Exhibit 10.1

 

THIS CONTRACT IS SUBJECT TO ARBITRATION

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”) is made and
entered into effective as of this ___ day of October, 2020 (the “Effective
Date”), by and between LMP Long island 001 Holdings, LLC (“LMP”), a Delaware
limited liability company, and or its assigns (“LMP”), and JOHN STALUPPI, an
individual resident of Florida (“Staluppi”). Terms capitalized but not otherwise
defined herein shall have the meaning ascribed to there in Exhibit A.

 

W I T N E S S E T H :

 

WHEREAS, Staluppi is the sole member or shareholder with respect to each of the
entities listed on Exhibit B (with such entities being hereinafter included in
the term “AAG Subsidiaries”);

 

WHEREAS, prior to the Closing Date, through a series of transactions, Staluppi
will contribute (or cause to be contributed) into a newly-formed Delaware
limited liability company (the “Company”), as a capital contribution, all of the
outstanding and issued Equity Securities in each of the AAG Subsidiaries in
exchange for the Company’s issuance to Staluppi of 100% of the membership
interests (the “AAG Membership Interests”) in the Company. Staluppi will provide
LMP copies of all material agreements and documents with respect thereto. For
the avoidance of doubt, following the completion of the AAG Reorganization, each
AAG Subsidiary will be wholly-owned by the Company; and

 

WHEREAS, Staluppi desires to sell, and LMP desires to purchase, 70% of the AAG
Membership Interests (the “Acquired Interest”) for the consideration and on the
terms set forth in this Agreement; and

 

WHEREAS, the Parties desire to set forth certain representations, warranties and
covenants made by each to the other as an inducement to the execution and
delivery of this Agreement, and to set forth certain additional agreements
related to the Contemplated Transactions; and

 

WHEREAS, the AAG Subsidiaries conduct certain of their respective Business
operations from the addresses set forth on Exhibit C (collectively, the
“Dealership Premises”). The Dealership Premises and the improvements thereon are
owned by the individuals or entities listed on Exhibit C (each a “Landlord,” and
collectively the “Landlords”).

 

NOW, THEREFORE, for and in consideration of the premises, the mutual
representations, warranties and covenants herein contained and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereby agree as follows:

 

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Article 1. SALE AND TRANSFER OF ACQUIRED INTEREST; CLOSING DATE; PURCHASE PRICE
DELIVERY.

 

1.1 Purchase and Sale. At the Closing and subject to and upon the terms and
conditions of this Agreement, Staluppi shall sell, transfer and deliver to LMP,
and LMP shall purchase and acquire from Staluppi, all right, title and interest
in and to all of the Acquired Interest, free and clear of all Liens (other than
restrictions on transfer imposed by the Securities Act and state securities laws
and except as set forth in Schedules 2.21 and 2.32) in consideration for the
Purchase Price. In reliance upon the representations and warranties of Staluppi
contained herein, and on the terms and subject to the conditions herein set
forth, LMP agrees that at Closing it will purchase the Acquired Interest from
Staluppi.

 

1.2 Closing; Closing Date. Subject to the terms and conditions herein contained,
the consummation of the Contemplated Transactions (the “Closing”) shall take
place at such time, date and place as the Parties may mutually agree on or
before the 30th day following the satisfaction (or appropriate waiver) of each
of the conditions set forth in Sections 5.1 and 5.2 below, unless the Parties
otherwise mutually agree (the “Closing Date”) but in no event shall the Closing
Date be later than 180 days after the Effective Date (“Outside Closing Date”).
The Closing shall be effective at 12:01 a.m. local time on the Closing Date.

 

1.3 Purchase Price. Subject to the adjustments set forth herein, the purchase
price for the Acquired Interest shall be $425,600,000 (the “Purchase Price”),
which LMP shall deliver to Staluppi as follows:

 

(a) A cash amount equal to $375,600,000; PLUS

 

(b) The Purchase Money Note, in form attached hereto and labeled Exhibit D.

 

1.4 Estimated Net Working Capital.

 

(a) Not more than 5 and not less than 2 Business Days prior to the Closing Date,
the Company and Staluppi shall deliver, or cause to be delivered, to LMP a
certificate of the Company, prepared by the Company’s certified public accounts
(the “Staluppi CPA”), that contains a reasonable good faith estimate of the
Company Group Entities’ aggregate Net Working Capital, as of the Adjustment
Calculation Time (“Estimated NWC”), and the Staluppi CPA shall provide LMP with
supporting financial statements, work sheets, and other documentation reasonably
requested by LMP.

 

(b) “Net Working Capital” of the Company Group Entities shall mean an amount
equal to the aggregate value of the Company Group Entities’ total current assets
MINUS the aggregate value of the Company Group Entities’ total current
liabilities, all calculated by Staluppi CPA in accordance with GAAP (for the
avoidance of doubt, and for the purposes of the foregoing, no Tax assets or
deferred Tax liabilities will be taken into account); provided, however, that
the value of certain of the Company Group Entities’ balance sheet items shall be
adjusted as follows in determining Net Working Capital:

 

(i) All New Vehicles will be valued at the New Vehicles Value;

 

(ii) All Used Vehicles will be valued at the Used Vehicles Value;

 

(iii) All Service Loaners will be valued at the Service Loaners Value;

 

(iv) All Parts Inventory will be valued at the Parts Value; and

 

(iv) All outstanding Repairs and WIP will be valued at the Company’s cost with
no internal mark-ups applied by the Company.

 

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(c) Along with the certificate described in Section 1.4(a) above, the Staluppi
CPA shall prepare and deliver to LMP, in accordance with GAAP, a schedule,
reasonably acceptable to LMP, listing all the Pre-Closing Un-booked Liabilities
existing as of the Adjustment Calculation Time that are not reflected on the
Company’s balance sheet (the “Un-booked Liability Schedule”), along with any
available documentation or other information related thereto. The Pre-Closing
Un-booked Liabilities shall include, without limitation:

 

(i) All customer purchase deposits for New or Used Vehicles;

 

(ii) All customer purchase deposits for Manufacturer Parts and Miscellaneous
Inventories;

 

(iii) All customer deposits for Repairs and WIP;

 

(iv) Any warranty or similar obligations due within 12 months after the Closing
Date, to the extent that such obligations will not be fully reimbursed by a
Manufacturer or third party provider;

 

(v) All Staluppi Taxes;

 

(vi) All accrued and unpaid sales, use, real and personal property taxes, and
other taxes and governmental charges;

 

(vii) Any refunds, credits, or other amounts due to customers, suppliers, or
other third parties not already listed above;

 

(viii) Any outstanding we-owes of the Company;

 

(ix) Any bonus or other obligation to make payments (other than normal payroll
and normal payment plans in the ordinary course of business as shown in Schedule
2.19(j)) to any employee within 12 months after the Closing Date;

 

(x) The tax effect of the Company’s LIFO accrual, as applicable, which will be
reconciled and the tax consequence determined at the Closing using then current
tax tables; and

 

(d) The Net Working Capital shall be reduced by an amount equal to the sum of
the Pre-Closing Un-booked Liabilities.

 

(e) The amount, if any, by which the Estimated NWC is less than the Target NWC
is the “Estimated NWC Deficiency,” and the amount, if any, by which the
Estimated NWC is greater than the Target NWC is the “Estimated NWC Surplus.”
Should there be an Estimated NWC Deficiency, the Staluppi shall, prior to the
Closing Date make an additional capital contribution to the Company in the form
of cash in amount equal to such deficiency. Should there be an Estimated NWC,
the Company may make a distribution to Staluppi of return of capital in the form
of cash in amount equal to such surplus.

 

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1.5 Payment of Purchase Price. At the Closing, and utilizing the Estimated NWC,
LMP shall deliver to Staluppi, by wire transfer of immediately available funds
to the designated account or accounts of Staluppi, an amount equal to the
Purchase Price.

 

1.6 Post-Closing True-Up of Calculation of Company’s Net Working Capital and
Pre-Closing Un-booked Liabilities; Final Payment.

 

(a) Not more than 60 days following the Closing Date, LMP shall prepare and
provide a statement of the final calculation of the Company’s Net Working
Capital (“Final NWC Statement”) as of the Adjustment Calculation Time (“Final
NWC”). The Final NWC, as proposed by LMP under this Section 1.6(a), shall be
deemed for purposes of this Section 1.6 to be the “Final Adjusted NWC,” and
shall be final and binding on all Parties, unless Staluppi timely delivers to
LMP an Objection Notice in accordance with Section 1.6(b).

 

(b) In the event that Staluppi disputes the Final Adjusted NWC, Staluppi shall
notify LMP in writing (the “Objection Notice”) of the amount, nature and basis
of such dispute, within 30 days after delivery of the Final NWC Statement in
accordance with Section 1.6(a). Any such Objection Notice shall specify those
items or amounts as to which Staluppi disagrees, and Staluppi shall be deemed to
have agreed with all other items and amounts contained in the Final NWC
Statement. In the event of such a dispute, LMP and Staluppi shall first
negotiate in good faith to reach agreement on each disputed item or amount. If
LMP and Staluppi reach a final resolution on the Final NWC Statement within 15
days after LMP’s receipt of the Objection Notice (or within any additional
period as mutually agreed to between LMP and the Staluppi), then the Final NWC
Statement agreed upon by LMP and Staluppi shall be deemed for purposes of this
Section 1.6 to be the “Final NWC Statement” and shall be final and binding on
all Parties.

 

(c) If LMP and Staluppi are unable to resolve the dispute within 15 days after
delivery of the Objection Notice, then any remaining items or amounts in dispute
shall be submitted to an independent nationally recognized accounting firm
selected in writing by Staluppi and LMP or, if Staluppi and LMP fail or refuse
to select a firm within 10 days after written request therefor by Staluppi or
LMP, such an independent nationally recognized accounting firm shall be selected
in accordance with the rules of the American Arbitration Association, New York
office of the American Arbitration Association (the “Neutral Accountant”). All
determinations and calculations under this Section 1.6 shall consider only those
items or amounts that are set forth in the Objection Notice and remain in
dispute, shall be a value that is between LMP’s calculation delivered under
Section 1.6 and Staluppi’s calculation delivered under Section 1.7(c), shall be
in writing and shall be delivered to LMP and Staluppi as promptly as
practicable. Absent fraud or manifest error, the Adjusted Purchase Price
Statement as finally determined by the Neutral Accountant shall be deemed for
purposes of this Section 1.6 to be the “Final NWC Statement” and shall be final
and binding on all Parties. In determining the Final NWC Statement, the Neutral
Accountant shall act as an expert and not as arbitrator. A judgment on the
determination made by the Neutral Accountant pursuant to this Section 1.6 may be
entered in and enforced by any court having jurisdiction thereover.

 

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(d) The fees and expenses of the Neutral Accountant in connection with the
resolution of disputes under Section 1.6(c) shall be borne by Staluppi, on the
one hand, and LMP, on the other hand, in proportion to the amounts by which the
proposals of LMP and Staluppi differed from the Neutral Accountant’s final
determination.

 

(e) The amount, if any, by which the NWC reflected in the Final NWC Statement is
less than the Target NWC is the “Final NWC Deficiency,” and the amount, if any,
by which such Net Working Capital is greater than the Target NWC is the “Final
NWC Surplus.” Should there be an Final NWC Deficiency, the Staluppi shall, on
the 2rd Business Day following the determination of the Final NWC Statement,
deliver an additional capital contribution to the Company in the form of cash in
amount equal to such deficiency. Should there be an Final NWC Surplus, the
Company shall, on the 2rd Business Day following the determination of the Final
NWC Statement, make a distribution of return of capital to the Staluppi in the
form of cash in amount equal to such surplus.

 

(f) The Parties agree that the procedures set forth in this Section 1.6 shall be
the sole and exclusive method for resolving any disputes with respect to the
determination of the Final NWC Statement; provided, that, this provision shall
not prohibit LMP or Staluppi from instituting litigation to enforce the
determination of the Neutral Accountant and shall not limit any remedy of any
Person under Article 4.

 

(g) By way of clarification, the determination of Final NWC shall occur after
the Closing Date and shall not delay or hinder LMP’s delivery to Staluppi of the
Purchase Price at Closing.

 

1.7 Physical Inventories. The classification and valuation of the Manufacturer
Parts Inventory and Miscellaneous Inventories shall be established, in
accordance with the applicable provisions hereof, by a physical inventory count
conducted by an independent inventory service acceptable to LMP and Staluppi.
The physical inventory count 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 Manufacturer Parts and
Miscellaneous Inventories between the date of such physical inventory count and
the Closing Date. Staluppi agrees that no such additions and deductions shall be
made in such inventory except in the ordinary course consistent with past
practices and, further, shall cause the Company to keep its usual and adequate
records of such additions and deductions, which records shall be made available
to LMP for review and verification. Staluppi and LMP agree to share equally in
the cost of the physical inventory conducted by the independent inventory
service pursuant to this Section 1.7.

 

1.8 Withholding Taxes. LMP shall be entitled to deduct and withhold from any
amounts otherwise payable to Staluppi under this Agreement, by placing into
escrow such amounts that a Governmental Authority requires LMP to deduct and
withhold under an applicable Legal Requirement. To the extent that any amount is
to be placed into escrow it shall be treated for all purposes of this Agreement
as having been paid to Staluppi.

 

1.9 Non-Audited Interim Financials. Within 30 days after the Effective Date, the
Staluppi shall provide to the LMP (a) a CPA-prepared quality of earnings report
and (b) the following CPA-prepared financial statements as of the end of the 3rd
quarter 2020: profit and loss statement, cash-flow statement, and balance sheet.
Such financial statements shall be prepared according to GAAP.

 

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Article 2. REPRESENTATIONS AND WARRANTIES OF STALUPPI.

 

On or before the 7th day after the Effective Date (the “Disclosure Date”),
Staluppi shall deliver to LMP a Disclosure Letter that compiles all of the
disclosure schedules (including related information and documents) described
herein. In the event that Staluppi fails to deliver the Disclosure Letter by the
Disclosure Date, then the Due Diligence Period (as defined below) shall be
extended by the number of days between the Disclosure Date and the date Staluppi
delivers the Disclosure Letter. Staluppi represents and warrants to LMP that the
statements contained in this Article 2 are correct and complete as of the
Effective Date, except as set forth in the schedules included in the Disclosure
Letter, and Staluppi acknowledges that LMP is relying on the following
representations and warranties in entering into this Agreement. The disclosure
schedules compiled in the Disclosure Letter will be arranged in pages or
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Article 2.

 

2.1 Capacity. Staluppi has full legal right, power, capacity and authority to
execute, deliver and perform his obligations pursuant to this Agreement and to
execute, deliver and perform his obligations under each instrument, document or
agreement required hereby to be executed and delivered by Staluppi at, or prior
to, the Closing.

 

2.2 Enforceability. This Agreement has been duly and validly executed and
delivered by Staluppi and constitutes the legal, valid and binding obligation of
Staluppi, enforceable against Staluppi in accordance with its terms, subject to
Creditors’ Rights.

 

2.3 Intentionally Omitted

 

2.4 Consents; Absence of Conflicts. Except for filings under the HSR Act or any
other applicable antitrust or competition Legal Requirements, and as otherwise
provided in Schedule 2.4 of the Disclosure Letter, neither the execution and
delivery of this Agreement or any other Transaction Document by Staluppi, nor
the consummation of the Contemplated Transactions or compliance by Staluppi and
the Company Group Entities with any of the provisions hereof or thereof, will
(a) violate or breach the terms of, cause a default under, conflict with, result
in the loss by the Company Group Entities of any rights or benefits under,
impose on the Company Group Entities any additional or greater burdens or
obligations under, create in any other Person additional or greater rights or
benefits under, create in any other Person the right to accelerate, terminate,
modify or cancel, require any notice or consent or give rise to any preferential
purchase right, right of first refusal, right of first offer or similar right
under (i) any applicable Legal Requirement, (ii) the Organizational Documents of
the Company Group Entities or (iii) any Material Contract to which a Company
Group Entity is a party or by which a Company Group Entity, or any of its
properties, is bound, (b) result in the creation or imposition of any Lien
(other than a Permitted Lien) on any Company Group Entity Assets or any
Membership Interest, including the Acquired held by Staluppi, (c) result in the
cancellation, forfeiture, revocation, suspension or adverse modification of any
Company Group Entity Asset or any Membership Interest held by Staluppi, or any
existing consent, approval, authorization, license, permit, certificate or order
of any Governmental Authority, or (d) with the passage of time or the giving of
notice or the taking of any action of any third party have any of the effects
set forth in clauses (a), (b) or (c) of this Section 2.4. The Company Group
Entities are not required to obtain any consent from any Governmental Authority
or any other Person or provide any notice to any Governmental Authority or any
other Person in connection with the consummation of the Contemplated
Transactions. All such consents or notices have been obtained or given and have
been furnished in writing to LMP, or will be obtained or given at or prior to
Closing. Notwithstanding anything herein to the contrary, it is understood that
the transfer of membership interest contemplated in this Agreement may require
the consent of the AAG Subsidiaries third-party landlords, lenders and motor
vehicle manufacturers/distributors, in addition to the N.Y.S Department of Motor
Vehicles, and Staluppi and LMP agree to cooperate as reasonably required in
order to obtain these consents (the “Consents”).

 

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2.5 Organization; Good Standing. The Company Group Entities are legal entities
duly formed, validly existing and in good standing under the laws of their
jurisdiction or organization. Staluppi has furnished to LMP true and complete
copies of the Organizational Documents for the Company Group Entities, each as
presently in effect.

 

2.6 Membership Interest Ownership. Staluppi is the sole record and beneficial
owner of all issued and outstanding AAG Membership Interests, free and clear of
all Liens, other than restrictions on transfer that may be imposed by state or
federal securities laws. By way of clarification, the Acquired Interest must not
be subject to any Liens.

 

2.7 Capitalization; Subsidiaries.

 

(a) Schedule 2.7(a) of the Disclosure Letter will set forth a true and complete
list that accurately reflects all of the Company’s Interests in the Company
Group Entities and the holder thereof. All such Interests in the Company Group
Entities have been duly authorized, are validly issued and are fully paid and
non-assessable and were not issued in violation of, and are not subject to, any
preemptive rights, rights of first refusal, rights of first offer, purchase
options, call options or other similar rights of any Person. There are no
Interests issued or outstanding in the Company Group Entities other than as set
forth on Schedule 2.7(a) of the Disclosure Letter.

 

(b) Except as set forth in Schedule 2.7(b) of the Disclosure Letter, there are
no Contracts (including options, warrants, calls, puts and preemptive rights)
obligating the Company Group Entities to: (i) issue, sell, pledge, dispose of or
encumber any Interests in any Company Group Entity; (ii) redeem, purchase or
acquire in any manner any Interests in any Company Group Entity; or (iii) make
any dividend or distribution of any kind with respect to any Interests in any
Company Group Entity.

 

(c) Except as set forth in Schedule 2.7(c) of the Disclosure Letter, there are
no outstanding or authorized equity appreciation, phantom equity, profit
participation, or similar rights affecting any of the Interests of any Company
Group Entity. There are no voting trusts, proxies, or other equity holder or
similar agreements or understandings with respect to the voting of any Interests
of any Company Group Entity.

 

(d) Except as set forth in Schedule 2.7(d) of the Disclosure Letter, there are
no, and there have not been any, Persons or joint ventures in which any Company
Group Entity owns, or has owned, of record or beneficially, any direct or
indirect (through a Subsidiary or otherwise) Interest. There are no outstanding
obligations of any Company Group Entity to provide funds or make any investment
(in either case, in the form of a loan, capital contribution, purchase of an
Interest (whether from the issuer or another Person) or otherwise) in, any other
Person.

 

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2.8 Financial Statements. Schedule 2.8 of the Disclosure Letter will consist of
copies of (a) the audited balance sheets of the Company Group Entities as of
December 31, 2018, and December 31, 2019, and the related audited statements of
income and cash flows for the years then ended (the “Company Group Annual
Financial Statements”) and (b) the unaudited balance sheet of the Company Group
Entities at August 31, 2020, and the related unaudited statements of income and
cash flows for the year then ended (the financial statements described in clause
(b), collectively, the “Company Group Interim Financial Statements”). The
Company Group Financial Statements and the Company Group Interim Financial
Statements are referred to collectively as the “Company Group Financial
Statements.” The Company Group Annual Financial Statements have been prepared in
accordance with the standards and rules of the Public Company Accounting
Oversight Board. The Company Group Financial Statements (including any related
notes thereto) (x) have been prepared in accordance with GAAP, consistently
applied throughout the periods covered thereby, except as otherwise noted
therein, (y) fairly present, in all material respects, the financial condition
and results of operations of the Company as of the respective dates thereof and
for the respective periods covered thereby, subject, however, in the case of the
Company Group Interim Financial Statements, to normal non-material year-end
adjustments and accruals and to the absence of notes and other textual
disclosure, and (z) have been prepared from, and are in accordance with, the
books and records of the Company Group entities.

 

2.9 Absence of Changes. Since December 31, 2019, and except as set forth in
Schedule 2.9 of the Disclosure Letter:

 

(a) the Business has been operated and maintained in the Ordinary Course of
Business of the Company Group Entities, except to the extent affected by
Covid-19 Conditions;

 

(b) there has not been any damage, destruction or loss to any portion of the
Company Group Assets, whether covered by insurance or not, having a replacement
cost of more than $100,000 for any single loss or $400,000 for all such losses;

 

(c) other than in connection with the Contemplated Transactions, including the
AAG Reorganization, there has been no merger or consolidation of any Company
Group Entity with any other Person or any acquisition or disposition by any
Company Group Entity of any Interests or business of any other Person or any
agreement with respect thereto;

 

(d) there has been no declaration, setting aside or payment of any dividend on,
or any other distribution with respect to, the Interests in any Company Group
Entity;

 

(e) there has been no undisclosed borrowing of funds, agreement to borrow funds,
guaranty or agreement to maintain the financial position of any Person or other
incurrence of Debt by any Company Group Entity, except in the ordinary course of
Business and/or pursuant to the Federal Paycheck Protection Program;

 

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(f) no Company Group Entity has established or materially amended any Plan or
entered into or materially amended any other employment, consulting, change in
control, retention, severance or indemnification agreement or an agreement with
respect to a bonus (nor amended any such agreement) with any Person, nor has any
Company Group Entity incurred or entered into, or become bound by, any new
collective bargaining agreement or other obligation to or Contract with any
labor organization or employee representative;

 

(g) there has been no actual, pending or, to the Knowledge of Staluppi,
threatened adverse change in the relationship of any Company Group Entity with
the Manufacturer or any other material customer, supplier, distributor or sales
representative of the Business;

 

(h) there has been no increase in the compensation or benefits provided, outside
the Ordinary Course of Business, or to be provided, outside Ordinary Course of
Business, to any manager, director, officer, employee or contractor of any
Company Group Entity;

 

(i) there has been no payment by any Company Group Entity to any manager,
director, officer, employee, contractor or holder of any Interest in any Company
Group Entity, or any Affiliate of any such Person or of any Company Group Entity
(whether as a loan or otherwise), except regular compensation and usual benefits
payments in the Ordinary Course of Business of the Company Group Entities;

 

(j) no Company Group Entity has entered into any Contract with or relating to
any manager, director, officer, equity holder, employee or consultant of any
Company Group Entity or any Affiliate of the foregoing;

 

(k) each Company Group Entity has promptly paid and discharged current
liabilities when due and consistent with past practices except where disputed in
good faith by appropriate proceedings;

 

(l) Company Group Entity has not mortgaged, pledged or subjected any Company
Group Assets to any Lien except Permitted Liens, or acquired any assets except
for assets acquired in the Ordinary Course of Business of the Company Group
Entities;

 

(m) no Company Group Entity has discharged or satisfied any Lien, or paid any
obligation or liability (fixed or contingent), except in the Ordinary Course of
Business of the Company Group Entities and that, in the aggregate, would not be
material to the Company Group Entities;

 

(n) no Company Group Entity has canceled or compromised any Debt or Claim or
amended, canceled, terminated, relinquished, waived or released any Contract or
right except in the Ordinary Course of Business of the Company Group Entities
and that, in the aggregate, would not be material to the Company Group Entities;

 

(o) no Company Group Entity has made or committed to make any capital
expenditures or capital additions or betterments in excess of $250,000
individually or $400,000 in the aggregate;

 

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(p) no Company Group Entity has granted any license or sublicense of any rights
under or with respect to any Intellectual Property;

 

(q) no Company Group Entity has instituted or settled any material legal
actions, suits or other legal proceedings; and

 

(r) no Company Group Entity has sold or leased any of its assets (other than any
vehicle inventory sales or leases in the Ordinary Course of Business for fair
market value).

 

There is no Contract to take any of the foregoing actions set forth in this
Section 2.9, except as expressly permitted by this Agreement.

 

2.10 Affiliate Transactions. Schedule 2.10 of the Disclosure Letter will
describe all services provided, and assets owned, licensed to or otherwise held,
by Staluppi or any of his/its respective Affiliates (other than any post-AAG
Reorganization Company Group Entity), that are or were made available or
provided to or used by any Company Group Entity or the Business within the
1-year period preceding the Closing Date. From and after the Closing Date, no
Company Group Entity will be obligated to pay any amounts to Staluppi or any of
his respective Affiliates (other than any post-AAG Reorganization Company Group
Entity), and Staluppi nor any of his respective Affiliates (other than any
post-AAG Reorganization Company Group Entity) will be obligated to pay any
amounts to any Company Group Entity. Since December 31, 2017, no Company Group
Entity (other than Staluppi) has purchased, transferred or leased any real or
personal property from or for the benefit of, paid any fee, commission, salary
or bonus to or for the benefit of, Staluppi or any of his respective Affiliates
(other than any post-AAG Reorganization Company Group Entity) or any director,
manager, officer or equity holder thereof and the Company has not sold,
transferred or leased any real or personal property to Staluppi or any of his
respective Affiliates (other than any post-AAG Reorganization Company Group
Entity).

 

2.11 Real Property.

 

(a) The Company Group Entities do not own any fee interest in any real property.

 

(b) Schedule 2.11 of the Disclosure Letter will list all leases of real property
(and the lands covered thereby) pursuant to which any Company Group Entity
leases real property for use in connection with the Business (all such leased
real property, the “Leased Real Property” and, all such listed leases
collectively, the “Scheduled Leases”), in each case specifying the address of
the Leased Real Property, the name of the lessor and lessee, and term of each
lease. Each Scheduled Lease is in full force and effect and constitutes a
binding obligation of each landlord, lessor or sublessor thereunder, enforceable
against such landlord, lessor or sublessor in accordance with its terms subject
to Creditors’ Rights. No event has occurred that would constitute, or that with
the giving of notice or the passage of time or both would constitute, a default
under any Scheduled Lease by a Company Group entity or by any other party to any
Scheduled Lease. The Company Group Entities validly occupy the Leased Real
Property in accordance with the terms of such lease free and clear of all Liens
except Permitted Liens.

 

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(c) The Leased Real Property constitutes all of the real property that has been
used in connection with the ownership and operation of the Business since
December 31, 2017. Other than the Company Group Entities, there are no parties
in possession of any portion of any Leased Real Property as lessees, subtenants,
tenants at sufferance or trespassers. The Company Group Entities have full right
and authority to use and operate all of the improvements located on the Leased
Real Property. Such improvements are being used, occupied, and maintained in all
material respects by the Company Group Entities in accordance with all
applicable easements, Contracts, permits, insurance requirements, restrictions,
building setback lines, covenants and reservations. Certificates of occupancy
and all other material licenses, permits, authorizations and approvals required
by any Governmental Authority having jurisdiction over the Leased Real Property
have been issued for the applicable Company Group Entity’s occupancy of each of
such improvements and all such certificates, licenses, permits, authorizations
and approvals have been paid for and are in full force and effect. No casualty
loss has occurred with respect to the improvements located on the Leased Real
Property (the “Facilities”). There is no pending or, to the Knowledge of
Staluppi, threatened condemnation, eminent domain or similar proceeding or
special assessment affecting any of the Leased Real Property, nor is any such
proceeding or assessment being contemplated. The Facilities are free from
material structural and mechanical defects (including roofs) and have been used
by the Company Group Entities in the Ordinary Course of Business and remain as
of the date of this Agreement in suitable and adequate condition for such
continued use. Neither Staluppi nor any of his/its respective Affiliates have
deferred maintenance of the Facilities in contemplation of the Contemplated
Transactions. All of the Leased Real Property has direct access to public roads
without the use of any easement, license or right of way.

 

(d) Staluppi shall furnish LMP with true and complete copies of (i) all deeds,
leases, title opinions, title encumbrances, title insurance policies and surveys
in the possession of Staluppi, the Company Group Entities, or any of their
respective Affiliates that relate to the Leased Real Property, together with
true and complete copies of all title insurance policies and the most current
survey of the Leased Real Property and the Facilities in the possession or
control of Staluppi, the Company Group Entities, or any of their respective
Affiliates, and (ii) all reports of any engineers, environmental consultants or
other consultants in their possession relating to any of the Leased Real
Property or the Facilities.

 

(e) All utilities (including water, sewer or septic, gas, electricity, trash
removal and telephone service) are available to the Leased Real Property in
sufficient quantities and quality to adequately serve the Leased Real Property
in connection with the operation of the Business conducted therefrom as such
operations are currently conducted thereon.

 

2.12 Personal Property.

 

(a) Schedule 2.12(a) of the Disclosure Letter will list (i) certain items of
furniture, fixtures, and equipment or other item of tangible personal property
used or held for use by the Company Group Entities or any of their respective
Affiliates in connection with the Business that is subject to a lease (the
“Leased Equipment”), and (ii) if such lease is treated as a capital lease under
GAAP, the purchase price as of the date of this Agreement for such item of
Leased Equipment under the terms of the relevant lease for such item of Leased
Equipment.

 

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(b) Unless listed on Schedule 2.12(a) of the Disclosure Letter, Schedule 2.12(b)
of the Disclosure Letter will provide a current depreciation schedule of
furniture, fixtures, and equipment and other items of tangible personal property
used or held for use by the Company Group Entities in connection with the
Business (the “Scheduled Personal Property”). The Company Group Entities have
good and valid title to the Scheduled Personal Property free and clear of all
Liens, except Permitted Liens.

 

(c) The Leased Equipment, the Scheduled Personal Property and all other tangible
personal property used or held for use by the Company Group Entities in
connection with the Business (together, the “Personal Property”) constitute all
of the tangible personal property necessary for the continued ownership, use and
operation of the Business consistent in all material respects with the Company
Group Entities’ past practices since December 31, 2017, and with the practices
of the Company Group Entities as of the date of this Agreement.

 

(d) The Personal Property is located on the Leased Real Property (or is in
transit to the same). Each item of Personal Property has been operated and
maintained in the Ordinary Course of Business of the Company Group Entities and
remains in suitable and adequate condition for use consistent with its primary
use since December 31, 2017 (or later acquisition date).

 

2.13 Permits. Schedule 2.13 lists all New York motor vehicle dealer licenses
used or held by the Company Group Entities in connection with the ownership of
the Company Group Assets and the operation of the Business (the “Scheduled
Licenses”). Except as set forth in Schedule 2.13 of the Disclosure Letter, the
Scheduled Licenses are valid and in full force and effect and no Company Group
Entity is in default, and no condition exists that with notice or lapse of time
or both would constitute a default, under any of the Scheduled Licenses.

 

2.14 Contracts.

 

(a) True and complete copies (including all amendments) of each Contract under
which the liability to or burden on the Company exceeds $50,000 (each a
“Material Contract” and collectively the “Material Contracts”) shall be
furnished to LMP for its review during the Due Diligence Period. Staluppi
represents that each Material Contract is the legal, valid and binding
obligation of any Company Group Entity and, to the Knowledge of Staluppi, any
other Person party thereto, binding and enforceable against any Company Group
Entity and, in the case of non-Affiliate counterparties, to the Knowledge of
Staluppi, any other Person party thereto, in accordance with its terms, subject
to Creditors’ Rights; (ii) no Material Contract has been terminated, and no
Company Group Entity, to the Knowledge of Staluppi, is in material breach or
default thereunder, and, to the Knowledge of Staluppi, no event has occurred
that with notice or lapse of time, or both, would constitute a material breach
or default, or permit termination, modification in any manner adverse to any
Company Group Entity or acceleration thereunder; (iii) no party has asserted or
has (except by operation of Legal Requirements) any right to offset, discount or
otherwise abate any amount owing under any Material Contract except as expressly
set forth in such Material Contract; and (iv) there are no material waivers or
consents regarding any Material Contract that have not been disclosed in writing
to LMP.

 

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2.15 Intellectual Property.

 

(a) Schedule 2.15(a) of the Disclosure Letter identifies all patents, patent
applications, registered trademarks, trademark applications, copyright
registrations, copyright applications and Internet domain names owned by any
Company Group Entity (the “Registered Intellectual Property”). The Registered
Intellectual Property together with all other Intellectual Property owned or
used by any Company Group Entity (collectively, the “Company Intellectual
Property”) constitute all Intellectual Property necessary for the continued
operation of the Business consistent in all respects with the past practices of
the Business. In addition, Schedule 2.15(a) of the Disclosure Letter separately
identifies all names or marks used by Staluppi or any of his Affiliates that are
similar to a name or mark used by any Company Group Entity.

 

(b) The Company Group Intellectual Property is valid, subsisting, and
enforceable and the Company Group Entities have exclusive ownership of, or valid
licenses to use, as applicable, all Intellectual Property, free and clear of all
Liens, other than Permitted Liens, currently used or held for use by any Company
Group Entity. Each item of Company Intellectual Property will continue to be
owned or licensed by the Company Group Entities on identical terms and
conditions immediately following the consummation of the Contemplated
Transactions, as are in effect immediately prior to such consummation.

 

(c) Except as disclosed on Schedule 2.15(c) of the Disclosure Letter, no Company
Group Entities has been a party to any judicial or administrative proceeding
alleging, nor has Staluppi or his/its Affiliates been notified in writing of any
allegation of, any infringement, misappropriation or violation of any item of
the Company Group Intellectual Property, or challenging the validity or
ownership of any item of the Company Group Intellectual Property, whether owned
by the Company Group Entities or any other Person. There has been no
infringement, misappropriation or violation (or facts that are reasonably likely
to give rise to infringement, misappropriation or violation) by the Company
Group Entities of any Intellectual Property of other Persons or, to the
Knowledge of Staluppi, any infringement, misappropriation or violation (or facts
that are reasonably likely to give rise to infringement, misappropriation or
violation) by any other Person of any of the Company Group Intellectual
Property. No Company Group Entity is a party or subject to any settlement
agreement involving Intellectual Property or any outstanding Judgment,
stipulation or agreement restricting the use of Intellectual Property by the
Company Group Entities.

 

(d) Each Company Group Entity has taken reasonable measures to protect the
confidentiality of the trade secrets and confidential information of such
Company Group Entity with respect to the Business. None of the trade secrets or
confidential information of any Company Group Entity relating to the Business
has been disclosed or provided to anyone except to employees and contractors of
any Company Group Entity pursuant to signed, written agreements which impose a
duty of confidentiality on such employees and contractors with respect to such
trade secrets and confidential information.

 

(e) The Company Group Entities own, lease, or license all computer systems that
are necessary for the operations of the Business. In the past 12 months, there
has been no failure or other material substandard performance of any computer
systems which has caused any material disruption to the Business. The Company
Group Entities have taken commercially reasonable steps to provide for the
back-up and recovery of data and information, has commercially reasonable
disaster recovery plans, procedures and facilities, and, as applicable, has
taken commercially reasonable steps to implement such plans and procedures. The
Company Group Entities have taken commercially reasonable actions to protect the
integrity and security of the computer systems and the software information
stored thereon from unauthorized use, access or modification by third parties.

 

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2.16 Accounts Receivable. Each of the Accounts Receivable arose in the Ordinary
Course of Business of the Company Group Entities and represents the genuine,
valid and legally enforceable obligation of the account debtor (subject only to
Creditors’ Rights) and no contra account, set-off, defense, counterclaim,
allowance or adjustment (other than discounts for prompt payment shown on the
invoice) has been asserted or, to the Knowledge of Staluppi, is threatened by
any of the account debtors of such Accounts Receivable. To the Knowledge of
Staluppi, none of the account debtors of the Accounts Receivable is involved in
a bankruptcy or insolvency proceeding or is generally unable to pay its debts as
they become due. The Company Group Entities have good and valid title to the
Accounts Receivable free and clear of all Liens, except Permitted Liens. Since
December 31, 2019, other than in the ordinary course, no goods or services, the
sale or provision of which gave rise to any Accounts Receivable, have been
returned or rejected by any account debtor or lost or damaged prior to receipt
thereby. Since December 31, 2019, no Company Group Entity has written off any
Accounts Receivable as uncollectible.

 

2.17 Brokers’ Fees; Expenses.

 

(a) Except as set forth in Schedule 2.17(a) of the Disclosure Letter, neither
Staluppi, nor any of his Affiliates has any Liability or obligation to pay any
fees or commissions to any broker, finder, or agent in respect of the
Contemplated Transactions for which any Company Group Entity or LMP could become
liable or obligated.

 

(b) Except as set forth in Schedule 2.17(b) of the Disclosure Letter, no Company
Group Entity has Liability or obligation to pay any fees or expenses of
attorneys, investment bankers, accountants or other advisors or service
providers in connection with the Contemplated Transactions; and there is no
Basis for any action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against any Company Group Entity or LMP giving rise
to Liability associated therewith.

 

2.18 No Undisclosed Liabilities. To the best of Staluppi’s knowledge, neither
any Company Group Entity nor the Business has any Liability (and there is no
Basis for any present or future Claims against any Company Group Entity or the
Business giving rise to any Liability), other than Liabilities set forth on the
face of the Company Group Interim Balance Sheet (rather than any notes thereto);
Liabilities that have arisen after the date of the Company Group Interim Balance
Sheet in the Ordinary Course of Business of the Company Group Entities (none of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement or
violation of Legal Requirements); or Liabilities set forth on Schedule 2.18.

 

2.19 Legal Compliance. To Staluppi’s Knowledge, each Company Group Entity is,
and at all times since its formation has been, in compliance in all material
respects with all applicable Legal Requirements.

 

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2.20 Taxes.

 

(a) all Tax Returns required to be filed by or with respect to any Company Group
Entity have been duly and timely filed with the appropriate Governmental
Authority, and each such Tax Return is true, correct and complete;

 

(b) all Taxes owed by any Company Group Entity (or for which any Company Group
Entity may be liable) that are or have become due have been timely paid in full,
whether disputed or not, and whether or not shown on any Tax Return;

 

(c) all Tax withholding and deposit obligations imposed on or with respect to
any Company Group Entity or its employees (or for which any Company Group Entity
may otherwise be liable) have been satisfied in full;

 

(d) there are no Liens (other than Liens for current period Taxes that are not
yet due and payable) on any of the Company Group Assets or the AAG Membership
Interests that are attributable to any Tax Liability or payment obligation;

 

(e) there are no Claims pending against any Company Group Entity for any Taxes,
and no assessment, deficiency or adjustment has been asserted, proposed or
threatened in writing with respect to any Taxes or Tax Returns of or with
respect to any Company Group Entity;

 

(f) no Tax audits or administrative or judicial proceedings are being conducted
or have been threatened in writing with respect to any Company Group Entity;

 

(g) true, correct and complete copies of all material Tax Returns filed by or
with respect to each Company Group Entity during the past 3 years, and all
material correspondence with a Governmental Authority relating to such Tax
Returns or Taxes due from or with respect to any Company Group Entity, have been
made available to LMP;

 

(h) there are no agreements, waivers or other arrangements in force or effect
providing for an extension of time with respect to the filing of any Tax Return
of or with respect to any Company Group Entity or the assessment or collection
of any Tax of or with respect to any Company Group Entity;

 

(i) no Company Group Entity is a party to or bound by any Tax allocation,
sharing or indemnity agreement or arrangement with any Person;

 

(j) no Claim has ever been made by a Governmental Authority in a jurisdiction in
which a Company Group Entity does not file Tax Returns or pay Taxes that any
Company Group Entity is or may be required to file a Tax Return or pay Taxes in
that jurisdiction;

 

(k) no Company Group Entity has any material property or obligation, including
uncashed checks to vendors, customers, or employees, non-refunded overpayments,
or unclaimed subscription balances, that is escheatable or reportable as
unclaimed property to any state or municipality under any applicable escheatment
or unclaimed property laws;

 

15

 

 

(l) no power of attorney that is currently in force has been granted with
respect to any matter relating to Taxes that could affect any Company Group
Entity;

 

(m) all of the Company Group Assets that are subject to property Tax have been
properly listed and described on the property Tax rolls for the Tax units in
which the Company Group Assets are located and no portion of the Company Group
Assets constitutes omitted property for property Tax purposes; and

 

(n) neither LMP nor any Company Group Entity will be held liable for any unpaid
Taxes that are or have become due on or prior to the Closing Date as a successor
or transferee, by statute, contract or otherwise, as a result of the transfer of
the Acquired Interests pursuant to this Agreement.

 

2.21 Inventory. Except as set forth in Schedule 2.21 of the Disclosure Letter
and except for Permitted Liens, each Company Group Entity owns its inventory
free and clear of all Liens except Permitted Liens and floor plan liens on
vehicle inventory. None of such inventory is covered by any financing statements
except those filed in connection with Permitted Liens. Such inventory is located
at the Facilities and none of such inventory is subject to any consignment,
bailment, warehousing or similar arrangement. The inventories of the Company
Group Entities reflected on the Company Group Interim Financial Statements
consist of items of a quality and quantity usable and saleable in the Ordinary
Course of Business of the Company Group Entities, as historically conducted. The
method of valuing such inventories on the Company Group Interim Financial
Statements is consistent with that used in respect of the beginning and end of
each of the 2 most recent fiscal years of the Company Group Entities. The
inventories of the Company Group Entities are not excessive in kind or amount in
light of the business done or reasonably expected to be done by it. The values
at which such inventories are carried reflect the inventory valuation policy
applied by each Company Group Entity of stating inventory at the lower of actual
cost (first in-first out method) or realizable market value in accordance with
GAAP.

 

2.22 Litigation. Except as set forth in Schedule 2.21 of the Disclosure Letter,
there are no actions, suits, charges, investigations or proceedings pending or,
to the Knowledge of Staluppi, threatened at law or in equity, or before or by
any Governmental Authority or before any arbitrator of any kind, against any
Company Group Entity or any of its Affiliates that affect or would materially
affect the Business, the Company Group Assets or the consummation of the
Contemplated Transactions.

 

2.23 Product and Service Warranty.

 

(a) To Staluppi’s Knowledge, each product sold, leased, delivered or installed
or service performed by any Company Group Entity prior to the Closing Date has
complied with and conformed to all applicable Legal Requirements, contractual
commitments and all applicable warranties of such Company Group Entity and the
applicable Manufacturer.

 

(b) All outstanding Claims, whether in contract or tort, for defective or
allegedly defective products or workmanship pending or, to the Knowledge of
Staluppi, threatened against any Company Group entity, which are not covered by
Insurance or indemnified and defended by a motor vehicle
manufacturer/distributor, are listed or described on Schedule 2.23(b) of the
Disclosure Letter.

 

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2.24 Employees; Employee Relations.

 

(a) Schedule 2.24(a) of the Disclosure Letter identifies for each employee who
provides services to any Company Group entity, his or her (i) name, job title,
employing entity, original hire date, service date and status as exempt or
non-exempt under the FLSA and any other applicable Legal Requirement, (ii)
current annualized salary (or rate of pay) and other compensation (including
bonus, additional forms of pay, profit-sharing, pension benefits and other
compensation for which he or she is eligible) paid during 2019 and paid or
payable for 2020 to such Person, (iii) leave status (including type of leave,
duration of leave and expected return date) and (iv) details of any applicable
visa.

 

(b) Those individuals set forth on Schedule 2.24(a) of the Disclosure Letter
represent the entirety of the individuals who are employed or otherwise engaged
in conjunction with the Business. Except as accrued as a current Liability on
the Company Group Interim Balance Sheet, all wages, bonuses and other
compensation, if any, due and payable as of the Closing Date to all present and
former employees and contractors of any Company Group Entity have been paid in
full, or will be paid in full, to such employees and contractors prior to the
Closing Date. The compensation and benefits (including vacation and other paid
time off benefits) paid, payable or provided with respect to all employees and
contractors of any Company Group Entity have been reflected in the Company Group
Financial Statements for the periods covered thereby.

 

(c) Except as set forth on Schedule 2.24(c) of the Disclosure Letter, no Company
Group entity is a party to, nor has it ever been bound by, the terms of any
collective bargaining agreement or any other Contract with any labor union or
representative of employees, and no such agreements are being negotiated. Except
as set forth on Schedule 2.24(c) of the Disclosure Letter no labor union or
representative thereof claims to or, to the Knowledge of Staluppi, is seeking to
represent any such employees.

 

(d) Except as set forth on Schedule 2.24(d) of the Disclosure Letter, no Company
Group Entity has entered into, and is bound by any severance, retention, bonus,
change of control, termination pay or similar Contract with any Person, either
express or implied, and no Company Group Entity is currently negotiating, and it
does not have any outstanding offer with respect to, any such agreement or
matter.

 

(e) Except as set forth on Schedule 2.24(e) of the Disclosure Letter, no legal
proceedings, charges, complaints, grievances, investigations or similar actions
have been commenced with respect to any Company Group Entity under any Legal
Requirement affecting or relating to the employment relationship, and no
proceedings, charges, complaints, grievances, investigations, audits or similar
actions are, to the Knowledge of Staluppi, threatened under any such Legal
Requirement and no facts or circumstances exist which could give rise to any
such proceedings, charges, complaints, grievances, investigations or similar
actions. Except as set forth on Schedule 2.24(e) of the Disclosure Letter, no
Governmental Authority has issued a Judgment or finding with respect to the
labor and employment practices (including practices relating to discrimination,
wage payments, recordkeeping, employee classification and immigration) of any
Company Group Entity..

 

17

 

 

(f) To the Knowledge of Staluppi, each Company Group Entity is, and since the
date of its formation has been, in compliance with any applicable Legal
Requirement relating to the employment of labor, including labor and employment
practices, terms and conditions of employment, wages and hours. No Company Group
Entity is in violation of any Legal Requirement concerning retention or
classification of independent contractors. Each employee and contractor of each
Company Group Entity is lawfully authorized to work in the United States.

 

2.25 Employee Benefit Matters.

 

(a) Schedule 2.25(a) of the Disclosure Letter, includes a true and complete list
of each of the following (collectively referred to as the “Plans,” and
individually referred to as a “Plan”) that is sponsored, maintained or
contributed to or by any Company Group Entity or any ERISA Affiliates of any
Company Group Entity or with respect to which any Company Group Entity could
have any Liability, or has been so sponsored, maintained or contributed to
within 6 years prior to the Closing Date by any Company Group Entity or any
ERISA Affiliates of any Company Group Entity:

 

(i) each “employee benefit plan,” as such term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”),
(including employee benefit plans, such as foreign plans, which are not subject
to the provisions of ERISA); and

 

(ii) each personnel policy, equity option plan, equity appreciation rights plan,
restricted equity plan, phantom equity plan, equity based compensation
arrangement, collective bargaining agreement, bonus plan or arrangement,
incentive award plan or arrangement, vacation policy, severance pay plan, policy
or agreement, deferred compensation agreement or arrangement, executive
compensation or supplemental income arrangement, change in control plan or
agreement, retention plan or agreement, fringe benefit plan or arrangement,
consulting agreement, employment agreement and each other employee benefit plan,
agreement, arrangement, program, practice or understanding which is not
described in Section 2.25(a)(i).

 

(b) Staluppi has furnished to LMP true, correct and complete copies of each of
the Plans, and related trusts and services agreements, if applicable, in each
case, including all amendments thereto. Staluppi has also furnished to LMP, with
respect to each Plan and to the extent applicable: (i) the 3 most recent annual
or other reports filed with each Governmental Authority and all schedules
thereto, (ii) the insurance contract and other funding agreement, and all
amendments thereto, (iii) the most recent summary plan description, scheme
booklet and all announcements (including all summaries of material modifications
thereto), (iv) the most recent audited accounts and actuarial report or
valuation required to be prepared under any applicable Legal Requirement, (v)
the most recent determination letter or opinion letter issued by the Internal
Revenue Service and (vi) copies of all material notices, letters or other
correspondence from any Governmental Authority.

 

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(c) No Company Group Entity nor any ERISA Affiliates of any Company Group Entity
contributes to, or has any obligation to contribute to, or has at any time
within 6 years prior to the Closing Date contributed to or had an obligation to
contribute to, and no Plan is (i) a “multiemployer plan” within the meaning of
Section 3(37) of ERISA or (ii) a plan subject to Title IV of ERISA, Section 302
of ERISA or Section 412 of the Code.

 

(d) each Company Group Entity and its ERISA Affiliates have performed all
obligations, whether arising by operation of any Legal Requirement or by
contract, required to be performed by it or them in connection with the Plans,
and there have been no defaults or violations by any other party to the Plans;

 

(e) Each of the Plans intended to be qualified under Section 401(a) of the Code
(i) satisfies the requirements of such Section, (ii) is maintained pursuant to a
prototype document approved by the Internal Revenue Service, and is entitled to
rely on a favorable opinion letter issued by the Internal Revenue Service with
respect to such prototype document, or has received a favorable determination
letter from the Internal Revenue Service regarding such qualified status, (iii)
has been amended as required by any applicable Legal Requirement, and (iv) has
not been amended or operated in a way which would adversely affect such
qualified status;

 

(f) there are no Claims pending (other than routine Claims for benefits) or, to
the Knowledge of Staluppi, threatened against, or with respect to, any of the
Plans or their assets; and

 

(g) the execution and delivery of this Agreement and the consummation of the
Contemplated Transactions will not (i) require any Company Group Entity or any
of its ERISA Affiliates to make a larger contribution to, or pay greater
compensation, payments or benefits under, any Plan or under any Contract
disclosed under Section 2.24 than they otherwise would, in the absence of the
execution and delivery of this Agreement or the consummation of the Contemplated
Transactions, whether or not some other subsequent action or event would be
required to cause such payment or provision to be triggered, or (ii) create or
give rise to any additional vested rights or service credits under any Plan or
under any Contract disclosed under Section 2.24.

 

(h) Without limiting anything in this Section 2.25, to Staluppi’s Knowledge,
each Company Group Entity has complied with the continuation coverage
requirements of §601 et seq. of ERISA and §4980B of the Code (“COBRA”),
including the requirements related to COBRA contained in the American Recovery
and Reinvestment Act of 2009. There are no Claims pending or, to the Staluppi’s
Knowledge, threatened, alleging any breach of the terms of any Plan or of any
fiduciary duties thereunder or violation of any Legal Requirement with respect
to any Plan (other than routine Claims for benefits made in the ordinary course
of plan administration for which plan administrative procedures have not been
exhausted). No Person is or could be subject to any adverse tax consequences
under §409A of the Code.

 

(i) To Staluppi’s Knowledge, in connection with the consummation of the
Contemplated Transactions, no payments of money or property, acceleration of
benefits, or provisions of other rights have or will be made which, in the
aggregate, would be reasonably likely to result in imposition of the sanctions
imposed under Sections 280G and 4999 of the Code (determined without regard to
the exceptions contained in Sections 280G(b)(4) and 280G(b)(5) of the Code),
whether or not some other subsequent action or event would be required to cause
such payment, acceleration or provision to be triggered.

 

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2.26 Environmental Matters.

 

(a) The Business and the Company Group Assets are and, during all times while
under the control of Staluppi, to the best of Staluppi’s Knowledge, have been in
compliance with all Environmental Laws and Environmental Authorizations and no
material unbudgeted expenditures are required to achieve or maintain such
continued compliance with Environmental Laws and Environmental Authorizations.

 

(b) All Environmental Authorizations required for operating the Business and the
Company Group Assets as they are currently being operated are set forth on
Schedule 2.26(b) of the Disclosure Letter, have been duly obtained, and are
currently in full force and effect, and Staluppi, the Company Group Entities or
any of their other Affiliates have received any written notice that any such
Environmental Authorization will be canceled, revoked or suspended.

 

(c) There are no Claims pending or, to the Knowledge of Staluppi, threatened
under any Environmental Law against any Company Group Entity or any of its
Affiliates or the Business or the Company Group Assets, and none of Staluppi,
any Company Group Entity, or any of their other Affiliates has otherwise
received notice from any Governmental Authority or other Person of alleged
violation of, non-compliance with or Liability under, any Environmental Law with
respect to the Business or the Company Group Assets.

 

(d) To Staluppi’s Knowledge, except as set forth on Schedule 2.26(d) of the
Disclosure Letter, there are no current or, to the extent occurring within the
relevant time periods specified under all applicable statutes of limitations,
past facts, events, circumstances or conditions with respect to the Business or
the Company Group Assets that could reasonably be expected to form the Basis for
assertion of any Environmental Liability against any owner or operator of the
Business or the Company Group Assets, and no Company Group Entity nor any of
their respective Affiliates has assumed or retained by contract or operation of
law any material Liabilities under any Environmental Law or regarding any
Hazardous Materials.

 

(e) To Staluppi’s Knowledge, there has been no Release of Hazardous Materials
at, on, under or from any Company Group Assets in connection with any Company
Group Entity or the Business or the operations of any Predecessor for which any
investigatory, remedial, monitoring or restoration actions required under
Environmental Laws have not been performed and completed to the satisfaction of
all applicable Governmental Authorities.

 

(f) None of Staluppi, any of the Company Group Entities, or any of their other
Affiliates, has received any notice asserting an alleged Liability or obligation
under any Environmental Law with respect to investigatory, remedial, monitoring
or restoration actions at any real properties other than the real properties
included among the Company Group Assets where any Company Group Entity or any of
its Affiliates or any Predecessor transported or disposed or arranged for the
transport or disposal of any Hazardous Materials and, to the Knowledge of
Staluppi, there are no facts, events, circumstances or conditions that would
reasonably be expected to result in the receipt of such notice.

 

20

 

 

(g) Staluppi has furnished to LMP complete and accurate copies of all
environmental audits, assessments, reports, studies, analyses and correspondence
on alleged environmental matters that are in Staluppi’s or any Company Group
Entity’s, or any of their other Affiliate’s possession or control and relating
to the ownership or operation of the Business or the Company Group Assets.

 

For further clarity, Staluppi shall not incur any Liability under this Section
2.26 related to environmental matters absent his failure to disclose such
environmental matters of which he has Knowledge.

 

2.27 Vendors and Suppliers. Schedule 2.27 of the Disclosure Letter sets forth
the 10 largest vendors and suppliers of the Business (as operated by Staluppi,
the Company Group Entities, and their respective predecessors, as applicable)
(measured by aggregate expenditures) during the fiscal year ended on December
31, 2019. To the Knowledge of Staluppi, there is no present intent of any
material vendor or supplier of the Business to discontinue or materially alter
its relationship with the Business or LMP upon consummation of the Contemplated
Transactions.

 

2.28 Bank Accounts. Schedule 2.28 of the Disclosure Letter sets forth each bank,
savings institution and other financial institution with which a Company Group
Entity has an account or safe deposit box and the names of all Persons
authorized to draw thereon or to have access thereto. Neither Staluppi nor any
Company Group Entity has given any revocable or irrevocable powers of attorney
or similar grant of authority to any Person relating to its business for any
purpose whatsoever.

 

2.29 Insurance. Schedule 2.29 of the Disclosure Letter sets forth a true and
complete list of all policies, binders and insurance contracts under which any
of the Company Group Entities, the Business or the Company Group Assets is
insured (the “Insurance Policies”). With respect to each Insurance Policy,
Schedule 2.29 of the Disclosure Letter sets forth a true and correct description
of (a) the scope of coverage, (b) the limits of liability, (c) deductibles and
other similar amounts and (d) the aggregate limits and available coverage (if
less than the aggregate limits). Each of the Insurance Policies is in full force
and effect, there has been no notice of any cancellation or, to the Knowledge of
Seller, any threatened cancellation of any Insurance Policy. Schedule 2.29 of
the Disclosure Letter sets forth the Company Group Entity that is a named
insured or loss payee, as applicable, under each Insurance Policy, and the
Insurance Policies will continue to be in full force and effect after the
Initial Closing Date until their ordinary expiration date. There is no claim by
any Company Group Entity pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. To the Knowledge of Seller, none of the Company Group
Entities’ insurance provider(s) intend to materially increase the premiums
payable by any Company Group Entity or non-renew or materially and negatively
revise the material terms of any of the Insurance Policies upon their
expiration. True and complete copies of each Insurance Policy have been
furnished to LMP.

 

2.30 Books and Records. All Books and Records are located at the premises of the
Business to which such books and records primarily relate, have been maintained
substantially in accordance with any applicable Legal Requirement, and comprise
all of the Books and Records relating to the ownership and operation of the
Business and the Company Group Assets.

 

21

 

 

2.31 Assets Necessary to the Business. At and following the Closing Date, the
Company Group Assets (a) will constitute all of the assets necessary or required
to permit the Company Group Entities to carry on the Business in substantially
the same manner as presently conducted and as conducted since December 31, 2017
by the Company Group Entities and (b) constitute all of the assets of the
Company Group Entities, other than the Excluded Assets listed in Schedule 2.31,
used in the Business presently and as conducted since December 31, 2017.

 

2.32 Debt. Schedule 2.32 of the Disclosure Letter sets forth by category all
Debt (other than vendor payables) of the Company Group Entities, and describes
any Liens on any of the Company Group Assets which secure the same such
Indebtedness, in each case as of the Closing Date (the “Scheduled Debt”). Except
for the Scheduled Debt, no Company Group Entity has any Debt, and there is no
Debt related to or associated with the Company Group Assets.

 

2.33 Manufacturer Audits. Except as set forth on Schedule 2.33 of the Disclosure
Letter, as of the Effective Date, no Manufacturer is currently conducting an
audit of any Company Group Entity’s sales practices and documentation or service
practices and warranty claim documentation.

 

2.34 Manufacturers Communications. Except as set forth on Schedule 2.33 of the
Disclosure Letter, the Manufacturer has not (a) notified any Company Group
Entity of any deficiency in dealership operations for which if not cured would
be deemed a Breach of the Dealer Agreement for a manufacturer including, but not
limited to, the following areas: (i) brand imaging, (ii) facility conditions;
(b) notified any Company Group Entity of the awarding or possible awarding of a
franchise to an entity or entities or relocation of an existing franchised
dealership within the primary market area of the Dealership Premises.

 

2.35 Finance & Insurance Programs. During the Due Diligence Period, a complete
and accurate list and description of all programs of any type related to credit
life insurance, accident and health insurance, vehicle maintenance, vehicle
service or vehicle warranty programs extended (even if there are insurance
policies, stop loss agreements or other resources available to satisfy
obligations of those programs) or sold by Company since January 1, 2014 shall be
provided to LMP for their review.

 

2.36 No Misleading Statements. This Agreement, the information and schedules
referred to herein and the information that has been furnished to LMP in
connection with the Contemplated Transactions do not include any untrue
statement of a material fact and do not omit to state any material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.

 

22

 

 

Article 3. REPRESENTATIONS AND WARRANTIES OF LMP.

 

LMP represents and warrants to Staluppi that the statements contained in this
Article 3 are correct and complete as of the date of this Agreement, except as
set forth in the disclosure schedules attached to a letter delivered by LMP to
Staluppi within 5 days after the Effective Date (the “LMP Disclosure Letter”).
Nothing in the LMP Disclosure Letter shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the LMP
Disclosure Letter identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (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 herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The LMP
Disclosure Letter will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Article 3.

 

3.1 Organization. LMP is a limited liability company duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.

 

3.2 Authority; Enforceability. LMP has all requisite power and authority to
execute and deliver each Transaction Document to which LMP is a party and to
perform LMP’s obligations thereunder. The execution and delivery of each
Transaction Document to which a LMP is a party and the performance of LMP’s
obligations contemplated thereby have been duly and validly approved by all
action necessary on behalf of LMP. Each Transaction Document to which LMP is a
party constitutes the legal, valid and binding obligation of LMP enforceable
against LMP in accordance with its terms, subject to Creditors’ Rights, assuming
in each case that such Transaction Document has been duly executed and delivered
by each party other than LMP to such Transaction Document.

 

3.3 Absence of Conflicts. Neither the execution and delivery by LMP of this
Agreement or any other Transaction Document to which LMP is a party, nor the
consummation of the transactions contemplated hereby or thereby by LMP will
violate or breach the terms of, cause a default under or conflict with (a) any
applicable Legal Requirement, (b) the Organizational Documents of LMP, or (c)
any Contract to which LMP is a party or by which it, or any of its properties,
is bound, except, in each case, as would not have a material and adverse effect
on the ability of LMP to perform its obligations under this Agreement. Except
for filings under the HSR Act or any other applicable antitrust or competition
Legal Requirement, no other Governmental Authority consents are necessary for
LMP’s performance hereunder.

 

3.4 Brokers’ Fees. Except as set forth in Schedule 3.4, neither LMP nor its
Affiliates has any Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the Contemplated Transactions for which
Staluppi or any Company Group Entity could become liable or obligated.

 

3.5  Manufacturers Approval. LMP is not aware of any facts or circumstances that
could reasonably be expected to be the basis for a Manufacturer not to approve
the Contemplated Transactions, including disqualifications for criminal
convictions or bankruptcies of an officer or director of LMP.

 

3.6 Financial. LMP shall on the Closing Date have sufficient funds to consummate
the Contemplated Transactions, and no portion of the funds used by LMP to pay
the Purchase Price will have been obtained through the solicitation of any
individual investors in the Company and LMP has not made any promise or
representation to anyone concerning any guaranteed return on investment.

 

3.7 No Misleading Statements. This Agreement, the information and schedules
referred to herein and the information that has been furnished to Staluppi in
connection with the Contemplated Transactions do not include any untrue
statement of a material fact and do not omit to state any material fact
necessary to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.

 

23

 

 

Article 4. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS, GUARANTEES,
REPRESENTATIONS AND WARRANTIES OF STALUPPI.

 

All statements contained in any Schedule or certificate delivered hereunder or
in connection herewith by or on behalf of any of the parties pursuant to this
Agreement shall be deemed representations and warranties by the respective
parties hereunder unless otherwise expressly provided herein. Staluppi’s
obligations under Article 7 to indemnify LMP for LMP’s Damages resulting from an
inaccurate representation or warranty of Staluppi, will not be affected if LMP
has, or by reasonably diligent investigation could have obtained, knowledge of
that inaccuracy or breach. The representations and warranties of Staluppi or LMP
contained in this Agreement, including those contained in any Schedule or
certificate delivered hereunder or in connection herewith, shall survive the
Closing for a period of 3 years with the exception of the representations and
warranties of Staluppi contained in Sections 2.1 (Authority), 2.2 (Authority),
2.12(d) (Title to Fixed Assets), 2.18 (Undisclosed Liability), 2.20 (Taxes),
2.25 (ERISA/COBRA), and 2.26 (Environmental), each of which shall constitute
“Fundamental Representations” and shal1 survive the Closing until the expiration
of the applicable tax statutes of limitation plus a period of 60 days.

 

Article 5. CONDITIONS TO OBLIGATIONS TO CLOSE.

 

5.1 Conditions to Obligation of LMP. The obligation of LMP to consummate the
transactions to be performed by it in connection with the Closing is subject to
satisfaction of the following conditions:

 

(a) all representations and warranties of Staluppi and the Company Group
Entities contained in this Agreement (including the Schedules hereto) (i) that
are qualified as to materiality, shall be true, correct and complete in all
respects and (ii) that are not qualified as to materiality, shall be true,
correct and complete 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, and Staluppi shall have delivered to LMP a certificate
dated as of the Closing Date and executed by Staluppi to such effect or
disclosing any such representation or warranty not so true, correct and
complete;

 

(b) each and all of the agreements and covenants of Staluppi to be performed on
or before the Closing Date pursuant to the terms hereof shall have been
performed in all material respects;

 

(c) LMP shall not have terminated this Agreement as provided in Article 7;

 

(d) Staluppi shall have delivered to LMP an assignment agreement (the
“Assignment Agreement”) evidencing the assignment and transfer of the Acquired
Interests to LMP, in substantially the form attached hereto as Exhibit E, duly
executed by Staluppi;

 

24

 

 

(e) Staluppi shall have procured in writing each of the consents from the
Company Group Entities’ Lender(s) as disclosed in Section 2.4, on terms
(including capitalization and financial covenants) no less favorable than
currently imposed upon any Company Group Entity, and such consents must be in
full force and effect as of the Closing;

 

(f)  each Manufacturer shall have delivered to LMP written approval of the
transfer of the Acquired Interest to LMP and agreed to the appointment of John
Staluppi as the dealer operator/general manager of the applicable Company Group
Entity’s dealership operations at the applicable Dealership Premises, all on
terms (including capitalization and financial covenants) no less favorable than
currently set forth in applicable Company Group Entity’s dealer sales and
service agreements with such Manufacturer;

 

(g) the Parties shall have received all authorizations, consents, and approvals
of any Governmental Authority or Regulatory Authority required in connection
with the consummation of the Contemplated Transactions, Staluppi shall have
reimbursed LMP for ½ of the cost (excluding professional fees) of obtaining all
such authorizations, consents, and approvals of any Governmental Authority or
Regulatory Authority required in connection with the consummation of the
Contemplated Transactions, any required waiting periods under the HSR Act, as
applicable, shall have expired or have been terminated, and no Governmental
Authority or Regulatory Authority shall have taken any action as a result of
which LMP reasonably deems it inadvisable to proceed with the Contemplated
Transactions;

 

(h) LMP shall have received the resignations, effective as of the Closing, of
each director and officer of each Company Group Entity, if any, each of which
shall be in compliance and form required by such Company Group Entity’s
Operating Agreement;

 

(i) no action or proceedings shall have been instituted or threatened before a
court or other government body or by any Governmental Authority to restrain or
prohibit any of the Contemplated Transactions;

 

(j) no Material Adverse Change in the business of any Company Group Entity shall
have occurred since the Effective Date;

 

(k) LMP shall have completed its legal, accounting, and other due diligence, and
its review of the Audited Financial Statements, and such investigations shall be
satisfactory to LMP in its discretion; provided, however, if LMP does not
terminate this Agreement in accordance with Section 9.1(g), then this condition
shall be deemed satisfied;

 

(l) each Company Group Entity shall have eliminated all member loans from its
books;

 

(m) Staluppi shall have delivered to LMP appropriate releases from all obligees
with respect to any and all Liability, contingent or otherwise, of each Company
Group Entity for primary obligations of any Person other than a Company Group
Entity (including, without limitation, corporate guarantees by a Company Group
Entity for obligations of Staluppi and other Related Guarantees), or Staluppi
shall cause such primary obligations to be satisfied at Closing. In addition,
LMP shall have been furnished with appropriate lien releases from all secured
parties with respect to any and all Liens upon any property or assets of a
Company Group Entity securing obligations of any Person other than such Company
Group Entity;

 

25

 

 

(n) The transactions contemplated under all the Transaction Agreements shall
have closed simultaneously with the Closing herein;

 

(o) LMP shall have received a written commitment for acquisition financing
(including an inventory credit facility or floor plan) all on terms satisfactory
to the LMP; provided, however, if LMP does not terminate this Agreement in
accordance with Section 9.1(g), then this condition shall be deemed satisfied.

 

(p) Each of the Parties certified public accountants shall have agreed to the
Company’s Net Working Capital on the Closing Date, subject to adjustment as
contemplated under Section 1.6, and a closing and disbursement statement
(“Closing Statement”) enumerating the Purchase Price, prorations, and
adjustments, all in accordance with this Agreement or as otherwise agreed upon
by the Parties.

 

(q) The Company and Staluppi shall each have delivered to LMP counterpart
signature pages to the First Amended and Restated Operating Agreement, in
substantially the form attached hereto as Exhibit F.

 

(r) Staluppi shall have delivered to LMP such other documents, instruments or
opinions as may be required or otherwise reasonably contemplated pursuant to
this Agreement.

 

(s) Staluppi and LMP shall have entered into an employment agreement on terms
mutually acceptable to LMP and Staluppi.

 

(t) Staluppi shall have delivered to LMP copies of all written Consents as set
forth in Schedule 2.4.

 

LMP may waive any condition specified in this Section 5.1 if it executes a
writing so stating at or prior to the Closing.

 

5.2 Conditions to Obligation of Staluppi. The obligation of Staluppi to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:

 

(a) all representations and warranties of LMP contained in this Agreement
(including the Schedules hereto) (i) that are qualified as to materiality shall
be true, correct and complete in all respects and (ii) that are not qualified as
to materiality shall be true, correct and complete 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, and LMP shall have
delivered to Staluppi a certificate dated as of the Closing Date and executed by
LMP to such effect or disclosing any such representation or warranty not so
true, correct and complete;

 

(b) each and all of the agreements and covenants of LMP to be performed on or
before the Closing Date pursuant to the terms hereof shall have been performed
in all material respects;

 

26

 

 

(c) the Parties shall have received all authorizations, consents, and approvals
of any Governmental Authority or Regulatory Authority required in connection
with the consummation of the Contemplated Transactions, any required waiting
periods under the HSR Act, as applicable, shall have expired or have been
terminated, and no Governmental Authority or Regulatory Authority shall have
taken any action as a result of which Staluppi reasonably deem it inadvisable to
proceed with the Contemplated Transactions;

 

(d) LMP shall have paid and delivered the Purchase Price as provided in Section
1.5 hereof;

 

(e) No action or proceeding shall have been instituted or, to the knowledge of
LMP, threatened before a court or other government body or by any Governmental
Authority to restrain or prohibit any of the Contemplated Transactions;

 

(f) The transactions contemplated under all the Transaction Agreements shall
have closed simultaneously with the Closing herein;

 

(g)  Each of the Parties certified public accountants shall have agreed to the
Company’s Net Working Capital on the Closing Date, subject to adjustment as
contemplated under Section 1.6, and a closing and disbursement statement
(“Closing Statement”) enumerating the Purchase Price, prorations, and
adjustments, all in accordance with this Agreement or as otherwise agreed upon
by the Parties.

 

(h) LMP shall have delivered to Staluppi and the Company counterpart signature
pages to the First Amended and Restated Operating Agreement.

 

(i) Staluppi shall have procured in writing each of the consents from the
Company Group Entities’ Lender(s) as disclosed in Section 2.4, on terms
(including capitalization and financial covenants) no less favorable than
currently imposed upon any Company Group Entity, and such consents must be in
full force and effect as of the Closing.

 

(j) LMP shall have delivered to Staluppi such other documents, instruments or
opinions as may be required or otherwise reasonably contemplated pursuant to
this Agreement.

 

(k) Staluppi shall have received all Consents as set forth in Schedule 2.4, in
addition to all releases from all obligees with respect to any liability for
personal guarantees provided by Staluppi for the benefit of any of the Company
Group Entities or AAG Subsidiaries.

 

Staluppi may waive any condition specified in this Section 5.2 if they execute a
writing so stating at or prior to the Closing.

 

Article 6. CLOSING AND POST-CLOSING COVENANTS

 

6.1 Third Party Consents.

 

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

 

27

 

 

(b) Within 5 Business Days of the Effective Date, Staluppi shall cause each
Company Group Entity to deliver a notice on such Company Group Entity’s
letterhead, addressed to each applicable Manufacturer and prepared in accordance
with applicable New York law, expressing the Staluppi’s desire to consummate the
Contemplated Transactions and otherwise obtain each Manufacturer’s consent to
the Contemplated Transaction and continued appointment of the applicable Company
Group Entity as an authorized dealer in the Manufacturer’s products at the
applicable Dealership Premises. Such notice shall include a request that the
Manufacturer provide to Staluppi and LMP any forms or applications necessary to
achieve the Contemplated Transaction. Upon receipt of any request by the
Manufacturer to LMP for further information, including completed applications or
forms, LMP agrees to take prompt action to submit to such Manufacturer all
information commercially reasonably required by such Manufacturer to approve the
Contemplated Transaction. Staluppi will provide any and all information and
assistance reasonably necessary to assist the LMP in its applications to the
Manufacturers.

 

6.2 Further Assurances. After Closing, as and when requested by any Party from
time to time, the other Parties shall and shall cause their Affiliates to
execute and deliver, or cause to be executed and delivered, such documents and
instruments and shall take, or cause to be taken, such further or other actions
as may be reasonably necessary to carry out the purposes of this Agreement
including, without limitation, executing and delivering any instrument LMP may
reasonably request to convey the Acquired Interest to LMP as required by this
Agreement.

 

6.3 Delivery of Funds and Other Assets Collected by Staluppi. To the extent that
after Closing Staluppi receive any funds or other assets in connection with any
Company Group Entity’s Business, which was included in determining the Final NWC
Statement, Staluppi shall promptly deliver such funds and assets to such Company
Group Entity and take all steps necessary to vest title to such funds and assets
in the Company Group Entity.

 

6.4 Payment of Delinquent Accounts Receivables. To the extent that any accounts
receivables owed to any Company Group Entity prior to the Closing Date are not
collected by such Company Group Entity 120 days after the Closing Date (the
“Delinquent Accounts Receivables”), Staluppi shall within 10 days of receipt of
notice from LMP of the Delinquent Accounts Receivable pay such Company Group
Entity a sum equal to the sum of the Delinquent Accounts Receivables. Upon
receipt in full of such payment from Staluppi of an amount equal to the
Delinquent Accounts Receivables, LMP shall transfer to Staluppi the rights to
all payments under the Delinquent Accounts Receivables, after which LMP shall
have no further collection responsibilities with respect to such Delinquent
Accounts Receivables other than to remit to Staluppi any additional amounts
related thereto received by a Company Group Entity.

 

6.5 Access to Files. For a period that is the later of 5 years or applicable
records retention requirements under a Legal Requirement, after the Closing or
such longer term as Staluppi may reasonably require if Staluppi is then involved
in litigation or under investigation or audit by a governmental agency or bureau
relating to Staluppi or the Company Group Entities, LMP shall maintain and give
Staluppi and their representatives reasonable access to, and shall permit
Staluppi and their representatives, at their own expense, to make photocopies
of, all originals of the files and records relating to the Company Group
Entities.

 

28

 

 

6.6 Notification. Between the Effective Date and the Closing Date, Staluppi will
promptly notify the LMP in writing if Staluppi or any Company Group Entity
becomes aware of any fact or condition that causes or constitutes a breach of
any of Staluppi’s representations and warranties as of the Effective Date, or if
Staluppi or any Company Group Entity becomes aware of the occurrence after the
Effective Date of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a Breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Disclosure Letter if the Schedules
were dated the date of the occurrence or discovery of any such fact or
condition, Staluppi will promptly deliver to LMP a supplement to the Disclosure
Letter specifying such change. Without limiting the foregoing, Staluppi shall
furnish to LMP within 10 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 Manufacturers’ accounting
standards.

 

6.7 Related Party Agreements and Liabilities.

 

(a) After the Effective Date, Staluppi agrees, and agrees to cause each Company
Group Entity, not to enter into any Related Party Agreements or engage in any
transactions with Staluppi or a Related Person without LMP’s consent, which
shall not be unreasonably withheld, conditioned, or delayed.

 

(b) Prior to the Closing:

 

(i) each Company Group Entity shall pay in full or otherwise discharge all
amounts payable by the Company Group Entity to, or loans made to the Company
Group Entity by, the Staluppi or Related Person;

 

(ii) Staluppi, and any Related Person, as applicable, shall pay in full to each
Company Group Entity any amounts payable by such Persons to the Company Group
Entity and any loans made by the Company Group Entity to such Persons; and

 

(iii) the Company and Staluppi agrees to take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary proper or
advisable to terminate, waive or release all Related Guarantees.

 

6.8 No Negotiation. Until such time, if any, as this Agreement is terminated
pursuant to Article 9, Staluppi will not, and will cause each Company Group
Entity and each of their respective Representatives not to, directly or
indirectly solicit, initiate, or encourage any inquiries or proposals from,
discuss or negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person (other
than LMP) relating to any transaction involving the sale of the business or
assets (other than in the Ordinary Course of Business) of each Company Group
Entity, or any of the AAG Membership Interests of the Company, or any merger,
consolidation, business combination. or similar transaction involving the
Company Group Entities. Staluppi shall promptly advice LMP of any such inquiry
or proposal so received.

 

29

 

 

6.9 Cooperation. For purposes of complying with the terms set forth herein, each
Party will reasonably cooperate with and, subject to the execution of customary
confidentiality agreements reasonably required by third parties in connection
with disclosure of such third parties’ confidential information to the receiving
Party hereunder, reasonably and promptly make available to the other Parties and
their auditors and representatives the information, records, data and supporting
papers reasonably relevant to the determination of the Company’s Net Working
Capital and a Closing Statement, the closing inventory schedules, and any
adjustment thereto being disputed and the resolution of any disputes thereunder.
Staluppi will cause the Company Group Entities to permit the LMP and its
representatives reasonable access to the Company Group Entities’ books and
records and personnel, as may be reasonably required (upon reasonable advance
notice) in connection with preparing for Closing.

 

6.10 Transition. Staluppi will not take any action that is designed or intended
to have the effect of discouraging any lessor, licensor, customer, supplier, or
other business associate of any Company Group Entity from maintaining the same
business relationships with such Company Group Entity after the Closing Date as
it maintained with the Company Group Entity prior to the Closing. Staluppi will
refer to the Company all customer inquiries relating to the business of the
Company Group Entities from and after the Closing.

 

6.11 Tax Periods Ending on or Before the Closing Date. Staluppi shall prepare
and file or cause to be prepared and filed, al1 income tax returns for the
Company Group Entities for all periods ending on or prior to the Closing Date,
which are required to be filed after the Closing Date. Staluppi shall provide to
LMP a copy of the tax returns proposed to be field pursuant to the preceding
sentence, a reasonable time in advance of such filing date, and shall make such
revisions to such tax returns as are reasonably requested by LMP. Staluppi shall
not file such tax returns without the consent of LMP, which consent will not be
unreasonably withheld. LMP will make available all information necessary to
complete Staluppi’s income tax returns for all periods ending on or prior to
Closing Date.

 

6.12 Staluppi’s Release of Claims Against the Company Group Entities.

 

(a) As of the Closing, Staluppi does hereby, for himself or his heirs,
executors, administrators and legal representatives, remise, release, acquit and
forever discharge each Company Group Entity, and each of its Representatives, of
and from any and all Claims of every nature whatsoever, liquidated or
unliquidated, known or unknown, matured or unmatured, fixed or contingent, that
Staluppi now has, owns or holds, or has at any time previously had, owned or
held, against any Company Group Entity, including without limitation all
Liabilities created as a result of the negligence, gross negligence and willful
acts of any Company Group Entity and their employees and agents existing as of
the Closing or relating to any matter that occurred on or prior to the Closing;
provided, however, that any Claims that may arise in connection with the failure
of any of the Parties hereto to perform any of their respective obligations
hereunder or under any other agreement relating to the Contemplated Transactions
or from any breaches by any of them of any representations or warranties herein
or in connection with any of such other agreements shall not be released or
discharged pursuant to this Agreement.

 

(b) Staluppi represents and warrants that he has not previously assigned or
transferred, or purported to assign or transfer, to any person or entity
whatsoever all or any part of the Claims released herein. Staluppi covenants and
agrees that he will not assign or transfer to any person or entity whatsoever
all or any part of the Claims to be released herein. Staluppi represents and
warrants that he has read and understands all of the provisions of this Section
6.12 and that he has been represented by legal counsel of his own choosing in
connection with the negotiation, execution and delivery of this Agreement.

 

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6.13 Conduct of Operations. Between the Effective Date and the Closing Date,
Staluppi will, and will cause Company to (a) conduct the business of Company
only in the Ordinary Course of Business; (b) use his Best Efforts to preserve
intact the current business organization of Company, keep available the services
of the current officers, employees, and agents of Company, and maintain the
relations and good will with suppliers, customers, landlords, creditors,
employees, agents, and others having business relationships with Company; (c)
confer with LMP concerning operational matters of a material nature; and (d)
otherwise report periodically to LMP concerning the status of the business,
operations, and finances of any Company Group Entity. The Company Group Entities
and Staluppi will not omit to take any action that is inconsistent with any
representation or warranty of the Staluppi, or that would cause any such
representation or warranty to be untrue or incorrect if such representation or
warranty were made immediately following the taking of or failure to take such
action.

 

6.14 Prohibited Activities. Except as otherwise expressly permitted by this
Agreement between the Effective Date of this Agreement and the Closing Date,
Staluppi will not, and will cause each Company Group Entity not to, without the
prior consent of LMP, take any affirmative action, or fail to take any
reasonable action within their or its control, as a result of which any of the
changes or events listed in Section 2.11 or a Material Adverse Change is likely
to occur. Staluppi and the Company Group Entities, will not (a) make any changes
to its organizational documents (charter documents) or Company’s Operating
Agreement; (b) make any declaration of or pay any dividend or distribution; (c)
directly or indirectly redeem, retire, purchase, or otherwise acquire or obtain
the surrender of any membership interest, option, warrant or derivative of or
Affiliate; (d) issue any membership interest, option, warrant, bond, or
derivative of the Company Group Entities; (e) make any investment in the
membership interest, stock, indebtedness, or any derivative security of any
Person; or (d) enter into any transaction which is outside the Ordinary Course
of Business, or prohibited hereby.

 

6.15 The Company Group Entities’ 401(k). Except with the prior written consent
of LMP, during the period from the Effective Date to the Closing Date, the
Company Group Entities shall not (i) make any discretionary contribution to any
Company Group Entity’s 401(k) plan (the “401(k) Plan”).  If requested by LMP, a
Company Group Entity shall terminate the 401(k) Plan at least 1 Business Day
prior to the Closing Date.

 

6.16 Use of Name. Staluppi agrees that from and after the Closing Date, Staluppi
and his Affiliates (other than the other Company Group Entities) will not
directly or indirectly use in connection with any business activities any
service marks, trademarks, trade names (regardless of whether any Company Group
Entity currently uses such names), trade dress, internet domain names,
identifying symbols, logos, emblems, signs or insignia related thereto or
containing or comprising the foregoing, including any word or logo that is
confusingly similar in sound or appearance thereto and used or otherwise
exploited by any Company Group Entity on or before the Closing Date. The
foregoing limitation shall not apply to Staluppi performing business activities
as an employee of the Company Group Entities. In addition, Staluppi agrees that
he will not, without the prior written consent of LMP, in each instance, (a) use
in advertising, publicity, or otherwise the name of LMP or any of LMP’s
affiliates, nor any trade name, trademark, trade device, service mark, symbol or
any abbreviation, contraction or simulation thereof owned by LMP or any of LMP’s
affiliates, or (b) represent, directly or indirectly, that any product or any
service provided by any Company Group Entity has been approved or endorsed by
LMP or LMP’s affiliates. LMP agrees that so long as Staluppi owns an Interest in
the Company, LMP will not, without the prior written consent of Staluppi, in
each instance, (x) use the name of “Atlantic Automotive Group” in any
advertising, publicity, or otherwise, of any of LMP’s Affiliates (other than an
Affiliate that is part of the Company Group Entities), nor any trade name,
trademark, trade device, service mark, symbol or any abbreviation, contraction
or simulation thereof owned by the Company or any of the Company’s Affiliates,
or (y) represent, directly or indirectly, that any product or any service
provided by any LMP Affiliate (other than an Affiliate that is part of the
Company Group Entities) has been approved or endorsed by “Atlantic Automotive
Group”.

 

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6.17 Transfer Taxes. The Contemplated Transactions are the transfer of AAG
Membership Interests, which are intangible assets; accordingly, the Parties do
not expect any state and local transfer, sales, use, stamp, registration or
other similar Taxes to arise by reason of the consummation of the transactions
contemplated by this Agreement (“Transfer Taxes”). The Parties agree that
Staluppi shall be responsible for any and all Transfer Taxes that are actually
incurred as a result of the transfer of the AAG Membership Interests. The
Parties will cooperate in good faith to minimize, to the extent permissible
under applicable Legal Requirements, the amount of any Transfer Taxes.

 

6.18 Liability for Taxes; Other Tax Matters. For purposes of determining the
portion of any Taxes with respect to any Straddle Period that constitutes
Staluppi Taxes, the portion of any such Taxes that are attributable to the
portion of such Straddle Period ending on the Closing Date will be:

 

(a) in the case of Taxes that are imposed on a periodic basis with respect to
the assets or capital of any Company Group Entity, the amount of such Taxes for
the entire Straddle Period (or, in the case of such Taxes determined on an
arrears basis, the amount of such Taxes for the immediately preceding period),
multiplied by a fraction the numerator of which is the gross income of the
Company Group Entities on a consolidated basis for the portion of the period
ending on and including the Closing Date and the denominator of which is the
total gross income of the Company Group Entities on a consolidated basis for the
entire period, as determined by Parties or, if the Parties are unable to reach a
determination, a Neutral Accountant; and

 

(b) in the case of all other Taxes, deemed equal to the amount that would be
payable if the relevant Straddle Period ended on and included the Closing Date;
provided that exemptions, allowances, or deductions that are calculated on an
annual basis (including depreciation and amortization deductions) will be
allocated between the portion of the Straddle Period ending on and including the
Closing Date and the portion of the Straddle Period beginning after the Closing
Date in proportion to the number of days in each period.

 

6.19 Cooperation on Tax Matters. Each Party will cooperate fully as and to the
extent reasonably requested by the other Party in connection with the filing of
Tax Returns and any audit, litigation, or other proceeding with respect to Taxes
imposed on or with respect to the assets, operations or activities of the
Company Group Entities (each a “Tax Proceeding”). Such cooperation will include
the retention and (upon the other Party’s request) the provision of records and
information that are reasonably relevant to any such Tax Return or Tax
Proceeding, and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Staluppi further agrees, upon request, to use commercially reasonable
efforts to obtain any certificate or other document from any Governmental
Authority or any other person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed on LMP, the any Company Group Entity
(including, but not limited to, with respect to the transactions contemplated
hereby). Notwithstanding the above, the control and conduct of any Tax
Proceeding that is a Third-Party Claim will be governed by Section 8.5. Any
information obtained by a Party or its Affiliates from another Party or its
Affiliates in connection with any Tax matters to which this Agreement applies
will be kept confidential, except as may be otherwise necessary in connection
with the filing of Tax Returns or in conducting a Tax Proceeding, or as may
otherwise be necessary to enforce the provisions of this Agreement.

 

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6.20 Regulatory Approvals.

 

(a) Staluppi and LMP shall, as promptly as practicable following the Effective
Date, file with the United States Federal Trade Commission (the “FTC”) and the
United States Department of Justice (the “DOJ”), the notification and report
form required from each of Staluppi and LMP for the transactions contemplated by
this Agreement and any supplemental information requested in connection
therewith pursuant to the HSR Act, which forms shall specifically request early
termination of the waiting period prescribed by the HSR Act. Each of Staluppi
and LMP shall furnish to each other’s counsel such necessary information and
reasonable assistance as the other may request in connection with its
preparation of any filing or submission that is necessary under the HSR Act. The
Parties agree that LMP, on the one hand, and Staluppi, on the other hand, shall
each be responsible for 50% of any and all filing fees payable in connection
with the foregoing filings.

 

(b) Staluppi and LMP shall use their respective commercially reasonable efforts
to promptly obtain any clearance required under the HSR Act for the consummation
of the transactions contemplated by this Agreement and shall keep each other
apprised of the status of any communications with, and any inquiries or requests
for additional information from any Governmental Authority and shall comply
promptly with any such inquiry or request. LMP and Staluppi shall use their
commercially reasonable efforts to obtain any necessary approval from any
Government Authority under the HSR Act. Notwithstanding anything contained in
this Agreement to the contrary, neither LMP nor Staluppi nor any of their
Subsidiaries or other Affiliates shall be obligated to do any of the following:
(i) dispose or transfer any asset other than pursuant to this Agreement; (ii)
license or otherwise make available to any Person any technology or other
intellectual property rights; (iii) hold separate any assets or operations
(either before or after the applicable Closing Date); or (iv) change or modify
any course of conduct or otherwise make any commitment regarding future
operations.

 

(c) The Parties commit to instruct their respective counsel to cooperate with
each other and use commercially reasonable efforts to facilitate and expedite
the identification and resolution of any issues arising under the HSR Act at the
earliest practicable dates. Such commercially reasonable efforts and cooperation
include counsel’s undertaking (i) to keep each other appropriately informed of
communications from and to personnel of the reviewing Governmental Authority,
and (ii) to confer with each other regarding appropriate contacts with and
response to personnel of such Governmental Authority.

 

(d) Each of LMP and Staluppi shall use its reasonable best efforts to
“substantially comply” as promptly as practicable with any request for
additional information or documentary material issued by a Governmental
Authority under 15 U.S.C. Sec 18(e) and in conjunction with the Contemplated
Transactions (a “Second Request”). Each of LMP and Staluppi will certify to
substantial compliance with respect thereto as promptly as practicable. Each of
LMP and Staluppi agrees to take all reasonable steps to assert, defend, and
support certification of substantial compliance with any Second Request. Each of
LMP and Staluppi agrees to give such advance notices as may be required
(including, if necessary, notice of an anticipated Closing Date), and to
otherwise reasonably cooperate to give effect to the rights of the other set
forth in this Section 6.20.

 

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Article 7. DUE DILIGENCE

 

7.1 Due Diligence.

 

(a) Prior to the Closing, LMP may conduct due diligence concerning the Company
Group Entities and the Business to confirm the veracity of Staluppi’s warranties
and representations. Without limiting the foregoing, the LMP shall have 60 days
from the later of the Effective Date or the delivery of the final schedule to be
delivered hereunder (the “Due Diligence Period”) to complete to its satisfaction
inspections and due diligence regarding the Business and the Purchased Assets,
including obtaining such reports and studies as the LMP deems appropriate.
Staluppi agrees to provide LMP and its Representatives reasonable access to the
books, records, reports, department managers (which access to such managers
shall be permitted as mutually agreed by the Parties, and which LMP shall
diligently undertake and complete any desired access with a manager in a timely
manner), information, and facilities of the Business, and will make the officers
and accountants of the Company Group Entities available at reasonable times to
discuss with LMP and its Representatives such aspects of the Company Group
Entities’ Business as LMP may wish. Staluppi will cooperate with any reasonable
request by the LMP to conduct financial due diligence at one of the Dealership
Premises prior to the expiration of the Due Diligence Period, which shall
include while on site read-only access to Staluppi’s dealership management
systems, with prior notice to Staluppi, and subject to such reasonable
limitations as Staluppi may impose to protect confidentiality. Any and all
on-site visits and direct communications with any Company Group Entity employees
Staluppi shall be coordinated in advance with John Staluppi or John Gentile.
LMP’s right to inspect or to receive data and information from Staluppi or any
Company Group Entity shall terminate upon any termination of this Agreement.

 

(b) Prior to the Closing, LMP may conduct, inspect and review any and all tests,
studies, and surveys of all aspects of the Dealership Premises, including,
without limitation, to evaluate the condition of the improvements located
thereon, the soil conditions, environmental conditions (including Phase I and
Phase II environmental site assessments), structural integrity, to confirm the
ownership, zoning and status of entitlements applicable to the Dealership
Premises, and to determine LMP’s ability to obtain future financing for the
purchase of the Dealership Premises. LMP shall avoid any unreasonable
interference with the business and operations of Staluppi’s business operations;
and LMP, at its sole expense, shall promptly repair any damage caused by said
inspections. Staluppi will make its appropriate officers, employees and
representatives available to LMP at all reasonable times for the purpose of
assisting LMP in such investigations or examinations. Notwithstanding the
foregoing, LMP may not perform any test of the Dealership Premises of an
intrusive or disruptive nature (including, without limitation, soil borings),
without the prior written consent of Staluppi, which consent shall not be
unreasonably withheld, conditioned or delayed, except that Staluppi shall be
entitled to review and approve any investigation planned and split any samples
taken.

 

(c) If LMP determines on or before expiration of the Due Diligence Period, that
any of the information provided during the Due Diligence Period is materially
different or varies in any material respects from the information provided in
the 2018 and/or 2019 Certified Financial Statements for the Company Group
Entities (both of which LMP acknowledges receipt), then LMP may terminate this
Agreement, without premium or penalty, by sending written notice to Staluppi
(which, notwithstanding anything to the contrary in this Agreement, may be
delivered by email only without the necessity of any other communication
delivery method).

 

7.2 Pre-Closing Preparation. After Manufacturer approval and prior to the
Closing Date, Staluppi agrees to afford LMP and its agents, attorneys,
accountants and Representatives such access to the Dealership Premises, business
records and properties of each of the Company Group Entities, and shall furnish
to LMP such information concerning the Business, as LMP shall reasonably deem
necessary or desirable for the purpose of enabling LMP to prepare for Closing,
including preparation of closing inventory schedules. Staluppi will make its
appropriate Representatives available to LMP at all reasonable times for the
purpose of assisting, in all reasonable respects, LMP with Closing preparations.

 

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Article 8. INDEMNIFICATION.

 

8.1 Indemnities of Staluppi.

 

(a) Staluppi shall, and hereby does, indemnify, hold harmless and agree to
defend LMP and its Affiliates, officers, directors, employees, agents,
consultants, representatives, stockholders and controlling Persons and their
respective successors and assigns (collectively, the “LMP Indemnified Parties”)
at all times from and after the date of this Agreement, from and against any and
all Damages, demands, Judgments, injuries, Claims, Liens, costs, and expenses
(including, without limitation, reasonable attorneys' fees and expert witness
fees), of or to any of the LMP Indemnified Parties (“LMP Damages”), which may
now or in the future be paid, incurred or suffered by or asserted against the
LMP Indemnified Parties by any Person resulting or arising from or incurred in
connection with any one or more of the following (the “Staluppi Indemnified
Liabilities”):

 

(i) any Pre-Closing Un-booked Liabilities not accounted for on the Closing Date
pursuant to Section 1.4;

 

(ii) any Liabilities or Claims for Liability (whether in contract, in tort or
otherwise, and whether or not successful) related in any way to the Company
Group Entities to the extent such Liability or Claim for Liability arises in
connection with any action, omission, or event occurring on or prior to the
Closing Date, except to the extent accounted for as a Pre-Closing Un-booked
Liability pursuant to Section 1.4;

 

(iii) any breach or nonfulfillment of any covenant or agreement of Staluppi
contained in this Agreement or in any other agreement, document or instrument
delivered hereunder or pursuant hereto;

 

(iv) any untruth or breach of any representation and warranty of Staluppi
contained in or made pursuant to this Agreement, including in any other
agreement, document or instrument delivered hereunder or pursuant hereto; and

 

(v) all actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including costs of court and reasonable attorneys’ fees) incident
to sub-parts (i) through (iv).

 

(b) Basket. Notwithstanding anything in this Agreement, Staluppi shall not have
any Liability for any LMP Damages resulting from matters described in
Section 8.1(a)(iv), until the aggregate amount of all such Liabilities incurred
by the LMP Indemnified Parties exceeds the Basket; provided, however, that
Staluppi’s Liability for any LMP Damages will not be limited as set forth in
this Section 8.1(b) if such Staluppi Indemnified Liability relates to a breach
of any Fundamental Representations or any representation or warranty set forth
in Sections 2.3 through 2.7 (inclusive), and 2.9.

 

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

 

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8.2 Indemnities of LMP.

 

(a) LMP shall, and hereby does indemnify, hold harmless and agree to defend
Staluppi at all times from and after the date of this Agreement, from and
against any and all Damages, demands, Judgments, injuries, Claims, Liens, costs,
and expenses (including, without limitation, reasonable attorneys' fees and
expert witness fees), of or to the Company and/or Staluppi (“Staluppi Damages”),
which may now or in the future be paid, incurred or suffered by or asserted
against Staluppi and/or the Company by any Person resulting or arising from or
incurred in connection with any one or more of the following (“LMP
Indemnification Liabilities”):

 

(i) any breach or nonfulfillment of any covenant or agreement of LMP contained
in this Agreement or in any other agreement, document or instrument delivered
hereunder or pursuant hereto;

 

(ii) any untruth, inaccuracy, or breach of any representation and warranty of
LMP contained in or made pursuant to this Agreement, including in any other
agreement, document or instrument delivered hereunder or pursuant hereto; and

 

(iii) all actions, suits, proceedings, demands, assessments, adjustments, costs
and expenses (including costs of court and reasonable attorneys’ fees) incident
to sub-parts (i) through (ii) any of the foregoing.

 

(b) Basket. In no event will any amount be recovered from LMP for any Staluppi
Damages resulting from matters described in Section 8.2(a)(ii) until the
aggregate amount of all LMP Indemnified Liabilities incurred by Staluppi and/or
the Company exceeds the Basket, in which event LMP will be obligated, subject to
the other provisions of this Agreement, to indemnify Staluppi for only those
amounts in excess of the Basket.

 

8.3 Claim Procedures. Each Person that desires to make a Claim for
indemnification pursuant to this Article 8 (an “Indemnified Party”) will provide
notice (a “Claim Notice”) thereof in writing to LMP (if the Indemnified Party is
Staluppi) or to Staluppi (if the Indemnified Party is a LMP 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 8.3, 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.

 

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8.4 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.

 

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

 

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

 

(a) Payments of all amounts owed 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 Article 8 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 Damages 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 Damages 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.

 

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8.6 Express Negligence. THE PARTIES INTEND THAT THE INDEMNITIES SET FORTH IN
THIS Article 8 BE CONSTRUED AND APPLIED AS WRITTEN ABOVE, NOTWITHSTANDING ANY
RULE OF CONSTRUCTION TO THE CONTRARY. WITHOUT LIMITING THE FOREGOING, SUCH
INDEMNITIES WILL APPLY NOTWITHSTANDING ANY STATE’S “EXPRESS NEGLIGENCE” OR
SIMILAR RULE THAT WOULD DENY COVERAGE BASED ON AN INDEMNIFIED PARTY’S SOLE OR
CONCURRENT, ACTIVE OR PASSIVE NEGLIGENCE OR GROSS NEGLIGENCE. IT IS THE INTENT
OF THE PARTIES THAT, TO THE EXTENT PROVIDED ABOVE, THE INDEMNITIES SET FORTH IN
THIS Article 8 WILL APPLY TO AN INDEMNIFIED PARTY’S SOLE OR CONCURRENT, ACTIVE
OR PASSIVE NEGLIGENCE OR GROSS NEGLIGENCE. THE PARTIES AGREE THAT THIS PROVISION
IS “CONSPICUOUS” FOR PURPOSES OF ALL STATE LAWS.

 

8.7 Setoff. Upon any default by Staluppi of this Agreement (in addition to any
rights and remedies of LMP provided by law (including, without limitation, other
rights of setoff) but expressly limited by the terms of this Agreement), LMP
shall have the right, without prior notice to Staluppi or any other party (any
such notice being expressly waived by Staluppi to the extent permitted by
applicable law), to setoff, appropriate and apply any and all payments to be
made in accordance with this Agreement, Convertible Purchase Money Note, or the
Company’s Operating Agreement, against and on account of the obligations or
liabilities of Staluppi under this Agreement, Convertible Purchase Money Note,
or the Company’s Operating Agreement. The LMP’s right of setoff may be exercised
by LMP (or its assignee or their affiliates) against Staluppi (or against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver or execution, judgment or attachment creditor, or against
anyone else claiming through or against Staluppi or any such trustee in
bankruptcy, debtor in possession, assignee for the benefit of creditors,
receiver, or execution, judgment or attachment creditor) notwithstanding the
fact that such right of setoff shall not have been exercised by LMP prior to the
occurrence of any default pursuant to either this Agreement, Convertible
Purchase Money Note, or the Company’s Operating Agreement. LMP agrees promptly
to notify Staluppi in writing after any such setoff and application made by LMP;
provided, however, that the failure to give such notice shall not affect the
validity of such setoff and application.

 

8.8 Exclusive Remedy. In the absence of fraud or criminal conduct, the
indemnification provisions in this Article 8 will be the sole and exclusive
remedy and recourse for any breach of this Agreement by LMP and Staluppi, except
as expressly provided in this Agreement. In addition, (a) in the event of a
breach or threatened breach by Staluppi of any of the provisions of Section
6.16, LMP will be entitled to immediate injunctive relief, as Staluppi
acknowledges and agrees that any such breach would cause LMP irreparable injury
for which they would have no adequate remedy at law; and (b) any Party will be
entitled to seek specific performance against any other Party pursuant to
Section 11.9.

 

8.9 Materiality. For purposes of determining whether there has been a breach or
inaccuracy and the amount of Damages 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
“Material Adverse Effect” or similar phrases contained in such representation or
warranty.

 

8.10 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
Purchase Price, unless otherwise required by any applicable Legal Requirement.

 

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Article 9. Termination.

 

9.1 Termination this Agreement may be terminated at any time prior to the
Closing:

 

(a) by LMP by Notice to Staluppi, if the conditions set forth in Section 5.1
have not been satisfied or the deliveries required herein of Staluppi 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 Outside Closing Date unless such
failure shall be due to the failure of LMP to comply with any of its obligations
to be performed or complied with by it prior to the Closing;

 

(b) by Staluppi by Notice to LMP, if the conditions set forth in Section 5.2
have not been satisfied or the deliveries required by herein of LMP 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 Outside Closing Date, unless such failure shall be
due to the failure of Staluppi to comply with any of its obligations to be
performed or complied with by it prior to the Closing;

 

(c) by mutual agreement of Staluppi and LMP;

 

(d) by either Staluppi or LMP if (i) there shall be any Legal Requirement that
makes consummation of the Contemplated Transactions illegal or otherwise
prohibited or (ii) any Judgment enjoining LMP or Staluppi from consummating the
Contemplated Transactions or any other Transaction Document is entered and such
Judgment shall have become final and non-appealable.

 

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

 

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

 

(g) by LMP, within 3 Business Days after the expiration of the Due Diligence
Period, if LMP is dissatisfied with its due diligence inspections; and

 

(h) by either Party, if any Manufacturer shall reject the Contemplated
Transaction or exercises, or purports to exercise, any right of first refusal to
purchase the Acquired Interest.

 

9.2 Rights and Obligations on Termination.

 

(a) If this Agreement is terminated as provided in Section 9.1, this Agreement
shall forthwith become void, there shall be no Liability or obligation on the
part of any Party or their respective Representatives, except as otherwise
provided in Section 9.2(b) below.

 

(b) Notwithstanding the provisions of Section 9.2(a) above:

 

(i) if this Agreement is terminated and abandoned pursuant to Section 9.1(b) due
to a breach or default by LMP under any of its express or implied covenants and
obligations hereunder, LMP shall pay to Staluppi a $1,000,000.00 breakup fee, as
and for liquidation damages, which shall be Staluppi’s sole and exclusive
remedy.

 

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(ii) if this Agreement is terminated and abandoned pursuant to Section 9.1(a)
due to a breach or default by Staluppi under any of its express or implied
covenants and obligations hereunder, Staluppi shall pay to LMP a $1,000,000.00
breakup fee, as and for liquidation damages, which shall be LMP’s sole and
exclusive remedy.

 

(c) The Parties acknowledge and agree that the rights and obligations set forth
in this Section 9.2 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, without limitation, the provisions of Article 8
above.

 

(d) In the event of a termination and abandonment of this Agreement, the LMP
shall promptly redeliver to the Staluppi all documents, work papers and other
material of the Staluppi relating to the Transaction, whether so obtained before
or after the execution of this Agreement. In such event, the LMP agrees not to
use to the detriment of the Staluppi, nor to disclose to third parties, any of
such information with respect to the Business; provided, however, that the
foregoing restriction shall not apply to any document, work paper, material, or
information which is a matter of public knowledge or which has heretofore been
or is hereafter published in any publication for public distribution or filed as
public information with any Governmental Authority or is otherwise in the public
domain.

 

Article 10. NOTICES. Unless otherwise provided in this Agreement, any notice,
demand and other communications to be given or delivered under or by reason of
the provisions of this Agreement will be in writing and will be deemed to have
been given (a) when delivered if personally delivered by hand, (b) when received
if sent by a nationally recognized overnight courier service (receipt
requested), (c) 5 Business Days after being mailed, if sent by first class mail,
return receipt requested, or (d) when receipt is acknowledged by an affirmative
act of the Party confirmed, if sent by electronic mail, facsimile, telecopy or
other similar electronic transmission device (including an acknowledgment
generated automatically by a facsimile or telecopy machine or other electronic
transmission device); provided, however, that where a Party delivers a notice,
demand or other communication by electronic mail, such Party shall cause a copy
of such notice to be delivered by nationally recognized overnight courier
(charges prepaid) the next business day. Notices, demands and communications to
the Parties will, unless another address is specified in writing by notice to
the other Parties pursuant to this Article 10, be sent to the address indicated
below.

 

If to Staluppi, addressed to:

 

[**]

 

With a copy (which shall not constitute notice) to:

 

[**]

 

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If to LMP, addressed to:

 

LMP Automotive Holdings, Inc.

500 East Broward Boulevard

Fort Lauderdale, Florida 33394

Attention: Sam Tawfik

Email: sam@lmpmotors.com

 

With a copies (which shall not constitute notice) to:

 

Bass Sox Mercer

2822 Remington Green Cir.

Tallahassee, FL 32308

Attn: Robert A. Bass, Esq.

Email: bassra@dealerlawyer.com

Facsimile: 850-942-4869

 

and

 

Greenspoon Marder LLP

1875 Century Park East, Suite 1900

Los Angeles, CA 90067

Attn: Sander C. Zagzebski, Esq.

Email: sander.zagzebski@gmlaw.com

Facsimile: 954-771-9264

 

or to such other place and with such other copies as Staluppi or LMP may
designate by written notice to the others in accordance with this Article 10.

 

Article 11. GENERAL PROVISIONS.

 

11.1 Choice of Law. The Parties stipulate that this Agreement has been entered
into in the State of New York. Except as provided in Section 11.2(b), this
Agreement will be construed and interpreted and the rights of the Parties
governed by the internal laws of the State of Delaware, without regard to any
conflict of law or choice of law principles that would apply the substantive law
of another jurisdiction.

 

11.2 Dispute Resolution. Any dispute between, among, or involving the Parties
that arises from or relates to this Agreement or any of the other Transaction
Documents (except to the extent expressly provided in a Transaction Document),
the relationship between such Parties that is created pursuant to such
agreements, any alleged breach of any provision thereof, or in any way relating
to the subject matter of such agreements (all of which are referred to herein as
“Disputes”), including any Disputes that are extra-contractual in nature, or
that are based on contract, tort, state or federal law, or other legal or
equitable bases, regardless of whether a Party is seeking Damages or any other
relief and regardless of whether or not any specific Transaction Document refers
to this Section 11.2 will be resolved as provided in this Section 11.2;
provided, however, that a Party will be permitted to take the actions
contemplated by Section 11.2(a)(iv).

 

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(a) Informal Dispute Resolution. Prior to the initiation of formal dispute
resolution procedures, the Parties will first attempt to resolve their Dispute
informally, as follows:

 

(i) First, the complaining party must provide notice of the Dispute in
accordance with the notice provisions of Article 10 (the “Dispute Notice”). Upon
receipt of the Dispute Notice, executives of LMP and Staluppi who have the
actual or apparent authority to resolve the controversy (collectively, the
“Arbitration Representatives”), will meet to discuss the Basis for the Dispute
and will use their good faith efforts to reach a reasonable resolution to the
Dispute. Upon receipt of the Dispute Notice, the receiving party will submit to
the other party a written response (the “Dispute Response”). The Dispute Notice
and the Dispute Response will include (A) a statement of the Party’s concerns
and perspectives on the issues in dispute, (B) a summary of supporting facts and
circumstances, and (C) the identity of the Arbitration Representatives who will
represent such Party and of any other Person who will accompany the Arbitration
Representatives. Such Arbitration Representatives will meet as often as they
reasonably deem necessary and will discuss the problem and negotiate in good
faith in an effort to resolve the Dispute without the necessity of any formal
proceeding. In addition, to facilitate such negotiations the Parties may agree
to utilize the services of a mediator whose fees will be split equally by the
Parties.

 

(ii) The Parties agree that any written statements, including the Dispute Notice
and the Dispute Response, will be prepared in connection with settlement
negotiations, and as such will be privileged and will not be used against the
Party who prepared such statement unless it is subsequently introduced by the
preparing Party in any formal proceedings. The Parties also agree that the
informal settlement negotiations will be conducted privately, amicably and
confidentially.

 

(iii) Should the Arbitration Representatives fail to reach agreement within 30
days after receipt of the Dispute Notice in accordance with Section 11.2(a)(i)
above (or such longer period as such Arbitration Representatives may agree in
writing), then formal proceedings for the resolution of such Dispute may be
commenced in accordance with Section 11.2(b).

 

(iv) This Section 11.2 will not be construed to prevent LMP from instituting,
and LMP is hereby authorized to institute, formal proceedings (including seeking
provisional remedies such as attachment, preliminary injunction and replevin
from the appropriate court) earlier to avoid the expiration of any applicable
limitations period, to avoid irreparable harm (including irreparable harm caused
by Staluppi’s breach of the covenants set forth in Section 6.16), to preserve a
superior position with respect to other creditors, or, to the extent
contemplated by Section 11.9, to pursue injunctive or other equitable remedies.

 

(b) Arbitration. If the Parties are unable to resolve any Dispute arising under
this Agreement as contemplated by Section 11.2(a), then (subject to the
exceptions referred to in Section 11.2(a)(iv)) such Dispute will be submitted to
mandatory and binding arbitration at the election of any Party (the “Disputing
Party”) pursuant to the following conditions:

 

(i) Procedures. The arbitration will be conducted pursuant to the then
applicable Commercial Arbitration Rules of the American Arbitration Association,
except as expressly provided in this Section 11.2 (the “AAA Rules”). The
arbitrator(s) (the “Arbitrator(s)”) will be selected pursuant to the procedures
set forth in Section 11.2(b)(iii) below. In resolving the substance of the
Dispute, the Arbitrator(s) will apply substantive New York law or applicable
substantive federal law without regard to the conflicts of law principles of
such state.

 

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(ii) Submission to Arbitration. The Disputing Party will notify the other
applicable Parties that it is submitting the Dispute to final and binding
arbitration to be conducted privately and confidentially in accordance with the
terms of Article 10.

 

(iii) Selection of Arbitrator(s). If the amount in dispute is less than
$1,000,000, such Dispute will be resolved by a single Arbitrator mutually
acceptable to the applicable Parties. If LMP and Staluppi are unable to agree
upon a mutually acceptable Arbitrator within 30 days of the submission of the
Dispute to arbitration, such Arbitrator will be appointed in accordance with the
AAA Rules. If the amount in dispute is $1,000,000 or more, within 30 days after
the notice of initiation of the arbitration procedure, each of LMP (on the one
hand) and Staluppi (on the other hand) will nominate one Arbitrator, who need
not be neutral. If any Party fails or refuses to timely nominate an Arbitrator,
such Arbitrator will be appointed in accordance with the AAA Rules. Upon
selection of the two Arbitrators by the applicable Parties, the 2 Arbitrators
will select a 3rd Arbitrator within 15 days after their appointment, failing
agreement on which such 3rd Arbitrator will be appointed in accordance with the
AAA Rules. The Arbitrators, acting by majority vote, will resolve all Disputes
between the applicable Parties. If one of the Party-appointed Arbitrators
refuses to participate in the proceedings or refuses to vote, the unanimous
decision of the other two Arbitrators will be binding.

 

(iv) Replacement of Arbitrator. Should any Arbitrator refuse or be unable to
proceed with arbitration proceedings as called for by this Section 11.2(b), such
Arbitrator will be replaced in the same manner by which he or she was appointed
(e.g., if LMP appointed the departing Arbitrator, LMP would appoint his or her
replacement, and if the two Party-appointed Arbitrators appointed the departing
Arbitrator, then they would appoint his or her replacement).

 

(v) Place of Arbitration. The arbitration will be conducted in the Manhattan,
New York office of the American Arbitration Association. The Parties expressly
consent to the location of such arbitration and agree not to contest this venue
provision or the choice of law provision set forth in Section 11.2(b)(i) above,
it being acknowledged and agreed that New York bears a reasonable relation to
this Agreement and the Parties have knowingly and voluntarily elected a New York
forum. Any action in order to enforce this arbitration clause or an award
granted hereunder may be brought in the courts of the State of New York, in
Nassau County, and the federal courts with jurisdiction thereover. Each of the
Parties (A) consents to the exclusive jurisdiction of such courts in any such
suit, action or proceeding, (B) irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding which is brought in any such court has been
brought in an inconvenient forum, (C) will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
and (D) will not bring any action relating to this Agreement or any of the
transactions contemplated by this Agreement in any other court. Process in any
such suit, action or proceeding may be served on any Party anywhere in the
world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each Party agrees that notice on such Party as provided
in Article 10 will be deemed effective service of process on such Party.

 

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(vi) Conduct of Arbitration. The Arbitrator(s) shall have the authority to
determine the enforceability of this Section 11.2, including whether the terms
of the provisions under this Section 11.2 are conscionable. Upon the service of
an arbitration demand, the Parties will discuss and attempt to agree upon the
manner, timing and extent of discovery that may be conducted prior to and in
preparation for the arbitration hearing. In the event the Parties are unable to
agree upon the manner, timing and extent of discovery, such issues will be
submitted to the Arbitrator(s) for resolution. However, under no circumstances
will the Arbitrator(s) allow more depositions, interrogatories, requests for
production of documents and requests for admission than permitted by the
presumptive limitations set forth in Fed. R. Civ. P. 26(b)(2). The Arbitrator(s)
will have the authority to impose appropriate sanctions, including an award of
reasonable attorneys’ fees, against any party that fails to cooperate in good
faith in discovery permitted by this Section 11.2(b)(vi) or ordered by the
Arbitrator(s). If the amount in dispute is less than $1,000,000, unless
otherwise agreed by the Parties the arbitration hearing will be conducted no
later than 150 days after the determination of the Arbitrator in accordance with
the procedures set forth in Section 11.2(b)(iii). If the amount in dispute is
$1,000,000 or more, the arbitration hearing will be conducted at such time as
the Parties have completed the discovery permitted by this Section 11.2(b)(vi)
and as determined by the Arbitrators. Unless otherwise agreed by the Parties,
the arbitration hearing will be conducted on consecutive days. There will be no
transcript of the arbitration hearing. The Arbitrator(s) must give effect to
legal privileges including the attorney-client privilege and the work-product
immunity.

 

(vii) Arbitration Award. The Arbitrator(s) will render a binding, reasoned
decision within 20 days following the completion of the arbitration hearing. The
award of the Arbitrator(s) will be in writing. The Arbitrator(s) must certify in
the award that such award conforms to the terms and conditions set forth in this
Agreement (e.g., the award must comply with the parameters set forth in
Article 8). The award rendered by the Arbitrator(s) will be binding and
conclusive, and Judgment on the award may be entered pursuant to
Section 11.2(b)(v).

 

(viii) Time of the Essence. The Arbitrator(s) are instructed that time is of the
essence in the arbitration proceeding, and that the Arbitrator(s) will have the
right and authority to issue reasonable monetary sanctions against either LMP
(on the one hand) or Staluppi (on the other hand) if, upon a showing of good
cause, such Party is unreasonably delaying the proceeding. The amount of such
sanction will be related to the additional harm, if any, caused by the delay.

 

(ix) Expenses. The Arbitrator(s) will have the authority to assess the costs and
expenses of the arbitration proceeding (including the Arbitrator(s)’ fees and
expenses) against either LMP (on the one hand) or Staluppi (on the other hand).
The Arbitrator(s) will also have the authority to award attorneys’ fees and
expenses to the prevailing side.

 

(x) Confidentiality. To the fullest extent permitted by law, the arbitration
proceedings and award will be maintained in confidence by the Parties, except as
otherwise required by Legal Requirements.

 

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(xi) Severability. The provisions of this Section 11.2 are independent of the
remaining provisions of this Agreement and the Parties intend that the
provisions of this Section 11.2 will continue in effect even though one or more
provisions of the Agreement (including, for the avoidance of doubt, any
provision of this Section 11.2) will be determined to be invalid or
unenforceable by a court of competent jurisdiction. This agreement to arbitrate
will also survive the termination or expiration of this Agreement.

 

(c) Acknowledgment. THE PARTIES EXPRESSLY ACKNOWLEDGE AND AGREE THAT THEY HAVE
READ AND UNDERSTOOD THIS SECTION 11.2 AND THAT THEY ARE HEREBY KNOWINGLY AND
VOLUNTARILY WAIVING THEIR RIGHT TO A JURY TRIAL.

 

11.3 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the Parties to comply with any obligation,
covenant, agreement or condition in this Agreement may be waived by the Person
or Persons entitled to the benefits thereof only by a written instrument signed
by the Person or Persons granting such waiver, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition will not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.

 

11.4 Expenses. Except as otherwise provided in this Agreement, (a) Staluppi will
be responsible for all legal fees, accountant’s fees, consultant’s fees, broker
fees, investment banker’s fees, other advisory fees and other costs and expenses
that Staluppi may incur in connection with the negotiation, preparation,
execution or performance of this Agreement, and (b) LMP will be responsible for
all legal fees, accountant’s fees, consultant’s fees, broker fees, investment
banker’s fees, other advisory fees and other costs and expenses that LMP and its
Affiliates incur in connection with the negotiation, preparation, execution or
performance of this Agreement.

 

11.5 Completion of Schedules. The listing (or inclusion of a copy) of a document
or other item under one Schedule to a representation or warranty made in this
Agreement will be deemed adequate to disclose an exception to a separate
representation or warranty made in this Agreement only if such listing has
sufficient detail on its face that it is reasonably clear that such document or
other item applies to such other representation or warranty made in this
Agreement.

 

11.6 Invalidity. In the event that any one or more of the provisions set forth
in this Agreement or in any other instrument referred to in this Agreement will,
for any reason, be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability will not affect any other
provision of this Agreement or any other such instrument.

 

11.7 No Third-Party Beneficiaries. This Agreement is solely for the benefit of
(a) the Parties and their successors and assigns permitted under this Agreement,
and (b) LMP Indemnified Parties and the Staluppi (solely with respect to such
Persons’ rights to indemnification pursuant to Article 8 and the rights to
enforce such rights to indemnification pursuant to this Article 11), and no
provisions of this Agreement will be deemed to confer upon any other Person any
remedy, Claim, Liability, reimbursement, cause of action or other right except
as expressly provided in this Agreement.

 

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11.8 No Presumption Against Any Party. Neither this Agreement nor any
uncertainty or ambiguity herein will be construed or resolved against any Party,
whether under any rule of construction or otherwise. On the contrary, this
Agreement has been reviewed by each of the Parties and their counsel and will be
construed and interpreted according to the ordinary meaning of the words used so
as to fairly accomplish the purposes and intentions of all Parties.

 

11.9 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.

 

11.10 Entire Agreement; Amendments. This Agreement, together with all Exhibits,
Annexes and Schedules hereto, and the other Transaction Documents constitute the
entire agreement of the Parties with regard to the subject matter hereof and
supersede all prior and contemporaneous agreements, understandings, negotiations
and discussions, whether oral or written, of the Parties. No amendment,
supplement or modification of this Agreement will be binding unless executed in
writing by all Parties

 

11.11 Electronic Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more Parties , and an
executed copy of this Agreement may be delivered by one or more Parties by
facsimile or similar instantaneous electronic transmission device pursuant to
which the signature of or on behalf of such party can be seen, and such
execution and delivery shall be considered valid, binding and effective for all
purposes. At the request of any Party, all Parties agree to execute an original
of this Agreement as well as any facsimile, telecopy or other reproduction
hereof.

 

11.12 Severability. Should any provision of this Agreement be held unenforceable
or invalid under the laws of the United States of America or the State of New
York, or under any other applicable laws of any other jurisdiction, then the
Parties agree that such provision shall be deemed modified for purposes of
performance of this Agreement in such jurisdiction to the extent necessary to
render it lawful and enforceable, or if such a modification is not possible
without materially altering the intention of the Parties , then such provision
shall be severed here from for purposes of performance of this Agreement in such
jurisdiction. The validity of the remaining provisions of this Agreement shall
not be affected by any such modification or severance, except that if any
severance materially alters the intentions of the Parties as expressed herein (a
modification being permitted only if there is no material alteration), then the
Parties shall use commercially reasonable efforts to agree to appropriate
equitable amendments to this Agreement in light of such severance, and if no
such agreement can be reached within a reasonable time, any party may initiate
arbitration under the then current commercial arbitration rules of the American
Arbitration Association to determine and effect such appropriate equitable
amendments.

 

11.13 Binding Effect. All the terms, provisions, covenants and conditions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the Parties and their respective heirs, executors,
administrators, representatives, successors and permitted assigns.

 

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11.14 Assignment. This Agreement and the rights under this Agreement may not be
assigned by LMP without the prior written consent of Staluppi; provided,
however, that LMP will be permitted, without Staluppi’s consent, to (a)
collaterally assign this Agreement and its rights herein and in the other
Transaction Documents to any of LMP’s or its Affiliate’s lenders, (b) assign the
provisions and benefits of this Agreement and the other Transaction Documents to
any Affiliate of LMP provided that, unless otherwise consented to in writing by
Staluppi, LMP shall remain contractually liable hereunder for any payment
obligations of LMP, and Staluppi hereby consents to any such assignment. This
Agreement and the rights hereunder may not be assigned by Staluppi without the
prior written consent of LMP. Subject to the foregoing, this Agreement will be
binding upon and inure to the benefit of the Parties and their respective
successors and assigns.

 

11.15 Computation of Time. 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. (eastern) 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

 

11.16 Interpretation & Administration. The words “include”, “includes”,
“included”, “including” and “such as” do not limit the preceding words or terms
and will be deemed to be followed by the words “without limitation.” The Parties
have a duty of good faith and fair dealing. All captions and headings contained
in this Agreement are for convenience of reference only and will not be
construed to limit or extend the terms or conditions of this Agreement. All
pronouns and any variations thereof refer to the masculine, feminine or neuter,
singular or plural, as the context may require. All terms defined in this
Agreement in their singular or plural forms, have correlative meanings when used
herein in their plural or singular forms, respectively. Each Party and its
counsel have reviewed this Agreement and the rule of construction that any
ambiguities are to be resolved against the drafter will not be employed in the
interpretation of this Agreement or any amendments, schedules or exhibits
hereto.

 

(signatures on the following page)

 

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IN WITNESS WHEREOF, the Parties have executed this Membership Interest Purchase
Agreement effective as of the Effective Date.

 

  LMP:       LMP Long island 001 Automotive Holdings, Inc.         By:
                        Name:      Title:           STALUPPI:           John
Staluppi

 

 

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