ASSET SALE AGREEMENT

 

 

                              ASSET SALE AGREEMENT

 

        THIS AGREEMENT, made this 6th day of April, 2005, by and between:

 

         STATELINE FORD, INC., a New Jersey Corporation,   c/o Joseph S. Aboyoun,

         Esq.,   Aboyoun   &   Heller,   L.L.C.,   695   Route   46   West,   Suite   401,

         Fairfield, New Jersey 07004 (hereinafter referred to as "SELLER");

 

                                       And

 

         ELITE FLIGHT SOLUTIONS,   INC. C/O Harris Siskind,   Esq.,   Kirkpatrick &

         Lockhart   Nicholson   Graham LLP, 201 South Biscayne   Blvd.   Suite 2000,

         Miami, Florida 33131 hereinafter referred to as "BUYER").

 

                              ---------------------

                              W I T N E S S E T H :

                               ---------------------

 

         WHEREAS,   SELLER is the owner and operator of a certain   motor   vehicle

dealership establishment which conducts business at 630 and 640 Memorial Parkway

(Route 22), Phillipsburg (Warren County), New Jersey, and is duly franchised for

the sale of FORD and HYUNDAI   automobiles,   trucks and used vehicles,   parts and

accessories, and the rendering of factory authorized service of FORD and HYUNDAI

motor   vehicles   and is   licensed   by the State of New Jersey to conduct a motor

vehicle dealership business at said premises aforementioned; and

 

         WHEREAS,   SELLER is   desirous   of selling   and   conveying   its FORD and

HYUNDAI business, and all of the personal property used in connection therewith,

together with its FORD and HYUNDAI franchise rights as aforesaid; and

 

         WHEREAS, BUYER is desirous of acquiring said assets; and

 

         WHEREAS,   the parties have reached an understanding with respect to the

terms and   considerations of the foregoing and are desirous of memorializing the

same herein;

 

         NOW, THEREFORE, in consideration of the terms, covenants and conditions

hereinafter set forth, the parties hereto agree as follows:

 

         1. SUBJECT   MATTER.   SELLER   agrees to sell and transfer to BUYER,   and

BUYER agrees to purchase and acquire from SELLER, the following:

 

                  (a) New FORD and   HYUNDAI   Motor   Vehicle   Sales   and   Service

operation,   presently   located   at 630   and   640   Memorial   Parkway   (Route   22)

Phillipsburg,   New Jersey (the "Premises"),   including all furniture,   fixtures,

tools, special tools, machinery,   lifts,   compressors,   signs, supplies, and all

other   equipment   utilized in the   operation of the subject   business and sundry

items, brochures and materials;   franchise rights; used car operation; new motor

vehicle   inventories   as   herein   provided;   parts   and   accessories   as   herein

provided; customer lists and records (sales, parts and service); sales parts and

service   manuals;   computers and related   equipment   (including all hardware and

software   rights,   if   any);   display   cases   and   cabinets;   lease   rights   and

leaseholds;   goodwill,   the trade name "STATELINE   FORD",   SELLER's   website and

domain name, and all rights to use SELLER's existing business   telephone numbers

(hereinafter   referred to, in the   aggregate,   as "Assets")   (all in "as is" and

"where is" condition),   free and clear at closing of debts, mortgages,   security

interests, and other liens, taxes or other encumbrances.

 

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                   (b) Upon   reasonable   written   notice   to   SELLER by BUYER and

within ten (10) days of the date this   document   is   executed,   BUYER and SELLER

agree to   prepare   a list of the   Assets   to be   transferred   hereunder   ("Asset

List"), attached hereto and made a part hereof as EXHIBIT "A".

 

         2. AGGREGATE PURCHASE PRICE; PAYMENT.

 

                  (a)   The   purchase    price   for   all   of   the    aforementioned

(exclusive of parts and motor vehicle   inventories)   is the sum of EIGHT HUNDRED

THOUSAND DOLLARS ($800,000.00) (the "Purchase Price").

 

                  (b) The   aggregate   Purchase   Price   (subject to adjustment at

closing and subject to the Purchase   Price   Adjustment,   as defined in Section 3

below) shall be paid and satisfied as follows:

 

                           i) The sum of SEVENTY THOUSAND   DOLLARS   ($70,000.00)

paid by BUYER concurrently herewith, receipt of which is hereby acknowledged and

held in escrow by the law firm of Aboyoun & Heller,   L.L.C.   as agent for SELLER

("ESCROWEE"),   until   closing of title,   or   returned   to BUYER in the event the

contingencies   hereinafter provided are not satisfied without fault, neglect, or

omission(s)   of BUYER,   or this   Agreement is terminated in accordance   with its

terms.

 

                            ii) The balance sum in certified   or cashiers   funds,

attorney trust check or wire funds at closing.

 

                  (c) The deposit   monies   shall be held in an interest   bearing

account   and   the   interest   thereon   shall   accrue   and be   paid   to the   party

ultimately   entitled to the deposit - i.e.,   to the SELLER in the event   closing

occurs, or to BUYER in the event this Agreement is terminated in accordance with

its terms.

 

                  (d) The foregoing   aggregate Purchase Price shall be allocated

in the manner set forth in EXHIBIT "B", a true copy of which is attached   hereto

and made a part hereof.   The parties warrant and represent that said allocations

were a prime   subject   matter of their   negotiations   and that they believe that

these allocations truly reflect the economic value of the respective   interests,

rights and   restrictions   provided   herein.   The   parties   further   warrant   and

represent that they shall not at any time, directly or indirectly,   expressly or

implied, take any action, with the taxing authorities or otherwise, inconsistent

with   the   allocations   outlined   herein,   and for   which   they   have   expressly

bargained.

 

 

         3. PURCHASE OF PARTS AND ACCESSORIES AND MISCELLANEOUS INVENTORIES.   In

addition to the   aggregate   purchase   price   provided in for in Section 2 above,

SELLER   shall   transfer and BUYER shall   receive,   at closing,   SELLER's   entire

inventory of returnable FORD and HYUNDAI motor vehicle parts and accessories and

outside vendor parts and   accessories,   oil, gas and grease   inventories.   It is

understood that the foregoing shall be inventoried   immediately prior to closing

by an inventory service   satisfactory to both parties, the expense thereof to be

borne equally by SELLER and BUYER.   The FORD and HYUNDAI   parts and   accessories

inventories   shall be priced at FORD MOTOR COMPANY,   Ford Motor Division ("FMD")

and HYUNDAI   MOTOR   AMERICA,   INC.   ("HMA")   respective   stock order net invoice

prices. The outside vendor inventories shall be priced at the SELLER'S cost. The

risk of loss to said   inventory   between the date hereof and the date of closing

is expressly borne by SELLER.

 

                           The   term   "returnable",   as used in this   paragraph,

shall be either   such items of   inventory   as are   eligible   for return for full

value to FMD or HMA (as the case may be) in the   course of a regular   return (in

the ordinary   course of business) or a return in connection with the termination

 

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of a Dealer Sales and Service   Agreement   under such   document or in   accordance

with New   Jersey   law,   or such items of   inventory   as listed in the FMD or HMA

catalogs   then   in   effect   on the   closing   date.   A   "non-returnable"   part or

accessory is any such item that does not fall within the scope of the   preceding

sentence.

 

                           BUYER shall pay for the inventory in certified, bank,

attorney trust account,   or cashiers'   checks or wired funds at the closing.   In

addition,   SELLER shall assign to BUYER, at closing,   its termination   rights to

return parts and accessories to FMD and HMA, if any, under its respective Dealer

Sales and Service Agreements and applicable law.

 

         4. PURCHASE OF VEHICLES: It is understood that BUYER agrees to purchase

from SELLER at closing:

 

                  (a)   Its   then   inventory   of   all   new,   never   used,    never

registered 2004, 2005 and 2006 (if applicable) model year FORD and HYUNDAI motor

vehicles at factory net invoice   price to SELLER,   less as   applicable,   (i) all

factory hold backs, (ii) leftover/carryover allowances, (iii) finance assistance

credits or   payments;   (iv)   advertising   credits or payments;   (v)   preparation

allowances;   and (vi) the net cost to effectuate   unrepaired damage thereto,   if

any, free and clear of liens and encumbrances.   The term "never used" as used in

this   paragraph   shall mean a vehicle   with less than five   hundred   (500) miles

thereon and not titled in any consumer's name.   Notwithstanding   anything herein

contained to the contrary,   the adjustments contained in clauses (iii), (iv) and

(v) shall not be required   in the case of dealer   swaps in   instances   where the

SELLER has not obtained the benefit of said adjustments.

 

                  (b) SELLER's   inventory of 2004, 2005 and 2006 (if applicable)

FORD and HYUNDAI   demonstrator units at the price formula provided in subsection

(a),   less the sum of   fifteen   cents(15(cent))   per mile for each mile of usage

(reflected   on each unit as of the date of   closing)   in excess of five   hundred

(500) miles (per unit).

 

         In the event   there is any   damage to any motor   vehicles,   the cost of

such repairs are to be calculated at SELLER'S   existing   internal cost rates for

parts and labor. Nothing herein contained shall prohibit SELLER from selling and

delivering new or demonstrator vehicles prior to closing.

 

                  (c) In addition to the   foregoing,   BUYER shall   purchase from

SELLER, at a purchase price computed in accordance with the formula   established

in sub-paragraph (a) above, any and all FORD and HYUNDAI vehicles   consigned and

invoiced to SELLER by the aforesaid vehicle   manufacturer and/or distributor and

not received by SELLER prior to closing.   SELLER shall   forthwith,   on demand of

BUYER and   simultaneously   with the   payment   required   by   SELLER's   floor plan

institution therefore,   execute assignments of the statements of origin for such

vehicles so purchased.

 

         It is   understood   and agreed that the purchase   price paid by BUYER to

SELLER for motor   vehicles   pursuant to this section shall be in addition to the

purchase   price   paid for the   Assets of the   SELLER   as set forth in   Section 2

above.

 

         5. TAX CLEARANCE CERTIFICATE.

 

                  (a) SELLER agrees to provide BUYER with all information needed

to notify the New Jersey Division of Taxation ("Division"), pursuant to N.J.S.A.

54:32B-22,   and   any   other   state   governmental   agency.   Escrows,   if any   are

expressly required by the Division, shall be held by ESCROWEE,   unless the state

governmental   agency   requires   otherwise.   SELLER shall be responsible   for all

taxes required by the Division as a result of such bulk sale notification.

 

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                   (b) SELLER   warrants and   represents   that it has not used any

other corporate or trade names and/or addresses within the last three (3) years,

except "STATELINE FORD, INC.", "FORD WORLD OF PHILLIPSBURG",   and "HYUNDAI WORLD

OF PHILLIPSBURG".

 

         6. ACCOUNTS   RECEIVABLE OF SELLER.   SELLER's accounts   receivable shall

remain the   property of the SELLER.   It is   understood   and agreed that   factory

receivables   erroneously   credited to SELLER to which BUYER is entitled shall be

the property of BUYER and factory receivables   erroneously   credited to BUYER to

which SELLER is entitled shall be the property of SELLER.   These include without

limitation,   holdback and other   factory   credits to which BUYER is entitled but

may be   erroneously   assigned   to SELLER's   dealer   number by FMD or HMA. In the

event of any such erroneous credit to BUYER or SELLER,   BUYER or SELLER,   as the

case may be, shall promptly pay to the other party an amount   equivalent to said

erroneous credit(s). This provision shall survive closing of title.

 

         7.   REPRESENTATIONS   AND   WARRANTIES OF SELLER.   SELLER   represents and

warrants to BUYER.

 

                  (a) The SELLER is a corporation organized and existing in good

standing   under the laws of the State of New   Jersey and is duly   authorized   to

carry   on its   aforementioned   business   (and   shall   provide   a   good   standing

certificate,   or its equivalent,   issued by the New Jersey Secretary of State to

BUYER   at   closing);   that all   necessary   corporate   action   to   authorize   the

execution of this   Agreement and to   consummate   the   transactions   contemplated

herein has been taken, and that this Agreement constitutes the valid and binding

obligation of SELLER enforceable in accordance with its terms;

 

                   (b) That SELLER shall,   at closing,   have good and   marketable

title   to all of the   Assets   to be   sold,   transferred   and   assigned   to BUYER

pursuant to this Agreement, free and clear of all liens and encumbrances, except

vehicle floor planning to be satisfied at closing and such other items as may be

referenced in Section 20 below;

 

                  (c) That there are no legal,   quasi-judicial or administrative

actions,   suits or   proceedings of any kind or nature now pending to the best of

SELLERS's knowledge or other claims which would prevent SELLER from consummating

the transactions contemplated hereunder;

 

                  (d) That the consummation of the transactions   contemplated by

this Agreement and compliance with the provisions   hereof will not conflict with

or result in breach or default under any provision of law, order of any court or

other   agency of   government,   the   charter or   by-laws of SELLER,   or any note,

debenture,   mortgage,   loan   agreement or other   instrument to which SELLER is a

party or by which it is bound;

 

                  (e) That   SELLER's FMD   Franchise   Agreement and HMA Franchise

Agreement   are and will remain until   closing,   in full force and effect and the

SELLER   is in full   compliance   with   the   terms   of   either   the FMD   Franchise

Agreement or HMA   Franchise   Agreement   and there are no breaches or defaults by

either   party under   either the FMD   Franchise   Agreement   or the HMA   Franchise

Agreement;

 

                  (f) That all federal, state or local taxes imposed upon SELLER

which are due and payable at closing and for which BUYER would be responsible if

not paid by SELLER have been or will be paid as they mature;

 

                  (g) That SELLER is not a party to any employee   contracts,   or

union/collective   bargaining   agreements,   which will be binding upon the BUYER,

and any such agreements are expressly excluded from this Agreement;

 

                  (h) That there are no   tenancies   at the   Premises   other than

that of SELLER, which shall terminate concurrently with closing;

 

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                  (i) That   SELLER   has not   heretofore   received   any   unabated

written notice of any facility or other   franchise   deficiency   from FMD, HMA or

any written notice requiring it to relocate the dealership operation, cautioning

SELLER not to improve or expand the Premises,   or requiring SELLER to improve or

expand or otherwise modify its facility or the location thereof;

 

                  (j) That a valid   Certificate of Occupancy has been issued for

the Premises.   SELLER will, at its sole cost and expense obtain an unconditional

Certificate of Occupancy in favor of BUYER prior to closing   authorizing the use

of said   Premises   as a new and   used   motor   vehicle   dealership   and all   uses

incidental thereto and, in connection therewith,   SELLER covenants and agrees to

satisfy any and all requirements   and/or conditions   imposed by any governmental

entity   in order to obtain   said   Certificate   of   Occupancy   prior to   closing,

provided,   however,   that the cost does not   exceed   TEN   THOUSAND   ($10,000.00)

DOLLARS.   If the cost exceeds TEN   THOUSAND   ($10,000.00)   DOLLARS,   then SELLER

shall notify BUYER, in writing, as to whether or not it shall assume said excess

costs,   or refuse to assume said excess costs.   If SELLER refuses to assume said

excess   costs,   then BUYER   shall have the right to either   (A)   terminate   this

Agreement,   or (B)   assume   those   costs   to   satisfy   the   requirements   and/or

conditions   in excess of TEN THOUSAND   ($10,000.00)   DOLLARS so that SELLER will

obtain the   Certificate   of   Occupancy.   In the event of such   termination,   all

deposit   monies paid   hereunder and under the Realty   Agreements   (as defined in

Section   18   below)   shall be   returned   to   BUYER   (together   with all   accrued

interest),   and this Agreement and the Realty   Agreements   shall be deemed null,

void and of no   further   force or   effect.   To the best of   SELLER's   knowledge,

SELLER has neither   knowledge nor notice of, any uncured   zoning code,   building

code, or environmental   violations as of the date of this Agreement and warrants

that   such   warranty   will   be   true   and   correct   at   closing   or any   interim

notification cured prior to the date of closing;

 

                  (k) That SELLER will remove all debris from the Premises prior

to closing,   including, but not limited to, all used tires, batteries, drums and

abandoned vehicles;

 

                  (l) That SELLER has not removed any   equipment or   accessories

from the new vehicles to be