Exhibit 10.1

 

ASSET PURCHASE AND CONTRIBUTION AGREEMENT

 

THIS ASSET PURCHASE AND CONTRIBUTION AGREEMENT (the “Agreement”) is made and
entered into as of the date of the last signature to this Agreement (the
“Effective Date”), by and among LMP AUTOMOTIVE HOLDINGS, INC., a Delaware
corporation, and or its assigns, with a mailing address for purposes of notices
hereunder of c/o Sam Tawfik, 601 North State Road 7, Plantation, Florida 33317
(“Purchaser”), NEWNAN IMPORTS, INC., a Georgia corporation, with a mailing
address for purposes of notices hereunder of c/o Walt Gutierrez, 28 Rose Arbor
Court, Newnan, Georgia 30265 (the “Seller”), and WALT GUTIERREZ, an individual
resident of Georgia, with a mailing address for purposes of notices hereunder of
28 Rose Arbor Court, Newnan, Georgia 30265 (the “Shareholder”). The Purchaser,
Seller, and Shareholder may each be referred to herein as a “Party” or
collectively as the “Parties.”

 

W I T N E S S E T H

 

WHEREAS, the Seller owns and operates a franchised motor vehicle dealership
located at 2 Herring Road, Newnan, Georgia 30265 (the “Dealership Premises”),
which sells and services (i) new and used motor vehicles distributed by Toyota
Motor Sales, USA, Inc. and Southeast Toyota Distributors, LLC (collectively,
“Toyota” or “Manufacturer”), (ii) new parts and accessories, and (iii) other
used motor vehicles (collectively, the “Business”); and

 

WHEREAS, the Shareholder owns all of the outstanding and issued shares of stock
in the Seller; and

 

WHEREAS, subject to, and in accordance with, the terms and conditions of this
Agreement the Purchaser desires to purchase an undivided interest in the
Dealership Assets (as hereinafter defined) from the Seller; the Seller desires
to contribute an undivided interest in the Dealership Assets in exchange for
issuance of a membership interest in the Purchaser; and the Purchaser desires to
secure a dealer sales and service agreement from Manufacturer appointing the
Purchaser as an authorized Toyota dealer at the Dealership Premises; and

 

WHEREAS, the Seller desires to sell an undivided interest in the Dealership
Assets and contribute an undivided interest in the Dealership Assets in exchange
for issuance of a membership interest in the Purchaser, subject to, and in
accordance with, the terms and conditions of this Agreement; and

 

WHEREAS, the Seller occupies the Dealership Premises and facilities thereon
under that certain Real Estate Lease by and between the Seller and Herring Road,
LLC (“Landlord”), dated February 1, 2006, as amended (the “Premises Lease”). In
connection with the Purchaser’s acquisition of the Dealership Assets, Parties
will seek the consent of the Landlord to permit the Seller to assign its
interests, as tenant, under the Premises Lease to the Purchaser.

 

NOW, THEREFORE, in consideration of the Parties’ execution of this Agreement,
and the premises, mutual covenants and promises hereinafter set forth, and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:

 

1. DEFINITIONS

 

1.1 Certain Definitions. For purposes of this Agreement, the following terms
shall have the meanings set forth below:

 

(a) “Affiliate” of a Person shall mean a Person that, directly or indirectly,
controls, is controlled by or is under common control with the first Person.

 

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(b) “Applicable Law” shall mean all applicable provisions of any federal, state,
local, municipal, statute, law, common law, permit, ordinance, code, rule,
regulation, decision, order, decree, treaty or judgment enacted, promulgated or
issued by any Governmental Authority.

 

(c) “Applicable Rate” means 8% per annum, computed on the basis of a 360-day
year or, with respect to any amount that an Indemnifying Party has been finally
adjudicated as liable to an Indemnifying Party pursuant to Section 6, such
higher post-judgment interest as may be imposed by any court of competent
jurisdiction

 

(d) “Basis” shall mean any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act or transaction that forms or could form the basis for any
specified consequence

 

(e) “Business Day” shall mean any day excluding Saturday, Sunday and any day on
which commercial banks are by law closed in the State of Georgia.

 

(f) “Code” shall mean the Internal Revenue Code of 1986, as amended.

 

(g) “Consent” shall mean all consents, approvals, authorizations, stipulations,
ratifications, waivers, exemption or order of, registration, certificate,
declaration or filing with, or report or notice to, any Person, including any
Governmental Authority.

 

(h) “Contract” or “Contracts” shall mean all agreements, contracts, commitments,
orders, licenses, leases and other instruments, arrangements and understandings
(whether written or oral) to which a Person is a party, or by which any of its
assets or properties are bound.

 

(i) “Control” (including the terms “controlled by” and “under common control
with”) means the possession of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.

 

(j) “Current Financials” shall mean the internally prepared, un-audited
financial statements of the Seller in the form required by the Manufacturer, for
the fiscal years ending 2017, 2018, 2019, and year-to-date 2020.

 

(k) “Cut-Off Date” shall mean the date that is 180 days after the Effective
Date.

 

(l) “DMS” shall mean a dealership management system.

 

(m) “EEOC” shall mean the U.S. Equal Employment Opportunity Commission.

 

(n) “Employee Benefit Plan” shall mean any (i) employee benefit plan within the
meaning of Section 3(3) of ERISA, (ii) profit sharing, bonus, compensation,
stock purchase, stock option, employment, termination, severance, retention or
other similar plan, agreement or arrangement, and (iii) hospitalization,
medical, life, or supplemental unemployment benefits plan, program, agreement or
arrangement, which are or have been sponsored, maintained or contributed to or
required to be contributed to by the Seller, any of its subsidiaries or any
ERISA Affiliate for the benefit of any former or current consultant, employee,
officer or director of the Seller, any of its subsidiaries or any ERISA
Affiliate, whether formal or informal and whether legally binding or not.

 

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(o) “Encumbrance” shall mean any charge, claim, community property interest,
equitable interest, lien, option, pledge, security interest, right of first
option, right of first refusal or similar restriction, including any restriction
on use, voting (in the case of any security or equity interest), transfer, or
exercise of any other attribute of ownership that is imposed by agreement,
understanding, Applicable Law or otherwise, whether of record or otherwise.

 

(p) “Environmental, Health and Safety Liabilities” shall mean any Losses,
natural resource damages, Encumbrances, orders, and consulting fees, (i) which
are incurred as a result of (A) the existence or alleged existence of Hazardous
Substances in, on, under, at or emanating from the Dealership Premises, (B) the
actual or alleged offsite transportation, treatment, storage or disposal of
Hazardous Substances generated by the Seller or at the Dealership Premises or
(C) the violation or alleged violation of any Environmental Laws or (ii) which
arise under the Environmental Laws.

 

(q) “Environmental Laws” shall mean all Applicable Laws pertaining to the injury
to, or the pollution or protection of human health and safety and the
environment, including the regulation, control, clean-up, generation, use,
collection, treatment, storage, transportation, recovery, removal, discharge or
disposal of Hazardous Substances.

 

(r) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.

 

(s) “ERISA Affiliate” shall mean any trade or business, whether or not
incorporated, that together with the Seller or any of its subsidiaries would be
deemed a "single employer" within the meaning of Section 4001(b)(1) of ERISA.

 

(t) “Escrow Agent” shall mean Bass Sox Mercer, 2822 Remington Green Circle,
Tallahassee, Florida 32308.

 

(u) “GADOR” shall mean the Georgia Department of Revenue.

 

(v) “Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any entity exercising legislative, executive,
judicial, quasi-judicial, regulatory or administrative functions of or
pertaining to government, or any tribunal or arbitrators of competent
jurisdiction.

 

(w) “Hazardous Substances” shall mean any chemical, material, substance,
constituent, contaminant, waste or pollutant regulated under any Environmental
Law, including:

 

(i) any toxic or hazardous wastes, materials, pollutants or substances,
including petroleum products and by-products, flammable explosives, radioactive
materials, asbestos, polychlorinated byphenyls, pesticides, herbicides,
pesticide or herbicide containers, untreated sewage, industrial process sludge;

 

(ii) any substances defined as “hazardous substances” or “toxic substances” or
similarly identified under CERCLA (42 U.S.C. § 9601 et seq., as amended);

 

(iii) “hazardous materials” as identified under the Hazardous Materials
Transportation Act, 49 U.S.C. § 1801 et seq., as amended;

 

(iv) any chemical substance or mixture regulated under the Toxic Substance
Control Act of 1976, 15 U.S.C. § 2601 et seq., as amended;

 

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(v) any “toxic pollutant” under the Clean Water Act, 33 U.S.C. § 466 et seq., as
amended, any hazardous air pollutant under the Clean Air Act, 42 U.S.C. § 7401
et seq., as amended; or

 

(vi) any toxic or hazardous wastes, materials, pollutants or substances
regulated under any other Environmental Law including any so-called “Super Fund”
or “Super Lien” legislation, now existing, pertaining to hazardous materials,
pollutants or wastes.

 

(x) “IRCA” shall mean the Immigration Reform and Control Act of 1986, as
amended, and all regulations promulgated thereunder.

 

(y) “Knowledge” an individual will be deemed to have “Knowledge” of a particular
fact or other matter if such individual knows or should have known of the
particular matter referred to; with respect to the Seller, that any person
responsible for overseeing the day to day operations of the Company or any
general manager, new or used car sales manager, service manager,
comptroller/office manager (or any person with similar such responsibilities
regardless of title) knows or should have known of the particular fact or matter
referred to.

 

(z) “Liability” or “Liabilities” shall mean with respect to any Person, any
liability or obligation of such Person of any kind, character or description,
whether known or unknown, absolute or contingent, accrued or unaccrued, disputed
or undisputed, liquidated or unliquidated, secured or unsecured, joint or
several, due or to become due, vested or unvested, executory, determined,
determinable or otherwise and whether or not the same is required to be accrued
on the financial statements of such Person.

 

(aa) “Licenses” shall mean all licenses, grants, franchises, permits, approvals,
Consents and other authorizations issued to or maintained by the Seller in
connection with its ownership, possession, use, occupancy or operation of any of
the Dealership Assets, or its operation of the Business.

 

(bb) “Losses” shall mean any and all damages (including punitive damages and
consequential damages awarded by a court of competent jurisdiction), losses,
charges, liabilities, claims, demands, Proceedings, payments, judgments,
settlements, assessments, obligations, deficiencies, Taxes, interest, penalties,
costs, and expenses (including reasonable attorneys’ fees).

 

(cc) “Manufacturer Parts Inventory” shall mean all of the Company’s inventories
of new, current, returnable, and non-obsolete Manufacturer parts and accessories
in their original, unbroken packages, which are located on or in transit to the
Company as of the Closing Date, and which are listed in a Manufacturer’s current
parts and accessories price book/catalogues, with supplements in effect on the
inventory date described in Section 3.2. Notwithstanding the foregoing,
Manufacturer Parts shall not include any “Obsolete” parts, defined as parts (a)
not being listed in the current Manufacturer’s 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
value reflected in the Master Price List, or (b) that have been in the Company’s
inventory longer than 12 months prior to Closing Date.

 

(dd) “Material Adverse Change” shall mean any change in, or effect on, the
Seller (including the business thereof) which is, or could reasonably be
expected to be, materially adverse to the business, operations, assets,
condition (financial or otherwise) or prospects of the Seller.

 

(ee) “Miscellaneous Inventory” shall mean all miscellaneous inventory of the
Company located at the Dealership Premises on the Closing Date and consisting of
non-Manufacturer Parts, batteries, tires, and paint, gas, oil and grease, etc.,
each of which is less than 1 year old, and all of which (in the case of fluids
and paint) shall be in unopened containers and usable.

 

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(ff) “OA Prep Period” shall mean 21 days after the Effective Date.

 

(gg) “Operating Agreement” means that certain operating agreement by and between
the Seller and the Purchaser, a form of which shall be agreed upon by the
Parties during the OA Prep Period.

 

(hh) Other Agreements” shall mean collectively, the Bill of Sale and Assignment,
the Non-Competition and Non-Solicitation Agreement, and any other agreements,
instruments, certificates and documents executed by the Parties in connection
herewith or therewith.

 

(ii) “Parts” shall mean collectively, the Manufacturer Parts, the
Non-Manufacturer Parts, and the Supplies.

 

(jj) “Permitted Encumbrances” shall mean Encumbrances securing indebtedness or
other monetary obligations that constitute an Assumed Liability.

 

(kk) “Person” shall mean any natural person, firm, partnership, association,
corporation, company, limited liability company, trust, business trust,
Governmental Authority or other entity (foreign or domestic).

 

(ll) “Proceeding” shall mean any action, claim, demand, suit, proceeding,
arbitration, grievance, citation, summons, subpoena, inquiry or investigation,
civil, criminal, regulatory or otherwise, in law or in equity.

 

(mm) “Returns” shall mean any return, report, declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto and any amendment thereof.

 

(nn) “Service Loaners” shall mean motor vehicles owned by the Company, located
on the Dealership Premises on the Closing Date, and provided by the Company to
customers while their vehicles are being serviced by the Company. Service
Loaners shall include motor vehicles that are current in status as well as
vehicles that have been retired from such status.

 

(oo) “Tax” or “Taxes” shall mean any federal, state, local, foreign or other
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits, gross
receipts, value added, sales (including bulk sales), use, goods and services,
excise, customs duties, transfer, conveyance, mortgage, registration, stamp,
documentary, recording, premium, severance, environmental (including taxes under
section 59A of the Code), real property, personal property, ad valorem,
intangibles, rent, occupancy, license, occupational, employment, unemployment
insurance, social security, disability, workers’ compensation, payroll, health
care, withholding, estimated or other similar tax, duty or other governmental
charge or assessment or deficiencies thereof, including all interest and
penalties thereon and additions thereto whether disputed or not.

 

(pp) “Third-Party Claim” means a third-party claim asserted against an
Indemnified Party by a Person other than (a) an Affiliate of such Indemnified
Party or (b) any director, stockholder, officer, member, partner, equity holder
or employee of any such Indemnified Party or its Affiliates.

 

(qq) “Transaction” shall mean the sale by the Seller and the purchase by the
Purchaser of an undivided interest in the Dealership Assets, the assumption by
the Purchaser of the Assumed Liabilities, and the Seller’s contribution to
Purchaser of an undivided interest in the Dealership Assets in exchange for
issuance of a membership interest in the Purchaser, all in accordance with the
terms of this Agreement.

 

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(rr) “Treasury Regulations” shall mean the Federal income tax regulations
promulgated under the Code, as such Treasury Regulations may be amended from
time to time.

 

(ss) “URL” shall mean a uniform resource locator.

 

(tt) “Used Vehicles” shall mean all vehicles that are located on the Dealership
Premises on the Closing Date and owned and held by the Seller for resale, to
include Service Loaners, but excluding New Vehicles, Demos, or company vehicles.

 

(uu) “WARN Act” shall mean the Worker Adjustment and Retraining Notification Act
or any similar state or local Applicable Law.

 

(vv) “We-Owes” shall mean a promise by the Seller to a customer for the delivery
of goods or services in the future.

 

1.2 Other Defined Terms. Certain other terms are defined in this Agreement and
are used with the meanings so ascribed to them.

 

2. THE TRANSACTION

 

2.1 Purchased Asset Interest. Subject to the terms and conditions of this
Agreement, on the Closing Date (as defined in Section 4.1 below), the Seller
shall sell to the Purchaser and the Purchaser shall purchase from the Seller,
all of the Seller’s right, title and interest in and to an undivided 75%
interest (the “Purchased Asset Interest”) in each of the following assets
(collectively, the “Dealership Assets”), free and clear of all Encumbrances
(except Permitted Encumbrances):

 

(a) all of the Seller’s furniture, fixtures, signs, product marketing displays,
office equipment and computers, machinery and shop equipment, parts equipment,
special tools, lifts, hybrid charging stations and related equipment, removable
compressors, shop tools, company vehicles, and other items of tangible personal
property owned and used by the Seller in the operation of the Business,
including those items listed on the Seller’s depreciation schedules and on
Schedule 2.1(a) (the “Fixed Assets”), attached hereto;

 

(b) each new, undamaged, and not previously titled (even if later reversed) or
reported sold (even if later reversed), 2019 and newer model year Manufacturer
motor vehicles, which (i) has no more than 250 miles recorded on it odometer as
of the Closing Date, (ii) has been in inventory fewer than 365 days as of the
Closing Date, and (iii) is located at or in transit to the Dealership Premises
as of the Closing Date (collectively, the “New Vehicles”);

 

(c) each vehicle that would be a New Vehicle but for having more than 250 miles
recorded on its odometer as of the Closing Date (collectively, the “Demos”).
Notwithstanding the foregoing, a Demo shall not include any vehicle with more
than 4,000 miles recorded on its odometer as of the Closing Date;

 

(d) such of the Seller’s inventory of Used Vehicles for which the Parties are
able to agree to a value. Any Used Vehicle(s) for which the Parties cannot reach
an agreement on value shall be considered an Excluded Asset;

 

(e) the Seller’s assignable rights and privileges under (i) the Contracts
identified on Schedule 2.1(e) attached hereto, which as part of the Purchaser’s
business due diligence the Purchaser shall elect whether to assume
(collectively, the “Assumed Contracts”); and (ii) other Assumed Liabilities;

 

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(f) all of the Seller’s Manufacturer Parts Inventory;

 

(g) all of the Seller’s Miscellaneous Inventories;

 

(h) all of the Seller’s sublet repairs and work in process repairs for which (i)
the Seller possesses an initial repair order signed by the customer authorizing
such repair, (ii) the repair order has been open for fewer than 10 Business Days
prior to the Closing Date, (iii) in the case of work in process repairs, the
subject vehicle is present at the Dealership Premises on the Closing Date, and
(iv) in the case of sublet repairs, the subject vehicle is present at the sublet
repair facility on the Closing Date (collectively, the “WIP”). The Purchaser may
review all WIP prior to the Closing Date;

 

(i) the Seller’s return privileges, if any, concerning the Manufacturer Parts;

 

(j) the Seller’s assignable rights to its email addresses, PO Boxes, telephone
and facsimile numbers (local and toll-free), as listed on Schedule 2.1(k);

 

(k) to the extent transferable, all Licenses;

 

(l) all rights of the Seller relating to deposits and prepaid expenses, claims
for refunds and rights to offset in respect thereof, each of which relates to an
Assumed Liability and are not otherwise an Excluded Asset;

 

(m) all offices supplies, janitorial supplies, and similar items owned by the
Seller and located at the Dealership Premises as of the Closing Date;

 

(n) any rights relating to or arising out of or under any express or implied
warranties from suppliers with respect to the Dealership Assets;

 

(o) all assignable rights of the Seller arising under any non-compete or
restrictive covenant agreements between the Seller and any former member(s), or
between the Seller and its employees, current or former;

 

(p) any insurance proceeds for claims or damages to the Dealership Assets,
unless such proceeds have been used prior to the Closing Date for repair or
restoration; and

 

(q) all of the Seller’s perpetual inventory records, sales records, customer
lists, customer service records and all other customer data, deal jackets,
supply and manufacturer lists, technical data, and sales and marketing
literature, advertising materials, promotional materials, including
merchandising literature from the Manufacturer, whether in hard or digital
copies (the “Records”), and all of the Seller’s intangible property rights and
goodwill associated with the Business, including all assignable franchise rights
under the Manufacturer’s dealer sales and service agreements, all tradenames
(including Toyota of Newnan) and URLs (including
https://www.toyotaofnewnan.com/) owned or controlled by the Seller and utilized
by the Business, and any and all of the Seller’s rights to content and access
(including usernames and passwords, or other access means) related to
GooglePlusLocal, GooglePlusBusiness, yelp, LinkedIn®, Facebook®, MySpace®,
foursquare, Twitter®, Dealer Rater, Edmunds, and Cars.com, and other
intellectual property owned by Seller and used or useable in the Business, and
all other intangible assets, rights and properties of the Seller whatsoever
(along with the Records, collectively, the “Goodwill”), except as described in
Section 2.2.

 

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Notwithstanding the foregoing, the transfer of the Dealership Assets under this
Agreement shall not include the assumption of any Liability in respect thereof
unless the Purchaser expressly assumes such Liability under Section 2.3(a).

 

2.2 Contribution of the Contributed Asset Interest. Subject to the terms and
conditions of this Agreement, on the Closing Date (as defined in Section 4.1
below), the Seller shall, as a member contribution, contribute the Seller’s
right, title and interest in and to an undivided 25% interest (the “Contributed
Asset Interest”) in the Dealership Assets, free and clear of all Encumbrances
(other than Permitted Encumbrances), in exchange for the Purchaser’s issuance to
the Seller of a 25% membership interest in the Purchaser, all in accordance with
this Agreement and the Operating Agreement.

 

2.3 Excluded Assets. Notwithstanding any contrary provision contained herein,
the Seller shall retain, and shall not sell to the Purchaser, the assets not
included in the Dealership Assets, including the following specific items
(collectively, the “Excluded Assets”):

 

(a) cash and cash equivalents on hand and in banks, certificates of deposit,
commercial paper, stocks, bonds and other liquid investments;

 

(b) accounts receivable of the Seller (including any “contracts in transit,”
rebates receivable, holdbacks, discounts receivable, credit life commissions
receivable, A & H commissions and finance Seller receivables, both current and
deferred);

 

(c) any prepaid expense, insurance, interest, utilities, or rent and any
deposits related thereto, which accrue to the benefit of the Seller as of the
day prior to the Closing Date;

 

(d) the minute book, corporate, accounting, and Tax records, and corporate seal
of the

Seller;

 

(e) any correspondence or records of the Seller that constitutes attorney-client
privileged communications;

 

(f) the consideration for the Purchased Asset Interest to be delivered by the
Purchaser to the Seller under this Agreement;

 

(g) the consideration (membership interest) for the Contributed Asset Interest;

 

(h) the Seller’s right to enforce this Agreement;

 

(i) vehicle parts and accessories that do not constitute Manufacturer Parts
Inventory or Miscellaneous Inventories;

 

(j) vehicles not purchased by the Purchaser hereunder;

 

(k) the Seller’s contracts or policies of insurance and any refunds of taxes or
tax loss carry forwards of the Seller;

 

(l) any assets leased by the Seller that would otherwise constitute Fixed Assets
if not so leased, unless the Purchaser assumes such lease obligations;

 

(m) all rights under any Licenses and Contracts, except for Assumed Contracts
and assigned Licenses;

 

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(n) real estate owned by the Seller;

 

(o) those items of personal property owned by the Shareholder and located at the
Dealership Premises, which are listed on Schedule 2.2(j); and

 

(p) all Employee Benefit Plans.

 

2.4 Assumption of Liabilities.

 

(a) At the Closing, the Purchaser shall assume (and shall agree to discharge,
pay and perform in accordance with their terms) only the following Liabilities
of the Seller (each an “Assumed Liability,” and collectively, the “Assumed
Liabilities”), and no other liabilities or obligations of the Seller whatsoever:

 

(i) all of the Seller’s Liabilities under the Assumed Contracts arising on or
after the Closing Date (other than any Liabilities arising out of any breach or
default that occurred prior to the Closing Date);

 

(ii) all of the Seller’s Liabilities to customers under the conditions of the
Seller’s vehicle order forms or special parts order forms arising with respect
to any customer deposits received in the ordinary course consistent with past
practices, to the extent that (A) the terms and conditions thereof are
reasonably acceptable to the Purchaser and consistent with the Seller’s past
practices and current market, (B) the associated deposit is not escheatable or
otherwise subject to forfeiture to the State of Georgia as unclaimed property,
and (C) the associated vehicles are currently scheduled for production, which
such Liabilities shall be reflected at the Closing on a schedule, and, along
with any such Seller’s vehicle order or special parts order forms, shall be
delivered at the Closing (the “Customer Deposits”); provided, however, that the
Purchaser shall not assume any of the Seller’s Liabilities arising out of any
breach of or default under such vehicle order that occurred prior to the Closing
Date;

 

(iii) all of the Seller’s obligations to complete WIP;

 

(iv) all of the Seller’s We-Owes, the value of which shall be subtracted from
the Asset Interest Price; and

 

(v) all of the Seller’s Liabilities under the Premises Lease arising on or after
the Closing Date (other than any Liabilities arising out of any breach or
default that occurred prior to the Closing Date).

 

(b) Except as otherwise provided in this Section 2.4, the Purchaser shall not
assume, or in any way be responsible or liable for, any Retained Liabilities.
“Retained Liabilities” shall mean each and every Liability of the Seller, other
than the Assumed Liabilities, including (i) any Liabilities of the Seller
arising out of the operation of the Business prior to the Closing Date, (ii)
conditions existing or alleged to have existed or any acts or omissions
occurring or alleged to have occurred at the Dealership Premises prior to the
Closing Date, including any Liabilities described in this Agreement or the
Schedules, (iii) any Liabilities attributable to violations of any Applicable
Law, (iv) any pending or threatened Proceeding against the Seller, and (v)
chargebacks from the cancellation/termination of finance or insurance products
on vehicles sold by the Seller prior to the Closing Date.

 

(c) Except for the Assumed Liabilities, following the Closing, the Seller shall
pay all amounts due to creditors of the Seller for goods or services provided to
the Seller with respect to the Business as such amounts come due, it being
understood that Seller shall use its best efforts to discharge such obligations
in a timely manner so as not to result in any unreasonable interruption of
business or delivery of services or products to the Purchaser.

 

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(d) Without limitation of the foregoing, it is specifically understood and
agreed between the Parties that the Purchaser shall not be responsible for any
express or implied warranties given by the Seller to customers prior to the
Closing Date. Further, should any customer make a claim upon any warranty given
by the Seller or for defective vehicle repair by the Seller prior to the
Closing, then, in that event, the Purchaser at its option may adjust any such
minor item as it so desires, at the Seller’s expense, and on any major item
shall notify the Seller and, upon the Seller’s approval, shall repair said item
at the Seller’s expense. Any major item shall be defined as any item at cost to
the Purchaser in excess of $250.00.

 

(e) The obligations of the Seller and Purchaser under this Section 2.4 shall
survive the Closing of this Transaction.

 

3. ASSET INTEREST PRICE

 

3.1 Asset Interest Price. The consideration to be paid by the Purchaser to the
Seller for the Purchased Asset Interest (the “Asset Interest Price”) shall be an
amount equal to 75% of the value of the following Dealership Assets and Assumed
Liability Credits, determined and allocated as follows, and shall be payable at
Closing in accordance with Section 4.5(a):

 

(a) Goodwill: The value for the Goodwill, and all the items listed in Section
2.1 but not explicitly mentioned in this Section 3.1, shall be $36,000,000; PLUS

 

(b) Fixed Assets: The value for the Fixed Assets shall be equal to their
depreciated net book value (on tax basis accounting in accordance with the Code)
as of the month ending preceding the Closing Date; provided, however, with
respect to any lease or financing agreement involving the Fixed Assets and
included in the Assumed Contracts, the value for the Fixed Assets shall be
reduced by an amount equal to any applicable payoff amount of such obligation as
of the Closing Date. The value for the Fixed Assets will be subject to (i)
reduction (at replacement cost) prior to the Closing for Fixed Assets which are
listed on Schedule 2.1(a) on the Effective Date but missing from the Dealership
Premises or not in good working condition as of the Closing Date, and (ii)
increase (at depreciated net book value) prior to the Closing Date for Fixed
Assets which are not listed on Schedule 2.1(a) at the Effective Date, but are
added to Fixed Assets prior to the Closing Date with the Purchaser’s prior
written approval, not to be unreasonably withheld, conditioned, or delayed; PLUS

 

(c) Manufacturer Parts Inventory: The value for the Manufacturer Parts Inventory
shall be the value shown in the most recent Manufacturer parts and accessories
price book or catalogues, as applicable, with all supplements in effect as of
the date of an inventory, with such value to be reduced by any credits,
discounts, allowances, rebates, or other incentives for which the Seller has
received on or before the Closing Date or would be eligible to receive after the
Closing Date; PLUS

 

(d) Miscellaneous Inventory: The value for the Seller’s Miscellaneous Inventory
shall be the Seller’s verifiable costs in such inventories; PLUS

 

10

 

 

(e) New Vehicles: The value for each New Vehicle shall be an amount equal to the
aggregate sum of (i) the Manufacturer’s invoice cost to the Company, including
Manufacturer charges for freight and handling, PLUS (ii) the wholesale cost
(without internal markup) to the Company of all “add- on” parts or accessory
items (installed consistent with the Seller’s past practices, but specifically
excluding reconditioning charges and soft adds such as etch, leather treatment,
undercoatings, paint sealants, etc.), MINUS (iii) dealer holdback, floorplan
assistance, advertising or marketing allowance and any dealer cash/rebates or
carryover allowances, and any other dealer factory incentives with respect to
such vehicles and for which the Company has previously been paid, MINUS (iv) a
credit in favor of the Purchaser equal to the value of any Manufacturer
installed accessories removed or missing from a vehicle, valued at cost
reflected on such vehicle’s invoice, MINUS (v) the amount of any PDI payment
received from the Manufacturer but for which no PDI activity has been performed
on such vehicle (such formula being hereinafter referred to as the “Triple Net
Formula”). Any dealer-traded vehicle that constitutes a New Vehicle shall be
valued in accordance with the Triple Net Formula. The value of each New Vehicle
shall not include any cleaning or reconditioning charges or any Seller-imposed
surcharge or “pack” (whether or not such amounts have been or were to be taken
into income by the Seller); PLUS

 

(f) Demos: The value for each Demo shall be calculated in accordance with the
Triple Net Formula, except there shall be an additional credit in favor of the
Purchaser in the amount of $0.25 per mile for each mile in excess of 250 miles
recorded on such Demo’s odometer as of the Closing Date; PLUS

 

(g) Used Vehicles: The value for each Used Vehicle shall be as mutually agreed
upon by the Parties; PLUS

 

(h) WIP: The value for the WIP shall be the Seller’s cost of parts and
accessories (with no internal markup) and the cost of the Seller’s service
technician wage expense (with no internal markup); MINUS

 

(i) Customer Deposits: The sum of the value of all Customer Deposits held by the
Seller as of the Closing Date for all New Vehicles or special-order parts and
accessories to be delivered on or after the Closing Date; MINUS

 

(j) We-Owes: The sum of the value of all outstanding We-Owes issued prior to the
Closing Date, which shall be reflected at the Closing on a schedule.

 

3.2 Physical Inventories. The classification and valuation of the Manufacturer
Parts Inventory and Miscellaneous Inventory shall be established, in accordance
with the provisions hereof, by a physical inventory count conducted by an
independent inventory service reasonably acceptable to the Parties (the “Parts
Inventory”). The Parts Inventory shall be taken as close as practicable to the
Closing Date, but no later than 2 days before the Closing Date, and will be
adjusted to reflect purchases and sales of the Parts between the date of such
physical inventory count and the Closing Date. The Seller agrees that no such
additions and deductions shall be made in such inventory except in the ordinary
course consistent with past practices and, further, to keep its usual and
adequate records of such additions and deductions, which records shall be made
available to the Purchaser for review and verification.

 

3.3 Value of the Contributed Asset Interest. The value of the Contributed Asset
Interest (which shall be reflected in the Operating Agreement and the Seller’s
member capital account, thereunder) shall be an amount equal to 25% of the value
of the Dealership Assets and Assumed Liability Credits, as set forth in the
sub-parts to Section 3.1.

 

3.4 Audit of Seller’s 2018 and 2019 Financials; Non-Audited Financials.

 

(a) On or before the 10th Business Day after the Effective Date, the Seller
agrees to engage a public accounting firm to commence an independent audit of
the Seller’s book and records for the fiscal years 2018 and 2019 and to prepare
audited financial statements and related statements of income (profit and loss),
cash flow, and member equity (balance sheet) (collectively, the “Audited
Financial Statements”), to be delivered to the Seller on or before the 60th day
after the Effective Date. The Purchaser shall reimburse the Seller for the cost
of obtaining the Audited Financial Statements, not to exceed $50,000. The
Audited Financial Statements shall be prepared in accordance with GAAP applied
on a consistent basis throughout the periods covered thereby and shall be
consistent with the books and records of the Seller. Within 3 Business Days of
receipt of the Audited Financial Statements, the Seller shall deliver to the
Purchaser, together with the Audited Financial Statements, an opinion of
Seller's independent auditors that the Audited Financial Statements present
fairly the financial condition and results of operations of the business
relating to the Dealership Assets of the Seller. Seller shall make available to
the Purchaser and the Purchaser’s accountants the Seller’s work papers and
backup materials used in the preparation of the Audited Financial Statements.

 

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(b) Within 30 days after the Effective Date, the Seller shall provide to the
Purchaser the following CPA-prepared financial statements for the fiscal years
2018 and 2019: profit and loss statement, cash-flow statement, and balance
sheet. Such financial statements shall be prepared according to United States
generally accepted accounting principles.

 

3.5 Prorations.

 

(a) All obligations and liabilities represented by ad valorem taxes and
assessments on the Dealership Assets for the year in which the Closing occurs,
and all prepaid and accrued expenses related to utilities, prepaid items,
non-refundable utility deposits and the like relating to the Business or Assumed
Liabilities, shall be apportioned between the Seller and the Purchaser as of the
Closing Date, it being understood that the Seller shall be responsible for any
such obligations and liabilities accrued or allocable to periods prior to the
Closing Date (whether or not then paid) and the Purchaser shall be responsible
for any such obligations and liabilities accruing or allocable for the periods
on and after the Closing Date.

 

(b) To the extent not fixed at the Closing Date, the initial apportionment of
taxes shall be upon the basis of the appropriate rate or charge for the
preceding year or other applicable period and applied to the latest assessment.
If any final bill, including one for taxes and other apportioned obligations and
liabilities, is different from that upon which the initial apportionment is
made, the Parties shall promptly thereafter make an appropriate adjustment.

 

(c) Payments between the Parties to effect any apportionment under this Section
3.3 shall occur on the Closing Date or promptly after such adjustments have been
determined and mutually agreed to by the Parties.

 

3.6 Allocations. The Parties shall prepare an allocation of the Asset Interest
Price, taking into account any adjustments made thereto in accordance with this
Agreement, among the Dealership Assets in accordance with Section 1060 of the
Code and the Treasury Regulations thereunder (and any similar provision of
state, local or foreign law, as appropriate), which allocations shall be binding
upon the Parties. Each of the Parties shall take all actions and file all
Returns (including IRS Form 8594 “Asset Acquisition Statement”) consistent with
such allocation. The Parties shall timely and properly prepare, execute, file
and deliver all such documents, forms and other information as may be reasonably
requested by another Party to prepare such allocation.

 

3.7 Deposit.

 

(a) Within 3 Business Days of the Effective Date, the Purchaser shall deliver to
the Escrow Agent the amount of $1,000,000, to be held in the Escrow Agent’s
IOLTA Attorneys Trust Account (the “Deposit”). If the Transaction shall be
consummated, the Deposit shall be applied to the Purchaser’s obligations at the
Closing as set forth in Section 4.5, and if this Agreement shall be terminated
and the Transaction abandoned, then the Deposit shall be applied as set forth in
Section 8.2.

 

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(b) By its execution of a counterpart of this Agreement or other signed
agreement among Escrow Agent, the Seller, and the Purchaser, the Escrow Agent
hereby accepts its designation as the escrow agent with respect to the Deposit,
acknowledges receipt of the Deposit, subject to collection, and agrees to hold,
invest and disburse the same as herein provided. The Escrow Agent shall not be
liable for any acts taken in good faith, shall only be liable for its willful
default or action, or gross negligence, and may, in its sole discretion, rely in
good faith upon the written notices, communications, orders or instructions
given by any Party; provided, however, that if any notice or correspondence is
not executed by both the Purchaser and the Seller, the Escrow Agent shall give
to the Purchaser or the Seller, as the case may be, copies of any notice or
correspondence received from the other and shall not take any actions with
regard thereto for 5 Business Days following the giving of such notice.

 

(c) In the event of a disagreement between the Seller and the Purchaser as to
the proper disbursement of the Deposit, the Escrow Agent reserves the right to
deposit said funds into the Registry of the Clerk of Court of Coweta County,
Georgia (the “Court Registry”), by filing an interpleader action and Escrow
Agent shall thereupon be discharged from the liability hereunder and shall be
entitled to reimbursement from the Seller and the Purchaser for all attorney’s
fees incurred and court costs expended in connection therewith. The parties
acknowledge that the Escrow Agent is also the Purchaser’s attorney with respect
to this Transaction and that, in the event an interpleader action is filed with
respect to the Escrow Deposit, the Escrow Agent may continue to represent the
Seller in such action or in any other action against the Seller with respect to
this Agreement.

 

(d) The Seller and the Purchaser hereby agree to indemnify and hold harmless the
Escrow Agent against any and all losses, claims, damages, liabilities and
expenses which may be incurred by the Escrow Agent in connection with its
acceptance of this appointment or the performance of its duties hereunder;
provided, however, that if the Escrow Agent shall be found guilty of willful
default or action, or gross negligence, then, in such event, the Escrow Agent
shall bear all such losses, claims, damages, liabilities and expenses. In the
event the Escrow Agent places the Deposit in the Court Registry, upon the
delivery of same to the prevailing party, whether by court order or otherwise,
the non-prevailing party shall (i) pay to the prevailing party at the time of
such delivery, interest on said monies at the publicly announced prime rate of
J.P. Morgan Chase Bank, as such rate may change from time to time, said interest
to run from the date of deposit into the Court Registry until delivery of same
to the prevailing party, and (ii) notwithstanding any contrary provision
contained herein, pay to the Escrow Agent all monies necessary to reimburse the
Escrow Agent for any losses, claims, damages, liabilities and expenses incurred
by the Escrow Agent in connection with its appointment as the Escrow Agent or
the performance of its duties hereunder.

 

4. CLOSING

 

4.1 Time, Date and Place of Closing.

 

(a) Subject to the provisions of Section 8, the closing of the Transaction (the
“Closing”) shall take place at such time and location as the Parties shall
mutually select on or before the 30th day following the later of: (i)
Manufacturer’s approval of the Purchaser, as provided in Section 4.2(c) below,
(ii) the expiration of the Due Diligence Period, or (iii) such other date agreed
to by Seller and Purchaser (the “Closing Date”); provided, the satisfaction (or
appropriate waiver in writing) of the conditions set forth in Sections 4.2 and
4.3 below; provided, the foregoing does not diminish the requirement of the
fulfillment (or appropriate waiver in writing) of those conditions that by their
terms or nature are to be satisfied at the Closing, and such conditions to be
satisfied at the Closing shall not be grounds for delaying the scheduling of the
Closing.

 

(b) The Closing shall be effective at 12:00:01 am (Eastern) on the Closing Date.

 

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4.2 Conditions to Obligations of the Purchaser. The obligations of the Purchaser
to make the payments and deliveries required under Section 4.5 and to consummate
the Transaction are subject to the fulfillment prior to or at the Closing Date
of each of the following conditions:

 

(a) Accuracy of Representations. Each of the representations and warranties of
the Seller and the Shareholder contained in this Agreement, or in any
certificate, exhibit, Schedule or other document delivered by the Seller and the
Shareholder in connection with this Agreement shall be true and correct in all
material respects, in each case on the Effective Date and at and as of the
Closing Date as though made on and as of the Closing Date and each of such
representations and warranties that is qualified as to materiality shall be true
and correct in all respects in each case on the Effective Date and at and as of
the Closing Date as though made on and as of the Closing Date (except in each
case for such representations and warranties as are dated as of a particular
date, which shall be true and correct in all material respects or true and
correct in all respects, as the case may be, as of such date).

 

(b) Performance of Obligations. The Seller and the Shareholder shall have fully
complied with and performed all of their obligations and covenants under this
Agreement required to be performed or complied with prior to or at the Closing,
including tendering for delivery to the Purchaser all of the items set forth in
Section 4.4 below.

 

(c) No Material Adverse Change. Between the Effective Date and the Closing Date
there shall have been no Material Adverse Change.

 

(d) Manufacturer Approval. The Manufacturer shall have approved in writing the
Transaction and the appointment of the Purchaser as an authorized motor vehicle
dealer in the Manufacturer’s products at the Dealership Premises, all on terms
(including any facility or image improvement requirements) acceptable to the
Purchaser, and the Manufacturer shall have issued to the Purchaser such
documentation necessary for issuance of a Georgia new motor vehicle dealer
license. The Seller shall have executed all documents required by the
Manufacturer to terminate its dealer sales and service agreement with the
Manufacturer, to be effective as of the Closing Date and to be delivered to the
Purchaser and the Manufacturer at Closing.

 

(e) Financing. Within 30 days of the Effective Date, the Purchaser shall have
received a written commitments floor plan and acquisition financing, all on
terms and conditions acceptable to the Purchaser.

 

(f) Employment Agreement. The Purchaser, or its Affiliate, and Nick Pierce (the
“General Manager”) shall have entered into an employment agreement on terms
mutually acceptable to the Purchaser and General Manager.

 

(g) Third Party Consents. With respect to each Assumed Contract that requires,
prior to an assignment of the Seller’s interest therein, the Consent of a third
party, each such third party shall, without cost to the Purchaser, have granted
its Consent, in form and substance reasonably satisfactory to the Purchaser,
authorizing the assignment of each of the Assumed Contracts from the Seller to
the Purchaser.

 

(h) No Litigation. No Proceeding shall be pending, or threatened, or reasonably
foreseeable, before any court or other Governmental Authority, wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
restrain, enjoin, prohibit or prevent consummation of the Transaction or any
other transaction contemplated by this Agreement, (ii) cause the Transaction to
be rescinded following consummation, or (iii) affect adversely the right of the
Purchaser to own the Dealership Assets and to operate the Business (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect).

 

14

 

 

(i) Licenses. The Purchaser shall have obtained all required Licenses from
Governmental Authorities to operate a franchised new motor vehicle dealership at
the Dealership Premises, in the same manner as currently operated by the Seller.

 

(j) Due Diligence. The Purchaser shall be satisfied with its due diligence
investigations and inspections of the Business and the Dealership Assets. This
provision shall be deemed satisfied at the end of the 2nd Business Day after the
end of the Due Diligence Period, unless the Purchaser terminates this Agreement
pursuant to Section 8.1(f).

 

(k) Landlord Consent. The Landlord shall have consented to the Seller’s
assignment of the Premises Lease to the Purchaser.

 

(l) Subordination, Non-Disturbance and Attornment Agreement. Each of the
Landlord’s lenders shall have entered into a Subordination, Non-Disturbance and
Attornment Agreement with regard to the Premises Lease in form reasonably
acceptable to the Purchaser’s counsel.

 

4.3 Conditions to Obligations of the Seller. The obligations of the Seller to
make the deliveries set forth in Section 4.4 and to consummate this Transaction
are subject to the fulfillment prior to or at the Closing Date of each of the
following conditions:

 

(a) Accuracy of Representations. Each of the representations and warranties of
the Purchaser contained in this Agreement, or in any certificate, exhibit,
Schedule or other document delivered by the Purchaser in connection with this
Agreement shall be true and correct in all material respects in each case on the
Effective Date and at and as of the Closing Date as though made on and as of the
Closing Date and each of such representations and warranties that is qualified
as to materiality shall be true and correct in all respects in each case on the
Effective Date and at and as of the Closing Date as though made on and as of the
Closing Date (except in each case for such representations and warranties as are
dated as of a particular date, which shall be true and correct in all material
respects or true and correct in all respects, as the case may be, as of such
date).

 

(b) Performance of the Purchaser’s Obligations. The Purchaser shall have fully
complied with and performed all its obligations and covenants under this
Agreement required to be performed or complied with prior to or at the Closing,
including tendering for delivery to the Purchaser all of the items set forth in
Section 4.5 below.

 

(c) No Litigation. No Proceeding shall be pending, or threatened, or reasonably
foreseeable, before any court or other Governmental Authority, wherein an
unfavorable injunction, judgment, order, decree, ruling, or charge would (i)
restrain, enjoin, prohibit or prevent consummation of any of the Transaction or
any other transaction contemplated by this Agreement, or (ii) cause the
Transaction to be rescinded following consummation.

 

(d) Landlord Consent. The Landlord shall have consented to the Seller’s
assignment of the Premises Lease to the Purchaser.

 

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4.4 Deliveries by the Seller at the Closing. On or before the Closing Date, the
Seller and the Shareholder, as the case may be, shall deliver the following to
the Purchaser (or as otherwise provided herein), each, where applicable, duly
executed (or endorsed, as the case may be) by the Seller and/or Shareholder:

 

(a) (i) such deeds, bills of sale, endorsements, assignments and other good and
sufficient instruments of conveyance (collectively, the “Conveyance Instrument”)
as will effectively convey to the Purchaser all title to and interest in the
Purchased Asset Interest and Contributed Asset Interest, together with releases
or termination statements of all Encumbrances (other than Permitted
Encumbrances) on the Dealership Assets, and (ii) an instrument of assignment and
assumption with respect to the Assumed Liabilities (the “Assignment and
Assumption Instrument,” and along with the Conveyance Instrument, collectively,
the “Bill of Sale and Assignment”), in substantially the form attached hereto as
Exhibit A;

 

(b) an instrument of assignment and assumption with respect to the tradenames,
trademarks, domain names and URLs listed on Schedule 5.2(q), in substantially
the form attached hereto as Exhibit B (the “IP Assignment Agreement”);

 

(c) an agreement concerning the allocation of the Asset Interest Price and
preparation of IRS Form 8594, in substantially the form attached hereto as
Exhibit C (the “8594 Agreement”)

 

(d) a non-competition and non-solicitation agreement, in substantially the form
attached hereto as Exhibit D (the “Non-Competition Agreement”);

 

(e) a post-Closing agreement (the “Post-Closing Agreement”), as applicable;

 

(f) a closing and disbursement statement enumerating the Asset Interest Price,
prorations, and adjustments, all in accordance with this Agreement or as
otherwise agreed upon by the Seller and the Purchaser (the “Closing Statement”);

 

(g) the Operating Agreement;

 

(h) all manufacturer statements of origin furnished by the Manufacturer for the
New Vehicles, Demos, and Service Loaners, and all titles for the Used Vehicles
and the company vehicles (collectively, the “Titles”), along with a limited
power of attorney in favor of the Purchaser with respect to the Titles;

 

(i) a letter of good standing from the Georgia Department of Revenue (“DOR”)
stating that as of a date not more than 20 days prior to the Closing Date, no
taxes, interest or penalties are due to the DOR from the Seller. The foregoing
certification shall be referred to as the “Tax Certificate.” If the Seller is
unable to deliver the Tax Certificate, the Purchaser may waive this delivery
requirement subject to the Seller authorizing the Withheld Tax Amount described
in Section 7.11, as contemplated under Section 48-8-46, Georgia Code, and
executing the Tax Escrow Agreement attached hereto as Exhibit E;

 

(j) all owners’ manuals, all headsets, all DVD remotes (if applicable), all
navigation system SD cards and DVDs, all floor mats, and at least 2 keys and
wireless key fobs for each New Vehicle, Demo, and Service Loaner, and 1 key to
each of the Used Vehicles acquired by the Purchaser;

 

(k) schedules, inventories, and other data from the Seller’s DMS reasonably
requested by the Purchaser as part of building closing inventory/accounting
schedules;

 

(l) a certificate dated the Closing Date and executed by an authorized
representative of the Seller, certifying (i) that the representations and
warranties of the Seller in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date, (ii) the
covenants and agreements to be performed or complied with by the Seller prior to
the Closing have been performed and complied with in all respects, (iii) the
resolutions of the Seller authorizing the execution and delivery of this
Agreement and the agreements contemplated hereby and approving the consummation
of the Transaction, and (iv) the incumbency and signatures of any
representatives of the Seller executing this Agreement;

 

16

 

 

(m) such document(s) as may be required by the Manufacturer to (i) memorialize
or confirm the surrender or termination by the Seller of its dealer sales and
service agreement and franchise rights with respect to the Manufacturer’s
brands, (ii) confirm successful Closing of the Transaction, or (iii) memorialize
the agreed disposition of the Seller’s parts account (e.g., the “Parts Account
Settlement Acknowledgement”);

 

(n) a certificate of good standing with respect to the Seller from the Georgia
Secretary of State, dated as of a recent date prior to the Closing Date;

 

(o) the cancellation of, or transfer to the Purchaser, of all fictitious names
associated with the Business; and

 

(p) such other documents or instruments as may be required under this Agreement
or as may be reasonably requested by the Purchaser in connection with the
consummation of the Transaction.

 

4.5 Deliveries by the Purchaser at the Closing. On or before the Closing Date,
the Purchaser shall deliver or cause to be delivered the following to the Seller
(or as otherwise provided herein), each, where applicable, duly executed (or
endorsed, as the case may be) by the Purchaser:

 

(a) delivery to the Escrow Agent (who will serve as a disbursement agent at the
Closing) by wire transfer in immediately available funds of an amount equal to
the sum of the Asset Interest Price, subject to the adjustments provided herein
MINUS the Indemnification Escrow Amount MINUS the Withheld Tax Amount PLUS or
MINUS any adjustments for prorations and other payments and withholdings to be
paid or otherwise borne by the Seller or the Purchaser under this Agreement,
which such net amount shall be disbursed by the Escrow Agent to the Seller by
wire transfer to an account designated by the Seller, in immediately available
funds;

 

(b) the Bill of Sale and Assignment;

 

(c) the IP Assignment Agreement;

 

(d) the 8594 Agreement;

 

(e) the Non-Competition Agreement;

 

(f) the Post-Closing Agreement;

 

(g) the Operating Agreement;

 

(h) evidence of the issuance to the Seller of a 25% membership interest in the
Purchaser;

 

(i) the Closing Statement;

 

(j) as applicable, the Tax Escrow Agreement;

 

17

 

 

(k) a certificate of good standing with respect to the Purchaser from the
Georgia Secretary of State, dated as of a recent date prior to the Closing Date;

 

(l) a certificate dated the Closing Date and executed by an officer of the
Purchaser, certifying (i) that the representations and warranties of the
Purchaser in this Agreement are true and correct in all material respects on and
as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of such date, (ii) the covenants and
agreements to be performed or complied with by the Purchaser prior to the
Closing have been performed and complied with in all respects, (iii) the
resolutions of the Purchaser authorizing the execution and delivery by the
Purchaser of this Agreement and the agreements contemplated hereby and approving
the consummation of the Transaction, and (ii) the incumbency and signatures of
the officer of the Purchaser executing this Agreement; and

 

(m) such other documents or instruments as may be reasonably required by the
Seller in accordance with this Agreement, each in form and substance reasonably
satisfactory to the Purchaser.

 

4.6 Post-Closing Matters.

 

(a) Delivery of Possession. The Seller shall take all necessary action to
provide the Purchaser with possession of the Dealership Assets on the Closing
Date. Within 5 Business Days after the Closing Date, the Seller shall remove
from the Dealership Premises the Excluded Assets not sold to the Purchaser
hereunder, during which time the Purchaser shall not be liable for any damages
or losses to any of the Seller’s assets while on the Dealership Premises. If any
of the Seller’s Excluded Assets remain on the Dealership Premises after such
period, the Purchaser shall provide the Seller with written notice to remove the
remaining Excluded Assets within 5 Business Days, and any Excluded Assets not
removed by the Seller by the end of such additional period shall be deemed
included in the Transaction. The Seller agrees to indemnify and hold the
Purchaser harmless from any claims from customers or employees concerning their
respective assets located on the Dealership Premises on the Closing Date.

 

(b) Records. The Purchaser agrees to store the Records, at no expense to the
Seller, for the period(s) required under Applicable Law. The Purchaser shall be
obligated to exercise only the same degree of care in the safeguard and
maintenance of said Records as the Purchaser provides its own records. After the
Closing Date, the Purchaser shall give to the Seller, and its agents, reasonable
access to the Records as shall be necessary for recordkeeping and tax purposes,
or in connection with any third-party demand or claim made by or against the
Seller.

 

(c) Seller’s Receivables. Following the Closing, the Purchaser agrees for a
period of 120 days or 4 month-ends, whichever is greater (the “Run Out Period”),
to accept payment of the Seller’s accounts receivable payments arising out of
the operation of the Business prior to Closing and to hold same for prompt
payment over to the Seller. At the end of the Run Out Period, the Purchaser
shall no longer be obligated to accept payments of such accounts receivable. If
the Purchaser does accept payment of any of the Seller’s accounts receivable
after expiration of the Run Out Period, the Purchaser shall promptly pay same
over to the Seller. It is understood that the Purchaser’s responsibility, so far
as such collection is concerned, is only to accept monies paid on such accounts
receivable and shall not include any obligation to attempt to enforce payment
thereof, or to send out bills or statements therefor.

 

(d) Run Out of Books. The Purchaser agrees to turn over to the Seller all
payments, mail, invoices, general correspondence, and any other business-related
items (“Residual Transactions”) related to the Seller’s Business operations
prior to the Closing Date that are received by the Purchaser after the Closing
Date, so the Seller may account for such items in the winddown of its business
affairs. The Purchaser and Seller will work closely to reasonably ensure that
all Residual Transactions that may impact both the Purchaser and Seller will be
reconciled, reviewed, and settled on a weekly basis for the first month and
thereafter on a bi-weekly basis through the end of the Run Out Period.

 

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(e) Erroneous Payments. The Parties shall in good faith work together and use
their commercially reasonable efforts to ensure that (i) amounts paid by the
Seller but owed by the Purchaser as a result of Manufacturer or vendor
erroneously billing the Seller for items arising out of or in connection with
the operation of the Business following Closing shall be paid over to the Seller
promptly, and (ii) amounts paid by the Purchaser but owed by the Seller as a
result of Manufacturer or vendor erroneously billing the Purchaser for items
arising out of or in connection with the operation of the Dealership prior to
Closing shall be paid over to the Purchaser promptly.

 

(f) Further Assurances.

 

(i) To the extent that any of the Assumed Contracts is not assignable without
the consent of another party, this Agreement shall not constitute an assignment
or attempted assignment thereof at any time prior to receipt of such consent. If
such consent shall not be obtained on or prior to the Closing, the Seller agrees
to cooperate with the Purchaser after the Closing in implementing any reasonable
arrangement designed to provide for the Purchaser the benefits under any such
Assumed Contracts.

 

(ii) The Seller shall, from time to time after the Closing, deliver to the
Purchaser such further deeds, bills of sale and assignment, documents of title
and other instruments necessary or desirable, in the reasonable opinion of the
Purchaser’s counsel, to perfect the transfers of the Dealership Assets and the
Assumed Liabilities to the Purchaser, free and clear of all Encumbrances other
than the Permitted Encumbrances. The Purchaser shall, from time to time after
the Closing, deliver to the Seller such further assignments, instruments of
assumption, or other documents as may be necessary or desirable, in the
reasonable opinion of the Seller’s counsel, to perfect or clarify the
Purchaser’s assumption of the Assumed Liabilities.

 

(g) Survival. The matters under this Section 4.6 shall survive the Closing.

 

5. REPRESENTATIONS AND WARRANTIES

 

5.1 Representations and Warranties by the Purchaser. The Purchaser hereby
represents and warrants to the Seller as of the Effective Date and as of the
Closing Date as follows:

 

(a) Corporate Matters.

 

(i) The Purchaser is duly organized, validly existing and in good standing under
the laws of the state of its formation and in Georgia.

 

(ii) The execution, delivery and performance of this Agreement and the Other
Agreements to which it is a party by the Purchaser have been duly authorized by
all requisite company action. Except for the required Licenses and the Consent
of the Manufacturer to the appointment of the Purchaser as an authorized dealer
in the Manufacturer’s products, no approval or consent of any other person is
required in connection with the execution, delivery, and performance by the
Purchaser of this Agreement and the Other Agreements to which it is a party.

 

(iii) This Agreement has been, and at the Closing the Other Agreements to which
the Purchaser is a party will be duly executed and, assuming due authorization,
execution, and delivery by the Seller and Shareholder, this Agreement
constitutes and the Other Agreements to which the Purchaser is a party will
constitute legal, valid and binding obligations of the Purchaser, enforceable in
accordance with their respective terms, except to the extent that enforceability
may be limited by applicable bankruptcy, insolvency and other laws and equitable
principles affecting creditors’ rights generally and the discretion of the
courts in granting equitable remedies.

 

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(iv) The execution and delivery by the Purchaser of this Agreement and the Other
Agreements to which it is a party, and the consummation by the Purchaser of the
transactions contemplated hereby and thereby, will not constitute (with or
without the giving of notice or the lapse of time or both) a violation of,
contravene, be in conflict with, result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both), or constitute a default under (A) any term or provision of the articles
of organization or operating agreement of the Purchaser, (B) any Contract to
which the Purchaser is subject or by which it is bound, or (C) subject to
compliance with any Applicable Law.

 

(b) Brokers. Except as set forth in Schedule 5.1(b), no broker, agent,
consultant, finder or other similar person has assisted the Purchaser in
procuring, negotiating or executing this Agreement, and the Purchaser is under
no contract with any such party.

 

(c) No Material Misrepresentation or Omission. No representation or warranty by
the Purchaser contained in this Agreement, and no statement contained in any
instrument, list, certificate, or writing furnished by the Purchaser to the
Seller under the provisions hereof or in connection with the Transaction,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading.

 

5.2 Representations and Warranties by the Seller and Shareholder. Each of the
Seller and the Shareholder represent and warrant to the Purchaser as of the
Effective Date and as of the Closing Date as follows:

 

(a) Corporate Matters.

 

(i) The Seller is a Corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia.

 

(ii) The execution, delivery and performance of this Agreement and the Other
Agreements to which it is a party by the Seller have been duly authorized by all
requisite company action (including approval by the Shareholder). Except for the
Consent of the Manufacturer to the appointment of the Purchaser as an authorized
dealer in the Manufacturer’s products, and the approval of the Landlord to the
Assignment of the Premises Lease, no approval or consent of any other person is
required in connection with the execution, delivery, and performance by the
Seller and the Shareholder of this Agreement and the Other Agreements to which
they are parties.

 

(iii) This Agreement has been, and at the Closing the Other Agreements to which
the Seller and/or the Shareholder are parties will be duly executed and,
assuming due authorization, execution and delivery by the Purchaser, this
Agreement constitutes and the Other Agreements to which the Seller and/or the
Shareholder are parties will constitute the legal, valid and binding obligations
of each of the Seller and the Shareholder, enforceable in accordance with their
respective terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency and other laws and equitable principles
affecting creditors’ rights generally and the discretion of the courts in
granting equitable remedies.

 

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(iv) The execution and delivery by the Seller and the Shareholder of this
Agreement and the Other Agreements to which the Seller and/or the Shareholder
are parties, and the consummation by the Seller and the Shareholder of the
transactions contemplated hereby and thereby, will not constitute (with or
without the giving of notice or the lapse of time or both) a violation of,
contravene, be in conflict with, result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time or
both), or constitute a default under (A) any term or provision of the articles
of incorporation or by-laws of the Seller or the Shareholder, (B) any Contract
to which the Seller or the Shareholder are subject or by which they are bound,
or (C) subject to compliance with any Applicable Law.

 

(b) Legal Capacity. The Shareholder has the necessary legal capacity to enter
into this Agreement and the Seller’s Closing Documents to which the Shareholder
is a party and to perform his obligations hereunder and thereunder.

 

(c) Title. The Seller owns, and has, or shall have as of the Closing Date, good
title to, the Dealership Assets, free and clear of all Encumbrances, other than
the Permitted Encumbrances. Except as set forth in Schedule 5.2(c), all Fixed
Assets located at the Dealership Premises and utilized by the Seller in the
operation of its Business are owned by the Seller.

 

(d) Taxes. The Seller has duly filed all foreign, federal, state, county and
local income, excise, sales, property, withholding, social security, franchise,
license, information returns and other applicable tax returns and reports, or
appropriate and permitted extensions thereto, required to be filed by it as of
the Effective Date with respect to the Business and the Dealership Assets. To
the Seller’s Knowledge, each such return is true, correct, and complete, and the
Shareholder has paid all taxes, assessments, amounts, interest and penalties due
to any Governmental Authority. To its Knowledge, the Seller has no liability for
any taxes, assessments, amounts, interest or penalties of any nature whatsoever
other than those for which the Seller has created sufficient reserves or made
other adequate provision. No Governmental Authority is now asserting or, to the
Seller’s Knowledge, threatening to assert any deficiency or assessment for
additional taxes, interest, penalties or fines with respect to the Seller, the
Business, the Real Property or the Dealership Assets.

 

(e) Contracts.

 

(i) Each Assumed Contract listed on Schedule 2.1(e) is in full force and effect
and constitutes a legal, valid and binding agreement, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium, similar laws affecting creditors’ rights and remedies generally and
general principles of equity. 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
Assumed Contract by the Seller, or, to the Seller’s Knowledge, by any other
party thereto, in any term, covenant or condition of each Assumed Contract; and

 

(ii) except for (A) the Assumed Contracts, and (B) Contracts involving in each
case less than $2,000.00 over their respective terms or which are terminable at
will by the Seller without payment or penalty of any nature whatsoever, the
Seller is not a party to any Contract.

 

(f) Employees and Employment Matters. Unless otherwise set forth in detail
in Schedule 5.2(f):

 

(i) The Seller has complied with all requirements of Applicable Law relating to
the Seller’s employees (each an “Employee” and collectively, the “Employees”)
and will have paid all wages, salary, vacation, and sick leave (even if not
specifically accrued for by the Seller), and bonuses due to the Employees (the
“Employee Compensation”) through the Closing Date (including any accrued
bonuses). The Seller has not received any notice regarding a current claim
against it for (A) overtime pay, wages, salary or bonus, excluding current
payroll periods or (B) vacation time, excluding time earned in current payroll
periods.

 

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(ii) The Seller is not currently paying any pension, deferred compensation, or
retirement allowance to anyone.

 

(iii) The Seller has no oral or written collective bargaining or organized labor
contracts, employment agreements, bonus or commission agreements, pay plans,
deferred compensation agreements, profit sharing agreements, welfare or health
benefit agreements, or retirement plans or arrangements, whether or not legally
binding. In accordance with the deadlines in Section 7.4, the Seller shall
deliver to the Purchaser true and correct copies of each agreement, plan, or
arrangement described on Schedule 5.2(f), if any.

 

(iv) The Seller represents that it has taken no action that would interfere with
any employment by the Purchaser of any Employee.

 

(v) The Seller is not aware that any Employee intends to terminate his or her
employment relationship with the Seller. The Seller has no contract for the
future employment of any Employee.

 

(vi) The Seller is not aware of any Employee who intends to refuse employment
with the Purchaser after the Closing or will terminate his/her employment with
the Purchaser within 2 weeks after the Closing Date.

 

(vii) There have been no Employee walk-outs, strikes, or similar events within
the last 3 years.

 

(viii) No current or former Employee has filed a charge with the EEOC within the
last 2 years.

 

(ix) The Seller maintains current files containing all Labor Condition
Applications and related public and non-public access documentation which they
must present upon request by the Department of Labor including all documentation
noted in 20 CFR §655.760. The Seller also maintain current files containing all
documentation which they are required to maintain in the event of an audit
related to labor certification for permanent employment filings, including all
documentation noted in 20 CFR §655 and 656 and the rules and regulations
promulgated thereunder.

 

(x) 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 the Seller been warned,
fined or otherwise penalized for any failure to comply with IRCA or for any
willful violation of any other immigration law, rule or regulation.

 

(xi) The Seller has complied in all material respects with the applicable
requirements for its employee medical and benefit plans as set forth in the Code
and 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.”

 

(xii) The Seller has not violated the WARN Act.

 

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(g) Financial Statements. True, correct and complete copies of the Current
Financials have been delivered by the Seller to the Purchaser for Purchaser’s
review in connection with its due diligence investigation of the Business and
the Dealership Assets. The Current Financials (i) have been prepared in
accordance with the Manufacturer’s reporting requirements, (ii) represent
actual, bona fide transactions, and (iii) fairly present the financial condition
and the results of operations of the Business as at the respective dates of and
for the periods referred to in such records. To the Knowledge of the Seller,
neither the Seller nor its independent accountants have identified or been made
aware of any fraud, whether or not material, that involves the Seller’s
management or other employees who have a role in the preparation of financial
statements or the internal controls utilized by the Seller, or any claim or
allegation regarding any of the foregoing. Except as disclosed on Schedule
5.2(g), since June 1, 2020, there has been:

 

(i) no business condition or any fact that has specific application to the
Seller that may result in a Material Adverse Change;

 

(ii) no damage to, or destruction or loss of, any assets of the Seller
materially and adversely affecting the Dealership Assets or the condition
(financial or otherwise), business, operations or prospects of the Business;

 

(iii) no sale, lease, abandonment or other disposition or removal of any assets
that would have constituted Dealership Assets except in the ordinary course
consistent with past practices with replacement by assets of similar utility and
value;

 

(iv) no material increases in the compensation, commissions or bonuses payable
to any employee or agent of the Seller performing services with respect to the
Business; no entry into or amendment or modification of any employment,
severance or similar contract; no adoption of or material increase in benefits
under any employee benefit plan or program; and no labor problems, strikes or
other occurrences of a similar nature; or

 

(v) no change in the accounting methods used by the Seller with respect to the
Business.

 

(h) Absence of Undisclosed Liabilities. The Seller has no debts, claims,
liabilities or obligations of any nature, whether known or unknown, absolute,
accrued, contingent or otherwise and whether due or to become due, asserted or
un-asserted, except (1) to the extent disclosed or reserved against in the
Seller’s balance sheet for the 12 months ended December 31, 2019, and (2) for
liabilities and obligations that were incurred after December 31, 2019 in the
ordinary course consistent with past practices and that, individually or in the
aggregate, do not exceed $10,000.

 

(i) Condition of the Dealership Assets and Real Estate. Except as set forth in
Schedule 5.2(i):

 

(i) the Dealership Assets constitute all of the assets used by the Seller in
connection with, and necessary for, the operation of the Business in the
ordinary course and as historically operated by the Seller;

 

(ii) to the Seller’s Knowledge, the Fixed Assets and the plumbing, HVAC,
furnaces, boilers, and electrical systems servicing the Business and the
Dealership Premises are all in good operating condition, have been maintained in
accordance with prudent business practices and are performing the function or
service for which they were acquired in accordance with manufacturer
specifications;

 

23

 

 

(iii) to the Seller’s Knowledge, the roof is sound, and in serviceable
condition;

 

(iv) the Seller has not received notice of and has no actual knowledge of (A)
any pending or contemplated condemnation, eminent domain or rezoning Proceeding
affecting the Dealership Premises, (B) any proposal or other consideration for
increasing the assessed value of the Dealership Premises for state, county,
local or other ad valorem or similar Taxes by an amount that would materially
affect the profitability of the Business, or (C) any Proceedings or public
improvements which could or might result in the levy of any special Tax or
assessment against the Dealership Premises;

 

(v) the only real estate, properties, and interests used by the Seller in the
Business or necessary to the operation of the Business are the Dealership
Premises; and

 

(vi) a true and correct copy of the Premises Lease is attached hereto as Exhibit
F.

 

(j) Litigation. Except as set forth on Schedule 5.2(j), there is no Proceeding
pending or, to the Knowledge of the Seller or the Shareholder, threatened
against or relating to the Seller (including in connection with or relating to
the Transaction or the Other Agreements or of any action taken or to be taken in
connection therewith or the consummation of the transactions contemplated hereby
or thereby).

 

(k) Compliance with Applicable Laws. To its Knowledge, the Seller has complied
with all Applicable Laws relating to the Business, the Dealership Assets and its
use and occupation of the Dealership Premises (including zoning laws), and is
not and has not been either charged with, in receipt of any notice or warning
of, or to the Knowledge of the Seller, under investigation with respect to, any
failure or alleged failure to comply with any provision of any Applicable Law.

 

(l) Brokers. Except as set forth in Schedule 5.2(l), no broker, agent,
consultant or other similar person has assisted Seller in procuring, negotiating
or closing this Transaction, and the Seller is under no contract with any such
party.

 

(m) Environmental. Except as set forth in Schedule 5.2(m):

 

(i) To the Seller’s and Shareholder’s Knowledge, there are no Hazardous
Substances present at, on, in or under the Dealership Premises, except for
consumables used and waste generated in the ordinary course of the Seller’s
business, in each case in compliance with applicable Environmental Laws.

 

(ii) The Seller and Shareholder have not received any notice, whether oral or
written, from any Governmental Authority or other Person of any actual or
threatened Environmental, Health and Safety Liabilities that are pending or
unresolved with respect to the Dealership Premises Storage or the Business.

 

(iii) There are currently no underground storage tanks or underground hydraulic
lifts located in, at, on or under the Dealership Premises, and any former such
items that were removed from the Dealership Premises prior to Effective Date
were in good condition and repair and not leaking when removed and were removed
in accordance with all Applicable Laws.

 

(iv) To the Seller’s Knowledge, all gasoline, oil and other petroleum products
stored, treated, used or disposed of on, in or about any portion of the
Dealership Premises have been stored, treated, used or disposed of in full and
strict compliance with all Applicable Laws. All above-ground gasoline, oil or
petroleum product storage tanks on the Dealership Premises, if any, have been
properly registered.

 

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(v) The Seller or the Shareholder has provided to the Purchaser all material
environmental reports, assessments, audits, studies, investigations, data and
other nonprivileged written environmental information in its custody, possession
or control concerning the Business or the Dealership Premises.

 

(n) Manufacturer Communications. Except as set forth on Schedule 5.2(n), no
Manufacturer has (i) notified the Seller or Shareholder of any deficiency in
Dealership operations (including brand imaging, facility conditions, sales
efficiency, customer satisfaction, warranty work and reimbursement, or sales
incentives); (ii) advised the Seller of a present or future need for facility
improvements, upgrades, or relocation in connection with the Business; (iii)
notified the Seller of the Manufacturer’s desire to alter the configuration of
the Seller’s Business, including facility utilization; (iv) notified the Seller
of a plan to establish an additional dealer within 40 or fewer miles from the
Dealership Premises, (v) the relocation of an existing dealership for any of the
Manufacturer’s products within 20 miles of the Dealership Premises, or (vi) of
any reduction in the Seller’s new vehicle allocation for the Manufacturer’s
products. The Seller is not a party to any “exclusive use agreement,” “site
control agreement,” or other Contract with any Manufacturer (other than a dealer
sales and service agreement) concerning the occupation and use of the Dealership
Premises.

 

(o) Manufacturer Audits. Except as set forth on Schedule 5.2(o), in the last 5
years, the Manufacturer has not conducted any audit of the Seller’s sales
practices and documentation or service practices and warranty claim
documentation, and the Seller has not been subject to a chargeback of monies
previously paid to the Seller with respect to its vehicle sales and warranty
claims.

 

(p) Dealership Marketing Plans. Except as set forth on Schedule 5.2(p), in the
last 5 years, the Seller has not participated, and currently does not
participate, in customer marketing or added value plans such as “tires for
life,” “batteries for life,” “lifetime oil changes,” customer coupon programs,
customer gift certificates, extended service warranties, insurance related
products, or similar customer programs, and the Seller has not offered its
customers any products or services for which the Seller, or any of its
Affiliates, has an ongoing responsibility for administration and the Liability
thereof.

 

(q) Tradenames; Domain Names; URLs. Schedule 5.2(q) sets forth a complete list
of all tradenames and trademarks that have been utilized by the Seller in its
Business and a list of all Internet domain names or URLs registered, owned, or
leased by the Seller, Shareholder, or their Affiliates. The Seller owns, solely
and exclusively, or possesses the valid and enforceable right to use all of the
Seller’s tradenames.

 

(r) Odometer Accuracy. The odometer on each of the motor vehicles included in
the Seller’s inventory on the Closing Date represents the actual mileage that
such motor vehicle has been driven unless otherwise disclosed on the odometer
disclosure statement accompanying such motor vehicle.

 

(s) Privacy Laws. The Seller has complied with the Gramm-Leach-Bliley Act (the
“GLB Act”) with respect to customer information received by the Seller,
including, if applicable, responsibility for providing any notice required, and
the Seller has implemented and maintained privacy practices to protect any
financial information received by the Seller from its customers. Schedule 5.2(s)
contains a copy of the Seller’s internal policies and procedures document for
compliance with the GLB Act and a copy of the notice provided to the Seller’s
customers.

 

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(t) Solvency. The Seller is not insolvent and will not be rendered insolvent by
the Transaction. As used in this Section 5.2(t), “insolvent” means that the sum
of the Seller’s debts and other probable Liabilities exceeds the present fair
saleable value of the Seller’s assets.

 

(u) Intellectual Property Rights. 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 corporate 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).

 

(v) Licenses. Schedule 5.2(v) contains a list of all Licenses that, to the
Knowledge of Seller, constitute all material Licenses as required for the
operation of the Business as presently conducted and as presently intended to be
conducted. The Seller currently has all such Licenses, and to its Knowledge, the
Seller is not in default or violation (and no event has occurred which, with
notice or the lapse of time or both, would constitute a default or violation) of
any term, condition or provision of any such License, nor are any facts or
circumstances that could form the Basis for any such default or violation.

 

(w) No Material Misrepresentation or Omission. No representation or warranty by
the Seller or the Shareholder contained in this Agreement, and no statement
contained in any instrument, list, certificate, or writing furnished by the
Seller or the Shareholder to the Purchaser under the provisions hereof or in
connection with the Transaction, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading.

 

6. SURVIVAL; INDEMNIFICATION

 

6.1 Survival. Subject to the limitations described in Section 6.5, the
representations, warranties, covenants and agreements made by the Parties and in
any agreement, certificate, instrument or other document delivered under this
Agreement shall survive the Closing and consummation of the Transaction.

 

6.2 Indemnities of the Seller and Shareholder.

 

(a) The Seller and Shareholder shall, jointly and severally, indemnify, hold
harmless and agree to defend the Purchaser and its Affiliates, officers,
directors, employees, agents, consultants, representatives, stockholders and
controlling Persons and their respective successors and assigns (collectively,
the “Purchaser Indemnified Parties”) at all times from and after the date of
this Agreement, from and against any and all Losses incurred by any of the
Purchaser Indemnified Parties (the “Purchaser Damages”), which may now or in the
future be paid, incurred or suffered by or asserted against the Purchaser
Indemnified Parties by any Person resulting or arising from or incurred in
connection with any one or more of the following:

 

(i) any misrepresentation or breach of any warranty of the Seller or the
Shareholder made or contained in this Agreement

 

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(ii) any failure of the Seller or the Shareholder to perform any covenant or
agreement made or contained in this Agreement or fulfill any obligation in
respect thereof;

 

(iii) any Retained Liability or Excluded Asset;

 

(iv) any non-compliance by the Seller or the Shareholder with any fraudulent
transfer law in connection with the Transaction; or

 

(v) any brokerage or finder’s fees or commissions or similar payments based upon
any Contract made, or alleged to have been made, by any Person, with the Seller
or the Shareholder (or any Person acting on their behalf) in connection with the
Transaction.

 

(b) Basket. In no event will any amount be recovered from the Seller for any
Purchaser Damages resulting from matters described in Section 8.1(a)(i), until
the aggregate amount of all Purchaser Damages incurred by the Purchaser
Indemnified Parties exceeds $20,000 (the “Basket”), in which event the Seller
and Shareholder, jointly and severally, will be obligated, subject to the other
provisions of this Agreement, to indemnify the Purchaser Indemnified Parties to
the full extent of such Purchaser Damages, including the Basket, on a dollar for
dollar basis; provided, however, that the Seller’s Liability for any Purchaser
Damages will not be limited as set forth in this Section 8.1(b) if such
Purchaser Damages relate to a breach of representation or warranty set forth in
Sections 5.2(a), (b), or (c) (inclusive).

 

(c) Insurance. The Seller’s indemnification obligations shall be reduced to the
extent that the subject matter of any indemnification claim brought by the
Purchaser is covered by and paid to Purchaser pursuant to a warranty or
indemnification from a third-party or third-party insurance.

 

(d) Indemnification Escrow. At the Closing, an amount equal to $950,000 of the
Asset Interest Price shall be withheld and delivered to the Escrow Agent and
deposited in escrow by the Purchaser (the “Indemnification Escrow Amount”), to
be held for a period of 24 months following the Closing Date (the
“Indemnification Escrow Period”) to secure the Seller’s indemnification
obligations under this Section 6.2. The Escrow Agent shall deposit the
Indemnification Escrow Amount in a non-interest-bearing account to be held in
accordance with the form of escrow agreement (“Indemnification Escrow
Agreement”) attached hereto as Exhibit G.

 

(i) Fifty percent (50%) of the Indemnification Escrow Amount shall be released
and paid by the Escrow Agent to the Seller on the 1st anniversary of the Closing
Date (the “First Release”); provided, however, the First Release shall be
reduced by any amounts either (A) paid to a Purchaser Indemnified Party from the
Indemnification Escrow Amount, or (B) subject to a disputed claim as of the date
of the First Release.

 

(ii) The remaining portion of the Indemnification Escrow Amount shall be
released and paid by the Escrow Agent to the Seller on the 2nd anniversary of
the Closing Date (the “Second Release”); provided, however, the Second Release
shall be reduced by any amounts either (A) paid to a Purchaser Indemnified Party
from the Indemnification Escrow Amount, or (B) subject to a disputed claim as of
the date of the Second Release.

 

(iii) If the Seller receives notice from the Purchaser of a request for
indemnification during the Indemnification Escrow Period and the Seller does not
dispute its indemnification obligation in connection therewith, the Purchaser
may, only after complying with the procedures described in the Indemnification
Escrow Agreement, set off the amount owed to it in respect of such
indemnification obligation against the Indemnification Escrow Amount. Such
amount will reduce the Indemnification Escrow Amount and any corresponding
release owed to the Seller during the applicable period set forth in this
Section 6.2(d), or upon termination of the Indemnification Escrow Period, as the
case may be. Prior to exercising its right of set-off hereunder, the Purchaser
shall notify the Seller in writing of the matter in dispute together with all
material facts and circumstances reasonably necessary for the Seller to
determine the Basis for such claim or asserted obligation.

 

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6.3 Indemnities of the Purchaser.

 

(a) The Purchaser shall, and hereby does indemnify, hold harmless and agree to
defend the Seller and its Affiliates, officers, directors, employees, agents,
consultants, representatives, stockholders and controlling Persons and their
respective successors and assigns (collectively, the “Seller Indemnified
Parties”) at all times from and after the date of this Agreement, from and
against any and all Losses incurred by any of the Seller Indemnified Parties
(the “Seller Damages”), which may now or in the future be paid, incurred or
suffered by or asserted against the Seller Indemnified Parties by any Person
resulting or arising from or incurred in connection with any one or more of the
following:

 

(i) any misrepresentation or breach of any warranty of the Purchaser made or
contained in this Agreement;

 

(ii) any failure of the Purchaser to perform any covenant or agreement made or
contained in this Agreement or fulfill any obligation in respect thereof; or

 

(iii) any brokerage or finder’s fees or commissions or similar payments based
upon any Contract made, or alleged to have been made, by any Person, with the
Seller or the Shareholder (or any Person acting on their behalf) in connection
with the Transaction.

 

(b) Basket. In no event will any amount be recovered from the Purchaser for any
Seller’s Damages resulting from matters described in Section 6.3(a)(i) until the
aggregate amount of all Seller Damages incurred by the Seller Indemnified
Parties exceeds the Basket, in which event the Purchaser will be obligated,
subject to the other provisions of this Agreement, to indemnify the Seller to
the full extent of such Seller’s Damages, including the Basket, on a dollar for
dollar basis.

 

6.4 Claim Procedures. Each Person that desires to make a Claim for
indemnification pursuant to this Section 6 (an “Indemnified Party”) will provide
notice (a “Claim Notice”) thereof in writing to the Purchaser (if the
Indemnified Party is a Seller Indemnified Party) or to the Seller (if the
Indemnified Party is a Purchaser Indemnified Party) (in each such case, an
“Indemnifying Party”), specifying the nature and Basis for such Claim and a copy
of all papers served with respect to such Claim (if any). For purposes of this
Section 6.4, receipt by a Person of written notice of any Third-Party Claim
which gives rise to a Claim on behalf of such Person will require delivery of a
Claim Notice to the Indemnifying Party within 20 days following the receipt of
such Third-Party Claim; provided, however, that an Indemnified Party’s failure
to send or delay in sending a Claim Notice will not relieve an Indemnifying
Party from Liability hereunder with respect to such Claim except to the extent
and only to the extent the Indemnifying Party is materially prejudiced by such
failure or delay.

 

6.5 Limitations on Indemnification.

 

(a) Except for claims for indemnification arising out of (i) the Seller’s
Retained Liabilities or Excluded Assets, (ii) the Seller’s breach of Sections
5.2(a) and 5.2(b), (iii) the Purchaser’s breach of Section 5.1(a), or (iv) the
Seller’s or Purchaser’s willful, fraudulent, or intentional misrepresentation,
each of which shall survive the Closing through the period that ends 60 days
after all statutes of limitation applicable to the underlying claim(s), any
other claims for indemnification by the Seller or the Purchaser Indemnitees
under this Agreement must be made within 24 months following the Closing.

 

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(b) The representations, warranties and covenants that are the subject of a
claim shall survive until the claim is finally determined

 

6.6 Calculation, Timing, Manner and Characterization of Indemnification
Payments.

 

(a) Payments of all amounts owing by an Indemnifying Party other than as a
result of a Third-Party Claim will be made within 15 Business Days after the
later of (i) the date the Indemnifying Party is deemed liable therefor pursuant
to this Section 6 or (ii) if disputed, the date of the adjudication of the
Indemnifying Party’s Liability to the Indemnified Party under this Agreement.

 

(b) Payments of all amounts owing by an Indemnifying Party as a result of a
Third- Party Claim will be made as and when Losses with respect thereto are
incurred by the Indemnified Party and within 15 Business Days after the
Indemnified Party makes demand therefor to the Indemnifying Party.

 

(c) All amounts due and payable under this Agreement (i) with respect to a
Third- Party Claim, will bear interest at the Applicable Rate from the date due
and payable hereunder until the date paid and (ii) with respect to a Claim other
than a Third-Party Claim, will bear interest at the Applicable Rate from the
date the Indemnified Party suffers the Losses until the date paid. Such interest
shall be calculated daily on the basis of a 365-day year and the actual number
of days elapsed.

 

(d) Notwithstanding the foregoing, the Purchaser acknowledges and agrees that it
shall first offset any indemnification obligations of the Seller, so agreed or
finally adjudicated arising under this Section 6, against the Indemnification
Escrow Amount. To the extent the remaining balance of the Indemnification Escrow
Amount (after taking into account prior offsets or any releases of any portion
of the Indemnification Escrow Amount pursuant to Section 6.2(d)) is less than
any amounts to which the Purchaser is entitled to indemnification, the Seller
shall remain liable for the balance of any amounts owed pursuant to such
indemnification obligations and shall satisfy them in accordance with this
Section 6.5.

 

6.7 Third-Party Claims.

 

(a) In the event of the assertion of any Third-Party Claim, the Indemnifying
Party, at its option, may assume (with legal counsel reasonably acceptable to
the Indemnified Party) at its sole cost and expense the defense of such
Third-Party Claim if it acknowledges to the Indemnified Party in writing its
obligations to indemnify the Indemnified Party with respect to all elements of
such Third-Party Claim and may assert any defense of the Indemnified Party or
the Indemnifying Party; provided that the Indemnified Party will have the right
at its own expense to participate jointly with the Indemnifying Party in the
defense of any such Third-Party Claim. Counsel representing both the
Indemnifying Party and the Indemnified Party must acknowledge in writing its
obligation to act as counsel for all parties being represented and must
acknowledge and respect separate attorney-client privileges with respect to each
party represented. If the Indemnifying Party elects to undertake the defense of
any Third-Party Claim under this Agreement, the Indemnified Party will cooperate
with the Indemnifying Party in the defense or settlement of the Third-Party
Claim, including providing access to information, making documents available for
inspection and copying, and making employees available for interviews,
depositions and trial, in each case, at the Indemnifying Party’s expense. The
Indemnifying Party will not be entitled to settle any Third-Party Claim without
the prior written consent of the Indemnified Party, which consent will not be
unreasonably withheld or delayed.

 

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(b) If the Indemnifying Party, by the 30th day after receipt of notice of any
Third-Party Claim (or, if earlier, by the 10th day preceding the day on which an
answer or other pleading must be served in order to prevent Judgment by default
in favor of the Person asserting such Third-Party Claim) does not assume
actively and in good faith the defense of any such Third-Party Claim or action
resulting therefrom, the Indemnified Party may, at the Indemnifying Party’s
expense, defend against such Claim or litigation, after giving notice of the
same to the Indemnifying Party, on such terms as the Indemnified Party may deem
appropriate, and the Indemnifying Party will be entitled to participate in (but
not control) the defense of such action, with its counsel and at its own
expense. The Indemnified Party will not settle or compromise any Third-Party
Claim for which it is entitled to indemnification under this Agreement, without
the prior written consent of the Indemnifying Party, which consent will not be
unreasonably withheld or delayed.

 

(c) Notwithstanding anything in this Section 6.6 to the contrary, the Purchaser
will in all cases be entitled to control the defense of a Third-Party Claim if
the Purchaser reasonably believes (i) such Third-Party Claim could result in
Liabilities which, taken together with other then outstanding Claims by the
Purchaser under this Agreement, could exceed the remaining potential Losses
payable by the Seller under this Agreement or the amount that the Purchaser
believes it will be able to collect from the Seller under this Agreement or (ii)
such Third-Party Claim could adversely affect in any material respect the
Purchaser or its Affiliates (other than as a result of money damages) or if
injunctive or other non-monetary relief has been sought against the Purchaser or
its Affiliates.

 

6.8 Exclusive Remedy. In the absence of fraud or criminal conduct, the
indemnification provisions in this Section 6 will be the sole and exclusive
remedy and recourse for any breach of this Agreement by the Purchaser and
Seller, except as expressly provided in this Agreement. In addition, any Party
will be entitled to seek specific performance against any other Party in
accordance with this Agreement.

 

6.9 Materiality. For purposes of determining the amount of Losses that are the
subject matter of a Claim for indemnification or reimbursement hereunder, each
such representation or warranty shall be read without regard and without giving
effect to the term “material” or “materiality” or similar phrases contained in
such representation or warranty.

 

6.10 Treatment. Any indemnity payments made under this Agreement will be treated
for all U.S. federal income Tax purposes as an adjustment to the aggregate Asset
Interest Price, unless otherwise required by any applicable Legal Requirement.

 

7. OTHER AGREEMENTS

 

7.1 Covenants of the Seller. On and after the Effective Date and until the
Closing Date:

 

(a) Continuing Operation of Business. The Seller will (i) carry on the Business
in the ordinary course consistent with past practices, shall not engage in any
transaction or activity or enter into any Contract or make any commitment except
in the ordinary course consistent with past practices, (ii) comply with all
Applicable Laws, (iii) file all required tax returns and pay all required Taxes,
(iv) maintain or cause to be maintained in full force and effect fire, property
damage, and extended coverage insurance in the amount of the full replacement
cost of the Dealership Assets under the Seller’s blanket insurance policy or
policies, (v) use its commercial reasonable efforts to preserve and promote the
Business and preserve intact the reputation of the Business and the Seller’s
relationship with Employees, customers, and vendors, (vi) maintain all of the
Dealership Assets (including all buildings, structures and improvements on the
Dealership Premises) in good operating condition and repair, ordinary wear and
tear excepted, and make any necessary repairs, and (vii) not take or permit any
act or omission to act which would have a Materially Adverse Change to the
Business.

 

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(b) Financial Statements. The Seller will furnish to the Purchaser within 15
days after the end of each month a statement of income and a balance sheet as of
the end of such month with respect to the Business, all of which shall be
prepared in accordance with the Manufacturer’s accounting standards.

 

(c) Books and Records. The Seller will maintain books, accounts and records
relating to the Business in the ordinary course consistent with past practices.

 

(d) Negative Covenants of the Seller. After the Effective Date and without the
consent of the Purchaser, the Seller will not with respect to the Business:

 

(i) enter into any employment, collective bargaining or professional services C
ontract;

 

(ii) change employment terms, including with respect to wages, salary or
bonuses, or institute or modify any benefit plans or programs, except in the
ordinary course consistent in all material respects with past practices;

 

(iii) make any material change in management personnel;

 

(iv) enter into any new, or amend or terminate any Assumed Contract;

 

(v) take or omit to take any action which would cause a material breach of any
Assumed Contract;

 

(vi) implement any operation decision(s) of a material nature relating to the
Business; or

 

(vii) make any change in the “dealer agreement” (or any equivalent Contract with
the Manufacturer).

 

Except as set forth in Schedule 7.1(d), none of the foregoing has occurred
between January 1, 2020 and the Effective Date.

 

(e) Parts Return. Upon the satisfaction of the Manufacturer’s approval condition
in Section 4.2(d), if the Seller has any Parts return privileges or allowances
that are not assignable, then the Seller shall initiate a Parts return
(designating for return Parts selected by the Purchaser) prior to the Closing
Date, with the intent of exhausting any such non-assignable outstanding return
privileges or allowances.

 

(f) Dealer Trades. From the Effective Date through the Closing Date, the Seller
agrees not to transfer any of its New Vehicle inventory to any new vehicle
dealer unless the Seller receives in trade for placement in its New Vehicle
inventory a replacement New Vehicle of like kind and quality and in a model and
trim that the Seller has sold in the 3-month period prior to the Effective Date.

 

(g) Damage Disclosure. At Closing, the Seller agrees to inform the Purchaser as
to whether or not any of the motor vehicle inventory sold to the Purchaser
hereunder is known by the Seller to have incurred damages, and will provide
repair records for such vehicles.

 

(h) No Interference. The Seller shall not to take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, Employee, or other business associate of the Business, or the Seller,
from maintaining the same business relationships with the Business and the
Purchaser after the Closing Date as they maintained with the Business and the
Seller prior to the Closing. The Seller will refer all customer inquiries
relating to the Business to the Purchaser from and after the Closing Date.

 

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(i) Changes in Warranties, Representations and Schedules. The Seller (i) shall
not take or permit any action or omit to take any action which would cause any
of the representations and warranties of the Seller contained in this Agreement
or the Other Agreements become untrue, and (ii) shall promptly notify the
Purchaser in writing of any changes to the Seller’s warranties and
representations contained herein.

 

7.2 Third Party Consents.

 

(a) Each Party shall cooperate in good faith and shall use its respective
reasonable best efforts to obtain any Consents required under this Agreement.

 

(b) Within 2 Business Days after the Effective Date, the Seller shall deliver a
notice on the Seller’s letterhead, addressed to the Manufacturer, and prepared
in accordance with Applicable Law, expressing the Seller’s desire to consummate
the Transaction and otherwise obtain the Manufacturer’s consent to the
Transaction and appointment of the Purchaser as an authorized dealer in the
Manufacturer’s products at the Dealership Premises. Such notice shall include a
request that the Manufacturer provide to the Seller and the Purchaser any forms
or applications necessary to achieve the Transaction. The Seller will provide
any and all information and assistance reasonably necessary to assist the
Purchaser in its application to the Manufacturer.

 

7.3 Employees of the Seller; Employee Benefits; Payroll Tax Related Matters.

 

(a) Within 3 Business Days after the Effective Date, the Seller shall provide to
the Purchaser:

 

(i) a complete and correct list of the names, job title, and current salary,
bonus and commission arrangements, written or unwritten, for each Employee of
the Seller working at or for the Business; and

 

(ii) true and correct copies of each employment/bonus/commission agreement, plan
or arrangement described on Schedule 5.2(f).

 

(b) On the Closing Date, the Seller shall, with respect to all such Employees,
terminate the employment of all of its Employees working at or for the Business,
and shall fully pay and satisfy all outstanding Liabilities of the Seller for
wages and other compensation, including any unused vacation, sick leave, or paid
time-off benefits (even if not specifically accrued for by the Seller), or
bonuses, in whole or part, even though a partial month of business has only
occurred prior to the Closing Date. Nothing in this Agreement is intended to
confer upon any Employee any rights or remedies, including, any rights of
employment of any nature or kind whatsoever.

 

(c) The Seller shall after the Closing Date, in accordance with Applicable Law,
terminate or take all appropriate action in connection with Employee Benefit
Plans, if any, that are applicable to the Seller and/or Employees. The Seller
acknowledges that the Purchaser shall have no responsibility or liability or
obligation of any nature under any Employee Benefit Plans to any person, firm or
corporation whatsoever; it being understood and agreed that if any Applicable
Law provides that the Purchaser is or will be liable for any liability or
obligation under any Employee Benefit Plans despite the Seller’s contractual
liability for such liability or obligation hereunder, and the Seller fails to
pay or perform such liability or obligation within 5 Business Days of the
Purchaser’s written demand, then any and all such amounts may be subject to
indemnification in accordance with Section 6.

 

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(d) The Seller, or, where appropriate, the Seller’s health and welfare benefit
plans that are “group health plans,” shall retain liability for and shall 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) arising out of a
“qualifying event” prior to 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. The Parties acknowledge that, after giving effect
to the actions to be taken at the Closing, the Seller will not have any
employees and will not maintain any health and welfare benefit plans after the
Closing Date. No later than 10 Days prior to the Closing Date, the Seller shall
provide the Purchaser with a list of all individuals to whom the Seller is as of
that date liable to provide access to COBRA benefits as well as those employees
who have terminated their employment with the Seller prior to Closing and may
still apply for COBRA benefits. In accordance with Treasury Regulation Section
54.4980B9 Q&A-8, as of the Closing Date (or, if later, the date on which the
Seller ceases to offer any group health plan coverage), the Purchaser, or its
health and welfare benefit plans that are “group health plans,” will assume the
Seller’s post-Closing non-default liability to provide the Business’s “merger
and acquisition qualified beneficiaries” (as that term is defined under COBRA,
which includes qualified beneficiaries whose COBRA qualifying event occurred
before or in connection with the sale and who is, or whose COBRA qualifying
event occurred in connection with a covered employee whose last employment
before the COBRA qualifying event was, associated with assets being sold) access
to continuing health insurance coverage required under COBRA (at such
“beneficiaries’” cost), as well as providing applicable employee notices
required under COBRA, and the Seller shall provide to the Purchaser sufficient
employee information to enable the Purchaser to carry out such obligations..

 

(e) Upon the Parties’ receipt of the Manufacturer’s written approval of the
Transaction and agreement to appoint the Purchaser as an authorized dealer in
the Manufacturer’s products, the Purchaser may begin to interview the Employees
for purposes of considering whether and on what terms to offer employment to
them effective as of the Closing Date, in accordance with the Purchaser’s hiring
practices and requirements. It is the intention of the Purchaser, and the Seller
hereby acknowledges such intention, that any Employees that the Purchaser hires
will be new employees of the Purchaser as of the Closing Date or the date of
hire, whichever is later. Such new employees shall only be entitled to such
compensation and employee benefits as are agreed to by such employees and the
Purchaser, or as are otherwise provided by the Purchaser, in its sole
discretion.

 

(f) If requested by the Purchaser, the Seller agrees to provide reasonable
assistance to the Purchaser in the latter’s efforts to be restated as a
successor employer for employment tax purposes with respect to the Employees
hired by the Purchaser, including the annual wage limitation for FICA tax, and
to meet the requirements of Revenue Procedure 2004-53, Section 4, Standard
Procedure, for federal payroll tax purposes. The Purchaser agrees to perform the
obligations imposed upon it under such Revenue Procedure, together with such
requirements as may be imposed by FICA. If requested by the Purchaser, the
Seller shall execute all documents reasonably necessary to allow the Purchaser
to benefit from and take advantage of the payroll tax withholding and deductions
of the Seller for the current Tax year, as may be allowed by the Internal
Revenue Service and/or state agencies.

 

7.4 Schedule Delivery; Access to Property and Records. All schedules to this
Agreement (each a “Schedule,” and collectively, the “Schedules”) shall be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Agreement and delivered by the Seller on or before the 5th
Business Day after the Effective Date (the “Schedule Due Date”), along with a
signed certificate from the Seller that the Schedules so delivered are complete
(the “Schedule Certificate”). Without limiting the foregoing, each Schedule
shall identify with particularity and describe in relevant detail all relevant
facts to be described in such Schedules; the mere listing of (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made by the Seller herein unless the
representation or warranty has to do with the existence of the document or other
item itself.

 

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7.5 Due Diligence Inspections.

 

(a) The Purchaser shall have 60 days from the later of (i) the Effective Date,
or (ii) the date on which the Schedule Certificate is delivered by the Seller in
accordance with Section 7.4 above (the “Due Diligence Period”) to complete to
its satisfaction due diligence regarding the Business and the Dealership Assets,
including obtaining such reports and studies as the Purchaser deems appropriate.
The Parties agree that the Due Diligence Period shall be extended, as
applicable, so that the Purchaser shall have no less than 10 Business Days to
review the Audited Financial Statements after receipt by the Purchaser.

 

(b) The Purchaser may conduct due diligence regarding the Business, including
obtaining such reports and studies as the Purchaser deems appropriate. The
Seller agrees to provide to the Purchaser and Purchaser’s representatives
reasonable access to the books, records, reports, information and facilities of
the Dealership, and will make the officers, comptroller, accountants and
attorneys of the Seller available at reasonable times to discuss with the
Purchaser and Purchaser’s representatives such aspects of the Business as the
Purchaser may wish.

 

(c) The Purchaser may, at Purchaser’s expense, commission the services of a
qualified geotechnical and environmental consultant (hereinafter referred to as
the “Engineer”) to conduct a “Phase I Environmental Site Assessment” (a “Phase
I”) upon the Dealership Premises to identify any “recognized environmental
conditions” and to determine whether the Dealership Premises are in substantial
compliance with applicable Environmental Laws, in general accordance with
standards recommended by the American Society for Testing and Materials -- ASTM
E1527-13 “Standard Practice for Environmental Site Assessments: Phase I
Environmental Site Assessment Process.” The Purchaser will provide the Seller a
copy of the Engineer’s Phase I report(s). All access to the Dealership Premises
must be arranged and scheduled with Walt Guiterrez (cell phone: 678-4727766), so
that the Seller, or its representative, is present or available at the time of
inspection. The Purchaser shall have no obligation to indemnify the Seller with
respect to the presence of any Hazardous Substances discovered during the
Purchaser’s due diligence nor shall the Purchaser have any obligation to engage
in the remediation of the Dealership Premises with respect to such Hazardous
Substances.

 

(d) Should the Purchaser be dissatisfied with its inspections during the Due
Diligence Period, it may terminate this Agreement under Section 8.1(f), and
thereafter the Purchaser’s right to inspect or to receive data and information
shall terminate.

 

(e) No investigation made by, nor any disclosure made prior to or after the
Effective Date by, the Purchaser on the one hand, or by the Seller, on the other
hand, shall affect the enforceability of, or the remedies available under this
Agreement with respect to, any such representations, warranties, covenants,
agreements or undertakings or their survival.

 

(f) After Manufacturer approval and prior to the Closing Date, the Seller agrees
to afford the Purchaser and its agents, attorneys, accountants and
representatives such access to the Dealership Premises, business records and
properties of the Seller, and shall furnish to the Purchaser such information
concerning the Business, as the Purchaser shall reasonably deem necessary or
desirable for the purpose of enabling the Purchaser to prepare for Closing,
including preparation of closing inventory schedules. The Seller will make its
appropriate officers, employees and representatives available to the Purchaser
at all reasonable times for the purpose of assisting, in all reasonable
respects, the Purchaser with Closing preparations.

 

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7.6 Confidentiality.

 

(a) Except as may be required by law or legal process, the Purchaser agrees that
any confidential information received in due diligence will be kept confidential
by the Purchaser and its representatives and will not be disclosed by the
Purchaser to any Person except the Manufacturer, the Purchaser’s attorneys,
accountants, representatives, financial sources, engineers, etc., or otherwise
with the specific prior written consent of the Seller. The foregoing obligations
and restrictions shall not apply to that part of the Seller’s information that
(a) was or becomes generally available to the public other than as a result of a
disclosure by the Purchaser, or (b) was available, or becomes available, to the
Purchaser on a non-confidential basis prior to its disclosure to the Purchaser
by the Seller. Notwithstanding anything herein to the contrary, the Purchaser
may provide notice of this Transaction to the United States Securities and
Exchange Commission by filing of a copy of this Agreement.

 

(b) The Parties also agree that the terms and conditions of this Agreement, the
Transaction, and the fact the Transaction exists, are to remain confidential.
Neither the Seller nor the Purchaser will issue or approve a news release or
other announcement of the Transaction without the prior approval of the other as
to the contents of the announcement and its release, which approval will not be
unreasonably withheld, delayed or conditioned. Notwithstanding the foregoing,
the fact the Transaction exists may be disclosed after the Effective Date by the
Seller to its vendors and by the Purchaser to Seller’s employees and
contractors, with the prior written approval of the other. Furthermore, nothing
in this Section 7.6 shall be construed to prohibit the Purchaser or the
Purchaser’s Affiliates from applying for, and publishing in the local or
regional newspaper as required by Georgia law, fictitious names for the
operation of the Business post-Closing, and the Purchaser shall not be required
to obtain the Seller’s permission to make such applications and publications.

 

7.7 Expenses.

 

(a) General. Except as may otherwise be provided in Section 9.12, whether or not
the Transaction is consummated, each Party shall bear its own costs and expenses
incurred in connection with the negotiation, drafting and execution of this
Agreement. Except as otherwise set forth below or elsewhere in this Agreement,
each Party shall bear its own costs and expenses of consummating the
Transaction.

 

(b) Specific. Notwithstanding the foregoing:

 

(i) The Seller shall pay all costs, expenses and fees to release and discharge
any Encumbrances on the Dealership Assets (other than Permitted Encumbrances),
all federal and state Taxes in connection with the Transaction, and ½ of the
fees, costs, and expenses of the Parts Inventory.

 

(ii) The Purchaser shall pay (or reimburse the Seller, as the case may be) for
all costs, expenses and fees related to its due diligence and financing, the
Audited Financial Statements, and ½ of the fees, costs, and expenses of the
Parts Inventory.

 

7.8 Pre-Closing Access. The Seller shall afford to the Purchaser and its
employees and subcontractors, on reasonable prior notice, reasonable access
before Closing to the Dealership Premises for the purpose of installing
communications lines (“New Communications Lines”) which in the Purchaser’s
reasonable judgment are necessary to allow the Purchaser, immediately after
Closing, to connect those premises and the computer systems, telephone systems,
networks and data bases in them to the Purchaser’s computer systems, telephone
systems, networks and data bases; provided, however, that the Purchaser shall
not use the New Communications Lines before the Closing, other than for testing
purposes, without the Seller’s consent. If this Agreement is terminated for any
reason, the Purchaser shall undertake to promptly, but in no event later than 30
days after such termination, remove the New Communications Lines. The
Purchaser’s installation and, if applicable, removal of the New Communications
Lines shall be done in a manner that does not unreasonably interfere with the
Seller’s operation of the Business and that does not damage the Dealership
Premises. At least 1 week before the anticipated Closing Date, the Seller shall
provide the Purchaser with digital access to the Seller’s vehicle inventory. The
Purchaser may also arrange for the Seller’s employees to attend DMS and other
training prior to Closing so long as such training does not materially interfere
with such employee’s work duties to the Seller.

 

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7.9 Records. The Seller agrees to deliver to the Purchaser on the Closing Date
the Records in a format that meets the Purchaser’s reasonable requests. To the
extent the Records are in a digital form, the Purchaser and the Seller
acknowledge and understand that the transfer of a copy of a digital form of the
Records involves a joint and collaborative effort of the Parties along with the
Seller’s DMS vendor and requires the cooperation of the Parties and the vendor.
The Seller agrees to contact its DMS vendor and arrange for the transfer of a
copy of its Records that are in digital form on its DMS to the Purchaser on or
before the Closing, either through the creation of a separate sign-on and
creation of a mirror store on the Seller’s DMS or transfer of a copy of the
Records to a location of the Purchaser’s choice, it being contemplated that the
Purchaser shall have all necessary access to these Records immediately after the
Closing. Should the Purchaser obtain access to the Records prior to the Closing,
the Purchaser shall hold the Records subject to Section 7.6. In the event the
Transaction does not close, any Records in the Purchaser’s possession or control
shall be destroyed and the Purchaser shall be enjoined from using the Records
for its or any of its affiliates’ benefit. The Parties agree to equally share in
the expense of creating a mirror store and separate sign-on on the Seller’s DMS.

 

7.10 No Negotiations or Discussions. Until the Closing Date, the Seller and the
Shareholder shall deal exclusively with the Purchaser regarding the sale of the
Dealership Assets. In order to avoid any possible interference with or
frustration of this Transaction, neither the Seller nor the Shareholder shall,
directly or indirectly (including any agent or designee, or use of the services
of a third party), at any time on or prior to the Closing Date, pursue,
initiate, encourage or engage in any negotiations or discussions with, or
provide any information to, any person or entity (other than the Purchaser and
its representatives and affiliates) regarding the sale or possible sale to any
such person or entity of all or any of the Dealership Assets, Dealership
Premises or stock of the Seller or any merger, consolidation, joint venture,
management agreement, or any other transaction of any nature with the Seller or
the Shareholder, which would hinder or frustrate the Purchaser from closing in
accordance with the terms of this Agreement (a “Prohibited Discussion”). If any
person or entity other than the Purchaser makes inquiry of the Seller or the
Shareholder of any matter which could involve a Prohibited Discussion, then the
Seller or the Shareholder (as the case may be) shall inform the Purchaser in
writing and inform such person or entity of the existence of this Agreement, and
that any Prohibited Discussion would constitute a violation of this Agreement.

 

7.11 Tax Certificate; Withheld Amount; Clearance In the event the Tax
Certificate is not delivered to the Purchaser prior to the Closing Date, an
amount equal to the greater of the aggregate amount suggested by the DOR or 1½
times the average aggregate amount of the Seller’s sales tax obligations and
liabilities paid each month during the 6 month period prior to the Closing Date,
shall be withheld from the Asset Interest Price and shall remain in escrow with
the Escrow Agent (the “Withheld Tax Amount”), to be held in accordance with the
Tax Escrow Agreement for the purpose of assuring the Purchaser that the
aggregate of the Seller’s unpaid sales tax obligations to the DOR (as
contemplated under Georgia Code) and any related amounts, will be paid.

 

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7.12 Unemployment Rate Factor; Worker’s Compensation Experience Factor.

 

(a) The Purchaser, at its election, may utilize the Seller’s State of Georgia
unemployment rate factor to the extent allowed under law. The Seller agrees to
assist and cooperate with the Purchaser in such efforts.

 

(b) The Purchaser, at its election, may utilize the Seller’s worker’s
compensation experience factor to the extent allowed under Georgia law. The
Seller agrees to assist and cooperate with the Purchaser in such efforts.

 

8. TERMINATION AND ABANDONMENT

 

8.1 Termination and Abandonment. This Agreement may be terminated at any time
prior to the Closing:

 

(a) by mutual agreement of the Seller and the Purchaser; or

 

(b) by the Purchaser by Notice to the Seller, if the conditions set forth in
Section 4.2 have not been satisfied or the deliveries required by Section 4.4
shall not have been complied with and performed, and any such noncompliance or
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) on or before the Cut-Off Date unless such failure shall
be due to the failure of the Purchaser to comply with any of its obligations to
be performed or complied with by it prior to the Closing; or

 

(c) by the Seller by Notice to the Purchaser, if the conditions set forth in
Section 4.3 have not been satisfied or the deliveries required by Section 4.5
have not been complied with and performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by its nature cannot
be cured or eliminated) on or before the Cut-Off Date, unless such failure shall
be due to the failure of the Seller to comply with any of its obligations to be
performed or complied with by it prior to the Closing; or

 

(d) by the Purchaser if the Closing has not occurred on or before the Cut-Off
Date, or such later date as the Parties may agree upon, unless the Purchaser is
in material breach of or default under this Agreement; or

 

(e) by the Seller if the Closing has not occurred on or before the Cut-Off Date,
or such later date as the Parties may agree upon, unless the Seller or the
Shareholder is in material breach of or default under this Agreement; or

 

(f) by the Purchaser, within 2 Business Days after the expiration of the Due
Diligence Period, as extended, if the Purchaser is dissatisfied with its due
diligence inspections; or

 

(g) by either Party, after the expiration of the OA Prep Period, if the form of
the Operating Agreement has not been agreed upon and appended to this Agreement
through Amendment; or

 

(h) by either Party, if there shall be a final non-appealable order of a court
of competent jurisdiction in effect preventing the Closing; or

 

(i) by either Party, if the Manufacturer shall exercise, or purport to exercise,
any right of first refusal to purchase all or any material portion of the
Dealership Assets.

 

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8.2 Rights and Obligations on Termination.

 

(a) Except as otherwise provided in Section 8.2(b) below, if this Agreement is
terminated as provided in Section 8.1, this Agreement shall forthwith become
void, the Escrow Agent shall return the Deposit to Purchaser, and there shall be
no liability or obligation on the part of any Party or their respective
officers, directors, partners, members, shareholders, principals, agents or
representatives.

 

(b) Notwithstanding the provisions of Section 8.2(a) above:

 

(i) if this Agreement is terminated and abandoned pursuant to Section 8.1(c),
due to a material breach or material default by the Purchaser under any of its
express or implied covenants and obligations hereunder, then the Seller shall be
entitled to the Deposit, which will constitute payment in full payment of
liquidated damages of the Seller, and which shall be the Seller’s sole and
exclusive remedy.

 

(ii) if this Agreement is terminated and abandoned pursuant to Section 8.1(b)
due to a material breach or material default by the Seller under any of its
express covenants and obligations hereunder, then the Purchaser, at its sole
discretion, may seek specific performance or reimbursement by the Seller and the
Shareholder of its reasonable out-of-pocket costs not to exceed $100,000. The
Seller agrees that it is estopped from subsequently asserting in any action to
enforce the provisions of the covenants contained herein that the Purchaser has
an adequate remedy at law and therefore is not entitled to specific performance
or injunctive relief.

 

(c) The Parties acknowledge and agree that the rights and obligations set forth
in this Section 8.2 shall not in any way affect or limit the respective rights
and obligations of the Parties that arise out of, and survive, the Closing of
the Transaction, including the provisions of Section 6 above.

 

9. MISCELLANEOUS

 

9.1 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the Parties and their respective heirs, successors and permitted
assigns.

 

9.2 No Waiver. The waiver by any Party of a breach of any covenant, agreement or
undertaking contained herein shall be made only by an instrument in writing
signed by the Party giving such waiver, and no such waiver shall operate or be
construed as a waiver of any prior or subsequent breach of the same covenant,
agreement or undertaking. Except as otherwise specifically provided herein, the
exercise of any remedy provided by law or otherwise, and the provisions of this
Agreement for any remedy, shall not exclude any other remedy.

 

9.3 Severability. If any provision of this Agreement shall be held invalid,
illegal or unenforceable, in whole or in part, the validity, legality and
enforceability of the remaining part of such provision, and the validity,
legality and enforceability of the other provisions hereof shall not be affected
thereby. Any provision of this Agreement that is held invalid, illegal or
unenforceable in any jurisdiction shall not be deemed invalid, illegal or
unenforceable in any other jurisdiction.

 

9.4 Entire Agreement; Amendment. This Agreement, together with all exhibits and
Schedules hereto constitutes the entire agreement among the Parties pertaining
to the Transaction, and supersedes all prior agreements, understandings,
negotiations, and discussions, whether oral or written, of the Parties. Except
as otherwise provided herein, no supplement to, or modification of, this
Agreement shall be binding unless executed in writing by each of the Parties.

 

9.5 Governing Law. This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Georgia without regard to
any principles of conflict of laws.

 

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9.6 Submission to Jurisdiction; Jury Trial Waiver. Each of the Parties (a)
consents to submit itself to the exclusive personal jurisdiction of any state or
federal court sitting in the State of Georgia, Coweta County, in any Proceeding
for the adjudication of any dispute hereunder or in connection herewith or with
any transaction contemplated hereby or discussed herein, (b) agrees that all
claims in respect of such action or proceeding may be heard and determined only
in any such court, and (c) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such
court. Each of the Parties waives any defense of inconvenient forum to the
maintenance of any proceeding so brought and waives any bond, surety or other
security that might be required of any other Party with respect thereto. Any
Party may make service on the other Party by sending or delivering a copy of the
process to the Person to be served at the address and in the manner provided for
the giving of Notices in Section 9.9. Nothing in this Section 9.6, however,
shall affect the right of any Party to serve legal process in any other manner
permitted by law. EACH PARTY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY SUCH PROCEEDING.

 

9.7 Assignability. Subject to the terms and conditions of this Section 9.7, the
Purchaser may assign its rights under this Agreement, in whole or in part, to
any Affiliate of the Purchaser. Except as expressly provided in this Section
9.7, neither this Agreement, nor any of the rights and obligations arising
hereunder, may be assigned by either Party without the prior written consent of
the other Party.

 

9.8 Notices. All notices, demands and other communications (each, a “Notice”)
required or permitted hereunder shall be in writing (including facsimile), and
shall be (a) sent by registered or certified mail, First Class postage attached,
(b) sent by hand or overnight delivery, or (c) sent by electronic mail or
facsimile, in each case addressed to the respective Parties at the addresses
first set forth above, or to such other address and to the attention of such
other Persons as a Party hereto may specify from time to time by Notice to the
other Parties. Each Notice shall be deemed given and be effective only upon
actual receipt (or refusal of receipt). Copies of any Notices shall be provided
as below:

 

If to the Purchaser, then to its Counsel (which copy shall not constitute
notice) to:

 

Bass Sox Mercer

Attention: Robert A. Bass, Esq.

2822 Remington Green Circle

Tallahassee, Florida 32308

Telephone: (850) 878-6404

Email: bassra@dealerlawyer.com

 

If to the Seller or to Shareholder, then to their Counsel (which copy shall not
constitute notice) to:

 

Underwood & Roberts, PLLC

Attention: Eric Pridgen

3110 Edwards Mill Road, Suite 100

Raleigh, North Carolina 27612

Email: epridgen@rlulaw.com

 

9.9 Counterparts; Effective Date; Facsimile Copies. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, but all of which shall be deemed to be a single instrument, and shall
be effective as of the date when one or more counterparts have been signed by
each of the Parties and delivered to the other Parties. A facsimile copy of this
Agreement and any signatures on any counterpart hereof shall be considered for
all purposes as originals.

 

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9.10 Time of Essence; Computation of Time. Time is of the essence with respect
to all dates and time periods set forth or referred to in this Agreement and
each of its provisions. Whenever this Agreement requires that something be done
within a period of days, such period shall: (a) not include the day from which
such period commences; (b) include the day upon which such period expires; (c)
expire at 8:00 p.m. (ET) on the date by which such thing is to be done; or (d)
be extended by 2 Business Days if the final day of such period falls on a
Saturday, Sunday, or bank holiday in the state where such thing is to be done.

 

9.11 Agreement Not Recordable. No Party shall have the right or the authority to
file this Agreement or any notice thereof of record in any public office unless
the same is necessary in order to assert, vindicate, enforce or defend the
Party’s rights under this Agreement.

 

9.12 Attorneys’ Fees. Should any Party institute any suit, action or Proceeding
in court or otherwise to enforce or interpret this Agreement by reason of or
with respect to an alleged breach of any provision hereof, the prevailing Party
shall be entitled to receive from the non-prevailing Party such amount as the
court may judge to be reasonable attorneys’ and paralegals’ fees for the
services rendered to the prevailing Party in such action or Proceeding, plus the
prevailing Party’s costs and expenses therein, regardless of whether such suit,
action or Proceeding is prosecuted to judgment.

 

9.13 Interpretation. The Parties acknowledge and agree that: (a) each Party and
its counsel reviewed and negotiated the terms and provisions of this Agreement
and the Other Agreements and have contributed to their revision; and (b) the
rule of construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement and
the Other Agreements. The words “include,” “includes,” “included,” “including,”
and “such as” do not limit the preceding words or terms and shall be deemed to
be followed by the words “without limitation”. 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. The section headings contained in this Agreement
are solely for the purpose of reference, are not part of the agreement of the
Parties and shall not in any way affect the meaning or interpretation of this
Agreement

 

* * * * *

 

[signatures on following page]

 

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IN WITNESS WHEREOF, the Parties have duly executed this Asset Purchase and
Contribution Agreement on the day and year noted below.

 

SELLER:

 

  NEWNAN IMPORTS, INC.             BY: /s/ WALT GUTIERREZ             ITS: 
PRESIDENT             Date:  July 13, 2020  

 

SHAREHOLDER:

 

  /s/ WALT GUTIERREZ     WALT GUTIERREZ             Date:  July 13, 2020  

 

PURCHASER:

 

  LMP AUTOMOTIVE HOLDINGS, INC.             BY: [ex10-1_001.jpg]            
ITS: Chief Executive Officer             Date:  July 13, 2020  

 

 

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