balance with the Manufacturer and to pay such balance directly to the Manufacturer for Seller’s account. Buyer is not obligated to purchase old, opened, obsolete, superseded, incomplete, or damaged parts or accessories or any parts, accessories or sheet metal with no sales in the twelve (12) months prior to Closing. Buyer will not be obligated to purchase more than one year’s supply of any part or accessory (based on trailing one-year historical sales). Miscellaneous Supplies shall be purchased as provided for in subsection (d) below. The purchase price for all other parts not addressed in this Section or Section 1 will equal the value thereof as mutually agreed between Buyer and Seller provided, however, if the purchase price for such assets cannot be agreed upon, such assets shall be retained by Seller and be an Excluded Asset. If any parts and accessories or other inventories or goods that Buyer is not obligated to purchase hereunder are not removed from the Real Property within ten (10) days after the Closing Date, such property will automatically become Assets transferred to Buyer pursuant to the Bill of Sale without additional consideration.

 

 

(c)  Intellectual Property. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s telephone and data numbers, website addresses and domain names (owned or registered by or on behalf of the Dealership, ), e-mail addresses, classified telephone and internet advertising, prospect data, customer sales, lease, finance and service records (both hard copy and electronic format (including deal jackets), for no additional cost to Buyer), Seller’s workman’s compensation and unemployment rating in the State of West Virginia, all lawfully transferable licenses and permits of the Dealership or Seller, Dealership Intellectual Property (defined below), leasehold improvements and fixtures, unused internal and customer repair order forms, customer lists and marketing materials and catalogues, retail buyer’s order forms, office and shop supplies, shop reference manuals, parts reference catalogs, all books and records necessary for the continued operation of the Dealership (including training and promotional materials, employee records of employees hired by Buyer, P.O. boxes, third party warranties in Seller’s favor and all licenses and rights to use all software ( other than Vision AST software and other than DMS systems not assumed by Buyer) on or used in connection with any personal computer or other computing device used in connection with the Dealership, etc.), parts sales tickets, unused purchase order forms and all other forms and Seller’s goodwill and going concern value relating to the Dealership. “Dealership Intellectual Property” means any rights or ownership of the Dealership or Seller to all (i) patents, patent applications, patent disclosures and improvements, (ii) trademarks, trade, service marks, trade dress, and logos (excluding trade names, service marks, trade dress and logos, (iii) copyrights and registrations and applications for registration thereof, (iv) computer software, data and documentation, (v) trade secrets; and (vi) social media, directory assistance, reputation management and e-commerce sites and accounts (including E-Bay, Facebook, Instagram, Twitter, yelp!, Dealer Rater, Edmunds and Google programs).

 

(d)  Other Assets. Gas, oil, grease, nuts and bolts (“Miscellaneous Supplies”) shall be purchased by Buyer with the value thereof being equal to the Dealership’s cost of such items (established by invoice or such other documentation reasonably requested by Buyer), less any incentives received, or rebates received with respect thereto. Work in Process shall be purchased by Buyer as provided for in Section 3 (c).

 

(e)  Buyer agrees to buy all of Seller’s body shop inventories of unopened and not expired containers of paint (base and tints), quantities of paint in spray booths and machinery that can be accurately determined, new and unused dry supplies, and new and unused sheet metal, if any (“Body Shop Inventories”). The purchase price for Body Shop Inventories shall be Seller’s cost in such inventories.

 

(f)  Excluded Assets & Name License. Notwithstanding anything in this Agreement to the contrary, the following assets are not being sold pursuant to this Agreement: (i) all cash and cash equivalents, wherever located and in whatever form (unless “petty cash” is noted on the Closing Memorandum or Closing Statement); (ii) promissory notes and other evidences of indebtedness; (iii) all insurance policies; (iv) accounts receivable; (v) any claims or causes of action of Seller against third parties; (vi) tax credits and claims for tax refunds; (vii) securities, voting or otherwise in any entity; (viii) any rights in connection with and any assets of any employee benefit plan of Seller; (ix) the minute books and capital stock records of Seller, (x) all employment contracts, relating to any employees of Seller or Seller’s operations, (xi) any contract to which Seller is a party that is not an Assigned Contract, and (xii) any vehicle or parts that are not included in the purchased Assets; (collectively, the “Excluded Assets”). Seller shall remove all vehicles that are Excluded Assets from the Premises within ten (10) days following the Closing.

 

(g)  Excluded Liabilities. Notwithstanding anything contained herein to the contrary, Buyer shall not assume, or cause to be assumed, or be deemed to have assumed or caused to have assumed or be liable or responsible for any liabilities or obligations (whether known or unknown, fixed, absolute, matured, unmatured, accrued or contingent, now existing or arising after the date hereof) of Seller or any of its Affiliates (other than the liabilities expressly assumed in this Agreement) including, but not limited to, the following obligations and liabilities of Seller and its Affiliates (such obligations and liabilities not assumed hereunder, the “Excluded Liabilities”):

 

(i)  any liabilities or obligations relating to any current or former employee or independent contractor of Seller or any of its Affiliates (whether or not such employee is hired by Buyer following the Closing) and labor matters relating to any such current or former employee or independent contractor including any liabilities or obligations arising out of or relating to any employee-related matter, employee-related payment obligation, collective bargaining contract, labor negotiation, severance cost, pension plan, profit sharing plan, deferred compensation plan, accrued holiday benefit, accrued bonus, salary, bonus plan, phantom stock award, stock option or purchase plan, employment contract, consulting contract, any Employee Benefit Plan or any entitlements arising as a result of or in connection with the consummation of the Purchase;

 

 

(ii)  any Taxes, interest, and penalties (i) attributable to the purchased Assets or the Business with respect to any Pre-Closing Period or (ii) imposed on Seller or any of its Affiliates;

 

(iii)  any liabilities or obligations related to the Excluded Assets;

 

(iv)  any liabilities or obligations arising out of or relating to indebtedness of Seller or any of its Affiliates;

 

(v)  any liabilities or obligations arising out of or relating to any contract which is not an Assigned Contract;

 

(vi)  other than in connection with the operation of the Business after the Closing Date, any liabilities or obligations arising out of operations prior to the Closing Date, and /or relating to any real property owned, leased, occupied or controlled by Seller;

 

(vii)  any Seller Transaction Expenses; and

 

(viii)  any liabilities or obligations arising from product liability claims for which the injury or loss giving rise thereto (not just the delivery of the notice of such claims) occurs prior to the Closing Date, including specifically all losses caused by or arising out of any alleged design, manufacture, assembly, installation, use or sale of any products manufactured by the Factory or the Business prior to the Closing Date, whether the commencement of any related litigation, arbitration, investigation, proceeding or claim occurs before or after the Closing Date Seller shall satisfy all Excluded Liabilities that are an obligation of Seller promptly when due.

 

3.  Prorations & Assigned Contracts.

 

(a)  Prepaid Expenses & Prorations. Current personal property taxes will be prorated and adjusted between Buyer and Seller as of the Closing Date based on the number of days in the year to which the taxes relate that each party occupies the property. If current tax bills are unavailable on the Closing Date, the prior year’s tax bills will be used for proration purposes and taxes will be re-prorated between Buyer and Seller when the current year’s tax bills are received. Any amounts owed by either Party with respect to such re-proration will be paid to the other Party within ten (10) days after the determination of such re-proration. All operating expenses (other than prepaid expenses) of the Dealership for the month of Closing will be prorated and adjusted between Buyer and Seller as of the Closing Date based on a thirty (30) day month. To the extent possible, the Parties shall cause all utility meters to be read on the day preceding the Closing Date. Unless the applicable utility terminates billing on Seller’s account as of the Closing Date, utilities payable by Seller (or Buyer, to the extent applicable) for the Dealership Property, including, but not limited to electricity, gas and water and sewer, shall be prorated as of the Closing Date. The adjustment therefor shall be made on the basis of the most recently historical data/billings therefor and shall be subject to final reconciliation based upon actual charges after receipt of a final bill by Seller. Buyer will make its own arrangements for any security deposits required by any utility company, and Seller will cancel and retain any deposits previously furnished. Buyer shall receive a credit against the Purchase Price for the cost to replace any missing special tools required by the Manufacturer’s most recent catalogue.

 

(b)  Within sixty (60) days after the Closing Date, the Parties shall make an adjustment to the Purchase Price to reflect any customary adjustments, additions and deletions necessary to properly reflect the categorization and/or amount of the Assets in accordance with this Agreement. In the event the Purchase Price is adjusted, the appropriate party shall effect a wire transfer of immediately available funds to the other party for the appropriate amount within five (5) days after the determination of the adjustment.

 

(c)  Customer Deposits & Work in Process. Upon Closing, Seller shall transfer to Buyer all customer deposits for incomplete orders taken by Seller in the ordinary course of business. Seller shall retain all escheatable deposits, including but not limited to security deposit on any real property lease, if applicable. At the Closing, Seller shall furnish Buyer with a list of such deposits (including “we owes”, due bills, etc.), setting forth, as to each, the name and address of the customer, any goods or services owed to the customer and the amount of the deposit, and Seller shall deliver to Buyer all documents in Seller’s possession reflecting such deposits, we owes, due bills, etc. Seller shall credit Buyer for all we owes/due bills on the Closing Date. The Bill of Sale or Closing Statement will contain a list and description of such customer transactions (and Work in Process, as detailed below). Seller shall credit Buyer the actual cost to complete all due bills. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s pending service orders written by Seller in the ordinary course of business for an amount equal to Seller’s actual cost for parts and labor for any such orders which have been supplied by Seller which are in process at the opening of business on the Closing Date (“Work in Process”). Seller shall not receive the revenue from such Work in Process. Buyer may reject (and Seller shall retain) all Work in Process where (i) the Work in Process was not placed in the normal course of business; (ii) Seller does not possess an order signed by the customer authorizing such service, the vehicle isn’t at the Real Property on the Closing Date or such order has been open for longer than thirty (30) days prior to the Closing Date; (iii) the Work in Process does not provide for a profit to Buyer; or (iv) the Work in Process does not provide for cash or commercially reasonable credit terms on delivery of the vehicle.

 

 

(d)  Assigned Contracts. As of the Closing Date, Seller shall assign, and Buyer shall assume Seller’s contractual obligations, which Buyer has agreed to assume, listed on Schedule 3(d) hereto on the Closing Date (collectively, “Assigned Contracts”). The term “Assigned Contracts” excludes obligations and liabilities arising or accruing by the Closing Date or by reason of any breach or alleged breach by Seller, regardless of when such obligation or liability is asserted. Seller shall arrange for assignment of the Assigned Contracts at Seller’s cost. Buyer is not assuming any liabilities or obligations of Seller other than the Assigned Contracts or agree to pay, discharge or perform any liabilities or obligations arising out of any breach by Seller (other than with respect to a breach by Buyer) of any Assigned Contract.

 

4.  Deliveries.

 

(a)  At Closing, Buyer shall deliver to Seller the following:

 

(i)  the Purchase Price in immediately available funds, of which $2,500,000 (the “Holdback Amount”) shall be delivered to the Indemnity Escrow Agent (if not previously delivered) to hold under the Indemnity Escrow Agreement and the balance shall be delivered to Seller at Closing.

 

(ii)  A copy of resolutions duly adopted by Buyer’s Manager authorizing and approving Buyer’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the secretary or manager of Buyer, as true and in full force as of the Closing Date.

 

(iii)  A certificate executed by an authorized member, manager, or officer of Buyer certifying that, as of the Closing Date, all of the representations and warranties of Buyer are true and correct in all material respects and that each and every covenant and agreement to be performed by Buyer prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv)  A certificate of existence in good standing for Buyer from the State of its formation dated within fourteen (14) days of the Closing Date.

 

(v)  Assignment and assumption of the Assigned Contracts , together with consents to the assignments where noted on Schedule 3 (d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Buyer.

 

(vi)  The Indemnity Escrow Agreement executed by Buyer and Buyer’s Affiliates as named therein.

 

(b)  At Closing, Seller shall deliver to Buyer (or to Escrow Agent on behalf of Buyer), at Seller’s sole cost and expense, such bills of sale, endorsements, assignments, and other good and sufficient instruments of conveyance and transfer as provided for herein, and any other instruments in form and substance reasonably acceptable to Buyer as shall be necessary to vest effective in Buyer all right, title, and interest in and to the Assets, free and clear of all Encumbrances (except as provided herein), including without limitation, the following:

 

(i)  Duly executed Bill of Sale with respect to the Assets in the form and substance of Exhibit “A” attached hereto and incorporated herein by this reference (the “Bill of Sale”), and an Assignment of Trademarks, URLs and Telephone Numbers.

 

(ii)  Fully and properly executed transfers of MCOs, titles, or such instruments of title and other documents required to properly transfer Seller’ right, title and interest in and to the New Vehicles and Used Vehicles , and any other titled Assets to Buyer.

 

(iii)  A certificate executed by an authorized member, manager, or officer of Seller certifying that, as of the Closing Date, all of the representations and warranties of Seller are true and correct in all material respects and that each and every covenant and agreement to be performed by such Seller prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv)  A certificate of existence in good standing for Seller from the State of its formation dated within fourteen (14) days of the Closing Date.

 

 

(v)  A copy of resolutions duly adopted by each of Seller and LMP for the Necessary Seller Approvals authorizing and approving such Seller’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the manager of each Seller, as true and in full force as of the Closing Date.

 

(vi)  Intentionally Omitted.

 

(vii)  Seller shall deliver customary payoff and termination letters from the holders of any liens or Encumbrances reflecting the payoff amount required for the release of liens on the Closing.

 

(viii)  Seller will provide evidence of Seller’ voluntary termination of its dealer agreements with the Manufacturer as it relates to the Dealership.

 

(ix)  The License Use Agreement executed by Seller attached as Exhibit “B”.

 

(x)  The Indemnity Escrow Agreement executed by Seller, and Seller’s Affiliates as named therein, and the escrow agent thereunder.

 

(xi)  Assignment and assumption of the Assigned Contracts, together with consents to the assignments where noted on Schedule 3(d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Seller.

 

Such other instruments and documents as Buyer may reasonably consider necessary to effect the transactions contemplated herein

 

5.  Seller’s Representations & Warranties. Seller and LMP jointly, and severally , represent and warrant to Buyer on the Effective Date and the Closing Date as follows:

 

(a)  Formation. Seller is duly formed, validly existing, and in good standing under the laws of its organization and is duly qualified to transact business in the state in which the Dealership is located.

 

(b)  Authority. Subject to the Necessary Seller Approvals, Seller (i) has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby, and (ii) has taken all entity action necessary to authorize its execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereunder. For purposes of this Agreement, the “Necessary Seller Approvals” shall mean the consent of: Seller’s Board of Managers; LMP Automotive Holdings, LLC as the majority member of Seller; the Board of Directors of LMP; and the shareholders of LMP required to approve and authorize this Agreement and Transaction.

 

(c)  Conflicts. The execution and delivery of this Agreement by Seller and the performance by Seller of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any nation or government, or any state, regional, local or other political subdivision thereof (“Governmental Authority”).

 

(d)  Assets. Seller is the owner of, and has good and valid title to, all of the Assets except any liens described on Schedule 5(d) (which shall be satisfied at Closing). To the Knowledge of Seller, there are no special assessments against any of the Assets. All of the fixtures and equipment used in the Business are in operating condition, ordinary wear and tear excepted, and are adequate and suitable for the purposes for which they are presently being used.

 

 

(e)  Financial Statements. The Seller has delivered to Buyer the Financial Statements. Subject to the adjustment for Inventory as set for in Section 2 above, the Financial Statements are materially true, complete, and accurate. “Financial Statements” means Seller’s internally prepared, un-audited adjusted dealer income statements reflecting zero debt on the Dealership, substantially in the form required by Manufacturer, for the fiscal year ended December 31, 2021, and each of the completed months thereafter through the Closing Date, The Financial Statements are prepared in accordance with recognized industry standards and the Manufacturer’s guidelines and fairly present the financial condition of Seller’s business and the results of operations of Seller’s business, in all material respects, at the dates and for the periods covered by such financial statements and related materials. In connection with this representation of Seller regarding its financial statements, Buyer acknowledges Seller’s financial statements include expenses for a management fee to LMP, and exclude interest on Seller’s capital loan.

 

(f)  Compliance. The Dealership complies in all material respects with, and the Dealership has been conducted in all material respects in compliance with, all laws, rules and regulations (including all worker safety, applicable zoning and other laws, ordinances, regulations and building codes (collectively, the “Laws”). The Seller is not under investigation with respect to violations of any such Laws. To Seller’s Knowledge, Seller is not in material default of any its material agreements with third parties.

 

(g)  Litigation. There are no actions, suits, claims, investigations or other proceedings pending with respect to Seller, and, to the Seller’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Seller that could affect the ability to convey the Purchased Assets conveyed pursuant to this Agreement.

 

(h)  Good Title. Seller is the owner of, and has, good and marketable title to all of the Assets (including intangible assets such as websites and domain names); all of the Assets will be transferred to Buyer free and clear of all liens and encumbrances; and all of the Assets to be sold under the terms of this Agreement are, or on the Closing Date will be, in good operating condition and repair. Seller did not obtain any funds under the Paycheck Protection Program.

 

(i)  Licenses. Except as would not have a materially adverse effect on the Buyer, Seller has maintained all licenses and permits and has filed all registrations, reports and other documents required by local, state and federal authorities and regulating bodies in connection with the Dealership. None of the permits or licenses used by Seller in the operation of the Dealership has been terminated or revoked and to Seller’s Knowledge, no violations have been recorded regarding such licenses or permits, and no proceeding is pending or threatened seeking the revocation or limitation of any of them.

 

(j)  Assigned Leases and Contracts. To the Knowledge of Seller, each of the Assigned Leases and material contracts are valid, legal and binding and is in full force and effect. Seller has made all payments due under each of the Assigned Leases and any material contract through the date hereof. To the Knowledge of Seller, no event or condition has occurred and is continuing which, with or without the lapse of time or giving of notice, constitutes, or would ripen into or become, a breach of or default under an Assigned Leases and assigned material contract by the Seller, or, to the Seller’s Knowledge, by any other party thereto, in any term, covenant or condition of each Assigned Lease and assigned material contract.

 

(k)  Intellectual Property Rights. Except as set forth in Section 2c above, the Seller either owns or is otherwise entitled to use (under a license or otherwise) all Proprietary Rights necessary to conduct the business of the Business as presently conducted. For purposes of this Agreement, “Proprietary Rights” means all (i) trademarks, service marks, trade dress, logos, trade names and entity names and registrations and applications for registration thereof, (ii) copyrights and registrations and applications for registration thereof, (iii) mask works and registrations and applications for registration thereof, (iv) computer software data and documentation, (v) trade secrets and confidential business information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information), (vi) other proprietary rights or any intellectual property, and (vii) copies and tangible embodiments thereof (in whatever form or medium).

 

 

(l)  Taxes. Seller has duly filed all foreign, federal, state, county and local income, excise, sales, property, withholding, unemployment, social security, franchise, license, information returns and other tax returns and reports, or appropriate and permitted extensions thereto, required to be filed by it with respect to the Dealership or the Real Property. Each such return is true, correct, and complete in all material respects, and Seller has paid all taxes, assessments, amounts, interest and penalties due to applicable Governmental Authority. Seller has no liability for any taxes, assessments, amounts, interest or penalties of any nature whatsoever other than those for which Seller has created sufficient reserves or made other adequate provision. No governmental authority is now asserting or threatening to assert any deficiency or assessment for additional taxes, interest, penalties or fines with respect to Seller, or the Dealership.

 

(m)  Employment Matters. Except as set forth on Schedule 5(m), Seller has no oral or written collective bargaining or organized labor contracts, employment agreements, bonus, deferred compensation, profit sharing, welfare or health benefit, or retirement plan or arrangement, whether or not legally binding, nor is Seller currently paying any pension, deferred compensation or retirement allowance to anyone. Seller has no contract for the future employment of any person. Seller is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them or amounts required to be reimbursed to such employees. Seller has no knowledge that any Seller employee intends to terminate his or her employment. Seller has complied in all material respects with the applicable requirements for its employee medical and benefit plans, if any, as set forth in the Internal Revenue Code of 1986, as amended (the “Code”), and the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder (“ERISA”), including Section 4980B of the Code (as well as its predecessor provision, Section 162(k) of the Code) and Sections 601 through 608, inclusive, of ERISA, which provisions are hereinafter referred to collectively as “COBRA”. There have not been any unfair labor practice complaints or work stoppages (within the past thirty-six (36) months) and there are no present or, to Seller’s Knowledge, threatened walkout, strike or labor disturbance involving any of Seller’s employees working primarily at the Dealership. The Seller has taken the required actions under Applicable Law to confirm the identity and work status eligibility of its Employees. The Seller has not received any written notice of any inspection or investigation relating to their alleged noncompliance with or violation of IRCA, nor has or otherwise penalized for any failure to comply with IRCA or for any willful violation of any other immigration law, rule or regulation.

 

(n)  Brokers. Except for Broker, no broker, investment banker, financial advisor, consultant or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with this Agreement based upon arrangements made by or on behalf of the Seller. The sole broker’s commission or finder’s fee payable as a result of the closing of the transaction contemplated herein shall be paid by Seller at Closing to Bank of America Securities, Inc. (“Broker”) in accordance with the separate agreements between Seller and Broker. No person other than Broker is entitled to any commission in connection with the transactions contemplated by this Agreement.

 

(o)  Prohibited Persons. Neither Seller nor any members of the Seller: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

(p)  Solvency. Immediately after the Closing Date, and after giving effect to the sale of the Purchased Assets and the other transactions contemplated by this Agreement, Seller will be solvent (in that both the fair value of its assets will not be less than the sum of its known debts, provided however, immediately after Closing, the Seller and LMP anticipate paying such known debts in full and dissolving the Seller.

 

(q)  In-house Warranty Work. Except as provided in Schedule 5(q) , Seller is not obligated to provide to any customers or third parties any coupons, pre-paid parts, accessories, services or in-house warranties which may result in a liability of the same to Buyer after the Closing. Except as reflected in Schedule 5(q), Seller has no agreement or understanding with any customer or third party to return or refund any portions of any amounts paid for any extended warranty or service contract or otherwise pay any amounts to customers who elect not to or do not make claims under such contracts, but if such an obligation exists, Seller shall pay all amounts owed.

 

 

(r)  Option Agreements. Except with respect to the Manufacturer and as provided on Schedule 5(r), there are no options, right of first refusals, or similar agreements in connection with the Assets.

 

As used in this Agreement, the phrases “Knowledge of Seller” or “Seller’s Knowledge” means the actual knowledge of Seller’s officers, the Seller’s LLC company managers, the officers of LMP, the Board of Directors of LMP, the Dealership’s general managers, Sam Tawfik, and Richard Aldahan.

 

6.  Buyer’s Warranties & Representations. Buyer represents and warrants to Seller on the Effective Date and the Closing Date as follows:

 

(a)  Formation. Buyer is a Florida limited liability company. Buyer will be an entity duly formed and validly existing with authority to conduct business in West Virginia on the Closing Date.

 

(b)  Authority. Buyer has the requisite legal power and authority to execute and deliver this Agreement, to perform the obligations of Buyer hereunder, and to consummate the transactions contemplated hereby, all of which have been duly authorized and approved by all necessary entity action and for which no consent of any person or governmental authority is required for Buyer which has not been obtained (except as provided for in this Agreement for consents to be obtained and filings made before Closing), and no filing with or other notification to any person or governmental authority is required which has not been properly completed (except as provided for in this Agreement for consents to be obtained and filings made before Closing). This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms, subject only to the application of debtor relief laws and general equitable principles.

 

(c)  Brokers or Finders. The Buyer has not incurred and will not incur any liability to any broker, finder or agent for any fees, commissions or similar compensation with respect to the transactions contemplated herein.

 

(d)  Conflicts. The execution and delivery of this Agreement by Buyer and the performance by Buyer of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not (i) contravene any provision of its organizational or governing documents, (ii) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any Governmental Authority or of any arbitration award which is either applicable to, binding upon or enforceable against it, (iii) require the consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except the HSR filing, or as otherwise provided for herein.

 

(e)  Litigation. There are no actions, suits, claims, investigations or other proceedings pending and, to the Buyer’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Buyer that could affect the Seller’s ability to convey the Purchased Assets to Buyer conveyed pursuant to this Agreement.

 

(f)  [Reserved].

 

(g)  Sufficiency of Funds.

 

(i)  Buyer or its affiliates have sufficient funds or access to sufficient funds to make payment of the Purchase Price and consummate the transactions contemplated herein;

 

(ii)  Immediately after the Closing Date, and after giving effect to the purchase of the Purchased Assets and the other transactions contemplated by this Agreement, Buyer (i) will be solvent (in that both the fair value of its assets will not be less than the sum of its debts and that the present fair saleable value of its assets will not be less than the amount required to pay its debts as they become absolute and matured); (ii) will have adequate capital with which to engage in its business; and (iii) will not have incurred debts beyond its ability to pay as they become absolute and matured.

 

 

(h)  Prohibited Persons. Neither Buyer nor any members or principals of the Buyer: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

7.  Conditions to Obligations of Buyer. The obligation of Buyer to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or express written waiver by Buyer) prior to or at the Closing, of all of the following conditions:

 

(a)  Manufacturer Approval. Manufacturer has issued to Buyer a new Dealership Sales and Service Agreement, or commitment therefor, on terms and conditions acceptable to Buyer in its sole discretion, approving Buyer’s board of directors and other designees, permitting Buyer to operate the Dealership at the Real Property as Seller has operated it in the past.

 

(b)  HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction .

 

(c)  Intentionally Omitted.

 

(d)  Closing Statement. Buyer has agreed to the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(e)  Consents. Seller has obtained all consents required for the Lease Assignments and contract assignments being assumed by Buyer.

 

(f)  Seller Performance. Seller has performed in all material respects all of its obligations hereunder to be performed prior to or at Closing and each of Seller’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(g)  [reserved].

 

(h)  No Litigation. No proceeding with Seller as a Party, shall be pending before any court or other Governmental Authority, wherein an unfavorable injunction, judgement, order, decree, ruling, or charge would (1) restrain, enjoin, prohibit or prevent consummation of this transaction or any other transaction contemplated by this Agreement, or (2) cause the transaction to be rescinded following consummation.

 

(i)  Buyer shall have received all of the documents, certificates and resolutions described in Section 4.2(b), in form and substance reasonably satisfactory to Purchaser.

 

(j)  Adverse Change. Since the Effective Date, no Material Adverse Change shall have occurred. “Material Adverse Change” means any change, event or occurrence that individually or in the aggregate (taking into account all other such changes, events or occurrences) has had, or would be reasonably likely to have, a material adverse effect upon the assets, business, operations, financial condition or prospects of Seller, but shall not include any event or circumstance or change arising out of or attributable to general economic or political conditions, conditions generally affecting the motor vehicle industry (including supply chain problems), or the COVID-19 pandemic.

 

(k)  Necessary Seller Approvals. Seller has obtained the Necessary Seller Approvals.

 

(l)  Termination of Options and Minority Rights. Each of the agreements listed on Schedule 5(r) shall have been either terminated, waived, or Seller shall have been released and received a waiver from such minority member from any option or similar obligations thereunder, and the minority member and its principal(s) shall have agreed to a noncompetition provision of at least two (2) years with a seventy-five (75) mile radius of the Dealership.

 

 

(m)  Agreements Not To Compete. Seller, LMP, Sam Tawfik and Richard Aldahan, as officers of LMP, shall have executed an Agreement Not to Compete substantially in the form attached hereto as Exhibit D.

 

(n)  The Purchaser’s obligation to close is further conditioned upon:

 

(i) The receipt by Buyer or its affiliate of a fully executed Real Estate Purchase Agreement, materially in the same form as the other REPAs with The MEG Rental Corporation (“Landlord”) for the real property currently leased for the operation of the Subaru store at 117 Midtown Avenue, Mt. Hope West Virginia 25880 and which is situated described in the exhibits to the Lease between Seller and Landlord (the “Leased Land”) for a purchase price not to exceed the appraised value of the Leased Land; and

 

(ii) The simultaneous closing and conveyance of good and marketable title to the Leased Land at the same time as the closing of the Assets.

 

(iii)  Termination of the Lease upon Buyer or its affiliates purchase of the Leased Land.

 

8.  Conditions to Seller’s Obligations. Seller’s obligation to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or written waiver by Seller), prior to or at the Closing, of all of the following conditions:

 

(a)  Purchase Price Payment. Buyer paid Seller the aggregate Purchase Price for the Assets.

 

(b)  Buyer Performance. Buyer performed in all material respects all of its obligations hereunder to be performed prior to or at Closing each of Buyer’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(c)  [reserved].

 

(d)  HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction.

 

(e)  Necessary Seller Approvals. The receipt, of the Necessary Seller Approvals.

 

(f)  Closing Statement. Buyer executed and delivered the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(g)  Seller shall have received all of the documents, certificates and resolutions described in Section 4.2(a), in form and substance reasonably satisfactory to Seller.

 

 

9.  Pre- & Post-Closing Covenants.

 

(a)  Pre-Closing. Promptly upon the execution of this Agreement, Seller shall notify the Manufacturer regarding the transactions contemplated by this Agreement. Buyer (or its affiliate) shall promptly apply to the Manufacturer for the issuance of a contractual right to operate an automobile dealership upon the Premises. The Parties shall use commercially reasonable best efforts to obtain Manufacturer approval as soon as possible. Seller shall promptly provide the requisite information, documents and access necessary to prepare for Closing and ensure a seamless operational transfer of the Assets. Effective as of the Closing, Seller shall terminate its Dealer Sales and Service Agreements with the Manufacturer relative to the Dealership location and execute and deliver all of the Manufacturer’s customary documents and promptly remove Manufacturer’s intellectual property from all publicly visible Excluded Assets in every form and medium (i.e., retained internet sites, signs, etc.). Seller shall fully cooperate with Buyer, and take all reasonable steps to assist Buyer, in Buyer’s efforts to obtain its own similar Dealer Sales and Service Agreements with the Manufacturer. All actions to be taken at the Closing pursuant to this Agreement will be deemed to have occurred simultaneously, and no action, document or transaction will be deemed to have been taken, delivered or effected, until all such actions, documents and transactions have been taken, delivered or effected. Promptly after the Closing, Seller shall transfer to Buyer certificates of title or origin for all vehicles and all of its registration lists, owner follow-up lists and service files on hand as of the Closing, provided that such lists and files relate to the Assets. If Seller presents assets for purchase post-Closing that would have otherwise been Assets, then such assets may be purchased at a mutually agreed to price or otherwise retained by Seller.  Buyer is not required to submit an offer.  This does not apply to in-transit vehicles from the Manufacturer. Buyer shall retain and safeguard the pre-Closing customer paper deal jackets retained by Buyer in accordance with law, and, until Buyer destroys such records in accordance with company policy in effect from time to time, Seller shall have reasonable access to Seller’s pre-Closing customer records (e.g., paper deal jackets) and any records related to Assigned Contracts after the Closing for any legitimate purpose, such as (by way of example and not by limitation) for resolving customer inquiries.

 

(b)  Dealership Operations Pending Closing. Pending Closing, Seller shall continue to operate the Dealership in substantially the same manner as it has been operated by Seller in the past and Seller shall: (i) use commercially reasonable efforts to maintain working relationships with all suppliers, customers, employees and others having contact with the Dealership and bring all payables current as of the Closing Date; (ii) maintain current insurance policies in full force and effect; (iii) exercise reasonable diligence in safeguarding and maintaining the confidentiality of all books, reports and data pertaining to the Dealership, including use its commercially reasonable best efforts to ensure that Seller’s sales and service records remain adequately protected; failure to do so is a material breach of this Agreement; (iv) not grant increases in salary, pay or other employment related benefits to any officers or employees of the Dealership, except in the ordinary course of business; (v) not conduct any liquidation, close-out or going out of business sale or, (vi) attempt to order and restock inventory sold; (vii) intentionally omitted; (viii) not enter into any contract or agreement which is not terminable without penalty on not more than 30 days’ notice and which provides for payment by the Dealership, except those in the ordinary course of business; and (ix) not take or permit any action which would result in Seller’s representations or warranties becoming incorrect or untrue in any material respect.

 

(c)  Employee Matters.

 

(i)  Seller shall terminate or take all appropriate action in connection with pension, profit sharing and health and welfare benefit plans, if any, that are applicable to Seller and/or Seller’s employees (“Plans”), prior to or at Closing, so that Buyer will have no responsibility or liability or obligation of any nature under Plans to any person, firm or corporation whatsoever. If any applicable law provides that Buyer is or will be liable for any liability or obligation under any Plan despite Seller’s contractual liability for such liability or obligation hereunder, and Seller fail to pay or perform such liability or obligation within five (5) days after Buyer’s written demand, then in addition to any other remedies available, such amounts may be set off from time to time from any amount Buyer (or its affiliate) owes Seller (or its affiliate). Seller (including all employers, whether or not incorporated, that are treated together with Seller as a single employer within the meaning of Section 414 of the Code or, where appropriate, Seller’s health and welfare benefit plans that are “group health plans” will retain liability for and will pay when due all benefits (including all liabilities and obligations for or arising from any “COBRA” health care continuation coverage required to be provided under Section 4980B of the Code and Sections 601-608 of ERISA) attributable as of the Closing Date to “covered employees” or “qualified beneficiaries” entitled to “continuation coverage” (as those terms are defined in Section 4980B of the Code) regardless of when services were rendered or expenses incurred. By Closing, Seller shall pay all wages due Seller’s employees as of the Closing Date. At Closing, Buyer shall assume Seller’s obligations for payment of unused vacation, paid time off, holiday pay, sick pay and other similar compensation accrued to those employees of Seller which are retained by Buyer, and Buyer shall receive a credit against the Purchase Price for such amounts. Buyer shall be responsible to satisfy such amounts to the former employees of Seller to the extent of the credit received provided, however Buyer shall not be liable for any such amounts that are disputed or in excess of the credit given at the Closing and Seller and LMP shall defend and hold Buyer harmless for such disputed amounts. Seller shall terminate its employees on the Closing Date. Provided the Closing takes place, Buyer may, but is not obligated to, employ Seller’s employees who are willing to accept the offered employment with Buyer, and Buyer will give due regard to such employees’ benefits from their prior employer, so long as such employees meet all eligibility requirements, including any probationary period; provided that, notwithstanding anything in this Agreement to the contrary, Buyer shall hire on an at-will basis enough of Seller’s employees (each selected by Buyer in its sole and absolute discretion) so that Buyer and Seller will be in compliance with the provisions of the Workers Adjustment and Retraining Notification Act, 29 U.S.C. §2101-2109, if applicable. The foregoing does not grant to any of Seller’s individual employees a right of employment by Buyer.

 

 

(ii)  Subject to the approval and cooperation of Seller’s applicable health insurance plans and policies, Buyer shall have the right to cause Seller to continue its health insurance plans (including the related ancillary insurance benefits such as dental, vision, short term disability) for the employees of Seller that Buyer retains for the month of the Closing and the month following the Closing. In such case, the applicable premiums shall be prorated based upon the number of days allocable to Seller prior to Closing Date and Buyer following the Closing Date.

 

(d)  Seller’s Receivables. Following the Closing, upon the receipt of accounts receivable of the Seller, Buyer will remit checks thereof directly to the Seller at its principal office on a weekly basis. Buyer shall accept payment of Seller’s accounts receivable and Manufacturer warranty payments arising out of the operation of the Dealership prior to Closing for a period of 180 days. Buyer shall turn over to Seller on the last day of each calendar month during said period all of the monies it received as cleared funds so accepted on said accounts receivable during the previous calendar month. Buyer is not obligated to accept payments of such accounts receivable after such 180-day period, but if Buyer does so then Buyer will promptly pay the same over to Seller. Buyer is only obligated to accept payment during such period, not to attempt to enforce payment. No adjustment will be made in any of such accounts receivable without Seller’s permission. Seller reserves the right to pursue legal remedies of collection upon default by the customer with respect to any receivables owed to Seller. Buyer shall have no obligation to pursue or otherwise actively work to collect any of such Seller receivables or Manufacturer warranty payments. At the end of said 180-day period, Buyer shall no longer be obligated to accept payments of such accounts receivable. If Buyer does accept payment of any of Seller’s accounts receivable after expiration of the 180-day period, Buyer shall hold same in trust for Seller and promptly pay same over to Seller. It is understood that Buyer’s responsibility, so far as such collection is concerned, is only to accept monies paid on Seller’s accounts receivable and shall not include any obligation to ascertain the correct amount of any accounts receivable. Upon reasonable notice to Buyer, Buyer shall provide Seller with access to records relating to Seller’s operation of the Dealership, but Seller and LMP agree that they shall have no right to utilize the employees of Buyer to provide accounting or other bookkeeping services to themselves.

 

(e)  Manufacturer Payments. The Parties shall use their commercially reasonable efforts to ensure that (i) amounts due to Seller but collected by Buyer (e.g., Manufacturer receivables, Manufacturer credits relating to items such as warranty claims or other claims, credit card payments, etc.) arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Seller promptly; (ii) amounts due to Buyer but collected by Seller arising out of or in connection with the operation of the Dealership on or following the Closing or as provided in this Agreement will be paid over to Buyer promptly; (iii) amounts paid by Seller but owed by Buyer as a result of Manufacturer erroneously billing Seller for items arising out of or in connection with the operation of the Dealership following Closing will be paid over to Seller promptly; and (iv) amounts paid by Buyer but owed by Seller (e.g., any finance contract chargebacks, insurance (e.g. credit life, accident and health, extended warranty, etc.) chargebacks, or repossessions and all rebates to Seller’s customers of premiums for credit life insurance, credit accident and health insurance, mechanical insurance coverage and GAP insurance) as a result of Manufacturer or any third party erroneously billing Buyer for items arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Buyer promptly. This section survives Closing indefinitely. If there are vehicles in-transit on the Closing Date (whether or not they are physically present) that have not been funded by Seller’s floor plan lender and the Parties do not know whether they will be paid for by Buyer’s floor plan lender or Seller’s floor plan lender, then the Parties may separately schedule those vehicles, Buyer will buy them but not pay for them, and, if such vehicles are funded by Seller’s floor plan lender, then Seller shall notify Buyer and Buyer shall promptly pay Seller’s floor plan lender such amounts. Any other payments related to such vehicles misdirected by the Manufacturer will be redistributed as contemplated by this Section 9(e). Buyer with any needed cooperation of Seller shall undertake all accounting, bookkeeping and reconciliation as necessary under this section and shall make all payments as necessary. On a monthly basis, Buyer shall present Seller with a reconciliation and the amount owed by Buyer or by Seller (if any) and the parties shall pay any amounts owing to the other within ten (10) business days.

 

(f)  Dealing and Non-Circumvent. In order to induce Buyer to enter into this Agreement, during the period commencing on the Effective Date until the Closing Date (or earlier termination of this Agreement), Seller and LMP will not and will cause each of its stockholders, managers, directors, officers, agents, advisors and other representatives to not, directly or indirectly, through affiliates or otherwise, (i) enter into any sale, lease, pledge or other disposition of all or any significant part of the purchased Assets, or any agreement for the sale of any capital stock or other equity securities of Seller, or agreement relating to a merger, consolidation or other acquisition proposal involving Seller or its member with any other party, or any transaction similar to the foregoing in format or purpose, with any party other than Purchaser; or (ii) enter into any transaction (A) with a total cumulative and aggregate value in excess of One Hundred Fifty Thousand Dollars ($150,000), or (B) outside of the ordinary course of business of Seller consistent with past practice in contemplation of any transaction described above with any party other than Buyer; or (iii) encourage, solicit, provide information to or negotiate with any party, other than Buyer, to do any of the foregoing.

 

 

(g)  License Use. The Parties acknowledge that the State of West Virginia Division of Motor Vehicles may be experiencing delays in the processing of motor vehicle dealer licenses. The Seller hereby agrees that the Buyer may use the Seller’s licenses required under the laws of the State of West Virginia to operate the Business for a period of not more than 60 days after the Closing Date (and the Seller shall maintain all such licenses during such period). As a material inducement to the Seller to permit the Purchaser’s use of such licenses: (a) Buyer agrees that it will use best efforts to obtain its own licenses with the State of West Virginia as promptly as practicable , and (b) Buyer hereby agrees to indemnify and hold Seller, its respective affiliates, and their respective owners, managers, members, controlling persons, directors, officers, and employees (collectively, the “Seller Indemnified Parties”) harmless from and against any cost or liability, including reasonable attorneys’ fees, incurred by any Seller Indemnified Party in connection with or as a result of the Buyer’s use of the Seller’s licenses. Upon the Effective Date, the Seller will provide Buyer with a copy of the Seller’s DMV and other state and county regulatory licenses. Buyer agrees to add the Seller to its general liability insurance coverage as an additional insured during the term of the License Use Agreement. To effect the Purchaser’s use of the Seller’s license as contemplated hereby, the Seller agrees at the Closing to enter into a license use and indemnification agreement sufficient to satisfy applicable law for such license use in the form of Exhibit B hereto (the “License Use Agreement”).

 

10.  Access.

 

(a)  Upon receipt of Manufacturer’s approval to transfer the Dealership to Buyer, Buyer may set up Buyer’s computer system parallel to Seller’s computer systems for the Dealership, provided, however, Seller’s systems shall not be turned off until the Closing Date. Following the Effective Date, Buyer’s Information Technology personnel may access the Dealership for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve) to facilitate any applicable transfer purchased Assets.

 

(b)  Seller shall permit representatives of Buyer to have access to and to examine the records, properties and assets associated with the Assets and the Real Property, provided, however, all access hereunder shall be subject to this Agreement. Any access by Buyer shall be at times determined by Sellers and Buyer and in a manner so as not to interfere with the normal business operations of Seller .

 

(c)  Buyer’s Information Technology personnel may have certain access to the Dealership (no login access) for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve). Following receipt of Manufacturer approval for transfer of the Dealership to Buyer, Seller shall contact its providers for DMS, CRM, and any other third-party data servicers, and execute all necessary documents to effectuate the transfer all intangible data Assets to Buyer’s DMS system on the Closing Date. Buyer shall be solely responsible for any and all costs associated with effectuating the transfer of all intangible data Assets to Buyers DMS system.

 

11.  Default & Termination. Notwithstanding any provision in this Section 11 to the contrary, no Party may terminate this Agreement due to the breach of another Party if the first Party is in material breach of this Agreement.

 

(a)  Termination. The Parties may exercise their respective rights of termination by the delivery of written notice of termination to the other Party at any time prior to the completion of the Closing. This Agreement and the transactions contemplated hereby may be terminated on or before the Closing Date as follows:

 

(i)  By the mutual written agreement of the Parties;

 

(ii)  By Buyer if a breach of any material provision of this Agreement has been committed by Seller and such breach has not been either (A) cured within ten (10) days after written notice to Seller, or (B) waived in writing by Buyer;

 

 

(iii)  By Seller if a breach of any material provision of this Agreement has been committed by Buyer and such breach has not been either (A) cured within ten (10) days after written notice to Buyer, or (B) waived in writing by Seller;

 

(iv)  By Seller if Seller’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(v)  By Buyer if Buyer’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(vi)  By Seller or Buyer, if the Closing has not occurred by the Closing Date Deadline.

 

Unless this Agreement is terminated by Seller under the provisions of Section 11(a)(iii), Buyer shall be entitled to receive a return of the Deposit upon a termination.

 

(b)  Buyer’s Default. If prior to Closing Buyer breaches this Agreement and fails to cure as provided above, then Seller’s sole right and exclusive remedy will be to terminate this Agreement by giving written notice thereof to Buyer and then Seller may take the Deposit as liquidated damages in full settlement of all claims, remedies or causes of actions against Buyer under this Agreement, including the remedy of specific performance and other forms of equitable relief. It is impossible to estimate more precisely the damages which might be suffered by Seller upon Buyer’s default. Seller’s retention of the Deposit is intended not as a penalty, but as full liquidated damages.

 

(c)  Seller Default. If prior to Closing, if Seller breaches this Agreement and fails to cure as provided above, then Buyer may exercise any and all rights and remedies available to it at law or in equity, including (i) an action in equity against Seller (pursuant to which Buyer is not obligated to post a bond or prove special damages or irreparable injury) for the specific performance by Seller of the terms and provisions of this Agreement and disgorgement of profits from the date of the Closing Date Deadline until receipt of any applicable remedy at law or equity in the Buyer’s favor; and (ii) the right to terminate this Agreement by giving written notice of such termination to Seller and receive a full refund of the Deposit without prejudice to any of Buyer’s rights or remedies including an action for direct damages, but not consequential damages.

 

(d)  [reserved].

 

(e)  Breakup Fee. If this Agreement is terminated by any Party hereto due to the failure of Seller or LMP to obtain the Necessary Seller Approvals prior to the Closing Date Deadline, regardless of the reason for such failure, then Buyer shall be entitled to receive from Seller and LMP, and Seller and LMP shall be obligated to pay Buyer within 3 business days following receipt of an invoice from Buyer, a fee (the “Breakup Fee”) equal to the reasonable costs and fees expended or incurred by Buyer for the transactions contemplated herein and in connection with the purchase of the Leased Land.

 

12.  Survival and Indemnification.

 

(a)  Representations and Warranties Survive Closing. It is the express intention and agreement of the parties that all representations and warranties made by the parties in this Agreement shall survive the Closing for a period of twenty-four (24) months. Thereafter, all representations and warranties made by the parties in this Agreement shall terminate and no action may be had on them (excepting claims made during the Survival Period may continue to be pursued). All covenants and agreements of the parties shall survive the Closing in accordance with their terms.

 

(b)  Buyer’s Obligation to Indemnify. Following the Closing, Buyer will indemnify and hold Seller, its affiliates, managers, member, and officers harmless from and against any and all liability, loss, damage, or deficiency (collectively, “Losses”) resulting from: (i) any misrepresentation, breach of warranty, or non-fulfillment of any agreement on the part of Buyer under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument furnished or to be furnished by Buyer in connection with the transactions contemplated by this Agreement; (iii) the ownership, management and operations of the Dealership or the Assets from and after the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Buyer; (v) the Assigned Contracts, and; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity.

 

 

(c)  Seller’s Obligation to Indemnify. Following the Closing, Seller and LMP (jointly and severally with Seller) will indemnify and hold Buyer, its affiliates, managers, members, officers, and directors harmless from and against any and all Losses resulting from: (i) any misrepresentation, default, breach of warranty or non-fulfillment of any agreement on the part of Seller or LMP under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument or to be furnished by Seller or LMP in connection with the transactions contemplated by this Agreement; (iii) the ownership, management, and operations of the Dealership or the Assets prior to the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Seller; (v) the Excluded Liabilities; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity, and (vii) any audits, including warranty audits, for sales, service and business operations of Seller arising or accruing prior the Closing Date.

 

(d)  Limitations. No claim may be made for indemnification in respect of a breach of a representation or warranty unless notice of such claim is delivered in writing prior to the expiration of the survival of the representation or warranty that is the subject of such claim. Each party shall have the right to bring an action against the other on the breach of a representation or warranty hereunder, but only if the party bringing the action for breach gives written notice of such breach to the other party before the end of the Survival Period. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Buyer’s Group Global Losses exceeds $50,000; provided, however, that the foregoing limitation shall not apply to any Loss with respect to intentional misconduct or fraud. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(b) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Seller’s Group Global Losses exceeds $50,000. Notwithstanding anything in this Agreement to the contrary, the Seller and LMP shall not have any liability whatsoever under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss of any amount by which the Losses payable by the Seller and LMP shall, individually or in the aggregate, exceed Seller’s Group Global Cap of $2,500,000. For the purposes of applying the foregoing liability limitations, amounts paid by Seller, LMP and Seller’s affiliates shall be aggregated. Notwithstanding anything in this Agreement to the contrary, the foregoing limitation on liability shall not apply to any Losses arising or resulting from intentional misconduct or fraud of the Seller, or LMP or their affiliates. For purposes of this Agreement, “Buyer’s Group Global Losses” shall mean the cumulative Losses of Buyer and Buyer’s affiliates who purchase any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Seller or Seller’s affiliates. For purposes of this Agreement, “Seller’s Group Global Losses” shall mean the cumulative Losses of Seller and Seller’s affiliates who sell any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Buyer or Buyer’s affiliates. For purposes of this Agreement, “Seller’s Group Global Cap” shall mean the cumulative liability of LMP, Seller and Seller’s affiliates for Losses to Buyer and Buyer’s affiliates (excluding Losses arising or resulting from intentional misconduct or fraud) under their Dealership Asset Purchase Agreements for any of the Subject LMP Dealerships.

 

(e)  Matters Involving Third Parties.

 

(i)  To be entitled to such indemnification, the party claiming indemnification (“Indemnified Party”) will give the other party (“Indemnifying Party”) prompt written notice of the assertion by a third party of any claim with respect to which the Indemnified Party might bring a claim for indemnification hereunder (“Third Party Claim”), and in all events must have supplied such notice to the Indemnifying Party within the applicable period for defense of such claim; provided, however, that the failure to give prompt written notice as prescribed above will not preclude indemnification so long as such failure does not prejudice the Indemnifying Party’s defense against such claim.

 

(ii)  The Indemnifying Party will be entitled, at its own expense, to participate in the defense of such action, proceeding or claim, and, if (i) the action, proceeding or claim involved seeks (and continues to seek) solely monetary damages, environmental remediation or relates to any liability for taxes, (ii) the Indemnifying Party confirms, in writing, its obligation hereunder to indemnify and hold harmless the Indemnified Party with respect to such damages in their entirety, and (iii) the Indemnifying Party, in the reasonable judgment of the Indemnified Party, will be able to satisfy any adverse judgment as a result of its indemnification obligation with respect to such action, proceeding or claim, then the Indemnifying Party will be entitled to assume and control such defense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval will not be unreasonably withheld or delayed. The Indemnified Party will be entitled to participate therein after such assumption, the costs of such participation following such assumption to be at its own expense. Upon assuming such defense, the Indemnifying Party will have full rights to enter into any monetary compromise or settlement which is dispositive of the matters involved; provided, that such settlement is paid in full by the Indemnifying Party and will not have any direct or indirect adverse effect upon the Indemnified Party.

 

 

(iii)  With respect to any action, proceeding or claim as to which (i) the Indemnifying Party does not have the right to assume the defense or (ii) the Indemnifying Party will not have exercised its right to assume the defense, the Indemnified Party will assume and control the defense of and contest such action, proceeding or claim with counsel chosen by it and approved by the Indemnifying Party, which approval will not be unreasonably withheld or delayed. The Indemnifying Party will be entitled to participate in the defense of such action, proceeding or claim, the cost of such participation to be at its own expense. The Indemnifying Party will be obligated to pay the reasonable attorneys’ fees and expenses of the Indemnified Party. The Indemnified Party may not settle such action, proceeding or claim without the prior written consent of the Indemnifying Party, which will not be unreasonably withheld.

 

(iv)  Both the Indemnifying Party and the Indemnified Party will cooperate fully with one another in connection with the defense, compromise or settlement of any such action, proceeding or claim, including, without limitation, by making available to the other all pertinent information and witnesses within its control.

 

(f)  Procedures for Indemnification - Other Claims. A claim for indemnification relating to a breach of a warranty or representation for any matter not involving a Third-Party Claim must be asserted by notice to the Indemnifying Party by the Indemnified Party on or before the expiration of the Survival Period. The Indemnifying Party will have the obligation to eliminate or mitigate its indemnification obligation under this Agreement by affecting a cure of any breach of this Agreement not related to any Third-Party Claim (including any document, certificate, instrument or agreement to be executed and/or delivered under this Agreement), if susceptible of cure, within thirty (30) days after any such notice. The Indemnifying Party will pay any uncured indemnification claim and any claim that is not capable of cure that is undisputed promptly after such notice and failure to cure. The Indemnifying Party will promptly pay any other indemnification claim upon resolution by an agreement with the Indemnified Party or upon a final, non-appealable order of a court of competent jurisdiction. All claims for indemnification as to a breach of a representation or warranty will survive as to any claim or demand made on or before the expiration of the Survival Period until such claim or demand is fully paid or otherwise resolved by the parties hereto in writing or by a court of competent jurisdiction.

 

(g)  Seller’s Security for Indemnification Claims. To secure the indemnity obligations of Seller and LMP under this Section 12. for claims made by Buyer and claims of Buyer’s affiliates for indemnification under their Dealership Asset Purchase Agreements and underlying Real Estate Purchase Agreements with Seller’s affiliates within 24 months of the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith; the Parties and their affiliates who sell and purchase any of the Subject LMP Dealerships shall enter into an Indemnity Escrow Agreement with Greenberg Traurig, PA, as the “Indemnity Escrow Agent”. Seller and Seller’s affiliates shall fund the Holdback Amount under the Indemnity Escrow Agreement in full upon the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith. The form of the Indemnity Escrow Agreement is attached as Exhibit C .

 

(i)  Subject to the limitations set forth in this Section 12, all payments by the Seller or LMP to Buyer pursuant to this Section 12 shall be satisfied first from the Indemnity Escrow Funds (to the extent the Indemnity Escrow Funds are sufficient, and then, subject to the limitations herein, the Seller and or LMP shall pay any excess due hereunder directly) and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Indemnity Escrow Agent to make the applicable payments.

 

(ii)  On the first year anniversary following the Closing Date, an amount equal to 50% of the total Indemnity Escrow Funds originally funded to the Indemnity Escrow Agent minus  the amount of claims paid by the Indemnity Escrow Agent, and minus the aggregate outstanding  amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date shall be released to the Seller, LMP and or Seller’s affiliates on such date (if such number is positive), and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

(iii)  On the second year anniversary following the Closing Date, an amount equal to the balance of the Indemnity Escrow Funds minus the aggregate outstanding  amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date (any such claim, a “Remaining Indemnity Claim”) shall be released to the Seller, LMP and or Seller’s affiliates on such date, and the Buyer and the Seller shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.  Following the final resolution of any Remaining Indemnity Claim, if the Indemnity Escrow Funds exceed the aggregate amount, if any, which any of Buyer or Buyer’s affiliates has claimed under Section 12 or under any of their Dealership Asset Purchase Agreements with respect to Remaining Indemnity Claims that remain unresolved, the excess Indemnity Escrow Funds shall be released to the Seller, Seller’s affiliates or LMP on such date, and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

 

13.  Miscellaneous.

 

(a)  Transaction & Enforcement Costs. Each Party shall bear its own costs and expenses, including legal and accounting fees, incurred in connection with this Agreement and the transactions contemplated hereby, and shall pay such costs and expenses whether or not the Closing occurs. Notwithstanding the foregoing, in the event of any litigation between or among the Parties to enforce any provisions or rights hereunder, the unsuccessful Party, as determined by a final judgment, shall pay to the successful Party therein all costs and expenses of such Party (and any of such Party’s agents, such as attorneys or accountants) expressly including, but not limited to, reasonable attorneys’ fees and court costs incurred therein by such successful Party, which costs, expenses and attorneys’ fees will be included in and as a part of any judgment rendered in such litigation.

 

(b)  Confidentiality. Each Party and its representatives shall hold in strict confidence all data and information obtained in connection with this transaction, including all financial and other information of or related to the Dealership and the terms of this Agreement, and shall not directly or indirectly at any time reveal, report, publish, disclose or transfer to any person any of such data and information or utilize any of such data or information for any purpose; provided, however, each Party may disclose information to Manufacturer and legal, tax, accounting advisors, lenders and potential lenders and other parties deemed by a Party to be necessary or appropriate in connection with the transactions described herein, provided that such persons acknowledge that they too are bound by the confidentiality provisions contained herein. Notwithstanding any contrary provision herein, Buyer may notify governmental organizations (e.g., the Security and Exchange Commission, the FTC, if applicable) of this Agreement and the transactions contemplated hereby by filing an unredacted copy of this Agreement. The Parties may not otherwise announce the transactions contemplated hereby which may identify the Seller, the Buyer, and the Dealership to the general public without the consent of the other. Further, notwithstanding any contrary provision herein, Buyer may apply for licenses, tax applications, qualifications, and fictitious name registrations required for its business operations and the parties may disclose this transaction to obtain the necessary consents related to contract assumptions and the Necessary Seller Approvals.

 

(c)  Relationship & Authority. Each Party is acting as an independent contractor. Each Party is responsible for all taxes relating to its operation, including payroll taxes for its employees and nothing in this Agreement is intended to create a relationship, express or implied, of employer-employee or partnership or joint venture between or among any Party. Each individual executing this Agreement on behalf of a Party individually represents and warrants that such Party is validly existing, that such execution has been duly authorized, that the terms of the instrument will be binding upon the Party, and that such individual is duly authorized to execute this Agreement on behalf of such Party.

 

(d)  Notices. All notices and other communications provided for hereunder will be in writing, unless otherwise specified, and will be deemed to have been duly given if delivered personally, via e-mail, via Federal Express or other nationally recognized courier, to the addresses on the signature pages hereof or at such other addresses as a Party may designate from time to time in writing. Notices will be effective upon receipt by the Party or refusal to accept delivery. Notices on behalf of either Party may be given by the attorneys representing such Party.

 

(e)  Integration; Amendments & Time. This Agreement contains the entire understanding between the Parties and supersede any prior understanding and/or oral agreements between them respecting the subject matter of this Agreement. Any modification or amendment of this Agreement will be in writing and executed by Seller and Buyer. Time is of the essence in this Agreement. If the last day to perform under a provision of this Agreement or the final day of any period (e.g., the Closing Date Deadline) falls on a Saturday, Sunday, or legal holiday, then such performance deadline or period is automatically extended through the next day which is not a Saturday, Sunday, or legal holiday.

 

 

(f)  Interpretation & Administration. The words “include”, “includes”, “included”, “including” and “such as” do not limit the preceding words or terms and are deemed to be followed by the words “without limitation”. The Parties have a duty of good faith and fair dealing. All captions and headings contained in this Agreement are for convenience of reference only and will not be construed to limit or extend the terms or conditions of this Agreement. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. All terms defined in this Agreement in their singular or plural forms, have correlative meanings when used herein in their plural or singular forms, respectively. Each Party and its counsel have reviewed this Agreement and the rule of construction that any ambiguities are to be resolved against the drafter will not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits hereto. Except as expressly provided herein (e.g., “industry standard depreciation” or “as reflected on Manufacturer’s statement”), all accounting matters required or contemplated by this Agreement will be in accordance with generally accepted accounting principles. This Agreement may be executed in one or more counterparts and delivered by e-mail or facsimile, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement will be binding upon and inure to the benefit of the Parties, their successors and assigns. Buyer may assign or otherwise transfer all of Buyer’s rights, obligations and benefits hereunder to any entity owned or controlled by, or under common control with, Buyer without Seller’s consent. The invalidity of any one or more phrases, sentences, clauses, paragraphs, or sections of this Agreement will not affect the remaining portions of this Agreement. No failure or delay by any Party to enforce any right specified herein will operate as a waiver of such right, nor will any single partial exercise of a right preclude any further or later enforcement of the right. A business day shall mean Monday through Friday, excluding federal and national holidays or State of Florida holidays. The term “material” shall mean an amount which would involve an expenditure, liability or damages in excess of $50,000.00.

 

(g)  Further Assurances. At the request of Seller and at Seller’s expense, Buyer shall cooperate in the preparation by Seller of all filings to be made by Seller with the Securities and Exchange Commission including any periodic filings and any filing with respect to a registered offering of its securities by Seller and the closing of the offering registered thereby. Upon a party’s request at any time, the other party shall take any act, including executing and delivering any document, necessary or advisable to otherwise to carry out the provisions of this Agreement.

 

(h)  Escrow Agent. Escrow Agent’s duties pursuant to this Agreement are purely ministerial in nature, and the Escrow Agent shall incur no liability whatsoever except for its willful misconduct or gross negligence, so long as the Escrow Agent is acting in good faith. The Parties hereby release the Escrow Agent from any liability for any error of judgment or for any act done or omitted to be done by the Escrow Agent in the good faith performance of its duties hereunder and do each hereby indemnify the Escrow Agent against, and shall hold, save, and defend the Escrow Agent harmless from, any costs, liabilities, and expenses incurred by the Escrow Agent in serving as Escrow Agent hereunder and in faithfully discharging its duties and obligations hereunder. The Escrow Agent is acting as a stakeholder only with respect to the Deposit. If there is any dispute as to whether the Escrow Agent is obligated to deliver the Deposit or as to whom the Deposit is to be delivered, the Escrow Agent may refuse to make any delivery and may continue to hold the Deposit until receipt by the Escrow Agent of an authorization in writing, signed by Seller and Buyer, directing the disposition of the Deposit, or, in the absence of such written authorization, the Escrow Agent may hold the Deposit until a final non appealable determination of the rights of the Parties in an appropriate judicial proceeding. If such written authorization is not given, or a proceeding for such determination is not begun, within thirty (30) days after notice to the Escrow Agent of such dispute, the Escrow Agent may bring an appropriate action or proceeding for leave to deposit the Deposit in a court of competent jurisdiction pending such determination. The Escrow Agent shall be reimbursed for all costs and expenses of such action or proceeding, including reasonable attorneys’ fees and disbursements, by the Party determined not to be entitled to the Deposit. Upon making delivery of the Deposit in any of the manners herein provided, the Escrow Agent shall have no further liability or obligation hereunder. The Escrow Agent shall execute the Escrow Receipt attached hereto in order to confirm that it has received the Deposit and is holding the same on deposit in accordance with the provisions hereof.

 

(i)  Applicable Law & Venue. This Agreement will be governed by and construed and enforced in accordance with the internal laws and judicial decisions of the State of Florida without regard to conflict of law provisions thereof. Any litigation, action or proceeding arising out of or relating to this Agreement will be held exclusively in any state or Federal court in Broward County, Florida. Each Party waives any objection which it might have now or hereafter to the venue of any such litigation, action or proceeding, submits to the sole and exclusive jurisdiction of any such court and waives any claim or defense of inconvenient forum. Each Party consents to service of process at such Party’s address as provided herein (and updated in writing from time to time).

 

(j)  Waiver of Jury Trial. Each party hereto hereby acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.

 

(k)  [reserved].

 

[Remainder of Page Blank]

 

 

IN WITNESS WHEREOF, the Parties executed and delivered this Agreement as of the Effective Date.

 

LMP Beckley HS, LLC, a West Virginia limited liability company			Hope AWV S, LLC, a Florida limited liability company
By:	/s/ Sam Tawfik		By:	/s/ Ali Ahmed
	Sam Tawfik, Authorized Signatory			Name: Ali Ahmed
				Title: Manager
LMP Beckley 002 Holdings, LLC, a West				Notice Address for Buyer:
Virginia limited liability company				Attn: Ali Ahmed
By:	/s/ Sam Tawfik			5875 NW 163rd Street
	Sam Tawfik, Authorized Signatory			Suite 104
				Miami Lakes, FL 33014
LMP Automotive Holdings, Inc, a Delaware corporation				Email: [email protected]
By:	/s/ Sam Tawfik		With a copy to:
	Sam Tawfik, CEO
			Greenspoon Marder LLP
Notice Address for Seller and LMP:			Attn: David Weisman
			200 East Broward Blvd.
LMP Beckley HS, LLC			Suite 1800
500 East Broward Boulevard, Suite 1900			Fort Lauderdale, FL 33301
Fort Lauderdale, FL 33394			Email: [email protected]
Attn: Sam Tawfik, Chief Executive Officer			Greenspoon Marder LLP
			Attn: Greg Blodig
With a Copy To:			200 East Broward Blvd.
			Suite 1800
Greenberg Traurig, PA			Fort Lauderdale, FL 33301
Attn: Bruce C. Rosetto			Email: [email protected]
777 S. Flagler Rive
Suite 300 East
West Palm Beach, FL 33401
Email: [email protected]

 

 

Schedule 1(b)(ii) – Purchase Price for PreOwned, Service and Rental Vehicles

 

 

Schedule 2 – List of Assets

 

Inventory of new vehicles, used vehicles, parts and accessories will be inventoried and attached at or near Closing.

 

Seller’s FF&E is listed on Schedule 2(b).

 

 

Schedule 2(b) – FF&E

 

 

Schedule 3(d) – Assigned Contracts

 

Leases to be added.

 

 

Schedule 5(d) – Liens

 

 

Schedule 5(q) – In-House Warranties

 

 

Schedule 5(m) – Employment Matters

 

 

ESCROW RECEIPT

 

Dealership Asset Purchase Agreement

 

Escrow Agent agrees to be bound by the Dealership Asset Purchase Agreement and acknowledges receipt of:

 

☐ A. Executed copies of the Dealership Asset Purchase Agreement on August __, 2022;

 

☐ B. Deposit in the amount of $__________ on August __, 2022.

 

Escrow Agent:
By:
Name & Title:

 

Escrow Agent acknowledges having reviewed this Dealership Asset Purchase Agreement and will be bound by those provisions.

 

 

 

Exhibit 10.5

 

Execution Version

 

DEALERSHIP ASSET PURCHASE AGREEMENT

 

This DEALERSHIP ASSET PURCHASE AGREEMENT (this “Agreement”) is effective as of Auugst 5, 2022 (the “Effective Date”), by and among Fayette AWV AM, LLC, a Florida limited liability company (“Buyer”), LMP Beckley KCC, LLC, a West Virginia limited liability company (the “Seller”), a wholly owned subsidiary of LMP Beckley 001 Holdings, LLC, a West Virginia limited liability company, and LMP Automotive Holdings, Inc., a Delaware corporation (“LMP”), and together with Seller and Buyer, each a “Party” and, collectively, the “Parties”).

 

RECITALS:

 

WHEREAS, Seller owns, controls and operates a Chevrolet automotive dealership (the “Dealership”), and all ancillary business related thereto (the “Business”) located at 1508 Main St E, Oak Hill, WV 25901 (the “Premises”) under agreements with General Motors Company (the “Manufacturer”);

 

WHEREAS, LMP owns and operates through various affiliates, six (6) automotive dealerships, including the Seller, (the collectively, the “Subject LMP Dealerships”), and certain real property (the “Real Property”), which are the subject of that certain letter of intent with an affiliate of Buyer, dated June 11, 2022, for the purchase of substantially all of the assets of the Subject LMP Dealerships (the “LOI”), including the sale and transfer substantially all of the Dealership’s assets (as more particularly described in Section 2 below, but excluding the Excluded Assets defined below, collectively, the “Assets”);

 

WHEREAS, simultaneously with the consummation of this Agreement, Fayette AWV RE, LLC, a Florida limited liability company (the “Real Property Purchaser”) will purchase and acquire the real property of the Premises from LMP Automotive Holdings, LLC, a Florida limited liability company (the “Real Property Seller”) in accordance with that certain Real Property Purchase and Sale Agreement for the purchase and sale of the real property underlying the Premises (the “Real Property Purchase and Sale Agreement”);

 

WHEREAS, the LOI sets forth that there is no due diligence period with respect to the Dealership and the Assets once this Agreement is executed;

 

WHEREAS, the Buyer desires to purchase the Assets and Seller desires to sell and transfer the Assets on the terms and conditions hereinafter set forth (the “Transaction”).

 

NOW, THEREFORE, in consideration for the mutual promises contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged by each Party, the Parties as follows:

 

1.  Closing Date and Purchase Price.

 

(a) Closing Date. Subject to the terms and conditions set forth in this Agreement, the consummation of the transactions contemplated hereby (the “Closing”) shall take place no later than within (15) business days of the receipt of the latest to occur of: (i) all applicable manufacturers’ approvals in accordance with Section 7(a) in connection with the purchase and sale of all of the Subject LMP Dealerships and (ii) all required entity approvals from the boards of directors and shareholders of LMP, and the manager of sellers of the Subject LMP Dealerships as well as the manager of the sellers of the real estate properties underlying the LMP Dealerships being sold are obtained in connection with authorizing the contemplated Transaction and the transactions involving the Subject LMP Dealerships. The date of the Closing is referred to herein as the “Closing Date.” The Closing shall be deemed to be effective as of the opening of business on the Closing Date. The “Closing Date Deadline” means October 31, 2022; provided, however, that if, as of the fifteenth (15^th) day prior to such date, all of the manufacturers’ approvals have not been obtained, or if all applicable waiting periods pursuant to the HSR Act have not expired or terminated, the Closing Date Deadline will automatically be extended for thirty (30) days, time being of the essence. It is agreed that the closings for all of the Subject LMP Dealerships may occur in separated groups with the same manufacturer and/or by geographical regions. It is acknowledged that the actual Closing and funding for this transaction make take 1 or 2 business days.

 

 

(b)  Purchase Price & Broker. The purchase price for the Assets described in Section 2(e) below is $8,025,550 in connection with the purchase of goodwill and FF&E (the “Goodwill Purchase Price”) plus additional purchase price for parts, work in progress (“WIP”), and New Vehicles, Used Vehicles and Pre-Owned Vehicles (collectively, the “Vehicle Inventories”) calculated as described below (the “Additional Purchase Price,” with the Goodwill Purchase Price, collectively the “Purchase Price”). The parties agree that the FF&E portion of the Goodwill Purchase Price includes the price for Seller’s vehicles used in its business operations which are listed in the FF&E schedules to its financial statements. The Additional Purchase Price will be calculated as follows:

 

(i)  The purchase price for Dealership’s new, undamaged and untitled 2021, 2022 and subsequent year Manufacturer vehicles, including demonstrators and loaners, (the “New Vehicles”) is an amount equal to the actual Manufacturer’s original invoice; plus Seller’s direct out-of-pocket cost of dealer-installed optional parts and accessories theretofore installed upon New Vehicles; less all applicable dealer hold-backs paid to Seller; less fifty percent of all credits, and allowances floor plan assistance, Local Marketing (LMF & LMA) , and Essential Brand Elements; less “prep” expenses for New Vehicles which have not yet been prepared for sale; less the cost to repair any damage and less the replacement cost of any parts or equipment removed. Notwithstanding the foregoing, the purchase price of New Vehicles shall not include or be increased for rust proofing, undercoating, scotch-guarding, non-Manufacturer alarm systems, interrupt systems, theft protection devices and similar dealer additions. The purchase price of New Vehicles with more than 600 miles but less than 4,000 miles will be reduced by $0.60 per mile. New Vehicles with 4,000 or more miles will be valued as a Used Vehicle (defined below). For purposes of this Agreement, a vehicle will be considered damaged if it has more than six hundred and fifty dollars ($650.00) of repairs that are needed or previously performed on the vehicle.

 

(ii)  The purchase price for pre-owned, company (other than those scheduled as FF&E), service, and rental vehicles (the “Pre-Owned Vehicles” or “Used Vehicles”) shall be priced for each such vehicle at the lower of: (i) the pricing of a New Vehicle set forth above, or (ii) MMR adjusted as per CR rating, as set forth on Schedule 1(b)(ii) hereto.

 

(iii)  Buyer shall purchase all vehicles other than the New Vehicles in Seller’s vehicle inventory at CR based MMR (collectively, the “Used Vehicles”; provided, however, if the purchase price for a Pre-owned Vehicle or Used Vehicle cannot be agreed upon, such vehicle shall be retained by Seller and be an Excluded Asset and provided further that Buyer shall have no obligation to purchase any damaged vehicle or vehicle that has salvage status, a branded title, or was in an accident.

 

 

(iv)  The purchase price for all obsolete parts shall be equal to 50% of Seller’s cost of such obsolete parts with a cap of $10,000 and non-obsolete parts inventory shall be equal to manufacturer cost (less all applicable rebates and discounts). For purposes of clarity, any obsolete parts in excess of $10,000 shall be transferred to Buyer at Closing. Obsolete parts means (i) any of new OEM parts not listed in any of the manufacturer’s most recent price books; (ii) any vehicle parts or accessories that, at Closing, are not returnable to the supplier from whom they were originally purchased for a full refund less any normal restocking charge; or (iii) any vehicle part or accessory that, as of the Closing Date, has been in Seller’s parts inventory over 365 days.

 

(c)  Earnest Money Deposit. Within three (3) business days after the Effective date Buyer shall deliver to Escrow Agent $401,277.50 (five percent of the Goodwill Purchase Price) as earnest money (the “Deposit”) to be held in trust by Greenberg Traurig, PA, as Escrow Agent for and on behalf of the Parties pursuant to this Agreement. On the Closing Date, if the Closing occurs, the Deposit will be applied to the Purchase Price. The Deposit is non-refundable except if (i) Manufacturer fails to approve the Transaction; or (ii) as per Sections 11(a)(i), (ii), (iv), (v) or (vi).

 

(d)  Hart-Scott-Rodino Act. Filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) may be required. If filing or notice or other action is required under the HSR Act with respect to the transactions outlined herein, then Buyer shall effect such filing or notice and Buyer and Seller shall each pay for 50% of the filing fees required by the HSR Act . Buyer and Seller shall each be responsible for their own attorney fees incurred to effect such filing. Seller shall cooperate fully with Buyer in said action and promptly provide all requisite information.

 

2.  Dealership Assets. Subject to the terms and conditions contained in this Agreement, upon the consummation of the transactions contemplated by this Agreement (the “Closing”, and the date thereof, the “Closing Date”), Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Assets as set forth on Schedule 2 and as more generally described below in this Section 2. A mutually agreed to form of Bill of Sale, attached as Exhibit A hereto, executed and delivered by the Parties on the Closing Date (the “Bill of Sale”) will contain a list of all of the Assets sold to Buyer as set forth on Schedule 2.

 

(a)  Vehicles. Subject to Section 1:

 

(i)  Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s New Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date.

 

(ii)  Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s Used Vehicles and Pre-Owned Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date (but subject to the provisions of Section 1 (b) (iii)). Prior to Closing, Seller shall (i) disclose to Buyer any and all facts known to Seller concerning each Used Vehicle and Pre-Owned Vehicle that Seller would be legally obligated to disclose to a retail purchaser of a Used Vehicle including, but not limited to, known damage, known usage history, frame and flood damage, salvage status, open recalls, and warranty eligibility; (ii) provide Buyer with legal odometer statements for each Used and Pre-Owned Vehicle; and (iii) provide free and clear title for each of the Used Vehicles and Pre-Owned Vehicles. At least 10 days prior to Closing, Seller shall provide Buyer with its then current Used Vehicle and Pre-Owned vehicle inventory along with Seller’s asking price for each such vehicle.

 

 

(b)  Parts; Accessories & Other Inventories.

 

(i)  Inventory & Returnable. A physical inventory of Seller’s parts and accessories will be taken in the presence of a representative of Buyer and Seller by an inventory service chosen by Buyer and reasonably acceptable to Seller, the cost of which will be borne by the Buyer and Seller splitting the cost on a 50/50 basis (the “Inventory”). The Inventory will classify parts and accessories as “returnable” or “non-returnable”. The terms “returnable parts” and “returnable accessories” means only those new undamaged replacement parts and new undamaged accessories for Manufacturer vehicles which are listed (coded) in the latest current Master Parts Price List Suggested List Prices and Dealer Prices (or other applicable similar Manufacturer price lists, with supplements or the equivalent in effect as of the Inventory date, the “Master Price List”), as returnable to the Manufacturer at not less than the purchase price reflected in the Master Price List and are within the limits of returnable parts established by the Manufacturer from time to time. Buyer shall purchase from Seller, and Seller shall sell to Buyer, all of Seller’s returnable parts and returnable accessories for an amount equal to the price listed in the Master Price List (less all applicable rebates and discounts). At Closing the total Parts and Miscellaneous Inventory that are in their original packaging, current and returnable and with sales in the 12 months prior to closing for an amount equal to the Manufacturer prices as reflected in the most recent pricing catalogs less all discounts and allowances. Seller will assign Sellers’ parts return rights to Buyer at Closing.

 

(ii)  Nonreturnable. All parts and accessories not coded as returnable in the Master Price List are “nonreturnable” and shall be considered an obsolete part. The purchase price for the nonreturnable parts and accessories, non-Manufacturer, “jobber” or “NPN” parts and accessories will be considered as and sold as obsolete parts pursuant to Section 1 (b)(iv).

 

(iii)  Return Rights, etc. Upon Closing, Seller will be deemed to have automatically assigned, and Seller shall assign to Buyer, Seller’s parts return rights without any further action (but Seller shall take any further action requested by Buyer or required by the Manufacturer to implement such assignment of rights). At the request of Buyer, Seller shall use its best efforts to assist Buyer in effecting any parts return offered by the Manufacturer (including, if necessary, applying for parts return in Seller’s name), and Seller shall promptly pay over to Buyer any monies received from the Manufacturer related thereto. Buyer may deduct from the consideration to be paid to Seller at the Closing Seller’s parts account outstanding balance with the Manufacturer and to pay such balance directly to the Manufacturer for Seller’s account. Buyer is not obligated to purchase old, opened, obsolete, superseded, incomplete, or damaged parts or accessories or any parts, accessories or sheet metal with no sales in the twelve (12) months prior to Closing. Buyer will not be obligated to purchase more than one year’s supply of any part or accessory (based on trailing one-year historical sales). Miscellaneous Supplies shall be purchased as provided for in subsection (d) below. The purchase price for all other parts not addressed in this Section or Section 1 will equal the value thereof as mutually agreed between Buyer and Seller provided, however, if the purchase price for such assets cannot be agreed upon, such assets shall be retained by Seller and be an Excluded Asset. If any parts and accessories or other inventories or goods that Buyer is not obligated to purchase hereunder are not removed from the Real Property within ten (10) days after the Closing Date, such property will automatically become Assets transferred to Buyer pursuant to the Bill of Sale without additional consideration.

 

 

(c)  Intellectual Property. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s telephone and data numbers, website addresses and domain names (owned or registered by or on behalf of the Dealership, ), e-mail addresses, classified telephone and internet advertising, prospect data, customer sales, lease, finance and service records (both hard copy and electronic format (including deal jackets), for no additional cost to Buyer), Seller’s workman’s compensation and unemployment rating in the State of West Virginia, all lawfully transferable licenses and permits of the Dealership or Seller, Dealership Intellectual Property (defined below), leasehold improvements and fixtures, unused internal and customer repair order forms, customer lists and marketing materials and catalogues, retail buyer’s order forms, office and shop supplies, shop reference manuals, parts reference catalogs, all books and records necessary for the continued operation of the Dealership (including training and promotional materials, employee records of employees hired by Buyer, P.O. boxes, third party warranties in Seller’s favor and all licenses and rights to use all software ( other than Vision AST software and other than DMS systems not assumed by Buyer) on or used in connection with any personal computer or other computing device used in connection with the Dealership, etc.), parts sales tickets, unused purchase order forms and all other forms and Seller’s goodwill and going concern value relating to the Dealership. “Dealership Intellectual Property” means any rights or ownership of the Dealership or Seller to all (i) patents, patent applications, patent disclosures and improvements, (ii) trademarks, trade, service marks, trade dress, and logos (excluding trade names, service marks, trade dress and logos, (iii) copyrights and registrations and applications for registration thereof, (iv) computer software, data and documentation, (v) trade secrets; and (vi) social media, directory assistance, reputation management and e-commerce sites and accounts (including E-Bay, Facebook, Instagram, Twitter, yelp!, Dealer Rater, Edmunds and Google programs).

 

(d)  Other Assets. Gas, oil, grease, nuts and bolts (“Miscellaneous Supplies”) shall be purchased by Buyer with the value thereof being equal to the Dealership’s cost of such items (established by invoice or such other documentation reasonably requested by Buyer), less any incentives received, or rebates received with respect thereto. Work in Process shall be purchased by Buyer as provided for in Section 3 (c).

 

(e)  Buyer agrees to buy all of Seller’s body shop inventories of unopened and not expired containers of paint (base and tints), quantities of paint in spray booths and machinery that can be accurately determined, new and unused dry supplies, and new and unused sheet metal, if any (“Body Shop Inventories”). The purchase price for Body Shop Inventories shall be Seller’s cost in such inventories.

 

 

(f)  Excluded Assets & Name License. Notwithstanding anything in this Agreement to the contrary, the following assets are not being sold pursuant to this Agreement: (i) all cash and cash equivalents, wherever located and in whatever form (unless “petty cash” is noted on the Closing Memorandum or Closing Statement); (ii) promissory notes and other evidences of indebtedness; (iii) all insurance policies; (iv) accounts receivable; (v) any claims or causes of action of Seller against third parties; (vi) tax credits and claims for tax refunds; (vii) securities, voting or otherwise in any entity; (viii) any rights in connection with and any assets of any employee benefit plan of Seller; (ix) the minute books and capital stock records of Seller, (x) all employment contracts, relating to any employees of Seller or Seller’s operations, (xi) any contract to which Seller is a party that is not an Assigned Contract, and (xii) any vehicle or parts that are not included in the purchased Assets; (collectively, the “Excluded Assets”). Seller shall remove all vehicles that are Excluded Assets from the Premises within ten (10) days following the Closing.

 

(g)  Excluded Liabilities. Notwithstanding anything contained herein to the contrary, Buyer shall not assume, or cause to be assumed, or be deemed to have assumed or caused to have assumed or be liable or responsible for any liabilities or obligations (whether known or unknown, fixed, absolute, matured, unmatured, accrued or contingent, now existing or arising after the date hereof) of Seller or any of its Affiliates (other than the liabilities expressly assumed in this Agreement) including, but not limited to, the following obligations and liabilities of Seller and its Affiliates (such obligations and liabilities not assumed hereunder, the “Excluded Liabilities”):

 

(i)  any liabilities or obligations relating to any current or former employee or independent contractor of Seller or any of its Affiliates (whether or not such employee is hired by Buyer following the Closing) and labor matters relating to any such current or former employee or independent contractor including any liabilities or obligations arising out of or relating to any employee-related matter, employee-related payment obligation, collective bargaining contract, labor negotiation, severance cost, pension plan, profit sharing plan, deferred compensation plan, accrued holiday benefit, accrued bonus, salary, bonus plan, phantom stock award, stock option or purchase plan, employment contract, consulting contract, any Employee Benefit Plan or any entitlements arising as a result of or in connection with the consummation of the Purchase;

 

(ii)  any Taxes, interest, and penalties (i) attributable to the purchased Assets or the Business with respect to any Pre-Closing Period or (ii) imposed on Seller or any of its Affiliates;

 

(iii)  any liabilities or obligations related to the Excluded Assets;

 

(iv)  any liabilities or obligations arising out of or relating to indebtedness of Seller or any of its Affiliates;

 

(v)  any liabilities or obligations arising out of or relating to any contract which is not an Assigned Contract;

 

(vi)  other than in connection with the operation of the Business after the Closing Date, any liabilities or obligations arising out of operations prior to the Closing Date, and /or relating to any real property owned, leased, occupied or controlled by Seller;

 

(vii)    any Seller Transaction Expenses; and

 

 

(viii)    any liabilities or obligations arising from product liability claims for which the injury or loss giving rise thereto (not just the delivery of the notice of such claims) occurs prior to the Closing Date, including specifically all losses caused by or arising out of any alleged design, manufacture, assembly, installation, use or sale of any products manufactured by the Factory or the Business prior to the Closing Date, whether the commencement of any related litigation, arbitration, investigation, proceeding or claim occurs before or after the Closing Date Seller shall satisfy all Excluded Liabilities that are an obligation of Seller promptly when due.

 

3.  Prorations & Assigned Contracts.

 

(a)  Prepaid Expenses & Prorations. Current personal property [and real property] taxes will be prorated and adjusted between Buyer and Seller as of the Closing Date based on the number of days in the year to which the taxes relate that each party occupies the property. If current tax bills are unavailable on the Closing Date, the prior year’s tax bills will be used for proration purposes and taxes will be re-prorated between Buyer and Seller when the current year’s tax bills are received. Any amounts owed by either Party with respect to such re-proration will be paid to the other Party within ten (10) days after the determination of such re-proration. All operating expenses (other than prepaid expenses) of the Dealership for the month of Closing will be prorated and adjusted between Buyer and Seller as of the Closing Date based on a thirty (30) day month. To the extent possible, the Parties shall cause all utility meters to be read on the day preceding the Closing Date. Unless the applicable utility terminates billing on Seller’s account as of the Closing Date, utilities payable by Seller (or Buyer, to the extent applicable) for the Dealership Property, including, but not limited to electricity, gas and water and sewer, shall be prorated as of the Closing Date. The adjustment therefor shall be made on the basis of the most recently historical data/billings therefor and shall be subject to final reconciliation based upon actual charges after receipt of a final bill by Seller. Buyer will make its own arrangements for any security deposits required by any utility company, and Seller will cancel and retain any deposits previously furnished. Buyer shall receive a credit against the Purchase Price for the cost to replace any missing special tools required by the Manufacturer’s most recent catalogue.

 

(b)  Within sixty (60) days after the Closing Date, the Parties shall make an adjustment to the Purchase Price to reflect any customary adjustments, additions and deletions necessary to properly reflect the categorization and/or amount of the Assets in accordance with this Agreement. In the event the Purchase Price is adjusted, the appropriate party shall effect a wire transfer of immediately available funds to the other party for the appropriate amount within five (5) days after the determination of the adjustment.

 

(c) Customer Deposits & Work in Process. Upon Closing, Seller shall transfer to Buyer all customer deposits for incomplete orders taken by Seller in the ordinary course of business. Seller shall retain all escheatable deposits, including but not limited to security deposit on any real property lease, if applicable. At the Closing, Seller shall furnish Buyer with a list of such deposits (including “we owes”, due bills, etc.), setting forth, as to each, the name and address of the customer, any goods or services owed to the customer and the amount of the deposit, and Seller shall deliver to Buyer all documents in Seller’s possession reflecting such deposits, we owes, due bills, etc. Seller shall credit Buyer for all we owes/due bills on the Closing Date. The Bill of Sale or Closing Statement will contain a list and description of such customer transactions (and Work in Process, as detailed below). Seller shall credit Buyer the actual cost to complete all due bills. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s pending service orders written by Seller in the ordinary course of business for an amount equal to Seller’s actual cost for parts and labor for any such orders which have been supplied by Seller which are in process at the opening of business on the Closing Date (“Work in Process”). Seller shall not receive the revenue from such Work in Process. Buyer may reject (and Seller shall retain) all Work in Process where (i) the Work in Process was not placed in the normal course of business; (ii) Seller does not possess an order signed by the customer authorizing such service, the vehicle isn’t at the Real Property on the Closing Date or such order has been open for longer than thirty (30) days prior to the Closing Date; (iii) the Work in Process does not provide for a profit to Buyer; or (iv) the Work in Process does not provide for cash or commercially reasonable credit terms on delivery of the vehicle.

 

 

(d)  Assigned Contracts. As of the Closing Date, Seller shall assign, and Buyer shall assume Seller’s contractual obligations, which Buyer has agreed to assume, listed on Schedule 3(d) hereto on the Closing Date (collectively, “Assigned Contracts”). The term “Assigned Contracts” excludes obligations and liabilities arising or accruing by the Closing Date or by reason of any breach or alleged breach by Seller, regardless of when such obligation or liability is asserted. Seller shall arrange for assignment of the Assigned Contracts at Seller’s cost. Buyer is not assuming any liabilities or obligations of Seller other than the Assigned Contracts or agree to pay, discharge or perform any liabilities or obligations arising out of any breach by Seller (other than with respect to a breach by Buyer) of any Assigned Contract.

 

4.  Deliveries.

 

(a)  At Closing, Buyer shall deliver to Seller (or to Escrow Agent (as defined in the Real Property Purchase and Sale Agreement) for further disbursement to Seller) the following:

 

(i)  the Purchase Price in immediately available funds, of which $2,500,000 (the “Holdback Amount”) shall be delivered to the Indemnity Escrow Agent (if not previously delivered) to hold under the Indemnity Escrow Agreement and the balance shall be delivered to Seller at Closing.

 

(ii)  A copy of resolutions duly adopted by Buyer’s Manager authorizing and approving Buyer’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the secretary or manager of Buyer, as true and in full force as of the Closing Date.

 

(iii)  A certificate executed by an authorized member, manager, or officer of Buyer certifying that, as of the Closing Date, all of the representations and warranties of Buyer are true and correct in all material respects and that each and every covenant and agreement to be performed by Buyer prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv)  A certificate of existence in good standing for Buyer from the State of its formation dated within fourteen (14) days of the Closing Date.

 

 

(v)  Assignment and assumption of the Assigned Contracts , together with consents to the assignments where noted on Schedule 3 (d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Buyer.

 

(vi)  The Indemnity Escrow Agreement executed by Buyer and Buyer’s Affiliates as named therein.

 

(b)  At Closing, Seller shall deliver to Buyer (or to Escrow Agent on behalf of Buyer), at Seller’s sole cost and expense, such bills of sale, endorsements, assignments, and other good and sufficient instruments of conveyance and transfer as provided for herein, and any other instruments in form and substance reasonably acceptable to Buyer as shall be necessary to vest effective in Buyer all right, title, and interest in and to the Assets, free and clear of all Encumbrances (except as provided herein), including without limitation, the following:

 

(i)  Duly executed Bill of Sale with respect to the Assets in the form and substance of Exhibit “A” attached hereto and incorporated herein by this reference (the “Bill of Sale”), and an Assignment of Trademarks, URLs and Telephone Numbers.

 

(ii)  Fully and properly executed transfers of MCOs, titles, or such instruments of title and other documents required to properly transfer Seller’ right, title and interest in and to the New Vehicles and Used Vehicles , and any other titled Assets to Buyer.

 

(iii)  A certificate executed by an authorized member, manager, or officer of Seller certifying that, as of the Closing Date, all of the representations and warranties of Seller are true and correct in all material respects and that each and every covenant and agreement to be performed by such Seller prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv)  A certificate of existence in good standing for Seller from the State of its formation dated within fourteen (14) days of the Closing Date.

 

(v)  A copy of resolutions duly adopted by each of Seller and LMP for the Necessary Seller Approvals authorizing and approving such Seller’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the manager of each Seller, as true and in full force as of the Closing Date.

 

(vi)  Intentionally Omitted.

 

(vii)    Seller shall deliver customary payoff and termination letters from the holders of any liens or Encumbrances reflecting the payoff amount required for the release of liens on the Closing.

 

(viii)    Seller will provide evidence of Seller’ voluntary termination of its dealer agreements with the Manufacturer as it relates to the Dealership.

 

 

(ix)  The License Use Agreement executed by Seller attached as Exhibit “B”.

 

(x)  The Indemnity Escrow Agreement executed by Seller, and Seller’s Affiliates as named therein, and the escrow agent thereunder.

 

(xi)  Assignment and assumption of the Assigned Contracts, together with consents to the assignments where noted on Schedule 3(d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Seller.

 

Such other instruments and documents as Buyer may reasonably consider necessary to effect the transactions contemplated herein

 

5.  Seller’s Representations & Warranties. Seller and LMP jointly, and severally , represent and warrant to Buyer on the Effective Date and the Closing Date as follows:

 

(a)  Formation. Seller is duly formed, validly existing, and in good standing under the laws of its organization and is duly qualified to transact business in the state in which the Dealership is located.

 

(b)  Authority. Subject to the Necessary Seller Approvals, Seller (i) has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby, and (ii) has taken all entity action necessary to authorize its execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereunder. For purposes of this Agreement, the “Necessary Seller Approvals” shall mean the consent of: Seller’s Board of Managers; LMP Automotive Holdings, LLC as the majority member of Seller; the Board of Directors of LMP; and the shareholders of LMP required to approve and authorize this Agreement and Transaction.

 

(c)  Conflicts. The execution and delivery of this Agreement by Seller and the performance by Seller of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any nation or government, or any state, regional, local or other political subdivision thereof (“Governmental Authority”).

 

(d)  Assets. Seller is the owner of, and has good and valid title to, all of the Assets except any liens described on Schedule 5(d) (which shall be satisfied at Closing). To the Knowledge of Seller, there are no special assessments against any of the Assets. All of the fixtures and equipment used in the Business are in operating condition, ordinary wear and tear excepted, and are adequate and suitable for the purposes for which they are presently being used.

 

(e) Financial Statements. The Seller has delivered to Buyer the Financial Statements. Subject to the adjustment for Inventory as set for in Section 2 above, the Financial Statements are materially true, complete, and accurate. “Financial Statements” means Seller’s internally prepared, un-audited adjusted dealer income statements reflecting zero debt on the Dealership, substantially in the form required by Manufacturer, for the fiscal year ended December 31, 2021, and each of the completed months thereafter through the Closing Date, The Financial Statements are prepared in accordance with recognized industry standards and the Manufacturer’s guidelines and fairly present the financial condition of Seller’s business and the results of operations of Seller’s business, in all material respects, at the dates and for the periods covered by such financial statements and related materials. In connection with this representation of Seller regarding its financial statements, Buyer acknowledges Seller’s financial statements include expenses for a management fee to LMP, and exclude interest on Seller’s capital loan.

 

 

(f)   Compliance. The Dealership complies in all material respects with, and the Dealership has been conducted in all material respects in compliance with, all laws, rules and regulations (including all worker safety, applicable zoning and other laws, ordinances, regulations and building codes (collectively, the “Laws”). The Seller is not under investigation with respect to violations of any such Laws. To Seller’s Knowledge, Seller is not in material default of any its material agreements with third parties.

 

(g)  Litigation. There are no actions, suits, claims, investigations or other proceedings pending with respect to Seller, and, to the Seller’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Seller that could affect the ability to convey the Purchased Assets conveyed pursuant to this Agreement.

 

(h)  Good Title. Seller is the owner of, and has, good and marketable title to all of the Assets (including intangible assets such as websites and domain names); all of the Assets will be transferred to Buyer free and clear of all liens and encumbrances; and all of the Assets to be sold under the terms of this Agreement are, or on the Closing Date will be, in good operating condition and repair. Seller did not obtain any funds under the Paycheck Protection Program.

 

(i)  Licenses. Except as would not have a materially adverse effect on the Buyer, Seller has maintained all licenses and permits and has filed all registrations, reports and other documents required by local, state and federal authorities and regulating bodies in connection with the Dealership. None of the permits or licenses used by Seller in the operation of the Dealership has been terminated or revoked and to Seller’s Knowledge, no violations have been recorded regarding such licenses or permits, and no proceeding is pending or threatened seeking the revocation or limitation of any of them.

 

(j)  Assigned Leases and Contracts. To the Knowledge of Seller, each of the Assigned Leases and material contracts are valid, legal and binding and is in full force and effect. Seller has made all payments due under each of the Assigned Leases and any material contract through the date hereof. To the Knowledge of Seller, no event or condition has occurred and is continuing which, with or without the lapse of time or giving of notice, constitutes, or would ripen into or become, a breach of or default under an Assigned Leases and assigned material contract by the Seller, or, to the Seller’s Knowledge, by any other party thereto, in any term, covenant or condition of each Assigned Lease and assigned material contract.

 

(k) Intellectual Property Rights. Except as set forth in Section 2c above, the Seller either owns or is otherwise entitled to use (under a license or otherwise) all Proprietary Rights necessary to conduct the business of the Business as presently conducted. For purposes of this Agreement, “Proprietary Rights” means all (i) trademarks, service marks, trade dress, logos, trade names and entity names and registrations and applications for registration thereof, (ii) copyrights and registrations and applications for registration thereof, (iii) mask works and registrations and applications for registration thereof, (iv) computer software data and documentation, (v) trade secrets and confidential business information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information), (vi) other proprietary rights or any intellectual property, and (vii) copies and tangible embodiments thereof (in whatever form or medium).

 

 

(l)  Taxes. Seller has duly filed all foreign, federal, state, county and local income, excise, sales, property, withholding, unemployment, social security, franchise, license, information returns and other tax returns and reports, or appropriate and permitted extensions thereto, required to be filed by it with respect to the Dealership or the Real Property. Each such return is true, correct, and complete in all material respects, and Seller has paid all taxes, assessments, amounts, interest and penalties due to applicable Governmental Authority. Seller has no liability for any taxes, assessments, amounts, interest or penalties of any nature whatsoever other than those for which Seller has created sufficient reserves or made other adequate provision. No governmental authority is now asserting or threatening to assert any deficiency or assessment for additional taxes, interest, penalties or fines with respect to Seller, or the Dealership.

 

(m)  Employment Matters. Except as set forth on Schedule 5(m), Seller has no oral or written collective bargaining or organized labor contracts, employment agreements, bonus, deferred compensation, profit sharing, welfare or health benefit, or retirement plan or arrangement, whether or not legally binding, nor is Seller currently paying any pension, deferred compensation or retirement allowance to anyone. Seller has no contract for the future employment of any person. Seller is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them or amounts required to be reimbursed to such employees. Seller has no knowledge that any Seller employee intends to terminate his or her employment. Seller has complied in all material respects with the applicable requirements for its employee medical and benefit plans, if any, as set forth in the Internal Revenue Code of 1986, as amended (the “Code”), and the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder (“ERISA”), including Section 4980B of the Code (as well as its predecessor provision, Section 162(k) of the Code) and Sections 601 through 608, inclusive, of ERISA, which provisions are hereinafter referred to collectively as “COBRA”. There have not been any unfair labor practice complaints or work stoppages (within the past thirty-six (36) months) and there are no present or, to Seller’s Knowledge, threatened walkout, strike or labor disturbance involving any of Seller’s employees working primarily at the Dealership. The Seller has taken the required actions under Applicable Law to confirm the identity and work status eligibility of its Employees. The Seller has not received any written notice of any inspection or investigation relating to their alleged noncompliance with or violation of IRCA, nor has or otherwise penalized for any failure to comply with IRCA or for any willful violation of any other immigration law, rule or regulation.

 

(n) Brokers. Except for Broker, no broker, investment banker, financial advisor, consultant or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with this Agreement based upon arrangements made by or on behalf of the Seller. The sole broker’s commission or finder’s fee payable as a result of the closing of the transaction contemplated herein shall be paid by Seller at Closing to Bank of America Securities, Inc. (“Broker”) in accordance with the separate agreements between Seller and Broker. No person other than Broker is entitled to any commission in connection with the transactions contemplated by this Agreement.

 

 

(o)  Prohibited Persons. Neither Seller nor any members of the Seller: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

(p)  Solvency. Immediately after the Closing Date, and after giving effect to the sale of the Purchased Assets and the other transactions contemplated by this Agreement, Seller will be solvent (in that both the fair value of its assets will not be less than the sum of its known debts, provided however, immediately after Closing, the Seller and LMP anticipate paying such known debts in full and dissolving the Seller.

 

(q)  In-house Warranty Work. Except as provided in Schedule 5(q) , Seller is not obligated to provide to any customers or third parties any coupons, pre-paid parts, accessories, services or in-house warranties which may result in a liability of the same to Buyer after the Closing. Except as reflected in Schedule 5(q), Seller has no agreement or understanding with any customer or third party to return or refund any portions of any amounts paid for any extended warranty or service contract or otherwise pay any amounts to customers who elect not to or do not make claims under such contracts, but if such an obligation exists, Seller shall pay all amounts owed.

 

(r)   Option Agreements. Except with respect to the Manufacturer and as provided on Schedule 5(r), there are no options, right of first refusals, or similar agreements in connection with the Assets.

 

As used in this Agreement, the phrases “Knowledge of Seller” or “Seller’s Knowledge” means the actual knowledge of Seller’s officers, the Seller’s LLC company managers, the officers of LMP, the Board of Directors of LMP, the Dealership’s general managers, Sam Tawfik, and Richard Aldahan.

 

6.  Buyer’s Warranties & Representations. Buyer represents and warrants to Seller on the Effective Date and the Closing Date as follows:

 

(a)  Formation. Buyer is a Florida limited liability company. Buyer will be an entity duly formed and validly existing with authority to conduct business in West Virginia on the Closing Date.

 

(b) Authority. Buyer has the requisite legal power and authority to execute and deliver this Agreement, to perform the obligations of Buyer hereunder, and to consummate the transactions contemplated hereby, all of which have been duly authorized and approved by all necessary entity action and for which no consent of any person or governmental authority is required for Buyer which has not been obtained (except as provided for in this Agreement for consents to be obtained and filings made before Closing), and no filing with or other notification to any person or governmental authority is required which has not been properly completed (except as provided for in this Agreement for consents to be obtained and filings made before Closing). This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms, subject only to the application of debtor relief laws and general equitable principles.

 

 

(c)  Brokers or Finders. The Buyer has not incurred and will not incur any liability to any broker, finder or agent for any fees, commissions or similar compensation with respect to the transactions contemplated herein.

 

(d)  Conflicts. The execution and delivery of this Agreement by Buyer and the performance by Buyer of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not (i) contravene any provision of its organizational or governing documents, (ii) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any Governmental Authority or of any arbitration award which is either applicable to, binding upon or enforceable against it, (iii) require the consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except the HSR filing, or as otherwise provided for herein.

 

(e)  Litigation. There are no actions, suits, claims, investigations or other proceedings pending and, to the Buyer’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Buyer that could affect the Seller’s ability to convey the Purchased Assets to Buyer conveyed pursuant to this Agreement.

 

(f)   [Reserved].

 

(g)  Sufficiency of Funds.

 

(i)  Buyer or its affiliates have sufficient funds or access to sufficient funds to make payment of the Purchase Price and consummate the transactions contemplated herein;

 

(ii)  Immediately after the Closing Date, and after giving effect to the purchase of the Purchased Assets and the other transactions contemplated by this Agreement, Buyer (i) will be solvent (in that both the fair value of its assets will not be less than the sum of its debts and that the present fair saleable value of its assets will not be less than the amount required to pay its debts as they become absolute and matured); (ii) will have adequate capital with which to engage in its business; and (iii) will not have incurred debts beyond its ability to pay as they become absolute and matured.

 

(h) Prohibited Persons. Neither Buyer nor any members or principals of the Buyer: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

 

7.  Conditions to Obligations of Buyer. The obligation of Buyer to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or express written waiver by Buyer) prior to or at the Closing, of all of the following conditions:

 

(a)  Manufacturer Approval. Manufacturer has issued to Buyer a new Dealership Sales and Service Agreement, or commitment therefor, on terms and conditions acceptable to Buyer in its sole discretion, approving Buyer’s board of directors and other designees, permitting Buyer to operate the Dealership at the Real Property as Seller has operated it in the past.

 

(b)  HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction .

 

(c)  Intentionally Omitted.

 

(d)  Closing Statement. Buyer has agreed to the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(e)  Consents. Seller has obtained all consents required for the Lease Assignments and contract assignments being assumed by Buyer.

 

(f)   Seller Performance. Seller has performed in all material respects all of its obligations hereunder to be performed prior to or at Closing and each of Seller’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(g)  Purchase of the Premises. The consummation of the transactions contemplated under the Real Estate Purchase and Sale Agreement shall occur simultaneously.

 

(h)  No Litigation. No proceeding with Seller as a Party, shall be pending before any court or other Governmental Authority, wherein an unfavorable injunction, judgement, order, decree, ruling, or charge would (1) restrain, enjoin, prohibit or prevent consummation of this transaction or any other transaction contemplated by this Agreement, or (2) cause the transaction to be rescinded following consummation.

 

(i)  Buyer shall have received all of the documents, certificates and resolutions described in Section 4.2(b), in form and substance reasonably satisfactory to Purchaser.

 

(j) Adverse Change. Since the Effective Date, no Material Adverse Change shall have occurred. “Material Adverse Change” means any change, event or occurrence that individually or in the aggregate (taking into account all other such changes, events or occurrences) has had, or would be reasonably likely to have, a material adverse effect upon the assets, business, operations, financial condition or prospects of Seller, but shall not include any event or circumstance or change arising out of or attributable to general economic or political conditions, conditions generally affecting the motor vehicle industry (including supply chain problems), or the COVID-19 pandemic.

 

 

(k)  Necessary Seller Approvals. Seller has obtained the Necessary Seller Approvals.

 

(l)  Termination of Options and Minority Rights. Each of the agreements listed on Schedule 5(r) shall have been either terminated, waived, or Seller shall have been released and received a waiver from such minority member from any option or similar obligations thereunder, and the minority member and its principal(s) shall have agreed to a noncompetition provision of at least two (2) years with a seventy-five (75) mile radius of the Dealership.

 

(m)  Agreements Not To Compete. Seller, LMP, Sam Tawfik and Richard Aldahan, as officers of LMP, shall have executed an Agreement Not to Compete substantially in the form attached hereto as Exhibit D.

 

8.  Conditions to Seller’s Obligations. Seller’s obligation to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or written waiver by Seller), prior to or at the Closing, of all of the following conditions:

 

(a)  Purchase Price Payment. Buyer paid Seller the aggregate Purchase Price for the Assets.

 

(b)  Buyer Performance. Buyer performed in all material respects all of its obligations hereunder to be performed prior to or at Closing each of Buyer’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(c)  Purchase of the Premises. The consummation of the transactions contemplated under the Real Estate Purchase and Sale Agreement shall occur simultaneously.

 

(d)  HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction.

 

(e)  Necessary Seller Approvals. The receipt of the Necessary Seller Approvals.

 

(f)   Closing Statement. Buyer executed and delivered the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(g)  Seller shall have received all of the documents, certificates and resolutions described in Section 4.2(a), in form and substance reasonably satisfactory to Seller.

 

 

9.  Pre- & Post-Closing Covenants.

 

(a) Pre-Closing. Promptly upon the execution of this Agreement, Seller shall notify the Manufacturer regarding the transactions contemplated by this Agreement. Buyer (or its affiliate) shall promptly apply to the Manufacturer for the issuance of a contractual right to operate an automobile dealership upon the Premises. The Parties shall use commercially reasonable best efforts to obtain Manufacturer approval as soon as possible. Seller shall promptly provide the requisite information, documents and access necessary to prepare for Closing and ensure a seamless operational transfer of the Assets. Effective as of the Closing, Seller shall terminate its Dealer Sales and Service Agreements with the Manufacturer relative to the Dealership location and execute and deliver all of the Manufacturer’s customary documents and promptly remove Manufacturer’s intellectual property from all publicly visible Excluded Assets in every form and medium (i.e., retained internet sites, signs, etc.). Seller shall fully cooperate with Buyer, and take all reasonable steps to assist Buyer, in Buyer’s efforts to obtain its own similar Dealer Sales and Service Agreements with the Manufacturer. All actions to be taken at the Closing pursuant to this Agreement will be deemed to have occurred simultaneously, and no action, document or transaction will be deemed to have been taken, delivered or effected, until all such actions, documents and transactions have been taken, delivered or effected. Promptly after the Closing, Seller shall transfer to Buyer certificates of title or origin for all vehicles and all of its registration lists, owner follow-up lists and service files on hand as of the Closing, provided that such lists and files relate to the Assets. If Seller presents assets for purchase post-Closing that would have otherwise been Assets, then such assets may be purchased at a mutually agreed to price or otherwise retained by Seller.  Buyer is not required to submit an offer.  This does not apply to in-transit vehicles from the Manufacturer. Buyer shall retain and safeguard the pre-Closing customer paper deal jackets retained by Buyer in accordance with law, and, until Buyer destroys such records in accordance with company policy in effect from time to time, Seller shall have reasonable access to Seller’s pre-Closing customer records (e.g., paper deal jackets) and any records related to Assigned Contracts after the Closing for any legitimate purpose, such as (by way of example and not by limitation) for resolving customer inquiries.

 

(b)  Dealership Operations Pending Closing. Pending Closing, Seller shall continue to operate the Dealership in substantially the same manner as it has been operated by Seller in the past and Seller shall: (i) use commercially reasonable efforts to maintain working relationships with all suppliers, customers, employees and others having contact with the Dealership and bring all payables current as of the Closing Date; (ii) maintain current insurance policies in full force and effect; (iii) exercise reasonable diligence in safeguarding and maintaining the confidentiality of all books, reports and data pertaining to the Dealership, including use its commercially reasonable best efforts to ensure that Seller’s sales and service records remain adequately protected; failure to do so is a material breach of this Agreement; (iv) not grant increases in salary, pay or other employment related benefits to any officers or employees of the Dealership, except in the ordinary course of business; (v) not conduct any liquidation, close-out or going out of business sale or, (vi) attempt to order and restock inventory sold; (vii) intentionally omitted; (viii) not enter into any contract or agreement which is not terminable without penalty on not more than 30 days’ notice and which provides for payment by the Dealership, except those in the ordinary course of business; and (ix) not take or permit any action which would result in Seller’s representations or warranties becoming incorrect or untrue in any material respect.

 

 

(c)  Employee Matters.

 

(i) Seller shall terminate or take all appropriate action in connection with pension, profit sharing and health and welfare benefit plans, if any, that are applicable to Seller and/or Seller’s employees (“Plans”), prior to or at Closing, so that Buyer will have no responsibility or liability or obligation of any nature under Plans to any person, firm or corporation whatsoever. If any applicable law provides that Buyer is or will be liable for any liability or obligation under any Plan despite Seller’s contractual liability for such liability or obligation hereunder, and Seller fail to pay or perform such liability or obligation within five (5) days after Buyer’s written demand, then in addition to any other remedies available, such amounts may be set off from time to time from any amount Buyer (or its affiliate) owes Seller (or its affiliate). Seller (including all employers, whether or not incorporated, that are treated together with Seller as a single employer within the meaning of Section 414 of the Code or, where appropriate, Seller’s health and welfare benefit plans that are “group health plans” will retain liability for and will pay when due all benefits (including all liabilities and obligations for or arising from any “COBRA” health care continuation coverage required to be provided under Section 4980B of the Code and Sections 601-608 of ERISA) attributable as of the Closing Date to “covered employees” or “qualified beneficiaries” entitled to “continuation coverage” (as those terms are defined in Section 4980B of the Code) regardless of when services were rendered or expenses incurred. By Closing, Seller shall pay all wages due Seller’s employees as of the Closing Date. At Closing, Buyer shall assume Seller’s obligations for payment of unused vacation, paid time off, holiday pay, sick pay and other similar compensation accrued to those employees of Seller which are retained by Buyer, and Buyer shall receive a credit against the Purchase Price for such amounts. Buyer shall be responsible to satisfy such amounts to the former employees of Seller to the extent of the credit received provided, however Buyer shall not be liable for any such amounts that are disputed or in excess of the credit given at the Closing and Seller and LMP shall defend and hold Buyer harmless for such disputed amounts. Seller shall terminate its employees on the Closing Date. Provided the Closing takes place, Buyer may, but is not obligated to, employ Seller’s employees who are willing to accept the offered employment with Buyer, and Buyer will give due regard to such employees’ benefits from their prior employer, so long as such employees meet all eligibility requirements, including any probationary period; provided that, notwithstanding anything in this Agreement to the contrary, Buyer shall hire on an at-will basis enough of Seller’s employees (each selected by Buyer in its sole and absolute discretion) so that Buyer and Seller will be in compliance with the provisions of the Workers Adjustment and Retraining Notification Act, 29 U.S.C. §2101-2109, if applicable. The foregoing does not grant to any of Seller’s individual employees a right of employment by Buyer.

 

(ii)  Subject to the approval and cooperation of Seller’s applicable health insurance plans and policies, Buyer shall have the right to cause Seller to continue its health insurance plans (including the related ancillary insurance benefits such as dental, vision, short term disability) for the employees of Seller that Buyer retains for the month of the Closing and the month following the Closing. In such case, the applicable premiums shall be prorated based upon the number of days allocable to Seller prior to Closing Date and Buyer following the Closing Date.

 

(d) Seller’s Receivables. Following the Closing, upon the receipt of accounts receivable of the Seller, Buyer will remit checks thereof directly to the Seller at its principal office on a weekly basis. Buyer shall accept payment of Seller’s accounts receivable and Manufacturer warranty payments arising out of the operation of the Dealership prior to Closing for a period of 180 days. Buyer shall turn over to Seller on the last day of each calendar month during said period all of the monies it received as cleared funds so accepted on said accounts receivable during the previous calendar month. Buyer is not obligated to accept payments of such accounts receivable after such 180-day period, but if Buyer does so then Buyer will promptly pay the same over to Seller. Buyer is only obligated to accept payment during such period, not to attempt to enforce payment. No adjustment will be made in any of such accounts receivable without Seller’s permission. Seller reserves the right to pursue legal remedies of collection upon default by the customer with respect to any receivables owed to Seller. Buyer shall have no obligation to pursue or otherwise actively work to collect any of such Seller receivables or Manufacturer warranty payments. At the end of said 180-day period, Buyer shall no longer be obligated to accept payments of such accounts receivable. If Buyer does accept payment of any of Seller’s accounts receivable after expiration of the 180-day period, Buyer shall hold same in trust for Seller and promptly pay same over to Seller. It is understood that Buyer’s responsibility, so far as such collection is concerned, is only to accept monies paid on Seller’s accounts receivable and shall not include any obligation to ascertain the correct amount of any accounts receivable. Upon reasonable notice to Buyer, Buyer shall provide Seller with access to records relating to Seller’s operation of the Dealership, but Seller and LMP agree that they shall have no right to utilize the employees of Buyer to provide accounting or other bookkeeping services to themselves.

 

 

(e)  Manufacturer Payments. The Parties shall use their commercially reasonable efforts to ensure that (i) amounts due to Seller but collected by Buyer (e.g., Manufacturer receivables, Manufacturer credits relating to items such as warranty claims or other claims, credit card payments, etc.) arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Seller promptly; (ii) amounts due to Buyer but collected by Seller arising out of or in connection with the operation of the Dealership on or following the Closing or as provided in this Agreement will be paid over to Buyer promptly; (iii) amounts paid by Seller but owed by Buyer as a result of Manufacturer erroneously billing Seller for items arising out of or in connection with the operation of the Dealership following Closing will be paid over to Seller promptly; and (iv) amounts paid by Buyer but owed by Seller (e.g., any finance contract chargebacks, insurance (e.g. credit life, accident and health, extended warranty, etc.) chargebacks, or repossessions and all rebates to Seller’s customers of premiums for credit life insurance, credit accident and health insurance, mechanical insurance coverage and GAP insurance) as a result of Manufacturer or any third party erroneously billing Buyer for items arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Buyer promptly. This section survives Closing indefinitely. If there are vehicles in-transit on the Closing Date (whether or not they are physically present) that have not been funded by Seller’s floor plan lender and the Parties do not know whether they will be paid for by Buyer’s floor plan lender or Seller’s floor plan lender, then the Parties may separately schedule those vehicles, Buyer will buy them but not pay for them, and, if such vehicles are funded by Seller’s floor plan lender, then Seller shall notify Buyer and Buyer shall promptly pay Seller’s floor plan lender such amounts. Any other payments related to such vehicles misdirected by the Manufacturer will be redistributed as contemplated by this Section 9(e). Buyer with any needed cooperation of Seller shall undertake all accounting, bookkeeping and reconciliation as necessary under this section and shall make all payments as necessary. On a monthly basis, Buyer shall present Seller with a reconciliation and the amount owed by Buyer or by Seller (if any) and the parties shall pay any amounts owing to the other within ten (10) business days.

 

(f)  Dealing and Non-Circumvent. In order to induce Buyer to enter into this Agreement, during the period commencing on the Effective Date until the Closing Date (or earlier termination of this Agreement), Seller and LMP will not and will cause each of its stockholders, managers, directors, officers, agents, advisors and other representatives to not, directly or indirectly, through affiliates or otherwise, (i) enter into any sale, lease, pledge or other disposition of all or any significant part of the purchased Assets, or any agreement for the sale of any capital stock or other equity securities of Seller, or agreement relating to a merger, consolidation or other acquisition proposal involving Seller or its member with any other party, or any transaction similar to the foregoing in format or purpose, with any party other than Purchaser; or (ii) enter into any transaction (A) with a total cumulative and aggregate value in excess of One Hundred Fifty Thousand Dollars ($150,000), or (B) outside of the ordinary course of business of Seller consistent with past practice in contemplation of any transaction described above with any party other than Buyer; or (iii) encourage, solicit, provide information to or negotiate with any party, other than Buyer, to do any of the foregoing.

 

 

(g)  License Use. The Parties acknowledge that the State of West Virginia Division of Motor Vehicles may be experiencing delays in the processing of motor vehicle dealer licenses. The Seller hereby agrees that the Buyer may use the Seller’s licenses required under the laws of the State of West Virginia to operate the Business for a period of not more than 60 days after the Closing Date (and the Seller shall maintain all such licenses during such period). As a material inducement to the Seller to permit the Purchaser’s use of such licenses: (a) Buyer agrees that it will use best efforts to obtain its own licenses with the State of West Virginia as promptly as practicable , and (b) Buyer hereby agrees to indemnify and hold Seller, its respective affiliates, and their respective owners, managers, members, controlling persons, directors, officers, and employees (collectively, the “Seller Indemnified Parties”) harmless from and against any cost or liability, including reasonable attorneys’ fees, incurred by any Seller Indemnified Party in connection with or as a result of the Buyer’s use of the Seller’s licenses. Upon the Effective Date, the Seller will provide Buyer with a copy of the Seller’s DMV and other state and county regulatory licenses. Buyer agrees to add the Seller to its general liability insurance coverage as an additional insured during the term of the License Use Agreement. To effect the Purchaser’s use of the Seller’s license as contemplated hereby, the Seller agrees at the Closing to enter into a license use and indemnification agreement sufficient to satisfy applicable law for such license use in the form of Exhibit B hereto (the “License Use Agreement”).

 

10.  Access.

 

(a)  Upon receipt of Manufacturer’s approval to transfer the Dealership to Buyer, Buyer may set up Buyer’s computer system parallel to Seller’s computer systems for the Dealership, provided, however, Seller’s systems shall not be turned off until the Closing Date. Following the Effective Date, Buyer’s Information Technology personnel may access the Dealership for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve) to facilitate any applicable transfer purchased Assets.

 

(b)  Seller shall permit representatives of Buyer to have access to and to examine the records, properties and assets associated with the Assets and the Real Property, provided, however, all access hereunder shall be subject to this Agreement and the provisions of the Real Property Purchase Agreement. Any access by Buyer shall be at times determined by Sellers and Buyer and in a manner so as not to interfere with the normal business operations of Seller.

 

 

(c)  Buyer’s Information Technology personnel may have certain access to the Dealership (no login access) for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve). Following receipt of Manufacturer approval for transfer of the Dealership to Buyer, Seller shall contact its providers for DMS, CRM, and any other third-party data servicers, and execute all necessary documents to effectuate the transfer all intangible data Assets to Buyer’s DMS system on the Closing Date. Buyer shall be solely responsible for any and all costs associated with effectuating the transfer of all intangible data Assets to Buyers DMS system.

 

11.  Default & Termination. Notwithstanding any provision in this Section 11 to the contrary, no Party may terminate this Agreement due to the breach of another Party if the first Party is in material breach of this Agreement.

 

(a)  Termination. The Parties may exercise their respective rights of termination by the delivery of written notice of termination to the other Party at any time prior to the completion of the Closing. This Agreement and the transactions contemplated hereby may be terminated on or before the Closing Date as follows:

 

(i)  By the mutual written agreement of the Parties;

 

(ii)  By Buyer if a breach of any material provision of this Agreement has been committed by Seller and such breach has not been either (A) cured within ten (10) days after written notice to Seller, or (B) waived in writing by Buyer;

 

(iii)  By Seller if a breach of any material provision of this Agreement has been committed by Buyer and such breach has not been either (A) cured within ten (10) days after written notice to Buyer, or (B) waived in writing by Seller;

 

(iv)  By Seller if Seller’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(v)  By Buyer if Buyer’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(vi)  By Seller or Buyer, if the Closing has not occurred by the Closing Date Deadline.

 

Unless this Agreement is terminated by Seller under the provisions of Section 11(a)(iii), Buyer shall be entitled to receive a return of the Deposit upon a termination.

 

(b)  Buyer’s Default. If prior to Closing Buyer breaches this Agreement and fails to cure as provided above, then Seller’s sole right and exclusive remedy will be to terminate this Agreement by giving written notice thereof to Buyer and then Seller may take the Deposit as liquidated damages in full settlement of all claims, remedies or causes of actions against Buyer under this Agreement, including the remedy of specific performance and other forms of equitable relief. It is impossible to estimate more precisely the damages which might be suffered by Seller upon Buyer’s default. Seller’s retention of the Deposit is intended not as a penalty, but as full liquidated damages.

 

 

(c)  Seller Default. If prior to Closing, if Seller breaches this Agreement and fails to cure as provided above, then Buyer may exercise any and all rights and remedies available to it at law or in equity, including (i) an action in equity against Seller (pursuant to which Buyer is not obligated to post a bond or prove special damages or irreparable injury) for the specific performance by Seller of the terms and provisions of this Agreement and disgorgement of profits from the date of the Closing Date Deadline until receipt of any applicable remedy at law or equity in the Buyer’s favor; and (ii) the right to terminate this Agreement by giving written notice of such termination to Seller and receive a full refund of the Deposit without prejudice to any of Buyer’s rights or remedies including an action for direct damages, but not consequential damages.

 

(d)  Cross Default. Any default by the Real Property Purchaser under the Real Property Purchase and Sale Agreement shall be a default by Buyer under this Agreement and a default by Buyer under this Agreement shall be a default by the Real Property Purchaser under the Real Property Purchase and Sale Agreement. Any default by the Real Property Seller under the Real Property Purchase and Sale Agreement shall be a default by Seller under this Agreement and a default by Seller under this Agreement shall be a default by the Real Property Seller under the Real Property Purchase and Sale Agreement. The terms of the Real Property Purchase and Sale Agreement are incorporated herein by reference.

 

(e)  Breakup Fee. If this Agreement is terminated by any Party hereto due to the failure of Seller or LMP to obtain the Necessary Seller Approvals prior to the Closing Date Deadline, regardless of the reason for such failure, then Buyer shall be entitled to receive from Seller and LMP, and Seller and LMP shall be obligated to pay Buyer within 3 business days following receipt of an invoice from Buyer, a fee (the “Breakup Fee”) equal to the reasonable costs and fees expended or incurred by Buyer and Fayette AWV RE, LLC for the transactions contemplated herein and under the Real Property Purchase and Sale Agreement.

 

12.  Survival and Indemnification.

 

(a)  Representations and Warranties Survive Closing. It is the express intention and agreement of the parties that all representations and warranties made by the parties in this Agreement shall survive the Closing for a period of twenty-four (24) months. Thereafter, all representations and warranties made by the parties in this Agreement shall terminate and no action may be had on them (excepting claims made during the Survival Period may continue to be pursued). All covenants and agreements of the parties shall survive the Closing in accordance with their terms.

 

(b) Buyer’s Obligation to Indemnify. Following the Closing, Buyer will indemnify and hold Seller, its affiliates, managers, member, and officers harmless from and against any and all liability, loss, damage, or deficiency (collectively, “Losses”) resulting from: (i) any misrepresentation, breach of warranty, or non-fulfillment of any agreement on the part of Buyer under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument furnished or to be furnished by Buyer in connection with the transactions contemplated by this Agreement; (iii) the ownership, management and operations of the Dealership or the Assets from and after the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Buyer; (v) the Assigned Contracts, and; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity.

 

 

(c)  Seller’s Obligation to Indemnify. Following the Closing, Seller and LMP (jointly and severally with Seller) will indemnify and hold Buyer, its affiliates, managers, members, officers, and directors harmless from and against any and all Losses resulting from: (i) any misrepresentation, default, breach of warranty or non-fulfillment of any agreement on the part of Seller or LMP under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument or to be furnished by Seller or LMP in connection with the transactions contemplated by this Agreement; (iii) the ownership, management, and operations of the Dealership or the Assets prior to the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Seller; (v) the Excluded Liabilities; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity, and (vii) any audits, including warranty audits, for sales, service and business operations of Seller arising or accruing prior the Closing Date.

 

(d) Limitations. No claim may be made for indemnification in respect of a breach of a representation or warranty unless notice of such claim is delivered in writing prior to the expiration of the survival of the representation or warranty that is the subject of such claim. Each party shall have the right to bring an action against the other on the breach of a representation or warranty hereunder, but only if the party bringing the action for breach gives written notice of such breach to the other party before the end of the Survival Period. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Buyer’s Group Global Losses exceeds $50,000; provided, however, that the foregoing limitation shall not apply to any Loss with respect to intentional misconduct or fraud. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(b) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Seller’s Group Global Losses exceeds $50,000. Notwithstanding anything in this Agreement to the contrary, the Seller and LMP shall not have any liability whatsoever under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss of any amount by which the Losses payable by the Seller and LMP shall, individually or in the aggregate, exceed Seller’s Group Global Cap of $2,500,000. For the purposes of applying the foregoing liability limitations, amounts paid by Seller, LMP and Seller’s affiliates shall be aggregated. Notwithstanding anything in this Agreement to the contrary, the foregoing limitation on liability shall not apply to any Losses arising or resulting from intentional misconduct or fraud of the Seller, or LMP or their affiliates. For purposes of this Agreement, “Buyer’s Group Global Losses” shall mean the cumulative Losses of Buyer and Buyer’s affiliates who purchase any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Seller or Seller’s affiliates. For purposes of this Agreement, “Seller’s Group Global Losses” shall mean the cumulative Losses of Seller and Seller’s affiliates who sell any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Buyer or Buyer’s affiliates. For purposes of this Agreement, “Seller’s Group Global Cap” shall mean the cumulative liability of LMP, Seller and Seller’s affiliates for Losses to Buyer and Buyer’s affiliates (excluding Losses arising or resulting from intentional misconduct or fraud) under their Dealership Asset Purchase Agreements for any of the Subject LMP Dealerships.

 

 

(e)  Matters Involving Third Parties.

 

(i)  To be entitled to such indemnification, the party claiming indemnification (“Indemnified Party”) will give the other party (“Indemnifying Party”) prompt written notice of the assertion by a third party of any claim with respect to which the Indemnified Party might bring a claim for indemnification hereunder (“Third Party Claim”), and in all events must have supplied such notice to the Indemnifying Party within the applicable period for defense of such claim; provided, however, that the failure to give prompt written notice as prescribed above will not preclude indemnification so long as such failure does not prejudice the Indemnifying Party’s defense against such claim.

 

(ii)  The Indemnifying Party will be entitled, at its own expense, to participate in the defense of such action, proceeding or claim, and, if (i) the action, proceeding or claim involved seeks (and continues to seek) solely monetary damages, environmental remediation or relates to any liability for taxes, (ii) the Indemnifying Party confirms, in writing, its obligation hereunder to indemnify and hold harmless the Indemnified Party with respect to such damages in their entirety, and (iii) the Indemnifying Party, in the reasonable judgment of the Indemnified Party, will be able to satisfy any adverse judgment as a result of its indemnification obligation with respect to such action, proceeding or claim, then the Indemnifying Party will be entitled to assume and control such defense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval will not be unreasonably withheld or delayed. The Indemnified Party will be entitled to participate therein after such assumption, the costs of such participation following such assumption to be at its own expense. Upon assuming such defense, the Indemnifying Party will have full rights to enter into any monetary compromise or settlement which is dispositive of the matters involved; provided, that such settlement is paid in full by the Indemnifying Party and will not have any direct or indirect adverse effect upon the Indemnified Party.

 

(iii)  With respect to any action, proceeding or claim as to which (i) the Indemnifying Party does not have the right to assume the defense or (ii) the Indemnifying Party will not have exercised its right to assume the defense, the Indemnified Party will assume and control the defense of and contest such action, proceeding or claim with counsel chosen by it and approved by the Indemnifying Party, which approval will not be unreasonably withheld or delayed. The Indemnifying Party will be entitled to participate in the defense of such action, proceeding or claim, the cost of such participation to be at its own expense. The Indemnifying Party will be obligated to pay the reasonable attorneys’ fees and expenses of the Indemnified Party. The Indemnified Party may not settle such action, proceeding or claim without the prior written consent of the Indemnifying Party, which will not be unreasonably withheld.

 

(iv)  Both the Indemnifying Party and the Indemnified Party will cooperate fully with one another in connection with the defense, compromise or settlement of any such action, proceeding or claim, including, without limitation, by making available to the other all pertinent information and witnesses within its control.

 

 

(f)   Procedures for Indemnification - Other Claims. A claim for indemnification relating to a breach of a warranty or representation for any matter not involving a Third-Party Claim must be asserted by notice to the Indemnifying Party by the Indemnified Party on or before the expiration of the Survival Period. The Indemnifying Party will have the obligation to eliminate or mitigate its indemnification obligation under this Agreement by affecting a cure of any breach of this Agreement not related to any Third-Party Claim (including any document, certificate, instrument or agreement to be executed and/or delivered under this Agreement), if susceptible of cure, within thirty (30) days after any such notice. The Indemnifying Party will pay any uncured indemnification claim and any claim that is not capable of cure that is undisputed promptly after such notice and failure to cure. The Indemnifying Party will promptly pay any other indemnification claim upon resolution by an agreement with the Indemnified Party or upon a final, non-appealable order of a court of competent jurisdiction. All claims for indemnification as to a breach of a representation or warranty will survive as to any claim or demand made on or before the expiration of the Survival Period until such claim or demand is fully paid or otherwise resolved by the parties hereto in writing or by a court of competent jurisdiction.

 

(g)  Seller’s Security for Indemnification Claims. To secure the indemnity obligations of Seller and LMP under this Section 12. for claims made by Buyer and claims of Buyer’s affiliates for indemnification under their Dealership Asset Purchase Agreements and underlying Real Estate Purchase Agreements with Seller’s affiliates within 24 months of the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith; the Parties and their affiliates who sell and purchase any of the Subject LMP Dealerships shall enter into an Indemnity Escrow Agreement with Greenberg Traurig, PA, as the “Indemnity Escrow Agent”. Seller and Seller’s affiliates shall fund the Holdback Amount under the Indemnity Escrow Agreement in full upon the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith. The form of the Indemnity Escrow Agreement is attached as Exhibit C .

 

(i)  Subject to the limitations set forth in this Section 12, all payments by the Seller or LMP to Buyer pursuant to this Section 12 shall be satisfied first from the Indemnity Escrow Funds (to the extent the Indemnity Escrow Funds are sufficient, and then, subject to the limitations herein, the Seller and or LMP shall pay any excess due hereunder directly) and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Indemnity Escrow Agent to make the applicable payments.

 

(ii)  On the first year anniversary following the Closing Date, an amount equal to 50% of the total Indemnity Escrow Funds originally funded to the Indemnity Escrow Agent minus  the amount of claims paid by the Indemnity Escrow Agent, and minus the aggregate outstanding  amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date shall be released to the Seller, LMP and or Seller’s affiliates on such date (if such number is positive), and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

(iii)  On the second year anniversary following the Closing Date, an amount equal to the balance of the Indemnity Escrow Funds minus the aggregate outstanding  amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date (any such claim, a “Remaining Indemnity Claim”) shall be released to the Seller, LMP and or Seller’s affiliates on such date, and the Buyer and the Seller shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.  Following the final resolution of any Remaining Indemnity Claim, if the Indemnity Escrow Funds exceed the aggregate amount, if any, which any of Buyer or Buyer’s affiliates has claimed under Section 12 or under any of their Dealership Asset Purchase Agreements with respect to Remaining Indemnity Claims that remain unresolved, the excess Indemnity Escrow Funds shall be released to the Seller, Seller’s affiliates or LMP on such date, and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

 

13.  Miscellaneous.

 

(a)  Transaction & Enforcement Costs. Each Party shall bear its own costs and expenses, including legal and accounting fees, incurred in connection with this Agreement and the transactions contemplated hereby, and shall pay such costs and expenses whether or not the Closing occurs. Notwithstanding the foregoing, in the event of any litigation between or among the Parties to enforce any provisions or rights hereunder, the unsuccessful Party, as determined by a final judgment, shall pay to the successful Party therein all costs and expenses of such Party (and any of such Party’s agents, such as attorneys or accountants) expressly including, but not limited to, reasonable attorneys’ fees and court costs incurred therein by such successful Party, which costs, expenses and attorneys’ fees will be included in and as a part of any judgment rendered in such litigation.

 

(b)  Confidentiality. Each Party and its representatives shall hold in strict confidence all data and information obtained in connection with this transaction, including all financial and other information of or related to the Dealership and the terms of this Agreement, and shall not directly or indirectly at any time reveal, report, publish, disclose or transfer to any person any of such data and information or utilize any of such data or information for any purpose; provided, however, each Party may disclose information to Manufacturer and legal, tax, accounting advisors, lenders and potential lenders and other parties deemed by a Party to be necessary or appropriate in connection with the transactions described herein, provided that such persons acknowledge that they too are bound by the confidentiality provisions contained herein. Notwithstanding any contrary provision herein, Buyer may notify governmental organizations (e.g., the Security and Exchange Commission, the FTC, if applicable) of this Agreement and the transactions contemplated hereby by filing an unredacted copy of this Agreement. The Parties may not otherwise announce the transactions contemplated hereby which may identify the Seller, the Buyer, and the Dealership to the general public without the consent of the other. Further, notwithstanding any contrary provision herein, Buyer may apply for licenses, tax applications, qualifications, and fictitious name registrations required for its business operations and the parties may disclose this transaction to obtain the necessary consents related to contract assumptions and the Necessary Seller Approvals.

 

(c) Relationship & Authority. Each Party is acting as an independent contractor. Each Party is responsible for all taxes relating to its operation, including payroll taxes for its employees and nothing in this Agreement is intended to create a relationship, express or implied, of employer-employee or partnership or joint venture between or among any Party. Each individual executing this Agreement on behalf of a Party individually represents and warrants that such Party is validly existing, that such execution has been duly authorized, that the terms of the instrument will be binding upon the Party, and that such individual is duly authorized to execute this Agreement on behalf of such Party.

 

 

(d)  Notices. All notices and other communications provided for hereunder will be in writing, unless otherwise specified, and will be deemed to have been duly given if delivered personally, via e-mail, via Federal Express or other nationally recognized courier, to the addresses on the signature pages hereof or at such other addresses as a Party may designate from time to time in writing. Notices will be effective upon receipt by the Party or refusal to accept delivery. Notices on behalf of either Party may be given by the attorneys representing such Party.

 

(e)  Integration; Amendments & Time. This Agreement contains the entire understanding between the Parties and supersede any prior understanding and/or oral agreements between them respecting the subject matter of this Agreement. Any modification or amendment of this Agreement will be in writing and executed by Seller and Buyer. Time is of the essence in this Agreement. If the last day to perform under a provision of this Agreement or the final day of any period (e.g., the Closing Date Deadline) falls on a Saturday, Sunday, or legal holiday, then such performance deadline or period is automatically extended through the next day which is not a Saturday, Sunday, or legal holiday.

 

(f)   Interpretation & Administration. The words “include”, “includes”, “included”, “including” and “such as” do not limit the preceding words or terms and are deemed to be followed by the words “without limitation”. The Parties have a duty of good faith and fair dealing. All captions and headings contained in this Agreement are for convenience of reference only and will not be construed to limit or extend the terms or conditions of this Agreement. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. All terms defined in this Agreement in their singular or plural forms, have correlative meanings when used herein in their plural or singular forms, respectively. Each Party and its counsel have reviewed this Agreement and the rule of construction that any ambiguities are to be resolved against the drafter will not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits hereto. Except as expressly provided herein (e.g., “industry standard depreciation” or “as reflected on Manufacturer’s statement”), all accounting matters required or contemplated by this Agreement will be in accordance with generally accepted accounting principles. This Agreement may be executed in one or more counterparts and delivered by e-mail or facsimile, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement will be binding upon and inure to the benefit of the Parties, their successors and assigns. Buyer may assign or otherwise transfer all of Buyer’s rights, obligations and benefits hereunder to any entity owned or controlled by, or under common control with, Buyer without Seller’s consent. The invalidity of any one or more phrases, sentences, clauses, paragraphs, or sections of this Agreement will not affect the remaining portions of this Agreement. No failure or delay by any Party to enforce any right specified herein will operate as a waiver of such right, nor will any single partial exercise of a right preclude any further or later enforcement of the right. A business day shall mean Monday through Friday, excluding federal and national holidays or State of Florida holidays. The term “material” shall mean an amount which would involve an expenditure, liability or damages in excess of $50,000.00.

 

 

(g)  Further Assurances. At the request of Seller and at Seller’s expense, Buyer shall cooperate in the preparation by Seller of all filings to be made by Seller with the Securities and Exchange Commission including any periodic filings and any filing with respect to a registered offering of its securities by Seller and the closing of the offering registered thereby. Upon a party’s request at any time, the other party shall take any act, including executing and delivering any document, necessary or advisable to otherwise to carry out the provisions of this Agreement.

 

(h)  Escrow Agent. Escrow Agent’s duties pursuant to this Agreement are purely ministerial in nature, and the Escrow Agent shall incur no liability whatsoever except for its willful misconduct or gross negligence, so long as the Escrow Agent is acting in good faith. The Parties hereby release the Escrow Agent from any liability for any error of judgment or for any act done or omitted to be done by the Escrow Agent in the good faith performance of its duties hereunder and do each hereby indemnify the Escrow Agent against, and shall hold, save, and defend the Escrow Agent harmless from, any costs, liabilities, and expenses incurred by the Escrow Agent in serving as Escrow Agent hereunder and in faithfully discharging its duties and obligations hereunder. The Escrow Agent is acting as a stakeholder only with respect to the Deposit. If there is any dispute as to whether the Escrow Agent is obligated to deliver the Deposit or as to whom the Deposit is to be delivered, the Escrow Agent may refuse to make any delivery and may continue to hold the Deposit until receipt by the Escrow Agent of an authorization in writing, signed by Seller and Buyer, directing the disposition of the Deposit, or, in the absence of such written authorization, the Escrow Agent may hold the Deposit until a final non appealable determination of the rights of the Parties in an appropriate judicial proceeding. If such written authorization is not given, or a proceeding for such determination is not begun, within thirty (30) days after notice to the Escrow Agent of such dispute, the Escrow Agent may bring an appropriate action or proceeding for leave to deposit the Deposit in a court of competent jurisdiction pending such determination. The Escrow Agent shall be reimbursed for all costs and expenses of such action or proceeding, including reasonable attorneys’ fees and disbursements, by the Party determined not to be entitled to the Deposit. Upon making delivery of the Deposit in any of the manners herein provided, the Escrow Agent shall have no further liability or obligation hereunder. The Escrow Agent shall execute the Escrow Receipt attached hereto in order to confirm that it has received the Deposit and is holding the same on deposit in accordance with the provisions hereof.

 

(i)  Applicable Law & Venue. This Agreement will be governed by and construed and enforced in accordance with the internal laws and judicial decisions of the State of Florida without regard to conflict of law provisions thereof. Any litigation, action or proceeding arising out of or relating to this Agreement will be held exclusively in any state or Federal court in Broward County, Florida. Each Party waives any objection which it might have now or hereafter to the venue of any such litigation, action or proceeding, submits to the sole and exclusive jurisdiction of any such court and waives any claim or defense of inconvenient forum. Each Party consents to service of process at such Party’s address as provided herein (and updated in writing from time to time).

 

(j)  Waiver of Jury Trial. Each party hereto hereby acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.

 

(k)  Real Estate Agreement. The execution and delivery of this Agreement is contingent upon the concurrent and simultaneous execution and delivery of the Real Property Purchase and Sale Agreement.

 

[Remainder of Page Blank]

 

 

IN WITNESS WHEREOF, the Parties executed and delivered this Agreement as of the Effective Date.

 

LMP Beckley KCC, LLC, a West Virginia limited liability company			Fayette AWV AM, LLC, a Florida limited liability company
By:	/s/ Sam Tawfik		By:	/s/ Ali Ahmed
	Sam Tawfik, Authorized Signatory			Name: Ali Ahmed
				Title: Manager
LMP Beckley 001 Holdings, LLC, a West				Notice Address for Buyer:
Virginia limited liability company				Attn: Ali Ahmed
				5875 NW 163rd Street
By:	/s/ Sam Tawfik			Suite 104
	Sam Tawfik, Authorized Signatory			Miami Lakes, FL  33014
				Email:  [email protected]

 

LMP Automotive Holdings, Inc., a Delaware corporation			With a copy to:
By:	/s/ Sam Tawfik		Greenspoon Marder LLP
	Sam Tawfik, CEO		Attn:  David Weisman
			200 East Broward Blvd.
	Notice Address for Seller and LMP:		Suite 1800
			Fort Lauderdale, FL  33301
LMP Beckley HK, LLC			Email:  [email protected]
500 East Broward Boulevard, Suite 1900			Greenspoon Marder LLP
Fort Lauderdale, FL 33394			Attn:  Greg Blodig
Attn: Sam Tawfik, Chief Executive Officer			200 East Broward Blvd.
			Suite 1800
With a Copy To:			Fort Lauderdale, FL  33301
Greenberg Traurig, PA			Email:  [email protected]
Attn:  Bruce C. Rosetto
777 S. Flagler Rive
Suite 300 East
West Palm Beach, FL  33401
Email:  [email protected]

 

 

Schedule 1(b)(ii) – Purchase Price for PreOwned, Service and Rental Vehicles

 

 

 

 

Schedule 2 – List of Assets

 

Inventory of new vehicles, used vehicles, parts and accessories will be inventoried and attached at or near Closing.

 

Seller’s FF&E is listed on Schedule 2(b).

 

 

Schedule 2(b) – FF&E

 

 

 

 

Schedule 3(d) – Assigned Contracts

 

 

 

 

Schedule 5(d) – Liens

 

 

 

 

Schedule 5(q) – In-House Warranties

 

 

 

 

Schedule 5(m) – Employment Matters

 

 

 

 

ESCROW RECEIPT

 

Dealership Asset Purchase Agreement

 

Escrow Agent agrees to be bound by the Dealership Asset Purchase Agreement and acknowledges receipt of:

 

☐

A.

Executed copies of the Dealership Asset Purchase Agreement on August __, 2022;

 

☐

B.

Deposit in the amount of $__________ on August __, 2022.

 

Escrow Agent:
By:
Name & Title:

  

Escrow Agent acknowledges having reviewed this Dealership Asset Purchase Agreement and will be bound by those provisions.

 

 

37

 

Exhibit 10.6

 

Execution Version

 

DEALERSHIP ASSET PURCHASE AGREEMENT

 

This DEALERSHIP ASSET PURCHASE AGREEMENT (this “Agreement”) is effective as of August 5, 2022 (the “Effective Date”), by and among Beckley AWV AM, LLC, a Florida limited liability company (“Buyer”), LMP Beckley BAM, LLC, a West Virginia limited liability company (the “Seller”), a wholly owned subsidiary of LMP Beckley 001 Holdings, LLC, a West Virginia limited liability company, and LMP Automotive Holdings, Inc., a Delaware corporation (“LMP”), and together with Seller and Buyer, each a “Party” and, collectively, the “Parties”).

 

RECITALS:

 

WHEREAS, Seller owns, controls and operates a Buick GMC automotive dealership (the “Dealership”), and all ancillary business related thereto (the “Business”) located at 3934 Robert C Byrd Dr, Beckley, WV 25801 (the “Premises”) under agreements with General Motors Company (the “Manufacturer”);

 

WHEREAS, LMP owns and operates through various affiliates, six (6) automotive dealerships, including the Seller, (the collectively, the “Subject LMP Dealerships”), and certain real property (the “Real Property”), which are the subject of that certain letter of intent with an affiliate of Buyer, dated June 11, 2022, for the purchase of substantially all of the assets of the Subject LMP Dealerships (the “LOI”), including the sale and transfer substantially all of the Dealership’s assets (as more particularly described in Section 2 below, but excluding the Excluded Assets defined below, collectively, the “Assets”);

 

WHEREAS, simultaneously with the consummation of this Agreement, Fayette AWV RE, LLC, a Florida limited liability company (the “Real Property Purchaser”) will purchase and acquire the real property of the Premises from LMP Automotive Holdings, LLC, a Florida limited liability company (the “Real Property Seller”) in accordance with that certain Real Property Purchase and Sale Agreement for the purchase and sale of the real property underlying the Premises (the “Real Property Purchase and Sale Agreement”);

 

WHEREAS, the LOI sets forth that there is no due diligence period with respect to the Dealership and the Assets once this Agreement is executed;

 

WHEREAS, the Buyer desires to purchase the Assets and Seller desires to sell and transfer the Assets on the terms and conditions hereinafter set forth (the “Transaction”).

 

NOW, THEREFORE, in consideration for the mutual promises contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged by each Party, the Parties as follows:

 

1.  Closing Date and Purchase Price.

 

(a) Closing Date. Subject to the terms and conditions set forth in this Agreement, the consummation of the transactions contemplated hereby (the “Closing”) shall take place no later than within (15) business days of the receipt of the latest to occur of: (i) all applicable manufacturers’ approvals in accordance with Section 7(a) in connection with the purchase and sale of all of the Subject LMP Dealerships and (ii) all required entity approvals from the boards of directors and shareholders of LMP, and the manager of sellers of the Subject LMP Dealerships as well as the manager of the sellers of the real estate properties underlying the LMP Dealerships being sold are obtained in connection with authorizing the contemplated Transaction and the transactions involving the Subject LMP Dealerships. The date of the Closing is referred to herein as the “Closing Date.” The Closing shall be deemed to be effective as of the opening of business on the Closing Date. The “Closing Date Deadline” means October 31, 2022; provided, however, that if, as of the fifteenth (15^th) day prior to such date, all of the manufacturers’ approvals have not been obtained, or if all applicable waiting periods pursuant to the HSR Act have not expired or terminated, or if the West Virginia Department of Revenue has not provided a Clearance Letter to Seller, the Closing Date Deadline will automatically be extended for thirty (30) days, time being of the essence. It is agreed that the closings for all of the Subject LMP Dealerships may occur in separated groups with the same manufacturer and/or by geographical regions. It is acknowledged that the actual Closing and funding for this transaction make take 1 or 2 business days.

 

 

(b)  Purchase Price & Broker. The purchase price for the Assets described in Section 2(e) below is $11,451,380 in connection with the purchase of goodwill and FF&E (the “Goodwill Purchase Price”) plus additional purchase price for parts, work in progress (“WIP”), and New Vehicles, Used Vehicles and Pre-Owned Vehicles (collectively, the “Vehicle Inventories”) calculated as described below (the “Additional Purchase Price,” with the Goodwill Purchase Price, collectively the “Purchase Price”). The parties agree that the FF&E portion of the Goodwill Purchase Price includes the price for Seller’s vehicles used in its business operations which are listed in the FF&E schedules to its financial statements. The Additional Purchase Price will be calculated as follows:

 

(i)  The purchase price for Dealership’s new, undamaged and untitled 2021, 2022 and subsequent year Manufacturer vehicles, including demonstrators and loaners, (the “New Vehicles”) is an amount equal to the actual Manufacturer’s original invoice; plus Seller’s direct out-of-pocket cost of dealer-installed optional parts and accessories theretofore installed upon New Vehicles; less all applicable dealer hold-backs paid to Seller; less fifty percent of all credits, and allowances floor plan assistance, Local Marketing (LMF & LMA) , and Essential Brand Elements; less “prep” expenses for New Vehicles which have not yet been prepared for sale; less the cost to repair any damage and less the replacement cost of any parts or equipment removed. Notwithstanding the foregoing, the purchase price of New Vehicles shall not include or be increased for rust proofing, undercoating, scotch-guarding, non-Manufacturer alarm systems, interrupt systems, theft protection devices and similar dealer additions. The purchase price of New Vehicles with more than 600 miles but less than 4,000 miles will be reduced by $0.60 per mile. New Vehicles with 4,000 or more miles will be valued as a Used Vehicle (defined below). For purposes of this Agreement, a vehicle will be considered damaged if it has more than six hundred and fifty dollars ($650.00) of repairs that are needed or previously performed on the vehicle..

 

(ii)  The purchase price for pre-owned, company (other than those scheduled as FF&E), service, and rental vehicles (the   Vehicles” or “Used Vehicles”) shall be priced for each such vehicle at the lower of: (i) the pricing of a New Vehicle set forth above, or (ii) MMR adjusted as per CR rating, as set forth on Schedule 1(b)(ii) hereto.

 

(iii)  Buyer shall purchase all vehicles other than the New Vehicles in Seller’s vehicle inventory at CR based MMR (collectively, the “Used Vehicles”; provided, however, if the purchase price for a Pre-owned Vehicle or Used Vehicle cannot be agreed upon, such vehicle shall be retained by Seller and be an Excluded Asset and provided further that Buyer shall have no obligation to purchase any damaged vehicle or vehicle that has salvage status, a branded title, or was in an accident.

 

 

(iv)  The purchase price for all obsolete parts shall be equal to 50% of Seller’s cost of such obsolete parts with a cap of $10,000 and non-obsolete parts inventory shall be equal to manufacturer cost (less all applicable rebates and discounts). For purposes of clarity, any obsolete parts in excess of $10,000 shall be transferred to Buyer at Closing. Obsolete parts means (i) any of new OEM parts not listed in any of the manufacturer’s most recent price books; (ii) any vehicle parts or accessories that, at Closing, are not returnable to the supplier from whom they were originally purchased for a full refund less any normal restocking charge; or (iii) any vehicle part or accessory that, as of the Closing Date, has been in Seller’s parts inventory over 365 days.

 

(c)  Earnest Money Deposit. Within three (3) business days after the Effective date Buyer shall deliver to Escrow Agent $572,569 (five percent of the Goodwill Purchase Price) as earnest money (the “Deposit”) to be held in trust by Greenberg Traurig, PA, as Escrow Agent for and on behalf of the Parties pursuant to this Agreement. On the Closing Date, if the Closing occurs, the Deposit will be applied to the Purchase Price. The Deposit is non-refundable except if (i) Manufacturer fails to approve the Transaction; or (ii) as per Sections 11(a)(i), (ii), (iv), (v) or (vi).

 

(d)  Hart-Scott-Rodino Act. Filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the “HSR Act”) may be required. If filing or notice or other action is required under the HSR Act with respect to the transactions outlined herein, then Buyer shall effect such filing or notice and Buyer and Seller shall each pay for 50% of the filing fees required by the HSR Act . Buyer and Seller shall each be responsible for their own attorney fees incurred to effect such filing. Seller shall cooperate fully with Buyer in said action and promptly provide all requisite information.

 

2.  Dealership Assets. Subject to the terms and conditions contained in this Agreement, upon the consummation of the transactions contemplated by this Agreement (the “Closing”, and the date thereof, the “Closing Date”), Seller shall sell to Buyer, and Buyer shall purchase from Seller, the Assets as set forth on Schedule 2 and as more generally described below in this Section 2. A mutually agreed to form of Bill of Sale, attached as Exhibit A hereto, executed and delivered by the Parties on the Closing Date (the “Bill of Sale”) will contain a list of all of the Assets sold to Buyer as set forth on Schedule 2.

 

(a)  Vehicles. Subject to Section 1:

 

(i)  Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s New Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date.

 

(ii)  Buyer shall purchase from Seller and Seller shall sell to Buyer the Seller’s Used Vehicles and Pre-Owned Vehicles in Seller’s inventory in the ordinary course of business and identified by Seller on the Closing Date (but subject to the provisions of Section 1 (b) (iii)). Prior to Closing, Seller shall (i) disclose to Buyer any and all facts known to Seller concerning each Used Vehicle and Pre-Owned Vehicle that Seller would be legally obligated to disclose to a retail purchaser of a Used Vehicle including, but not limited to, known damage, known usage history, frame and flood damage, salvage status, open recalls, and warranty eligibility; (ii) provide Buyer with legal odometer statements for each Used and Pre-Owned Vehicle; and (iii) provide free and clear title for each of the Used Vehicles and Pre-Owned Vehicles. At least 10 days prior to Closing, Seller shall provide Buyer with its then current Used Vehicle and Pre-Owned vehicle inventory along with Seller’s asking price for each such vehicle.

 

 

(b)  Parts; Accessories & Other Inventories.

 

(i)  Inventory & Returnable. A physical inventory of Seller’s parts and accessories will be taken in the presence of a representative of Buyer and Seller by an inventory service chosen by Buyer and reasonably acceptable to Seller, the cost of which will be borne by the Buyer and Seller splitting the cost on a 50/50 basis (the “Inventory”). The Inventory will classify parts and accessories as “returnable” or “non-returnable”. The terms “returnable parts” and “returnable accessories” means only those new undamaged replacement parts and new undamaged accessories for Manufacturer vehicles which are listed (coded) in the latest current Master Parts Price List Suggested List Prices and Dealer Prices (or other applicable similar Manufacturer price lists, with supplements or the equivalent in effect as of the Inventory date, the “Master Price List”), as returnable to the Manufacturer at not less than the purchase price reflected in the Master Price List and are within the limits of returnable parts established by the Manufacturer from time to time. Buyer shall purchase from Seller, and Seller shall sell to Buyer, all of Seller’s returnable parts and returnable accessories for an amount equal to the price listed in the Master Price List (less all applicable rebates and discounts). At Closing the total Parts and Miscellaneous Inventory that are in their original packaging, current and returnable and with sales in the 12 months prior to closing for an amount equal to the Manufacturer prices as reflected in the most recent pricing catalogs less all discounts and allowances. Seller will assign Sellers’ parts return rights to Buyer at Closing.

 

(ii)  Nonreturnable. All parts and accessories not coded as returnable in the Master Price List are “nonreturnable” and shall be considered an obsolete part. The purchase price for the nonreturnable parts and accessories, non-Manufacturer, “jobber” or “NPN” parts and accessories will be considered as and sold as obsolete parts pursuant to Section 1 (b)(iv).

 

(iii)  Return Rights, etc. Upon Closing, Seller will be deemed to have automatically assigned, and Seller shall assign to Buyer, Seller’s parts return rights without any further action (but Seller shall take any further action requested by Buyer or required by the Manufacturer to implement such assignment of rights). At the request of Buyer, Seller shall use its best efforts to assist Buyer in effecting any parts return offered by the Manufacturer (including, if necessary, applying for parts return in Seller’s name), and Seller shall promptly pay over to Buyer any monies received from the Manufacturer related thereto. Buyer may deduct from the consideration to be paid to Seller at the Closing Seller’s parts account outstanding balance with the Manufacturer and to pay such balance directly to the Manufacturer for Seller’s account. Buyer is not obligated to purchase old, opened, obsolete, superseded, incomplete, or damaged parts or accessories or any parts, accessories or sheet metal with no sales in the twelve (12) months prior to Closing. Buyer will not be obligated to purchase more than one year’s supply of any part or accessory (based on trailing one-year historical sales). Miscellaneous Supplies shall be purchased as provided for in subsection (d) below. The purchase price for all other parts not addressed in this Section or Section 1 will equal the value thereof as mutually agreed between Buyer and Seller provided, however, if the purchase price for such assets cannot be agreed upon, such assets shall be retained by Seller and be an Excluded Asset. If any parts and accessories or other inventories or goods that Buyer is not obligated to purchase hereunder are not removed from the Real Property within ten (10) days after the Closing Date, such property will automatically become Assets transferred to Buyer pursuant to the Bill of Sale without additional consideration.

 

 

(c)  Intellectual Property. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s telephone and data numbers, website addresses and domain names (owned or registered by or on behalf of the Dealership, ), e-mail addresses, classified telephone and internet advertising, prospect data, customer sales, lease, finance and service records (both hard copy and electronic format (including deal jackets), for no additional cost to Buyer), Seller’s workman’s compensation and unemployment rating in the State of West Virginia, all lawfully transferable licenses and permits of the Dealership or Seller, Dealership Intellectual Property (defined below), leasehold improvements and fixtures, unused internal and customer repair order forms, customer lists and marketing materials and catalogues, retail buyer’s order forms, office and shop supplies, shop reference manuals, parts reference catalogs, all books and records necessary for the continued operation of the Dealership (including training and promotional materials, employee records of employees hired by Buyer, P.O. boxes, third party warranties in Seller’s favor and all licenses and rights to use all software ( other than Vision AST software and other than DMS systems not assumed by Buyer) on or used in connection with any personal computer or other computing device used in connection with the Dealership, etc.), parts sales tickets, unused purchase order forms and all other forms and Seller’s goodwill and going concern value relating to the Dealership. “Dealership Intellectual Property” means any rights or ownership of the Dealership or Seller to all (i) patents, patent applications, patent disclosures and improvements, (ii) trademarks, trade, service marks, trade dress, and logos (excluding trade names, service marks, trade dress and logos, (iii) copyrights and registrations and applications for registration thereof, (iv) computer software, data and documentation, (v) trade secrets; and (vi) social media, directory assistance, reputation management and e-commerce sites and accounts (including E-Bay, Facebook, Instagram, Twitter, yelp!, Dealer Rater, Edmunds and Google programs).

 

(d)  Other Assets. Gas, oil, grease, nuts and bolts (“Miscellaneous Supplies”) shall be purchased by Buyer with the value thereof being equal to the Dealership’s cost of such items (established by invoice or such other documentation reasonably requested by Buyer), less any incentives received, or rebates received with respect thereto. Work in Process shall be purchased by Buyer as provided for in Section 3 (c).

 

(e)  Buyer agrees to buy all of Seller’s body shop inventories of unopened and not expired containers of paint (base and tints), quantities of paint in spray booths and machinery that can be accurately determined, new and unused dry supplies, and new and unused sheet metal, if any (“Body Shop Inventories”). The purchase price for Body Shop Inventories shall be Seller’s cost in such inventories.

 

 

(f)   Excluded Assets & Name License. Notwithstanding anything in this Agreement to the contrary, the following assets are not being sold pursuant to this Agreement: (i) all cash and cash equivalents, wherever located and in whatever form (unless “petty cash” is noted on the Closing Memorandum or Closing Statement); (ii) promissory notes and other evidences of indebtedness; (iii) all insurance policies; (iv) accounts receivable; (v) any claims or causes of action of Seller against third parties; (vi) tax credits and claims for tax refunds; (vii) securities, voting or otherwise in any entity; (viii) any rights in connection with and any assets of any employee benefit plan of Seller; (ix) the minute books and capital stock records of Seller, (x) all employment contracts, relating to any employees of Seller or Seller’s operations, (xi) any contract to which Seller is a party that is not an Assigned Contract, and (xii) any vehicle or parts that are not included in the purchased Assets; (collectively, the “Excluded Assets”). Seller shall remove all vehicles that are Excluded Assets from the Premises within ten (10) days following the Closing.

 

(g)  Excluded Liabilities. Notwithstanding anything contained herein to the contrary, Buyer shall not assume, or cause to be assumed, or be deemed to have assumed or caused to have assumed or be liable or responsible for any liabilities or obligations (whether known or unknown, fixed, absolute, matured, unmatured, accrued or contingent, now existing or arising after the date hereof) of Seller or any of its Affiliates (other than the liabilities expressly assumed in this Agreement) including, but not limited to, the following obligations and liabilities of Seller and its Affiliates (such obligations and liabilities not assumed hereunder, the “Excluded Liabilities”):

 

(i)  any liabilities or obligations relating to any current or former employee or independent contractor of Seller or any of its Affiliates (whether or not such employee is hired by Buyer following the Closing) and labor matters relating to any such current or former employee or independent contractor including any liabilities or obligations arising out of or relating to any employee-related matter, employee-related payment obligation, collective bargaining contract, labor negotiation, severance cost, pension plan, profit sharing plan, deferred compensation plan, accrued holiday benefit, accrued bonus, salary, bonus plan, phantom stock award, stock option or purchase plan, employment contract, consulting contract, any Employee Benefit Plan or any entitlements arising as a result of or in connection with the consummation of the Purchase;

 

(ii)  any Taxes, interest, and penalties (i) attributable to the purchased Assets or the Business with respect to any Pre-Closing Period or (ii) imposed on Seller or any of its Affiliates;

 

(iii)  any liabilities or obligations related to the Excluded Assets;

 

(iv)  any liabilities or obligations arising out of or relating to indebtedness of Seller or any of its Affiliates;

 

(v)  any liabilities or obligations arising out of or relating to any contract which is not an Assigned Contract;

 

(vi)  other than in connection with the operation of the Business after the Closing Date, any liabilities or obligations arising out of operations prior to the Closing Date, and /or relating to any real property owned, leased, occupied or controlled by Seller;

 

(vii)    any Seller Transaction Expenses; and

 

 

(viii)    any liabilities or obligations arising from product liability claims for which the injury or loss giving rise thereto (not just the delivery of the notice of such claims) occurs prior to the Closing Date, including specifically all losses caused by or arising out of any alleged design, manufacture, assembly, installation, use or sale of any products manufactured by the Factory or the Business prior to the Closing Date, whether the commencement of any related litigation, arbitration, investigation, proceeding or claim occurs before or after the Closing Date Seller shall satisfy all Excluded Liabilities that are an obligation of Seller promptly when due.

 

3.  Prorations & Assigned Contracts.

 

(a)  Prepaid Expenses & Prorations. Current personal property [and real property] taxes will be prorated and adjusted between Buyer and Seller as of the Closing Date based on the number of days in the year to which the taxes relate that each party occupies the property. If current tax bills are unavailable on the Closing Date, the prior year’s tax bills will be used for proration purposes and taxes will be re-prorated between Buyer and Seller when the current year’s tax bills are received. Any amounts owed by either Party with respect to such re-proration will be paid to the other Party within ten (10) days after the determination of such re-proration. All operating expenses (other than prepaid expenses) of the Dealership for the month of Closing will be prorated and adjusted between Buyer and Seller as of the Closing Date based on a thirty (30) day month. To the extent possible, the Parties shall cause all utility meters to be read on the day preceding the Closing Date. Unless the applicable utility terminates billing on Seller’s account as of the Closing Date, utilities payable by Seller (or Buyer, to the extent applicable) for the Dealership Property, including, but not limited to electricity, gas and water and sewer, shall be prorated as of the Closing Date. The adjustment therefor shall be made on the basis of the most recently historical data/billings therefor and shall be subject to final reconciliation based upon actual charges after receipt of a final bill by Seller. Buyer will make its own arrangements for any security deposits required by any utility company, and Seller will cancel and retain any deposits previously furnished. Buyer shall receive a credit against the Purchase Price for the cost to replace any missing special tools required by the Manufacturer’s most recent catalogue.

 

(b)  Within sixty (60) days after the Closing Date, the Parties shall make an adjustment to the Purchase Price to reflect any customary adjustments, additions and deletions necessary to properly reflect the categorization and/or amount of the Assets in accordance with this Agreement. In the event the Purchase Price is adjusted, the appropriate party shall effect a wire transfer of immediately available funds to the other party for the appropriate amount within five (5) days after the determination of the adjustment.

 

(c) Customer Deposits & Work in Process. Upon Closing, Seller shall transfer to Buyer all customer deposits for incomplete orders taken by Seller in the ordinary course of business. Seller shall retain all escheatable deposits, including but not limited to security deposit on any real property lease, if applicable. At the Closing, Seller shall furnish Buyer with a list of such deposits (including “we owes”, due bills, etc.), setting forth, as to each, the name and address of the customer, any goods or services owed to the customer and the amount of the deposit, and Seller shall deliver to Buyer all documents in Seller’s possession reflecting such deposits, we owes, due bills, etc. Seller shall credit Buyer for all we owes/due bills on the Closing Date. The Bill of Sale or Closing Statement will contain a list and description of such customer transactions (and Work in Process, as detailed below). Seller shall credit Buyer the actual cost to complete all due bills. Buyer shall purchase from Seller, and Seller shall sell to Buyer, Seller’s pending service orders written by Seller in the ordinary course of business for an amount equal to Seller’s actual cost for parts and labor for any such orders which have been supplied by Seller which are in process at the opening of business on the Closing Date (“Work in Process”). Seller shall not receive the revenue from such Work in Process. Buyer may reject (and Seller shall retain) all Work in Process where (i) the Work in Process was not placed in the normal course of business; (ii) Seller does not possess an order signed by the customer authorizing such service, the vehicle isn’t at the Real Property on the Closing Date or such order has been open for longer than thirty (30) days prior to the Closing Date; (iii) the Work in Process does not provide for a profit to Buyer; or (iv) the Work in Process does not provide for cash or commercially reasonable credit terms on delivery of the vehicle.

 

 

(d)  Assigned Contracts. As of the Closing Date, Seller shall assign, and Buyer shall assume Seller’s contractual obligations, which Buyer has agreed to assume, listed on Schedule 3(d) hereto on the Closing Date (collectively, “Assigned Contracts”). The term “Assigned Contracts” excludes obligations and liabilities arising or accruing by the Closing Date or by reason of any breach or alleged breach by Seller, regardless of when such obligation or liability is asserted. Seller shall arrange for assignment of the Assigned Contracts at Seller’s cost. Buyer is not assuming any liabilities or obligations of Seller other than the Assigned Contracts or agree to pay, discharge or perform any liabilities or obligations arising out of any breach by Seller (other than with respect to a breach by Buyer) of any Assigned Contract.

 

4.  Deliveries.

 

(a)  At Closing, Buyer shall deliver to Seller (or to Escrow Agent (as defined in the Real Property Purchase and Sale Agreement) for further disbursement to Seller) the following:

 

(i)  the Purchase Price in immediately available funds, of which $2,500,000 (the “Holdback Amount”) shall be delivered to the Indemnity Escrow Agent (if not previously delivered) to hold under the Indemnity Escrow Agreement and the balance shall be delivered to Seller at Closing.

 

(ii)  A copy of resolutions duly adopted by Buyer’s Manager authorizing and approving Buyer’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the secretary or manager of Buyer, as true and in full force as of the Closing Date.

 

(iii)  A certificate executed by an authorized member, manager, or officer of Buyer certifying that, as of the Closing Date, all of the representations and warranties of Buyer are true and correct in all material respects and that each and every covenant and agreement to be performed by Buyer prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv)  A certificate of existence in good standing for Buyer from the State of its formation dated within fourteen (14) days of the Closing Date.

 

 

(v)  Assignment and assumption of the Assigned Contracts , together with consents to the assignments where noted on Schedule 3 (d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Buyer.

 

(vi)  The Indemnity Escrow Agreement executed by Buyer and Buyer’s Affiliates as named therein.

 

(b)  At Closing, Seller shall deliver to Buyer (or to Escrow Agent on behalf of Buyer), at Seller’s sole cost and expense, such bills of sale, endorsements, assignments, and other good and sufficient instruments of conveyance and transfer as provided for herein, and any other instruments in form and substance reasonably acceptable to Buyer as shall be necessary to vest effective in Buyer all right, title, and interest in and to the Assets, free and clear of all Encumbrances (except as provided herein), including without limitation, the following:

 

(i)  Duly executed Bill of Sale with respect to the Assets in the form and substance of Exhibit “A” attached hereto and incorporated herein by this reference (the “Bill of Sale”), and an Assignment of Trademarks, URLs and Telephone Numbers.

 

(ii)  Fully and properly executed transfers of MCOs, titles, or such instruments of title and other documents required to properly transfer Seller’ right, title and interest in and to the New Vehicles and Used Vehicles , and any other titled Assets to Buyer.

 

(iii)  A certificate executed by an authorized member, manager, or officer of Seller certifying that, as of the Closing Date, all of the representations and warranties of Seller are true and correct in all material respects and that each and every covenant and agreement to be performed by such Seller prior to or as of the Closing Date pursuant to this Agreement has been performed in all respects.

 

(iv)  A certificate of existence in good standing for Seller from the State of its formation dated within fourteen (14) days of the Closing Date.

 

(v)  A copy of resolutions duly adopted by each of Seller and LMP for the Necessary Seller Approvals authorizing and approving such Seller’s performance of the transactions contemplated herein and the execution and delivery of all documents in connection with such transactions, certified by the manager of each Seller, as true and in full force as of the Closing Date.

 

(vi)  Intentionally Omitted.

 

(vii)    Seller shall deliver customary payoff and termination letters from the holders of any liens or Encumbrances reflecting the payoff amount required for the release of liens on the Closing.

 

(viii)    Seller will provide evidence of Seller’ voluntary termination of its dealer agreements with the Manufacturer as it relates to the Dealership.

 

 

(ix)  The License Use Agreement executed by Seller attached as Exhibit “B”.

 

(x)  The Indemnity Escrow Agreement executed by Seller, and Seller’s Affiliates as named therein, and the escrow agent thereunder.

 

(xi)  Assignment and assumption of the Assigned Contracts, together with consents to the assignments where noted on Schedule 3(d). as necessary, in form and substance reasonably satisfactory to Buyer (the “Assignment of Contracts”), duly executed by Seller.

 

Such other instruments and documents as Buyer may reasonably consider necessary to effect the transactions contemplated herein

 

5.  Seller’s Representations & Warranties. Seller and LMP jointly, and severally , represent and warrant to Buyer on the Effective Date and the Closing Date as follows:

 

(a)  Formation. Seller is duly formed, validly existing, and in good standing under the laws of its organization and is duly qualified to transact business in the state in which the Dealership is located.

 

(b)  Authority. Subject to the Necessary Seller Approvals, Seller (i) has the requisite corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby, and (ii) has taken all entity action necessary to authorize its execution and delivery of this Agreement, the performance of its obligations hereunder and the consummation of the transactions contemplated hereunder. For purposes of this Agreement, the “Necessary Seller Approvals” shall mean the consent of: Seller’s Board of Managers; LMP Automotive Holdings, LLC as the majority member of Seller; the Board of Directors of LMP; and the shareholders of LMP required to approve and authorize this Agreement and Transaction.

 

(c)  Conflicts. The execution and delivery of this Agreement by Seller and the performance by Seller of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any nation or government, or any state, regional, local or other political subdivision thereof (“Governmental Authority”).

 

(d)  Assets. Seller is the owner of, and has good and valid title to, all of the Assets except any liens described on Schedule 5(d) (which shall be satisfied at Closing). To the Knowledge of Seller, there are no special assessments against any of the Assets. All of the fixtures and equipment used in the Business are in operating condition, ordinary wear and tear excepted, and are adequate and suitable for the purposes for which they are presently being used.

 

(e) Financial Statements. The Seller has delivered to Buyer the Financial Statements. Subject to the adjustment for Inventory as set for in Section 2 above, the Financial Statements are materially true, complete, and accurate. “Financial Statements” means Seller’s internally prepared, un-audited adjusted dealer income statements reflecting zero debt on the Dealership, substantially in the form required by Manufacturer, for the fiscal year ended December 31, 2021, and each of the completed months thereafter through the Closing Date, The Financial Statements are prepared in accordance with recognized industry standards and the Manufacturer’s guidelines and fairly present the financial condition of Seller’s business and the results of operations of Seller’s business, in all material respects, at the dates and for the periods covered by such financial statements and related materials. In connection with this representation of Seller regarding its financial statements, Buyer acknowledges Seller’s financial statements include expenses for a management fee to LMP, and exclude interest on Seller’s capital loan.

 

 

(f)   Compliance. The Dealership complies in all material respects with, and the Dealership has been conducted in all material respects in compliance with, all laws, rules and regulations (including all worker safety, applicable zoning and other laws, ordinances, regulations and building codes (collectively, the “Laws”). The Seller is not under investigation with respect to violations of any such Laws. To Seller’s Knowledge, Seller is not in material default of any its material agreements with third parties.

 

(g)  Litigation. There are no actions, suits, claims, investigations or other proceedings pending with respect to Seller, and, to the Seller’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Seller that could affect the ability to convey the Purchased Assets conveyed pursuant to this Agreement.

 

(h)  Good Title. Seller is the owner of, and has, good and marketable title to all of the Assets (including intangible assets such as websites and domain names); all of the Assets will be transferred to Buyer free and clear of all liens and encumbrances; and all of the Assets to be sold under the terms of this Agreement are, or on the Closing Date will be, in good operating condition and repair. Seller did not obtain any funds under the Paycheck Protection Program.

 

(i)  Licenses. Except as would not have a materially adverse effect on the Buyer, Seller has maintained all licenses and permits and has filed all registrations, reports and other documents required by local, state and federal authorities and regulating bodies in connection with the Dealership. None of the permits or licenses used by Seller in the operation of the Dealership has been terminated or revoked and to Seller’s Knowledge, no violations have been recorded regarding such licenses or permits, and no proceeding is pending or threatened seeking the revocation or limitation of any of them.

 

(j)  Assigned Leases and Contracts. To the Knowledge of Seller, each of the Assigned Leases and material contracts are valid, legal and binding and is in full force and effect. Seller has made all payments due under each of the Assigned Leases and any material contract through the date hereof. To the Knowledge of Seller, no event or condition has occurred and is continuing which, with or without the lapse of time or giving of notice, constitutes, or would ripen into or become, a breach of or default under an Assigned Leases and assigned material contract by the Seller, or, to the Seller’s Knowledge, by any other party thereto, in any term, covenant or condition of each Assigned Lease and assigned material contract.

 

(k) Intellectual Property Rights. Except as set forth in Section 2c above, the Seller either owns or is otherwise entitled to use (under a license or otherwise) all Proprietary Rights necessary to conduct the business of the Business as presently conducted. For purposes of this Agreement, “Proprietary Rights” means all (i) trademarks, service marks, trade dress, logos, trade names and entity names and registrations and applications for registration thereof, (ii) copyrights and registrations and applications for registration thereof, (iii) mask works and registrations and applications for registration thereof, (iv) computer software data and documentation, (v) trade secrets and confidential business information (including ideas, formulas, compositions, inventions (whether patentable or unpatentable and whether or not reduced to practice), copyrightable works, financial, marketing and business data, pricing and cost information, business and marketing plans and customer and supplier lists and information), (vi) other proprietary rights or any intellectual property, and (vii) copies and tangible embodiments thereof (in whatever form or medium).

 

 

(l)  Taxes. Seller has duly filed all foreign, federal, state, county and local income, excise, sales, property, withholding, unemployment, social security, franchise, license, information returns and other tax returns and reports, or appropriate and permitted extensions thereto, required to be filed by it with respect to the Dealership or the Real Property. Each such return is true, correct, and complete in all material respects, and Seller has paid all taxes, assessments, amounts, interest and penalties due to applicable Governmental Authority. Seller has no liability for any taxes, assessments, amounts, interest or penalties of any nature whatsoever other than those for which Seller has created sufficient reserves or made other adequate provision. No governmental authority is now asserting or threatening to assert any deficiency or assessment for additional taxes, interest, penalties or fines with respect to Seller, or the Dealership.

 

(m)  Employment Matters. Except as set forth on Schedule 5(m), Seller has no oral or written collective bargaining or organized labor contracts, employment agreements, bonus, deferred compensation, profit sharing, welfare or health benefit, or retirement plan or arrangement, whether or not legally binding, nor is Seller currently paying any pension, deferred compensation or retirement allowance to anyone. Seller has no contract for the future employment of any person. Seller is not delinquent in payments to any of its employees for any wages, salaries, commissions, bonuses or other direct compensation for any services performed by them or amounts required to be reimbursed to such employees. Seller has no knowledge that any Seller employee intends to terminate his or her employment. Seller has complied in all material respects with the applicable requirements for its employee medical and benefit plans, if any, as set forth in the Internal Revenue Code of 1986, as amended (the “Code”), and the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder (“ERISA”), including Section 4980B of the Code (as well as its predecessor provision, Section 162(k) of the Code) and Sections 601 through 608, inclusive, of ERISA, which provisions are hereinafter referred to collectively as “COBRA”. There have not been any unfair labor practice complaints or work stoppages (within the past thirty-six (36) months) and there are no present or, to Seller’s Knowledge, threatened walkout, strike or labor disturbance involving any of Seller’s employees working primarily at the Dealership. The Seller has taken the required actions under Applicable Law to confirm the identity and work status eligibility of its Employees. The Seller has not received any written notice of any inspection or investigation relating to their alleged noncompliance with or violation of IRCA, nor has or otherwise penalized for any failure to comply with IRCA or for any willful violation of any other immigration law, rule or regulation.

 

(n) Brokers. Except for Broker, no broker, investment banker, financial advisor, consultant or other Person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with this Agreement based upon arrangements made by or on behalf of the Seller. The sole broker’s commission or finder’s fee payable as a result of the closing of the transaction contemplated herein shall be paid by Seller at Closing to Bank of America Securities, Inc. (“Broker”) in accordance with the separate agreements between Seller and Broker. No person other than Broker is entitled to any commission in connection with the transactions contemplated by this Agreement.

 

 

(o)  Prohibited Persons. Neither Seller nor any members of the Seller: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

(p)  Solvency. Immediately after the Closing Date, and after giving effect to the sale of the Purchased Assets and the other transactions contemplated by this Agreement, Seller will be solvent (in that both the fair value of its assets will not be less than the sum of its known debts, provided however, immediately after Closing, the Seller and LMP anticipate paying such known debts in full and dissolving the Seller.

 

(q)  In-house Warranty Work. Except as provided in Schedule 5(q) , Seller is not obligated to provide to any customers or third parties any coupons, pre-paid parts, accessories, services or in-house warranties which may result in a liability of the same to Buyer after the Closing. Except as reflected in Schedule 5(q), Seller has no agreement or understanding with any customer or third party to return or refund any portions of any amounts paid for any extended warranty or service contract or otherwise pay any amounts to customers who elect not to or do not make claims under such contracts, but if such an obligation exists, Seller shall pay all amounts owed.

 

(r)   Option Agreements. Except with respect to the Manufacturer and as provided on Schedule 5(r), there are no options, right of first refusals, or similar agreements in connection with the Assets.

 

As used in this Agreement, the phrases “Knowledge of Seller” or “Seller’s Knowledge” means the actual knowledge of Seller’s officers, the Seller’s LLC company managers, the officers of LMP, the Board of Directors of LMP, the Dealership’s general managers, Sam Tawfik, and Richard Aldahan.

 

6.  Buyer’s Warranties & Representations. Buyer represents and warrants to Seller on the Effective Date and the Closing Date as follows:

 

(a)  Formation. Buyer is a Florida limited liability company. Buyer will be an entity duly formed and validly existing with authority to conduct business in West Virginia on the Closing Date.

 

(b) Authority. Buyer has the requisite legal power and authority to execute and deliver this Agreement, to perform the obligations of Buyer hereunder, and to consummate the transactions contemplated hereby, all of which have been duly authorized and approved by all necessary entity action and for which no consent of any person or governmental authority is required for Buyer which has not been obtained (except as provided for in this Agreement for consents to be obtained and filings made before Closing), and no filing with or other notification to any person or governmental authority is required which has not been properly completed (except as provided for in this Agreement for consents to be obtained and filings made before Closing). This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms, subject only to the application of debtor relief laws and general equitable principles.

 

 

(c)  Brokers or Finders. The Buyer has not incurred and will not incur any liability to any broker, finder or agent for any fees, commissions or similar compensation with respect to the transactions contemplated herein.

 

(d)  Conflicts. The execution and delivery of this Agreement by Buyer and the performance by Buyer of its obligations hereunder and the consummation by it of the transactions contemplated by this Agreement will not (i) contravene any provision of its organizational or governing documents, (ii) violate or conflict with any law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment or order of any Governmental Authority or of any arbitration award which is either applicable to, binding upon or enforceable against it, (iii) require the consent, approval, authorization or permit of, or filing with or notification to, any Governmental Authority, except the HSR filing, or as otherwise provided for herein.

 

(e)  Litigation. There are no actions, suits, claims, investigations or other proceedings pending and, to the Buyer’s knowledge, there is no action, suit, claim, investigation, proceeding, grievance, or controversy threatened against the Buyer that could affect the Seller’s ability to convey the Purchased Assets to Buyer conveyed pursuant to this Agreement.

 

(f)   [Reserved].

 

(g)  Sufficiency of Funds.

 

(i)  Buyer or its affiliates have sufficient funds or access to sufficient funds to make payment of the Purchase Price and consummate the transactions contemplated herein;

 

(ii)  Immediately after the Closing Date, and after giving effect to the purchase of the Purchased Assets and the other transactions contemplated by this Agreement, Buyer (i) will be solvent (in that both the fair value of its assets will not be less than the sum of its debts and that the present fair saleable value of its assets will not be less than the amount required to pay its debts as they become absolute and matured); (ii) will have adequate capital with which to engage in its business; and (iii) will not have incurred debts beyond its ability to pay as they become absolute and matured.

 

(h)  Prohibited Persons. Neither Buyer nor any members or principals of the Buyer: (i) appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control in the United States Department of the Treasury or the Annex to United States Executive Order 132224-Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, or (ii) is a prohibited party under the laws of the United States.

 

 

7.  Conditions to Obligations of Buyer. The obligation of Buyer to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or express written waiver by Buyer) prior to or at the Closing, of all of the following conditions:

 

(a)  Manufacturer Approval. Manufacturer has issued to Buyer a new Dealership Sales and Service Agreement, or commitment therefor, on terms and conditions acceptable to Buyer in its sole discretion, approving Buyer’s board of directors and other designees, permitting Buyer to operate the Dealership at the Real Property as Seller has operated it in the past.

 

(b)  HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction .

 

(c)  Intentionally Omitted.

 

(d)  Closing Statement. Buyer has agreed to the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(e)  Consents. Seller has obtained all consents required for the Lease Assignments and contract assignments being assumed by Buyer.

 

(f)   Seller Performance. Seller has performed in all material respects all of its obligations hereunder to be performed prior to or at Closing and each of Seller’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(g)  Purchase of the Premises. The consummation of the transactions contemplated under the Real Estate Purchase and Sale Agreement shall occur simultaneously.

 

(h)  No Litigation. No proceeding with Seller as a Party, shall be pending before any court or other Governmental Authority, wherein an unfavorable injunction, judgement, order, decree, ruling, or charge would (1) restrain, enjoin, prohibit or prevent consummation of this transaction or any other transaction contemplated by this Agreement, or (2) cause the transaction to be rescinded following consummation.

 

(i)  Buyer shall have received all of the documents, certificates and resolutions described in Section 4.2(b), in form and substance reasonably satisfactory to Purchaser.

 

(j) Adverse Change. Since the Effective Date, no Material Adverse Change shall have occurred. “Material Adverse Change” means any change, event or occurrence that individually or in the aggregate (taking into account all other such changes, events or occurrences) has had, or would be reasonably likely to have, a material adverse effect upon the assets, business, operations, financial condition or prospects of Seller, but shall not include any event or circumstance or change arising out of or attributable to general economic or political conditions, conditions generally affecting the motor vehicle industry (including supply chain problems), or the COVID-19 pandemic.

 

 

(k)  Necessary Seller Approvals. Seller has obtained the Necessary Seller Approvals.

 

(l)  Termination of Options and Minority Rights. Each of the agreements listed on Schedule 5(r) shall have been either terminated, waived, or Seller shall have been released and received a waiver from such minority member from any option or similar obligations thereunder, and the minority member and its principal(s) shall have agreed to a noncompetition provision of at least two (2) years with a seventy-five (75) mile radius of the Dealership.

 

(m)  Agreements Not To Compete. Seller, LMP, Sam Tawfik and Richard Aldahan, as officers of LMP, shall have executed an Agreement Not to Compete substantially in the form attached hereto as Exhibit D.

 

8.  Conditions to Seller’s Obligations. Seller’s obligation to consummate the transactions contemplated by this Agreement are subject to the fulfillment (or written waiver by Seller), prior to or at the Closing, of all of the following conditions:

 

(a)  Purchase Price Payment. Buyer paid Seller the aggregate Purchase Price for the Assets.

 

(b)  Buyer Performance. Buyer performed in all material respects all of its obligations hereunder to be performed prior to or at Closing each of Buyer’s representations and warranties contained in this Agreement are true and accurate as of the date made and at Closing.

 

(c)  Purchase of the Premises. The consummation of the transactions contemplated under the Real Estate Purchase and Sale Agreement shall occur simultaneously.

 

(d)  HSR Filing. If the HSR Filing is required to be made, all applicable waiting periods pursuant to the HSR Act shall have expired or have been terminated and there are no outstanding objections made by the Federal Trade Commission for a Closing of this transaction.

 

(e)  Necessary Seller Approvals. The receipt, of the Necessary Seller Approvals.

 

(f)   Closing Statement. Buyer executed and delivered the Closing and Disbursement Statement which shall enumerate the Purchase Price, prorations and adjustments, all in accordance with this Agreement or as otherwise agreed upon by Seller and Buyer.

 

(g)  Seller shall have received all of the documents, certificates and resolutions described in Section 4.2(a), in form and substance reasonably satisfactory to Seller.

 

 

9.  Pre- & Post-Closing Covenants.

 

(a) Pre-Closing. Promptly upon the execution of this Agreement, Seller shall notify the Manufacturer regarding the transactions contemplated by this Agreement. Buyer (or its affiliate) shall promptly apply to the Manufacturer for the issuance of a contractual right to operate an automobile dealership upon the Premises. The Parties shall use commercially reasonable best efforts to obtain Manufacturer approval as soon as possible. Seller shall promptly provide the requisite information, documents and access necessary to prepare for Closing and ensure a seamless operational transfer of the Assets. Effective as of the Closing, Seller shall terminate its Dealer Sales and Service Agreements with the Manufacturer relative to the Dealership location and execute and deliver all of the Manufacturer’s customary documents and promptly remove Manufacturer’s intellectual property from all publicly visible Excluded Assets in every form and medium (i.e., retained internet sites, signs, etc.). Seller shall fully cooperate with Buyer, and take all reasonable steps to assist Buyer, in Buyer’s efforts to obtain its own similar Dealer Sales and Service Agreements with the Manufacturer. All actions to be taken at the Closing pursuant to this Agreement will be deemed to have occurred simultaneously, and no action, document or transaction will be deemed to have been taken, delivered or effected, until all such actions, documents and transactions have been taken, delivered or effected. Promptly after the Closing, Seller shall transfer to Buyer certificates of title or origin for all vehicles and all of its registration lists, owner follow-up lists and service files on hand as of the Closing, provided that such lists and files relate to the Assets. If Seller presents assets for purchase post-Closing that would have otherwise been Assets, then such assets may be purchased at a mutually agreed to price or otherwise retained by Seller.  Buyer is not required to submit an offer.  This does not apply to in-transit vehicles from the Manufacturer. Buyer shall retain and safeguard the pre-Closing customer paper deal jackets retained by Buyer in accordance with law, and, until Buyer destroys such records in accordance with company policy in effect from time to time, Seller shall have reasonable access to Seller’s pre-Closing customer records (e.g., paper deal jackets) and any records related to Assigned Contracts after the Closing for any legitimate purpose, such as (by way of example and not by limitation) for resolving customer inquiries.

 

(b)  Dealership Operations Pending Closing. Pending Closing, Seller shall continue to operate the Dealership in substantially the same manner as it has been operated by Seller in the past and Seller shall: (i) use commercially reasonable efforts to maintain working relationships with all suppliers, customers, employees and others having contact with the Dealership and bring all payables current as of the Closing Date; (ii) maintain current insurance policies in full force and effect; (iii) exercise reasonable diligence in safeguarding and maintaining the confidentiality of all books, reports and data pertaining to the Dealership, including use its commercially reasonable best efforts to ensure that Seller’s sales and service records remain adequately protected; failure to do so is a material breach of this Agreement; (iv) not grant increases in salary, pay or other employment related benefits to any officers or employees of the Dealership, except in the ordinary course of business; (v) not conduct any liquidation, close-out or going out of business sale or, (vi) attempt to order and restock inventory sold; (vii) intentionally omitted; (viii) not enter into any contract or agreement which is not terminable without penalty on not more than 30 days’ notice and which provides for payment by the Dealership, except those in the ordinary course of business; and (ix) not take or permit any action which would result in Seller’s representations or warranties becoming incorrect or untrue in any material respect.

 

 

(c)  Employee Matters.

 

(i) Seller shall terminate or take all appropriate action in connection with pension, profit sharing and health and welfare benefit plans, if any, that are applicable to Seller and/or Seller’s employees (“Plans”), prior to or at Closing, so that Buyer will have no responsibility or liability or obligation of any nature under Plans to any person, firm or corporation whatsoever. If any applicable law provides that Buyer is or will be liable for any liability or obligation under any Plan despite Seller’s contractual liability for such liability or obligation hereunder, and Seller fail to pay or perform such liability or obligation within five (5) days after Buyer’s written demand, then in addition to any other remedies available, such amounts may be set off from time to time from any amount Buyer (or its affiliate) owes Seller (or its affiliate). Seller (including all employers, whether or not incorporated, that are treated together with Seller as a single employer within the meaning of Section 414 of the Code or, where appropriate, Seller’s health and welfare benefit plans that are “group health plans” will retain liability for and will pay when due all benefits (including all liabilities and obligations for or arising from any “COBRA” health care continuation coverage required to be provided under Section 4980B of the Code and Sections 601-608 of ERISA) attributable as of the Closing Date to “covered employees” or “qualified beneficiaries” entitled to “continuation coverage” (as those terms are defined in Section 4980B of the Code) regardless of when services were rendered or expenses incurred. By Closing, Seller shall pay all wages due Seller’s employees as of the Closing Date. At Closing, Buyer shall assume Seller’s obligations for payment of unused vacation, paid time off, holiday pay, sick pay and other similar compensation accrued to those employees of Seller which are retained by Buyer, and Buyer shall receive a credit against the Purchase Price for such amounts. Buyer shall be responsible to satisfy such amounts to the former employees of Seller to the extent of the credit received provided, however Buyer shall not be liable for any such amounts that are disputed or in excess of the credit given at the Closing and Seller and LMP shall defend and hold Buyer harmless for such disputed amounts. Seller shall terminate its employees on the Closing Date. Provided the Closing takes place, Buyer may, but is not obligated to, employ Seller’s employees who are willing to accept the offered employment with Buyer, and Buyer will give due regard to such employees’ benefits from their prior employer, so long as such employees meet all eligibility requirements, including any probationary period; provided that, notwithstanding anything in this Agreement to the contrary, Buyer shall hire on an at-will basis enough of Seller’s employees (each selected by Buyer in its sole and absolute discretion) so that Buyer and Seller will be in compliance with the provisions of the Workers Adjustment and Retraining Notification Act, 29 U.S.C. §2101-2109, if applicable. The foregoing does not grant to any of Seller’s individual employees a right of employment by Buyer.

 

(ii)  Subject to the approval and cooperation of Seller’s applicable health insurance plans and policies, Buyer shall have the right to cause Seller to continue its health insurance plans (including the related ancillary insurance benefits such as dental, vision, short term disability) for the employees of Seller that Buyer retains for the month of the Closing and the month following the Closing. In such case, the applicable premiums shall be prorated based upon the number of days allocable to Seller prior to Closing Date and Buyer following the Closing Date.

 

(d) Seller’s Receivables. Following the Closing, upon the receipt of accounts receivable of the Seller, Buyer will remit checks thereof directly to the Seller at its principal office on a weekly basis. Buyer shall accept payment of Seller’s accounts receivable and Manufacturer warranty payments arising out of the operation of the Dealership prior to Closing for a period of 180 days. Buyer shall turn over to Seller on the last day of each calendar month during said period all of the monies it received as cleared funds so accepted on said accounts receivable during the previous calendar month. Buyer is not obligated to accept payments of such accounts receivable after such 180-day period, but if Buyer does so then Buyer will promptly pay the same over to Seller. Buyer is only obligated to accept payment during such period, not to attempt to enforce payment. No adjustment will be made in any of such accounts receivable without Seller’s permission. Seller reserves the right to pursue legal remedies of collection upon default by the customer with respect to any receivables owed to Seller. Buyer shall have no obligation to pursue or otherwise actively work to collect any of such Seller receivables or Manufacturer warranty payments. At the end of said 180-day period, Buyer shall no longer be obligated to accept payments of such accounts receivable. If Buyer does accept payment of any of Seller’s accounts receivable after expiration of the 180-day period, Buyer shall hold same in trust for Seller and promptly pay same over to Seller. It is understood that Buyer’s responsibility, so far as such collection is concerned, is only to accept monies paid on Seller’s accounts receivable and shall not include any obligation to ascertain the correct amount of any accounts receivable. Upon reasonable notice to Buyer, Buyer shall provide Seller with access to records relating to Seller’s operation of the Dealership, but Seller and LMP agree that they shall have no right to utilize the employees of Buyer to provide accounting or other bookkeeping services to themselves.

 

 

(e)  Manufacturer Payments. The Parties shall use their commercially reasonable efforts to ensure that (i) amounts due to Seller but collected by Buyer (e.g., Manufacturer receivables, Manufacturer credits relating to items such as warranty claims or other claims, credit card payments, etc.) arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Seller promptly; (ii) amounts due to Buyer but collected by Seller arising out of or in connection with the operation of the Dealership on or following the Closing or as provided in this Agreement will be paid over to Buyer promptly; (iii) amounts paid by Seller but owed by Buyer as a result of Manufacturer erroneously billing Seller for items arising out of or in connection with the operation of the Dealership following Closing will be paid over to Seller promptly; and (iv) amounts paid by Buyer but owed by Seller (e.g., any finance contract chargebacks, insurance (e.g. credit life, accident and health, extended warranty, etc.) chargebacks, or repossessions and all rebates to Seller’s customers of premiums for credit life insurance, credit accident and health insurance, mechanical insurance coverage and GAP insurance) as a result of Manufacturer or any third party erroneously billing Buyer for items arising out of or in connection with the operation of the Dealership prior to Closing will be paid over to Buyer promptly. This section survives Closing indefinitely. If there are vehicles in-transit on the Closing Date (whether or not they are physically present) that have not been funded by Seller’s floor plan lender and the Parties do not know whether they will be paid for by Buyer’s floor plan lender or Seller’s floor plan lender, then the Parties may separately schedule those vehicles, Buyer will buy them but not pay for them, and, if such vehicles are funded by Seller’s floor plan lender, then Seller shall notify Buyer and Buyer shall promptly pay Seller’s floor plan lender such amounts. Any other payments related to such vehicles misdirected by the Manufacturer will be redistributed as contemplated by this Section 9(e). Buyer with any needed cooperation of Seller shall undertake all accounting, bookkeeping and reconciliation as necessary under this section and shall make all payments as necessary. On a monthly basis, Buyer shall present Seller with a reconciliation and the amount owed by Buyer or by Seller (if any) and the parties shall pay any amounts owing to the other within ten (10) business days.

 

(f)  Dealing and Non-Circumvent. In order to induce Buyer to enter into this Agreement, during the period commencing on the Effective Date until the Closing Date (or earlier termination of this Agreement), Seller and LMP will not and will cause each of its stockholders, managers, directors, officers, agents, advisors and other representatives to not, directly or indirectly, through affiliates or otherwise, (i) enter into any sale, lease, pledge or other disposition of all or any significant part of the purchased Assets, or any agreement for the sale of any capital stock or other equity securities of Seller, or agreement relating to a merger, consolidation or other acquisition proposal involving Seller or its member with any other party, or any transaction similar to the foregoing in format or purpose, with any party other than Purchaser; or (ii) enter into any transaction (A) with a total cumulative and aggregate value in excess of One Hundred Fifty Thousand Dollars ($150,000), or (B) outside of the ordinary course of business of Seller consistent with past practice in contemplation of any transaction described above with any party other than Buyer; or (iii) encourage, solicit, provide information to or negotiate with any party, other than Buyer, to do any of the foregoing.

 

 

(g)  License Use. The Parties acknowledge that the State of West Virginia Division of Motor Vehicles may be experiencing delays in the processing of motor vehicle dealer licenses. The Seller hereby agrees that the Buyer may use the Seller’s licenses required under the laws of the State of West Virginia to operate the Business for a period of not more than 60 days after the Closing Date (and the Seller shall maintain all such licenses during such period). As a material inducement to the Seller to permit the Purchaser’s use of such licenses: (a) Buyer agrees that it will use best efforts to obtain its own licenses with the State of West Virginia as promptly as practicable , and (b) Buyer hereby agrees to indemnify and hold Seller, its respective affiliates, and their respective owners, managers, members, controlling persons, directors, officers, and employees (collectively, the “Seller Indemnified Parties”) harmless from and against any cost or liability, including reasonable attorneys’ fees, incurred by any Seller Indemnified Party in connection with or as a result of the Buyer’s use of the Seller’s licenses. Upon the Effective Date, the Seller will provide Buyer with a copy of the Seller’s DMV and other state and county regulatory licenses. Buyer agrees to add the Seller to its general liability insurance coverage as an additional insured during the term of the License Use Agreement. To effect the Purchaser’s use of the Seller’s license as contemplated hereby, the Seller agrees at the Closing to enter into a license use and indemnification agreement sufficient to satisfy applicable law for such license use in the form of Exhibit B hereto (the “License Use Agreement”).

 

10.  Access.

 

(a)  Upon receipt of Manufacturer’s approval to transfer the Dealership to Buyer, Buyer may set up Buyer’s computer system parallel to Seller’s computer systems for the Dealership, provided, however, Seller’s systems shall not be turned off until the Closing Date. Following the Effective Date, Buyer’s Information Technology personnel may access the Dealership for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve) to facilitate any applicable transfer purchased Assets.

 

(b)  Seller shall permit representatives of Buyer to have access to and to examine the records, properties and assets associated with the Assets and the Real Property, provided, however, all access hereunder shall be subject to this Agreement and the provisions of the Real Property Purchase Agreement. Any access by Buyer shall be at times determined by Sellers and Buyer and in a manner so as not to interfere with the normal business operations of Seller.

 

 

(c)  Buyer’s Information Technology personnel may have certain access to the Dealership (no login access) for the purposes of assessment of technology resources and criteria, and may interact with Seller’s Chief Technology Officer(s) (or such other technicians as Seller may approve). Following receipt of Manufacturer approval for transfer of the Dealership to Buyer, Seller shall contact its providers for DMS, CRM, and any other third-party data servicers, and execute all necessary documents to effectuate the transfer all intangible data Assets to Buyer’s DMS system on the Closing Date. Buyer shall be solely responsible for any and all costs associated with effectuating the transfer of all intangible data Assets to Buyers DMS system.

 

11.  Default & Termination. Notwithstanding any provision in this Section 11 to the contrary, no Party may terminate this Agreement due to the breach of another Party if the first Party is in material breach of this Agreement.

 

(a)  Termination. The Parties may exercise their respective rights of termination by the delivery of written notice of termination to the other Party at any time prior to the completion of the Closing. This Agreement and the transactions contemplated hereby may be terminated on or before the Closing Date as follows:

 

(i)  By the mutual written agreement of the Parties;

 

(ii)  By Buyer if a breach of any material provision of this Agreement has been committed by Seller and such breach has not been either (A) cured within ten (10) days after written notice to Seller, or (B) waived in writing by Buyer;

 

(iii)  By Seller if a breach of any material provision of this Agreement has been committed by Buyer and such breach has not been either (A) cured within ten (10) days after written notice to Buyer, or (B) waived in writing by Seller;

 

(iv)  By Seller if Seller’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(v)  By Buyer if Buyer’s conditions precedent to Closing have not been satisfied by the Closing Date Deadline; or

 

(vi)  By Seller or Buyer, if the Closing has not occurred by the Closing Date Deadline.

 

Unless this Agreement is terminated by Seller under the provisions of Section 11(a)(iii), Buyer shall be entitled to receive a return of the Deposit upon a termination.

 

(b)  Buyer’s Default. If prior to Closing Buyer breaches this Agreement and fails to cure as provided above, then Seller’s sole right and exclusive remedy will be to terminate this Agreement by giving written notice thereof to Buyer and then Seller may take the Deposit as liquidated damages in full settlement of all claims, remedies or causes of actions against Buyer under this Agreement, including the remedy of specific performance and other forms of equitable relief. It is impossible to estimate more precisely the damages which might be suffered by Seller upon Buyer’s default. Seller’s retention of the Deposit is intended not as a penalty, but as full liquidated damages.

 

 

(c)  Seller Default. If prior to Closing, if Seller breaches this Agreement and fails to cure as provided above, then Buyer may exercise any and all rights and remedies available to it at law or in equity, including (i) an action in equity against Seller (pursuant to which Buyer is not obligated to post a bond or prove special damages or irreparable injury) for the specific performance by Seller of the terms and provisions of this Agreement and disgorgement of profits from the date of the Closing Date Deadline until receipt of any applicable remedy at law or equity in the Buyer’s favor; and (ii) the right to terminate this Agreement by giving written notice of such termination to Seller and receive a full refund of the Deposit without prejudice to any of Buyer’s rights or remedies including an action for direct damages, but not consequential damages.

 

(d)  Cross Default. Any default by the Real Property Purchaser under the Real Property Purchase and Sale Agreement shall be a default by Buyer under this Agreement and a default by Buyer under this Agreement shall be a default by the Real Property Purchaser under the Real Property Purchase and Sale Agreement. Any default by the Real Property Seller under the Real Property Purchase and Sale Agreement shall be a default by Seller under this Agreement and a default by Seller under this Agreement shall be a default by the Real Property Seller under the Real Property Purchase and Sale Agreement. The terms of the Real Property Purchase and Sale Agreement are incorporated herein by reference.

 

(e)  Breakup Fee. If this Agreement is terminated by any Party hereto due to the failure of Seller or LMP to obtain the Necessary Seller Approvals prior to the Closing Date Deadline, regardless of the reason for such failure, then Buyer shall be entitled to receive from Seller and LMP, and Seller and LMP shall be obligated to pay Buyer within 3 business days following receipt of an invoice from Buyer, a fee (the “Breakup Fee”) equal to the reasonable costs and fees expended or incurred by Buyer and Fayette AWV RE, LLC for the transactions contemplated herein and under the Real Property Purchase and Sale Agreement.

 

12.  Survival and Indemnification.

 

(a)  Representations and Warranties Survive Closing. It is the express intention and agreement of the parties that all representations and warranties made by the parties in this Agreement shall survive the Closing for a period of twenty-four (24) months. Thereafter, all representations and warranties made by the parties in this Agreement shall terminate and no action may be had on them (excepting claims made during the Survival Period may continue to be pursued). All covenants and agreements of the parties shall survive the Closing in accordance with their terms.

 

(b)  Buyer’s Obligation to Indemnify. Following the Closing, Buyer will indemnify and hold Seller, its affiliates, managers, member, and officers harmless from and against any and all liability, loss, damage, or deficiency (collectively, “Losses”) resulting from: (i) any misrepresentation, breach of warranty, or non-fulfillment of any agreement on the part of Buyer under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument furnished or to be furnished by Buyer in connection with the transactions contemplated by this Agreement; (iii) the ownership, management and operations of the Dealership or the Assets from and after the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Buyer; (v) the Assigned Contracts, and; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity.

 

 

(c)  Seller’s Obligation to Indemnify. Following the Closing, Seller and LMP (jointly and severally with Seller) will indemnify and hold Buyer, its affiliates, managers, members, officers, and directors harmless from and against any and all Losses resulting from: (i) any misrepresentation, default, breach of warranty or non-fulfillment of any agreement on the part of Seller or LMP under this Agreement; (ii) any misrepresentation in or occasioned by any certificate, document, or other instrument or to be furnished by Seller or LMP in connection with the transactions contemplated by this Agreement; (iii) the ownership, management, and operations of the Dealership or the Assets prior to the Closing Date; (iv) any misrepresentation, inaccuracy, or failure of any representation or warranty of Seller; (v) the Excluded Liabilities; (vi) any and all actions, suits, proceedings, claims, demands, assessments, judgments, costs, and expenses, including without limitation, reasonable legal fees and expenses incident to any of the foregoing or incurred in investigating or attempting to void the same or to oppose the imposition thereof or in enforcing this indemnity, and (vii) any audits, including warranty audits, for sales, service and business operations of Seller arising or accruing prior the Closing Date.

 

(d) Limitations. No claim may be made for indemnification in respect of a breach of a representation or warranty unless notice of such claim is delivered in writing prior to the expiration of the survival of the representation or warranty that is the subject of such claim. Each party shall have the right to bring an action against the other on the breach of a representation or warranty hereunder, but only if the party bringing the action for breach gives written notice of such breach to the other party before the end of the Survival Period. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Buyer’s Group Global Losses exceeds $50,000; provided, however, that the foregoing limitation shall not apply to any Loss with respect to intentional misconduct or fraud. Notwithstanding anything in this Agreement to the contrary, no indemnification shall be required to be made under Section 12(b) for a misrepresentation or breach of a warranty hereof in respect of any Loss unless, and to the extent that, the aggregate amount of the Seller’s Group Global Losses exceeds $50,000. Notwithstanding anything in this Agreement to the contrary, the Seller and LMP shall not have any liability whatsoever under Section 12(c) for a misrepresentation or breach of a warranty hereof in respect of any Loss of any amount by which the Losses payable by the Seller and LMP shall, individually or in the aggregate, exceed Seller’s Group Global Cap of $2,500,000. For the purposes of applying the foregoing liability limitations, amounts paid by Seller, LMP and Seller’s affiliates shall be aggregated. Notwithstanding anything in this Agreement to the contrary, the foregoing limitation on liability shall not apply to any Losses arising or resulting from intentional misconduct or fraud of the Seller, or LMP or their affiliates. For purposes of this Agreement, “Buyer’s Group Global Losses” shall mean the cumulative Losses of Buyer and Buyer’s affiliates who purchase any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Seller or Seller’s affiliates. For purposes of this Agreement, “Seller’s Group Global Losses” shall mean the cumulative Losses of Seller and Seller’s affiliates who sell any of the Subject LMP Dealerships as provided for under their Dealership Asset Purchase Agreements with Buyer or Buyer’s affiliates. For purposes of this Agreement, “Seller’s Group Global Cap” shall mean the cumulative liability of LMP, Seller and Seller’s affiliates for Losses to Buyer and Buyer’s affiliates (excluding Losses arising or resulting from intentional misconduct or fraud) under their Dealership Asset Purchase Agreements for any of the Subject LMP Dealerships.

 

 

(e)  Matters Involving Third Parties.

 

(i)  To be entitled to such indemnification, the party claiming indemnification (“Indemnified Party”) will give the other party (“Indemnifying Party”) prompt written notice of the assertion by a third party of any claim with respect to which the Indemnified Party might bring a claim for indemnification hereunder (“Third Party Claim”), and in all events must have supplied such notice to the Indemnifying Party within the applicable period for defense of such claim; provided, however, that the failure to give prompt written notice as prescribed above will not preclude indemnification so long as such failure does not prejudice the Indemnifying Party’s defense against such claim.

 

(ii)  The Indemnifying Party will be entitled, at its own expense, to participate in the defense of such action, proceeding or claim, and, if (i) the action, proceeding or claim involved seeks (and continues to seek) solely monetary damages, environmental remediation or relates to any liability for taxes, (ii) the Indemnifying Party confirms, in writing, its obligation hereunder to indemnify and hold harmless the Indemnified Party with respect to such damages in their entirety, and (iii) the Indemnifying Party, in the reasonable judgment of the Indemnified Party, will be able to satisfy any adverse judgment as a result of its indemnification obligation with respect to such action, proceeding or claim, then the Indemnifying Party will be entitled to assume and control such defense with counsel chosen by the Indemnifying Party and approved by the Indemnified Party, which approval will not be unreasonably withheld or delayed. The Indemnified Party will be entitled to participate therein after such assumption, the costs of such participation following such assumption to be at its own expense. Upon assuming such defense, the Indemnifying Party will have full rights to enter into any monetary compromise or settlement which is dispositive of the matters involved; provided, that such settlement is paid in full by the Indemnifying Party and will not have any direct or indirect adverse effect upon the Indemnified Party.

 

(iii)  With respect to any action, proceeding or claim as to which (i) the Indemnifying Party does not have the right to assume the defense or (ii) the Indemnifying Party will not have exercised its right to assume the defense, the Indemnified Party will assume and control the defense of and contest such action, proceeding or claim with counsel chosen by it and approved by the Indemnifying Party, which approval will not be unreasonably withheld or delayed. The Indemnifying Party will be entitled to participate in the defense of such action, proceeding or claim, the cost of such participation to be at its own expense. The Indemnifying Party will be obligated to pay the reasonable attorneys’ fees and expenses of the Indemnified Party. The Indemnified Party may not settle such action, proceeding or claim without the prior written consent of the Indemnifying Party, which will not be unreasonably withheld.

 

(iv)  Both the Indemnifying Party and the Indemnified Party will cooperate fully with one another in connection with the defense, compromise or settlement of any such action, proceeding or claim, including, without limitation, by making available to the other all pertinent information and witnesses within its control.

 

 

(f)   Procedures for Indemnification - Other Claims. A claim for indemnification relating to a breach of a warranty or representation for any matter not involving a Third-Party Claim must be asserted by notice to the Indemnifying Party by the Indemnified Party on or before the expiration of the Survival Period. The Indemnifying Party will have the obligation to eliminate or mitigate its indemnification obligation under this Agreement by affecting a cure of any breach of this Agreement not related to any Third-Party Claim (including any document, certificate, instrument or agreement to be executed and/or delivered under this Agreement), if susceptible of cure, within thirty (30) days after any such notice. The Indemnifying Party will pay any uncured indemnification claim and any claim that is not capable of cure that is undisputed promptly after such notice and failure to cure. The Indemnifying Party will promptly pay any other indemnification claim upon resolution by an agreement with the Indemnified Party or upon a final, non-appealable order of a court of competent jurisdiction. All claims for indemnification as to a breach of a representation or warranty will survive as to any claim or demand made on or before the expiration of the Survival Period until such claim or demand is fully paid or otherwise resolved by the parties hereto in writing or by a court of competent jurisdiction.

 

(g)  Seller’s Security for Indemnification Claims. To secure the indemnity obligations of Seller and LMP under this Section 12. for claims made by Buyer and claims of Buyer’s affiliates for indemnification under their Dealership Asset Purchase Agreements and underlying Real Estate Purchase Agreements with Seller’s affiliates within 24 months of the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith; the Parties and their affiliates who sell and purchase any of the Subject LMP Dealerships shall enter into an Indemnity Escrow Agreement with Greenberg Traurig, PA, as the “Indemnity Escrow Agent”. Seller and Seller’s affiliates shall fund the Holdback Amount under the Indemnity Escrow Agreement in full upon the Closing Date of the first transaction that closes under the Dealership Asset Purchase Agreements being executed simultaneously herewith. The form of the Indemnity Escrow Agreement is attached as Exhibit C .

 

(i)  Subject to the limitations set forth in this Section 12, all payments by the Seller or LMP to Buyer pursuant to this Section 12 shall be satisfied first from the Indemnity Escrow Funds (to the extent the Indemnity Escrow Funds are sufficient, and then, subject to the limitations herein, the Seller and or LMP shall pay any excess due hereunder directly) and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Indemnity Escrow Agent to make the applicable payments.

 

(ii)  On the first year anniversary following the Closing Date, an amount equal to 50% of the total Indemnity Escrow Funds originally funded to the Indemnity Escrow Agent minus  the amount of claims paid by the Indemnity Escrow Agent, and minus the aggregate outstanding  amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date shall be released to the Seller, LMP and or Seller’s affiliates on such date (if such number is positive), and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

(iii)  On the second year anniversary following the Closing Date, an amount equal to the balance of the Indemnity Escrow Funds minus the aggregate outstanding  amount, if any, which Buyer or any of Buyer’s affiliates has claimed for indemnification on or prior to such date (any such claim, a “Remaining Indemnity Claim”) shall be released to the Seller, LMP and or Seller’s affiliates on such date, and the Buyer and the Seller shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.  Following the final resolution of any Remaining Indemnity Claim, if the Indemnity Escrow Funds exceed the aggregate amount, if any, which any of Buyer or Buyer’s affiliates has claimed under Section 12 or under any of their Dealership Asset Purchase Agreements with respect to Remaining Indemnity Claims that remain unresolved, the excess Indemnity Escrow Funds shall be released to the Seller, Seller’s affiliates or LMP on such date, and the Buyer and the Seller and their affiliates shall execute the necessary documents instructing the Escrow Agent to make the applicable payment.

 

 

13.  Miscellaneous.

 

(a)  Transaction & Enforcement Costs. Each Party shall bear its own costs and expenses, including legal and accounting fees, incurred in connection with this Agreement and the transactions contemplated hereby, and shall pay such costs and expenses whether or not the Closing occurs. Notwithstanding the foregoing, in the event of any litigation between or among the Parties to enforce any provisions or rights hereunder, the unsuccessful Party, as determined by a final judgment, shall pay to the successful Party therein all costs and expenses of such Party (and any of such Party’s agents, such as attorneys or accountants) expressly including, but not limited to, reasonable attorneys’ fees and court costs incurred therein by such successful Party, which costs, expenses and attorneys’ fees will be included in and as a part of any judgment rendered in such litigation.

 

(b)  Confidentiality. Each Party and its representatives shall hold in strict confidence all data and information obtained in connection with this transaction, including all financial and other information of or related to the Dealership and the terms of this Agreement, and shall not directly or indirectly at any time reveal, report, publish, disclose or transfer to any person any of such data and information or utilize any of such data or information for any purpose; provided, however, each Party may disclose information to Manufacturer and legal, tax, accounting advisors, lenders and potential lenders and other parties deemed by a Party to be necessary or appropriate in connection with the transactions described herein, provided that such persons acknowledge that they too are bound by the confidentiality provisions contained herein. Notwithstanding any contrary provision herein, Buyer may notify governmental organizations (e.g., the Security and Exchange Commission, the FTC, if applicable) of this Agreement and the transactions contemplated hereby by filing an unredacted copy of this Agreement. The Parties may not otherwise announce the transactions contemplated hereby which may identify the Seller, the Buyer, and the Dealership to the general public without the consent of the other. Further, notwithstanding any contrary provision herein, Buyer may apply for licenses, tax applications, qualifications, and fictitious name registrations required for its business operations and the parties may disclose this transaction to obtain the necessary consents related to contract assumptions and the Necessary Seller Approvals.

 

(c) Relationship & Authority. Each Party is acting as an independent contractor. Each Party is responsible for all taxes relating to its operation, including payroll taxes for its employees and nothing in this Agreement is intended to create a relationship, express or implied, of employer-employee or partnership or joint venture between or among any Party. Each individual executing this Agreement on behalf of a Party individually represents and warrants that such Party is validly existing, that such execution has been duly authorized, that the terms of the instrument will be binding upon the Party, and that such individual is duly authorized to execute this Agreement on behalf of such Party.

 

 

(d)  Notices. All notices and other communications provided for hereunder will be in writing, unless otherwise specified, and will be deemed to have been duly given if delivered personally, via e-mail, via Federal Express or other nationally recognized courier, to the addresses on the signature pages hereof or at such other addresses as a Party may designate from time to time in writing. Notices will be effective upon receipt by the Party or refusal to accept delivery. Notices on behalf of either Party may be given by the attorneys representing such Party.

 

(e)  Integration; Amendments & Time. This Agreement contains the entire understanding between the Parties and supersede any prior understanding and/or oral agreements between them respecting the subject matter of this Agreement. Any modification or amendment of this Agreement will be in writing and executed by Seller and Buyer. Time is of the essence in this Agreement. If the last day to perform under a provision of this Agreement or the final day of any period (e.g., the Closing Date Deadline) falls on a Saturday, Sunday, or legal holiday, then such performance deadline or period is automatically extended through the next day which is not a Saturday, Sunday, or legal holiday.

 

(f)   Interpretation & Administration. The words “include”, “includes”, “included”, “including” and “such as” do not limit the preceding words or terms and are deemed to be followed by the words “without limitation”. The Parties have a duty of good faith and fair dealing. All captions and headings contained in this Agreement are for convenience of reference only and will not be construed to limit or extend the terms or conditions of this Agreement. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. All terms defined in this Agreement in their singular or plural forms, have correlative meanings when used herein in their plural or singular forms, respectively. Each Party and its counsel have reviewed this Agreement and the rule of construction that any ambiguities are to be resolved against the drafter will not be employed in the interpretation of this Agreement or any amendments, schedules or exhibits hereto. Except as expressly provided herein (e.g., “industry standard depreciation” or “as reflected on Manufacturer’s statement”), all accounting matters required or contemplated by this Agreement will be in accordance with generally accepted accounting principles. This Agreement may be executed in one or more counterparts and delivered by e-mail or facsimile, each of which will be deemed to be an original copy of this Agreement and all of which, when taken together, will be deemed to constitute one and the same agreement. This Agreement will be binding upon and inure to the benefit of the Parties, their successors and assigns. Buyer may assign or otherwise transfer all of Buyer’s rights, obligations and benefits hereunder to any entity owned or controlled by, or under common control with, Buyer without Seller’s consent. The invalidity of any one or more phrases, sentences, clauses, paragraphs, or sections of this Agreement will not affect the remaining portions of this Agreement. No failure or delay by any Party to enforce any right specified herein will operate as a waiver of such right, nor will any single partial exercise of a right preclude any further or later enforcement of the right. A business day shall mean Monday through Friday, excluding federal and national holidays or State of Florida holidays. The term “material” shall mean an amount which would involve an expenditure, liability or damages in excess of $50,000.00.

 

 

(g)  Further Assurances. At the request of Seller and at Seller’s expense, Buyer shall cooperate in the preparation by Seller of all filings to be made by Seller with the Securities and Exchange Commission including any periodic filings and any filing with respect to a registered offering of its securities by Seller and the closing of the offering registered thereby. Upon a party’s request at any time, the other party shall take any act, including executing and delivering any document, necessary or advisable to otherwise to carry out the provisions of this Agreement.

 

(h)  Escrow Agent. Escrow Agent’s duties pursuant to this Agreement are purely ministerial in nature, and the Escrow Agent shall incur no liability whatsoever except for its willful misconduct or gross negligence, so long as the Escrow Agent is acting in good faith. The Parties hereby release the Escrow Agent from any liability for any error of judgment or for any act done or omitted to be done by the Escrow Agent in the good faith performance of its duties hereunder and do each hereby indemnify the Escrow Agent against, and shall hold, save, and defend the Escrow Agent harmless from, any costs, liabilities, and expenses incurred by the Escrow Agent in serving as Escrow Agent hereunder and in faithfully discharging its duties and obligations hereunder. The Escrow Agent is acting as a stakeholder only with respect to the Deposit. If there is any dispute as to whether the Escrow Agent is obligated to deliver the Deposit or as to whom the Deposit is to be delivered, the Escrow Agent may refuse to make any delivery and may continue to hold the Deposit until receipt by the Escrow Agent of an authorization in writing, signed by Seller and Buyer, directing the disposition of the Deposit, or, in the absence of such written authorization, the Escrow Agent may hold the Deposit until a final non appealable determination of the rights of the Parties in an appropriate judicial proceeding. If such written authorization is not given, or a proceeding for such determination is not begun, within thirty (30) days after notice to the Escrow Agent of such dispute, the Escrow Agent may bring an appropriate action or proceeding for leave to deposit the Deposit in a court of competent jurisdiction pending such determination. The Escrow Agent shall be reimbursed for all costs and expenses of such action or proceeding, including reasonable attorneys’ fees and disbursements, by the Party determined not to be entitled to the Deposit. Upon making delivery of the Deposit in any of the manners herein provided, the Escrow Agent shall have no further liability or obligation hereunder. The Escrow Agent shall execute the Escrow Receipt attached hereto in order to confirm that it has received the Deposit and is holding the same on deposit in accordance with the provisions hereof.

 

(i)  Applicable Law & Venue. This Agreement will be governed by and construed and enforced in accordance with the internal laws and judicial decisions of the State of Florida without regard to conflict of law provisions thereof. Any litigation, action or proceeding arising out of or relating to this Agreement will be held exclusively in any state or Federal court in Broward County, Florida. Each Party waives any objection which it might have now or hereafter to the venue of any such litigation, action or proceeding, submits to the sole and exclusive jurisdiction of any such court and waives any claim or defense of inconvenient forum. Each Party consents to service of process at such Party’s address as provided herein (and updated in writing from time to time).

 

(j)  Waiver of Jury Trial. Each party hereto hereby acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues and, therefore, each such party irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any legal action arising out of or relating to this Agreement or the transactions contemplated hereby.

 

(k)  Real Estate Agreement. The execution and delivery of this Agreement is contingent upon the concurrent and simultaneous execution and delivery of the Real Property Purchase and Sale Agreement.

 

[Remainder of Page Blank]

 

 

IN WITNESS WHEREOF, the Parties executed and delivered this Agreement as of the Effective Date.

 

LMP Beckley KCC, LLC, a West Virginia limited liability company			Fayette AWV AM, LLC, a Florida limited liability company
By:	/s/ Sam Tawfik		By:	/s/ Ali Ahmed
	Sam Tawfik, Authorized Signatory			Name: Ali Ahmed
				Title: Manager
LMP Beckley 001 Holdings, LLC, a West				Notice Address for Buyer:
Virginia limited liability company				Attn: Ali Ahmed
By:	/s/ Sam Tawfik			5875 NW 163rd Street
	Sam Tawfik, Authorized Signatory			Suite 104
				Miami Lakes, FL  33014
				Email:  [email protected]

 

LMP Automotive Holdings, Inc., a Delaware corporation			With a copy to:
By:	/s/ Sam Tawfik		Greenspoon Marder LLP
	Sam Tawfik, CEO		Attn:  David Weisman
			200 East Broward Blvd.
	Notice Address for Seller and LMP:		Suite 1800
			Fort Lauderdale, FL  33301
LMP Beckley HK, LLC			Email:  [email protected]
500 East Broward Boulevard, Suite 1900			Greenspoon Marder LLP
Fort Lauderdale, FL 33394			Attn:  Greg Blodig
Attn: Sam Tawfik, Chief Executive Officer			200 East Broward Blvd.
			Suite 1800
With a Copy To:			Fort Lauderdale, FL  33301
			Email:  [email protected]
Greenberg Traurig, PA
Attn:  Bruce C. Rosetto
777 S. Flagler Rive
Suite 300 East
West Palm Beach, FL  33401
Email:  [email protected]

 

 

Schedule 1(b)(ii) – Purchase Price for PreOwned, Service and Rental Vehicles

 

 

 

 

Schedule 2 – List of Assets

 

Inventory of new vehicles, used vehicles, parts and accessories will be inventoried and attached at or near Closing.

 

Seller’s FF&E is listed on Schedule 2(b).

 

 

Schedule 2(b) – FF&E

 

 

 

 

Schedule 3(d) – Assigned Contracts

 

 

 

 

Schedule 5(d) – Liens

 

 

 

 

Schedule 5(q) – In-House Warranties

  

 

 

Schedule 5(m) – Employment Matters

 

 

 

 

ESCROW RECEIPT

 

Dealership Asset Purchase Agreement

 

Escrow Agent agrees to be bound by the Dealership Asset Purchase Agreement and acknowledges receipt of:

 

☐

A.

Executed copies of the Dealership Asset Purchase Agreement on August __, 2022;

 

☐

B.

Deposit in the amount of $__________ on August __, 2022.

 

Escrow Agent:
By:
Name & Title:

 

Escrow Agent acknowledges having reviewed this Dealership Asset Purchase Agreement and will be bound by those provisions.

 

37

 

 

 

 

 

 

 

 

Exhibit 10.7

 

 

REAL ESTATE PURCHASE AND SALE AGREEMENT

 

between

 

LMP BECKLEY RE KCC, LLC, a West Virginia limited liability company and LMP
BECKLEY BAM, LLC, a West Virginia limited liability company

 

as Sellers

 

and

 

BECKLEY AWV AM, LLC, a Florida limited liability company

 

as Purchaser

 

August 5, 2022

 

 

 

 

REAL ESTATE PURCHASE AND SALE AGREEMENT

 

THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of the 4^th day of August, 2022 (the “Effective Date”), by and between LMP BECKLEY RE KCC, a West Virginia limited liability company (the “KCC Seller”) and LMP BECKLEY RE BAM, LLC (the “BAM Seller” and with the KCC Seller, collectively the “Seller”), and BECKLEY AWV AM, LLC, a Florida limited liability company (the “Purchaser”).

 

RECITALS

 

WHEREAS, the KCC Seller is the owner and holder of the fee simple title to those certain parcels of real property legally described on Exhibit A attached hereto, and located at 1156 Big Laurel Highway, Bluefield, West Virginia 24701 together with all easements, rights-of-way, privileges, appurtenances and rights to same, belonging to and inuring to the benefit of said real property; all strips and gores, if any; all right, title and interest, if any, of Seller in and to any land lying in the bed of any street, road, avenue, open or proposed, in front of or adjoining said property to the center line thereof, and all right, title and interest of Seller in and to any awards for damage to said property by reason of change of grade of any street (collectively, the “KCC Property”);

 

WHEREAS, the BAM Seller is the owner and holder of the fee simple title to those certain parcels of real property legally described on Exhibit B attached hereto, and located at 3934 Robert C. Byrd Drive, Beckley, West Virginia 05801 together with all easements, rights-of-way, privileges, appurtenances and rights to same, belonging to and inuring to the benefit of said real property; all strips and gores, if any; all right, title and interest, if any, of Seller in and to any land lying in the bed of any street, road, avenue, open or proposed, in front of or adjoining said property to the center line thereof, and all right, title and interest of Seller in and to any awards for damage to said property by reason of change of grade of any street (collectively, the “BAM Property” and with the KCC Property, collectively, the “Property”);

 

WHEREAS, LMP Beckley KCC, LLC (the “KCC Asset Seller”), operates a Chevrolet automotive dealership and all ancillary business related thereto on the KCC Property (the “KCC Franchise”), and is also the owner of certain fixed assets used in the operation of the Franchise which are located on the KCC Property (the “KCC Fixed Assets”);

 

WHEREAS, LMP Beckley BAM, LLC (the “BAM Asset Seller”), operates a General Motors automotive dealership and all ancillary business related thereto on the BAM Property (the “BAM Franchise”), and is also the owner of certain fixed assets used in the operation of the Franchise which are located on the BAM Property (the “BAM Fixed Assets”);

 

 

WHEREAS, simultaneously with the execution of this Agreement, the KCC Seller and Fayette AWV AM, LLC, a Florida limited liability company, are entering into that certain Asset Purchase Agreement for the sale of the KCC Franchise and the KCC Fixed Assets (the “KCC Asset Purchase Agreement”);

 

WHEREAS, simultaneously with the execution of this Agreement, the BAM Seller and Beckley AWV AM, LLC, a Florida limited liability company, are entering into that certain Asset Purchase Agreement for the sale of the BAM Franchise and the BAM Fixed Assets (the “BAM Asset Purchase Agreement” and collectively with KCC Asset Purchase Agreement, the “Asset Purchase Agreements”);

 

WHEREAS, Purchaser desires to purchase the KCC Property and the BAM Property from the KCC Seller and BAM Seller, respectively, and the KCC Seller and BAM Seller Purchaser desire to sell the KCC Property and the BAM Property, respectively, for the price and pursuant to the terms and conditions and upon the representations hereinafter set forth; and

 

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, do hereby agree as follows

 

1. DEFINITIONS AND EXHIBITS.

 

1.1 Definitions. In this Agreement, the following defined terms have the meanings set forth for them in the Section of this Agreement indicated below:

 

Term
Agreement	Recitals
Asset Purchase Agreements	Recitals
Closing	Section 2.2(b)
Closing Date	Section 9.1
Effective Date	Opening
Environmental Laws	Section 5.5
Environmental Notice	Section 3.3(b)
Exceptions	Section 4.1(a)
Governmental Authorities	Section 5.5
Hazardous Conditions	Section 5.5
Hazardous Substances	Section 5.5
Immaterial Taking	Section 12.2
Improvements	Section 2.1(c)
Improvements Price	Section 2.2(a)
Inspection Period	Section 3.5
Intangible Property	Section 2.1(f)

 

 

Term
Property	Recitals
New Purchaser Entities	Section 14.11
Objection Date	Section 4.1
PCBs	Section 5.5
Permits	Section 2.1(d)
Permitted Exceptions	Section 4.2
Plans	Section 2.1(e)
Property	Section 2.1
Purchaser	Recitals
Purchase Price	Section 2.2(a)
Purchaser’s Assessment	Section 3.3
Real Property	Section 2.1(c)
Seller	Opening
Seller Closing Documents	Section 5.2
Stated Price	Section 2.2(a)
Survey	Section 3.1
Surviving Obligations	Section 3.5
Title Commitment	Section 3.1
Title Company	Section 3.1
Title Policy	Section 8.1(a)
Unsatisfactory Environmental Condition	Section 3.3(b)

 

1.2 Exhibits. The Exhibits listed below are attached to and incorporated into this Agreement. In the event of any inconsistency between such Exhibits and the terms and provisions of this Agreement, the terms and provisions of the Exhibits shall control. The Exhibits to this Agreement are:

 

	Exhibit A	–	Legal Description of the KCC Real Property
	Exhibit B	–	Legal Description of the BAM Real Property
	Exhibit C	–	Form of Special Warranty Deed

 

1.3  Asset Purchase Agreement. The terms and condition of the Asset Purchase Agreements are incorporated by reference to this Agreement.

 

2. PURCHASE AND SALE OF THE PROPERTY.

 

2.1 Purchase. For the consideration hereinafter set forth, and subject to the provisions contained herein, the KCC Seller and the BAM Seller, each respectively hereby agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller, all of the following (collectively, the “Property”):

 

(a) The Property, together with all easements, rights-of-way, appurtenances, hereditaments and water and mineral rights appertaining to or otherwise benefiting or used in connection with such real property and inuring to the benefit of the Property or the fee owner thereof, together with all of Seller’s right, title and interest in and to any strips of land, streets, and alleys abutting or adjoining such real property, as further described on Exhibit A and Exhibit B hereto;

 

 

(b) All water, well, ditch surface and reservoir rights of whatever nature or kind related to the Property (the “Water Rights”);

 

(c) All existing buildings or other improvements, structures, open parking facilities and fixtures placed, constructed, installed or located on the Property and owned by Seller, if any, and all plants, trees, sculptures, signs, and other appurtenances located upon, over or under the Property and owned by Seller, if any, (collectively, the “Improvements”; the Property and Improvements are sometimes hereinafter collectively referred to as the “Real Property”);

 

(d) All right, title and interest of the applicable Seller, in and to all governmental permits, approvals, variances, impact fees and credits, licenses, certificates and authorizations, including, without limitation, certificates of occupancy, relating to the Real Property, to the extent assignable and capable of being transferred under applicable law in the applicable Seller’s possession or control (the “Permits”); and

 

(e) All right, title and interest of the applicable Seller in and to (to the extent assignable and capable of being transferred under applicable law) all site plans, surveys, soil and substratus studies, architectural drawings, plans and specifications, engineering, electrical and mechanical plans and studies, floor plans, landscape plans, environmental assessment reports, engineering, structural or physical inspection reports, appraisals, feasibility studies, and other plans and studies of any kind, in Seller’s possession or control, relating to the Real Property (the “Plans”); and

 

(f)   Any and all other rights, privileges, and appurtenances owned by Seller and in any way related to, or used in connection with, the Real Property, to the extent assignable and capable of being transferred under applicable law (the “Intangible Property”).

 

(g) Purchaser acknowledges and agrees that the definition of Property specifically excludes any such items that are owned entirely by Asset Seller and that are the subject of the Asset Purchase Agreement.

 

2.2 Purchase Price.

 

(a) The purchase price to be paid by Purchaser for the KCC Property (the “KCC Purchase Price”) shall be Four Million Eight Hundred Thousand Dollars ($4,800,000.00). The purchase price to be paid by Purchaser for the BAM Property (the “BAM Purchase Price”) shall be Six Million Five Hundred Thousand Dollars ($6,500,000.00) The total purchase price (the “Purchase Price”) for the KCC Property and the BAM Property shall be Eleven Million Three Hundred Thousand Dollars ($11,300,000.00). The Purchase Price, subject to adjustment in accordance with Article 10, shall be paid at the closing of the purchase contemplated hereby (the “Closing”) in cash, by wire transfer, or other immediately available funds as each Seller and Purchaser may mutually agree.

 

 

3. INVESTIGATION OF THE PROPERTY.

 

3.1 Title and Survey.

 

(a) Title Insurance Commitment and Survey. Within ten (10) business days after the Effective Date, Purchaser shall obtain at the sole cost and expense of Purchaser: a) a title insurance commitment issued by First American Title Company, licensed in the State of West Virginia, (the “Title Company”) showing the status of record title to the Property (a “Title Commitment”) and committing to insure, subject to the exceptions and requirements set forth therein, title to the Property in Purchaser in the amount of the Purchase Price under the Title Company’s standard owner’s title insurance policy; and b) a current ALTA survey certified to Purchaser (the “Survey”). Purchaser shall promptly provide Seller with a copy of the Title Commitment and Survey upon Purchaser’s receipt and said delivery shall include legible copies of or links to all recorded documents referred to in the Title Commitment. Extended title coverage or endorsements will be issued only at the request of the Purchaser and will be at Purchaser’s sole expense.

 

(b) Copies and Descriptions. After the Effective Date, each Seller shall provide to Purchaser, copies of all Permits, if any; copies of all Plans, if any; copies of the most recent tax bills concerning the Real Property, together with a copy of any notice of increase in valuation, if any, received by Seller since such tax statements were issued; and copies of any notices concerning existing or proposed special assessments levied against or affecting the Real Property, if any.

 

(c) Environmental History. Copies of any documents or communications relating to the environmental condition of the Real Property in the possession of Seller (“Environmental Reports”).

 

(d) All information and documentation relating to the Property that have been provided or that may be provided to Purchaser during the course of Purchaser’s due diligence investigation of the Property, including, but not limited to, any Environmental Reports, is provided without warranty of any kind, including as to the accuracy, validity or completeness of any such information or documentation.

 

3.2 Inspection of Property. At any time during the Inspection Period (as defined herein in Section 3.4), Purchaser and its employees, agents, and contractors, shall have the right to enter the Real Property, at times mutually agreeable to each Seller and Purchaser to complete a physical inspection of the Property as part of its condition, development, usage, zoning, survey, title and environmental due diligence activities. Such right of inspection shall include, without limitation, the right to have made, at Purchaser’s expense, any studies or reports of the Property as Purchaser may deem necessary or appropriate, including, without limitation, soils and environmental tests and inspections. Sellers shall cooperate reasonably with any such investigations, inspections, or studies made by or at Purchaser’s direction. Promptly following completion of any such activities, Purchaser agrees, at its sole cost and expense, to restore the Property to its condition that existed immediately prior to such activities. Copies of all documents provided by each Seller to Purchaser hereunder shall be promptly returned to the applicable Seller upon any termination of this Agreement. Purchaser agrees that in entering upon the Property and inspecting or examining the Property, Purchaser and the other Purchaser Parties (as defined herein) will not: (i) unreasonably disturb the Sellers or unreasonably interfere with its use of the Property; (ii) unreasonably interfere with the operation and maintenance of the Property; (iii) damage any part of the Property or any personal property owned or held by Sellers or any other person or entity; (iv) injure or otherwise cause bodily harm or death to Sellers, or to any of its tenants, agents, guests, invitees, contractors and employees, or to any other person or entity; or (v) permit any liens to attach to the Property by reason of the exercise of Purchaser’s rights under this Section 3.

 

 

3.3 Environmental Inspection. Without limiting the inspection and investigation rights set forth in Section 3.2, Purchaser shall have the right during the Inspection Period, at Purchaser’s sole expense, to enter the Property, at times mutually agreeable to the applicable Seller and Purchaser, to conduct environmental assessments of the Property, including but not limited to, the collection and analysis of soils, surface water and groundwater samples, to conduct a “Phase I Environmental Site Assessment” (a “Phase I”) upon the Property to identify any “recognized environmental conditions” and to determine whether the Property is in substantial compliance with applicable Environmental Laws, in general accordance with standards recommended by the American Society for Testing and Materials – ASTM E1527-05 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process.” Purchaser will promptly provide Seller a copy of the Phase I testing results and the draft and final report(s) as soon as the information is available. (“Purchaser’s Assessment”).

 

3.4 If the Phase I reveals that there are “recognized environmental conditions” on the Property, or the Property is not in substantial compliance with applicable Environmental Laws, and recommends a Phase II environmental assessment (“Phase II”), then Purchaser shall, at Purchaser’s cost, commission an environmental consultant satisfactory to Purchaser (the “Engineer”) complete a Phase II within thirty (30) days of Purchaser’s receipt of the Phase I. Provided that Purchaser has promptly ordered the Phase II, and the provider of such Phase II has not completed it with the thirty (30) days, Purchaser shall have an additional fifteen (15) days to complete the Phase II. Each Seller hereby agrees to allow the Purchaser to undertake any such Phase II investigation on the Property. If the Phase II discloses the existence of Hazardous Substances in violation of applicable Environmental Laws, Purchaser may deliver a notice to each applicable Seller within five (5) days of Purchaser’s receipt of the Phase II either (i) terminating the Agreement, and neither party shall thereafter have any further liability or obligation to the other, except as otherwise expressly provided herein or (ii) setting forth such matters contained in the Phase II to which it objects (the “Notice of Violations”). If Purchaser elects to send a Notice of Violations, the applicable Seller shall have fifteen (15) days from receipt of the Notice of Violations to elect to remediate the violations set forth therein, in which case the parties shall enter into an environmental remediation agreement on terms mutually agreeable to the parties. If the parties are unable to reach a mutually agreeable environmental remediation agreement within thirty (30) days after the applicable Seller’s receipt of the Notice of Violations (assuming such Seller elects to remediate), the Agreement shall automatically terminate, Purchaser shall receive a refund of the Deposits under this Agreement and under the Asset Purchase Agreement), and neither party shall thereafter have any further liability or obligation to the other, except as otherwise expressly provided herein. Notwithstanding the foregoing, the applicable Seller shall have no obligation to remediate unless it so elects. If the applicable Seller elects, by Notice to Purchaser, not to remediate the matters set forth in the Notice of Violation, Purchaser shall have five (5) business days from receipt of such Notice to give Seller its Notice that Purchaser is electing to: (a) accept the Property in “As Is” condition; or (b) terminate this Agreement and receive a refund of the Deposits (under this Agreement and under the Asset Purchase Agreement), thereby releasing Purchaser and the applicable Seller from all further obligations under this Agreement. If Purchaser fails to give Notice of its election within such five (5) business day period, or fails to give a Notice of Defects within five (5) business days of receipt of the Phase II, then Purchaser will be deemed to have approved the environmental condition of the Property and to have elected to proceed to Closing. Purchaser shall have no obligation to indemnify such Seller with respect to the presence of any Hazardous Substances discovered during Purchaser’s environmental inspections of the Property nor shall Purchaser have any obligation to engage in the remediation of the Property with respect to such Hazardous Substances. “Hazardous Substance” shall mean any substance or material defined or designated as hazardous or toxic waste, hazardous or toxic material, a hazardous or toxic substance, or other similar term by any federal, state, or local environmental statute, regulation, or ordinance presently in effect, as such statutes, regulations, and ordinances may be amended from time to time, prior to Closing, and mold, lead-based paint and asbestos. However, “Hazardous Substance” shall not include substances which are used in each Seller’s ordinary course of its automotive dealership business; provided, however, that such substances are used, handled, transported, stored and disposed of in substantial compliance with any applicable federal, state and local law, rule, regulation, code, ordinance or any other governmental restriction or requirement.

 

 

3.5 Termination of Agreement. At any time during the Inspection Period, Purchaser shall be permitted, in Purchasers sole discretion, to give Sellers written notice in accordance with the notice provisions of this Agreement terminating this Agreement if Purchaser is dissatisfied with its physical inspection of the Property as part of its condition, development, usage, zoning, survey, title and environmental due diligence activities. Purchaser shall have no obligation to give a reason for such termination. If Purchaser delivers such a notice, then this Agreement shall terminate, Purchaser shall receive a refund of the Deposits (under this Agreement and under the Asset Purchase Agreement), and both parties shall be relieved from any further liability hereunder, except for those matters which, by their terms, survive the termination of this Agreement (the “Surviving Obligations”). The sixty (60) day period following the Effective Date is herein referred to as the “Inspection Period.” Purchaser may at its option waive its right to terminate this Agreement pursuant to this Section 3.5 by written notice delivered to Sellers. Notwithstanding anything contained herein to the contrary, following the expiration of the Inspection Period, the Escrow Deposit (as defined in the Asset Agreement) shall become non-refundable except as otherwise expressly set forth in Section 11 of the Asset Purchase Agreement.

 

4. TITLE.

 

4.1 Review.

 

(a) Within ten (10) business days after Purchaser’s receipt of the Title Commitment (the “Objection Date”), Purchaser shall be entitled to object to any exceptions to title disclosed in the Title Commitment or matters affecting title reflected on the Survey (“Exceptions”), in its sole discretion, by a written notice of objections delivered to Sellers. If Purchaser fails to deliver to the applicable Seller a notice of objections on or before the Objection Date, Purchaser shall be deemed to have waived any objection to the Exceptions and thereafter all Exceptions shall be deemed to be Permitted Exceptions (as hereinafter defined). The applicable Seller shall have ten (10) business days from the receipt of Purchaser’s notice of objections either to (i) remove the Exceptions, or (ii) provide Purchaser with assurances satisfactory to Purchaser, in its sole discretion, that the Exceptions will be removed or affirmative title insurance protection will be provided before or as of the Closing. If Purchaser waives in writing its objection to any matters described in the notice of objections, such matters shall be deemed to be Permitted Exceptions. Notwithstanding anything in this paragraph to the contrary, and whether or not Purchaser specifically objects, the applicable Seller shall be obligated to remove any Exceptions which can be removed by the payment of money, including but not limited to mortgages, liens, judgments, and fines (“Monetary Exceptions”). At Closing, Purchaser shall pay for any title insurance policies issued by the Title Company.

 

 

(b) If any endorsement or update issued to the Title Commitment or Survey contains Exceptions other than those in the Title Commitment or Survey, Purchaser shall be entitled to object to any such Exceptions by a written notice of objections to Seller on or before the date ten (10) days following Purchaser’s receipt of such endorsement or update. If Purchaser fails to deliver to the applicable Seller a notice of objections on or before such date, except as to Monetary Exceptions, Purchaser shall be deemed to have waived any objection to matters appearing on such endorsement or update, and thereafter all such Exceptions shall be deemed to be Permitted Exceptions. The applicable Seller shall have ten (10) business days from the receipt of Purchaser’s notice either to (i) remove the Exceptions, or (ii) provide Purchaser with assurances satisfactory to Purchaser, in its sole discretion, that the Exceptions will be removed or affirmative title insurance protection will be provided before or as of the Closing. If Purchaser waives in writing its objection to any matters described in the notice of objections, such matters shall be deemed to be Permitted Exceptions.

 

4.2 Permitted Exceptions. The term “Permitted Exceptions” shall mean: (i) zoning regulations and ordinances (and any variances therefrom) of the municipality in which the Property is located; (ii) curb cuts and access roads to and from abutting streets and other easements, driveways or rights of way in existence as of the Effective Date; (iii) real property taxes, water charges and sewer rents which are not yet due and payable, but subject to apportionment as hereinafter provided; (iv) recorded utility, water and sewer easements, if any, as existing on the Effective Date and (v) all Exceptions contained in the Title Commitment (other than Monetary Exceptions) or Survey (a) to which Purchaser does not object as herein provided or (b) as to which Purchaser has waived or is deemed to have waived its objection; provided, however, that the term Permitted Exceptions shall not include (i) any taxes or assessments other than general ad valorem real estate taxes for the year of Closing; (ii) any monetary judgments, mortgages or liens; or (iii) any matters that, prior to Closing, each Seller agrees in writing to remove or cure at or before the Closing. The existence of monetary judgments, mortgages or liens, other than the Permitted Exceptions, shall not be objections to title, provided that properly executed instruments, in recordable form, necessary to satisfy and release the same are delivered to Purchaser at the Closing together with recording and/or filing fees, and each Seller shall pay such mortgages or liens from the cash consideration to be paid to such Seller by Purchaser hereunder.

 

 

5. SELLER’S REPRESENTATIONS AND WARRANTIES.

 

Each Seller represents and warrants to Purchaser, that the representations and warranties set forth below are true and correct as of the Effective Date, and shall be true and correct on and as of the date of the Closing, but only with regard to each Seller’s respective Property being conveyed hereunder:

 

5.1 No Possessory Rights. Except for any rights of possession granted under the Permitted Exceptions, there are no parties in possession of any of the Real Property, and each Seller has not granted any other rights of possession or use to any third party or parties. No party has a right of first refusal or option to purchase any of the Real Property.

 

5.2 Due Execution; Authority. (i) Each Seller is a limited liability company duly organized, validly existing and in good standing as a limited liability company under the laws of the State of West Virginia; (ii) this Agreement is, and all the documents to be delivered by each Seller pursuant to this Agreement (the “Seller Closing Documents”) will be, when executed by each Seller, binding on and enforceable against Seller in accordance with their respective terms; (iii) except for internal governance approvals required by law, there are no other consents required to authorize Seller’s entry into and performance of this Agreement, the applicable Seller Closing Documents and/or the transactions contemplated hereby or thereby; (iv) this Agreement, the applicable Seller Closing Documents and the transactions contemplated hereby and thereby have been, or will have been prior to the Closing, approved by all necessary action of each such Seller; and (v) the execution and delivery of the respective Seller Closing Documents do not and will not constitute a breach or default under any agreement by which the applicable Seller is bound.

 

5.3 Contracts. To each Seller’s knowledge, and except for this Agreement, any Permitted Exceptions, any contracts provided to Purchaser and any documentation related to existing financing on the Property, (i) there are no contracts entered into by the applicable Seller or its agents relating to the ownership, management, parking, operation, maintenance or repair of the Property (ii) each Seller or its agents have not entered into any contracts for the sale, lease, assignment, exchange or transfer of the Property or any portion thereof, or contracts or other material obligations currently in effect, creating or imposing any burdens, obligations or restrictions on the use or operation of the Property and the business conducted thereon and (iii) there are no contracts, agreements, liabilities, claims or obligations of any kind or nature relating to the Property to which the Property or the Sellers will be bound following the Closing.

 

5.4 Condemnation. Sellers have no knowledge of any pending or contemplated condemnation proceedings affecting all or any part of the Real Property.

 

5.5 Environmental. Except as disclosed on Schedule 5.5 (which Sellers shall deliver to Purchaser within ten (10) business days following the Effective Date):

 

(a) Nature of Claims. During each Seller’s ownership of the Property, there have not been and there are not now pending or, to each applicable Seller’s knowledge, threatened: (i) claims, causes of action, notices, or requests for information received by such Seller with respect to any alleged violation of any Environmental Law with respect to the Property; or (ii) claims, causes of action, notices, or requests for information received by each Seller regarding potential or alleged liability under any Environmental Law with respect to the Property.

 

 

(b) Existing Conditions. To each Seller’s knowledge, no conditions exist at, on, or under the Property that would constitute a Hazardous Condition.

 

(c) Compliance with Environmental Laws. Each Seller is in compliance in all material respects with all orders, directives, permits, certificates, approvals, licenses, and other authorizations from applicable Governmental Authorities, if any, relating to Environmental Laws with respect to the Property. To each Seller’s knowledge, the Property and all Improvements are in compliance with all Environmental Laws.

 

(d) Storage Tanks. To each Seller’s knowledge, there are no above ground tanks that are not in compliance with all Environmental Laws. Neither Seller has removed nor abandoned any underground storage tanks (herein referred to as “USTs”) at the Property nor does each Seller have any knowledge of the abandonment or removal of USTs at the Property.

 

(e) PCBs. To each Seller’s knowledge, there are no polychlorinated biphenyls (“PCBs”) other than those that may be incorporated within building materials such as window caulk or glazing or friable or damaged asbestos at the Property; nor has eacj Seller removed (or required or requested the removal of) any PCBs other than those that may be incorporated within building materials such as window caulk or glazing or damaged or friable asbestos from the Property, nor has Seller knowledge of the previous existence of any PCBs other than those that may be incorporated within building materials such as window caulk or glazing or damaged or friable asbestos at the Property.

 

“Environmental Law” means all federal, state and local laws, whether common laws, court or administrative decisions, statutes, rules, regulations, ordinances, court orders and decrees, and administrative orders and all enforceable administrative policies and guidelines concerning action levels of a governmental authority (federal, state or local) now or in effect at Closing relating to the environment, public health, occupational safety, industrial hygiene, any Hazardous Substance (including, without limitation, the disposal, generation, manufacture, presence, processing, production, release, storage, transportation, treatment or use thereof), or the environmental conditions on, under or about the Property, as amended and as in effect during the Seller’s ownership of the Property, now and at the time of Closing (including, without limitation, the following statutes and all regulations thereunder as amended and in effect during the Seller’s ownership of the Property, now and at the time of Closing: the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601, et seq.; the Superfund Amendments and Reauthorization Act of 1986, Title III, 42 U.S.C. §§ 11001, et seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300(f), et seq.; the Solid Waste Disposal Act, 42 U.S.C. §§ 6901, et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 1801, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. §§ 1251, et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. §§ 2601, et seq.; and the Occupational Safety and Health Act, 29 U.S.C. §§ 651, et seq.; and any successor statues and regulations to the foregoing in effect during the Seller’s ownership of the Property, now and at the time of Closing.

 

 

“Governmental Authorities” shall mean any commission, department or body of any municipality, township, city, county, state or Federal governmental unit having jurisdiction over any of the Property or the ownership, management, operation, use or improvement thereof.

 

“Hazardous Conditions” refers to the presence on, in or under any of the Property (including ground water) of Hazardous Substances, the concentration, condition, quantity, location or other characteristics of which fail to comply with, or otherwise create an obligation or liability under applicable Environmental Laws.

 

“Hazardous Substances” means (i) all chemicals, materials and substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants” or “pollutants,” or words of similar import, under any applicable Environmental Law; and (ii) all other chemicals, materials and substances, exposure to which is prohibited, limited or regulated by any governmental authority, including, without limitation, asbestos and asbestos-containing materials in any form, lead-based paint, radioactive materials, polychlorinated biphenyls (“PCB’s”), and substances and compounds containing PCB’s.

 

5.6 Zoning. To each Seller’s knowledge, the Property is currently zoned to permit the ownership and operation of an automotive retail sales and service dealership. To each Seller’s knowledge, there is not now pending nor is there any proposed or threatened proceeding for the rezoning of the Property or any portion thereof. Seller has no knowledge of nor has it received any written notice from any Governmental Authority that any zoning, subdivision, environmental, hazardous waste, building code, health, fire, safety or other law, order, ordinance or regulation is violated by the continued maintenance, operation or use of the Property in a manner substantially the same as current operations, including, without limitation, any Improvements located thereon or any parking areas. Notwithstanding the foregoing, Seller and Purchaser agree and acknowledge that any representations or warranties made with respect to the environmental condition of the Property and compliance, obligations and liabilities under Environmental Laws are set forth in Section 5.5 herein.

 

5.7 Permitted Exceptions. Each Seller has performed all obligations under and has not received notice that it is in default for failure to comply with the terms and provisions of any of the covenants, conditions, restrictions, rights-of-way and easements constituting one or more of the Permitted Exceptions for the Property.

 

5.8 Permits, Etc. To each Seller’s respective knowledge, all applicable permits, licenses, authorizations and certificates of occupancy required by Governmental Authorities for the management, occupancy, leasing and operation of the Property are in full force and effect.

 

5.9 Litigation. No dispute, proceeding, suit or litigation relating to the Property or any part thereof is pending or, to each Seller’s respective knowledge, threatened in any tribunal.

 

5.10 FIRPTA. Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

 

5.11 Indebtedness. Neither Seller has received notice of any material defaults or events of default (as defined therein) or any notice that such defaults are continuing under the terms of any documents evidencing or securing indebtedness which is secured by the Property or for which such Seller is liable.

 

5.12 Material Adverse Change. Neither Seller has received written notice from any Governmental Authority of any pending or contemplated change in any regulation, code, ordinance or law, or private restriction applicable to the Property, or any natural or artificial condition upon or affecting the Property, or any part thereof, which would result in any material adverse change in the condition of the Property or any part thereof, or would in any way limit or impede the operation or development of the Property.

 

5.13 Not Misleading. The representations and warranties of each Seller in this Agreement do not contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained herein not misleading.

 

5.14 Tax Matters. Each Seller has relied solely on its own counsel for advice on any and all federal, state and local tax matters relating to this Agreement and the transactions contemplated herein and have not relied on any advice or representations of Purchaser, or its counsel with respect to any federal, state and local tax matters relating to this Agreement or the transactions contemplated herein.

 

5.15 Utilities. Usable sanitary and storm sewers and public water, gas and electrical utilities (collectively, the “Utilities”) of adequate capacity required for the operation of the Property as it is currently being used as of the Effective Date, are installed in, and are duly connected to, the Property.

 

5.16 Bankruptcy. Each Seller has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by Seller’s creditors, (iii) suffered the appointment of a receiver to take possession of all or substantially all of Seller’s assets, (iv) suffered the attachment, or other judicial seizure of all, or substantially all, of Seller’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or compromise to its creditors generally.

 

5.17 Knowledge. For purposes of this Agreement, the phrase “to Seller’s knowledge” or words of similar import, shall mean that the applicable party has conducted a reasonable review of its files and interviewed current employees in positions of responsibility on the subject and such review and interviews did not disclose any information contrary to the accuracy or veracity of any such representation or warranty.

 

5.18 Supplemental Information. Seller shall provide written notice to Purchaser at any time and from time to time after the Effective Date through the Closing if it acquires any information that any of the representations or warranties made in this Agreement were inaccurate in any material respect as of the Effective Date or will be inaccurate in any material respect as of the Closing.

 

 

5.19 Property Being Sold “AS IS, WHERE IS”. Purchaser hereby acknowledges, understands and agrees that it had or will have during the Inspection period sufficient opportunity to inspect the Property and any Environmental Reports and Purchaser agrees, represents and warrants that (i) prior to the Closing Date, Purchaser will have fully examined and inspected the Property, including the construction, renovation, environmental condition, all governmental approvals, and any applicable resolutions and agreements, operation and leasing of the Property, together with any other documents and materials with respect to the Property which Purchaser deems necessary or appropriate in connection with its investigation and examination of the Property, (ii) the Property will be purchased by Purchaser in its “AS IS, WHERE IS” condition and (iii) Purchaser will have decided to purchase the Property solely on the basis of its own independent investigation. Purchaser hereby acknowledges and agrees that Seller has not made, does not make, and has not authorized anyone else to make any representations and/or warranty regarding any matter or thing pertaining to the Property except for those limited representations and warranties set forth in Section 5 herein. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THE PURCHASE PRICE OF THE PROPERTY REFLECTS THE FACT THAT SELLER IS NOT MAKING ANY REPRESENTATIONS OR WARRANTIES, EXCEPT AS SET FORTH IN SECTION 5 HEREOF. SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED OR ARISING BY OPERATION OF LAW, EXCEPT FOR THOSE LIMITED REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 5 HEREIN, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF CONDITION, HABITABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE IN CONNECTION WITH THE PROPERTY or COMPLIANCE OR NON-COMPLIANCE WITH ZONING OR OTHER LAWS. PURCHASER AGREES TO ACCEPT THE PROPERTY WITHOUT RECOURSE AGAINST SELLER OF ANY KIND UNDER APPLICABLE LAWS AND REGULATIONS. All information and documentation relating to the Property that have been provided or that may be provided to Purchaser during the course of Purchaser’s due diligence investigation of the Property, including, but not limited any Environmental Reports, is provided without warranty of any kind, including as to the accuracy, validity or completeness of any such information or documentation.

 

5.20 The representations and warranties of Sellers as set forth in this Agreement shall be true and correct as of the effective date of this Agreement and as of the date of Closing and shall survive the Closing of this transaction.

 

6. PURCHASER’S REPRESENTATIONS AND WARRANTIES.

 

Purchaser represents and warrants to Seller, that the representations and warranties set forth below are true and correct as of the Effective Date, and shall be true and correct on and as of the date of the Closing:

 

6.1 Authority. Purchaser is a limited liability company duly organized and validly existing and in good standing under the laws of the State of Florida, and authorized to do business in the State of West Virginia. Purchaser has the full right and authority to enter into this Agreement and consummate the transactions contemplated by this Agreement. All requisite company action has been, or will be by the Closing Date, taken by Purchaser in connection with the execution of this Agreement and the documents referenced herein and the consummation of the transactions contemplated hereby. Each of the persons signing this Agreement on behalf of Purchaser is authorized to do so. Purchaser shall furnish to Seller any and all documents to evidence such authority as Seller shall reasonably request.

 

 

6.2 Consents; Restrictions; Binding Obligations. No third party approval or consent is required to enter into this Agreement or the documents referenced herein or to consummate the transactions contemplated hereby other than as stated in this Agreement. The entering into and consummation of the transactions contemplated hereby will not conflict with or, with or without notice or the passage of time or both, constitute a default under, any contract, lease or other agreement to which Purchaser is a party or by which Purchaser may be bound or any law, rule, license, regulation, judgment, order or decree governing or affecting Purchaser. This Agreement and all documents required hereby to be executed by Purchaser are and shall be valid and legally binding obligations of Purchaser.

 

7. SELLER’S UNDERTAKINGS PENDING CLOSING.

 

7.1 Operation of the Property. Until the earlier of the Closing or the termination of this Agreement, each Seller shall:

 

(a) Status of Title. Not do anything, or permit anything to be done, that would impair the status of title as shown on the Title Commitment or the Survey.

 

(b) Operation. Continue to operate and maintain the Property in the same manner as immediately prior to the Effective Date, reasonable wear and tear excepted.

 

(c) Contracts. Not enter into any lease, service contract or other contract that, following Closing, will be binding upon Purchaser or the Property without, in each instance, obtaining the prior written approval of Purchaser. The foregoing shall not apply to any service contract having a term of thirty (30) days or less.

 

(d) Transfer. Not cause or permit transfer, conveyance, sale, assignment, pledge, mortgage, or encumbrance of any of the Property.

 

(e) Zoning. Not to submit any application or similar document to any Governmental Authority in connection with the rezoning or special permitting of any part of the Property without first obtaining Purchaser’s written approval thereof (unless said submittal is fully consistent with any other submittal theretofore approved by Purchaser).

 

7.2 Notification of Purchaser. Until the earlier of the Closing or the termination of this Agreement, each Seller shall notify Purchaser in writing promptly upon learning or receiving notice, whichever first occurs, of:

 

(a) Events. Any event, transaction, or occurrence prior to Closing that would or could materially adversely affect any of the Property.

 

(b) Representations. Any fact or event that would make any of the representations or warranties of Seller contained in this Agreement untrue or misleading in any material respect or that would cause Seller to be in violation of any of its covenants or other undertakings or obligations hereunder.

 

(c) Laws. Any violation of any law, ordinance, regulation or law that would or might materially adversely affect any of the Property.

 

 

(d) Zoning. Any proposed change in any zoning or other law affecting the use or development of any of the Property.

 

(e) Litigation. Any pending or threatened litigation that affects any of the Property or that could affect the transaction contemplated hereby.

 

(f)   Bankruptcy. Any pending or threatened proceeding in bankruptcy or insolvency that could affect any of the Property or any person owning any interest therein.

 

(g) Defaults. Any default under any of the Permitted Exceptions or other agreements affecting any of the Property, or any act or omission that with the notice or the passage of time, or both, would constitute such a default.

 

(h) Environmental. Any (a) enforcement, clean-up, removal or other governmental or regulatory action concerning the Property instituted, completed or threatened pursuant to any Environmental Law; (b) any claim made or threatened by any person against Asset Seller and/or Seller, or the Property, relating to damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Substances; and (c) reports made to any environmental agency arising out of or in connection with any Hazardous Substance in, on or under the Property including, without limitation, any causes of action, notices, warnings, reports or asserted violations in connection therewith.

 

8. PURCHASER’S AND SELLER’S OBLIGATION TO CLOSE.

 

8.1 Conditions to Purchaser’s Obligations. Purchaser shall not be obligated to close the transaction contemplated hereunder unless each of the following conditions shall be satisfied on or prior to the Closing Date, which may be waived by Purchaser.

 

(a) Title Policy. The title company that issued the Title Commitment (the “Title Company”) shall issue (or commit unconditionally to issue) a title policy to Purchaser subject only to the Permitted Exceptions (the “Title Policy”).

 

(b) Accuracy of Representations. The representations of Sellers in this Agreement shall be true and complete as of the date when given and on the Closing Date.

 

(c) Seller’s Performance. Each Seller shall have performed all covenants and obligations and complied with all conditions required by this Agreement to be performed or complied with by Seller on or before the Closing Date.

 

(f)  Asset Purchase Agreement. The transactions contemplated under the Asset Purchase Agreement and any ancillary documents related thereto, shall have closed, or close concurrently with this Agreement.

 

(g)  Termination of Intercompany Leases. Seller shall terminate any intercompany leases with respect to the Real Property upon Closing, as may be applicable.

 

8.2 Condition to Seller’s Obligations. Each Seller shall not be obligated to close the transaction contemplated hereunder unless each of the following conditions shall be satisfied on or prior to the Closing Date, which may be waived by each Seller, as applicable.

 

(a) Purchaser’s Performance. Purchaser shall have performed all covenants and obligations and complied with all conditions required by this Agreement to be performed or complied with by Purchaser on or before the Closing Date.

 

 

(b) Accuracy of Representations. All representations of Purchaser in this Agreement will be true and complete as of the date when given and on the Closing Date.

 

(c) Asset Purchase Agreement. The transactions contemplated under the Asset Purchase Agreements and the other Real Estate Agreements (as defined in the Asset Purchase Agreements) shall have closed, or close concurrently with this Agreement.

 

8.3 Failure of Conditions. If any condition specified herein is not satisfied on or before the Closing, then (i) Purchaser may terminate this Agreement, by notice to Sellers, if any of Purchaser’s conditions precedent to Closing have not been satisfied as of the Closing Date or has become incapable of being satisfied by the Closing Date, and (ii) each Seller may terminate this Agreement, by notice to Purchaser, if any of Seller’s conditions precedent to Closing have not been satisfied as of the Closing Date or has become incapable of being satisfied by the Closing Date. Upon a termination in accordance with this Section 8.3, Purchaser shall receive a refund of the Deposits (under this Agreement and under the Asset Purchase Agreement), this Agreement will have no further force or effect and the parties shall thereupon be relieved of all further obligations hereunder other than the Surviving Obligations. The parties’ rights under this Section 8 are cumulative and are in addition to the other rights and remedies available to them under this Agreement or any other agreement, including Section 11 of the Asset Purchase Agreement. Notwithstanding anything else set forth herein, in the event the closings under the Asset Agreement or the other Real Estate Agreements do not close for any reason, this Agreement shall automatically terminate without any further action required by Purchaser or Seller and the provisions of Section 11 of the Asset Purchase Agreement shall apply.

 

9. CLOSING.

 

9.1 Time of Closing. Unless otherwise agreed in writing between the parties hereto, the Closing shall take place contemporaneously with that of the Asset Purchase Agreements (the “Closing Date”). Purchaser hereby covenants to work with Sellers during the Closing process to keep Seller informed of the progress and timing under the Asset Purchase Agreement so as to enable the Closing to occur under this Agreement as contemplated.

 

9.2 Deliveries. At the Closing, simultaneously with the payment of the Purchase Price by Purchaser:

 

(a) Each Seller shall execute and deliver or cause to be delivered to Escrow Agent on behalf of Purchaser the following, with respect to the applicable Property, to wit:

 

(i) A duly executed and acknowledged special warranty deed, conveying fee simply title to the applicable Property, in substantially the form and content of Exhibit B the “Deed”), free and clear of all matters affecting title, in recordable form;

 

 

(ii)   A standard No-Lien, “Gap” and Parties in Possession Affidavit satisfactory to the Title Insurer in order to delete the standard printed exceptions; and to insure the period between the last update of the Title Commitment and recording of the deed;

 

(iii) Applicable state and local conveyance tax forms completed and signed by or on behalf of the applicable Seller and Purchaser, together with checks, in the amount of the applicable real estate transfer and conveyance taxes, payable to the County Clerk of the county where the Property is located by reason of the purchase and sale of the Property;

 

(iv) Such other documents and affidavits as shall be reasonably required by the Title Insurer as called for or required under the terms of the Commitment;

 

(v) A resolution of the applicable Seller authorizing the conveyance of the applicable Property to Purchaser pursuant to this Agreement;

 

(vi) The applicable Seller shall execute and deliver to Purchaser a certificate confirming such Seller’s representations and warranties as described in Section 8.1(b).

 

(vii)   The applicable Seller shall execute and deliver to Title Company such affidavits, agreements or statements concerning parties in possession of the Property or claims for mechanic’s liens as may be required by Title Company in order to issue the Title Policy

 

(viii)   A non-foreign Seller Affidavit.

 

(ix) Satisfactions of all mortgages of record encumbering any part of the Subject Property.

 

(x) UCC-3 Termination Statements for all UCC-1 financing statements filed with respect to any part of the Property, and UCC-3 Amendments changing the principal place of business of Seller for any UCC-1 financing statements filed to perfect any security interest in any personalty of the Seller located on the Property or for which the Subject Property is identified as the principal place of business of the Seller for filing purposes.

 

(xi) All keys, remote controls and security and access codes;

 

(xii)   all the originals of all Plans in Seller’s possession or control and all other materials of whatever kind owned by Seller relating to the design, construction, development, ownership, maintenance and operation of the Property shall be delivered to and become the property of Purchaser to the extent that such documents are assignable and capable of being transferred under applicable law;

 

(xiii)   All such other documents contemplated by this Agreement;

 

 

(b) At the Closing, Purchaser shall deliver to Escrow Agent the Purchase Price adjusted for all appropriate prorated items, credits and adjustments, of which the Deposit and all accrued interest thereon shall constitute a part thereof, and Purchaser shall also deliver or cause to be delivered to Escrow Agent, on behalf of Seller the following:

 

(i) A resolution of the Purchaser authorizing the purchase of the Subject Property.

 

(c) At the Closing, Seller and Purchaser shall mutually execute and deliver to each other a closing statement in customary form which shall also be executed by Escrow Agent, and any and all conveyances, assignments and all other instruments and documents as may be reasonably necessary in order to complete the transaction herein provided and to carry out the intent and purposes of this Agreement.

 

10. PRORATIONS AND CLOSING EXPENSES.

 

10.1   Closing Adjustments. The cash due at Closing pursuant to Section 2.2 shall be subject to adjustment as of the Closing Date in accordance with the following provisions:

 

(a) Taxes and Prorations. Real estate taxes, water, sewer and other utility charges and other assessments typically pro-rated between purchasers and sellers of commercial real estate in the county where the Property is located will be prorated between Seller and Purchaser as of the date of Closing based on the number of days of the applicable period that each party owns the Property. To the extent practicable, all such pro-rations and payments will be made on the day of Closing, with the balance to be made as soon as practicable following the Closing upon delivery by Purchaser or Seller, as applicable, of reasonable documentation of such payment to the other party.

 

(b) Utilities. To the extent possible, the parties shall cause all utility meters to be read on the day preceding the Closing Date. Each Seller shall escrow with Title Company an amount sufficient to pay Seller’s final water and sewer bill if Title Company so requires in order to issue the Title Policy. Each Seller shall not receive credit for security deposits, if any, posted with utility companies, and each Seller may seek return thereof following Closing.

 

(c) Liens and Encumbrances. The amount of any lien, deed of trust or other monetary encumbrance then affecting the Property shall be paid from the funds to which Seller shall otherwise be entitled. If such funds are insufficient to pay all such encumbrances, Seller shall pay the deficiency.

 

(d) Closing Costs. The costs of recording any transfer tax on the Deed of conveyance, shall be paid by the respective Seller. The Purchaser shall pay the costs of: (i) recording the Deed; (ii) searching or examining title and the title insurance premium due with respect to the Title Policy to be issued pursuant to the Commitment; (iii) financing costs (including but not limited to lender’s origination fees, appraisal expenses, lender title policy premiums and endorsements); and (iv) Buyer’s inspection expenses.

 

10.2   Settlement Statement. At the Closing, each Seller and Purchaser shall execute a Closing settlement statement to reflect the credits, prorations, and adjustments contemplated by or specifically provided for in this Agreement.

 

 

11. CASUALTY DAMAGE. In the event that the Real Property is damaged by fire or other material casualty prior to Closing, Seller shall promptly give Purchaser written notice of such occurrence. In the event the damage creates a hazardous or otherwise dangerous environment, as determined by Purchaser in its reasonable discretion, Purchaser may elect to terminate this Agreement upon notice to Seller within fifteen (15) days after Purchaser’s receipt of Seller’s notice of such casualty, in which event the parties shall be relieved of any further obligations hereunder except for the Surviving Obligations. In the event Purchaser elects not to terminate, the parties shall proceed to the Closing and Seller shall deliver and/or assign to Purchaser all insurance proceeds collectible for such loss or damage and provide a credit against the Purchase Price equal to the applicable deductible.

 

12. CONDEMNATION.

 

12.1   Notice. If, prior to Closing, any Seller learns of any actual or threatened taking in condemnation or by eminent domain (or a sale in lieu thereof) of any of the Real Property, Seller shall notify Purchaser promptly thereof.

 

12.2   Termination. Other than with respect to an Immaterial Taking (as hereinafter defined), any actual or threatened taking or condemnation for any public or quasi-public purpose or use by any competent authority in appropriate proceedings or by any right of eminent domain of any of the Real Property between the date of this Agreement and the Closing Date shall, at Purchaser’s option, cause a termination of this Agreement. The election to terminate provided hereby shall be exercised by Purchaser by written notice to the applicable Seller to that effect given within thirty (30) days following Purchaser’s receipt of such Seller’s notice pursuant to Section 12.1 above. Upon delivery of such termination notice, both parties shall be relieved of any further obligations hereunder except for the Surviving Obligations. If Purchaser shall not so elect to terminate this Agreement, or in the event of an Immaterial Taking, Seller shall be relieved of all obligations under this Agreement with respect to the portion of the Real Property so taken or condemned, but Purchaser shall be entitled to receive all proceeds of any such taking or condemnation, and Seller agrees that it shall not make any adjustment or settlement of any such taking or condemnation proceeding without Purchaser’s consent and shall take at Closing all action necessary to assign its entire interest in such award to Purchaser. Any taking or condemnation for any public or quasi-public purpose or use that affects less than ten percent (10%) of the square footage of the Property and that does not affect access, materially reduce parking or operational capacity, materially reduce the square footage of buildings and other improvements that may be constructed on the Property, or reduce required utilities shall be deemed an “Immaterial Taking.”

 

13. REMEDIES.

 

13.1 Buyer’s Default. If Purchaser shall breach this Agreement at or prior to the Closing, or if the Closing fails to occur by reason of Purchaser’s failure or refusal to perform its obligations hereunder or by reason of Purchaser’s inability to perform its obligations under this Agreement, then Seller shall so notify Purchaser in writing specifying the nature of the breach. Purchaser shall have ten (10) days from the date of such notice to cure the breach. If Purchaser fails to cure said breach within said ten (10) day period or otherwise resolve the matter to Seller’s reasonable satisfaction, then Seller’s sole right and exclusive remedy will be to terminate this Agreement by giving written notice thereof to Buyer and then Seller may take the Deposits (under this Agreement and the Asset Purchase Agreement) as liquidated damages in full settlement of all claims, remedies or causes of actions against Buyer under this Agreement, including the remedy of specific performance and other forms of equitable relief. It is impossible to estimate more precisely the damages which might be suffered by Seller upon Buyer’s default. Seller’s retention of the Deposit is intended not as a penalty, but as full liquidated damages.

 

 

13.2   Seller Default. If any Seller shall breach this Agreement at or prior to the Closing, or if the Closing fails to occur by reason of such Seller’s failure or refusal to perform its obligations hereunder or by reason of such Seller’s inability to perform its obligations under this Agreement, then Purchaser shall so notify such Seller in writing specifying the nature of the breach. Seller shall have ten (10) days from the date of such notice to cure the breach. If Seller fails to cure said breach within said ten (10) day period or otherwise resolve the matter to Purchaser’s reasonable satisfaction, then Buyer may exercise any and all rights and remedies available to it at law or in equity, including (i) an action in equity against Seller (pursuant to which Buyer is not obligated to post a bond or prove special damages or irreparable injury) for the specific performance by Seller of the terms and provisions of this Agreement; and (ii) the right to terminate this Agreement by giving written notice of such termination to Seller and receive a full refund of the Deposit without prejudice to any of Buyer’s rights or remedies including an action for direct damages, but not consequential damages.

 

14. GENERAL PROVISIONS.

 

14.1   Construction. As used in this Agreement, the singular shall include the plural and any gender shall include all genders as the context requires and the following words and phrases shall have the following meanings: (a) ”including” shall mean “including without limitation”; (b) ”provisions” shall mean “provisions, terms, agreements, covenants and/or conditions”; (c) ”lien” shall mean “lien, charge, encumbrance, title retention agreement, pledge, security interest, mortgage and/or deed of trust”; (d) ”obligation” shall mean “obligation, duty, agreement, liability, covenant and/or condition”; (e) ”any of the Property” shall mean “the Property or any part thereof or interest therein”; (f) ”any of the Property” shall mean “the Property or any part thereof or interest therein”; (g) ”any of the Real Property” shall mean “the Real Property or any part thereof or interest therein”; and (h) ”any of the Improvements” shall mean “the Improvements or any part thereof or interest therein.”

 

14.2   Brokers. Seller has engaged Bank of America Securities, LLC (“Broker”) as the broker in this transaction, and Seller shall be solely responsible for any and all fees and commissions payable to Broker. Except for Seller’s engagement of Broker and the fees payable by Seller thereto, Seller and Purchaser each hereby represent and warrant to the other that their sole contact with the other or with the Real Property has been made without the assistance of any broker or other third party and that no fees are payable to any broker or third party in connection with the consummation of the transactions contemplated by this Agreement. Purchaser and Seller shall each indemnify, defend and hold the other party, each Affiliate of such party, and their respective members, partners, venturers, directors, officers, stockholders, agents, employees, spouses, legal representatives, successors and assigns, harmless from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities, or losses (including, without limitation, reasonable attorneys’ fees) resulting from the breach by the indemnifying party of the representation and warranty set forth above in this Section 14.2 or for any action by such Party’s representative for payment or commissions. The mutual representations and warranty contained in this Section 14.2 will survive the Closing.

 

 

14.3   Further Assurances. Each of the parties hereto undertakes and agrees to execute and deliver such documents, writings and further assurances as may be reasonably required to carry out the intent and purposes of this Agreement.

 

14.4   Environmental Indemnity. Seller will indemnify, defend and hold Purchaser, its Affiliates (as defined below) and their respective members, partners, venturers, stockholders, directors, officers, employees, spouses, legal representatives, agents, successors and assigns (the “Purchaser Indemnified Parties”) harmless from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities, losses or expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred by the Purchaser Indemnified Parties (collectively, “Losses”) arising from or directly or indirectly relating to (1) any breach by Seller of the representations and warranties set forth under Section 5.5 (Environmental) of this Agreement and (2) any Hazardous Conditions that exist prior to and at the time of Closing caused by Seller or any Affiliate of Seller (as that term is defined in the Asset Agreement), (collectively, the “Environmental Indemnity”). The terms and conditions of this Section 14.4 shall survive Closing and acceptance by Purchaser of the Deeds to the Property.

 

14.5   Entire Agreement. No change or modification of this Agreement shall be valid unless the same is in writing and signed by the parties hereto. No waiver of any of the provisions of this Agreement shall be valid unless in writing and signed by the party against whom such waiver is sought to be enforced. This Agreement contains the entire agreement between the parties relating to the purchase and sale of the Property. All prior negotiations between the parties are merged in this Agreement, and there are no promises, agreements, conditions, undertakings, warranties or representations, oral or written, express or implied, between the parties other than as herein set forth. All exhibits and schedules mentioned in this Agreement shall be attached to this Agreement and shall form an integral part hereof.

 

14.6   Survival. The Seller’s representations and warranties under Section 5.5 (Environmental) and the environmental indemnity under Section 14.4 shall survive Closing and acceptance by Purchaser of the Deed to the Property for a period of four (4) years.

 

14.7   Dates. If any date set forth in this Agreement for the delivery of any document or the happening of any event (such as, for example, the expiration of the Inspection Period or the Closing Date) should, under the terms hereof, fall on a weekend or holiday, then such date shall be automatically extended to the next succeeding weekday that is not a holiday.

 

14.8   Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Florida. Any litigation, action or proceeding arising out of or relating to this Agreement will be held exclusively in any state or Federal court in Broward County, Florida. Each Party waives any objection which it might have now or hereafter to the venue of any such litigation, action or proceeding, submits to the sole and exclusive jurisdiction of any such court and waives any claim or defense of inconvenient forum. Each Party consents to service of process at such Party’s address as provided herein (and updated in writing from time to time).

 

 

14.9   Notices. All notices, demands or other communications required or permitted to be given hereunder shall be in writing, and any and all such items shall be deemed to have been duly delivered upon personal delivery; or as of the date of acceptance or refusal of delivery after mailing by United States mail, certified, return receipt requested, postage prepaid, addressed as follows; or as of the immediately following business day after deposit with Federal Express or a similar overnight courier service, addressed as follows:

 

Notices to Sellers:

 

LMP Beckley RE KCC, LLC

500 East Broward Boulevard, Suite 1900

Fort Lauderdale, FL 33394

Attn: Sam Tawfik, Chief Executive Officer

Phone:

Email:

 

LMP Beckley RE BAM, LLC

500 East Broward Boulevard, Suite 1900

Fort Lauderdale, FL 33394

Attn: Sam Tawfik, Chief Executive Officer

Phone:

Email:

 

With copies to:

 

Greenberg Traurig, PA

777 South Flagler Drive, Suite 300E

West Palm Beach, FL 33401

Attention: Bruce C. Rosetto

Phone: (561) 650-7940

Email: [email protected]

 

Notices to Purchaser:

 

BECKLEY AWV AM, LLC

Attn: Ali Ahmed

5875 NW 163^rd Street

Suite 104

Miami Lakes, FL 33014

Email: [email protected]

 

With copies to:

 

Greenspoon Marder LLP

Attn: David Weisman

200 East Broward Blvd.

Suite 1800

Fort Lauderdale, FL 33301

Email: [email protected]

 

Greenspoon Marder LLP

Attn: Greg Blodig

200 East Broward Blvd.

Suite 1800

Fort Lauderdale, FL 33301

Email: [email protected]

 

Any address fixed pursuant to the foregoing may be changed by the addressee by notice given pursuant to this Section 14.9.

 

 

14.10 Headings. The headings of Articles and Sections of this Agreement are for purposes of convenience and reference and shall not be construed as modifying the Articles or Sections in which they appear.

 

14.11 Assignment. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of Purchaser and Seller, as applicable; provided, however, that Purchaser may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates or to an entity or entities to be formed by Purchaser or an Affiliate of Purchaser (the “New Purchaser Entities”) and (ii) designate one or more of its Affiliates or one or more New Purchaser Entities to perform its obligations hereunder, provided, however, that in either instance, Purchaser shall remain jointly and severally liable with any such assignee for all of Purchaser’s obligations hereunder. “Affiliate” as used herein shall have the meaning ascribed to it in the Asset Agreement.

 

14.12 Successors and Assigns. Subject to Section 14.11, this Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns.

 

14.13   Attorneys’ Fees. If either party commences an action to enforce the terms of, or resolve a dispute concerning, this Agreement, the prevailing party in such action shall be entitled to recover all costs and expenses incurred by such party in connection therewith, including reasonable attorneys’ fees.

 

14.14 Counterparts. This Agreement may be executed in one or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same instrument. This Agreement may also be executed by facsimile or “PDF” counterparts. In the event facsimile or “PDF” counterparts are used to execute this Agreement, Purchaser and Seller shall timely deliver to the other original counterparts for their respective records.

 

14.15 Severability. If any provision of this Agreement is declared void or unenforceable by a final judicial or administrative order, this Agreement shall continue in full force and effect, except that the void or unenforceable provision shall be deemed deleted and replaced with a provision as similar in terms to such void or unenforceable provision as may be possible and be valid and enforceable.

 

 

14.16 Confidentiality. From and after the Effective Date, each party to this Agreement shall, and shall cause its Affiliates (as defined in the Asset Agreement) and its or their respective representatives and agents, to hold, in confidence any and all information, whether written or oral, concerning the transactions contemplated under this Agreement, except (i) the disclosure that a transaction is occurring, but not any specific deal or economic terms, and (ii) to the extent that party can show that such information (a) is generally available to and known by the public through no fault of the disclosing party, any of its Affiliates or its or their respective representatives and agents; or (b) is lawfully acquired by the disclosing party, any of its Affiliates or its or their respective representatives and agents from and after the Effective Date from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If any party or any of its Affiliates or their respective representatives and agents are compelled to disclose any information by judicial or administrative process or by other requirements of Law (as defined in the Asset Agreement), such party shall promptly notify the other party in writing and shall disclose only that portion of such information which such disclosing party is advised by its counsel in writing is legally required to be disclosed, provided that such disclosing party shall use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

 

14.17   Risk of Loss. All risk of loss, damage or destruction of the Subject Property or any Improvement thereon by fire, act of God or other casualty prior to the Closing shall be on Seller. Seller agrees to maintain existing fire and extended insurance coverage on the Improvements to and through the date of the Closing. If the Improvements are damaged by fire, act of God, or other casualty before the Closing and the same can be restored to substantially the same condition as now existing within a period of sixty (60) days following the Closing Date set forth herein, Seller may restore the Improvements (at Seller’s expense) and the Closing shall be extended accordingly. If Seller elects not to restore the Improvements within said period, Purchaser shall have the option of: (i) taking the Improvements as is, together with Seller paying to Purchaser Seller’s deductible and assigning to Purchaser all rights under its insurance policies and all insurance proceeds, if any, without reduction in Purchase Price; or (ii) cancelling this Agreement, in which event Escrow Agent shall return the Deposit to Purchaser, together with all accrued interest thereon, this Agreement shall be terminated and the parties released of any further liability hereunder, except as otherwise provided herein.

 

14.18   Waiver of Trial by Jury. Seller and Purchaser hereby expressly covenant and agree to waive the right to trial by jury in connection with any litigation or judicial proceeding relating to, directly or indirectly, or concerning this Agreement or the conduct, omission, action, obligation, duty, right, benefit, privilege or liability of a party hereunder to the full extent permitted by law. This waiver of right to trial by jury is separately given and is knowingly, intentionally and voluntarily made by Purchaser and Seller. The Purchaser and Seller have had an opportunity to seek legal counsel concerning this waiver. This waiver is intended to and does encompass each instance and each issue as to which the right to a jury trial would otherwise accrue. Purchaser and Seller further certify and represent to each other that no party, representative, or agent of the Seller or Purchaser (including, but not limited to, their respective counsel) has represented, expressly or otherwise to the Purchaser or Seller or to any agent or representative of Purchaser or Seller (including, but not limited to, their respective counsel) that they will not seek to enforce this waiver of right to jury trial. This waiver shall apply to this Agreement and any future amendments, supplements or modifications of this Agreement.

 

14.19  Radon Disclosure. Radon is a naturally occurring radioactive gas that when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit. [Note: This paragraph is provided for informational purposes pursuant to Section 404.056(8), Florida Statutes, (1988).

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first set forth above.

 

	SELLER:
	LMP BECKLEY RE KCC, LLC, a West Virginia limited liability company
	By:	/s/ Sam Tawfik
		Sam Tawfik, Authorized Signatory
	LMP BECKLEY RE BAM, LLC, a West Virginia limited liability company
	By:	/s/ Sam Tawfik
		Sam Tawfik, Authorized Signatory
	PURCHASER:
	BECKLEY AWV AM, LLC, a Florida limited liability company
	By:	/s/ Ali Ahmed
	Name:	Ali Ahmed
	Title:	Manager

 

 

 

EXHIBIT A

 

 

LEGAL DESCRIPTION OF THE PROPERTY

 

 

27

 

Exhibit 10.8

 

 

 

 

 

 

REAL ESTATE PURCHASE AND SALE AGREEMENT

 

between

 

LMP PORT CHARLOTTE KOPC, LLC, a Florida limited liability company

 

as Seller

 

and

 

PORT CHARLOTTE AFL K, LLC, a Florida limited liability company

 

and

 

PORT CHARLOTTE AFL RE, LLC, a Florida limited liability company

 

as Purchaser

 

August 5, 2022

 

 

 

 

 

 

 

REAL ESTATE PURCHASE AND SALE AGREEMENT

 

THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of the 4th day of August, 2022 (the “Effective Date”), by and between LMP PORT CHARLOTTE KOPC, LLC, a Florida limited liability company (the “Seller”), and PORT CHARLOTTE AFL RE, LLC, a Florida limited liability company, as to an undivided 99%, and PORT CHARLOTTE AFL K, LLC, a Florida limited liability company, as to an undivided 1%, as tenants in common (collectively the “Purchaser”).

 

RECITALS

 

WHEREAS, Seller is the owner and holder of the fee simple title to those certain parcels of real property legally described on Exhibit A attached hereto, and located at 202 Tamiami Trail, Port Charlotte, Florida 33953 together with all easements, rights-of-way, privileges, appurtenances and rights to same, belonging to and inuring to the benefit of said real property; all strips and gores, if any; all right, title and interest, if any, of Seller in and to any land lying in the bed of any street, road, avenue, open or proposed, in front of or adjoining said property to the center line thereof, and all right, title and interest of Seller in and to any awards for damage to said property by reason of change of grade of any street (collectively, the “Property”);

 

WHEREAS, Seller operates a Kia automotive dealership and all ancillary business related thereto on the Property (the “Franchise”), and Seller is also the owner of certain fixed assets used in the operation of the Franchise which are located on the Property (the “Fixed Assets”);

 

WHEREAS, simultaneously with the execution of this Agreement, Seller and PORT CHARLOTTE AFL K, LLC are entering into that certain Asset Purchase Agreement for the sale of the Franchise and the Fixed Assets (the “Asset Purchase Agreement”);

 

WHEREAS, Purchaser desires to purchase the Property from Seller and Seller desires to sell the Property to Purchaser, all for the price and pursuant to the terms and conditions and upon the representations hereinafter set forth; and

 

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, do hereby agree as follows

 

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, do hereby agree as follows:

 

 

1. DEFINITIONS AND EXHIBITS.

 

1.1 Definitions. In this Agreement, the following defined terms have the meanings set forth for them in the Section of this Agreement indicated below:

 

Term
Agreement	Recitals
Asset Purchase Agreement	Recitals
Closing	Section 2.2(b)
Closing Date	Section 9.1
Effective Date	Opening
Environmental Laws	Section 5.5
Environmental Notice	Section 3.3(b)
Exceptions	Section 4.1(a)
Governmental Authorities	Section 5.5
Hazardous Conditions	Section 5.5
Hazardous Substances	Section 5.5
Immaterial Taking	Section 12.2
Improvements	Section 2.1(c)
Improvements Price	Section 2.2(a)
Inspection Period	Section 3.5
Intangible Property	Section 2.1(f)
Property	Recitals
New Purchaser Entities	Section 14.11
Objection Date	Section 4.1
PCBs	Section 5.5
Permits	Section 2.1(d)
Permitted Exceptions	Section 4.2
Plans	Section 2.1(e)
Property	Section 2.1
Purchaser	Recitals
Purchase Price	Section 2.2(a)
Purchaser’s Assessment	Section 3.3
Real Property	Section 2.1(c)
Seller	Opening
Seller Closing Documents	Section 5.2
Stated Price	Section 2.2(a)
Survey	Section 3.1
Surviving Obligations	Section 3.5
Title Commitment	Section 3.1
Title Company	Section 3.1
Title Policy	Section 8.1(a)
Unsatisfactory Environmental Condition	Section 3.3(b)

 

 

1.2 Exhibits. The Exhibits listed below are attached to and incorporated into this Agreement. In the event of any inconsistency between such Exhibits and the terms and provisions of this Agreement, the terms and provisions of the Exhibits shall control. The Exhibits to this Agreement are:

 

Exhibit A – Legal Description of the Real Property

 

Exhibit B – Form of Special Warranty Deed

 

1.3 Asset Purchase Agreement. The terms and condition of the Asset Purchase Agreement are incorporated by reference to this Agreement.

 

2. PURCHASE AND SALE OF THE PROPERTY.

 

2.1 Purchase. For the consideration hereinafter set forth, and subject to the provisions contained herein, Seller hereby agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller, all of the following (collectively, the “Property”):

 

(a) The Property, together with all easements, rights-of-way, appurtenances, hereditaments and water and mineral rights appertaining to or otherwise benefiting or used in connection with such real property and inuring to the benefit of the Property or the fee owner thereof, together with all of Seller’s right, title and interest in and to any strips of land, streets, and alleys abutting or adjoining such real property, as further described on Exhibit A hereto;

 

(b) All water, well, ditch surface and reservoir rights of whatever nature or kind related to the Property (the “Water Rights”);

 

(c) All existing buildings or other improvements, structures, open parking facilities and fixtures placed, constructed, installed or located on the Property and owned by Seller, if any, and all plants, trees, sculptures, signs, and other appurtenances located upon, over or under the Property and owned by Seller, if any, (collectively, the “Improvements”; the Property and Improvements are sometimes hereinafter collectively referred to as the “Real Property”);

 

(d) All right, title and interest of Seller, in and to all governmental permits, approvals, variances, impact fees and credits, licenses, certificates and authorizations, including, without limitation, certificates of occupancy, relating to the Real Property, to the extent assignable and capable of being transferred under applicable law in Seller’s possession or control (the “Permits”); and

 

 

(e) All right, title and interest of Seller in and to (to the extent assignable and capable of being transferred under applicable law) all site plans, surveys, soil and substratus studies, architectural drawings, plans and specifications, engineering, electrical and mechanical plans and studies, floor plans, landscape plans, environmental assessment reports, engineering, structural or physical inspection reports, appraisals, feasibility studies, and other plans and studies of any kind, in Seller’s possession or control, relating to the Real Property (the “Plans”); and

 

(f) Any and all other rights, privileges, and appurtenances owned by Seller and in any way related to, or used in connection with, the Real Property, to the extent assignable and capable of being transferred under applicable law (the “Intangible Property”).

 

(g) Purchaser acknowledges and agrees that the definition of Property specifically excludes any such items that are owned entirely by Asset Seller and that are the subject of the Asset Purchase Agreement.

 

2.2 Purchase Price.

 

(a) The purchase price to be paid by Purchaser for the Property (the “Purchase Price”) shall be Twenty-Two Million Three Hundred and Fifty Thousand Dollars ($22,350,000.00). The Purchase Price, subject to adjustment in accordance with Article 10, shall be paid at the closing of the purchase contemplated hereby (the “Closing”) in cash, by wire transfer, or other immediately available funds as Seller and Purchaser may mutually agree.

 

3. INVESTIGATION OF THE PROPERTY.

 

3.1 Title and Survey.

 

(a) Title Insurance Commitment and Survey. Within ten (10) business days after the Effective Date, Purchaser shall obtain at the sole cost and expense of Purchaser: a) a title insurance commitment issued by First American Title Company, licensed in the State of Florida, (the “Title Company”) showing the status of record title to the Property (a “Title Commitment”) and committing to insure, subject to the exceptions and requirements set forth therein, title to the Property in Purchaser in the amount of the Purchase Price under the Title Company's standard owner's title insurance policy; and b) a current ALTA survey certified to Purchaser (the “Survey”). Purchaser shall promptly provide Seller with a copy of the Title Commitment and Survey upon Purchaser’s receipt and said delivery shall include legible copies of or links to all recorded documents referred to in the Title Commitment. Extended title coverage or endorsements will be issued only at the request of the Purchaser and will be at Purchaser's sole expense.

 

(b) Copies and Descriptions. After the Effective Date, Seller shall provide to Purchaser, copies of all Permits, if any; copies of all Plans, if any; copies of the most recent tax bills concerning the Real Property, together with a copy of any notice of increase in valuation, if any, received by Seller since such tax statements were issued; and copies of any notices concerning existing or proposed special assessments levied against or affecting the Real Property, if any.

 

 

(c) Environmental History. Copies of any documents or communications relating to the environmental condition of the Real Property in the possession of Seller (“Environmental Reports”).

 

(d) All information and documentation relating to the Property that have been provided or that may be provided to Purchaser during the course of Purchaser’s due diligence investigation of the Property, including, but not limited to, any Environmental Reports, is provided without warranty of any kind, including as to the accuracy, validity or completeness of any such information or documentation.

 

3.2 Inspection of Property. At any time during the Inspection Period (as defined herein in Section 3.4), Purchaser and its employees, agents, and contractors, shall have the right to enter the Real Property, at times mutually agreeable to Seller and Purchaser to complete a physical inspection of the Property as part of its condition, development, usage, zoning, survey, title and environmental due diligence activities. Such right of inspection shall include, without limitation, the right to have made, at Purchaser’s expense, any studies or reports of the Property as Purchaser may deem necessary or appropriate, including, without limitation, soils and environmental tests and inspections. Seller shall cooperate reasonably with any such investigations, inspections, or studies made by or at Purchaser’s direction. Promptly following completion of any such activities, Purchaser agrees, at its sole cost and expense, to restore the Property to its condition that existed immediately prior to such activities. Copies of all documents provided by Seller to Purchaser hereunder shall be promptly returned to Seller upon any termination of this Agreement. Purchaser agrees that in entering upon the Property and inspecting or examining the Property, Purchaser and the other Purchaser Parties (as defined herein) will not: (i) unreasonably disturb the Seller or unreasonably interfere with its use of the Property; (ii) unreasonably interfere with the operation and maintenance of the Property; (iii) damage any part of the Property or any personal property owned or held by Seller or any other person or entity; (iv) injure or otherwise cause bodily harm or death to Seller, or to any of its tenants, agents, guests, invitees, contractors and employees, or to any other person or entity; or (v) permit any liens to attach to the Property by reason of the exercise of Purchaser’s rights under this Section 3.

 

3.3 Environmental Inspection. Without limiting the inspection and investigation rights set forth in Section 3.2, Purchaser shall have the right during the Inspection Period, at Purchaser’s sole expense, to enter the Property, at times mutually agreeable to Seller and Purchaser, to conduct environmental assessments of the Property, including but not limited to, the collection and analysis of soils, surface water and groundwater samples, to conduct a “Phase I Environmental Site Assessment” (a “Phase I”) upon the Property to identify any “recognized environmental conditions” and to determine whether the Property is in substantial compliance with applicable Environmental Laws, in general accordance with standards recommended by the American Society for Testing and Materials – ASTM E1527-05 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process.” Purchaser will promptly provide Seller a copy of the Phase I testing results and the draft and final report(s) as soon as the information is available. (“Purchaser’s Assessment”).

 

 

3.4 If the Phase I reveals that there are “recognized environmental conditions” on the Property, or the Property is not in substantial compliance with applicable Environmental Laws, and recommends a Phase II environmental assessment (“Phase II”), then Purchaser shall, at Purchaser’s cost, commission an environmental consultant satisfactory to Purchaser (the “Engineer”) complete a Phase II within thirty (30) days of Purchaser’s receipt of the Phase I. Provided that Purchaser has promptly ordered the Phase II, and the provider of such Phase II has not completed it with the thirty (30) days, Purchaser shall have an additional fifteen (15) days to complete the Phase II. The Seller hereby agrees to allow the Purchaser to undertake any such Phase II investigation on the Property. If the Phase II discloses the existence of Hazardous Substances in violation of applicable Environmental Laws, Purchaser may deliver a notice to Seller within five (5) days of Purchaser’s receipt of the Phase II either (i) terminating the Agreement,, to Purchaser and neither party shall thereafter have any further liability or obligation to the other, except as otherwise expressly provided herein or (ii) setting forth such matters contained in the Phase II to which it objects (the “Notice of Violations”). If Purchaser elects to send a Notice of Violations, Seller shall have fifteen (15) days from receipt of the Notice of Violations to elect to remediate the violations set forth therein, in which case the parties shall enter into an environmental remediation agreement on terms mutually agreeable to the parties. If the parties are unable to reach a mutually agreeable environmental remediation agreement within thirty (30) days after Seller’s receipt of the Notice of Violations (assuming Seller elects to remediate), the Agreement shall automatically terminate, Purchaser shall receive a refund of the Deposits under this Agreement and under the Asset Purchase Agreement), and neither party shall thereafter have any further liability or obligation to the other, except as otherwise expressly provided herein. Notwithstanding the foregoing, Seller shall have no obligation to remediate unless it so elects. If Seller elects, by Notice to Purchaser, not to remediate the matters set forth in the Notice of Violation, Purchaser shall have five (5) business days from receipt of such Notice to give Seller its Notice that Purchaser is electing to: (a) accept the Property in “As Is” condition; or (b) terminate this Agreement and receive a refund of the Deposits (under this Agreement and under the Asset Purchase Agreement), thereby releasing Purchaser and Seller from all further obligations under this Agreement. If Purchaser fails to give Notice of its election within such five (5) business day period, or fails to give a Notice of Defects within five (5) business days of receipt of the Phase II, then Purchaser will be deemed to have approved the environmental condition of the Property and to have elected to proceed to Closing. Purchaser shall have no obligation to indemnify Seller with respect to the presence of any Hazardous Substances discovered during Purchaser’s environmental inspections of the Property nor shall Purchaser have any obligation to engage in the remediation of the Property with respect to such Hazardous Substances. “Hazardous Substance” shall mean any substance or material defined or designated as hazardous or toxic waste, hazardous or toxic material, a hazardous or toxic substance, or other similar term by any federal, state, or local environmental statute, regulation, or ordinance presently in effect, as such statutes, regulations, and ordinances may be amended from time to time, prior to Closing, and mold, lead-based paint and asbestos. However, “Hazardous Substance” shall not include substances which are used in Seller’s ordinary course of its automotive dealership business; provided, however, that such substances are used, handled, transported, stored and disposed of in substantial compliance with any applicable federal, state and local law, rule, regulation, code, ordinance or any other governmental restriction or requirement.

 

 

3.5 Termination of Agreement. At any time during the Inspection Period, Purchaser shall be permitted, in Purchasers sole discretion, to give Seller written notice in accordance with the notice provisions of this Agreement terminating this Agreement if Purchaser is dissatisfied with its physical inspection of the Property as part of its condition, development, usage, zoning, survey, title and environmental due diligence activities. Purchaser shall have no obligation to give a reason for such termination. If Purchaser delivers such a notice, then this Agreement shall terminate, Purchaser shall receive a refund of the Deposits (under this Agreement and under the Asset Purchase Agreement), and both parties shall be relieved from any further liability hereunder, except for those matters which, by their terms, survive the termination of this Agreement (the “Surviving Obligations”). The sixty (60) day period following the Effective Date is herein referred to as the “Inspection Period.” Purchaser may at its option waive its right to terminate this Agreement pursuant to this Section 3.5 by written notice delivered to Seller. Notwithstanding anything contained herein to the contrary, following the expiration of the Inspection Period, the Escrow Deposit (as defined in the Asset Purchase Agreement) shall become non-refundable except as otherwise expressly set forth in Section 11 of the Asset Purchase Agreement.

 

4. TITLE.

 

4.1 Review.

 

(a) Within ten (10) business days after Purchaser’s receipt of the Title Commitment (the “Objection Date”), Purchaser shall be entitled to object to any exceptions to title disclosed in the Title Commitment or matters affecting title reflected on the Survey (“Exceptions”), in its sole discretion, by a written notice of objections delivered to Seller. If Purchaser fails to deliver to Seller a notice of objections on or before the Objection Date, Purchaser shall be deemed to have waived any objection to the Exceptions and thereafter all Exceptions shall be deemed to be Permitted Exceptions (as hereinafter defined). Seller shall have ten (10) business days from the receipt of Purchaser’s notice of objections either to (i) remove the Exceptions, or (ii) provide Purchaser with assurances satisfactory to Purchaser, in its sole discretion, that the Exceptions will be removed or affirmative title insurance protection will be provided before or as of the Closing. If Purchaser waives in writing its objection to any matters described in the notice of objections, such matters shall be deemed to be Permitted Exceptions. Notwithstanding anything in this paragraph to the contrary, and whether or not Purchaser specifically objects, Seller shall be obligated to remove any Exceptions which can be removed by the payment of money, including but not limited to mortgages, liens, judgments, and fines (“Monetary Exceptions”). At Closing, Purchaser shall pay for any title insurance policies issued by the Title Company.

 

(b) If any endorsement or update issued to the Title Commitment or Survey contains Exceptions other than those in the Title Commitment or Survey, Purchaser shall be entitled to object to any such Exceptions by a written notice of objections to Seller on or before the date ten (10) days following Purchaser’s receipt of such endorsement or update. If Purchaser fails to deliver to Seller a notice of objections on or before such date, except as to Monetary Exceptions, Purchaser shall be deemed to have waived any objection to matters appearing on such endorsement or update, and thereafter all such Exceptions shall be deemed to be Permitted Exceptions. Seller shall have ten (10) business days from the receipt of Purchaser’s notice either to (i) remove the Exceptions, or (ii) provide Purchaser with assurances satisfactory to Purchaser, in its sole discretion, that the Exceptions will be removed or affirmative title insurance protection will be provided before or as of the Closing. If Purchaser waives in writing its objection to any matters described in the notice of objections, such matters shall be deemed to be Permitted Exceptions.

 

 

4.2 Permitted Exceptions. The term “Permitted Exceptions” shall mean: (i) zoning regulations and ordinances (and any variances therefrom) of the municipality in which the Property is located; (ii) curb cuts and access roads to and from abutting streets and other easements, driveways or rights of way in existence as of the Effective Date; (iii) real property taxes, water charges and sewer rents which are not yet due and payable, but subject to apportionment as hereinafter provided; (iv) recorded utility, water and sewer easements, if any, as existing on the Effective Date and (v) all Exceptions contained in the Title Commitment (other than Monetary Exceptions) or Survey (a) to which Purchaser does not object as herein provided or (b) as to which Purchaser has waived or is deemed to have waived its objection; provided, however, that the term Permitted Exceptions shall not include (i) any taxes or assessments other than general ad valorem real estate taxes for the year of Closing; (ii) any monetary judgments, mortgages or liens; or (iii) any matters that, prior to Closing, Seller agrees in writing to remove or cure at or before the Closing. The existence of monetary judgments, mortgages or liens, other than the Permitted Exceptions, shall not be objections to title, provided that properly executed instruments, in recordable form, necessary to satisfy and release the same are delivered to Purchaser at the Closing together with recording and/or filing fees, and Seller shall pay such mortgages or liens from the cash consideration to be paid to Seller by Purchaser hereunder.

 

5. SELLER’S REPRESENTATIONS AND WARRANTIES.

 

Seller represents and warrants to Purchaser, that the representations and warranties set forth below are true and correct as of the Effective Date, and shall be true and correct on and as of the date of the Closing:

 

5.1 No Possessory Rights. Except for any rights of possession granted under the Permitted Exceptions, there are no parties in possession of any of the Real Property, and Seller has not granted any other rights of possession or use to any third party or parties. No party has a right of first refusal or option to purchase any of the Real Property.

 

5.2 Due Execution; Authority. (i) Seller is a limited liability company duly organized, validly existing and in good standing as a limited liability company under the laws of the State of Florida; (ii) this Agreement is, and all the documents to be delivered by Seller pursuant to this Agreement (the “Seller Closing Documents”) will be, when executed by Seller, binding on and enforceable against Seller in accordance with their respective terms; (iii) except for internal governance approvals required by law, there are no other consents required to authorize Seller’s entry into and performance of this Agreement, the Seller Closing Documents and/or the transactions contemplated hereby or thereby; (iv) this Agreement, the Seller Closing Documents and the transactions contemplated hereby and thereby have been, or will have been prior to the Closing, approved by all necessary action of Seller; and (v) the execution and delivery of the Seller Closing Documents do not and will not constitute a breach or default under any agreement by which Seller is bound.

 

5.3 Contracts. To Seller’s knowledge, and except for this Agreement, any Permitted Exceptions, any contracts provided to Purchaser and any documentation related to existing financing on the Property, (i) there are no contracts entered into by Seller or its agents relating to the ownership, management, parking, operation, maintenance or repair of the Property (ii) Seller or its agents have not entered into any contracts for the sale, lease, assignment, exchange or transfer of the Property or any portion thereof, or contracts or other material obligations currently in effect, creating or imposing any burdens, obligations or restrictions on the use or operation of the Property and the business conducted thereon and (iii) there are no contracts, agreements, liabilities, claims or obligations of any kind or nature relating to the Property to which the Property or the Seller will be bound following the Closing.

 

 

5.4 Condemnation. Seller has no knowledge of any pending or contemplated condemnation proceedings affecting all or any part of the Real Property.

 

5.5 Environmental. Except as disclosed on Schedule 5.5 (which Seller shall deliver to Purchaser within ten (10) business days following the Effective Date):

 

(a) Nature of Claims. During Seller’s ownership of the Property, there have not been and there are not now pending or, to Seller’s knowledge, threatened: (i) claims, causes of action, notices, or requests for information received by Seller with respect to any alleged violation of any Environmental Law with respect to the Property; or (ii) claims, causes of action, notices, or requests for information received by Seller regarding potential or alleged liability under any Environmental Law with respect to the Property.

 

(b) Existing Conditions. To Seller’s knowledge, no conditions exist at, on, or under the Property that would constitute a Hazardous Condition.

 

(c) Compliance with Environmental Laws. Seller is in compliance in all material respects with all orders, directives, permits, certificates, approvals, licenses, and other authorizations from applicable Governmental Authorities, if any, relating to Environmental Laws with respect to the Property. To Seller’s knowledge, the Property and all Improvements are in compliance with all Environmental Laws.

 

(d) Storage Tanks. To Seller’s knowledge, there are no above ground tanks that are not in compliance with all Environmental Laws. Seller has not removed or abandoned any underground storage tanks (herein referred to as “USTs”) at the Property nor does Seller have any knowledge of the abandonment or removal of USTs at the Property.

 

(e) PCBs. To Seller’s knowledge, there are no polychlorinated biphenyls (“PCBs”) other than those that may be incorporated within building materials such as window caulk or glazing or friable or damaged asbestos at the Property; nor has Seller removed (or required or requested the removal of) any PCBs other than those that may be incorporated within building materials such as window caulk or glazing or damaged or friable asbestos from the Property, nor has Seller knowledge of the previous existence of any PCBs other than those that may be incorporated within building materials such as window caulk or glazing or damaged or friable asbestos at the Property.

 

“Environmental Law” means all federal, state and local laws, whether common laws, court or administrative decisions, statutes, rules, regulations, ordinances, court orders and decrees, and administrative orders and all enforceable administrative policies and guidelines concerning action levels of a governmental authority (federal, state or local) now or in effect at Closing relating to the environment, public health, occupational safety, industrial hygiene, any Hazardous Substance (including, without limitation, the disposal, generation, manufacture, presence, processing, production, release, storage, transportation, treatment or use thereof), or the environmental conditions on, under or about the Property, as amended and as in effect during the Seller’s ownership of the Property, now and at the time of Closing (including, without limitation, the following statutes and all regulations thereunder as amended and in effect during the Seller’s ownership of the Property, now and at the time of Closing: the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601, et seq.; the Superfund Amendments and Reauthorization Act of 1986, Title III, 42 U.S.C. §§ 11001, et seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300(f), et seq.; the Solid Waste Disposal Act, 42 U.S.C. §§ 6901, et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 1801, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. §§ 1251, et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. §§ 2601, et seq.; and the Occupational Safety and Health Act, 29 U.S.C. §§ 651, et seq.; and any successor statues and regulations to the foregoing in effect during the Seller’s ownership of the Property, now and at the time of Closing.

 

 

“Governmental Authorities” shall mean any commission, department or body of any municipality, township, city, county, state or Federal governmental unit having jurisdiction over any of the Property or the ownership, management, operation, use or improvement thereof.

 

“Hazardous Conditions” refers to the presence on, in or under any of the Property (including ground water) of Hazardous Substances, the concentration, condition, quantity, location or other characteristics of which fail to comply with, or otherwise create an obligation or liability under applicable Environmental Laws.

 

“Hazardous Substances” means (i) all chemicals, materials and substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants” or “pollutants,” or words of similar import, under any applicable Environmental Law; and (ii) all other chemicals, materials and substances, exposure to which is prohibited, limited or regulated by any governmental authority, including, without limitation, asbestos and asbestos-containing materials in any form, lead-based paint, radioactive materials, polychlorinated biphenyls (“PCB’s”), and substances and compounds containing PCB’s.

 

5.6 Zoning. To Seller’s knowledge, the Property is currently zoned to permit the ownership and operation of an automotive retail sales and service dealership. To Seller’s knowledge, there is not now pending nor is there any proposed or threatened proceeding for the rezoning of the Property or any portion thereof. Seller has no knowledge of nor has it received any written notice from any Governmental Authority that any zoning, subdivision, environmental, hazardous waste, building code, health, fire, safety or other law, order, ordinance or regulation is violated by the continued maintenance, operation or use of the Property in a manner substantially the same as current operations, including, without limitation, any Improvements located thereon or any parking areas. Notwithstanding the foregoing, Seller and Purchaser agree and acknowledge that any representations or warranties made with respect to the environmental condition of the Property and compliance, obligations and liabilities under Environmental Laws are set forth in Section 5.5 herein.

 

 

5.7 Permitted Exceptions. Seller has performed all obligations under and has not received notice that it is in default for failure to comply with the terms and provisions of any of the covenants, conditions, restrictions, rights-of-way and easements constituting one or more of the Permitted Exceptions for the Property.

 

5.8 Permits, Etc. To Seller’s knowledge, all applicable permits, licenses, authorizations and certificates of occupancy required by Governmental Authorities for the management, occupancy, leasing and operation of the Property are in full force and effect.

 

5.9 Litigation. No dispute, proceeding, suit or litigation relating to the Property or any part thereof is pending or, to Seller’s knowledge, threatened in any tribunal.

 

5.10 FIRPTA. Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

5.11 Indebtedness. Seller has not received notice of any material defaults or events of default (as defined therein) or any notice that such defaults are continuing under the terms of any documents evidencing or securing indebtedness which is secured by the Property or for which Seller is liable.

 

5.12 Material Adverse Change. Seller has not received written notice from any Governmental Authority of any pending or contemplated change in any regulation, code, ordinance or law, or private restriction applicable to the Property, or any natural or artificial condition upon or affecting the Property, or any part thereof, which would result in any material adverse change in the condition of the Property or any part thereof, or would in any way limit or impede the operation or development of the Property.

 

5.13 Not Misleading. The representations and warranties of Seller in this Agreement do not contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained herein not misleading.

 

5.14 Tax Matters. Seller has relied solely on its own counsel for advice on any and all federal, state and local tax matters relating to this Agreement and the transactions contemplated herein and have not relied on any advice or representations of Purchaser, or its counsel with respect to any federal, state and local tax matters relating to this Agreement or the transactions contemplated herein.

 

5.15 Utilities. Usable sanitary and storm sewers and public water, gas and electrical utilities (collectively, the “Utilities”) of adequate capacity required for the operation of the Property as it is currently being used as of the Effective Date, are installed in, and are duly connected to, the Property.

 

5.16 Bankruptcy. Seller has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by Seller’s creditors, (iii) suffered the appointment of a receiver to take possession of all or substantially all of Seller’s assets, (iv) suffered the attachment, or other judicial seizure of all, or substantially all, of Seller’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or compromise to its creditors generally.

 

 

5.17 Knowledge. For purposes of this Agreement, the phrase “to Seller’s knowledge” or words of similar import, shall mean that the applicable party has conducted a reasonable review of its files and interviewed current employees in positions of responsibility on the subject and such review and interviews did not disclose any information contrary to the accuracy or veracity of any such representation or warranty.

 

5.18 Supplemental Information. Seller shall provide written notice to Purchaser at any time and from time to time after the Effective Date through the Closing if it acquires any information that any of the representations or warranties made in this Agreement were inaccurate in any material respect as of the Effective Date or will be inaccurate in any material respect as of the Closing.

 

5.19 Property Being Sold “AS IS, WHERE IS”. Purchaser hereby acknowledges, understands and agrees that it had or will have during the Inspection period sufficient opportunity to inspect the Property and any Environmental Reports and Purchaser agrees, represents and warrants that (i) prior to the Closing Date, Purchaser will have fully examined and inspected the Property, including the construction, renovation, environmental condition, all governmental approvals, and any applicable resolutions and agreements, operation and leasing of the Property, together with any other documents and materials with respect to the Property which Purchaser deems necessary or appropriate in connection with its investigation and examination of the Property, (ii) the Property will be purchased by Purchaser in its “AS IS, WHERE IS” condition and (iii) Purchaser will have decided to purchase the Property solely on the basis of its own independent investigation. Purchaser hereby acknowledges and agrees that Seller has not made, does not make, and has not authorized anyone else to make any representations and/or warranty regarding any matter or thing pertaining to the Property except for those limited representations and warranties set forth in Section 5 herein. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THE PURCHASE PRICE OF THE PROPERTY REFLECTS THE FACT THAT SELLER IS NOT MAKING ANY REPRESENTATIONS OR WARRANTIES, EXCEPT AS SET FORTH IN SECTION 5 HEREOF. SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED OR ARISING BY OPERATION OF LAW, EXCEPT FOR THOSE LIMITED REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 5 HEREIN, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF CONDITION, HABITABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE IN CONNECTION WITH THE PROPERTY or COMPLIANCE OR NON-COMPLIANCE WITH ZONING OR OTHER LAWS. PURCHASER AGREES TO ACCEPT THE PROPERTY WITHOUT RECOURSE AGAINST SELLER OF ANY KIND UNDER APPLICABLE LAWS AND REGULATIONS. All information and documentation relating to the Property that have been provided or that may be provided to Purchaser during the course of Purchaser’s due diligence investigation of the Property, including, but not limited any Environmental Reports, is provided without warranty of any kind, including as to the accuracy, validity or completeness of any such information or documentation.

 

5.20 The representations and warranties of Seller as set forth in this Agreement shall be true and correct as of the effective date of this Agreement and as of the date of Closing and shall survive the Closing of this transaction.

 

 

6. PURCHASER’S REPRESENTATIONS AND WARRANTIES.

 

Purchaser represents and warrants to Seller, that the representations and warranties set forth below are true and correct as of the Effective Date, and shall be true and correct on and as of the date of the Closing:

 

6.1 Authority. Purchaser is a limited liability company duly organized and validly existing and in good standing under the laws of the State of Florida. Purchaser has the full right and authority to enter into this Agreement and consummate the transactions contemplated by this Agreement. All requisite company action has been, or will be by the Closing Date, taken by Purchaser in connection with the execution of this Agreement and the documents referenced herein and the consummation of the transactions contemplated hereby. Each of the persons signing this Agreement on behalf of Purchaser is authorized to do so. Purchaser shall furnish to Seller any and all documents to evidence such authority as Seller shall reasonably request.

 

6.2 Consents; Restrictions; Binding Obligations. No third party approval or consent is required to enter into this Agreement or the documents referenced herein or to consummate the transactions contemplated hereby other than as stated in this Agreement. The entering into and consummation of the transactions contemplated hereby will not conflict with or, with or without notice or the passage of time or both, constitute a default under, any contract, lease or other agreement to which Purchaser is a party or by which Purchaser may be bound or any law, rule, license, regulation, judgment, order or decree governing or affecting Purchaser. This Agreement and all documents required hereby to be executed by Purchaser are and shall be valid and legally binding obligations of Purchaser.

 

7. SELLER’S UNDERTAKINGS PENDING CLOSING.

 

7.1 Operation of the Property. Until the earlier of the Closing or the termination of this Agreement, Seller shall:

 

(a) Status of Title. Not do anything, or permit anything to be done, that would impair the status of title as shown on the Title Commitment or the Survey.

 

(b) Operation. Continue to operate and maintain the Property in the same manner as immediately prior to the Effective Date, reasonable wear and tear excepted.

 

(c) Contracts. Not enter into any lease, service contract or other contract that, following Closing, will be binding upon Purchaser or the Property without, in each instance, obtaining the prior written approval of Purchaser. The foregoing shall not apply to any service contract having a term of thirty (30) days or less.

 

(d) Transfer. Not cause or permit transfer, conveyance, sale, assignment, pledge, mortgage, or encumbrance of any of the Property.

 

(e) Zoning. Not to submit any application or similar document to any Governmental Authority in connection with the rezoning or special permitting of any part of the Property without first obtaining Purchaser’s written approval thereof (unless said submittal is fully consistent with any other submittal theretofore approved by Purchaser).

 

 

7.2 Notification of Purchaser. Until the earlier of the Closing or the termination of this Agreement, Seller shall notify Purchaser in writing promptly upon learning or receiving notice, whichever first occurs, of:

 

(a) Events. Any event, transaction, or occurrence prior to Closing that would or could materially adversely affect any of the Property.

 

(b) Representations. Any fact or event that would make any of the representations or warranties of Seller contained in this Agreement untrue or misleading in any material respect or that would cause Seller to be in violation of any of its covenants or other undertakings or obligations hereunder.

 

(c) Laws. Any violation of any law, ordinance, regulation or law that would or might materially adversely affect any of the Property.

 

(d) Zoning. Any proposed change in any zoning or other law affecting the use or development of any of the Property.

 

(e) Litigation. Any pending or threatened litigation that affects any of the Property or that could affect the transaction contemplated hereby.

 

(f) Bankruptcy. Any pending or threatened proceeding in bankruptcy or insolvency that could affect any of the Property or any person owning any interest therein.

 

(g) Defaults. Any default under any of the Permitted Exceptions or other agreements affecting any of the Property, or any act or omission that with the notice or the passage of time, or both, would constitute such a default.

 

(h) Environmental. Any (a) enforcement, clean-up, removal or other governmental or regulatory action concerning the Property instituted, completed or threatened pursuant to any Environmental Law; (b) any claim made or threatened by any person against Asset Seller and/or Seller, or the Property, relating to damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Substances; and (c) reports made to any environmental agency arising out of or in connection with any Hazardous Substance in, on or under the Property including, without limitation, any causes of action, notices, warnings, reports or asserted violations in connection therewith.

 

8. PURCHASER’S AND SELLER’S OBLIGATION TO CLOSE.

 

8.1 Conditions to Purchaser’s Obligations. Purchaser shall not be obligated to close the transaction contemplated hereunder unless each of the following conditions shall be satisfied on or prior to the Closing Date, which may be waived by Purchaser.

 

(a) Title Policy. The title company that issued the Title Commitment (the “Title Company”) shall issue (or commit unconditionally to issue) a title policy to Purchaser subject only to the Permitted Exceptions (the “Title Policy”).

 

(b) Accuracy of Representations. The representations of Seller in this Agreement shall be true and complete as of the date when given and on the Closing Date.

 

 

(c) Seller’s Performance. Seller shall have performed all covenants and obligations and complied with all conditions required by this Agreement to be performed or complied with by Seller on or before the Closing Date.

 

(f) Asset Purchase Agreement. The transactions contemplated under the Asset Purchase Agreement and any ancillary documents related thereto, shall have closed, or close concurrently with this Agreement.

 

(g) Termination of Intercompany Leases. Seller shall terminate any intercompany leases with respect to the Real Property upon Closing, as may be applicable.

 

8.2 Condition to Seller’s Obligations. Seller shall not be obligated to close the transaction contemplated hereunder unless each of the following conditions shall be satisfied on or prior to the Closing Date, which may be waived by Seller.

 

(a) Purchaser’s Performance. Purchaser shall have performed all covenants and obligations and complied with all conditions required by this Agreement to be performed or complied with by Purchaser on or before the Closing Date.

 

(b) Accuracy of Representations. All representations of Purchaser in this Agreement will be true and complete as of the date when given and on the Closing Date.

 

(c) Asset Purchase Agreement. The transactions contemplated under the Asset Purchase Agreement and the other Real Estate Agreements (as defined in the Asset Purchase Agreement) shall have closed, or close concurrently with this Agreement.

 

8.3 Failure of Conditions. If any condition specified herein is not satisfied on or before the Closing, then (i) Purchaser may terminate this Agreement, by notice to Seller, if any of Purchaser’s conditions precedent to Closing have not been satisfied as of the Closing Date or has become incapable of being satisfied by the Closing Date, and (ii) Seller may terminate this Agreement, by notice to Purchaser, if any of Seller’s conditions precedent to Closing have not been satisfied as of the Closing Date or has become incapable of being satisfied by the Closing Date. Upon a termination in accordance with this Section 8.3, Purchaser shall receive a refund of the Deposits (under this Agreement and under the Asset Purchase Agreement), this Agreement will have no further force or effect and the parties shall thereupon be relieved of all further obligations hereunder other than the Surviving Obligations. The parties’ rights under this Section 8 are cumulative and are in addition to the other rights and remedies available to them under this Agreement or any other agreement, including Section 11 of the Asset Purchase Agreement. Notwithstanding anything else set forth herein, in the event the closings under the Asset Purchase Agreement or the other Real Estate Agreements do not close for any reason, this Agreement shall automatically terminate without any further action required by Purchaser or Seller and the provisions of Section 11 of the Asset Purchase Agreement shall apply.

 

9. CLOSING.

 

9.1 Time of Closing. Unless otherwise agreed in writing between the parties hereto, the Closing shall take place contemporaneously with that of the Asset Purchase Agreements (the “Closing Date”). Purchaser hereby covenants to work with Seller during the Closing process to keep Seller informed of the progress and timing under the Asset Purchase Agreement so as to enable the Closing to occur under this Agreement as contemplated.

 

 

9.2 Deliveries. At the Closing, simultaneously with the payment of the Purchase Price by Purchaser:

 

(a) Seller shall execute and deliver or cause to be delivered to Escrow Agent on behalf of Purchaser the following, to wit:

 

(i) A duly executed and acknowledged special warranty deed, conveying fee simply title to the Property, in substantially the form and content of Exhibit B the “Deed”), free and clear of all matters affecting title, in recordable form;

 

(ii) A standard No-Lien, “Gap” and Parties in Possession Affidavit satisfactory to the Title Insurer in order to delete the standard printed exceptions; and to insure the period between the last update of the Title Commitment and recording of the deed;

 

(iii) Applicable state and local conveyance tax forms completed and signed by or on behalf of Seller and Purchaser, together with checks, in the amount of the applicable real estate transfer and conveyance taxes, payable to the County Clerk of the county where the Property is located by reason of the purchase and sale of the Property;

 

(iv) Such other documents and affidavits as shall be reasonably required by the Title Insurer as called for or required under the terms of the Commitment;

 

(v) A resolution of the Seller authorizing the conveyance of the Property to Purchaser pursuant to this Agreement;

 

(vi) Seller shall execute and deliver to Purchaser a certificate confirming Seller’s representations and warranties as described in Section 8.1(b).

 

(vii) Seller shall execute and deliver to Title Company such affidavits, agreements or statements concerning parties in possession of the Property or claims for mechanic’s liens as may be required by Title Company in order to issue the Title Policy

 

(viii) A non-foreign Seller Affidavit.

 

(ix) Satisfactions of all mortgages of record encumbering any part of the Subject Property.

 

(x) UCC-3 Termination Statements for all UCC-1 financing statements filed with respect to any part of the Property, and UCC-3 Amendments changing the principal place of business of Seller for any UCC-1 financing statements filed to perfect any security interest in any personalty of the Seller located on the Property or for which the Subject Property is identified as the principal place of business of the Seller for filing purposes.

 

(xi) All keys, remote controls and security and access codes;

 

 

(xii) all the originals of all Plans in Seller’s possession or control and all other materials of whatever kind owned by Seller relating to the design, construction, development, ownership, maintenance and operation of the Property shall be delivered to and become the property of Purchaser to the extent that such documents are assignable and capable of being transferred under applicable law;

 

(xiii) All such other documents contemplated by this Agreement;

 

(b) At the Closing, Purchaser shall deliver to Escrow Agent the Purchase Price adjusted for all appropriate prorated items, credits and adjustments, of which the Deposit and all accrued interest thereon shall constitute a part thereof, and Purchaser shall also deliver or cause to be delivered to Escrow Agent, on behalf of Seller the following:

 

(i) A resolution of the Purchaser authorizing the purchase of the Subject Property.

 

(c) At the Closing, Seller and Purchaser shall mutually execute and deliver to each other a closing statement in customary form which shall also be executed by Escrow Agent, and any and all conveyances, assignments and all other instruments and documents as may be reasonably necessary in order to complete the transaction herein provided and to carry out the intent and purposes of this Agreement.

 

10. PRORATIONS AND CLOSING EXPENSES.

 

10.1 Closing Adjustments. The cash due at Closing pursuant to Section 2.2 shall be subject to adjustment as of the Closing Date in accordance with the following provisions:

 

(a) Taxes and Prorations. Real estate taxes, water, sewer and other utility charges and other assessments typically pro-rated between purchasers and sellers of commercial real estate in the county where the Property is located will be prorated between Seller and Purchaser as of the date of Closing based on the number of days of the applicable period that each party owns the Property. To the extent practicable, all such pro-rations and payments will be made on the day of Closing, with the balance to be made as soon as practicable following the Closing upon delivery by Purchaser or Seller, as applicable, of reasonable documentation of such payment to the other party.

 

(b) Utilities. To the extent possible, the parties shall cause all utility meters to be read on the day preceding the Closing Date. Seller shall be responsible for the payment of all utility charges incurred prior to the Closing Date. Seller shall escrow with Title Company an amount sufficient to pay Seller’s final water and sewer bill if Title Company so requires in order to issue the Title Policy. Seller shall not receive credit for security deposits, if any, posted with utility companies, and Seller may seek return thereof following Closing.

 

(c) Liens and Encumbrances. The amount of any lien, deed of trust or other monetary encumbrance then affecting the Property shall be paid from the funds to which Seller shall otherwise be entitled. If such funds are insufficient to pay all such encumbrances, Seller shall pay the deficiency.

 

 

(d) Closing Costs. The costs of recording any transfer tax on the Deed of conveyance, shall be paid by Seller. The Buyer shall pay the costs of: (i) recording the Deed; (ii) searching or examining title and the title insurance premium due with respect to the Title Policy to be issued pursuant to the Commitment; (iii) financing costs (including but not limited to lender’s origination fees, appraisal expenses, lender title policy premiums and endorsements); and (iv) Buyer’s inspection expenses.

 

10.2 Settlement Statement. At the Closing, Seller and Purchaser shall execute a Closing settlement statement to reflect the credits, prorations, and adjustments contemplated by or specifically provided for in this Agreement.

 

11. CASUALTY DAMAGE. In the event that the Real Property is damaged by fire or other material casualty prior to Closing, Seller shall promptly give Purchaser written notice of such occurrence. In the event the damage creates a hazardous or otherwise dangerous environment, as determined by Purchaser in its reasonable discretion, Purchaser may elect to terminate this Agreement upon notice to Seller within fifteen (15) days after Purchaser’s receipt of Seller’s notice of such casualty, in which event the parties shall be relieved of any further obligations hereunder except for the Surviving Obligations. In the event Purchaser elects not to terminate, the parties shall proceed to the Closing and Seller shall deliver and/or assign to Purchaser all insurance proceeds collectible for such loss or damage and provide a credit against the Purchase Price equal to the applicable deductible.

 

12. CONDEMNATION.

 

12.1 Notice. If, prior to Closing, Seller learns of any actual or threatened taking in condemnation or by eminent domain (or a sale in lieu thereof) of any of the Real Property, Seller shall notify Purchaser promptly thereof.

 

12.2 Termination. Other than with respect to an Immaterial Taking (as hereinafter defined), any actual or threatened taking or condemnation for any public or quasi-public purpose or use by any competent authority in appropriate proceedings or by any right of eminent domain of any of the Real Property between the date of this Agreement and the Closing Date shall, at Purchaser’s option, cause a termination of this Agreement. The election to terminate provided hereby shall be exercised by Purchaser by written notice to Seller to that effect given within thirty (30) days following Purchaser’s receipt of Seller’s notice pursuant to Section 12.1 above. Upon delivery of such termination notice, both parties shall be relieved of any further obligations hereunder except for the Surviving Obligations. If Purchaser shall not so elect to terminate this Agreement, or in the event of an Immaterial Taking, Seller shall be relieved of all obligations under this Agreement with respect to the portion of the Real Property so taken or condemned, but Purchaser shall be entitled to receive all proceeds of any such taking or condemnation, and Seller agrees that it shall not make any adjustment or settlement of any such taking or condemnation proceeding without Purchaser’s consent and shall take at Closing all action necessary to assign its entire interest in such award to Purchaser. Any taking or condemnation for any public or quasi-public purpose or use that affects less than ten percent (10%) of the square footage of the Property and that does not affect access, materially reduce parking or operational capacity, materially reduce the square footage of buildings and other improvements that may be constructed on the Property, or reduce required utilities shall be deemed an “Immaterial Taking.”

 

 

13. REMEDIES.

 

13.1 Buyer’s Default. If Purchaser shall breach this Agreement at or prior to the Closing, or if the Closing fails to occur by reason of Purchaser’s failure or refusal to perform its obligations hereunder or by reason of Purchaser’s inability to perform its obligations under this Agreement, then Seller shall so notify Purchaser in writing specifying the nature of the breach. Purchaser shall have ten (10) days from the date of such notice to cure the breach. If Purchaser fails to cure said breach within said ten (10) day period or otherwise resolve the matter to Seller’s reasonable satisfaction, then Seller’s sole right and exclusive remedy will be to terminate this Agreement by giving written notice thereof to Buyer and then Seller may take the Deposits (under this Agreement and the Asset Purchase Agreement) as liquidated damages in full settlement of all claims, remedies or causes of actions against Buyer under this Agreement, including the remedy of specific performance and other forms of equitable relief. It is impossible to estimate more precisely the damages which might be suffered by Seller upon Buyer’s default. Seller’s retention of the Deposit is intended not as a penalty, but as full liquidated damages.

 

13.2 Seller Default. If Seller shall breach this Agreement at or prior to the Closing, or if the Closing fails to occur by reason of Seller’s failure or refusal to perform its obligations hereunder or by reason of Seller’s inability to perform its obligations under this Agreement, then Purchaser shall so notify Seller in writing specifying the nature of the breach. Seller shall have ten (10) days from the date of such notice to cure the breach. If Seller fails to cure said breach within said ten (10) day period or otherwise resolve the matter to Purchaser’s reasonable satisfaction, then Buyer may exercise any and all rights and remedies available to it at law or in equity, including (i) an action in equity against Seller (pursuant to which Buyer is not obligated to post a bond or prove special damages or irreparable injury) for the specific performance by Seller of the terms and provisions of this Agreement¹; and (ii) the right to terminate this Agreement by giving written notice of such termination to Seller and receive a full refund of the Deposit without prejudice to any of Buyer’s rights or remedies including an action for direct damages, but not consequential damages.

 

14. GENERAL PROVISIONS.

 

14.1 Construction. As used in this Agreement, the singular shall include the plural and any gender shall include all genders as the context requires and the following words and phrases shall have the following meanings: (a) ”including” shall mean “including without limitation”; (b) ”provisions” shall mean “provisions, terms, agreements, covenants and/or conditions”; (c) ”lien” shall mean “lien, charge, encumbrance, title retention agreement, pledge, security interest, mortgage and/or deed of trust”; (d) ”obligation” shall mean “obligation, duty, agreement, liability, covenant and/or condition”; (e) ”any of the Property” shall mean “the Property or any part thereof or interest therein”; (f) ”any of the Property” shall mean “the Property or any part thereof or interest therein”; (g) ”any of the Real Property” shall mean “the Real Property or any part thereof or interest therein”; and (h) ”any of the Improvements” shall mean “the Improvements or any part thereof or interest therein.”

 

1	NTD: On the call our client only agreed to limited disgorgement of profits resulting from the operations of the dealership.

 

 

14.2 Brokers. Seller has engaged Bank of America Securities, LLC (“Broker”) as the broker in this transaction, and Seller shall be solely responsible for any and all fees and commissions payable to Broker. Except for Seller’s engagement of Broker and the fees payable by Seller thereto, Seller and Purchaser each hereby represent and warrant to the other that their sole contact with the other or with the Real Property has been made without the assistance of any broker or other third party and that no fees are payable to any broker or third party in connection with the consummation of the transactions contemplated by this Agreement. Purchaser and Seller shall each indemnify, defend and hold the other party, each Affiliate of such party, and their respective members, partners, venturers, directors, officers, stockholders, agents, employees, spouses, legal representatives, successors and assigns, harmless from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities, or losses (including, without limitation, reasonable attorneys’ fees) resulting from the breach by the indemnifying party of the representation and warranty set forth above in this Section 14.2 or for any action by such Party’s representative for payment or commissions. The mutual representations and warranty contained in this Section 14.2 will survive the Closing.

 

14.3 Further Assurances. Each of the parties hereto undertakes and agrees to execute and deliver such documents, writings and further assurances as may be reasonably required to carry out the intent and purposes of this Agreement.

 

14.4 Environmental Indemnity. Seller will indemnify, defend and hold Purchaser, its Affiliates (as defined below) and their respective members, partners, venturers, stockholders, directors, officers, employees, spouses, legal representatives, agents, successors and assigns (the “Purchaser Indemnified Parties”) harmless from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities, losses or expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred by the Purchaser Indemnified Parties (collectively, “Losses”) arising from or directly or indirectly relating to (1) any breach by Seller of the representations and warranties set forth under Section 5.5 (Environmental) of this Agreement and (2) any Hazardous Conditions that exist prior to and at the time of Closing caused by Seller or any Affiliate of Seller (as that term is defined in the Asset Purchase Agreement), (collectively, the “Environmental Indemnity”). The terms and conditions of this Section 14.4 shall survive Closing and acceptance by Purchaser of the Deeds to the Property.

 

14.5 Entire Agreement. No change or modification of this Agreement shall be valid unless the same is in writing and signed by the parties hereto. No waiver of any of the provisions of this Agreement shall be valid unless in writing and signed by the party against whom such waiver is sought to be enforced. This Agreement contains the entire agreement between the parties relating to the purchase and sale of the Property. All prior negotiations between the parties are merged in this Agreement, and there are no promises, agreements, conditions, undertakings, warranties or representations, oral or written, express or implied, between the parties other than as herein set forth. All exhibits and schedules mentioned in this Agreement shall be attached to this Agreement and shall form an integral part hereof.

 

14.6 Survival. The Seller’s representations and warranties under Section 5.5 (Environmental) and the environmental indemnity under Section 14.4 shall survive Closing and acceptance by Purchaser of the Deed to the Property for a period of four (4) years.

 

14.7 Dates. If any date set forth in this Agreement for the delivery of any document or the happening of any event (such as, for example, the expiration of the Inspection Period or the Closing Date) should, under the terms hereof, fall on a weekend or holiday, then such date shall be automatically extended to the next succeeding weekday that is not a holiday.

 

14.8 Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Florida. Any litigation, action or proceeding arising out of or relating to this Agreement will be held exclusively in any state or Federal court in Broward County, Florida. Each Party waives any objection which it might have now or hereafter to the venue of any such litigation, action or proceeding, submits to the sole and exclusive jurisdiction of any such court and waives any claim or defense of inconvenient forum. Each Party consents to service of process at such Party’s address as provided herein (and updated in writing from time to time).

 

 

14.9 Notices. All notices, demands or other communications required or permitted to be given hereunder shall be in writing, and any and all such items shall be deemed to have been duly delivered upon personal delivery; or as of the date of acceptance or refusal of delivery after mailing by United States mail, certified, return receipt requested, postage prepaid, addressed as follows; or as of the immediately following business day after deposit with Federal Express or a similar overnight courier service, addressed as follows:

 

Notices to Seller:

 

LMP Port Charlotte KOPC, LLC

500 East Broward Boulevard, Suite 1900

Fort Lauderdale, FL 33394

Attn: Sam Tawfik, Chief Executive Officer

Phone:

Email:

 

With copies to:

 

Greenberg Traurig, PA

777 South Flagler Drive, Suite 300E

West Palm Beach, FL 33401

Attention: Bruce C. Rosetto

Phone: (561) 650-7940

Email: [email protected]

 

Notices to Purchaser:

 

PORT CHARLOTTE AFL RE, LLC

PORT CHARLOTTE AFL K, LLC

Attn: Ali Ahmed

5875 NW 163^rd Street

Suite 104

Miami Lakes, FL 33014

Email: [email protected]

 

With copies to:

 

Greenspoon Marder LLP

Attn: David Weisman

200 East Broward Blvd.

Suite 1800

Fort Lauderdale, FL 33301

Email: [email protected]

 

Greenspoon Marder LLP

Attn: Greg Blodig

200 East Broward Blvd.

Suite 1800

Fort Lauderdale, FL 33301

Email: [email protected]

 

Any address fixed pursuant to the foregoing may be changed by the addressee by notice given pursuant to this Section 14.9.

 

 

14.10 Headings. The headings of Articles and Sections of this Agreement are for purposes of convenience and reference and shall not be construed as modifying the Articles or Sections in which they appear.

 

14.11 Assignment. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of Purchaser and Seller, as applicable; provided, however, that Purchaser may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates or to an entity or entities to be formed by Purchaser or an Affiliate of Purchaser (the “New Purchaser Entities”) and (ii) designate one or more of its Affiliates or one or more New Purchaser Entities to perform its obligations hereunder, provided, however, that in either instance, Purchaser shall remain jointly and severally liable with any such assignee for all of Purchaser’s obligations hereunder. “Affiliate” as used herein shall have the meaning ascribed to it in the Asset Purchase Agreement.

 

14.12 Successors and Assigns. Subject to Section 14.11, this Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns.

 

14.13 Attorneys’ Fees. If either party commences an action to enforce the terms of, or resolve a dispute concerning, this Agreement, the prevailing party in such action shall be entitled to recover all costs and expenses incurred by such party in connection therewith, including reasonable attorneys’ fees.

 

14.14 Counterparts. This Agreement may be executed in one or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same instrument. This Agreement may also be executed by facsimile or “PDF” counterparts. In the event facsimile or “PDF” counterparts are used to execute this Agreement, Purchaser and Seller shall timely deliver to the other original counterparts for their respective records.

 

14.15 Severability. If any provision of this Agreement is declared void or unenforceable by a final judicial or administrative order, this Agreement shall continue in full force and effect, except that the void or unenforceable provision shall be deemed deleted and replaced with a provision as similar in terms to such void or unenforceable provision as may be possible and be valid and enforceable.

 

14.16 Confidentiality. From and after the Effective Date, each party to this Agreement shall, and shall cause its Affiliates (as defined in the Asset Purchase Agreement) and its or their respective representatives and agents, to hold, in confidence any and all information, whether written or oral, concerning the transactions contemplated under this Agreement, except (i) the disclosure that a transaction is occurring, but not any specific deal or economic terms, and (ii) to the extent that party can show that such information (a) is generally available to and known by the public through no fault of the disclosing party, any of its Affiliates or its or their respective representatives and agents; or (b) is lawfully acquired by the disclosing party, any of its Affiliates or its or their respective representatives and agents from and after the Effective Date from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If any party or any of its Affiliates or their respective representatives and agents are compelled to disclose any information by judicial or administrative process or by other requirements of Law (as defined in the Asset Purchase Agreement), such party shall promptly notify the other party in writing and shall disclose only that portion of such information which such disclosing party is advised by its counsel in writing is legally required to be disclosed, provided that such disclosing party shall use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

 

 

14.17 Risk of Loss. All risk of loss, damage or destruction of the Subject Property or any Improvement thereon by fire, act of God or other casualty prior to the Closing shall be on Seller. Seller agrees to maintain existing fire and extended insurance coverage on the Improvements to and through the date of the Closing. If the Improvements are damaged by fire, act of God, or other casualty before the Closing and the same can be restored to substantially the same condition as now existing within a period of sixty (60) days following the Closing Date set forth herein, Seller may restore the Improvements (at Seller’s expense) and the Closing shall be extended accordingly. If Seller elects not to restore the Improvements within said period, Purchaser shall have the option of: (i) taking the Improvements as is, together with Seller paying to Purchaser Seller’s deductible and assigning to Purchaser all rights under its insurance policies and all insurance proceeds, if any, without reduction in Purchase Price; or (ii) cancelling this Agreement, in which event Escrow Agent shall return the Deposit to Purchaser, together with all accrued interest thereon, this Agreement shall be terminated and the parties released of any further liability hereunder, except as otherwise provided herein.

 

14.18 Waiver of Trial by Jury. Seller and Purchaser hereby expressly covenant and agree to waive the right to trial by jury in connection with any litigation or judicial proceeding relating to, directly or indirectly, or concerning this Agreement or the conduct, omission, action, obligation, duty, right, benefit, privilege or liability of a party hereunder to the full extent permitted by law. This waiver of right to trial by jury is separately given and is knowingly, intentionally and voluntarily made by Purchaser and Seller. The Purchaser and Seller have had an opportunity to seek legal counsel concerning this waiver. This waiver is intended to and does encompass each instance and each issue as to which the right to a jury trial would otherwise accrue. Purchaser and Seller further certify and represent to each other that no party, representative, or agent of the Seller or Purchaser (including, but not limited to, their respective counsel) has represented, expressly or otherwise to the Purchaser or Seller or to any agent or representative of Purchaser or Seller (including, but not limited to, their respective counsel) that they will not seek to enforce this waiver of right to jury trial. This waiver shall apply to this Agreement and any future amendments, supplements or modifications of this Agreement.

 

14.19 Radon Disclosure. Radon is a naturally occurring radioactive gas that when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit. [Note: This paragraph is provided for informational purposes pursuant to Section 404.056(8), Florida Statutes, (1988).

 

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first set forth above.

 

	SELLER:
	LMP Port Charlotte KOPC, LLC, a Florida
	limited liability company
	By:	/s/ Sam Tawfik
		Sam Tawfik, Authorized Signatory
	PURCHASER:
	Port Charlotte AFL K, LLC, a Florida limited liability company
	By:	/s/ Ali Ahmed
	Name:	Ali Ahmed
	Title:	Manager
	Port Charlotte AFL RE, LLC, a Florida limited liability company
	By:	/s/ Ali Ahmed
	Name:	Ali Ahmed
	Title:	Manager

 

 

EXHIBIT A

 

LEGAL DESCRIPTION OF THE PROPERTY

 

 

Page 1 of 28

 

 

Exhibit 10.9

 

 

 

REAL ESTATE PURCHASE AND SALE AGREEMENT

between

 

LMP CAPE CORAL KOCC, LLC, a Florida limited liability company

 

as Seller

 

and

 

CAPE CORAL AFL K, LLC, a Florida limited liability company

 

and

 

CAPE CORAL AFL RE, LLC, a Florida limited liability company

 

as Purchaser

 

August 5, 2022

 

 

 

 

REAL ESTATE PURCHASE AND SALE AGREEMENT

 

THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of the 4th day of August, 2022 (the “Effective Date”), by and between LMP CAPE CORAL KOCC, LLC, a Florida limited liability company (the “Seller”), and CAPE CORAL AFL RE, LLC, a Florida limited liability company, as to an undivided 99%, and CAPE CORAL AFL K, LLC, a Florida limited liability company, as to an undivided 1%, as tenants in common (collectively the “Purchaser”).

RECITALS

 

WHEREAS, Seller is the owner and holder of the fee simple title to those certain parcels of real property legally described on Exhibit A attached hereto, and located at 202 Tamiami Trail, Port Charlotte, Florida 33953 together with all easements, rights-of-way, privileges, appurtenances and rights to same, belonging to and inuring to the benefit of said real property; all strips and gores, if any; all right, title and interest, if any, of Seller in and to any land lying in the bed of any street, road, avenue, open or proposed, in front of or adjoining said property to the center line thereof, and all right, title and interest of Seller in and to any awards for damage to said property by reason of change of grade of any street (collectively, the “Property”);

 

WHEREAS, Seller operates a Kia automotive dealership and all ancillary business related thereto on the Property (the “Franchise”), and Seller is also the owner of certain fixed assets used in the operation of the Franchise which are located on the Property (the “Fixed Assets”);

 

WHEREAS, simultaneously with the execution of this Agreement, Seller and CAPE CORAL AFL K, LLC are entering into that certain Asset Purchase Agreement for the sale of the Franchise and the Fixed Assets (the “Asset Purchase Agreement”);

 

WHEREAS, Purchaser desires to purchase the Property from Seller and Seller desires to sell the Property to Purchaser, all for the price and pursuant to the terms and conditions and upon the representations hereinafter set forth; and

 

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, do hereby agree as follows

 

 

NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto, each intending to be legally bound, do hereby agree as follows:

 

1. DEFINITIONS AND EXHIBITS.

 

1.1 Definitions. In this Agreement, the following defined terms have the meanings set forth for them in the Section of this Agreement indicated below:

 

Term
Agreement	Recitals
Asset Purchase Agreement	Recitals
Closing	Section 2.2(b)
Closing Date	Section 9.1
Effective Date	Opening
Environmental Laws	Section 5.5
Environmental Notice	Section 3.3(b)
Exceptions	Section 4.1(a)
Governmental Authorities	Section 5.5
Hazardous Conditions	Section 5.5
Hazardous Substances	Section 5.5
Immaterial Taking	Section 12.2
Improvements	Section 2.1(c)
Improvements Price	Section 2.2(a)
Inspection Period	Section 3.5
Intangible Property	Section 2.1(f)
Property	Recitals
New Purchaser Entities	Section 14.11
Objection Date	Section 4.1
PCBs	Section 5.5
Permits	Section 2.1(d)
Permitted Exceptions	Section 4.2
Plans	Section 2.1(e)
Property	Section 2.1
Purchaser	Recitals
Purchase Price	Section 2.2(a)
Purchaser’s Assessment	Section 3.3
Real Property	Section 2.1(c)
Seller	Opening
Seller Closing Documents	Section 5.2
Stated Price	Section 2.2(a)
Survey	Section 3.1
Surviving Obligations	Section 3.5
Title Commitment	Section 3.1
Title Company	Section 3.1
Title Policy	Section 8.1(a)
Unsatisfactory Environmental Condition	Section 3.3(b)

 

 

 

1.2 Exhibits. The Exhibits listed below are attached to and incorporated into this Agreement. In the event of any inconsistency between such Exhibits and the terms and provisions of this Agreement, the terms and provisions of the Exhibits shall control. The Exhibits to this Agreement are:

 

1.3  Asset Purchase Agreement. The terms and condition of the Asset Purchase Agreements are incorporated by reference to this Agreement.

 

2. PURCHASE AND SALE OF THE PROPERTY.

 

2.1 Purchase. For the consideration hereinafter set forth, and subject to the provisions contained herein, Seller hereby agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller, all of the following (collectively, the “Property”):

 

(a) The Property, together with all easements, rights-of-way, appurtenances, hereditaments and water and mineral rights appertaining to or otherwise benefiting or used in connection with such real property and inuring to the benefit of the Property or the fee owner thereof, together with all of Seller’s right, title and interest in and to any strips of land, streets, and alleys abutting or adjoining such real property, as further described on Exhibit A hereto;

 

(b) All water, well, ditch surface and reservoir rights of whatever nature or kind related to the Property (the “Water Rights”);

 

(c) All existing buildings or other improvements, structures, open parking facilities and fixtures placed, constructed, installed or located on the Property and owned by Seller, if any, and all plants, trees, sculptures, signs, and other appurtenances located upon, over or under the Property and owned by Seller, if any, (collectively, the “Improvements”; the Property and Improvements are sometimes hereinafter collectively referred to as the “Real Property”);

 

(d) All right, title and interest of Seller, in and to all governmental permits, approvals, variances, impact fees and credits, licenses, certificates and authorizations, including, without limitation, certificates of occupancy, relating to the Real Property, to the extent assignable and capable of being transferred under applicable law in Seller’s possession or control (the “Permits”); and

 

(e) All right, title and interest of Seller in and to (to the extent assignable and capable of being transferred under applicable law) all site plans, surveys, soil and substratus studies, architectural drawings, plans and specifications, engineering, electrical and mechanical plans and studies, floor plans, landscape plans, environmental assessment reports, engineering, structural or physical inspection reports, appraisals, feasibility studies, and other plans and studies of any kind, in Seller’s possession or control, relating to the Real Property (the “Plans”); and

 

(f)   Any and all other rights, privileges, and appurtenances owned by Seller and in any way related to, or used in connection with, the Real Property, to the extent assignable and capable of being transferred under applicable law (the “Intangible Property”).

 

(g) Purchaser acknowledges and agrees that the definition of Property specifically excludes any such items that are owned entirely by Asset Seller and that are the subject of the Asset Purchase Agreement.

 

2.2 Purchase Price.

 

(a) The purchase price to be paid by Purchaser for the Property (the “Purchase Price”) shall be Twenty-Two Million Three Hundred and Fifty Thousand Dollars ($22,350,000.00). The Purchase Price, subject to adjustment in accordance with Article 10, shall be paid at the closing of the purchase contemplated hereby (the “Closing”) in cash, by wire transfer, or other immediately available funds as Seller and Purchaser may mutually agree.

 

 

3. INVESTIGATION OF THE PROPERTY.

 

3.1 Title and Survey.

 

(a) Title Insurance Commitment and Survey. Within ten (10) business days after the Effective Date, Purchaser shall obtain at the sole cost and expense of Purchaser: a)a) a title insurance commitment issued by First American Title Company, licensed in the State of Florida, (the “Title Company”) showing the status of record title to the Property (a “Title Commitment”) and committing to insure, subject to the exceptions and requirements set forth therein, title to the Property in Purchaser in the amount of the Purchase Price under the Title Company’s standard owner’s title insurance policy; and b)b) a current ALTA survey certified to Purchaser (the “Survey”). Purchaser shall promptly provide Seller with a copy of the Title Commitment and Survey upon Purchaser’s receipt and said delivery shall include legible copies of or links to all recorded documents referred to in the Title Commitment. Extended title coverage or endorsements will be issued only at the request of the Purchaser and will be at Purchaser’s sole expense.

 

(b) Copies and Descriptions. After the Effective Date, Seller shall provide to Purchaser, copies of all Permits, if any; copies of all Plans, if any; copies of the most recent tax bills concerning the Real Property, together with a copy of any notice of increase in valuation, if any, received by Seller since such tax statements were issued; and copies of any notices concerning existing or proposed special assessments levied against or affecting the Real Property, if any.

 

(c) Environmental History. Copies of any documents or communications relating to the environmental condition of the Real Property in the possession of Seller (“Environmental Reports”).

 

(d) All information and documentation relating to the Property that have been provided or that may be provided to Purchaser during the course of Purchaser’s due diligence investigation of the Property, including, but not limited to, any Environmental Reports, is provided without warranty of any kind, including as to the accuracy, validity or completeness of any such information or documentation.

 

3.2 Inspection of Property. At any time during the Inspection Period (as defined herein in Section 3.4), Purchaser and its employees, agents, and contractors, shall have the right to enter the Real Property, at times mutually agreeable to Seller and Purchaser to complete a physical inspection of the Property as part of its condition, development, usage, zoning, survey, title and environmental due diligence activities. Such right of inspection shall include, without limitation, the right to have made, at Purchaser’s expense, any studies or reports of the Property as Purchaser may deem necessary or appropriate, including, without limitation, soils and environmental tests and inspections. Seller shall cooperate reasonably with any such investigations, inspections, or studies made by or at Purchaser’s direction. Promptly following completion of any such activities, Purchaser agrees, at its sole cost and expense, to restore the Property to its condition that existed immediately prior to such activities. Copies of all documents provided by Seller to Purchaser hereunder shall be promptly returned to Seller upon any termination of this Agreement. Purchaser agrees that in entering upon the Property and inspecting or examining the Property, Purchaser and the other Purchaser Parties (as defined herein) will not: (i) unreasonably disturb the Seller or unreasonably interfere with its use of the Property; (ii) unreasonably interfere with the operation and maintenance of the Property; (iii) damage any part of the Property or any personal property owned or held by Seller or any other person or entity; (iv) injure or otherwise cause bodily harm or death to Seller, or to any of its tenants, agents, guests, invitees, contractors and employees, or to any other person or entity; or (v) permit any liens to attach to the Property by reason of the exercise of Purchaser’s rights under this Section 3.

 

 

3.3 Environmental Inspection. Without limiting the inspection and investigation rights set forth in Section 3.2, Purchaser shall have the right during the Inspection Period, at Purchaser’s sole expense, to enter the Property, at times mutually agreeable to Seller and Purchaser, to conduct environmental assessments of the Property, including but not limited to, the collection and analysis of soils, surface water and groundwater samples, to conduct a “Phase I Environmental Site Assessment” (a “Phase I”) upon the Property to identify any “recognized environmental conditions” and to determine whether the Property is in substantial compliance with applicable Environmental Laws, in general accordance with standards recommended by the American Society for Testing and Materials – ASTM E1527-05 “Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process.” Purchaser will promptly provide Seller a copy of the Phase I testing results and the draft and final report(s) as soon as the information is available. (“Purchaser’s Assessment”).

 

3.4 If the Phase I reveals that there are “recognized environmental conditions” on the Property, or the Property is not in substantial compliance with applicable Environmental Laws, and recommends a Phase II environmental assessment (“Phase II”), then Purchaser shall, at Purchaser’s cost, commission an environmental consultant satisfactory to Purchaser (the “Engineer”) complete a Phase II within thirty (30) days of Purchaser’s receipt of the Phase I. Provided that Purchaser has promptly ordered the Phase II, and the provider of such Phase II has not completed it with the thirty (30) days, Purchaser shall have an additional fifteen (15) days to complete the Phase II. The Seller hereby agrees to allow the Purchaser to undertake any such Phase II investigation on the Property. If the Phase II discloses the existence of Hazardous Substances in violation of applicable Environmental Laws, Purchaser may deliver a notice to Seller within five (5) days of Purchaser’s receipt of the Phase II either (i) terminating the Agreement,, to Purchaser and neither party shall thereafter have any further liability or obligation to the other, except as otherwise expressly provided herein or (ii) setting forth such matters contained in the Phase II to which it objects (the “Notice of Violations”). If Purchaser elects to send a Notice of Violations, Seller shall have fifteen (15) days from receipt of the Notice of Violations to elect to remediate the violations set forth therein, in which case the parties shall enter into an environmental remediation agreement on terms mutually agreeable to the parties. If the parties are unable to reach a mutually agreeable environmental remediation agreement within thirty (30) days after Seller’s receipt of the Notice of Violations (assuming Seller elects to remediate), the Agreement shall automatically terminate, Purchaser shall receive a refund of the Deposits under this Agreement and under the Asset Purchase Agreement), and neither party shall thereafter have any further liability or obligation to the other, except as otherwise expressly provided herein. Notwithstanding the foregoing, Seller shall have no obligation to remediate unless it so elects. If Seller elects, by Notice to Purchaser, not to remediate the matters set forth in the Notice of Violation, Purchaser shall have five (5) business days from receipt of such Notice to give Seller its Notice that Purchaser is electing to: (a) accept the Property in “As Is” condition; or (b) terminate this Agreement and receive a refund of the Deposits (under this Agreement and under the Asset Purchase Agreement), thereby releasing Purchaser and Seller from all further obligations under this Agreement. If Purchaser fails to give Notice of its election within such five (5) business day period, or fails to give a Notice of Defects within five (5) business days of receipt of the Phase II, then Purchaser will be deemed to have approved the environmental condition of the Property and to have elected to proceed to Closing. Purchaser shall have no obligation to indemnify Seller with respect to the presence of any Hazardous Substances discovered during Purchaser’s environmental inspections of the Property nor shall Purchaser have any obligation to engage in the remediation of the Property with respect to such Hazardous Substances. “Hazardous Substance” shall mean any substance or material defined or designated as hazardous or toxic waste, hazardous or toxic material, a hazardous or toxic substance, or other similar term by any federal, state, or local environmental statute, regulation, or ordinance presently in effect, as such statutes, regulations, and ordinances may be amended from time to time, prior to Closing, and mold, lead-based paint and asbestos. However, “Hazardous Substance” shall not include substances which are used in Seller’s ordinary course of its automotive dealership business; provided, however, that such substances are used, handled, transported, stored and disposed of in substantial compliance with any applicable federal, state and local law, rule, regulation, code, ordinance or any other governmental restriction or requirement.

 

 

3.5 Termination of Agreement. At any time during the Inspection Period, Purchaser shall be permitted, in Purchasers sole discretion, to give Seller written notice in accordance with the notice provisions of this Agreement terminating this Agreement if Purchaser is dissatisfied with its physical inspection of the Property as part of its condition, development, usage, zoning, survey, title and environmental due diligence activities. Purchaser shall have no obligation to give a reason for such termination. If Purchaser delivers such a notice, then this Agreement shall terminate, Purchaser shall receive a refund of the Deposits (under this Agreement and under the Asset Purchase Agreement), and both parties shall be relieved from any further liability hereunder, except for those matters which, by their terms, survive the termination of this Agreement (the “Surviving Obligations”). The sixty (60) day period following the Effective Date is herein referred to as the “Inspection Period.” Purchaser may at its option waive its right to terminate this Agreement pursuant to this Section 3.5 by written notice delivered to Seller. Notwithstanding anything contained herein to the contrary, following the expiration of the Inspection Period, the Escrow Deposit (as defined in the Asset Agreement) shall become non-refundable except as otherwise expressly set forth in Section 11 of the Asset Purchase Agreement.

 

4. TITLE.

 

4.1 Review.

 

(a) Within ten (10) business days after Purchaser’s receipt of the Title Commitment (the “Objection Date”), Purchaser shall be entitled to object to any exceptions to title disclosed in the Title Commitment or matters affecting title reflected on the Survey (“Exceptions”), in its sole discretion, by a written notice of objections delivered to Seller. If Purchaser fails to deliver to Seller a notice of objections on or before the Objection Date, Purchaser shall be deemed to have waived any objection to the Exceptions and thereafter all Exceptions shall be deemed to be Permitted Exceptions (as hereinafter defined). Seller shall have ten (10) business days from the receipt of Purchaser’s notice of objections either to (i) remove the Exceptions, or (ii) provide Purchaser with assurances satisfactory to Purchaser, in its sole discretion, that the Exceptions will be removed or affirmative title insurance protection will be provided before or as of the Closing. If Purchaser waives in writing its objection to any matters described in the notice of objections, such matters shall be deemed to be Permitted Exceptions. Notwithstanding anything in this paragraph to the contrary, and whether or not Purchaser specifically objects, Seller shall be obligated to remove any Exceptions which can be removed by the payment of money, including but not limited to mortgages, liens, judgments, and fines (“Monetary Exceptions”). At Closing, Purchaser shall pay for any title insurance policies issued by the Title Company.

 

(b) If any endorsement or update issued to the Title Commitment or Survey contains Exceptions other than those in the Title Commitment or Survey, Purchaser shall be entitled to object to any such Exceptions by a written notice of objections to Seller on or before the date ten (10) days following Purchaser’s receipt of such endorsement or update. If Purchaser fails to deliver to Seller a notice of objections on or before such date, except as to Monetary Exceptions, Purchaser shall be deemed to have waived any objection to matters appearing on such endorsement or update, and thereafter all such Exceptions shall be deemed to be Permitted Exceptions. Seller shall have ten (10) business days from the receipt of Purchaser’s notice either to (i) remove the Exceptions, or (ii) provide Purchaser with assurances satisfactory to Purchaser, in its sole discretion, that the Exceptions will be removed or affirmative title insurance protection will be provided before or as of the Closing. If Purchaser waives in writing its objection to any matters described in the notice of objections, such matters shall be deemed to be Permitted Exceptions.

 

 

4.2 Permitted Exceptions. The term “Permitted Exceptions” shall mean: (i) zoning regulations and ordinances (and any variances therefrom) of the municipality in which the Property is located; (ii) curb cuts and access roads to and from abutting streets and other easements, driveways or rights of way in existence as of the Effective Date; (iii) real property taxes, water charges and sewer rents which are not yet due and payable, but subject to apportionment as hereinafter provided; (iv) recorded utility, water and sewer easements, if any, as existing on the Effective Date and (v) all Exceptions contained in the Title Commitment (other than Monetary Exceptions) or Survey (a) to which Purchaser does not object as herein provided or (b) as to which Purchaser has waived or is deemed to have waived its objection; provided, however, that the term Permitted Exceptions shall not include (i) any taxes or assessments other than general ad valorem real estate taxes for the year of Closing; (ii) any monetary judgments, mortgages or liens; or (iii) any matters that, prior to Closing, Seller agrees in writing to remove or cure at or before the Closing. The existence of monetary judgments, mortgages or liens, other than the Permitted Exceptions, shall not be objections to title, provided that properly executed instruments, in recordable form, necessary to satisfy and release the same are delivered to Purchaser at the Closing together with recording and/or filing fees, and Seller shall pay such mortgages or liens from the cash consideration to be paid to Seller by Purchaser hereunder.

 

5. SELLER’S REPRESENTATIONS AND WARRANTIES.

 

Seller represents and warrants to Purchaser, that the representations and warranties set forth below are true and correct as of the Effective Date, and shall be true and correct on and as of the date of the Closing:

 

5.1 No Possessory Rights. Except for any rights of possession granted under the Permitted Exceptions, there are no parties in possession of any of the Real Property, and Seller has not granted any other rights of possession or use to any third party or parties. No party has a right of first refusal or option to purchase any of the Real Property.

 

5.2 Due Execution; Authority. (i) Seller is a limited liability company duly organized, validly existing and in good standing as a limited liability company under the laws of the State of Florida; (ii) this Agreement is, and all the documents to be delivered by Seller pursuant to this Agreement (the “Seller Closing Documents”) will be, when executed by Seller, binding on and enforceable against Seller in accordance with their respective terms; (iii) except for internal governance approvals required by law, there are no other consents required to authorize Seller’s entry into and performance of this Agreement, the Seller Closing Documents and/or the transactions contemplated hereby or thereby; (iv) this Agreement, the Seller Closing Documents and the transactions contemplated hereby and thereby have been, or will have been prior to the Closing, approved by all necessary action of Seller; and (v) the execution and delivery of the Seller Closing Documents do not and will not constitute a breach or default under any agreement by which Seller is bound.

 

5.3 Contracts. To Seller’s knowledge, and except for this Agreement, any Permitted Exceptions, any contracts provided to Purchaser and any documentation related to existing financing on the Property, (i) there are no contracts entered into by Seller or its agents relating to the ownership, management, parking, operation, maintenance or repair of the Property (ii) Seller or its agents have not entered into any contracts for the sale, lease, assignment, exchange or transfer of the Property or any portion thereof, or contracts or other material obligations currently in effect, creating or imposing any burdens, obligations or restrictions on the use or operation of the Property and the business conducted thereon and (iii) there are no contracts, agreements, liabilities, claims or obligations of any kind or nature relating to the Property to which the Property or the Seller will be bound following the Closing.

 

 

5.4 Condemnation. Seller has no knowledge of any pending or contemplated condemnation proceedings affecting all or any part of the Real Property.

 

5.5 Environmental. Except as disclosed on Schedule 5.5 (which Seller shall deliver to Purchaser within ten (10) business days following the Effective Date):

 

(a) Nature of Claims. During Seller’s ownership of the Property, there have not been and there are not now pending or, to Seller’s knowledge, threatened: (i) claims, causes of action, notices, or requests for information received by Seller with respect to any alleged violation of any Environmental Law with respect to the Property; or (ii) claims, causes of action, notices, or requests for information received by Seller regarding potential or alleged liability under any Environmental Law with respect to the Property.

 

(b) Existing Conditions. To Seller’s knowledge, no conditions exist at, on, or under the Property that would constitute a Hazardous Condition.

 

(c) Compliance with Environmental Laws. Seller is in compliance in all material respects with all orders, directives, permits, certificates, approvals, licenses, and other authorizations from applicable Governmental Authorities, if any, relating to Environmental Laws with respect to the Property. To Seller’s knowledge, the Property and all Improvements are in compliance with all Environmental Laws.

 

(d) Storage Tanks. To Seller’s knowledge, there are no above ground tanks that are not in compliance with all Environmental Laws. Seller has not removed or abandoned any underground storage tanks (herein referred to as “USTs”) at the Property nor does Seller have any knowledge of the abandonment or removal of USTs at the Property.

 

(e) PCBs. To Seller’s knowledge, there are no polychlorinated biphenyls (“PCBs”) other than those that may be incorporated within building materials such as window caulk or glazing or friable or damaged asbestos at the Property; nor has Seller removed (or required or requested the removal of) any PCBs other than those that may be incorporated within building materials such as window caulk or glazing or damaged or friable asbestos from the Property, nor has Seller knowledge of the previous existence of any PCBs other than those that may be incorporated within building materials such as window caulk or glazing or damaged or friable asbestos at the Property.

 

“Environmental Law” means all federal, state and local laws, whether common laws, court or administrative decisions, statutes, rules, regulations, ordinances, court orders and decrees, and administrative orders and all enforceable administrative policies and guidelines concerning action levels of a governmental authority (federal, state or local) now or in effect at Closing relating to the environment, public health, occupational safety, industrial hygiene, any Hazardous Substance (including, without limitation, the disposal, generation, manufacture, presence, processing, production, release, storage, transportation, treatment or use thereof), or the environmental conditions on, under or about the Property, as amended and as in effect during the Seller’s ownership of the Property, now and at the time of Closing (including, without limitation, the following statutes and all regulations thereunder as amended and in effect during the Seller’s ownership of the Property, now and at the time of Closing: the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601, et seq.; the Superfund Amendments and Reauthorization Act of 1986, Title III, 42 U.S.C. §§ 11001, et seq.; the Clean Air Act, 42 U.S.C. §§ 7401 et seq.; the Safe Drinking Water Act, 42 U.S.C. §§ 300(f), et seq.; the Solid Waste Disposal Act, 42 U.S.C. §§ 6901, et seq.; the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 1801, et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901, et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C. §§ 1251, et seq.; the Toxic Substances Control Act of 1976, 15 U.S.C. §§ 2601, et seq.; and the Occupational Safety and Health Act, 29 U.S.C. §§ 651, et seq.; and any successor statues and regulations to the foregoing in effect during the Seller’s ownership of the Property, now and at the time of Closing.

 

 

“Governmental Authorities” shall mean any commission, department or body of any municipality, township, city, county, state or Federal governmental unit having jurisdiction over any of the Property or the ownership, management, operation, use or improvement thereof.

 

“Hazardous Conditions” refers to the presence on, in or under any of the Property (including ground water) of Hazardous Substances, the concentration, condition, quantity, location or other characteristics of which fail to comply with, or otherwise create an obligation or liability under applicable Environmental Laws.

 

“Hazardous Substances” means (i) all chemicals, materials and substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants” or “pollutants,” or words of similar import, under any applicable Environmental Law; and (ii) all other chemicals, materials and substances, exposure to which is prohibited, limited or regulated by any governmental authority, including, without limitation, asbestos and asbestos-containing materials in any form, lead-based paint, radioactive materials, polychlorinated biphenyls (“PCB’s”), and substances and compounds containing PCB’s.

 

5.6 Zoning. To Seller’s knowledge, the Property is currently zoned to permit the ownership and operation of an automotive retail sales and service dealership. To Seller’s knowledge, there is not now pending nor is there any proposed or threatened proceeding for the rezoning of the Property or any portion thereof. Seller has no knowledge of nor has it received any written notice from any Governmental Authority that any zoning, subdivision, environmental, hazardous waste, building code, health, fire, safety or other law, order, ordinance or regulation is violated by the continued maintenance, operation or use of the Property in a manner substantially the same as current operations, including, without limitation, any Improvements located thereon or any parking areas. Notwithstanding the foregoing, Seller and Purchaser agree and acknowledge that any representations or warranties made with respect to the environmental condition of the Property and compliance, obligations and liabilities under Environmental Laws are set forth in Section 5.5 herein.

 

5.7 Permitted Exceptions. Seller has performed all obligations under and has not received notice that it is in default for failure to comply with the terms and provisions of any of the covenants, conditions, restrictions, rights-of-way and easements constituting one or more of the Permitted Exceptions for the Property.

 

5.8 Permits, Etc. To Seller’s knowledge, all applicable permits, licenses, authorizations and certificates of occupancy required by Governmental Authorities for the management, occupancy, leasing and operation of the Property are in full force and effect.

 

5.9 Litigation. No dispute, proceeding, suit or litigation relating to the Property or any part thereof is pending or, to Seller’s knowledge, threatened in any tribunal.

 

5.10 FIRPTA. Seller is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

 

5.11 Indebtedness. Seller has not received notice of any material defaults or events of default (as defined therein) or any notice that such defaults are continuing under the terms of any documents evidencing or securing indebtedness which is secured by the Property or for which Seller is liable.

 

5.12 Material Adverse Change. Seller has not received written notice from any Governmental Authority of any pending or contemplated change in any regulation, code, ordinance or law, or private restriction applicable to the Property, or any natural or artificial condition upon or affecting the Property, or any part thereof, which would result in any material adverse change in the condition of the Property or any part thereof, or would in any way limit or impede the operation or development of the Property.

 

 

5.13 Not Misleading. The representations and warranties of Seller in this Agreement do not contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained herein not misleading.

 

5.14 Tax Matters. Seller has relied solely on its own counsel for advice on any and all federal, state and local tax matters relating to this Agreement and the transactions contemplated herein and have not relied on any advice or representations of Purchaser, or its counsel with respect to any federal, state and local tax matters relating to this Agreement or the transactions contemplated herein.

 

5.15 Utilities. Usable sanitary and storm sewers and public water, gas and electrical utilities (collectively, the “Utilities”) of adequate capacity required for the operation of the Property as it is currently being used as of the Effective Date, are installed in, and are duly connected to, the Property.

 

5.16 Bankruptcy. Seller has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by Seller’s creditors, (iii) suffered the appointment of a receiver to take possession of all or substantially all of Seller’s assets, (iv) suffered the attachment, or other judicial seizure of all, or substantially all, of Seller’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or compromise to its creditors generally.

 

5.17 Knowledge. For purposes of this Agreement, the phrase “to Seller’s knowledge” or words of similar import, shall mean that the applicable party has conducted a reasonable review of its files and interviewed current employees in positions of responsibility on the subject and such review and interviews did not disclose any information contrary to the accuracy or veracity of any such representation or warranty.

 

5.18 Supplemental Information. Seller shall provide written notice to Purchaser at any time and from time to time after the Effective Date through the Closing if it acquires any information that any of the representations or warranties made in this Agreement were inaccurate in any material respect as of the Effective Date or will be inaccurate in any material respect as of the Closing.

 

5.19 Property Being Sold “AS IS, WHERE IS”. Purchaser hereby acknowledges, understands and agrees that it had or will have during the Inspection period sufficient opportunity to inspect the Property and any Environmental Reports and Purchaser agrees, represents and warrants that (i) prior to the Closing Date, Purchaser will have fully examined and inspected the Property, including the construction, renovation, environmental condition, all governmental approvals, and any applicable resolutions and agreements, operation and leasing of the Property, together with any other documents and materials with respect to the Property which Purchaser deems necessary or appropriate in connection with its investigation and examination of the Property, (ii) the Property will be purchased by Purchaser in its “AS IS, WHERE IS” condition and (iii) Purchaser will have decided to purchase the Property solely on the basis of its own independent investigation. Purchaser hereby acknowledges and agrees that Seller has not made, does not make, and has not authorized anyone else to make any representations and/or warranty regarding any matter or thing pertaining to the Property except for those limited representations and warranties set forth in Section 5 herein. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT THE PURCHASE PRICE OF THE PROPERTY REFLECTS THE FACT THAT SELLER IS NOT MAKING ANY REPRESENTATIONS OR WARRANTIES, EXCEPT AS SET FORTH IN SECTION 5 HEREOF. SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED OR ARISING BY OPERATION OF LAW, EXCEPT FOR THOSE LIMITED REPRESENTATIONS AND WARRANTIES SET FORTH IN SECTION 5 HEREIN, INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF CONDITION, HABITABILITY, MERCHANTABILITY, OR FITNESS FOR A PARTICULAR PURPOSE IN CONNECTION WITH THE PROPERTY or COMPLIANCE OR NON-COMPLIANCE WITH ZONING OR OTHER LAWS. PURCHASER AGREES TO ACCEPT THE PROPERTY WITHOUT RECOURSE AGAINST SELLER OF ANY KIND UNDER APPLICABLE LAWS AND REGULATIONS. All information and documentation relating to the Property that have been provided or that may be provided to Purchaser during the course of Purchaser’s due diligence investigation of the Property, including, but not limited any Environmental Reports, is provided without warranty of any kind, including as to the accuracy, validity or completeness of any such information or documentation.

 

 

5.20 The representations and warranties of Seller as set forth in this Agreement shall be true and correct as of the effective date of this Agreement and as of the date of Closing and shall survive the Closing of this transaction.

 

6. PURCHASER’S REPRESENTATIONS AND WARRANTIES.

 

Purchaser represents and warrants to Seller, that the representations and warranties set forth below are true and correct as of the Effective Date, and shall be true and correct on and as of the date of the Closing:

 

6.1 Authority. Purchaser is a limited liability company duly organized and validly existing and in good standing under the laws of the State of Florida. Purchaser has the full right and authority to enter into this Agreement and consummate the transactions contemplated by this Agreement. All requisite company action has been, or will be by the Closing Date, taken by Purchaser in connection with the execution of this Agreement and the documents referenced herein and the consummation of the transactions contemplated hereby. Each of the persons signing this Agreement on behalf of Purchaser is authorized to do so. Purchaser shall furnish to Seller any and all documents to evidence such authority as Seller shall reasonably request.

 

6.2 Consents; Restrictions; Binding Obligations. No third party approval or consent is required to enter into this Agreement or the documents referenced herein or to consummate the transactions contemplated hereby other than as stated in this Agreement. The entering into and consummation of the transactions contemplated hereby will not conflict with or, with or without notice or the passage of time or both, constitute a default under, any contract, lease or other agreement to which Purchaser is a party or by which Purchaser may be bound or any law, rule, license, regulation, judgment, order or decree governing or affecting Purchaser. This Agreement and all documents required hereby to be executed by Purchaser are and shall be valid and legally binding obligations of Purchaser.

 

7. SELLER’S UNDERTAKINGS PENDING CLOSING.

 

7.1 Operation of the Property. Until the earlier of the Closing or the termination of this Agreement, Seller shall:

 

(a) Status of Title. Not do anything, or permit anything to be done, that would impair the status of title as shown on the Title Commitment or the Survey.

 

(b) Operation. Continue to operate and maintain the Property in the same manner as immediately prior to the Effective Date, reasonable wear and tear excepted.

 

(c) Contracts. Not enter into any lease, service contract or other contract that, following Closing, will be binding upon Purchaser or the Property without, in each instance, obtaining the prior written approval of Purchaser. The foregoing shall not apply to any service contract having a term of thirty (30) days or less.

 

(d) Transfer. Not cause or permit transfer, conveyance, sale, assignment, pledge, mortgage, or encumbrance of any of the Property.

 

(e) Zoning. Not to submit any application or similar document to any Governmental Authority in connection with the rezoning or special permitting of any part of the Property without first obtaining Purchaser’s written approval thereof (unless said submittal is fully consistent with any other submittal theretofore approved by Purchaser).

 

7.2 Notification of Purchaser. Until the earlier of the Closing or the termination of this Agreement, Seller shall notify Purchaser in writing promptly upon learning or receiving notice, whichever first occurs, of:

 

(a) Events. Any event, transaction, or occurrence prior to Closing that would or could materially adversely affect any of the Property.

 

(b) Representations. Any fact or event that would make any of the representations or warranties of Seller contained in this Agreement untrue or misleading in any material respect or that would cause Seller to be in violation of any of its covenants or other undertakings or obligations hereunder.

 

 

(c) Laws. Any violation of any law, ordinance, regulation or law that would or might materially adversely affect any of the Property.

 

(d) Zoning. Any proposed change in any zoning or other law affecting the use or development of any of the Property.

 

(e) Litigation. Any pending or threatened litigation that affects any of the Property or that could affect the transaction contemplated hereby.

 

(f)   Bankruptcy. Any pending or threatened proceeding in bankruptcy or insolvency that could affect any of the Property or any person owning any interest therein.

 

(g) Defaults. Any default under any of the Permitted Exceptions or other agreements affecting any of the Property, or any act or omission that with the notice or the passage of time, or both, would constitute such a default.

 

(h) Environmental. Any (a) enforcement, clean-up, removal or other governmental or regulatory action concerning the Property instituted, completed or threatened pursuant to any Environmental Law; (b) any claim made or threatened by any person against Asset Seller and/or Seller, or the Property, relating to damage, contribution, cost recovery, compensation, loss or injury resulting from or claimed to result from any Hazardous Substances; and (c) reports made to any environmental agency arising out of or in connection with any Hazardous Substance in, on or under the Property including, without limitation, any causes of action, notices, warnings, reports or asserted violations in connection therewith.

 

8. PURCHASER’S AND SELLER’S OBLIGATION TO CLOSE.

 

8.1 Conditions to Purchaser’s Obligations. Purchaser shall not be obligated to close the transaction contemplated hereunder unless each of the following conditions shall be satisfied on or prior to the Closing Date, which may be waived by Purchaser.

 

(a) Title Policy. The title company that issued the Title Commitment (the “Title Company”) shall issue (or commit unconditionally to issue) a title policy to Purchaser subject only to the Permitted Exceptions (the “Title Policy”).

 

(b) Accuracy of Representations. The representations of Seller in this Agreement shall be true and complete as of the date when given and on the Closing Date.

 

(c) Seller’s Performance. Seller shall have performed all covenants and obligations and complied with all conditions required by this Agreement to be performed or complied with by Seller on or before the Closing Date.

 

(f)  Asset Purchase Agreement. The transactions contemplated under the Asset Purchase Agreement and any ancillary documents related thereto, shall have closed, or close concurrently with this Agreement.

 

(g)  Termination of Intercompany Leases. Seller shall terminate any intercompany leases with respect to the Real Property upon Closing, as may be applicable.

 

 

8.2 Condition to Seller’s Obligations. Seller shall not be obligated to close the transaction contemplated hereunder unless each of the following conditions shall be satisfied on or prior to the Closing Date, which may be waived by Seller.

 

(a) Purchaser’s Performance. Purchaser shall have performed all covenants and obligations and complied with all conditions required by this Agreement to be performed or complied with by Purchaser on or before the Closing Date.

 

(b) Accuracy of Representations. All representations of Purchaser in this Agreement will be true and complete as of the date when given and on the Closing Date.

 

(c) Asset Purchase Agreement. The transactions contemplated under the Asset Agreement and the other Real Estate Agreements (as defined in the Asset Agreement) shall have closed, or close concurrently with this Agreement.

 

8.3 Failure of Conditions. If any condition specified herein is not satisfied on or before the Closing, then (i) Purchaser may terminate this Agreement, by notice to Seller, if any of Purchaser’s conditions precedent to Closing have not been satisfied as of the Closing Date or has become incapable of being satisfied by the Closing Date, and (ii) Seller may terminate this Agreement, by notice to Purchaser, if any of Seller’s conditions precedent to Closing have not been satisfied as of the Closing Date or has become incapable of being satisfied by the Closing Date. Upon a termination in accordance with this Section 8.3, Purchaser shall receive a refund of the Deposits (under this Agreement and under the Asset Purchase Agreement), this Agreement will have no further force or effect and the parties shall thereupon be relieved of all further obligations hereunder other than the Surviving Obligations. The parties’ rights under this Section 8 are cumulative and are in addition to the other rights and remedies available to them under this Agreement or any other agreement, including Section 11 of the Asset Purchase Agreement. Notwithstanding anything else set forth herein, in the event the closings under the Asset Purchase Agreement or the other Real Estate Agreements do not close for any reason, this Agreement shall automatically terminate without any further action required by Purchaser or Seller and the provisions of Section 11 of the Asset Purchase Agreement shall apply.

 

9. CLOSING.

 

9.1 Time of Closing. Unless otherwise agreed in writing between the parties hereto, the Closing shall take place contemporaneously with that of the Asset Purchase Agreements (the “Closing Date”). Purchaser hereby covenants to work with Seller during the Closing process to keep Seller informed of the progress and timing under the Asset Purchase Agreement so as to enable the Closing to occur under this Agreement as contemplated.

 

9.2 Deliveries. At the Closing, simultaneously with the payment of the Purchase Price by Purchaser:

 

(a) Seller shall execute and deliver or cause to be delivered to Escrow Agent on behalf of Purchaser the following, to wit:

 

(i) A duly executed and acknowledged special warranty deed, conveying fee simply title to the Property, in substantially the form and content of Exhibit B the “Deed”), free and clear of all matters affecting title, in recordable form;

 

 

(ii) A standard No-Lien, “Gap” and Parties in Possession Affidavit satisfactory to the Title Insurer in order to delete the standard printed exceptions; and to insure the period between the last update of the Title Commitment and recording of the deed;

 

(iii)   Applicable state and local conveyance tax forms completed and signed by or on behalf of Seller and Purchaser, together with checks, in the amount of the applicable real estate transfer and conveyance taxes, payable to the County Clerk of the county where the Property is located by reason of the purchase and sale of the Property;

 

(iv) Such other documents and affidavits as shall be reasonably required by the Title Insurer as called for or required under the terms of the Commitment;

 

(v) A resolution of the Seller authorizing the conveyance of the Property to Purchaser pursuant to this Agreement;

 

(vi) Seller shall execute and deliver to Purchaser a certificate confirming Seller’s representations and warranties as described in Section 8.1(b).

 

(vii) Seller shall execute and deliver to Title Company such affidavits, agreements or statements concerning parties in possession of the Property or claims for mechanic’s liens as may be required by Title Company in order to issue the Title Policy

 

(viii)   A non-foreign Seller Affidavit.

 

(ix) Satisfactions of all mortgages of record encumbering any part of the Subject Property.

 

(x) UCC-3 Termination Statements for all UCC-1 financing statements filed with respect to any part of the Property, and UCC-3 Amendments changing the principal place of business of Seller for any UCC-1 financing statements filed to perfect any security interest in any personalty of the Seller located on the Property or for which the Subject Property is identified as the principal place of business of the Seller for filing purposes.

 

(xi) All keys, remote controls and security and access codes;

 

(xii) all the originals of all Plans in Seller’s possession or control and all other materials of whatever kind owned by Seller relating to the design, construction, development, ownership, maintenance and operation of the Property shall be delivered to and become the property of Purchaser to the extent that such documents are assignable and capable of being transferred under applicable law;

 

(xiii)   All such other documents contemplated by this Agreement;

 

 

(b) At the Closing, Purchaser shall deliver to Escrow Agent the Purchase Price adjusted for all appropriate prorated items, credits and adjustments, of which the Deposit and all accrued interest thereon shall constitute a part thereof, and Purchaser shall also deliver or cause to be delivered to Escrow Agent, on behalf of Seller the following:

 

(i) A resolution of the Purchaser authorizing the purchase of the Subject Property.

 

(c) At the Closing, Seller and Purchaser shall mutually execute and deliver to each other a closing statement in customary form which shall also be executed by Escrow Agent, and any and all conveyances, assignments and all other instruments and documents as may be reasonably necessary in order to complete the transaction herein provided and to carry out the intent and purposes of this Agreement.

 

10. PRORATIONS AND CLOSING EXPENSES.

 

10.1 Closing Adjustments. The cash due at Closing pursuant to Section 2.2 shall be subject to adjustment as of the Closing Date in accordance with the following provisions:

 

(a) Taxes and Prorations. Real estate taxes, water, sewer and other utility charges and other assessments typically pro-rated between purchasers and sellers of commercial real estate in the county where the Property is located will be prorated between Seller and Purchaser as of the date of Closing based on the number of days of the applicable period that each party owns the Property. To the extent practicable, all such pro-rations and payments will be made on the day of Closing, with the balance to be made as soon as practicable following the Closing upon delivery by Purchaser or Seller, as applicable, of reasonable documentation of such payment to the other party.

 

(b) Utilities. To the extent possible, the parties shall cause all utility meters to be read on the day preceding the Closing Date. Seller shall be responsible for the payment of all utility charges incurred prior to the Closing Date. Seller shall escrow with Title Company an amount sufficient to pay Seller’s final water and sewer bill if Title Company so requires in order to issue the Title Policy. Seller shall not receive credit for security deposits, if any, posted with utility companies, and Seller may seek return thereof following Closing.

 

(c) Liens and Encumbrances. The amount of any lien, deed of trust or other monetary encumbrance then affecting the Property shall be paid from the funds to which Seller shall otherwise be entitled. If such funds are insufficient to pay all such encumbrances, Seller shall pay the deficiency.

 

(d) Closing Costs. The costs of recording any transfer tax on the Deed of conveyance, shall be paid by Seller. The Buyer shall pay the costs of: (i) recording the Deed; (ii) searching or examining title and the title insurance premium due with respect to the Title Policy to be issued pursuant to the Commitment; (iii) financing costs (including but not limited to lender’s origination fees, appraisal expenses, lender title policy premiums and endorsements); and (iv) Buyer’s inspection expenses.

 

10.2 Settlement Statement. At the Closing, Seller and Purchaser shall execute a Closing settlement statement to reflect the credits, prorations, and adjustments contemplated by or specifically provided for in this Agreement.

 

11. CASUALTY DAMAGE. In the event that the Real Property is damaged by fire or other material casualty prior to Closing, Seller shall promptly give Purchaser written notice of such occurrence. In the event the damage creates a hazardous or otherwise dangerous environment, as determined by Purchaser in its reasonable discretion, Purchaser may elect to terminate this Agreement upon notice to Seller within fifteen (15) days after Purchaser’s receipt of Seller’s notice of such casualty, in which event the parties shall be relieved of any further obligations hereunder except for the Surviving Obligations. In the event Purchaser elects not to terminate, the parties shall proceed to the Closing and Seller shall deliver and/or assign to Purchaser all insurance proceeds collectible for such loss or damage and provide a credit against the Purchase Price equal to the applicable deductible.

 

 

12. CONDEMNATION.

 

12.1 Notice. If, prior to Closing, Seller learns of any actual or threatened taking in condemnation or by eminent domain (or a sale in lieu thereof) of any of the Real Property, Seller shall notify Purchaser promptly thereof.

 

12.2 Termination. Other than with respect to an Immaterial Taking (as hereinafter defined), any actual or threatened taking or condemnation for any public or quasi-public purpose or use by any competent authority in appropriate proceedings or by any right of eminent domain of any of the Real Property between the date of this Agreement and the Closing Date shall, at Purchaser’s option, cause a termination of this Agreement. The election to terminate provided hereby shall be exercised by Purchaser by written notice to Seller to that effect given within thirty (30) days following Purchaser’s receipt of Seller’s notice pursuant to Section 12.1 above. Upon delivery of such termination notice, both parties shall be relieved of any further obligations hereunder except for the Surviving Obligations. If Purchaser shall not so elect to terminate this Agreement, or in the event of an Immaterial Taking, Seller shall be relieved of all obligations under this Agreement with respect to the portion of the Real Property so taken or condemned, but Purchaser shall be entitled to receive all proceeds of any such taking or condemnation, and Seller agrees that it shall not make any adjustment or settlement of any such taking or condemnation proceeding without Purchaser’s consent and shall take at Closing all action necessary to assign its entire interest in such award to Purchaser. Any taking or condemnation for any public or quasi-public purpose or use that affects less than ten percent (10%) of the square footage of the Property and that does not affect access, materially reduce parking or operational capacity, materially reduce the square footage of buildings and other improvements that may be constructed on the Property, or reduce required utilities shall be deemed an “Immaterial Taking.”

 

13. REMEDIES.

 

13.1 Buyer’s Default. If Purchaser shall breach this Agreement at or prior to the Closing, or if the Closing fails to occur by reason of Purchaser’s failure or refusal to perform its obligations hereunder or by reason of Purchaser’s inability to perform its obligations under this Agreement, then Seller shall so notify Purchaser in writing specifying the nature of the breach. Purchaser shall have ten (10) days from the date of such notice to cure the breach. If Purchaser fails to cure said breach within said ten (10) day period or otherwise resolve the matter to Seller’s reasonable satisfaction, then Seller’s sole right and exclusive remedy will be to terminate this Agreement by giving written notice thereof to Buyer and then Seller may take the Deposits (under this Agreement and the Asset Purchase Agreement) as liquidated damages in full settlement of all claims, remedies or causes of actions against Buyer under this Agreement, including the remedy of specific performance and other forms of equitable relief. It is impossible to estimate more precisely the damages which might be suffered by Seller upon Buyer’s default. Seller’s retention of the Deposit is intended not as a penalty, but as full liquidated damages.

 

13.2 Seller Default. If Seller shall breach this Agreement at or prior to the Closing, or if the Closing fails to occur by reason of Seller’s failure or refusal to perform its obligations hereunder or by reason of Seller’s inability to perform its obligations under this Agreement, then Purchaser shall so notify Seller in writing specifying the nature of the breach. Seller shall have ten (10) days from the date of such notice to cure the breach. If Seller fails to cure said breach within said ten (10) day period or otherwise resolve the matter to Purchaser’s reasonable satisfaction, then Buyer may exercise any and all rights and remedies available to it at law or in equity, including (i) an action in equity against Seller (pursuant to which Buyer is not obligated to post a bond or prove special damages or irreparable injury) for the specific performance by Seller of the terms and provisions of this Agreement¹; and (ii) the right to terminate this Agreement by giving written notice of such termination to Seller and receive a full refund of the Deposit without prejudice to any of Buyer’s rights or remedies including an action for direct damages, but not consequential damages.

 

1	NTD: On the call our client only agreed to limited disgorgement of profits resulting from the operations of the dealership.

 

 

14. GENERAL PROVISIONS.

 

14.1 Construction. As used in this Agreement, the singular shall include the plural and any gender shall include all genders as the context requires and the following words and phrases shall have the following meanings: (a) “including” shall mean “including without limitation”; (b) “provisions” shall mean “provisions, terms, agreements, covenants and/or conditions”; (c) “lien” shall mean “lien, charge, encumbrance, title retention agreement, pledge, security interest, mortgage and/or deed of trust”; (d) “obligation” shall mean “obligation, duty, agreement, liability, covenant and/or condition”; (e) “any of the Property” shall mean “the Property or any part thereof or interest therein”; (f) “any of the Property” shall mean “the Property or any part thereof or interest therein”; (g) “any of the Real Property” shall mean “the Real Property or any part thereof or interest therein”; and (h) “any of the Improvements” shall mean “the Improvements or any part thereof or interest therein.”

 

14.2 Brokers. Seller has engaged Bank of America Securities, LLC (“Broker”) as the broker in this transaction, and Seller shall be solely responsible for any and all fees and commissions payable to Broker. Except for Seller’s engagement of Broker and the fees payable by Seller thereto, Seller and Purchaser each hereby represent and warrant to the other that their sole contact with the other or with the Real Property has been made without the assistance of any broker or other third party and that no fees are payable to any broker or third party in connection with the consummation of the transactions contemplated by this Agreement. Purchaser and Seller shall each indemnify, defend and hold the other party, each Affiliate of such party, and their respective members, partners, venturers, directors, officers, stockholders, agents, employees, spouses, legal representatives, successors and assigns, harmless from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities, or losses (including, without limitation, reasonable attorneys’ fees) resulting from the breach by the indemnifying party of the representation and warranty set forth above in this Section 14.2 or for any action by such Party’s representative for payment or commissions. The mutual representations and warranty contained in this Section 14.2 will survive the Closing.

 

14.3 Further Assurances. Each of the parties hereto undertakes and agrees to execute and deliver such documents, writings and further assurances as may be reasonably required to carry out the intent and purposes of this Agreement.

 

14.4 Environmental Indemnity. Seller will indemnify, defend and hold Purchaser, its Affiliates (as defined below) and their respective members, partners, venturers, stockholders, directors, officers, employees, spouses, legal representatives, agents, successors and assigns (the “Purchaser Indemnified Parties”) harmless from and against any and all claims, judgments, damages, penalties, fines, costs, liabilities, losses or expenses (including, without limitation, reasonable attorneys’ fees and expenses) incurred by the Purchaser Indemnified Parties (collectively, “Losses”) arising from or directly or indirectly relating to (1) any breach by Seller of the representations and warranties set forth under Section 5.5 (Environmental) of this Agreement and (2) any Hazardous Conditions that exist prior to and at the time of Closing caused by Seller or any Affiliate of Seller (as that term is defined in the Asset Agreement), (collectively, the “Environmental Indemnity”). The terms and conditions of this Section 14.4 shall survive Closing and acceptance by Purchaser of the Deeds to the Property.

 

14.5 Entire Agreement. No change or modification of this Agreement shall be valid unless the same is in writing and signed by the parties hereto. No waiver of any of the provisions of this Agreement shall be valid unless in writing and signed by the party against whom such waiver is sought to be enforced. This Agreement contains the entire agreement between the parties relating to the purchase and sale of the Property. All prior negotiations between the parties are merged in this Agreement, and there are no promises, agreements, conditions, undertakings, warranties or representations, oral or written, express or implied, between the parties other than as herein set forth. All exhibits and schedules mentioned in this Agreement shall be attached to this Agreement and shall form an integral part hereof.

 

 

14.6 Survival. The Seller’s representations and warranties under Section 5.5 (Environmental) and the environmental indemnity under Section 14.4 shall survive Closing and acceptance by Purchaser of the Deed to the Property for a period of four (4) years.

 

14.7 Dates. If any date set forth in this Agreement for the delivery of any document or the happening of any event (such as, for example, the expiration of the Inspection Period or the Closing Date) should, under the terms hereof, fall on a weekend or holiday, then such date shall be automatically extended to the next succeeding weekday that is not a holiday.

 

14.8 Governing Law. This Agreement shall be construed and enforced in accordance with the laws of the State of Florida. Any litigation, action or proceeding arising out of or relating to this Agreement will be held exclusively in any state or Federal court in Broward County, Florida. Each Party waives any objection which it might have now or hereafter to the venue of any such litigation, action or proceeding, submits to the sole and exclusive jurisdiction of any such court and waives any claim or defense of inconvenient forum. Each Party consents to service of process at such Party’s address as provided herein (and updated in writing from time to time).

 

14.9 Notices. All notices, demands or other communications required or permitted to be given hereunder shall be in writing, and any and all such items shall be deemed to have been duly delivered upon personal delivery; or as of the date of acceptance or refusal of delivery after mailing by United States mail, certified, return receipt requested, postage prepaid, addressed as follows; or as of the immediately following business day after deposit with Federal Express or a similar overnight courier service, addressed as follows:

 

Notices to Seller:

 

LMP CAPE CORAL KOCC, LLC

500 East Broward Boulevard, Suite 1900

Fort Lauderdale, FL 33394

Attn: Sam Tawfik, Chief Executive Officer

Phone:

Email:

 

With copies to:

 

Greenberg Traurig, PA

777 South Flagler Drive, Suite 300E

West Palm Beach, FL 33401

Attention: Bruce C. Rosetto

Phone: (561) 650-7940

Email: [email protected]

 

Notices to Purchaser:

 

CAPE CORAL AFL RE, LLC

CAPE CORAL AFL K, LLC

Attn: Ali Ahmed

5875 NW 163^rd Street

Suite 104

Miami Lakes, FL 33014

Email: [email protected]

 

 

With copies to:

 

Greenspoon Marder LLP

Attn: David Weisman

200 East Broward Blvd.

Suite 1800

Fort Lauderdale, FL 33301

Email: [email protected]

 

Greenspoon Marder LLP

Attn: Greg Blodig

200 East Broward Blvd.

Suite 1800

Fort Lauderdale, FL 33301

Email: [email protected]

 

 

Any address fixed pursuant to the foregoing may be changed by the addressee by notice given pursuant to this Section 14.9.

 

14.10 Headings. The headings of Articles and Sections of this Agreement are for purposes of convenience and reference and shall not be construed as modifying the Articles or Sections in which they appear.

 

14.11 Assignment. No Party may assign either this Agreement or any of its rights, interests, or obligations hereunder without the prior written approval of Purchaser and Seller, as applicable; provided, however, that Purchaser may (i) assign any or all of its rights and interests hereunder to one or more of its Affiliates or to an entity or entities to be formed by Purchaser or an Affiliate of Purchaser (the “New Purchaser Entities”) and (ii) designate one or more of its Affiliates or one or more New Purchaser Entities to perform its obligations hereunder, provided, however, that in either instance, Purchaser shall remain jointly and severally liable with any such assignee for all of Purchaser’s obligations hereunder. “Affiliate” as used herein shall have the meaning ascribed to it in the Asset Agreement.

 

14.12 Successors and Assigns. Subject to Section 14.11, this Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, personal representatives, successors and assigns.

 

14.13   Attorneys’ Fees. If either party commences an action to enforce the terms of, or resolve a dispute concerning, this Agreement, the prevailing party in such action shall be entitled to recover all costs and expenses incurred by such party in connection therewith, including reasonable attorneys’ fees.

 

14.14 Counterparts. This Agreement may be executed in one or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same instrument. This Agreement may also be executed by facsimile or “PDF” counterparts. In the event facsimile or “PDF” counterparts are used to execute this Agreement, Purchaser and Seller shall timely deliver to the other original counterparts for their respective records.

 

14.15 Severability. If any provision of this Agreement is declared void or unenforceable by a final judicial or administrative order, this Agreement shall continue in full force and effect, except that the void or unenforceable provision shall be deemed deleted and replaced with a provision as similar in terms to such void or unenforceable provision as may be possible and be valid and enforceable.

 

 

14.16 Confidentiality. From and after the Effective Date, each party to this Agreement shall, and shall cause its Affiliates (as defined in the Asset Agreement) and its or their respective representatives and agents, to hold, in confidence any and all information, whether written or oral, concerning the transactions contemplated under this Agreement, except (i) the disclosure that a transaction is occurring, but not any specific deal or economic terms, and (ii) to the extent that party can show that such information (a) is generally available to and known by the public through no fault of the disclosing party, any of its Affiliates or its or their respective representatives and agents; or (b) is lawfully acquired by the disclosing party, any of its Affiliates or its or their respective representatives and agents from and after the Effective Date from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If any party or any of its Affiliates or their respective representatives and agents are compelled to disclose any information by judicial or administrative process or by other requirements of Law (as defined in the Asset Agreement), such party shall promptly notify the other party in writing and shall disclose only that portion of such information which such disclosing party is advised by its counsel in writing is legally required to be disclosed, provided that such disclosing party shall use commercially reasonable efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

 

14.17   Risk of Loss. All risk of loss, damage or destruction of the Subject Property or any Improvement thereon by fire, act of God or other casualty prior to the Closing shall be on Seller. Seller agrees to maintain existing fire and extended insurance coverage on the Improvements to and through the date of the Closing. If the Improvements are damaged by fire, act of God, or other casualty before the Closing and the same can be restored to substantially the same condition as now existing within a period of sixty (60) days following the Closing Date set forth herein, Seller may restore the Improvements (at Seller’s expense) and the Closing shall be extended accordingly. If Seller elects not to restore the Improvements within said period, Purchaser shall have the option of: (i) taking the Improvements as is, together with Seller paying to Purchaser Seller’s deductible and assigning to Purchaser all rights under its insurance policies and all insurance proceeds, if any, without reduction in Purchase Price; or (ii) cancelling this Agreement, in which event Escrow Agent shall return the Deposit to Purchaser, together with all accrued interest thereon, this Agreement shall be terminated and the parties released of any further liability hereunder, except as otherwise provided herein.

 

14.18   Waiver of Trial by Jury. Seller and Purchaser hereby expressly covenant and agree to waive the right to trial by jury in connection with any litigation or judicial proceeding relating to, directly or indirectly, or concerning this Agreement or the conduct, omission, action, obligation, duty, right, benefit, privilege or liability of a party hereunder to the full extent permitted by law. This waiver of right to trial by jury is separately given and is knowingly, intentionally and voluntarily made by Purchaser and Seller. The Purchaser and Seller have had an opportunity to seek legal counsel concerning this waiver. This waiver is intended to and does encompass each instance and each issue as to which the right to a jury trial would otherwise accrue. Purchaser and Seller further certify and represent to each other that no party, representative, or agent of the Seller or Purchaser (including, but not limited to, their respective counsel) has represented, expressly or otherwise to the Purchaser or Seller or to any agent or representative of Purchaser or Seller (including, but not limited to, their respective counsel) that they will not seek to enforce this waiver of right to jury trial. This waiver shall apply to this Agreement and any future amendments, supplements or modifications of this Agreement.

 

14.19 Radon Disclosure. Radon is a naturally occurring radioactive gas that when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit. [Note: This paragraph is provided for informational purposes pursuant to Section 404.056(8), Florida Statutes, (1988).

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first set forth above.

 

	SELLER:
	LMP CAPE CORAL KOCC, LLC, a Florida limited liability company
	By:	/s/ Sam Tawfik
		Sam Tawfik, Authorized Signatory
	PURCHASER:
	CAPE CORAL AFL RE, LLC, a Florida limited liability company
	By:	/s/ Ali Ahmed
	Name:	Ali Ahmed
	Title:	Manager
	CAPE CORAL AFL K, LLC, a Florida limited liability company
	By:	/s/ Ali Ahmed
	Name:	Ali Ahmed
	Title:	Manager

 

 

EXHIBIT A

 

LEGAL DESCRIPTION OF THE PROPERTY

 

 

 

23

Exhibit 99.1

 

 

 

LMP Automotive Holdings, Inc. and its Affiliates Enters into an All Cash Asset Sale Agreements and Intends to Seek Stockholder Approval for Plan of Liquidation

 

FORT LAUDERDALE, Fla., Aug. 08, 2022 (GLOBE NEWSWIRE) -- LMP Automotive Holdings, Inc. (NASDAQ: LMPX) (“LMP” or the “Company”), an e-commerce and facilities-based automotive retailer in the United States, today announced it has entered into dealership and real estate asset sale agreements (the “Agreements”) to sell its Kia dealerships in Port Charlotte, FL, Cape Coral, FL and Beckley, WV, its Subaru dealership in Beckley, WW, its Chevrolet dealership in Beckley, WV and its General Motors dealership in Beckley, WV (the “Sale”).

 

The Company anticipates that the expected closing of the Sale will occur in October of this year, subject to the terms of the Agreements and numerous conditions precedent to Closing including but not limited to regulatory approval including any approval necessary under the Hart-Scott Rodino Antitrust Act.

 

We continue to believe that our stock price does not reflect the net asset value of our company and believe that this transaction along with the sale of our remaining assets will enable us to maximize stockholder value. The LMP Board of Directors (the “Board”) unanimously recommends that at our next Special Meeting of Stockholders (the “Special Meeting”) the Company’s stockholders vote to approve a proposed plan of liquidation of LMP’s assets and the dissolution of the Company (the “Plan of Liquidation”). The Plan of Liquidation will allow the LMP Board to sell all of the Company’s assets, distribute the net proceeds to stockholders and dissolve the Company. Importantly, the Plan of Liquidation will allow LMP to consummate the Sale of the above mentioned assets and to enter into sales for its remaining assets not currently subject to sale agreements and to enter into value maximizing transactions without subjecting any such transaction to the delay and conditionality associated with having to seek and obtain stockholder approval.

 

“The Board and the management team all believe that, given the diversified nature of our portfolio, pursuing multiple transactions with different potential buyers for assets or groups of assets presents the best opportunity to maximize stockholder value,” said Sam Tawfik, Chief Executive Officer and Chairman. “We believe that the Plan of Liquidation will maximize stockholder value as we continue to sell our remaining assets. Management believes that upon finalization of the Plan of Liquidation we expect that the Company will be able to distribute aproximatly $115 million to $126 million to shareholders.”

 

 

 

 

ABOUT LMP AUTOMOTIVE HOLDINGS, INC.

 

LMP Automotive Holdings, Inc. (NASDAQ: LMPX) is a growth company with a long-term plan to profitably consolidate and partner with automotive dealership groups in the United States. We offer a wide array of products and services fulfilling the entire vehicle ownership lifecycle, including new and used vehicles, finance and insurance products and automotive repair and maintenance.

 

Our proprietary e-commerce technology and strategy are designed to disrupt the industry by leveraging our experienced teams, growing selection of owned inventories and physical logistics network. We seek to provide customers with a seamless experience both online and in person. Our physical logistics network enables us to provide convenient free delivery points for customers and provide services throughout the entire ownership life cycle. We use digital technologies to lower our customer acquisition costs, achieve operational efficiencies and generate additional revenues. Our unique growth model generates significant cash flows, which funds our innovation and expansion into new geographical markets, along with strategically building out dealership networks, creating personal transportation solutions that consumers desire.

 

Investor Relations:

 

LMP Automotive Holdings, Inc.

500 East Broward Boulevard, Suite 1900

Fort Lauderdale, FL 33394

[email protected]

 

For more information visit:

lmpmotors.com

 

FORWARD-LOOKING STATEMENTS:

 

This press release may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, each as amended. Such statements include, but are not limited to, any statements relating to our expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar matters that are not historical facts. These statements may be preceded by, followed by or include the words “aim,” “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “outlook,” “plan,” “potential,” “project,” “projection,” “seek,” “can,” “could,” “may,” “should,” “would,” will,” the negatives thereof and other words and terms of similar meanings. These forward-looking statements are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company or any successor entity of the transaction and include statements concerning the expected timing of closing the transaction. Many factors could cause actual future events to differ materially from the forward-looking statements in this Current Report on Form 8-K, including but not limited to: (i) the risk that the transaction may not be completed in a timely manner or at all, (ii) the failure to satisfy the conditions to the consummation of the Atlantic Sale, (iii) the occurrence of any event, change or other circumstance that could give rise to the termination of the Agreements, (iv) the effect of the announcement or pendency of the transaction on the Company’s business relationships, operating results and business generally, and (v) risks that the transaction disrupts current plans and operations of the Company. There is no assurance that any forward-looking statements will materialize. You are cautioned not to place undue reliance on forward-looking statements, which reflect expectations only as of this date. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations or any changes in events, conditions or circumstances on which any such statement is based, except as required by law.

 

 

 

 

Additional Information and Where to Find It

 

A full description of the terms of the Atlantic Sale and the plan of liquidation will be provided in proxy statement to be filed with the Securities and Exchange Commission (“SEC”) by the Company that will include a proxy statement with respect to the stockholder meeting of the Company to vote on a plan of liquidation. The Company urges investors, stockholders and other interested persons to read, when available, the preliminary proxy statement, as well as other documents filed with the SEC, because these documents will contain important information about the Company, the Atlantic Sale and the plan of liquidation. The definitive proxy statement will be mailed to stockholders of the Company as of a record date to be established for voting on the plan of liquidation. Once available, stockholders will also be able to obtain a copy of the proxy statement, and other documents filed with the SEC without charge by directing a request to: 500 East Broward Boulevard, Suite 1900 Fort Lauderdale, FL 33394, or via email at [email protected]. The preliminary and definitive proxy statement can also be obtained, without charge, at the SEC’s website (www.sec.gov).

 

No Offer or Solicitation

 

This press release does not constitute an offer or invitation for the sale or purchase of securities, assets or the business described herein or a commitment to the Company, nor is it a solicitation of any vote, consent or approval in any jurisdiction pursuant to or in connection with the Atlantic Sale, the plan of liquidation or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of applicable law.

 

Participants in Solicitation

 

The Company, and its respective directors and executive officers, may be deemed participants in the solicitation of proxies of the Company’s stockholders in respect of the plan of liquidation. Information about the directors and executive officers of the Company is set forth in the Company’s filings with the SEC. Additional information regarding the identity of all potential participants in the solicitation of proxies to the Company’s stockholders in connection with the Atlantic Sale and plan of liquidation and other matters to be voted upon at the special meeting, and their direct and indirect interests, by security holdings or otherwise, will be included in the definitive proxy statement, when it becomes available.

 

 

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