SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
(DECEMBER 30, 1998)
(Date of earliest event reported)
AUTOCORP EQUITIES, INC.
(Exact name of registrant as specified in its charter)
NEVADA 87-0522501
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
000-15216
(Commission File Number)
5949 Sherry Lane, Suite 525
Dallas, Texas 75225
(Address of principal executive offices)
(214) 378-8271
(Registrant's telephone number, including area code)
2980 E. Northern Avenue, Suite A1, Phoenix, Arizona 85028
(Former name or former address, if changed since last report)
<PAGE>
In this report, the words we, our, ours, us, Company, and us refer only
to Auto Corp Equities, Inc. They do not include any of our subsidiaries unless
we specifically refer to them.
Headquartered in Dallas, Texas, we are a subprime indirect consumer
lender for automobile finance. At December 30, 1998, we and our consolidated
subsidiaries were financially distressed companies. We restructured our Company
on that date in order to create an organizational structure which is efficient
and reflects our business plans.
We accomplished the following through the restructuring:
o We disposed of non-productive subsidiaries not consistent with
our future plans.
o We substantially reduced our debt and made arrangements to
reduce our exposure to further liability.
o The control of our Company changed.
In this report, we usually refer to the restructuring as the
"Transaction" because it is defined that way in the documents providing for it.
Item 1. Change in Control of Registrant
Item 1(a).
General
On December 30, 1998, Charles Norman, as Trustee under three separate
trusts, acquired control of our Company. He acquired control from William O.
Merritt, Dennis W. Miller and others in the Transaction.
Basis of Control
The basis of Mr. Norman's control is that he is the trustee under the
three trusts. The beneficiaries of the three trusts and the securities in each
trust are:
<TABLE>
Name of Trust Beneficiaries Securities Held
------------- ------------- ----------------
<S> <C> <C>
Voting Trust I Executive officers of ours to 350,000 Common Shares
be named in the future
Voting Trust II Executive officers of AutoPrime, 350,000 Common Shares
Inc. ("Auto Prime") to be named
in the future
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<PAGE>
The Exchange Trust (a) Consumer Investment Corporation up to 1,425,887 Common
("CIC") (for the benefit of the Shares (all unused shares
holders of the CIC debentures) will first be available to
AutoPrime for satisfaction
of our obligations to
AutoPrime)
(b) AutoPrime (for the purpose of 3,340,529 Preferred Shares
holding the securities tendered and
to AutoPrime and that it cannot 1,091,113 Common Shares
lawfully accept prior to receipt
of approval from the Office
of Thrift Supervision)
</TABLE>
Beneficial Ownership of Our Company
Mr. Norman, in his capacity as Trustee of the three trusts,
beneficially owns a total of 3,217,000 Common Shares. This is 53% of the
6,061,848 Common Shares which, according to our stock transfer agent, were
outstanding as of January 10, 1999.
After the Transaction, Merritt and Miller each continue to have
beneficial ownership of 300,000 (or 4.9%) of the outstanding Common Shares. Mr.
Merritt is also a Director.
A tender to AutoPrime of 1,091,113 Common Shares was made, as described
in "Description of the Transaction, (16) - (18)" below. AutoPrime can accept the
tender only after approval has been received from the Office of Thrift
Supervision. There is no assurance the approval can be obtained. AutoPrime
disclaims any beneficial ownership of the 1,091,113 shares as long as it cannot
accept the tender.
AutoPrime is our major creditor. It has agreed, subject to the tender,
to exchange a substantial portion of its claims as a creditor for equity in our
company.
Source and Amount of Consideration
The amount and source of the consideration used to acquire the
securities now held in the trusts was:
o The redemption of our Common Shares from Merritt and Miller in
exchange for the subsidiaries we transferred to them.
o Our agreement to permit one of the subsidiaries being
transferred to attempt to exchange our Common Shares for its
outstanding debentures. This is subject to compliance with the
Federal and applicable state securities laws.
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o Our issuance and tender of securities to AutoPrime in exchange
for releasing us from liability on a substantial portion of
our indebtedness,
New Management
In 1998, Mr. Merritt and Mr. Miller were our controlling shareholders.
They asked Charles Norman to assume day-to-day management control of our
Company.
Mr. Norman became a Director and President and Chief Executive Officer
of our Company in August 1998. Since December 30, 1998, our Directors have been:
o Charles Norman
o William O. Merritt
We plan to add additional members to the Board of Directors who have
experience in the automobile and/or financial service industries.
In addition, since December 30, 1998, our officers have been:
o President and Chief Executive Officer: Charles Norman
o Secretary and Treasurer: Hunter Ennis
Information About Charles Norman
Charles Norman, age 41, has been engaged in various aspects of working
with and making successful, financially distressed companies. A resume of his
experience is attached to this report as Exhibit 99.1.
Mr. Norman agreed to assist us in our re-structuring effort, but only
if he had control of all major decisions. Based on Mr. Norman's past experience,
and his knowledge of the subprime automobile business, our Board of Directors,
in August, 1998, hired Mr. Norman and gave him the necessary authority to
restructure our Company. His authority became effective control on December 30,
1998.
How the Purpose of the Restructuring Was Achieved
The purpose of the restructuring was achieved by the following:
o The disposition of non-productive subsidiaries not consistent
with our future plans
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This was achieved by transferring them, along with other
interests, to Merritt and Miller in exchange for the
redemption of 2,653,500 Common Shares. These represent 43.8%
of the Common Shares now outstanding. Merritt and Miller (or
their assignees), combined, still own 600,000 Common Shares
(9.8% of the outstanding).
o The change of control of our Company
This took place through:
(a) The redemption of the 2,655,500 Common Shares
previously owned by Merritt and Miller
(b) The re-issuance of the redeemed Common Shares, as
well as another 563,000 Common Shares that were
already in our treasury.
(c) The establishment of the three trusts, and the
transfer to them of the reissued 3,217,000 shares.
These represent 53% of the Common Shares now
outstanding.
(d) The Transaction also allowed AutoPrime to defer
taking ownership of any of our stock until receipt of
approval from the Office of Thrift Supervision and
any other governmental approval that may be
necessary. The Transaction is based on the assumption
that any necessary approval can be obtained. The
deferral was accomplished by:
o We tendered Preferred and Common Shares to
AutoPrime in exchange for AutoPrime
releasing us from liability on a substantial
portion of our indebtedness,
o AutoPrime declined to accept the tender
until after receipt of any necessary
regulatory approvals; and
o We placed these securities in the Exchange
Trust pending the outcome of the tender.
In addition, the parties anticipate that some number
of Common Shares will remain in the Exchange Trust
after the earlier to occur of the retirement of the
CIC debentures or December 31, 1999. These shares
will first be available to Auto Prime for
satisfaction of our obligations to Auto Prime.
However, the Trustee will not transfer these
shares to AutoPrime unless the tender has been
accepted.
o The substantial reduction of our debt and the arrangements to
reduce our exposure to further liability
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(a) The reduction was accomplished in this manner:
o We and our subsidiaries had total debt to
AutoPrime in excess of $7,500,000.00 We
tendered to AutoPrime equity securities of
ours in satisfaction of $7,289,142.90 of our
liability on this debt. We tendered
3,340,529 Preferred Shares and 1,091,113
Common Shares.
o One of our subsidiaries (CIC) being
transferred to Merritt and Miller has
approximately $2,400,000 principal amount of
debentures outstanding. These bear interest
at 12% or more, and the accrued interest at
December 30 was in excess of $450,000. We
are permitting CIC to use our Common Shares
to retire this debt, but only in compliance
with applicable securities laws.
Specifically, we placed 1,425,887 of the reissued
Common Shares into the Exchange Trust. The
subsidiary, Consumer Investment Corporation, or
"CIC," can use as many of them as needed for this
purpose until December 31, 1999, but only on the
basis of exchanging $4.00 of principal amount of
debenture debt for each of our Common Shares being
transferred for that purpose. After that date, all
unused shares will first be available to AutoPrime
for satisfaction of our obligations to AutoPrime.
(b) The specific debts and amounts that were retired and
the equity shares we issued are:
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<PAGE>
<TABLE>
Debts and Amounts Equity Shares Involved in Transaction
----------------- -------------------------------------
<S> <C> <C>
Release of $3,239,389.79 of co-maker liability 3,500,000 Preferred Shares, plus our agreement to maintain
on the Three Promissory Notes (actual principal their value of at least $3,500,000 (This is before the
balance due on 12/30/98, after credits to release from pledge of the 262,044 shares of Preferred Stock
principal of $125,000 and to interest of detailed below.)
$137,044)
These 3,500,000 shares were issued and delivered to CIC and
Lenders Liquidation Centers, Inc. ("LLCI"). They pledged
them as collateral to secure their various debts and other
obligations to AutoPrime.
After these two releases, 3,237,956 Preferred Shares are
owned by CIC and pledged to AutoPrime, and 262,044 shares
have been tendered to AutoPrime and are held in the Exchange
Trust pending the outcome of the tender.
Release of $1,787,709.11 of "repurchase 1,787,709 Preferred Shares (tendered)
obligations" relating to recourse liability on
contracts owned by AutoPrime
Release of $2,000,000 of "repurchase 1,290,776 Preferred Shares, and 1,091,113 Common Shares
obligations" relating to recourse liability on (tendered)
contracts owned by AutoPrime
The separate release of us (and agreement to 262,044 Preferred Shares released from pledge to Auto Prime
release CIC and LLCI) from $125,000 of (tendered)
principal and $137,044 of interest on the three
original notes of $3,000,000, $450,000 and
$100,000 to AutoPrime
Total - AutoPrime: $7,289,142.90 6,578,485 Preferred Shares and 1,091,113 Common Shares
(tendered and pledged)
</TABLE>
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<PAGE>
Description of the Transaction
This is a description of the Transaction. It also discloses the terms
of any loans or any pledges involved in the change of control, the names of the
lenders or pledgees, and any arrangements or understandings among members of
both the former and new controlling persons and their associates with respect to
other matters.
The Transaction is provided for in a Master Agreement dated as of
December 30, 1998. The parties to the Master Agreement are:
o AutoPrime
o AutoCorp
o Consumer Investment Corporation (We refer to this corporation
as "CIC")
o Lenders Liquidation Centers, Inc. (We refer to this
corporation as "LLCI")
o Merritt
o Miller
o Andrew J. Kacic
o Vincent W. Bustillo
o Wayne McLaws
o Efrain Diaz
We sometimes refer to Merritt, Miller, Kacic, Bustillo, Diaz and McLaws
as the "Merritt Group."
The various components of the Transaction are:
(1) AutoPrime's Release of an Existing Pledge. AutoPrime released
from a prior pledge 600,000 of our Common Shares owned by
Merritt and Miller and directed the return to Merritt and
Miller of the certificates evidencing these shares. Merritt
and Miller then transferred the 600,000 shares to us as a part
of the redemption transaction described below.
(2) We Redeemed Common Shares. Merritt and Miller sold to us, and
we redeemed from them, 2,653,500 of our Common Shares. These
shares constitute all the shares of Merritt and Miller except
300,000 shares (4.9% of the outstanding) retained by each.
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<PAGE>
(3) We Quitclaimed Subsidiaries and Other Corporations in
Exchange. We quitclaimed to Merritt and Miller whatever
interest, if any, we had in several corporations with which we
had previous involvement. Some of these we operated, and some
of them we did not. This is referred to as the "CIC Stock." We
made the transfer on a quitclaim basis, without any
representation or warranty.
(4) Merritt and Miller Pledged the CIC Stock to AutoPrime. Merritt
and Miller pledged the CIC Stock to AutoPrime to secure:
o all debts and obligations of the Merritt Group, CIC,
and LLCI to AutoPrime;
o any guaranty by the Merritt Group of debts or
obligations of CIC or LLCI to AutoPrime; and
o the representations and warranties of Merritt and
Miller made in Paragraph 2 of the Master Agreement.
(5) The Three Promissory Notes-Makers and Amounts. Prior to the
closing, AutoCorp, CIC and LLCI were indebted to AutoPrime on
three promissory notes (the "Three Promissory Notes")
aggregating $3,364,389.79 in unpaid principal amount.
AutoPrime released us from our co-maker obligations on the
Three Promissory Notes, but did not release CIC or LLCI.
(6) Issuance and Pledge of 3,500,00 Preferred Shares. We issued to
CIC and LLCI 3,500,000 new Preferred Shares for the General
Indemnity Agreement" described in (11) below. They then
pledged the shares to AutoPrime as further security for all
the debts they owe now and will owe in the future to
AutoPrime. These debts include their unreleased co-maker
obligations on the Three Promissory Notes.
(7) Release of 262,044 Shares from the 3,500,000 Preferred Shares.
AutoPrime agreed to release CIC and LLCI from $125,000 of
principal and $137,044 of accrued interest on the Three
Promissory Notes. AutoPrime agreed to give the release in
exchange for 262,044 of the 3,500,000 Preferred Shares.
AutoPrime then released the 262,044 shares from the pledge of
the 3,500,000 shares, and they were tendered to AutoPrime.
(8) Break-Up of the 3,500,000 Preferred Shares. The 3,500,000
Preferred Shares were transferred and reissued in two
certificates. One is for the tendered 262,044 Preferred
Shares, and the other is for the remaining pledged 3,237,956
Preferred Shares.
(9) Where the 262,044 Preferred Shares Went. The 262,044 Preferred
Shares were then tendered to AutoPrime as part of the
Unconditional Tender. These shares are
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being held by Charles Norman, as Trustee under the Exchange
Trust, until the outcome of the tender is known.
(10) Our Commitment to Maintain $3,500,000 in Value. We committed
to maintain the value of the 3,500,000 Preferred Shares at
$3,500,000 and agreed to issue to CIC and LLCI, for pledge to
AutoPrime, such additional Preferred Shares as may be
necessary to maintain $3,500,000 in value.
(11) CIC's and LLCI's Indemnity and Ratification. CIC and LLCI
delivered to us a General Indemnity Agreement indemnifying us
against various losses, liabilities and obligations related to
the Transaction. CIC and LLCI also ratified all their debts
and obligations to AutoPrime.
(12) Establishment of the Trusts. We established three trusts
naming Charles Norman as Trustee. Then we issued a total of
3,217,000 Common Shares, from our treasury, and 3,340,529 new
Preferred Shares, as an original issuance, to Mr. Norman, as
Trustee.
The sources of these shares going into the trusts were:
o The 2,653,500 Common Shares we redeemed from Miller
and Merritt
o The 563,500 Common Shares we already had in our
treasury.
o The 3,340,529 Preferred Shares we issued for the
purpose of tender to AutoPrime.
(13) Beneficiaries and Securities of Each Trust. The beneficiaries
of the three trusts and the securities in each trust are:
<TABLE>
Name of Trust Beneficiaries Securities Held
------------- ------------- ---------------
<S> <C>
Voting Trust I Executive officers of ours to 350,000 Common Shares
be named in the future
Voting Trust II Executive officers of AutoPrime 350,000 Common Shares
to be named in the future
The Exchange Trust (a) CIC (for the benefit of the 1,425,887 Common Shares
holders of the CIC debentures)
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(b) AutoPrime (for the purpose of 3,340,529 Preferred Shares
holding the securities tendered and
to AutoPrime and that it cannot 1,091,113 Common Shares
accept prior to receipt
of approval from the Office
of Thrift Supervision)
</TABLE>
(14) Proposed Exchange of Our Stock for CIC Debentures. CIC has
$2,400,000 of debentures outstanding. The interest rate
varies, but is in the range of 12% per year. The accrued
interest at December 30, 1998, approximates $450,000.
CIC and LLCI agreed to use their best efforts to effect an
exchange of CIC's debentures for as many of the 1,425,887
Common Shares in the Exchange Trust as may be needed. This
must be completed by December 31, 1999.
CIC/LLCI will offer to effect the exchange at the rate of one
Common Share for each $4.00 of principal amount of debenture
and interest.
Any offer to exchange will be made in compliance with Federal
and applicable state securities laws. We presently intend to
register the exchange offer when, as and if needed, if
exemptions from registration are not available.
(15) CIC and LLCI Pledge to AutoPrime. CIC and LLCI pledged to
AutoPrime the 3,500,000 Preferred Shares. CIC also pledged to
AutoPrime its Certificate for 1,425,887 shares of Beneficial
Interest in the Exchange Trust. CIC and LLCI pledged these to
secure their co-maker obligations under the Three Promissory
Notes and any other obligations they may have to AutoPrime,
including their representations and warranties.
(16) The Unconditional Tender - The Reason For It. AutoPrime is
majority owned by a regulated financial institution and can
lawfully own stock of AutoCorp only after receiving approval
from the Office of Thrift Supervisor and perhaps other
governmental regulatory agencies.
As a result, three components of the Transaction were effected
using an Unconditional Tender until such time as the necessary
regulatory approvals can be obtained. There is no assurance of
this.
If the necessary approvals are not received, the parties to
the Transaction presently intend to renegotiate some of the
debt release portions of its terms.
(17) The Securities Covered by the Unconditional Tender. The three
components of the Transaction covered by the Unconditional
Tender are:
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(a) 1,787,709 of our Preferred Shares.
AutoPrime released us from $1,787,709.11 of
"repurchase obligations" We issued and
unconditionally tendered to AutoPrime 1,787,709 of
our new Preferred Shares.
(b) 1,290,776 of our Preferred Shares and 1,091,113
Common Shares.
Prior to the Transaction, CIC and LLCI were indebted
to AutoPrime for at least $2,000,000 of cash
advances, expenditures and other "repurchase
obligations," as well as other obligations related to
past and future business relationships. These are
separate and apart from other obligations described
in this report. We had also guaranteed them.
We issued and unconditionally tendered to Auto Prime
1,290,776 Preferred Shares and 1,091,113 shares
Common Shares in satisfaction of $2,000,000 of such
debt and the release of us from our related guaranty.
Of the $2,000,000 credit, $709,224 was allocated to
the Common Shares at $0.65 per share and $1,290,776
was allocated to the Preferred Shares at $1.00 per
share.
(c) 262,044 of Our Preferred Shares.
As mentioned above, AutoCorp issued to CIC and LLCI
3,500,000 new Preferred Shares. They pledged the
shares to AutoPrime as further security for all debts
to AutoPrime, including their obligations on the
Three Promissory Notes.
AutoPrime agreed to release CIC and LLCI from
$125,000 of principal and $137,044 of accrued
interest on the Three Promissory Notes, the original
$3,000,000 note, the $450,000 note and the $100,000
note. The release was given in exchange for 262,044
of the 3,5000,000 pledged Preferred Shares. AutoPrime
released them from the pledge and they were tendered
to AutoPrime as part of the Unconditional Tender.
These shares are being held by Charles Norman, as
Trustee under the Exchange Trust until the outcome of
the Unconditional Tender is known.
(18) The Terms of the Unconditional Tender. The terms of the
Unconditional Tender are:
(a) AutoPrime may not accept the tender prior to May 31,
1999. From that date until December 31, 1999:
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o AutoPrime must accept the tender if approval is
received from the Office of Thrift Supervision (or
any other applicable governmental agency).
o AutoPrime may accept the tender if governmental
approval is no longer required or if AutoPrime
determines to accept the tender.
(b) If approval is not received by December 31, 1999 and
AutoPrime determines not to accept the tender, then
the tender is rejected. In this case, the credits
will be withdrawn, and the debts for which credit was
given will be reinstated and will be immediately due
and payable, with interest at 8% per year from
December 31, 1998. We and AutoPrime have agreed to
renegotiate the Transaction if this event occurs.
Summary of the Terms of the Preferred Shares
As part of the Transaction, we established a new series of 9,000,000
authorized shares of Series A Non-Cumulative Convertible Preferred Stock. Then,
we issued a total of 6,578,485 new Preferred Shares as part of the Transaction.
The terms of the Preferred Shares are:
o The Preferred Shares pay non-cumulative dividends at the rate
of 5% per year.
o They have a liquidation preference of $1.00 per share.
o They have no voting rights, sinking fund provisions or
redemption rights.
o The Preferred Shares are convertible into Common Shares on a
1-for-1 basis at any time starting January 1, 2002. They will
also become convertible prior to that date if any of certain
specified events take place. Here is a summary of the events
that can accelerate convertibility:
(a) If we issue any shares of any kind of capital stock,
or any securities convertible into, exchangeable for,
or exercisable to purchase any shares of capital
stock, without AutoPrime's consent. (We also made a
specific covenant not to do any of these things
before January 1, 2002, without AutoPrime's consent.)
(b) If anyone other than our current Board of Directors
is elected to our Board of Directors, without
AutoPrime's consent.
(c) If CIC or LLCI default in the payment or performance
of any of a number of obligations to AutoPrime or to
us.
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<PAGE>
(d) If Merritt or Miller breach any representation or
warranty made by them.
So that Auto Prime's pledge is protected, we also agreed in the
"Agreement to Issue Additional Preferred Stock" that we will not issue any kind
of preferred stock to any one other than CIC/LLCI until after February 1, 2002.
Before that date, we can only issue Preferred Shares to CIC/LLCI in amounts
required by the Agreement, and we can only issue them for the benefit of
AutoPrime, our primary creditor.
Item 1 (b). Various of the disclosures made in Item 1(a) above involve
arrangements known to us, the operation of which may, at a subsequent date,
result in a change of control of our Company. However, at this time, we do not
have sufficient information to predict what future events will occur that could
result in any change of control.
Item 2. Acquisition or Disposition of Assets
(a) Disposition of Assets.
As a part of the Transaction, we quitclaimed to Merritt and
Miller any interest in the following entities:
o Consumer Investment Corporation
o Auto Del Norte Resale Centers, LLC
o Lenders Liquidation Centers, Inc.
o Lenders Auto Resale Centers of Texas, Inc.
o Lenders Recon Services, Inc.
o Consumer Insurance Service Company, Inc.
o Auto Finance Retail Center, Inc.
o CIC Holdings, Inc.
The result was that, after the Transaction, we had only these
subsidiaries:
o ACE Motor Company
o AutoCorp Financial Services, Inc.
(b) Acquisition of Assets.
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<PAGE>
At December 30, 1998 our subsidiary, ACE Motor Company,
acquired certain assets of Lenders Resale Centers of Texas,
Inc., a corporation owned by Messrs. Miller and Merritt. We
refer to this corporation as "Lenders of Texas." The purchase
price was $50,000.00. Simultaneously, ACE Financial Services,
Inc. assumed the rights and obligations of Lenders of Texas
pertaining to a note portfolio with a remaining gross balance
of $1,400,000. The portfolio had previously been sold to
AutoPrime. The obligations ACE assumed contained recourse as
to the contracts in that portfolio. In return, Lenders of
Texas gave its note in the amount of $2,205,919.22 to ACE. We
attribute no value to that note in our financial record.
Item 7. Financial Statements and Exhibits
(a) Financial statements of business acquired.
Not applicable
(b) Proforma financial information
Not applicable
(c) Exhibits
2.1 Master Agreement dated as of December 30, 1998 by
and among AutoPrime, Inc., AutoCorp Equities, Inc.,
Consumer Investment Corporation, Lenders
Liquidation Centers, Inc., William O. Merritt, Dennis
W. Miller, Andrew J. Kacic, Vincent W. Bustillo,
Wayne McLaws and Efrain Diaz.
2.2 Unconditional Tender of AutoCorp Preferred and
Common Stock, effective December 30, 1998, by and
between AutoCorp Equities, Inc. and AutoPrime, Inc.
2.3 Agreement to Issue Additional Preferred Stock
between AutoCorp Equities, Inc., AutoPrime, Inc.,
Consumer Investment Corporation and Lenders
Liquidation Centers, Inc. effective December 30,
1998.
2.4 Pledge Agreement dated as of December 30, 1998, from
Consumer Investment Corporation and Lenders
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Liquidation Centers, Inc. to AutoPrime, Inc.
2.5 Pledge Agreement dated as of December 30, 1998, from
William O. Merritt and Dennis W. Miller to AutoPrime,
Inc.
2.6 General Indemnity Agreement dated as of December
30, 1998, from Consumer Investment Corporation and
Lenders Liquidation Centers, Inc. to AutoCorp
Equities, Inc.
2.7 Ratification of Obligations dated as of December 30,
1998, from Consumer Investment Corporation and
Lenders Liquidation Centers, Inc. to AutoPrime, Inc.
2.8 Release of Pledge Agreement dated as of December 30,
1998, from AutoPrime, Inc. to the Merritt Group.
3.1 Certificate of Designation of the Series A Non-
Cumulative Convertible Preferred Stock of Autocorp
Equities, Inc.
9.1 Voting Trust Agreement I dated as of December 30,
1998, Charles Norman, Trustee.
9.2 Voting Trust Agreement II dated as of December 30,
1998, Charles Norman, Trustee.
9.3 Exchange Trust Agreement dated as of December 30,
1998, Charles Norman, Trustee.
99.1 Resume of Experience of Charles Norman (This
relates to "Item 1(a) - Information About Charles
Norman.")
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
Date: March 9, 1999 AUTOCORP EQUITIES, INC.
(Registrant)
/s/ Charles Norman
---------------------------------
Charles Norman
President and Chief Executive
Officer
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INDEX TO EXHIBITS
2.1. Master Agreement dated as of December 30, 1998 by and among AutoPrime,
Inc., AutoCorp Equities, Inc., Consumer Investment Corporation,
Lenders Liquidation Centers, Inc., William O. Merritt, Dennis W.
Miller, Andrew J. Kacic, Vincent W. Bustillo, Wayne McLaws and Efrain
Diaz.
2.2. Unconditional Tender of AutoCorp Preferred and Common Stock, effective
December 30, 1998, by and between AutoCorp Equities, Inc. and
AutoPrime, Inc.
2.3 Agreement to Issue Additional Preferred Stock between AutoCorp
Equities, Inc., AutoPrime, Inc., Consumer Investment Corporation
and Lenders Liquidation Centers, Inc. effective December 30, 1998.
2.4 Pledge Agreement dated as of December 30, 1998, from Consumer
Investment Corporation and Lenders Liquidation Centers, Inc. to
AutoPrime, Inc.
2.5 Pledge Agreement dated as of December 30, 1998, from William O.
Merritt and Dennis W. Miller to AutoPrime, Inc.
2.6 General Indemnity Agreement dated as of December 30, 1998, from
Consumer Investment Corporation and Lenders Liquidation Centers, Inc.
to AutoCorp Equities, Inc.
2.7 Ratification of Obligations dated as of December 30, 1998, from
Consumer Investment Corporation and Lenders Liquidation Centers, Inc.
to AutoPrime, Inc.
2.8 Release of Pledge Agreement dated as of December 30, 1998, from
AutoPrime, Inc. to the Merritt Group.
3.1 Certificate of Designation of the Series A Non-Cumulative Convertible
Preferred Stock of Autocorp Equities, Inc.
9.1 Voting Trust Agreement I dated as of December 30, 1998, Charles
Norman, Trustee.
9.2. Voting Trust Agreement II dated as of December 30, 1998, Charles
Norman, Trustee.
9.3 Exchange Trust Agreement dated as of December 30, 1998, Charles
Norman, Trustee.
99.1 Resume of Experience of Charles Norman (This relates to "Item 1(a) -
Information About Charles Norman.")
MASTER AGREEMENT
This Master Agreement (the "Agreement") is made and entered into as of
the 30th day of December, 1998, by and among AutoPrime, Inc., a Delaware
corporation, ("AutoPrime"), AutoCorp Equities, Inc., a Nevada corporation
("AutoCorp"), Consumer Investment Corporation, an Arizona corporation ("CIC"),
Lenders Liquidation Centers, Inc., an Arizona corporation ("LLCI"), William O.
Merritt, ("Merritt"), Dennis W. Miller,("Miller"), Andrew J. Kacic, ("Kacic"),
Vincent W. Bustillo, ("Bustillo"), Wayne McLaws ("McLaws") and Efrain Diaz,
("Diaz") (Merritt, Miller, Kacic, Bustillo, Diaz and McLaws are sometimes
collectively referred to in this Agreement as the "Merritt Group"). In addition
to this Master Agreement, the parties have agreed to execute and deliver various
"Additional Documents" defined as any and all documents, instruments and
agreements to be delivered in connection with the consummation of this
Agreement, whether prior to, at, or subsequent to the execution and delivery of
this Agreement including, without limitation, the documents listed on Exhibit
"A" attached hereto.
R E C I T A L S
A. The authorized capital of AutoCorp consists of 110,000,000 shares of
Common Stock, $0.001 par value, and 10,000,000 shares of Preferred Stock, $0.001
par value. Of the 110,000,000 shares of Common Stock, based upon the
Stockholder's List supplied by AutoCorp's transfer agent dated December 10, 1998
(the "Shareholder's List"), 5,498,348 shares are issued and outstanding
(including 20,000 shares held by Consumer Insurance Company, an affiliate), and
563,000 shares are issued but held in the treasury of AutoCorp. No shares of
Preferred Stock have been designated or issued. However, the Board of Directors
of AutoCorp has the authority to designate and set the terms of any series of
Preferred Stock, and shall designate and set the terms of 6,428,776 shares of
series A Preferred Stock and issue the same as a part of this Transaction.
B. Based on the Shareholder's List the Merritt Group owns or controls
3,605,500 shares (approximately 65.6%) of the 5,498,348 outstanding Shares of
Common Stock of AutoCorp, a portion of which was purchased in 1997, by Merritt
and Miller from Bustillo, Diaz and McLaws pursuant to certain Stock Purchase
Agreements and related Promissory Notes.
C. AutoCorp is the parent corporation of CIC and LLCI. The Merritt
Group also controls the Board of Directors and Management of AutoCorp, but, as a
part of this Agreement, shall resign as directors, officers and employees of
AutoCorp. As such, prior to closing they also control CIC and LLCI, and,
following closing, will continue to control CIC and LLCI (as well as the other
"Companies", as defined in a certain Bill of Sale and Assignment of even date),
but shall no longer have control of AutoCorp.
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D. AutoCorp, CIC and LLCI (the "Makers") are indebted to AutoPrime on
three (3) promissory notes (the "Notes") aggregating $3,428,550.14 in unpaid
principal amount. The Notes are as follows:
(1) That certain Promissory Note effective October
31, 1997, in the principal amount of $100,000, wherein the
Makers are AutoCorp Equities, Inc., Lenders Liquidation
Centers, Inc. and Consumer Investment Corporation, and the
Payee is AutoPrime, Inc., which note has a current
principal balance of $69,374.96.
(2) That certain Secured Line of Credit Note
effective October 31, 1997, in the principal amount of
$450,000, wherein the Makers are AutoCorp Equities, Inc.,
Lenders Liquidation Centers, Inc. and Consumer Investment
Corporation, and the Payee is AutoPrime, Inc., which note has
a current
principal balance of $416,464.69.
(3) That certain Promissory Note effective October
31, 1997, in the principal amount of $3,000,000, wherein the
Makers are AutoCorp Equities, Inc., Lenders Liquidation
Centers, Inc. and Consumer Investment Corporation, and the
Payee is AutoPrime, Inc., which note has a current principal
balance of $2,878,550.14.
(4) Accrued interest, at December 30, 1998, on all
three notes is $137,044.13.
E. The Notes are collaterally secured pursuant to that certain Security
Agreement effective October 31, 1997, between the Makers and AutoPrime (the
"1997 Security Agreement").
F. The Merritt Group has guaranteed the Notes by a Guaranty dated
October 31, 1997 (the "Merritt Group Guaranty").
G. The Merritt Group has pledged 600,000 shares of AutoCorp Common
Stock to AutoPrime to secure the Notes. Such pledge was made pursuant to a
Pledge Agreement dated October 31, 1997 (the "Merritt Group Pledge Agreement"),
which Pledge Agreement shall be terminated and rescinded.
H. AutoCorp is indebted as a guarantor, to AutoPrime for at least
$1,787,709.11 of cash advances and expenditures, as well as "repurchase debt"
arising out of transactions by which, prior to December 30, 1998, numerous
retail installments contracts secured by motor vehicles which have become
delinquent and whose repurchase have been guaranteed by AutoCorp and its
subsidiaries, AutoCorp shall unconditionally tender, contemporaneously with
closing, 1,787,709 shares of its Series A Preferred Stock in full satisfaction
of such debt.
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I. CIC and LLCI are indebted to AutoPrime for at least $2,000,000 of
cash advances, expenditures and other "repurchase obligations" (separate and
apart from those obligations described in the foregoing Recital H which are also
guaranteed by AutoCorp.), as well as other obligations arising and to arise from
past and future business relationships. AutoCorp, for the benefit of CIC and
LLCI, shall unconditionally tender, contemporaneously with closing, 1,290,776
shares of its Series A Preferred Stock and 1,091,113 shares of its Common Stock
in satisfaction of $2,000,000 of such debt. Such tender shall be accepted by
AutoPrime upon AutoPrime's receipt of approvals from the Office of Thrift
Supervision and any other governmental agency having jurisdiction and/or
supervision over approval of the receipt of securities by a bank-controlled
subsidiary. In the event such approval is not received by AutoPrime on or before
June 1, 1999, AutoPrime shall notify AutoCorp, CIC and LLCI that the tender is
rejected, and the debt presently satisfied by AutoCorp's stock tender shall be
reinstated on the books of CIC, LLCI and AutoPrime, and shall thereupon be
immediately due and payable with interest at eight percent (8%) per annum, by
CIC and LLCI to AutoPrime.
J. CIC is indebted to certain debenture holders in an aggregate
principal amount of approximately $2,400,000.00, plus accrued interest of
approximately $450,000.00. An Exchange Trust is being created for two separate
purposes: one for the purpose of making available to the debenture holders
Common Stock of AutoCorp to be used by CIC to exchange for such debentures on
the basis of one (1) share of AutoCorp Common Stock for each $4.00 of principal
amount of debenture debt, and the other purpose being to hold 1,290,776 shares
of AutoCorp Series A Preferred Stock and the 1,091,113 shares of AutoCorp Common
Stock tendered by AutoCorp to AutoPrime subject to the "Unconditional Tender of
AutoCorp Preferred and Common Stock" listed on Exhibit "A" attached hereto.
K. Bustillo, Diaz and McLaws shall release Merritt and Miller from
their respective purchase money obligations arising from the completed and
irrevocable prior sale of AutoCorp stock to Merritt and Miller.
L. All parties understand and acknowledge the attributes and conversion
provisions pertaining to the Series A Preferred Stock are detailed in the
Certificate of Designation included in the Additional Documents.
M. Due to the complexity of the transaction, and the numerous
obligations which will continue to be owed to AutoCorp, and will arise in the
future, CIC and LLCI shall ratify their existing and future obligations and
shall generally indemnify AutoCorp against any and all losses or damages.
N. Because AutoPrime is relying upon the represented $3,500,000.00
value of the Series A Preferred Stock as a material inducement to AutoPrime's
participation in the Transaction, AutoCorp has agreed to maintain that value
pursuant to an Agreement to Issue Additional Preferred Stock, one of the
Additional Documents.
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O. Finally, ACE Motor Company and AutoCorp Financial Services, Inc.,
subsidiaries of AutoCorp which are being retained by AutoCorp and which are not
being transferred to Miller and Merritt, contemporaneously with the closing of
the Transaction, as defined below, are purchasing certain assets of one of the
Companies, Lenders Auto Resale Centers of Texas, Inc., upon the terms and
conditions specified under the heading "Austin Documents" in the Additional
Documents listed on Exhibit "A" attached hereto.
The parties are entering into the transaction described herein (the
"Transaction") for the purpose of realigning variety of business, corporate and
debt relationships, all for their mutual benefit.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained in this Agreement, the parties agree as follows:
ARTICLE 1
ELEMENTS OF THE TRANSACTION
1.1 Redemption of Merritt Group Stock. Merritt and Miller hereby sell,
transfer and assign to AutoCorp, and AutoCorp shall redeem from them, free and
clear of all Liens, an aggregate of 2,653,500 shares of Common Stock of AutoCorp
(the "Merritt Stock"). In addition, Merritt and Miller shall, and do hereby,
sell, transfer and assign to AutoCorp, free and clear of all Liens, any other
equity securities of AutoCorp, including, without limitation, any claims they
may have to receive any additional shares of capital stock of AutoCorp through
options, warrants, earnouts or any other mechanism, save and except (i) 300,000
shares of the Common Stock to be retained by Merritt out of the Common Stock
presently registered in his name, and (ii) 300,000 shares of Common Stock to be
acquired by Miller from (a) CIC Fund V, Inc. (200,000 shares) and (b) John
Mitchell (100,000 shares). As used in this Agreement, the term "Lien" means any
mortgage, deed of trust, lien, security interest, pledge, conditional sales
contract, claim, right of first refusal, option, charge, agreement, easement,
right-of-way, limitation, reservation, restriction and other encumbrance of any
kind.
1.2 AutoCorp shall quitclaim to Merritt and Miller all of its right,
title and interest in and to the issued and outstanding shares of common stock
of CIC, LLCI, and Consumer Insurance Services, Inc., and other specifically
named subsidiaries (the "Companies" described in the Additional Document
entitled "Bill of Sale and Assignment"), save and except only stock issued and
to be issued by AutoCorp and any of its subsequently created or acquired
subsidiaries and affiliates The common stock being quitclaimed to Miller and
Merritt pursuant to the bill of Sale and Assignment is collectively referred to
herein as the "CIC Stock". This transfer is to be made on a quitclaim basis
without any representation or warranty whatsoever.
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1.3 By separate document, AutoPrime shall release AutoCorp from the
Notes described in Recital D, above.
1.4 AutoCorp shall issue to CIC and LLCI and CIC and LLCI shall pledge
to AutoPrime 3,500,000 shares of Series A Non-Cumulative Convertible Preferred
Stock ("Series A Preferred").
1.5 CIC and LLCI shall deliver to AutoCorp a General Indemnity
Agreement of even date herewith.
1.6 AutoCorp shall establish and issue an aggregate of 3,117,000 shares
of Common Stock from its treasury to Charles Norman, as Trustee under Voting
Trust Agreement I, Voting Trust Agreement II and Exchange Trust Agreement,
pursuant to, and for the benefit of those beneficiaries named in said Trust
Agreements, as follows:
(j) to Voting Trust I - 350,000 shares
(k) to Voting Trust II - 350,000 shares
(l) to Exchange Trust - 2,517,000 shares
1.7 Contemporaneously with the December 30, 1998, closing of this
Transaction, AutoCorp shall unconditionally tender to AutoPrime 1,091,113 shares
of its Common Stock and 1,290,776 shares of its Series A Preferred Stock in
exchange for a release of its of $2,000,000 ($709,224 attributed to the Common
Stock at $0.65/share and $1,290,776 attributed to the Series A Preferred at
$1.00/share) owned by LLCI and CIC and arising from advances, expenditures and
a"repurchase indebtedness" (and described in Recital I above), and guaranteed by
AutoCorp. Such tender (i) may be accepted by AutoPrime in whole or in part at
any time on or before December 31, 1999, or (ii) shall be accepted by AutoPrime
upon AutoPrime's receipt of approvals from the Office of Thrift Supervision and
any other governmental agency having jurisdiction and/or supervision over
approval of the receipt of securities by a bank-controlled subsidiary. In the
event, (i) such approval is not received by AutoPrime on or before December 31,
1999 and (ii) AutoPrime elects not to accept AutoCorp's tender, then, AutoPrime
shall notify AutoCorp, CIC and LLCI that the tender is rejected, and the debt
presently satisfied by AutoCorp's stock tender shall be reinstated on the books
of CIC, LLCI and AutoPrime, and shall thereupon be immediately due and payable,
with interest at eight percent (8%) per annum from December 31, 1998, by CIC and
LLCI to AutoPrime. This "repurchase indebtedness" is separate from the Notes and
other indebtedness arising from the Master Servicing Agreement pertaining to
contracts originated by Lipshy Motorcars, Inc.
AutoPrime shall immediately release AutoCorp from its related guaranty,
all as evidenced by an Additional Document entitled "Release of AutoCorp
Guaranty of $2,000,000 Debt", and all being subject to the terms of the
"Unconditional Tender of AutoCorp Preferred and Common Stock" listed on Exhibit
"A" attached hereto.
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1.8 CIC and LLCI each covenant and agree to use their best efforts to
effect an exchange of CIC's outstanding Debentures for as many shares of the
1,425,887 shares of AutoCorp Common Stock held for that specific purpose in the
Exchange Trust as may be needed up to December 31, 1999, at which time any
shares unneeded for such conversion shall be released from the Exchange Trust
and delivered free and clear of all Liens and trust restrictions as AutoPrime
shall direct in writing. The exchange rate for conversion of Debentures into
Common Stock shall be $4.00 of the principal amount of Debenture debt for each
one (1) share of Common Stock.
1.9 Merritt and Miller shall pledge the CIC Stock to AutoPrime pursuant
to a certain Pledge Agreement of even date. The pledge is made to secure (a) all
debts and obligations of Miller, Merritt, CIC, and LLCI to AutoPrime, (b) any
guaranty by Miller or Merritt of debts or obligations of CIC or LLCI to
AutoPrime, and (c) the representations and warranties of Merritt and Miller made
in paragraph 2 of this Agreement. "CIC Stock" is defined as those shares of
stock being assigned by AutoCorp to Merritt and Miller pursuant to paragraph
1.2, above.
1.10 At closing, Merritt and Miller shall resign as officers and
employees of AutoCorp and Miller shall resign as director.
1.11 Contemporaneously with the December 30, 1998, closing of this
Transaction and by separate document, AutoPrime shall acknowledge its release of
AutoCorp's guaranty of $1,787,709.11 "repurchase debt"owed by LLCI and CIC as
described in an Additional "document subtitled "Release of AutoCorp Guaranty of
$1,787,709.11 Debt", and, in exchange, AutoCorp shall unconditionally tender and
deliver to AutoPrime 1,787,709 shares of AutoCorp Series A Preferred Stock
subject to the terms and conditional in the "Unconditional Tender of AutoCorp
Preferred and Common Stock" list on Exhibit "A" attached hereto.
1.12 By a certain "Agreement to Issue Additional Preferred Stock" of
even date herewith, AutoCorp shall covenant and agree to issue jointly to CIC
and LLCI such additional shares of Series A Preferred Stock as may be necessary
from time to time to maintain $3,500,000 in value, as described in such
agreement, all of which Series A Preferred Stock shall be immediately pledged to
AutoPrime to secure all debts owed and to be owed by CIC and LLCI to AutoPrime.
Such covenant is made on the terms and conditions set forth in such agreement.
1.13 By separate document, AutoPrime shall release the Merritt Group
from the Merritt Group Pledge Agreement and shall direct the return to Merritt
and Miller of the certificates evidencing the 600,000 shares of pledged Common
Stock of AutoCorp, which 600,000 shares of Common Stock shall be transferred and
assigned by Merritt and Miller to AutoCorp as a part of the transaction
described in paragraph 1.1 above.
1.14 In that certain Ratification of Obligations of even date herewith,
CIC and LLCI shall ratify all their debts and obligations to AutoPrime.
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1.15 In that certain Pledge Agreement of even date herewith, CIC and
LLCI shall pledge to AutoPrime 3,500,000 shares of Series A Preferred and CIC
shall pledge to AutoPrime the Certificate of Beneficial Interest in the Exchange
Trust , all to secure their co-maker obligations under the Notes and any other
obligations they, or either of them, may now or hereafter owe to AutoPrime.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF MERRITT GROUP
2.1 General. CIC, LLCI and Merritt Group jointly and severally
represent and warrant to AutoCorp and AutoPrime that the representations and
warranties set out in this Article 2 are true and correct on and as of the date
of this Agreement.
2.2 Title to the Merritt Stock. Merritt, Miller and AutoCorp each have
good, absolute and marketable title in and to all securities being issued
pursuant to this Agreement and hold the same free and clear of all Liens. Each
issuer hereunder has complete and unrestricted right, power and authority to
sell, transfer and assign the securities described in this Agreement. The
delivery of the Merritt Stock to AutoCorp, as herein contemplated, will vest in
AutoCorp good, absolute and marketable title to all the Merritt Stock, free and
clear of all Liens. This Agreement constitutes the legal, valid and binding
obligation of the Merritt Group.
After transferring the Merritt Stock, except for an additional 600,000
shares of Common Stock of AutoCorp being retained by Merritt and Miller as
hereinabove described, neither Merritt nor Miller have any rights or claim of
any kind to any equity securities of any kind of AutoCorp. Specifically, neither
Merritt nor Miller have any claim to now or hereafter directly or indirectly
own, claim or receive any additional shares of capital stock of AutoCorp by or
through trusts, third parties holdings, options, warrants, rights, convertible
securities, earnouts or any other mechanism or device.. In addition, neither
Merritt nor Miller know of any other person or entity who has any claim to
receive any additional shares of capital stock of AutoCorp by any mechanism or
device, save and except those shares specifically described in this Agreement
(and Additional Documents) and for only the number of shares stated, or as
shown, as registered owners of AutoCorp common stock, on the shareholder list
(the "Shareholder List") dated December 10, 1998, which Shareholder List is
incorporated herein.
2.3 Authorizations. The Merritt Group, and each of them, has the
requisite power and authority to enter into this Agreement, as well all other
Additional Documents. This Agreement and the Additional Documents have been duly
executed and delivered by the Merritt Group and constitute a legal, valid and
binding obligation of the Merritt Group, enforceable against the Merritt Group
in accordance with their terms, except as may be limited by bankruptcy,
reorganization,
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insolvency and similar laws of general application relating to or affecting the
enforcement of rights of creditors.
2.4 Power of Attorney. Each of the Merritt Group hereby names Charles
Norman as their respective attorney-in-fact for the specific and limited purpose
of consummating, completing and implementing this Agreement. To that end, he is
hereby given the authority and direction to execute and deliver all documents
and other writings, including the Additional Documents, and to take any and all
actions which may be necessary or useful in consummating, completing or
implementing this Agreement.
2.5 Consents. Each party hereto may execute, deliver and perform this
Agreement and the transactions contemplated by it, including without limitation,
execution, delivery and performance of the Additional Documents to which each of
them is a party, without the necessity of obtaining any consent, approval,
authorization or waiver or giving any notice or make any filing or declaration.
2.6 Binding Effect. The execution, delivery and performance of this
Agreement and the Additional Documents by any party hereto does not and will not
(a) constitute a violation of any statute, judgment, order, decree or regulation
or rule of any governmental body applicable or relating to the them, or (b)
conflict with, or constitute a breach or default under, or give rise to any
right of termination, cancellation or acceleration under, any term or provision
of any contract, agreement, lease, mortgage, deed of trust, commitment, license,
franchise, permit, authorization or any other instrument or obligation to which
any of them is a party or by which their respective assets are bound, or an
event which with notice, lapse of time, or both, would result in any conflict,
breach, default or right or other than those breaches, defaults or violations
which the any party shall have cured on or before the Closing.
2.7 Litigation, Investigations, Etc. There are no pending or threatened
claims, actions, suits or proceedings, whether in equity or in law, or
governmental or administrative investigations pending, or to the best knowledge
and belief of any party hereto which would have any effect on this Agreement or
the transactions contemplated by this Agreement
2.8 Taxes and Tax Liens. There are no federal, state or local tax liens
or related notices filed against any of CIC, LLCI and the Merritt Group, and
none of CIC, LLCI and the Merritt Group have not been notified of any fact or
circumstance which would give any federal, state or local taxing authority the
right to file any such lien or notice.
2.9 Accuracy of Information. No representation or warranty by CIC, LLCI
and the Merritt Group contained in this Agreement or the Additional Documents,
and no statement contained in any certificate or other instrument delivered or
to be delivered by any of them to AutoCorp or AutoPrime pursuant to this
Agreement or in connection with the transactions contemplated by this
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Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary in order to make the
statements contained in this Agreement not misleading.
2.10 Books and Records. CIC, LLCI and the Merritt Group, and each of
them, represent that each has previously delivered to AutoCorp all AutoCorp
books, records, financial information, corporate documents, and other materials
in their possession or under their control.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF CIC AND LLCI
3.1 General. CIC and LLCI jointly and severally represent and warrant
to AutoCorp and AutoPrime that the representations and warranties set out in
this Article 3 are true and correct on and as of the date of this Agreement.
3.2 Corporate Standing. CIC and LLCI are each corporations duly
organized, validly existing and in good standing under the laws of the State of
Arizona, and each has all requisite corporate power and authority to carry on
its business as the same is now being conducted and to own its property as the
same is now used.
3.3 Authorizations. CIC and LLCI each have all the requisite corporate
power and authority to enter into this Agreement, as well as the Additional
Documents, and to carry out their obligations under this Agreement and the
Additional Documents. This Agreement and the Additional Documents have been duly
authorized, executed and delivered by CIC and LLCI and constitute legal, valid
and binding obligations of CIC and LLCI, enforceable against them in accordance
with their terms, except as may be limited by bankruptcy, reorganization,
insolvency and similar laws of general application relating to or affecting the
enforcement of rights of creditors.
3.4 Litigation, Investigations, Etc. There are no actions, suits,
proceedings or claims filed or, pending or threatened, governmental or
otherwise, against any of the Merritt Group, CIC or LLCI which would prevent the
carrying out of this Agreement or any of the transactions contemplated by this
Agreement or declare the same unlawful or cause the rescision thereof and to the
best knowledge and belief of each of the Merritt Group, CIC and LLCI there is no
basis for any such action, suit, proceeding or claim.
3.5 Conflict with Other Documents. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not violate, with or
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without the giving of notice or the lapse of time, any provision of law, federal
or state or otherwise, applicable to any of the Merritt Group, CIC and LLCI and
will not conflict with, or result in a breach or termination of any provision
of, or constitute a default under, the Articles of Incorporation or Bylaws of
CIC or LLCI, or pursuant to any loan agreement, indenture, mortgage, lease,
contract or other agreement or instrument to which any of the foregoing is a
party or by which any of them or their assets and properties may be bound.
3.6 Consents. No consent, approval, authorization, filing or
declaration of any third party or any governmental authority is required of any
of the Merritt Group, CIC or LLCI in connection with the execution of this
Agreement or the consummation of the transactions contemplated by this
Agreement.
ARTICLE 4
CLOSING DOCUMENTS
4.1 Closing Documents to Purchaser. At the Closing, the Sellers and the
Companies shall deliver or cause to be delivered to the Purchaser the following
instruments and documents, duly executed by the Companies, Sellers or Persons or
entities required by the Purchaser, as the case may be, unless otherwise
indicated:
(a) Stock certificates evidencing the Merritt Stock, duly endorsed for
transfer or with duly executed stock powers attached, and such other documents
as AutoCorp or AutoPrime may reasonably request to effect the transfer and
assignment of the Merritt Stock free and clear of all Liens.
(b) Additional Documents including those described on Exhibit "A"
attached hereto.
(c) All pertinent records, files, documents and papers relating to the
Companies and their operations and businesses required to be delivered to
Purchaser under this Agreement, or later reasonably requested by AutoCorp or
AutoPrime.
(d) Such other instruments and documents relating to the transactions
contemplated by this Agreement as may reasonably be requested by AutoCorp or
AutoPrime.
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ARTICLE 5
RELEASE
Release. The Merritt Group, CIC and LLCI, and each of them hereby
releases, acquits and forever discharges AutoPrime, AutoCorp, and all of their
respective directors, officers, shareholders, affiliates, employees,
professionals, agents, servants and employees and all persons, natural or
corporate, in privity with them, from any and all claims or causes of action of
any kind whatsoever, at common law, statutory, or otherwise, that any of the
foregoing or any of them has or might have, known or unknown, arising prior to
or on the date hereof, or directly or indirectly related to this Transaction, it
being intended to release all such claims of any kind arising prior to the date
hereof which the Merritt Group might have against those hereby released, save
and except only claims directly related to any material breach by AutoPrime or
AutoCorp of their respective contractual obligations under this Agreement and
the Additional Documents.
ARTICLE 6
BROKERS, COUNSEL AND FEES
6.1 Brokers. None of the parties to this Agreement has used a finder or
broker in connection with this Agreement or the transactions contemplated by
this Agreement or agreed to pay a finders fee or brokerage commission or fee, or
any other compensation to any intermediary for acting or serving as a finder,
broker or other intermediary in connection with this transaction.
6.2 General. All parties to this Agreement have each engaged, or had
the opportunity to engage separate legal firms to assist them with this
Agreement and the transactions contemplated by this Agreement. Each party
acknowledges that each has read and fully understands this Agreement and its
legal effect, that each has executed this Agreement freely and without coercion,
and that each has the ability, legal capacity and intention to fully perform all
duties and obligations required under this Agreement and the Additional
Documents.
6.3 Fees. All fees and other related costs incurred in connection with
the authorization and consummation of this Agreement shall be borne solely by
the respective party who incurred them, and the other parties shall have no
liability for such fees and costs, and the party who incurred such fees and
costs shall indemnify and hold harmless the other party against liabilities for
such fees and costs in the manner provided in Article 7.
ARTICLE 7
MISCELLANEOUS
7.1 Issuances of Securities. All shares of securities which are to be
issued pursuant to this Agreement shall only be issued at such time or times and
in such manner as are permissible. under all applicable laws and regulations,
including state and federal securities laws. All parties
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hereto agree to co-operate and use their best efforts to expedite the issuance
of all such securities. The inability or failure to issue securities shall not
affect the consummation of this Agreement which the parties acknowledge is
consummated effective as of December 30, 1998. To the extent that any required
securities are not issued and delivered on or before January 1, 2002, the
parties agree to quantify, in dollars, the value of such unissued securities and
the non-issuing party shall pay the quantified amount to the intended recipient
party. In the event of disagreement as to value, the affected parties shall each
designate an informal arbitrator and the amount in dispute shall be the average
of their respective determinations.
7.2 Further Actions. From time to time, as and when requested by any
party to this Agreement, each party shall 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
consummate and effect the various transactions expressly required to be
performed by any party to this Agreement, including, without limitation, the
Additional Documents..
7.3 Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants in this Agreement shall survive
Closing..
7.4 Waivers and Consents. No waiver of compliance with any term,
provision or condition of this Agreement and no consent provided for in this
Agreement shall be effective unless evidenced by an instrument in writing duly
executed by the party hereto sought to be charged with such waiver or consent.
No waiver of any breach of any representation, warranty or covenant or the term
or provision of this Agreement shall be deemed to be a waiver of any preceding
or succeeding breach of the same or any other representation, warranty,
covenant, term or provision. No extension of time for or consent to the
performance of any obligation or act shall be deemed to be an extension of the
time for or consent to the performance of any other obligation or act.
7.5 Construction and Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of Texas,
regardless of the jurisdiction in which litigation relating to the subject
matter hereof shall be initiated or continued. Venue for any such action shall
be any court of competent jurisdiction of the State of Texas located in Dallas
County, Texas.
7.6 Entire Agreement. This Agreement, together with the attached
Exhibit, the Additional Documents and those documents referred to in the
foregoing sub-paragraph 7.2, contain the entire agreement between the parties
with respect to the transactions contemplated hereby and supersede all prior
agreements, arrangements and understandings among them with respect to the
Transaction. Neither this Agreement nor the Additional Documents may be amended,
modified or changed in any respect except by an instrument in writing signed by
all of the parties hereto. Notwithstanding anything herein to the contrary, any
representation, warranty or disclosure made herein for one purpose shall also be
deemed to be made for all other purposes as are appropriate.
7.7 Third Party Rights. Notwithstanding any other provision of this
Agreement, this Agreement shall not create benefits on behalf of any Person who
is not a party to this Agreement and this Agreement shall be effective only as
between the parties hereto, their successors and permitted assigns.
Master Agreement Page 12
<PAGE>
7.8 Access to Books and Records. After Closing, each party shall afford
any other party and its representatives, at their expense, reasonable access
during normal business hours to all records and books of account of CIC, LLCI,
and the Companies, Voting Trusts I and II and the Exchange Trust (including
without limitation all books and records maintained by any of them prior to
Closing and delivered to another party pursuant to this Agreement) and furnish
each other party and its representatives with copies of any of the foregoing and
all information concerning the business and affairs of each party and its
representatives as it may reasonably request as being needed in the preparation
of its federal income tax returns or its audited or unaudited financial
statements, or for any other reasonable purpose. Prior to destroying any records
which may be relevant to this provision, each party shall notify the others and
allow the others to obtain those records at the other's cost and expense.
7.9 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
7.10 Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
7.11 Legal Fees and Costs. If any party shall breach any provision of
this Agreement, or fail to timely and promptly perform as required hereunder,
the breaching party shall be liable to all other parties for all damages
directly or indirectly arising from or related to such breach, including, as
damages, all attorneys fees, costs and expenses paid or incurred by the
non-breaching party(ies) in the protection, preservation or prosecution of any
rights or benefits directly or indirectly arising under or related to this
Agreement.
7.12 Assignability. This Agreement shall not be assignable by any party
to this Agreement without the prior written consent of AutoCorp and AutoPrime,
and any purported assignment by any party without such prior written consent
shall be void.
7.13 Controlling Document. If there shall be any conflict between the
language or effect of any Additional Document and this Master Agreement, the
terms of this Master Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed on their behalf by a duly authorized officer or
representative, as of the day and year first above written.
AUTOPRIME, INC.
By: /s/ Robert A. Baker
----------------
Robert A. Baker
President
AUTOCORP EQUITIES, INC.
By: /s/ Charles Norman
--------------------
Charles Norman
President
Master Agreement Page 13
<PAGE>
CONSUMER INVESTMENT
CORPORATION
By: /s/ William O. Merritt
----------------------------
Name: William O. Merritt
---------------------------
Title: President
---------------------------
LENDERS LIQUIDATION
CENTERS, INC.
By: /s/ William O. Merritt
----------------------------
Name: William O. Merritt
---------------------------
Title: President
---------------------------
/s/ William O. Merritt
--------------------------------
William O. Merritt
/s/ Dennis W. Miller
--------------------------------
Dennis W. Miller
/s/ Andrew J. Kacic
--------------------------------
Andrew J. Kacic
Excludes from release paragraph;
Financial Consulting Agreement
dated 6/18/98 plus approximately
1.5 months of wages and
consulting fees.
/s/ Wayne McLaws
--------------------------------
Wayne McLaws
/s/ Vincent W. Bustillo
--------------------------------
Vincent W. Bustillo
/s/ Efrain Diaz
---------------------------------
Efrain Diaz
Master Agreement Page 14
UNCONDITIONAL TENDER OF AUTOCORP
PREFERRED AND COMMON STOCK
This Unconditional Tender of AutoCorp Preferred and Common Stock
("Tender") is made and entered into by and between AutoCorp Equities, Inc.
("AutoCorp") and AutoPrime, Inc.
("AutoPrime), effective December 30, 1998.
RECITALS:
A. As a part of the "Transaction" described in a certain "Master
Agreement" of even date, to which reference is hereby made,
AutoPrime shall release AutoCorp from $1,787,709.11 of
"repurchase obligation".
B. As a part of the same Master Agreement, AutoPrime shall
release AutoCorp from $2,000,000.00 of additional "repurchase
obligations" owed by Consumer Investment Company ("CIC") and
Lenders Liability Company, Inc. ("LLCI") to AutoPrime and
guaranteed by AutoCorp.
C. As an adjunct to the Transaction, AutoCorp shall release
AutoCorp from $125,000.00 of principal indebtedness and
$137,044 of accrued interest due to AutoPrime on a certain
$3,000,000.00 promissory note executed by AutoCorp, CIC and
LLCI (defined in paragraph 3, below) and dated effective
October 31, 1997.
D. In consideration for such release, AutoCorp has agreed to a
future issue and delivery of certain of its Series A Preferred
Stock and Common Stock to AutoPrime, subject to this Tender.
TENDER:
In consideration of the premises, and the mutual agreements and
covenants of the parties hereto, the parties agree as follows:
1. AutoPrime shall, and does hereby, release AutoCorp from the
three indebtednesses described in the foregoing Recitals A, B,
and C and shall contemporaneously execute such release
documents as may be reasonably requested by AutoCorp.
2. In exchange for such releases, AutoCorp hereby unconditionally
tenders to AutoPrime the following shares of its authorized
Series A Preferred and Common Stock (collectively, the
"Shares"):
(a) 1,787,709 shares of Series A Preferred Stock (re: Recital
A).
(b) 1,290,776 shares of Series A Preferred Stock and
1,091,113 shares of Common Stock (re: Recital B).
(c) 262,044 shares of Series A Preferred Stock (re: Recital
C).
<PAGE>
3. With respect to the 262,044 shares of Series A Preferred Stock
described in paragraph 2,c of this Tender, those shares are
the subject of a certain letter dated December 30, 1998, from
AutoPrime's counsel, L. E. Creel, III, to William O. Merritt,
President of Consumer Investment Corporation ("CIC") and of
Lenders Liability Company, Inc. ("LLCI"). The described
262,044 shares are a part of the 3,500,000 shares of Series A
Preferred Stock pledged by CIC and LLCI to AutoPrime on
December 30, 1998, as a part of the Transaction. The 3,500,000
shares are held by AutoPrime which, as a part of this Tender,
does hereby instruct AutoCorp to segregate such 262,044 shares
from the 3,500,000 of Series A Preferred Stock shares so
pledged, and hold the same for AutoPrime's benefit, pursuant
to this Tender.
4. On or before December 31, 1999, but not before May 31, 1999,
AutoPrime shall accept the tender of all of the Shares if
AutoPrime shall have received approvals, satisfactory to
AutoPrime's counsel, from the Office of Thrift Supervision
and/or all other governmental regulatory agencies having
authority over and supervision of entities (like AutoPrime)
which are controlled by regulated financial institutions, with
respect to the ownership by such entities of securities issued
by public or private corporations (the "Approval").
5. Neither AutoPrime, nor its designee, may accept tender of all
or part of the Shares until such time, after May 31, 1999, as
(i) the Approval is received, or (ii) such Approval is not
legally required, or (iii) AutoPrime, in its sole discretion,
may designate.
6. AutoCorp's tender of the Shares is unconditional and without
reservation. Acceptance of such tender by AutoPrime, and the
issuance by AutoCorp of securities to AutoPrime, is controlled
by this Tender.
7. If, by December 31, 1999, AutoPrime has not accepted any part
or all of the securities tendered Shares, or if AutoCorp, upon
AutoPrime's acceptance of AutoCorp's tender, or if AutoCorp
fails or refuses to issue and deliver any part or all of the
tendered Shares, then AutoPrime's release of AutoCorp debt
shall be rescinded by AutoPrime to the extent (pro rata by
number of shares and by category) that tendered Shares are not
timely received by AutoPrime. All of such unreleased debt
shall, upon written demand by AutoPrime to AutoCorp, become
immediately due and payable, along with interest thereon at
the rate of 8% per annum from December 31, 1998, until paid
in full.
8. This Tender is binding upon the parties hereto and each of
their successors and assigns; is not assignable; shall be
construed and interpreted under the laws of the State of
Texas; and shall be considered and enforced only by a court of
competent jurisdiction sitting in Dallas County, Texas, the
county agreed to be the sole venue for all issues and disputes
arising hereunder.
<PAGE>
9. If any party shall breach any provision of this Agreement, or
fail to timely and promptly perform as required hereunder, the
breaching party shall be liable to all other parties for all
damages directly or indirectly arising from or related to such
breach, including, as damages, all attorneys fees, costs and
expenses paid or incurred by the non-breaching party(ies) for
the protection, preservation or prosecution of any rights or
benefits directly or indirectly arising under or related to
this Agreement.
Executed effective December 30, 1998.
AUTOCORP EQUITIES, INC.
By: /s/ Charles Norman,
--------------------
Charles Norman,
President
AUTOPRIME, INC.
By: /s/ Robert A. Baker,
---------------------
Robert A. Baker,
President
AGREEMENT TO ISSUE ADDITIONAL PREFERRED STOCK
This Agreement to Issue Additional Preferred Stock ("Agreement") is
made and entered into by and between AutoCorp Equities, Inc. ("AutoCorp"),
AutoPrime, Inc. ("AutoPrime"), Consumer Investment Company ("CIC") and Lenders
Liquidation Center, Inc. ("LLCI"), effective on the date shown below.
RECITALS
A. By separate agreement and for valuable consideration, AutoCorp
has issued and delivered to Consumer Investment Corporation
("CIC") and Lenders Liquidation Centers, Inc. ("LLCI"),
3,500,000 shares of Series A Non-Cumulative Convertible
Preferred Stock of AutoCorp (the "Series A Preferred Stock").
B. By separate agreement and for valuable consideration, CIC and
LLCI have pledged the Series A Preferred Stock as collateral
to secure various obligations owed by CIC and LLCI to
AutoPrime, both of them representing to AutoPrime that the
value of the Preferred Stock does not now, nor shall it later,
have value of less than $3,500,000.00.
C. AutoPrime, relying on CIC/LLCI's representation of value of
not less than $3,500,000.00, has agreed not to seek immediate
payment of various obligations presently owed by CIC and LLCI
to AutoPrime.
D. Contemporaneously, and as a part of a contemporaneous
transaction involving AutoCorp, AutoPrime, CIC, LLCI and
others detailed in a certain Master Agreement of even date
(the "Transaction") and in order to induce AutoPrime (i) to
make certain concessions as a part of the overall
transaction, (ii) to continue the extension of credit to CIC
and LLCI, and (iii) to continue the credit risks arising
from transactions between CIC and LLCI and AutoCorp, CIC and
LLCI, jointly and severally have executed, delivered, and
agreed to perform promptly and consistently with, this
Agreement.
AGREEMENT
Therefore, for valuable consideration, it is agreed as follows:
1. If at any time prior to January 1, 2002, the fair market value
of the Preferred Stock shall become less than $3,500,000.00,
AutoCorp shall issue to CIC/LLCI, jointly, and CIC/LLCI shall
pledge to AutoPrime as additional collateral, such number of
shares of the Series A Preferred Stock of AutoCorp as shall be
required from time to time to cause the fair market value of
the Series A Preferred Stock and all newly issued shares of
Series A Preferred Stock to maintain an aggregate value of not
less than $3,500,000.00 at all times during such period of
time.
AGREEMENT TO ISSUE ADDITIONAL PREFERRED STOCK - Page 1
<PAGE>
2. The number of newly issued shares of AutoCorp Series A
Preferred Stock, as required from time to time, to maintain a
fair market value of all collateral of $3,500,000.00, shall be
that number of shares agreed upon between AutoCorp and
AutoPrime. In the event of any disagreement, the number of
shares shall be that number of shares required by AutoPrime,
taking into account then existing market conditions pertaining
to the preferred and common stock of AutoCorp and the then
existing financial condition of AutoCorp.
3. Newly issued shares of AutoCorp Series A Preferred Stock shall
be issued and delivered to AutoPrime, at AutoCorp's sole cost
and expense, promptly following AutoCorp's receipt of each
written demand for such issuance and delivery from AutoPrime,
with copies of each such demand to be delivered to both CIC
and LLCI.
4. AutoCorp hereby covenants not to issue any preferred stock of
any kind to any person or entity other than CIC/LLCI, for the
benefit of AutoPrime, in amounts required by this Agreement
until after February 1, 2002.
5. This Agreement is binding upon the parties hereto, their
successors and assigns; may not be assigned in whole or in
part without the prior written consent of AutoPrime; shall be
construed under the laws of the State of Nevada; and, with
respect to any disputes arising hereunder, shall be
interpreted, construed and enforced only by a court of
competent jurisdiction located in Dallas, Dallas County,
Texas.
6. If any party shall breach any provision of this Agreement, or
fail to timely and promptly perform as required hereunder, the
breaching party shall be liable to all other parties for all
damages directly arising from or related or indirectly to such
breach, including, as damages, all attorneys fees, costs and
expenses paid or incurred by the non-breaching party(ies) in
the protection, preservation or prosecution of any rights or
benefits directly or indirectly arising under or related to
this Agreement.
Executed this 30th day of December, 1998.
CONSUMER INVESTMENT CORPORATION
By: /s/ William O. Merritt
----------------------------
William O. Merritt
LENDERS LIQUIDATORS CENTER, INC.
By: /s/ William O. Merritt
----------------------------
William O. Merritt
AUTOCORP EQUITIES, INC.
By: /s/ Charles Norman
----------------------------
Charles Norman
AUTOPRIME, INC.
By: /s/ Robert A. Baker
----------------------------
Robert A. Baker
AGREEMENT TO ISSUE ADDITIONAL PREFERRED STOCK- Page 2
EXHIBIT 2.4 TO FORM 8-K
PLEDGE AGREEMENT
This Pledge Agreement (the "Pledge Agreement") dated as of the 30th day
of December, 1998, is made by and between Consumer Investment Corporation, an
Arizona corporation, and Lenders Liquidation Centers, Inc., an Arizona
corporation (collectively, the "Debtor") and AutoPrime, Inc., a Delaware
corporation (the "Secured Party").
RECITALS:
A. Debtor is a co-Maker of the following promissory notes (the
"Promissory Notes"):
1. That certain Promissory Note effective October 31, 1997, in
the principal amount of $100,000, wherein the Makers are AutoCorp
Equities, Inc., Lenders Liquidation Centers, Inc. and Consumer
Investment Corporation, and the Payee is AutoPrime, Inc.
2. That certain Promissory Note effective October 31, 1997, in
the principal amount of $450,000, wherein the Makers are AutoCorp
Equities, Inc., Lenders Liquidation Centers, Inc. and Consumer
Investment Corporation, and the Payee is AutoPrime, Inc.
3. That certain Promissory Note effective October 31, 1997, in
the principal amount of $3,000,000, wherein the Makers are
AutoCorp Equities, Inc., Lenders Liquidation Centers, Inc. and
Consumer Investment Corporation, and the Payee is AutoPrime, Inc.
B. Debtor has various other debts and obligations (the "Other
Debts and Obligations") to Secured Party.
C. Debtor, Secured Party and others have this day entered into
a transaction detailed in a certain Master Agreement ("Master
Agreement") of even date (the "Transaction") pursuant to which
Debtor has become the registered owner of, and possessor of
certificates evidencing, the following securities ( collectively
the "Securities"):
1. 3,500,000 shares of Series A Non-Cumulative Convertible
Preferred Stock of AutoCorp Equities, Inc., a Nevada
corporation; and
<PAGE>
2. 1,425,887 shares of Beneficial Interest issued by Charles
Norman, Trustee under Exchange Trust Agreement dated
December 30, 1998, (the "Exchange Trust Agreement") for
Exchange Trust of AutoCorp Equities, Inc.
D. As a condition to entering into the transactions, the Secured
Party requires that Debtor pledge to Secured Party and grant a
security interest to Secured Party in the certificates evidencing
the Securities, to secure the payment and performance of Debtor's
obligations contained in the Promissory Notes and the Other Debts
and Obligations.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged and confessed, the parties hereto agree as follows:
1. The Debtor hereby pledges to and grants to the Secured Party a
security interest in and to any and all present or future rights of the Debtor
in and to all of the following rights, interests, and property (all of the
following being in this Pledge Agreement sometimes called "Collateral"): (a) the
Securities, and any and all substitutes, replacements, accessions, attachments,
increases, revisions, or additions thereto; and (b) any and all proceeds arising
from or by virtue of the sale or other disposition of, or from the collection
of, the Collateral described in (a) preceding.
2. This Pledge Agreement is being executed and delivered to secure the
security interest herein granted (the "Security Interest"), which shall secure
(a) the payment and performance by Debtor of the Promissory Notes and the Other
Debts and Obligations, and (b) the payment or performance of any and all
indebtedness, liabilities and obligations of the Debtor to the Secured Party at
any time arising under the terms of the Promissory Notes, the Other Debts and
Obligations, this Pledge Agreement, and any other agreement securing or executed
in connection with the foregoing (all of such debts, indebtedness, liabilities
and duties) referred to in (a) and (b) of this paragraph are hereinafter
collectively referred to as the "Obligation."
3. The Collateral and the Security Interest shall only be released
upon full and complete discharge and satisfaction of the Obligation.
4. Debtor represents and warrants to Secured Party that: (a) Debtor
owns the Collateral and has the authority to grant this Security Interest; (b)
the Security Interest is a first, prior, and exclusive security interest in and
to all of the Collateral; (c) no other person or entity is an owner of the
Collateral; (d) no other presently effective financing statement covering the
Collateral, or any part thereof, has been filed except in favor of Secured
Party; (e) no dispute, right of set-off, counterclaim, or defense exists with
respect to any part of the Collateral; and (f) the representations and
warranties made by Debtor in the Master Agreement are incorporated herein by
reference as though set forth herein verbatim, and such representations and
warranties are true and correct.
<PAGE>
5. The Collateral has been (and any other such instruments at any time
constituting part of the Collateral will be) delivered to Secured Party,
endorsed in bearer form, to be held by Secured Party in accordance with the
terms and provisions hereof. The delivery at any time by any Debtor to Secured
Party of any additional Collateral to be covered by this Pledge Agreement shall
constitute a representation and warranty by Debtor of the matters set forth in
Paragraph 4 hereof, as of that time with respect to the additional Collateral.
6. Debtor will defend the Collateral against all claims and demands
adverse to Secured Party's interest in it and will keep it free from all liens
except those for taxes not yet due and from all security interests except this
one.
7. Debtor will pay all expenses incurred by Secured Party in
obtaining, preserving, perfecting, defending, and enforcing this Security
Interest or the Collateral and in enforcing its rights under this Pledge
Agreement, and the Voting Trust Agreement. Expenses for which Debtor is liable
include, but are not limited to, taxes, assessments, and other expenses
enumerated in Paragraph 13 of this Pledge Agreement. These expenses will bear
interest from the dates of payments at the rate of ten percent (10 %) per annum
and Debtor will pay Secured Party such expenses and interest on demand at the
Secured Party's address for notice, determined in accordance with Paragraph 20
of this Pledge Agreement. These expenses and interest will become part of the
Obligation and shall be secured by this Pledge Agreement.
8. Debtor will sign any papers that Secured Party considers necessary
to obtain, maintain, and perfect this Security Interest or to comply with any
relevant law.
9. Debtor will immediately notify Secured Party of any material change
in the Collateral; change in Debtor's name, address, or location; change in any
matter warranted or represented in this Pledge Agreement; any change that may
affect this Security Interest; and any Default.
10. Debtor will not sell, transfer, or encumber any of the Collateral
without the prior written consent of Secured Party.
11.a Secured Party may exercise the following rights and remedies
either before or after default: (a) take control of any proceeds of the
Collateral; (b) take control of any funds generated by the Collateral; and (c)
demand, collect, convert, redeem, settle, compromise, receipt for, realize on,
sue for, and adjust the Collateral either in Secured Party's or Debtor's name,
as Secured Party desires.
11.b In addition to the rights and remedies set forth in the foregoing
sub-paragraph 11.a, at any time, with or without notice to Debtor, Secured
Party, may at its sole option release any part or all of the Collateral from the
Security Interest, take any part or all of such collateral in its name and for
its sole benefit, and apply such collateral, on the basis of $1.00 per share for
each share so taken, to any outstanding Obligtion(s) of any kind, whether or not
the same may be due.
<PAGE>
12. Debtor shall pay, prior to delinquency, all taxes, charges, liens
and assessments against the Collateral, and upon Debtor's failure to do so,
Secured Party at its option may pay any of these and shall be sole judge of the
legality or validity of these obligations and the amount necessary to discharge
them.
13. If Debtor fails to perform any part of the Obligation including,
without limitation, Debtor's Obligations under this Pledge Agreement, Secured
Party may, in its sole discretion, but shall not be obligated to, perform such
part of the Obligation for Debtor and be reimbursed by Debtor on demand at the
Secured Party's address for notice, determined in accordance with Paragraph 20
of this Pledge Agreement, for any sums so paid, including attorney's fees, court
costs, other legal expenses, agent's fees and commissions, plus interest on
those sums from the dates of payment at the rate of ten percent (10 %) per
annum. The sum to be reimbursed shall become part of the Obligation and shall be
secured by this Pledge Agreement.
14. As used herein, the term "Default" means (a) Debtor fails to pay
or perform in a timely manner any portion of the Obligation; (b) any material
warranty, representation or statement made or furnished to the Secured Party by
or in behalf of the Debtor proves to be false or untrue; (c) the sale, loss,
theft, destruction, encumbrance or transfer of any of the Collateral in
violation hereof, or substantial damage to any of the Collateral; (d) the death
of the Debtor; (e) a receiver is appointed for Debtor or any of the Collateral;
(f) the Collateral is assigned for the benefit of creditors or, to the extent
permitted by law, if bankruptcy or insolvency proceedings commence against or by
any of the following parties: Debtor; any partnership of which Debtor is a
general partner; and any maker, drawer, acceptor, endorser, guarantor, surety,
accommodation party, or other person liable on or for any part of the
Obligation; (g) the filing of any financing statement with regard to the
Collateral, other than relating to the Security Interests; (h) the attachment to
the Collateral of any lien or security interest other than the Security
Interests; or (i) the breach of any of the terms, covenants, agreements,
conditions, or provisions of any portion of the Obligation, which are
incorporated herein by reference the same as if set forth herein verbatim, which
terms, covenants, agreements, conditions, and provisions shall continue in full
force and effect hereunder, until the Obligation is paid or performed in full.
15. Upon the occurrence of a Default, in addition to any and all other
rights and remedies which Secured Party may then have hereunder, under the
Uniform Commercial Code of the State of Texas or of any other pertinent
jurisdiction (the "Code"), or otherwise, Secured Party may, at its option: (a)
enter upon the premises where any of the Collateral not in the possession of
Secured Party or its agent is located and take possession thereof and remove the
same, with or without judicial process; (b) reduce its claim to judgement or
foreclosure or otherwise enforce the Security Interests, in whole or in part, by
any available judicial procedure; (c) after notification, if any, provided for
herein, sell, lease, or otherwise dispose of, at the office of Secured Party, on
the premises of Debtor, or elsewhere, all or any part of the Collateral; Secured
Party will give Debtor reasonable notice of any public sale of the Collateral or
of a time after which it may be otherwise disposed of without further notice to
Debtor; in this event, notice will be deemed reasonable if it is mailed, postage
prepaid, to Debtor at the address specified in this Pledge Agreement at least
ten days before any public sale or ten days before the time when the Collateral
may be otherwise disposed of without further notice to Debtor; (d) at its
discretion, retain the Collateral in satisfaction of the Obligation whenever the
circumstances are such that Secured Party is entitled to do so under the Code or
otherwise; and (e) exercise any and all other rights, remedies, and privileges
it may have under the Code, the Master Agreement, the Voting Trust Agreement,
this Pledge Agreement, or any other documents executed in connection with the
Transaction.
<PAGE>
16. Any and all proceeds ever received by Secured Party from any sale,
or other disposition of the Collateral, or any part thereof, or the exercise of
any other remedy pursuant hereto shall be applied by Secured Party to the
Obligation as contemplated by the Master Agreement, this Pledge Agreement, and
the Voting Trust Agreement, and, if such proceeds are not sufficient to pay the
Obligation in full, Debtor shall remain liable to Secured Party for the
deficiency, as contemplated in the Master Agreement
17. Reasonable notification of the time and place of any public sale
of the Collateral, or reasonable notification of the time after which any
private sale or other intended disposition of the Collateral is to be made,
shall be sent to Debtor and to any other person entitled under the Code to
notice. It is agreed that notice sent or given not less than ten calendar days
prior to the taking of the action to which the notice relates, is reasonable
notification and notice for the purposes of this Paragraph.
18. Because of the Securities Act of 1933, as amended, or other laws
or regulations, there may be legal restrictions or limitations affecting the
Secured Party in any attempts to dispose of certain portions of the Collateral
in the enforcement of its rights and remedies hereunder. For these reasons, if,
in the opinion of counsel to the Secured Party, Rule 144(k) promulgated by the
United States Securities and Exchange Commission under the Securities Act of
1933 is not available, the Secured Party is hereby authorized by Debtor, but not
obligated, in the event of any Default hereunder giving rise to the Secured
Party's rights to sell or otherwise dispose of the Collateral, to sell all or
any part of the Collateral at private sale, subject to investment letter or in
any other manner which will not require the Collateral, or any part thereof, to
be registered in accordance with the Securities Act of 1933, as amended, or the
rules and regulations promulgated thereunder, or any other law or regulation, at
the best price reasonably obtainable by the Secured Party at any such private
sale or other disposition in the manner mentioned above. The Secured Party is
also hereby authorized by Debtor, but not obligated, to take such actions, give
such notices, obtain such consents, and do such other things as the Secured
Party may deem required or appropriate in the event of a sale or disposition of
any of the Collateral. Debtor clearly understands that the Secured Party may in
its discretion approach a restricted number of potential purchasers and that a
sale under such circumstances may yield a lower price for the Collateral, or any
part or parts thereof, than would otherwise be obtainable if the Collateral were
registered and sold in the open market. Secured Party shall have the right to
rely upon the advice and opinion of any member firm of a national securities
exchange as to the best price reasonably obtainable upon a private sale of any
stock constituting part of the Collateral, and such reliance shall be conclusive
evidence that the Secured Party handled such matter in a commercially reasonable
manner under the Code.
<PAGE>
19. Foreclosure of this Security Interest by suit does not limit
Secured Party's remedies, including the right to sell the Collateral under the
terms of this Pledge Agreement. All remedies of Secured Party may be exercised
at the same or different times, and no remedy shall be a defense to any other.
Secured Party's rights and remedies include all those granted by law or
otherwise, in addition to those specified in this Pledge Agreement.
20. If given to a party to this Pledge Agreement, any notice, demand,
waiver or consent required or permitted under this Pledge Agreement shall be in
writing and shall be given by personal delivery, courier, overnight service,
facsimile transmission, prepaid telegram or prepaid registered or certified
mail, with return receipt requested, addressed to the mailing address set forth
at the beginning of this Pledge Agreement.
The date of any such notice and of service thereof shall be deemed to
be the day of its receipt by the party to whom it is addressed. Any party hereto
may at any time and from time to time change its address for the receipt of
notice pursuant to this Pledge Agreement by giving notice to the other parties
hereto in the manner set forth herein for the giving of notice.
21. This Pledge Agreement shall be binding upon and inure to the
benefit of Debtor and Secured Party, and their respective successors and
assigns.
22. Assignment of any part of the Obligation and delivery by Secured
Party of any part of the Collateral will fully discharge Secured Party from
responsibility for that part of the Collateral. If Debtor is more than one, all
their representations, warranties, and agreements are joint and several.
Debtor's obligations under this Pledge Agreement shall bind Debtor's personal
representatives, successors, and assigns.
23. Neither delay in exercise nor partial exercise of any of Secured
Party's remedies or rights shall waive further exercise of those remedies or
rights. Secured Party's failure to exercise remedies or rights does not waive
subsequent exercise of those remedies or rights. Secured Party's waiver of any
default does not waive further default. Secured Party's waiver of any right in
this agreement or of any default is binding only if it is in writing. Secured
Party may remedy any default without waiving it.
24. No provisions of this Pledge Agreement shall be modified or
limited except by written agreement.
25. The unenforceability of any provision of this Pledge Agreement
will not affect the enforceability or validity of any other provision.
<PAGE>
26. This Pledge Agreement will be construed according to Texas laws.
27. This Pledge Agreement is to be performed in the county of Secured
Party's mailing address.
28. If the Collateral is sold after default, recitals in the document
of sale or transfer will be prima facie evidence of their truth, and all
prerequisites to the sale specified by this Pledge Agreement and by Chapter 9 of
the Texas Business and Commerce Code will be presumed satisfied.
29. When the context requires, singular nouns and pronouns include the
plural, and pronouns in the masculine gender shall be construed as feminine or
neuter as the occasion may require.
30. This Security Interest shall neither affect nor be affected by any
other security for any of the Obligation. Neither extensions of any of the
Obligation nor releases of any of the Collateral will affect the priority or
validity of this Security Interest with reference to any third person.
31. Debtor hereby appoints Secured Party as Debtor's attorney-in-fact
to do any and every act that Debtor is obligated by this Pledge Agreement to do,
and to exercise all rights of Debtor in the Collateral, and to execute any and
all papers and instruments to do all other things necessary to preserve and
protect the Collateral and to protect Secured Party's security interest in the
Collateral. Debtor's appointment of Secured Party as Debtor's attorney-in-fact
is coupled with an interest and will survive any disability of Debtor.
DEBTOR:
Consumers Investment Corporation
By:/s/ William O. Merritt
--------------------------------
Name: William O. Merritt
Title: President
LENDERS LIQUIDATION CENTER, INC.
By:/s/ William O. Merritt
---------------------------------
Name: William O. Merritt
Title: President
SECURED PARTY:
AUTOPRIME, INC.
By:/s/ Robert A. Baker
----------------------------------------------
Robert A. Baker
President and Chief Executive Officer
EXHIBIT 2.5 TO FORM 8-K
PLEDGE AGREEMENT
This Pledge Agreement (the "Pledge Agreement") dated as of the 30th day
of December, 1998, is made by and between William O. Merritt and Dennis W.
Miller (collectively, the "Debtor") and AutoPrime, Inc., a Delaware corporation
(the "Secured Party").
RECITALS:
A. Debtor, Consumer Investment Corporation ("CIC") and Lenders
Liquidation Centers, Inc. ("LLCI") have various debts and
obligations to Secured Party.
B. Debtor has guaranteed to Secured Party various debts and
obligations of CIC and LLCI to Secured Party.
C. Debtor has made certain representations and warranties to Secured
Party in that certain Master Agreement of even date.
D. The debts, obligations, guaranties, representations and
warranties described in A, B and C above, and in paragraph 2,
below, are collectively referred to in this Pledge Agreement as
the "Obligations".
E. Debtor, Secured Party and others have entered into a "Master
Agreement" of even date and consummated certain transactions (the
"Transactions") pursuant to which Debtor has become the
registered owner and possessor of certificates evidencing all of
the outstanding stock of CIC, LLCI and all affiliated
corporations of CIC and LLCI, save and except only the
outstanding stock of AutoCorp Equities, Inc. (the "Securities")
F. As a condition to entering into the Transaction, the Secured
Party requires that Debtor pledge to Secured Party and grant a
security interest to Secured Party in the certificates evidencing
the Securities, to secure the payment and performance of the
Obligations.
<PAGE>
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged and confessed, the parties hereto agree as follows:
1. The Debtor hereby pledges and grants to the Secured Party a security
interest in and to any and all present or future rights of the Debtor in and to
all of the following rights, interests, and property (all of the following being
in this Pledge Agreement sometimes called "Collateral"): (a) the Securities, and
any and all substitutes, replacements, accessions, attachments, increases,
revisions, or additions thereto; and (b) any and all proceeds arising from or by
virtue of the sale or other disposition of, or from the collection of, the
Collateral described in (a) preceding.
2. This Pledge Agreement is being executed and delivered to secure the
security interest herein granted (the "Security Interest"), which shall secure
the payment and performance by Debtor of the Obligation, including, without
limitations, the payment or performance of any and all indebtedness, liabilities
and obligations of the Debtor to the Secured Party, now or hereafter at any time
arising in favor of Secured Party in connection with any transaction or
relationship involving Debtor and Secured Party, this Pledge Agreement, and any
other agreement securing or executed in connection with the foregoing.
3. The Collateral and the Security Interest shall only be released upon
full and complete discharge and satisfaction of the Obligations.
4. Debtor represents and warrants to Secured Party that: (a) Debtor
owns the Collateral and has the authority to grant this Security Interest; (b)
the Security Interest is a first, prior, and exclusive security interest in and
to all of the Collateral; (c) no other person or entity is an owner of the
Collateral; (d) no other presently effective financing statement covering the
Collateral, or any part thereof, has been filed except in favor of Secured
Party; (e) no dispute, right of set-off, counterclaim, or defense exists with
respect to any part of the Collateral; and (f) the representations and
warranties made by Debtor and by the Merritt Group in the Master Agreement are
incorporated herein by reference as though set forth herein verbatim, and such
representations and warranties are true and correct.
5. The Collateral has been (and any other such instruments at any time
constituting part of the Collateral will be) delivered to Secured Party,
endorsed in bearer form, to be held by Secured Party in accordance with the
terms and provisions hereof. The delivery at any time by any Debtor to Secured
Party of any additional Collateral to be covered by this Pledge Agreement shall
constitute a representation and warranty by Debtor of the matters set forth in
Paragraph 4 hereof, as of that time with respect to the additional Collateral.
<PAGE>
6. Debtor will defend the Collateral against all claims and demands
adverse to Secured Party's interest in it and will keep it free from all liens
except those for taxes not yet due and from all security interests except this
one.
7. Debtor will pay all expenses incurred by Secured Party in obtaining,
preserving, perfecting, defending, and enforcing this Security Interest or the
Collateral and in enforcing its rights under this Pledge Agreement. Expenses for
which Debtor is liable include, but are not limited to, taxes, assessments, and
other expenses enumerated in Paragraph 13 of this Pledge Agreement. These
expenses will bear interest from the dates of payments at the rate of ten
percent (10 %) per annum and Debtor will pay Secured Party such expenses and
interest on demand at the Secured Party's address for notice, determined in
accordance with Paragraph 20 of this Pledge Agreement. These expenses and
interest will become part of the Obligation and shall be secured by this Pledge
Agreement.
8. Debtor will sign any papers that Secured Party considers necessary
to obtain, maintain, and perfect this Security Interest or to comply with any
relevant law.
9. Debtor will immediately notify Secured Party of any material change
in the Collateral; change in Debtor's name, address, or location; change in any
matter warranted or represented in this Pledge Agreement; any change that may
affect this Security Interest; and any Default.
10. Debtor will not sell, transfer, or encumber any of the Collateral
without the prior written consent of Secured Party.
11.a Secured Party may exercise the following rights and remedies
either before or after default: (a) take control of any proceeds of the
Collateral; (b) take control of any funds generated by the Collateral; and (c)
demand, collect, convert, redeem, settle, compromise, receipt for, realize on,
sue for, and adjust the Collateral either in Secured Party's or Debtor's name,
as Secured Party desires.
11.b In addition to the rights and remedies set forth in the foregoing
sub-paragraph 11.a, at any time, with or without notice to Debtor, Secured
Party, may at its sole option release any part or all of the Collateral from the
Security Interest, take any part or all of such collateral in its name and for
its sole benefit, and apply such collateral, on the basis of $1.00 per share for
each share so taken, to any outstanding Obligtion(s) of any kind, whether or not
the same may be due.
<PAGE>
12. Debtor shall pay, prior to delinquency, all taxes, charges, liens
and assessments against the Collateral, and upon Debtor's failure to do so,
Secured Party at its option may pay any of these and shall be sole judge of the
legality or validity of these obligations and the amount necessary to discharge
them.
13. If Debtor fails to perform any part of the Obligations including,
without limitation, Debtor's duties, responsibilities and obligations under this
Pledge Agreement, Secured Party may, in its sole discretion, but shall not be
obligated to, perform such part of the Obligations for Debtor and be reimbursed
by Debtor on demand at the Secured Party's principal place of business for
notice, determined in accordance with Paragraph 20 of this Pledge Agreement, for
any sums so paid, including attorney's fees, court costs, other legal expenses,
agent's fees and commissions, plus interest on those sums from the dates of
payment at the rate of ten percent (10 %) per annum. The sum to be reimbursed
shall become part of the Obligations and shall be secured by this Pledge
Agreement.
14. As used herein, the term "Default" means (a) Debtor fails to pay or
perform in a timely manner any portion of the Obligations; (b) any material
warranty, representation or statement made or furnished to the Secured Party by
or in behalf of the Debtor proves to be false or untrue; (c) the sale, loss,
theft, destruction, encumbrance or transfer of any of the Collateral in
violation hereof, or substantial damage to any of the Collateral; (d) a receiver
is appointed for Debtor or any of the Collateral; (e) the Collateral is assigned
for the benefit of creditors or, to the extent permitted by law, if bankruptcy
or insolvency proceedings commence against or by any of the following parties:
Debtor; any partnership or other entity in which the Debtor has any interest;
and any maker, drawer, acceptor, endorser, guarantor, surety, accommodation
party, or other person liable on or for any part of the Obligations; (f) the
filing of any financing statement with regard to the Collateral, other than
relating to the Security Interests; (g) the attachment to the Collateral of any
lien or security interest other than the Security Interests; or (h) the breach
of any of the terms, covenants, agreements, conditions, or provisions of any
portion of the Obligations, which are incorporated herein by reference the same
as if set forth herein verbatim, which terms, covenants, agreements, conditions,
and provisions shall continue in full force and effect hereunder, until the
Obligations is paid or performed in full, or (i) the death of the Debtor, or
either of them.
<PAGE>
15. Upon the occurrence of a Default, in addition to any and all other
rights and remedies which Secured Party may then have hereunder, under the
Uniform Commercial Code of the State of Texas (the "Code"), or otherwise,
Secured Party may, at its option: (a) enter upon the premises where any of the
Collateral not in the possession of Secured Party or its agent is located and
take possession thereof and remove the same, with or without judicial process;
(b) reduce its claim to judgement or foreclosure or otherwise enforce the
Security Interests, in whole or in part, by any available judicial procedure;
(c) after notification, if any, provided for herein, sell, lease, or otherwise
dispose of, at the office of Secured Party, on the premises of Debtor, or
elsewhere, all or any part of the Collateral; Secured Party will give Debtor
reasonable notice of any public sale of the Collateral or of a time after which
it may be otherwise disposed of without further notice to Debtor; in this event,
notice will be deemed reasonable if it is mailed, postage prepaid, to Debtor at
the address specified in this Pledge Agreement at least ten (10) days before any
public sale or ten days before the time when the Collateral may be otherwise
disposed of without further notice to Debtor; (d) at its discretion, retain the
Collateral in satisfaction of the Obligation whenever the circumstances are such
that Secured Party is entitled to do so under the Code or otherwise; and (e)
exercise any and all other rights, remedies, and privileges it may have under
the Code, the Obligations, the Master Agreement, this Pledge Agreement, or any
other documents executed in connection with the Master Agreement, including the
Additional Documents referred to therein..
16. Any and all proceeds ever received by Secured Party from any sale,
or other disposition of the Collateral, or any part thereof, or the exercise of
any other remedy pursuant hereto shall be applied by Secured Party to the
Obligations as provided in this Pledge Agreement and, if such proceeds are not
sufficient to pay the Obligations in full, Debtor shall remain liable to Secured
Party for the deficiency.
17. Reasonable notification of the time and place of any public sale of
the Collateral, or reasonable notification of the time after which any private
sale or other intended disposition of the Collateral is to be made, shall be
sent to Debtor at the Debtor's ddress shown below. It is agreed that notice sent
or given not less than ten (10) calendar days prior to the taking of the action
to which the notice relates, is reasonable notification and notice for the
purposes of this Paragraph.
18. Because of the Securities Act of 1933, as amended, or other laws or
regulations, there may be legal restrictions or limitations affecting the
Secured Party in any attempts to dispose of certain portions of the Collateral
in the enforcement of its rights and remedies hereunder. For these reasons, if,
in the opinion of counsel to the Secured Party, Rule 144(k) promulgated by the
United States Securities and Exchange Commission under the Securities Act of
1933 is not available, the Secured Party is hereby authorized by Debtor, but not
obligated, in the event of any Default hereunder giving rise to the Secured
Party's rights to sell or otherwise dispose of the Collateral, to sell all or
any part of the Collateral at private sale, subject to investment letter or in
<PAGE>
any other manner which will not require the Collateral, or any part thereof, to
be registered in accordance with the Securities Act of 1933, as amended, or the
rules and regulations promulgated thereunder, or any other law or regulation, at
the best price reasonably obtainable by the Secured Party at any such private
sale or other disposition in the manner mentioned above. The Secured Party is
also hereby authorized by Debtor, but not obligated, to take such actions, give
such notices, obtain such consents, and do such other things as the Secured
Party may deem required or appropriate in the event of a sale or disposition of
any of the Collateral. Debtor clearly understands that the Secured Party may in
its discretion approach a restricted number of potential purchasers and that a
sale under such circumstances may yield a lower price for the Collateral, or any
part or parts thereof, than would otherwise be obtainable if the Collateral were
registered and sold in the open market. Secured Party shall have the right to
rely upon the advice and opinion of any member firm of a national securities
exchange as to the best price reasonably obtainable upon a private sale of any
stock constituting part of the Collateral, and such reliance shall be conclusive
evidence that the Secured Party handled such matter in a commercially reasonable
manner under the Code.
19. Foreclosure of this Security Interest by suit does not limit
Secured Party's remedies, including the right to sell the Collateral under the
terms of this Pledge Agreement. All remedies of Secured Party may be exercised
at the same or different times, and no remedy shall be a defense to any other.
Secured Party's rights and remedies include all those granted by law or
otherwise, in addition to those specified in this Pledge Agreement.
20. If given to a party to this Pledge Agreement, any notice, demand,
waiver or consent required or permitted under this Pledge Agreement shall be in
writing and shall be given by personal delivery, courier, overnight service,
facsimile transmission, prepaid telegram or prepaid registered or certified
mail, with return receipt requested, addressed to the mailing address set forth
below.
The date of any such notice and of service thereof shall be deemed to
be the day of its receipt by the party to whom it is addressed. Any party hereto
may at any time and from time to time change its address for the receipt of
notice pursuant to this Pledge Agreement by giving notice to the other parties
hereto in the manner set forth herein for the giving of notice.
21. This Pledge Agreement shall be binding upon and inure to the
benefit of Debtor and Secured Party, and their respective successors and
assigns.
22. Assignment of any part of the Obligations and delivery by Secured
Party of any part of the Collateral will fully discharge Secured Party from
responsibility for that part of the Collateral. If Debtor is more than one, all
<PAGE>
their representations, warranties, and agreements are joint and several.
Debtor's Obligations under this Pledge Agreement shall bind Debtor's executors,
personal representatives, successors, and assigns.
23. Neither delay in exercise nor partial exercise of any of Secured
Party's remedies or rights shall waive further exercise of those remedies or
rights. Secured Party's failure to exercise remedies or rights does not waive
subsequent exercise of those remedies or rights. Secured Party's waiver of any
default does not waive further default. Secured Party's waiver of any right in
this agreement or of any default is binding only if it is in writing. Secured
Party may remedy any default without waiving it.
24. No provisions of this Pledge Agreement shall be modified or limited
except by written agreement.
25. The unenforceability of any provision of this Pledge Agreement will
not affect the enforceability or validity of any other provision.
26. This Pledge Agreement will be construed according to the laws of
the State of Texas.
27. This Pledge Agreement is to be performed in, and interpreted and
enforced only by a court of competent jurisdiction sitting in Dallas, Dallas
County, Texas.
28. If the Collateral is sold after default, recitals in the document
of sale or transfer will be prima facie evidence of their truth, and all
prerequisites to the sale specified by this Pledge Agreement and by Chapter 9 of
the Texas Business and Commerce Code will be presumed satisfied
29. When the context requires, singular nouns and pronouns include the
plural, and pronouns in the masculine gender shall be construed as feminine or
neuter as the occasion may require.
30. This Security Interest shall neither affect nor be affected by any
other security for any of the Obligations. Neither extensions of any of the
Obligations nor releases of any of the Collateral will affect the priority or
validity of this Security Interest with reference to any third person.
<PAGE>
31. Debtor hereby appoints Secured Party as Debtor's attorney-in-fact
to do any and every act that Debtor is obligated by this Pledge Agreement to do,
and to exercise all rights of Debtor in the Collateral, and to execute any and
all papers and instruments to do all other things necessary to preserve and
protect the Collateral and to protect Secured Party's security interest in the
Collateral. Debtor's appointment of Secured Party as Debtor's attorney-in-fact
is coupled with an interest and will survive any disability of Debtor.
DEBTOR:
/s/ William O. Merritt
---------------------------
William O. Merritt
2980 E. Northern Avenue
Phoenix, AZ 85028
/s/ Dennis W. Miller
---------------------------
Dennis W. Miller
2980 E. Northern Avenue
Phoenix, AZ 85028
SECURED PARTY:
AUTOPRIME, INC.
By:/s/ Robert A. Baker
-------------------------------------
Robert A. Baker
President and Chief Executive Officer
200 Crescent Court, Suite 1900
Dallas, Texas 75201
EXHIBIT 2.6 TO FORM 8-K
GENERAL INDEMNITY AGREEMENT
This General Indemnity Agreement ("Agreement") is made and entered into
by and between Consumer Investment Corporation ("CIC") and Lenders Liquidations
Centers, Inc. ("LLCI"), as "Indemnitors", and AutoCorp, Equities, Inc.
("AutoCorp"), as "Indemnitee".
RECITALS:
A. Indemnitors and Indemnitee are parties, along with others, to
a certain corporate refinancing and restructuring transaction
detailed in a certain Master Agreement of even date, (the
"Transaction") which is intended to be consummated on or about
December 30, 1998.
B. As an integral part of the Transaction, and as an inducement
for various of the parties to participate in the Transaction,
Indemnitee is to issue and deliver to the Indemnitors,
jointly, 3,500,000 shares of Indemnitee's Series A
NonCumulative Convertible Preferred Stock (the "Series A
Preferred Stock"), which, following delivery is to be pledged
to AutoPrime, Inc. "AutoPrime") as additional collateral for
certain obligations owed and to be owed by the Indemnitors to
AutoPrime.
C. As an inducement to the Indemnitee to issue the Series
APreferred Stock, the Indemnitors have agreed to broadly
indemnify and hold harmless the Indemnitee for all claims,
causes of action, damages, losses, etc. which may arise from
or be related to the Transaction.
AGREEMENT:
Therefore, for valuable consideration, the parties have agreed
as follows:
1. At Closing, Indemnitee shall issue and deliver the authorized
Preferred Stock to the Indemnitors, jointly.
<PAGE>
2. At Closing, the Indemnitors shall execute and deliver to the
Indemnitee this Agreement.
3. Effective at Closing, the Indemnitors, jointly and severally,
do hereby fully indemnify and hold harmless the Indemnitee
of and from any and all losses, damages, costs, expenses,
liabilities and obligations of any type or nature whatsoever
which may arise from or be related to (i) any past, present
or future claims or causes of action, known or unknown,
which may be directly or indirectly related to the
Transaction and which may be asserted by any person or
entity or by one or more of the following persons or
entities, or their affiliates, subsidiaries, sister
corporation, parents, successors, assigns, legal
representatives, heirs or executors:
William O. Merritt
Dennis W. Miller
Andrew J. Kacic
Vincent W. Bustello
Efrain Diaz
E. Wayne McLaws
Consumer Insurance Company
Advisory Services, Inc.
CIC Fund V, Inc.
Stanley F. Wilson
Any shareholder of any corporation listed herein
AutoPrime, Inc.
AutoCorp Equities, Inc.
CIC Holdings, Inc.
Consumer Investment Corporation
Lenders Liquidation Centers, Inc.
Lenders Auto Resalers of Texas, Inc.
Consumer Insurance Company, and
(ii) any past, present or future obligation, duty,
responsibility, representation, omission, action, failure to
act, performance, non-performance, or other activity, known or
<PAGE>
unknown, and directly or indirectly arising from or related to
the Transaction.
4. Immediately upon Indemnitors' receipt of Indemnitee's written
notice of any claims or asserted claims against the
Indemnitee or which may affect the Indemnitee, coupled with
notice from the Indemnitee of the Indemnitee's selection of
counsel and other professionals, if any, to represent
Indemnitee's interests, the Indemnitors, and both of them,
shall make financial arrangements with the Indemnitee and
its selected professionals, sufficient in Indemnitee's sole
reasonable judgment to fully protect Indemnitee's interests
and satisfy Indemnitee's obligations to its professionals.
Indemnitee shall have sole control of the protection of its
interests, and of all negotiations, settlements and
litigation with respect thereto, but shall keep Indemnitors
reasonably informed of all actions taken with respect to
claims made against the Indemnitee. If any claim shall
result in any settlement involving, judgment against, or
other economic or business detriment to, the Indemnitee,
upon written demand from the Indemnitee, the Indemnitors
shall promptly pay to the Indemnitee, or its designee(s),
any sums needed to fully satisfy, or compensate the
Indemnitee for, any such settlement judgment, or economic or
business detriment.
5. This Agreement is binding upon the parties hereto, their
successors and assigns; may not be assigned in whole or in
part without the prior written consent of AutoPrime; shall be
construed under the laws of the State of Nevada; and, with
respect to any disputes arising hereunder, shall be
interpreted, construed and enforced only by a court of
competent jurisdiction located in Dallas, Dallas County,
Texas.
6. If any party shall breach any provision of this Agreement, or
fail to timely and promptly perform as required hereunder,
shall be liable to all other parties for all damages directly
or indirectly to such breach, including, as damages, all
attorneys fees, costs and expenses paid or incurred by the
non-breaching party(ies) in the protection, preservation or
prosecution of any rights or benefits directly or indirectly
arising under or related to this Agreement.
Executed this 30 day of December, 1998.
CONSUMER INVESTMENT CORPORATION
By:/s/ William O. Merritt
-----------------------------
William O. Merritt
LENDERS LIQUIDATORS CENTER, INC.
By:/s/ William O. Merritt
-----------------------------
William O. Merritt
AUTOCORP EQUITIES, INC.
By:/s/ Charles Norman
-----------------------------
Charles Norman
EXHIBIT 2.7 TO FORM 8-K
RATIFICATION OF OBLIGATIONS
This Ratification of Obligations ("Ratification") is made and entered
into by Consumers Investment Company ("CIC") and Lenders Liquidation Centers,
Inc. ("LLCI") for the benefit of AutoPrime, Inc. ("AutoPrime"), and is part of a
transaction detailed in a certain Master Agreement of even date (the
"Transaction").
RECITALS:
A. Prior to the date hereof, AutoPrime has extended credit to CIC
and LLCI and has purchased a substantial number of retail
installment contracts ("Contracts") subject to contractual
obligations of CIC and LLCI to repurchase certain of those
Contracts, if non-performing as required pursuant to those
agreements by which CIC and LLCI acquired the Contracts.
B. AutoPrime, CIC and LLCI are parties to the Transaction which
realigns a number of the ownership and business relationships
of and between the parties.
C. As an integral part of the Transaction, AutoPrime has agreed
(i) not to now pursue the collection of various obligations
owed to it by CIC and LLCI and (ii) to continue, subject to
AutoPrime's discretion and on a reduced level, an ongoing
business relationship with CIC and LLCI.
AGREEMENT:
1. CIC hereby ratifies, acknowledges and agrees to pay on the
later of (a) dates mutually agreed upon, or (b) as due, (i)
each and all of those obligations owed by CIC to AutoPrime
described on Exhibit A attached hereto and (ii) all other
debts, liabilities, costs, expenses and other obligations
shown on the books and records of AutoPrime, subject, as to
sub-paragraph (ii) only, to all legal and equitable defenses
available to CIC.
<PAGE>
2. LLCI hereby ratifies, acknowledges and agrees to pay on the
later of (a) dates mutually agreed upon, or (b) as due, (i)
each and all of those obligations owed by LLCI to AutoPrime
described on Exhibit B attached hereto and (ii) all other
debts, liabilities, costs, expenses and other obligations
shown on the books and records of AutoPrime, subject, as to
sub-paragraph (ii) only, to all legal and equitable defenses
available to LLCI.
3. This Agreement is binding upon the parties hereto, their
successors and assigns; may not be assigned in whole or in
part without the prior written consent of AutoPrime; shall be
construed under the laws of the State of Nevada; and, with
respect to any disputes arising hereunder, shall be
interpreted, construed and enforced only by a court of
competent jurisdiction located in Dallas, Dallas County,
Texas.
4. If any party shall breach any provision of this Agreement, or
fail to timely and promptly perform as required hereunder, the
breaching party shall be liable to all other parties for all
damages directly or indirectly arising from or related to such
breach, including, as damages, all attorneys fees, costs and
expenses paid or incurred by the non-breaching party(ies) in
the protection, preservation or prosecution of any rights or
benefits directly or indirectly arising under or related to
this Agreement.
Executed this 30th day of December, 1998
CONSUMER INVESTMENT COMPANY
By:/s/ William O. Merritt
-------------------------------
William O. Merritt
LENDERS LIQUIDATION CENTERS, INC.
By:/s/ William O. Merritt
-------------------------------
William O. Merritt
APPROVED:
AUTOPRIME, INC.
By:/s/ Robert A. Baker
------------------------------
Robert A. Baker
EXHIBIT 2.8 TO FORM 8-K
RELEASE OF PLEDGE AGREEMENT
This Release of Pledge Agreement ("Agreement") is entered into by and
between William O. Merritt, Andrew J. Kacic, Dennis W. Miller, Vincent W.
Bustillo and Efrain Diaz (the "Releasing Parties"), AutoPrime, Inc., a Nevada
corporation ("AutoPrime") and L. E. Creel, III ("Escrow Agent"), and is part of
a transaction detailed in a certain Master Agreement of even date (the
"Transaction").
RECITALS
A. Effective October 31, 1997, the Releasing Parties, AutoPrime
and the Escrow Agent entered into a certain Pledge Agreement,
a copy of which is attached hereto and incorporated herein
(the "Pledge Agreement").
B. The 600,000 shares of common stock of AutoCorp Equities, Inc.
("AutoCorp") which was pledged to AutoPrime by the Releasing
Parties is to be released from pledge and transferred to
AutoCorp and/or its designees, as a part of the Transaction.
C. It is the desire and intention of the parties hereto that the
Pledge Agreement be terminated and that the 600,000 shares of
pledged AutoCorp common stock be released by the Escrow Agent.
AGREEMENT:
1. The Escrow Agent shall release the pledged 600,000 shares of
common stock of AutoCorp (the "Common Stock") and deliver the
same to Charles Norman, president of AutoCorp, for transfer,
as authorized agent and attorney-in-fact for, each and all of
the Releasing Parties, all of such Common Stock to be
transferred to such persons and entities as are designated by
AutoCorp.
2. For the purpose of such transfer, Charles Norman is hereby
appointed Authorized agent and attorney-in-fact for each of
the Releasing Parties, to the full extent of their respective
<PAGE>
interests, if any, in such Common Stock, and Charles Norman is
hereby granted the power and authority, and is directed, to
endorse, transfer, assign and deliver all such Common Stock to
AutoCorp, and/or to AutoCorp's designees.
3. The Pledge Agreement is hereby terminated and rescinded, and
hereafter shall have no purpose or effect.
4. Each of the Releasing Parties and AutoPrime hereby fully
releases and discharges the Escrow Agent from (i) all of his
duties and obligations under the Escrow Agreement and (ii) all
claims, causes of action, responsibilities, damages and
liabilities, known or unknown, which may now, may have in the
past, or may in the future, directly or indirectly arise under
or be related to the Pledge Agreement or to any transaction or
event related thereto.
Executed this 30th day of December, 1998.
AUTOPRIME, INC.
By:/s/ Robert A. Baker
---------------------------------------
Robert A. Baker
/s/ William O. Merritt
---------------------------------------
William O. Merritt
/s/ Andrew J. Kacic
---------------------------------------
Andrew J. Kacic
/s/ Dennis W. Miller
---------------------------------------
Dennis W. Miller
/s/ Vincent W. Bustillo
---------------------------------------
Vincent W. Bustillo
/s/ Efrain Diaz
---------------------------------------
Efrain Diaz
/s/ L.E. Creel, III
---------------------------------------
L. E. Creel, III, Escrow Agent
EXHIBIT 3.1 TO FORM 8-K
CERTIFICATE OF DESIGNATION
OF THE
SERIES A NON-CUMULATIVE
CONVERTIBLE PREFERRED STOCK
OF
AUTOCORP EQUITIES, INC.
We, Charles Norman, President, and Hunter Ennis, Secretary, of AutoCorp
Equities, Inc., a corporation organized and existing under the General
Corporation Law of the State of Nevada, in accordance with the provisions of
Section 78.195 of the Nevada Revised Statutes DO HEREBY CERTIFY THAT:
1. The name of the Corporation (hereinafter called the "Corporation")
is
AUTOCORP EQUITIES, INC.
2. The Articles of Incorporation as amended, of the Corporation
authorize the issuance of 10,000,000 shares of Preferred Stock of a par value of
$.001 each and expressly confer upon the Board of Directors of the Corporation
the authority to prescribe the series and the number of each series of Preferred
Stock and the voting powers, designations, preferences, limitations,
restrictions and relative rights of each series of Preferred Stock.
3. The Board of Directors of the Corporation, pursuant to the authority
expressly conferred upon it as aforesaid, by a unanimous written consent dated
as of December 30, 1998, adopted a resolution providing for the issuance of a
series of Nine Million (9,000,000)
<PAGE>
shares of Series A Non-Cumulative Convertible Preferred Stock, which resolution
is as follows:
RESOLVED, that this Board of Directors, pursuant to the authority
expressly vested in it by the Articles of Incorporation of the
Corporation, hereby authorizes a series of Preferred Stock with the
voting powers, designations, preferences, limitations, restrictions,
relative rights and distinguishing designation set forth below:
Series A Non-Cumulative Convertible Preferred Stock. Of the 10,000,000
shares of Preferred Stock authorized by the Articles of Incorporation,
9,000,000 shares are hereby designated as "Series A Non-Cumulative
Convertible Preferred Stock" (the "Series A Preferred Stock"), and
shall have the voting powers, preferences and relative, participating,
optional, and other special rights and the qualifications, limitations,
restrictions, and other distinguishing characteristics set forth below.
(a) No Voting Rights. The Series A Preferred Stock shall be
nonvoting stock, and the holders (hereinafter called
"Holders") of Series A Preferred Stock shall have no voting
rights except where required by law.
(b) Non-Cumulative Dividend Rights. The Holders of Series A
Preferred Stock shall be entitled to receive dividends out
of any funds legally available for that purpose at the
annual rate of 5% of the amount of the liquidation
preference, and no more, payable in cash on January 31 of
each year, for the preceding year or portion thereof the
shares have been outstanding, or at intervals that the Board
of Directors may from time to time determine. Dividends
shall accrue on all shares of Series A Preferred Stock from
the date they are issued and shall accrue from day to day.
Dividends shall be payable when, as and if declared by the
Board of Directors. Nothing contained herein shall obligate
the Board of Directors to declare any dividends to the
Holders of Series A Preferred Stock, and such Holders shall
have no right to receive any dividends unless and until
declared by the Board of directors in its sole and absolute
discretion. Accrued but unpaid dividends on the Series A
Preferred Stock for any dividend period will be payable
before any dividends are paid, declared, or set apart for
holders of any other series of Preferred Stock junior to the
Series A Preferred Stock or for holders of Common Stock.
Dividends are non-cumulative so that if, for any dividend
period, the preferential dividends on Series A Preferred
Stock are not paid, or declared, or set apart, the
deficiency need not ever be paid or declared.
<PAGE>
(c) Liquidation Preference. On any voluntary or involuntary
liquidation of the Corporation, the Holders of Series A
Preferred Stock shall receive a liquidation preference equal
to $1.00 per share, plus any declared and unpaid dividends
on Series A Preferred Stock, and no more, before any amount
is paid to the holders of the Common Stock. or any other
series of Preferred Stock junior to the Series A Preferred
Stock. Each certificate representing shares of Series A
Preferred Stock shall show on its face the amount of the
liquidation preference per share. If the assets of the
Corporation should be insufficient to permit payment to the
Holders of Series A Preferred Stock of their full
liquidation preference amounts as herein provided, then such
assets will be distributed ratably among the holders of
outstanding shares of Series A Preferred Stock. If the
assets of the Corporation are sufficient to permit payment
to the Holders of Series A Preferred Stock of their
liquidation preference in full, the holders of any other
series of Preferred Stock junior to the Series A Preferred
Stock and/or the holders of Common Stock shall receive
ratably all the remaining assets of the Corporation. A
merger or consolidation of the Corporation with or into any
other corporation, or a sale of all or substantially all of
the assets of the Corporation will be deemed a liquidation
of the Corporation within the meaning of this paragraph,
thereby entitling Holders to the liquidation preference.
(d) Conversion Rights of Holders. The Holder of any shares of
Series A Preferred Stock shall have the right and option,
but not the obligation, to convert any of such shares of
Series A Preferred Stock into shares of Common Stock on the
following terms:
(i) Commencement of Convertibility. The Series A Preferred
Stock shall be convertible at any time and from time to time
on and after the first to occur of any of the following:
(t) January 1, 2002.
(u) The Corporation issues, or authorizes for
issuance, without the prior written consent of
AutoPrime, Inc., any shares of any class or series of
capital stock, whether Preferred Stock or Common
Stock, and whether authorized but unissued shares or
treasury shares; or the Corporation issues, or
authorizes for issuance any securities convertible
<PAGE>
into, exchangeable for, or exercisable to purchase
any shares of any such stock.
(v) Either Lenders Liquidation Centers, Inc. or
Consumer Investment Corporation defaults in the
payment of any of the three (3) following notes or in
the performance of any obligation in any instrument
securing or collateral to it, and the payee of such a
note in default has declared the unpaid principal
balance and earned interest on such note immediately
due:
(A) That certain Promissory Note effective
October 31, 1997, in the principal amount of
$100,000, wherein the Makers are AutoCorp
Equities, Inc., Lenders Liquidation Centers,
Inc. and Consumer Investment Corporation,
and the
Payee is AutoPrime, Inc.
(B) That certain Secured Line of Credit Note
effective October 31, 1997, in the principal
amount of $450,000, wherein the Makers are
AutoCorp Equities, Inc., Lenders Liquidation
Centers, Inc. and Consumer Investment
Corporation, and the Payee is AutoPrime,
Inc.
(C) That certain Promissory Note effective
October 31, 1997, in the principal amount of
$3,000,000, wherein the Makers are AutoCorp
Equities, Inc., Lenders Liquidation Centers,
Inc. and Consumer Investment Corporation,
and the
Payee is AutoPrime, Inc.
(w) Either or both of Lenders Liquidation Center,
Inc. or Consumer Investment Corporation defaults in
the performance of any duty, payment obligation, or
contractual obligation (including breach of
warranties or inaccuracy of any representation) of
any type or nature whatsoever which is for the
benefit or protection of AutoPrime, Inc.
(x) Either Consumer Investment Corporation or Lenders
Liquidation Centers, Inc. defaults in the payment or
performance of
<PAGE>
any obligation under, or breaches any of the
representations, warranties, terms, covenants,
agreements, conditions or provisions of, that certain
General Indemnity Agreement dated as of December 30,
1998, by and among such corporations and AutoCorp
Equities, Inc.
(y) Either Consumer Investment Corporation or Lenders
Liquidation Centers, Inc. defaults in the payment or
performance of any obligation under, or breaches any
of the representations, warranties, terms, covenants,
agreements, conditions or provisions of, any
agreement, contract, promissory note not mentioned
above, instrument or document pursuant to which
either of such corporations is obligated to
AutoPrime, Inc.
(z) Any person or persons are elected to the Board of
Directors of the Corporation, without the prior
written consent of AutoPrime, Inc., other than the
following persons:
Charles Norman
(aa) The breach of any representation or warranty
made by either William O. Merritt or Dennis W.
Miller.
(ii) Conversion Rate. On and after the date the Series A
Preferred Stock first becomes convertible, each outstanding
share of Series A Preferred Stock shall be convertible at any
time and from time to time, at the option of the Holder, into
one (1) share of Common Stock, subject to adjustment as
provided in sub-paragraph (e), below.
(iii) Procedure. Any Holder may convert by delivering to the
office of the Corporation or its transfer agent a written
notice electing to convert and surrendering the Holder's
certificate(s) evidencing the shares of Series A Preferred
Stock being converted, duly endorsed for transfer.
(e) General Conversion Provisions. The following provisions
apply to conversion:
<PAGE>
(i) Anti-dilution Rights. While the Series A Preferred Stock
is outstanding, if the Corporation:
(w) divides its outstanding shares of Common Stock into a
greater number of shares;
(x) combines its outstanding shares of Common Stock into a
small number of shares;
(y) pays a dividend or makes a distribution on its Common
Stock in shares of its capital stock or other property;
or
(z) issues by reclassification of its Common Stock any
shares of its capital stock or other property;
then the conversion privilege in effect immediately before
such action will be adjusted so that the each Holder of the
Series A Preferred Stock thereafter converted may receive the
number of shares of Common Stock, capital stock or other
property that he would have owned immediately following such
action if he had converted the shares of Series A Preferred
Stock immediately before the record date (or, if no record
date, the effective date) for such action.
The adjustment will become effective immediately after the
record date in the case of a dividend or distribution and
immediately after the effective date in the case of a
subdivision, combination or reclassification.
(ii) No Fractional Shares. Neither fractional shares, nor
scrip or other certificates evidencing such fractional shares,
will be issued by the Corporation on conversion of Series A
Preferred Stock, but the Corporation, at its option, in its
sole and absolute discretion, will either:
(y) Pay in lieu thereof the Determined Value (defined
below) in cash to the Holders who would be entitled to
receive such fractional shares. The "Determined Value"
means the otherwise-issuable fraction of a share of
Common Stock multiplied by the average of the daily
closing prices (i.e.,
<PAGE>
last sale price, regular way) for a share of Common
Stock for the 10 consecutive trading days on which such
shares are actually traded on the NASDAQ National
Market System (if the Common Stock is so traded at the
time) preceding the date the Holder delivered to the
office of the Corporation or its transfer agent a
written notice electing to convert and surrendering the
Holder's certificate(s) evidencing the shares of Series
A Preferred Stock being converted, duly endorsed for
transfer. If the Common Stock is not so traded at the
time, the average of the high bid and low asked prices
as reported in the Wall Street Journal, or if not so
reported, as furnished by a professional market maker
making a market in the Common Stock and selected by the
Board of Directors, shall be used; or
(z) Round up or round down to the nearest whole share what
would otherwise be fractional shares.
(iii) Status of Converted Shares. Shares of Series A Preferred
Stock that are converted will be restored to the status of
authorized but unissued shares of Preferred Stock, and will no
longer be authorized but unissued shares of Series A Preferred
Stock.
(iv) Reservation of Shares. The Corporation will at all times
reserve and keep available out of its authorized but unissued
shares of Common Stock such number of shares of Common Stock
as may be necessary for the purpose of converting all
outstanding shares of Series A Preferred Stock into the full
number of shares of Common Stock issuable upon conversion of
all such Series A Preferred Stock.
(f) Restriction of Surplus. The liquidation preference of the
Series A Preferred Stock exceeds the par value thereof by
$0.999 per share. As long as any shares of Series A
Preferred Stock are outstanding, surplus shall be restricted
on any specific date by an amount equal to the product of
(i) $0.999 multiplied by (ii) the number of shares of Series
<PAGE>
A Preferred Stock then outstanding. In furtherance of this
restriction of surplus, the Corporation covenants and agrees
that, so long as any shares of Series A Preferred Stock are
issued and outstanding, the Corporation shall not pay any
dividend, make any other distribution, or enter into or
consummate any transaction which would have the effect of
reducing the combined (i) par value of all shares of Series
A Preferred Stock then outstanding and (ii) surplus of the
Corporation to an amount less than the aggregate liquidation
preference of all the then-outstanding shares of Series A
Preferred Stock.
(g) Covenant Not to Issue Additional Securities. The Corporation
covenants and agrees that, prior to January 1, 2002, it will
not without the prior written consent of AutoPrime, Inc.,
issue or authorize for issuance:
(i) any shares of any class or series of capital stock,
whether Preferred Stock or Common Stock, and whether
authorized but unissued shares or treasury shares; or
(ii) any securities convertible into, exchangeable for, or
exercisable to purchase any shares of any such capital
stock.
IN WITNESS WHEREOF, AutoCorp Equities, Inc. has caused this Certificate
of Designation to be signed by Charles Norman, its President, and Hunter Ennis,
its Secretary, as of the 30th day of December, 1998.
/s/ Charles Norman
------------------------------
Charles Norman
President
/s/ Hunter Ennis
------------------------------
Hunter Ennis
Secretary
<PAGE>
STATE OF TEXAS )
) ss:
COUNTY OF DALLAS )
On December 29, 1998, personally appeared before me, a Notary Public,
Charles Norman and Hunter Ennis who acknowledged that they executed the above
instrument.
/s/ Diana J. Miltimore
------------------------------
NOTARY PUBLIC
(SEAL)
EXHIBIT 9.1 TO FORM 8-K
VOTING TRUST AGREEMENT I
(Management of AutoCorp)
This Voting Trust Agreement I (Agreement) is made as of the 30th day of
December, 1998, by AutoCorp Equities, Inc. (the "Company"), a Nevada
corporation, and Charles Norman, a resident of Collin County, Texas, as trustee
(the Trustee), to create a Voting Trust (the "Voting Trust") holding Shares of
Common Stock of the Company for the benefit of certain members of the Company's
management to be later named by the Company's Board of Directors (referred to
variously as the "Holders", the "Certificate Holders" or the "Voting Trust
Certificate Holders")
R E C I T A L S
A. The Company and various other parties have entered into a Master Agreement
of even date providing inter alia, for the restructuring and refinancing of
the Company.
B. The Master Agreement provides, among other things, that 350,000 Shares of
Common Stock of the Company will be placed in a voting trust for the
benefit of the Management of the Company, and the purpose of this Agreement
is to implement that provision.
C. Certain terms used in this Agreement shall have the meanings assigned to
them in Article 7 of this Agreement, including, without limitation, the
terms Shares and Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the parties agree as follows:
<PAGE>
ARTICLE 1
TRUSTEE
1.01 Number and Term of Trustees. There will be one (1) Trustee of this
Voting Trust. The initial Trustee is the individual named above. His successor,
as Trustee, will be appointed as provided in Paragraph 1.05. The Trustee will
serve for the entire term of this Voting Trust in the absence of his
resignation, removal, incapacity or death.
1.02 Death, etc. of Trustee. The Trustee is serving in a representative
capacity only. The powers, authority, rights, and duties of the Trustee shall
terminate on his death, incapacity, divorce, or bankruptcy, and no interest in
any of the property owned or held by the Voting Trust nor any of the powers,
authority, rights, or duties of the Trustee may be transferred by will, devise,
succession, incapacity, divorce, or bankruptcy, in any other manner, except as
provided in this Agreement. The heirs, administrators, executors, successors and
assigns for the Trustee shall, however, have the right and duty to convey any
property held by the Trustee to the successor Trustee. No creditor or creditors
of the Trustee shall have any interest in or rights whatsoever with respect to
any property owned or held by the Voting Trust.
1.03 Resignation. The Trustee may resign by giving notice of his
resignation to the Voting Trust Certificate Holders and the Company. When the
Trustee resigns, either the Holders or the Company may settle any account or
transaction with the resigning Trustee.
1.04 Removal. The Trustee may be removed for cause at any time by the
Company. The Trustee may also be removed at any time without cause by the mutual
agreement of AutoPrime, Inc. and the Company.
1.05 Successor Trustees. Subject to Paragraph 1.01 above, in the event
of the resignation, removal, incapacity or death of the Trustee (or any
successor Trustee), a successor Trustee shall be designated by the Company.
<PAGE>
ARTICLE 2
DEPOSIT AND TRANSFER OF SHARES;
ISSUANCE AND TRANSFER OF
VOTING TRUST CERTIFICATES
2.01 Deposit of Shares. On the execution of this Agreement, the Company
shall deposit with the Trustee a share certificate for 350,000 Shares of Common
Stock of the Company owned by it. Such share certificate shall be endorsed in
blank or to the Trustee and be accompanied by instruments of transfer that will
enable the Trustee to cause the share certificate to be transferred into the
name of the Trustee.
2.02 Transfer of Shares to Trustee. All share certificates delivered to
the Trustee shall be surrendered by the Trustee to the Company and canceled. New
share certificate(s) shall be issued in the name of the Trustee. The new share
certificate(s) shall state that they are issued pursuant to this Agreement. That
fact shall also be noted in the Companys stock transfer records as part of the
entry of the Trustees ownership of the Shares. The Trustee shall hold all share
certificates for stock of the Company subject to the terms of this Agreement.
Such share certificates shall be and remain in the possession of the Trustee.
2.03 Additional Shares. Any Shares of Common Stock of the Company which
are received by the Trustee during the term of this Agreement, whether received
pursuant to Paragraph 2.01, Paragraph 4.02, Paragraph 4.05, or otherwise, shall
become part of the assets of the Voting Trust and shall be subject to all the
terms and conditions of this Agreement.
2.04 Transfer of Shares to Successor Trustees. Notwithstanding any
changes in the identity of the Trustee, the certificate(s) for Shares standing
in the name of the Trustee may be endorsed and transferred by any successor
Trustee with the same effect as if endorsed and transferred by the Trustee who
has ceased to act. The Trustee is authorized and empowered to cause any further
transfer of the Shares that may be necessary because of any change of persons
holding the office of Trustee.
2.05 No Mortgage or Sale of Assets of the Voting Trust. The Trustee has
no authority to sell or otherwise dispose of or mortgage, pledge or encumber in
any manner any of the Shares deposited pursuant to the provisions of this
Agreement, or any other Shares or voting securities received by the Trustee
during the term of this Agreement except for the benefit of AutoPrime, Inc.
<PAGE>
2.06 Voting Trust Certificates. All right, title, and interest of the
Voting Trust Certificate Holders in and to the Voting Trust shall be divided
into Shares of Beneficial Interest. One share of Beneficial Interest shall
correspond to one share of Common Stock deposited pursuant to this Agreement.
Voting Trust Certificates shall evidence Shares of Beneficial Interest in the
Voting Trust. The Trustee shall issue and deliver to the Certificate Holders,
against receipt of the Shares deposited pursuant to Paragraph 2.01 above, one or
more Voting Trust Certificates in substantially the form of Exhibit A attached
to this Agreement evidencing the same number of Shares of Beneficial Interest as
the number of Shares the Certificate Holders has deposited. The aggregate number
of Shares of Beneficial Interest represented by all Voting Trust Certificates
shall at all times equal the aggregate number of all Shares deposited pursuant
to this Agreement.
Each Voting Trust Certificate shall contain a statement that the Shares
represented by the certificate are subject to the provisions of this Voting
Trust Agreement and shall contain a statement that a counterpart of Voting Trust
Agreement has been deposited with the Company at its registered office.
2.07 Fractional Trust Certificates. If an interest in this trust that
is owned by a Holder cannot be fully represented by whole Voting Trust
Certificates, the Trustee may issue fractional share Voting Trust Certificates,
scrip, or other evidence of ownership of the fractional part of one Voting Trust
Certificate that in his discretion properly indicates ownership of the
fractional interest. When such an issue is made, the fractional interest shall
not under any circumstances have any greater rights or lesser liabilities than
any other Voting Trust Certificate.
2.08 Transfer of Voting Trust Certificates. Voting Trust Certificates
shall be transferable only as provided in the Certificates and in this
Agreement, and on payment of any charges payable at the time of transfer. All
transfers shall be recorded in the Voting Trust Certificate Register provided
for in Paragraph 5.02. Any transfer made of any Voting Trust Certificate shall
vest in the transferee all rights of the transferor and shall subject the
transferee to the same limitations as those imposed on the transferor by the
terms of the Voting Trust Certificate and by this Agreement.
The Trustee shall deliver Voting Trust Certificates to the transferee
for the number of Shares represented by the Voting Trust Certificate so
transferred, subject, however, to AutoPrime's perfected security interest.
2.09 Proof of Ownership. The Trustee shall not be required to recognize
any transfer of a Voting Trust Certificate not made in accordance with the
provisions of this Agreement unless the persons claiming ownership have produced
indicia of title satisfactory to the Trustee, and shall have deposited with the
Trustee indemnity satisfactory to him.
<PAGE>
2.10 Holder of Certificate as Owner. The Trustee may treat any Voting
Trust Certificate Holder as the absolute owner and holder of the Voting Trust
Certificates registered in his or her name and as having all of the rights and
interests represented by them for all purposes, and the Trustee shall not be
bound or affected by any notice to the contrary.
2.11 Replacement of Certificates. If a Voting Trust Certificate becomes
mutilated or is destroyed, stolen, or lost, the Trustee, in his discretion, may
issue a new Voting Trust Certificate of like tenor and denomination in exchange
and substitution for and on cancellation of the mutilated Voting Trust
Certificate, or in substitution for the Certificate so destroyed, stolen, or
lost. The applicant for a substituted Voting Trust Certificate shall furnish to
the Trustee evidence of the destruction, theft, or loss of the Certificate
satisfactory to him in his discretion. The applicant shall also furnish
indemnity satisfactory to the Trustee and to his agents.
2.12 Securities Law Matters. The Voting Trust Certificates will be
issued without registration under the Securities Act of 1933, as amended (the
"1933 Act"), or the Texas Securities Act, in reliance on exemptions contained in
such statutes or in the rules and regulations promulgated by the Securities and
Exchange Commission under the 1933 Act.
There will not be any public market for the Voting Trust Certificates,
and the sale or transfer of Voting Trust Certificates will be subject to
significant restrictions on transferability.
Voting Trust Certificate Holders may not resell or transfer the Voting
Trust Certificates except in accordance with the provisions of the 1933 Act and
the Texas Securities Act. A Voting Trust Certificate Holder may be required to
bear the economic risk of holding such securities for an indefinite period of
time unless they are subsequently registered under applicable securities laws,
or an exemption from such registration is available. The Trustee does not intend
to cause any of such securities to be so registered or such an exemption to be
made available.
As a condition to sale or other transfer of Voting Trust Certificates,
the Trustee may, at his option, require:
(a) The proposed transferor or transferee to deliver to the Trustee
an opinion of counsel satisfactory to the Trustee, to the effect
that such registration or qualification is not required for such
proposed sale or other transfer; and/or
<PAGE>
(b) The proposed transferee to deliver to the Trustee an investment
letter in substantially the form of Exhibit B attached hereto.
2.13 Legends. All Voting Trust Certificates, whether original issue or
issued upon transfer of a Voting Trust Certificate, will have the following
legend imprinted on them:
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND SUCH LAWS. AS
A CONDITION TO SALE OR OTHER TRANSFER OF THIS SECURITY, THE COMPANY
MAY, AT ITS OPTION, REQUIRE THE PROPOSED TRANSFEROR HEREOF TO DELIVER
TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, TO
THE EFFECT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED FOR
SUCH PROPOSED SALE OR OTHER TRANSFER.
ARTICLE 3
ACTION BY TRUSTEE
3.01 Voting of Shares. While the Trustee holds Shares
deposited pursuant to the provisions of this Agreement, he shall,
subject to Paragraph 2.05, possess and shall be entitled to exercise in
person or by his nominee(s), agent(s), attorney(s)-in-fact, or proxies
all rights and powers of an absolute owner and to vote, assent, or
consent with respect to those rights and powers and to take part in and
consent to any corporate or shareholders actions, and to receive
dividends and distributions on the Shares. No other person shall have
any voting rights in respect to the Shares so long as this Agreement is
in effect and the Shares are registered in the name of the Trustee.
On any issue presented to shareholders of the Company, the
Trustee shall vote the Shares deposited pursuant to this Agreement, or
consent with respect to them, in his sole and absolute discretion.
3.02 Voting in Interest of Company. Subject to the
requirements of Paragraph 3.01 above, in doing any act not subject to
Paragraph 3.01 above regarding the control or management of the Company
or its affairs, as holder of stock deposited pursuant to this
<PAGE>
Agreement, the Trustee shall exercise his best judgment in the interest
of the Company to the end that its affairs shall be properly managed,
but he shall assume no responsibility regarding management or any
action taken by management or taken by the Company in pursuance of his
consent to it as a shareholder or in pursuance of his vote so cast.
3.03 Action of Trustee. All action to be taken on any question
presented to the Trustee, except as otherwise expressly provided in
this Agreement, shall from time to time be determined by a signed
writing of the Trustee. The Trustee may provide for the authentication
of evidence of any action taken by him.
3.04 Meeting with Certificate Holders. On any issue presented
to the shareholders of the Company for vote, upon which the Trustee
desires the opinion of the Voting Trust Certificate Holders, the
Trustee may call a meeting for this purpose. At the meeting, the
Holders may determine the manner in which they desire the Trustee to
act, but the Trustee shall not be bound to act in the manner
designated. The Trustee shall not be called upon or expected to take
any action as a result of this meeting unless and until he has been
fully indemnified against all loss, damage, claim, or injury to which
he might be subjected, either by reason of his action or by reason of
his position as Trustee under this Agreement.
3.05 Trustees Relationship with Company. The Trustee, his
employees or agents, and any firm, corporation, trust, or association
of which he may be a trustee, stockholder, director, officer, member,
agent, or employee may contract with or be or become pecuniarily
interested, directly or indirectly, in any matter or transaction to
which the Company or AutoPrime, or any subsidiary or controlled or
affiliated corporation, may be a party or in which he may be concerned,
as fully and freely as thought the Trustee were not a Trustee pursuant
to this Agreement. The Trustee, his employees, or agents may act as
directors or officers of the Company or AutoPrime, or of any subsidiary
or controlled or affiliated corporation.
3.06 Compensation of Trustee. The Trustee shall serve without
compensation, except as may be agreed, from time to time, by the
Company and the Trustee.
3.07 Expenses. The Trustee is expressly authorized to incur
and pay those reasonable charges and expenses that he may deem
necessary and proper for the administration of this Agreement. The
Voting Trust Certificate Holders shall reimburse and indemnify the
Trustee for all claims, expenses, and liabilities incurred by him in
connection with the discharge of his duties under this Agreement. Any
such claims, expenses, or liabilities shall be charged to the Voting
Trust Certificate Holders, pro rata, and may be
<PAGE>
deducted from dividends or other distributions to them, pursuant to
Paragraph 4.04, or may be made a charge payable following termination
of the Voting Trust as a condition to the delivery of Shares in
exchange for Voting Trust Certificates, pursuant to Paragraph 6.03, and
the Trustee shall be entitled to a lien for this charge on the share
certificates, Shares, funds, or other property in his possession.
3.08 Trustees Liability. The Trustee shall be free from
liability in acting upon any paper, document, or signature believed by
him to be genuine and to have been signed by the proper party. The
Trustee shall not be liable for any error of judgment, nor for any act
done or omitted, nor for any mistake of fact or law, nor for anything
that he may do or refrain from doing in good faith, nor generally shall
the Trustee have any accountability pursuant to this Agreement, except
that the Trustee shall be liable for his own intentional misconduct or
gross negligence. The Trustee may be advised by legal counsel, and any
action under this Agreement taken or suffered in good faith by him in
accordance with the opinion of counsel shall be conclusive on the
parties to this Agreement, and the Trustee shall be fully protected and
be subject to no liability in respect to any action taken or suffered
under this Agreement.
ARTICLE 4
DIVIDEND, DISTRIBUTION AND SUBSCRIPTION RIGHTS
OF CERTIFICATE HOLDERS
4.01 Cash Dividends. The Holders shall be entitled to receive
from time to time payments equal to the amount of cash dividends, if
any, collected or received by the Trustee on the Shares in regard to
which Voting Trust Certificates were issued, less the deductions
provided for in Paragraph 4.05. These payments shall be made to the
Holders as soon as practicable after the receipt of the dividends.
Instead of receiving cash dividends and paying them to the Holders, the
Trustee may instruct the Company in writing to pay the dividends
directly to the Holders. When these instructions are given to the
Company, all liability of the Trustee with regard to the dividends
shall cease, until the instructions are revoked. The Trustee may at any
time revoke the instructions and by written notice to the Company
direct it to make dividend payments to the Trustee.
4.02 Share Distributions. If the Trustee receives as a
dividend or other distribution on any Shares or other voting securities
held by him under this Agreement, any additional Shares or other voting
securities, the Trustee shall hold them subject to this Agreement for
the benefit of the Holders, and the Shares or other voting securities
shall become subject to all of the terms and conditions of this
Agreement to the same extent as if
<PAGE>
they were originally deposited under it. The Trustee may, in his
discretion, issue Voting Trust Certificates in respect of these Shares
or other voting securities to the Holders.
4.03 Other Distributions. If at any time during the term of
this Agreement the Trustee shall receive or collect any moneys
(including payment of cash dividends) through a distribution by the
Company to its shareholders or shall receive any property (other than
nonvoting securities) through a distribution by the Company to its
security holders, the Trustee shall distribute same to the Holders. The
Trustee may withhold from the distribution the deductions provided for
in Paragraph 4.04. Any voting securities received by the Trustee
through any such distribution shall be retained by the Trustee as part
of the assets of the Voting Trust, pursuant to Paragraphs 2.01 and 4.02
above.
4.04 Deductions for Distributions. There shall be deducted and
withheld from every distribution of every kind under this Agreement any
taxes, assessments, or other charges that may be required by law to be
deducted or withheld, as well as expenses and charges incurred pursuant
to Paragraph 3.07, to the extent that the expenses and charges remain
unpaid or unreimbursed.
4.05 Subscription Rights. If the Trustee shall receive notice
of an offer by the Company of additional securities for subscription,
the Trustee shall promptly mail a copy of the notice to the Holders. On
receipt by the Trustee, at least three (3) days prior to the last date
fixed by the Company for subscription, of a request from a Holder to be
subscribed in its behalf, accompanied by the sum of money required to
be paid for the securities, the Trustee shall make the subscription and
payment on behalf of such Holder.
On receiving from the Company the certificate for the
securities subscribed for, if the securities are voting securities, the
Trustee shall issue to the subscribing Holder a Voting Trust
Certificate in respect of those securities, and, if they are nonvoting
securities, the Trustee shall deliver the certificate to the
subscribing Holder.
4.06 Record Date for Distributions. The Trustee may, if he
deems it advisable, fix a date not exceeding ten (10) days preceding
any date for the payment or distribution of dividends, or for the
distribution of assets or rights, as a record date for the
determination of the Voting Trust Certificate Holders entitled to
receive the payment or distribution, and the Voting Trust Certificate
Holders of record on that date shall be exclusively entitled to
participate in the payment or distribution. If the Trustee fails to fix
a record date, the date three (3) days prior to the date of payment or
distribution of dividends or the distribution of assets or rights shall
constitute the record date for the determination of the Voting Trust
Certificate Holders entitled to receive the payment or distribution.
<PAGE>
ARTICLE 5
BOOKS AND RECORDS
5.01 Record of Shares. It shall be the duty of the Trustee to
maintain a record of all share certificates of the Company that are
transferred to the Trustee, indicating the name in which the stock was
held, the date of issuance of the stock, the class of the stock, the
number of Shares, and the number of the certificates representing those
Shares. The Trustee shall also maintain a record of the date on which
he received any share certificates and the date on which they were
delivered to the Company for transfer to the Trustee, and shall obtain
a receipt for any certificates so delivered. The Trustee shall receive
and hold the new share certificates issued by the Company in the name
of the Trustee and shall maintain a record indicating the date of
issuance of the certificates, the date of receipt of the certificates,
and the place in which he is holding the certificates.
5.02 Record of Voting Trust Certificates. The Trustee shall
maintain a record showing the names and addresses of the Holders. The
record shall show the number of Certificates held by each person. The
record shall show the dates on which the Voting Trust Certificates were
issued, canceled, transferred, or replaced. The record shall be known
as the Voting Trust Certificate Register and shall be open to
inspection by any of the parties to this Agreement or their successors
at any reasonable time. The first Voting Trust Certificate Holder to
appear in such Register shall be the Certificate Holders who are
signatories to this Agreement. The record shall show any subsequent
transfer, assignment, pledge, attachment, execution, and any other
matter affecting the title to the Voting Trust Certificates that comes
to the attention of the Trustee. Any documents purporting to affect the
title of the Voting Trust Certificates shall also be kept in the Voting
Trust Certificate Register, together with a sample copy of the Voting
Trust Certificate.
5.03 Books of Account. The Trustee or his agent shall maintain
books of account that shall be in the form prescribed from time to time
by the Trustee. In addition to other matters that the Trustee may
insert in the record, the record shall show all sums of money received
by the Trustee, all disbursements made by the Trustee, and all
obligations incurred by the Trustee that are unpaid. Information
concerning these accounts shall be posted at least monthly.
5.04 Other Records. The Trustee shall maintain such other
books and records and shall perform the duties required of him to be
performed elsewhere in this Agreement.
<PAGE>
5.05 Inspection of Records. The parties to this Agreement
shall deposit a counterpart of this Agreement with the Company at its
registered office, and the Agreement shall be subject to the same right
of examination by a shareholder of the Company, in person or by agent
or attorney, as are the books and records of the Company.
ARTICLE 6
TERM OF TRUST
6.01 Irrevocability of Trust. The trust created by this Agreement is
expressly declared to be irrevocable, except as otherwise provided in
this Agreement.
6.02 Termination. This Agreement shall terminate upon the earlier to
happen of the following events;
(a) The conversion of 3,500,000 Shares of Series A
Non-Cumulative Convertible Preferred Stock of the
Company;
(b) The mutual agreement evidenced in writing of (i) the
Holders of all Voting Trust Certificates, (ii) the
Company, and (iii) AutoPrime, Inc. or their
successor(s) in interest;
(c) December 30, 2013, subject to extension as provided in
Nevada Revised Statues, Section 78.365(2).
6.03 Distribution of Share Certificates After Termination. Within
thirty (30) days after the termination of this Agreement, the Trustee
shall distribute to the Voting Trust Certificate Holders, subject to
Paragraphs 3.07 and 4.04 above, share certificates representing the
number of Shares in respect of which the Voting Trust Certificates
were issued, in exchange for the surrender of the Voting Trust
Certificates properly endorsed and on payment by the persons entitled
to receive the share certificates of a sum sufficient to cover (a) any
governmental charge on the transfer or delivery of the share
certificates, and (b) any items described in Paragraphs 3.07 and 4.04
to the extent they remain unpaid or unreimbursed, subject, however, to
the liens benefitting AutoPrime.
6.04 Final Accounting. Within sixty (60) days after termination of
this Agreement, the Trustee shall render a final accounting to the
Voting Trust Certificate Holders and to the Company and shall
distribute any funds or other assets held by him to the parties
entitled to them.
<PAGE>
ARTICLE 7
CERTAIN DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings assigned to them below, unless the context otherwise requires:
Company shall mean AutoCorp Equities, Inc., a Nevada corporation, and
any other entity which may become a successor to AutoCorp Equities, Inc. or the
business and assets of AutoCorp Equities, Inc. through conversion, sale of
assets, merger, consolidation, plan of share exchange, reorganization, or
otherwise.
Beneficial Interest shall mean the right, title, and interest of the
Holders in and to the Voting Trust and shall be divided into Shares and
evidenced as provided in Paragraph 2.04.
Holder shall mean a Voting Trust Certificate Holder.
Shares and shares shall mean, unless the context otherwise requires,
(a) the Shares of Common Stock of AutoCorp Equities, Inc. being deposited by the
Certificate Holders pursuant to this Agreement in connection with the execution
and delivery of this Agreement; (b) any additional Shares of Common Stock or
other voting securities of the Company subsequently deposited by the Certificate
Holders pursuant to Paragraph 2.01 of this Agreement; and (c) any Shares of
Common Stock or other voting securities of the Company which are received by the
Trustee as a dividend or other distribution (including a liquidating
distribution), or otherwise.
Voting Trust Certificate Holder, Certificate Holder, or Holder shall
mean a holder of a Voting Trust Certificate. The initial Voting Trust
Certificate Holders shall be the Certificate Holders who are signatories to this
Agreement. When there is more than one Voting Trust Certificate Holder, action
by such Holders may be authorized by them in the manner provided in Paragraph
4.07.
<PAGE>
ARTICLE 8
MISCELLANEOUS
8.01 Place of Performance. This Agreement is made, executed, and
entered into at Dallas, Dallas County, Texas, and it is mutually agreed that the
performance of all parts of this contract shall be made at Dallas, Dallas
County, Texas, and any dispute arising hereunder must be resolved in the United
States District Court for the Northern District of Texas, Dallas Division, or a
Civil District Court, in and for Dallas County, Texas.
8.02 Governing Law. This Agreement is intended by the parties to be
governed and construed in accordance with the laws of the State of Texas, except
that all matters considered to be internal corporate matters of the Company,
including requirements of the formation and operation of voting trusts for
Nevada corporations shall be governed by Nevada law.
8.03 Construction by Trustee. The Trustee is authorized and empowered
to construe this Agreement. His reasonable construction made in good faith shall
be conclusive and binding on all parties to this Agreement and on any Voting
Trust Certificate Holders.
8.04 Notices to Parties. If given to a party to this Agreement, any
notice, demand, waiver, or consent required or permitted under this Agreement or
a Voting Trust Certificate shall be in writing and shall be given by personal
delivery, courier, overnight service, facsimile transmission, prepaid telegram
or prepaid registered or certified mail, with return receipt requested,
addressed to the pertinent address set forth on the signature page hereof.
The date of any such notice and of service thereof shall be deemed to
be the day of its receipt by the party to whom it is addressed. Any party hereto
may at any time and from time to time change its address for the receipt of
notice pursuant to this Agreement by giving notice to the other parties hereto
in the manner set forth herein for the giving of notice.
8.05 Notice to Holders. Any notice to be given to a Voting Trust
Certificate Holder other than the Certificate Holders shall be sufficiently
given if mailed, postage prepaid, to him or her at the address of the Voting
Trust Certificate Holder appearing in the Voting Trust Certificate Register to
be maintained by the Trustee. Every notice so given shall be effective whether
or not received, and such notice shall for all purposes be deemed to have been
given on the date of its mailing.
<PAGE>
8.06 Notice and Reports from Company. Each Holder shall have the right
to:
(a) Receive from the Company, in the same manner and at the
same time as if the Holder were a shareholder, copies
of such reports, financial statements, notices, proxy
statements, and other documents as the Company shall
distribute to its shareholders.
(b) Receive from the Company notice of each annual and
special meeting of shareholders, in the same manner and
at the same time as if the Holder were a shareholder.
8.07 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which, taken
together, shall constitute one and the same instrument.
8.08 Amendment of Agreement. This Agreement may be amended by the
agreement in writing of the Company and the Trustee, together with approval by
the Voting Trust Certificate Holders obtained in accordance with the provisions
of Paragraphs 4.07, 4.08 and this Paragraph 8.09. If the Trustee deems it
advisable, he shall call a special meeting of Voting Trust Certificate Holders
for the purpose of obtaining the approval of the Holders. The notice of the
meeting shall contain a copy of the proposed amendment.
8.09 Advice of Counsel. Each of the parties agrees and represents that
he or she has been represented by his or her own counsel with regard to the
execution of this Agreement or, if acting without counsel, that he or she has
had adequate opportunity and has been encouraged to take the advice of his or
her own counsel prior to the execution of this Agreement.
8.10 Duplicate of this Agreement. A duplicate of this Agreement shall
be filed in the registered office of the Company in the State of Nevada. Such
duplicate shall at all times during the term of this Agreement be open to
inspection by any stockholder or his attorney.
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
this Agreement to be duly executed on their behalf as of the day and year first
above written.
<PAGE>
ADDRESSES:
THE COMPANY
AutoCorp Equities, Inc. AUTOCORP EQUITIES, INC.
5949 Sherry Lane
Suite 525
Dallas, Texas 75225 By:/s/ Charles Norman
--------------------------
Charles Norman
President and
Chief Executive Officer
THE TRUSTEE
Charles Norman, Trustee
5949 Sherry Lane
Suite 525
Dallas, Texas 75225 /s/ Charles Norman
--------------------------
Charles Norman, Trustee
THE VOTING TRUST
CERTIFICATE HOLDERS
APPROVED:
AUTOPRIME, INC.
By:/s/ Robert A. Baker
--------------------------
Robert A. Baker
<PAGE>
EXHIBIT A
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT AND SUCH LAWS. AS A CONDITION TO SALE OR OTHER TRANSFER
OF THIS SECURITY, THE COMPANY MAY, AT ITS OPTION, REQUIRE THE PROPOSED
TRANSFEROR HEREOF TO DELIVER TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT
REQUIRED FOR SUCH PROPOSED SALE OR OTHER TRANSFER.
AUTOCORP EQUITIES, INC.
VOTING TRUST CERTIFICATE
ISSUED UNDER VOTING TRUST AGREEMENT I
(Management of AutoCorp)
Certificate Number ______
This Voting Trust Certificate (Certificate) evidences that
_________________ (referred to in this Certificate as the Certificate Holder) is
the owner and holder of _______ Shares of Beneficial Interest in Voting Trust I
(the Voting Trust) created pursuant to that certain Voting Trust Agreement I
(Voting Trust Agreement I) dated as of December 30, 1998, by and among certain
Certificate Holders, AutoCorp Equities, Inc. (the Company), and Charles Norman,
as Trustee (the Trustee).
Capitalized terms used herein, which are not defined herein, shall have
the same meanings when used herein as they do when used in Voting Trust
Agreement I.
This Certificate is issued by the Trustee to the Certificate Holder on
the following terms and conditions:
<PAGE>
1. Rights of Certificate Holder. The Certificate Holder hereby accepts
and ratifies all of the terms, conditions, and covenants of the Voting Trust
Agreement. A counterpart of this Agreement is on file at the registered office
of the Company in the State of Nevada and is incorporated by reference in this
Certificate as though set forth in full herein.
This Certificate evidences ownership of only a Beneficial Interest in
the Voting Trust. Pursuant to Voting Trust Agreement I, the Trustee is the owner
and holder of the legal title of all Shares of Common Stock of the Company
deposited pursuant to the Agreement. The Certificate Holder has rights with
respect to the Shares of stock of the Company deposited pursuant to Voting Trust
Agreement I only as provided in the Agreement.
2. Voting Rights. The undersigned Trustee during the term of this
Voting Trust Agreement is the legal owner of the Shares of stock of the Company
deposited pursuant to this Voting Trust Agreement for all purposes relating to
Voting Trust Agreement and in all matters of the Company for which the Shares
may be voted. No voting rights of Shares deposited pursuant to this Voting Trust
Agreement are granted to the Certificate Holder by this Certificate. Only the
rights as a Holder of a Beneficial Interest in Voting Trust provided to the
Certificate Holder in this Voting Trust Agreement are represented by this
Certificate.
3. Dividends and Distributions. The Certificate Holder is entitled to
receive, subject to the limitations in this Voting Trust Agreement, all cash
dividends or other distributions of non-voting securities of the Company
received by the undersigned Trustee. In the event of share dividends, the
Trustee shall receive and hold them pursuant to the terms of Voting Trust
Agreement I and may, in his discretion, issue to the Certificate Holder
additional Voting Trust Certificates representing the share dividends.
4. Termination. The Voting Trust shall terminate upon the earlier to
happen of the following events;
A. The conversion of all then-outstanding Shares of Series
A Non-Cumulative Convertible Preferred Stock of the
Company;
B. The mutual agreement evidenced in writing of (i) the
Holders of all Voting Trust Certificates, (ii) the
Company and (iii) AutoPrime, Inc. or its successor(s)
in interest;
<PAGE>
C. December 30, 2012, subject to extension as provided in
Nevada Revised Statutes, Section 78.365(2).
5. Distribution of Share Certificates After Termination. Subject to the
terms and provisions of Voting Trust Agreement I, within thirty (30) days after
the termination of Voting Trust Agreement I, the Trustee shall distribute to the
Certificate Holder, subject to Paragraphs 3.07 and 4.04 of Voting Trust
Agreement I, certificates for Shares representing the number of Shares in
respect of which this Certificate was issued, in exchange for the surrender of
this Certificate properly endorsed and on payment by the Certificate Holder of a
sum sufficient to cover (a) any governmental charge on the transfer or delivery
of the share certificates, and (b) the pro rata share attributable to this
Certificate of any items described in Paragraphs 3.07 and 4.04 of Voting Trust
Agreement I to the extent they remain unpaid or unreimbursed.
6. Transfer of Certificates. Subject to the terms of Voting Trust
Agreement I and the lien rights of AutoPrime, Inc., this Certificate is
transferable in the same manner as any other security. Any transfer shall be on
the books of the Trustee or his agent and shall be made only on the surrender of
this Certificate by the Certificate Holder or his or her attorney endorsed in
blank or to the transferee. The Trustee may treat the registered Certificate
Holder or, at the election of the Trustee in his sole and absolute discretion,
when presented duly endorsed in blank, the bearer of this Certificate as its
absolute owner and as the owner of all rights and interests in the Voting Trust
represented by this Certificate for all purposes whatsoever. The Trustee shall
not be bound or affected by any notice to the contrary.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Voting
Trust Certificate as of the ______ day of ___________________, 199__.
TRUSTEE
------------------------------------
Charles Norman, Trustee
<PAGE>
ASSIGNMENT
For value received, the undersigned hereby sells, assigns, and
transfers to ___________________ this Voting Trust Certificate and the
Beneficial Interest in the Voting Trust represented by this Voting Trust
Certificate. The undersigned irrevocably appoints _________________ his or her
attorney with full power of substitution to transfer this Certificate on the
books of the Trustee.
Dated: ______________, 19____. ____________________________________
(Please sign exactly as name appears on
Certificate)
_____________________________________
(Typed or Printed Name)
Taxpayer ID No._____________________
SIGNATURE GUARANTEED
______________________________________
(Name of Bank, trust company or broker)
By: _________________________________
Name: _______________________________
Its: _______________________________
Address: ____________________________
_____________________________________
<PAGE>
EXHIBIT B
FORM OF INVESTMENT LETTER
To: Charles Norman, Trustee
5949 Sherry Lane
Suite 525
Dallas, Texas 75225
In connection with the transfer to the undersigned of Shares of
Beneficial Interest in the Voting Trust established by that certain Voting Trust
Agreement I dated December 30, 1998, by and among certain Certificate Holders,
AutoCorp Equities, Inc., and Charles Norman (the Trustee), the undersigned
hereby represents that he/she/it is acquiring such Shares of Beneficial Interest
(as evidenced by one or more certain Voting Trust Certificate(s) issued pursuant
to Voting Trust Agreement I) for his/her/its own account for investment and not
with a view to or for sale in connection with any distribution of said Shares.
Capitalized terms used herein, which are not defined herein, shall have
the same meanings when used herein as they do when used in Voting Trust
Agreement I.
Dated:_________________________ ____________________________________
By:_________________________________
(Signature)
____________________________________
(Printed or Typed Name)
EXHIBIT 9.2 TO FORM 8-K
VOTING TRUST AGREEMENT II
(Management of AutoCorp)
This Voting Trust Agreement II (Agreement) is made as of the 30th day
of December, 1998, by AutoCorp Equities, Inc. (the "Company"), a Nevada
corporation, and Charles Norman, a resident of Collin County, Texas, as trustee
(the Trustee), to create a Voting Trust (the "Voting Trust") holding Shares of
Common Stock of the Company for the benefit of certain members of the Company's
management to be later named by the Company's Board of Directors (referred to
variously as the "Holders", the "Certificate Holders" or the "Voting Trust
Certificate Holders")
R E C I T A L S
A. The Company and various other parties have entered into a Master
Agreement of even date providing inter alia, for the
restructuring and refinancing of the Company.
B. The Master Agreement provides, among other things, that 350,000
Shares of Common Stock of the Company will be placed in a voting
trust for the benefit of the Management of the Company, and the
purpose of this Agreement is to implement that provision.
C. Certain terms used in this Agreement shall have the meanings
assigned to them in Article 7 of this Agreement, including,
without limitation, the terms Shares and Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the parties agree as follows:
<PAGE>
ARTICLE 1
TRUSTEE
1.01 Number and Term of Trustees. There will be one (1) Trustee of this
Voting Trust. The initial Trustee is the individual named above. His successor,
as Trustee, will be appointed as provided in Paragraph 1.05. The Trustee will
serve for the entire term of this Voting Trust in the absence of his
resignation, removal, incapacity or death.
1.02 Death, etc. of Trustee. The Trustee is serving in a representative
capacity only. The powers, authority, rights, and duties of the Trustee shall
terminate on his death, incapacity, divorce, or bankruptcy, and no interest in
any of the property owned or held by the Voting Trust nor any of the powers,
authority, rights, or duties of the Trustee may be transferred by will, devise,
succession, incapacity, divorce, or bankruptcy, in any other manner, except as
provided in this Agreement. The heirs, administrators, executors, successors and
assigns for the Trustee shall, however, have the right and duty to convey any
property held by the Trustee to the successor Trustee. No creditor or creditors
of the Trustee shall have any interest in or rights whatsoever with respect to
any property owned or held by the Voting Trust.
1.03 Resignation. The Trustee may resign by giving notice of his
resignation to the Voting Trust Certificate Holders and the Company. When the
Trustee resigns, either the Holders or the Company may settle any account or
transaction with the resigning Trustee.
1.04 Removal. The Trustee may be removed for cause at any time by the
Company. The Trustee may also be removed at any time without cause by the mutual
agreement of AutoPrime, Inc.
and the Company.
1.05 Successor Trustees. Subject to Paragraph 1.01 above, in the event
of the resignation, removal, incapacity or death of the Trustee (or any
successor Trustee), a successor Trustee shall be designated by the Company.
<PAGE>
ARTICLE 2
DEPOSIT AND TRANSFER OF SHARES;
ISSUANCE AND TRANSFER OF
VOTING TRUST CERTIFICATES
2.01 Deposit of Shares. On the execution of this Agreement, the Company
shall deposit with the Trustee a share certificate for 350,000 Shares of Common
Stock of the Company owned by it. Such share certificate shall be endorsed in
blank or to the Trustee and be accompanied by instruments of transfer that will
enable the Trustee to cause the share certificate to be transferred into the
name of the Trustee.
2.02 Transfer of Shares to Trustee. All share certificates delivered to
the Trustee shall be surrendered by the Trustee to the Company and canceled. New
share certificate(s) shall be issued in the name of the Trustee. The new share
certificate(s) shall state that they are issued pursuant to this Agreement. That
fact shall also be noted in the Companys stock transfer records as part of the
entry of the Trustees ownership of the Shares. The Trustee shall hold all share
certificates for stock of the Company subject to the terms of this Agreement.
Such share certificates shall be and remain in the possession of the Trustee.
2.03 Additional Shares. Any Shares of Common Stock of the Company which
are received by the Trustee during the term of this Agreement, whether received
pursuant to Paragraph 2.01, Paragraph 4.02, Paragraph 4.05, or otherwise, shall
become part of the assets of the Voting Trust and shall be subject to all the
terms and conditions of this Agreement.
2.04 Transfer of Shares to Successor Trustees. Notwithstanding any
changes in the identity of the Trustee, the certificate(s) for Shares standing
in the name of the Trustee may be endorsed and transferred by any successor
Trustee with the same effect as if endorsed and transferred by the Trustee who
has ceased to act. The Trustee is authorized and empowered to cause any further
transfer of the Shares that may be necessary because of any change of persons
holding the office of Trustee.
2.05 No Mortgage or Sale of Assets of the Voting Trust. The Trustee has
no authority to sell or otherwise dispose of or mortgage, pledge or encumber in
any manner any of the Shares deposited pursuant to the provisions of this
Agreement, or any other Shares or voting securities received by the Trustee
during the term of this Agreement except for the benefit of AutoPrime,Inc.
<PAGE>
2.06 Voting Trust Certificates. All right, title, and interest of the
Voting Trust Certificate Holders in and to the Voting Trust shall be divided
into Shares of Beneficial Interest. One share of Beneficial Interest shall
correspond to one share of Common Stock deposited pursuant to this Agreement.
Voting Trust Certificates shall evidence Shares of Beneficial Interest in the
Voting Trust. The Trustee shall issue and deliver to the Certificate Holders,
against receipt of the Shares deposited pursuant to Paragraph 2.01 above, one or
more Voting Trust Certificates in substantially the form of Exhibit A attached
to this Agreement evidencing the same number of Shares of Beneficial Interest as
the number of Shares the Certificate Holders has deposited. The aggregate number
of Shares of Beneficial Interest represented by all Voting Trust Certificates
shall at all times equal the aggregate number of all Shares deposited pursuant
to this Agreement.
Each Voting Trust Certificate shall contain a statement that the Shares
represented by the certificate are subject to the provisions of this Voting
Trust Agreement and shall contain a statement that a counterpart of Voting Trust
Agreement has been deposited with the Company at its registered office.
2.07 Fractional Trust Certificates. If an interest in this trust that
is owned by a Holder cannot be fully represented by whole Voting Trust
Certificates, the Trustee may issue fractional share Voting Trust Certificates,
scrip, or other evidence of ownership of the fractional part of one Voting Trust
Certificate that in his discretion properly indicates ownership of the
fractional interest. When such an issue is made, the fractional interest shall
not under any circumstances have any greater rights or lesser liabilities than
any other Voting Trust Certificate.
2.08 Transfer of Voting Trust Certificates. Voting Trust Certificates
shall be transferable only as provided in the Certificates and in this
Agreement, and on payment of any charges payable at the time of transfer. All
transfers shall be recorded in the Voting Trust Certificate Register provided
for in Paragraph 5.02. Any transfer made of any Voting Trust Certificate shall
vest in the transferee all rights of the transferor and shall subject the
transferee to the same limitations as those imposed on the transferor by the
terms of the Voting Trust Certificate and by this Agreement.
The Trustee shall deliver Voting Trust Certificates to the transferee
for the number of Shares represented by the Voting Trust Certificate so
transferred, subject, however, to AutoPrime's perfected security interest.
<PAGE>
2.09 Proof of Ownership. The Trustee shall not be required to recognize
any transfer of a Voting Trust Certificate not made in accordance with the
provisions of this Agreement unless the persons claiming ownership have produced
indicia of title satisfactory to the Trustee, and shall have deposited with the
Trustee indemnity satisfactory to him.
2.10 Holder of Certificate as Owner. The Trustee may treat any Voting
Trust Certificate Holder as the absolute owner and holder of the Voting Trust
Certificates registered in his or her name and as having all of the rights and
interests represented by them for all purposes, and the Trustee shall not be
bound or affected by any notice to the contrary.
2.11 Replacement of Certificates. If a Voting Trust Certificate becomes
mutilated or is destroyed, stolen, or lost, the Trustee, in his discretion, may
issue a new Voting Trust Certificate of like tenor and denomination in exchange
and substitution for and on cancellation of the mutilated Voting Trust
Certificate, or in substitution for the Certificate so destroyed, stolen, or
lost. The applicant for a substituted Voting Trust Certificate shall furnish to
the Trustee evidence of the destruction, theft, or loss of the Certificate
satisfactory to him in his discretion. The applicant shall also furnish
indemnity satisfactory to the Trustee and to his agents.
2.12 Securities Law Matters. The Voting Trust Certificates will be
issued without registration under the Securities Act of 1933, as amended (the
"1933 Act"), or the Texas Securities Act, in reliance on exemptions contained in
such statutes or in the rules and regulations promulgated by the Securities and
Exchange Commission under the 1933 Act.
There will not be any public market for the Voting Trust Certificates,
and the sale or transfer of Voting Trust Certificates will be subject to
significant restrictions on transferability.
Voting Trust Certificate Holders may not resell or transfer the Voting
Trust Certificates except in accordance with the provisions of the 1933 Act and
the Texas Securities Act. A Voting Trust Certificate Holder may be required to
bear the economic risk of holding such securities for an indefinite period of
time unless they are subsequently registered under applicable securities laws,
or an exemption from such registration is available. The Trustee does not intend
to cause any of such securities to be so registered or such an exemption to be
made available.
As a condition to sale or other transfer of Voting Trust Certificates,
the Trustee may, at his option, require:
<PAGE>
(a) The proposed transferor or transferee to deliver to the Trustee
an opinion of counsel satisfactory to the Trustee, to the effect
that such registration or qualification is not required for such
proposed sale or other transfer; and/or
(b) The proposed transferee to deliver to the Trustee an investment
letter in substantially the form of Exhibit B attached hereto.
2.13 Legends. All Voting Trust Certificates, whether original issue or
issued upon transfer of a Voting Trust Certificate, will have the following
legend imprinted on them:
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND SUCH LAWS. AS
A CONDITION TO SALE OR OTHER TRANSFER OF THIS SECURITY, THE COMPANY
MAY, AT ITS OPTION, REQUIRE THE PROPOSED TRANSFEROR HEREOF TO DELIVER
TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, TO
THE EFFECT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED FOR
SUCH PROPOSED SALE OR OTHER TRANSFER.
ARTICLE 3
ACTION BY TRUSTEE
3.01 Voting of Shares. While the Trustee holds Shares
deposited pursuant to the provisions of this Agreement, he shall,
subject to Paragraph 2.05, possess and shall be entitled to exercise in
person or by his nominee(s), agent(s), attorney(s)-in-fact, or proxies
all rights and powers of an absolute owner and to vote, assent, or
consent with respect to those rights and powers and to take part in and
consent to any corporate or shareholders actions, and to receive
dividends and distributions on the Shares. No other person shall have
any voting rights in respect to the Shares so long as this Agreement is
in effect and the Shares are registered in the name of the Trustee.
On any issue presented to shareholders of the Company, the
Trustee shall vote the Shares deposited pursuant to this Agreement, or
consent with respect to them, in his sole and absolute discretion.
<PAGE>
3.02 Voting in Interest of Company. Subject to the
requirements of Paragraph 3.01 above, in doing any act not subject to
Paragraph 3.01 above regarding the control or management of the Company
or its affairs, as holder of stock deposited pursuant to this
Agreement, the Trustee shall exercise his best judgment in the interest
of the Company to the end that its affairs shall be properly managed,
but he shall assume no responsibility regarding management or any
action taken by management or taken by the Company in pursuance of his
consent to it as a shareholder or in pursuance of his vote so cast.
3.03 Action of Trustee. All action to be taken on any question
presented to the Trustee, except as otherwise expressly provided in
this Agreement, shall from time to time be determined by a signed
writing of the Trustee. The Trustee may provide for the authentication
of evidence of any action taken by him.
3.04 Meeting with Certificate Holders. On any issue presented
to the shareholders of the Company for vote, upon which the Trustee
desires the opinion of the Voting Trust Certificate Holders, the
Trustee may call a meeting for this purpose. At the meeting, the
Holders may determine the manner in which they desire the Trustee to
act, but the Trustee shall not be bound to act in the manner
designated. The Trustee shall not be called upon or expected to take
any action as a result of this meeting unless and until he has been
fully indemnified against all loss, damage, claim, or injury to which
he might be subjected, either by reason of his action or by reason of
his position as Trustee under this Agreement.
3.05 Trustees Relationship with Company. The Trustee, his
employees or agents, and any firm, corporation, trust, or association
of which he may be a trustee, stockholder, director, officer, member,
agent, or employee may contract with or be or become pecuniarily
interested, directly or indirectly, in any matter or transaction to
which the Company or AutoPrime, or any subsidiary or controlled or
affiliated corporation, may be a party or in which he may be concerned,
as fully and freely as thought the Trustee were not a Trustee pursuant
to this Agreement. The Trustee, his employees, or agents may act as
directors or officers of the Company or AutoPrime, or of any subsidiary
or controlled or affiliated corporation.
3.06 Compensation of Trustee. The Trustee shall serve without
compensation, except as may be agreed, from time to time, by the
Company and the Trustee.
3.07 Expenses. The Trustee is expressly authorized to incur
and pay those reasonable charges and expenses that he may deem
necessary and proper for the administration of this Agreement. The
Voting Trust Certificate Holders shall reimburse and indemnify the
Trustee for all claims, expenses, and liabilities incurred by him in
<PAGE>
connection with the discharge of his duties under this Agreement. Any
such claims, expenses, or liabilities shall be charged to the Voting
Trust Certificate Holders, pro rata, and may be deducted from dividends
or other distributions to them, pursuant to Paragraph 4.04, or may be
made a charge payable following termination of the Voting Trust as a
condition to the delivery of Shares in exchange for Voting Trust
Certificates, pursuant to Paragraph 6.03, and the Trustee shall be
entitled to a lien for this charge on the share certificates, Shares,
funds, or other property in his possession.
3.08 Trustees Liability. The Trustee shall be free from
liability in acting upon any paper, document, or signature believed by
him to be genuine and to have been signed by the proper party. The
Trustee shall not be liable for any error of judgment, nor for any act
done or omitted, nor for any mistake of fact or law, nor for anything
that he may do or refrain from doing in good faith, nor generally shall
the Trustee have any accountability pursuant to this Agreement, except
that the Trustee shall be liable for his own intentional misconduct or
gross negligence. The Trustee may be advised by legal counsel, and any
action under this Agreement taken or suffered in good faith by him in
accordance with the opinion of counsel shall be conclusive on the
parties to this Agreement, and the Trustee shall be fully protected and
be subject to no liability in respect to any action taken or suffered
under this Agreement.
ARTICLE 4
DIVIDEND, DISTRIBUTION AND SUBSCRIPTION RIGHTS
OF CERTIFICATE HOLDERS
4.01 Cash Dividends. The Holders shall be entitled to receive
from time to time payments equal to the amount of cash dividends, if
any, collected or received by the Trustee on the Shares in regard to
which Voting Trust Certificates were issued, less the deductions
provided for in Paragraph 4.05. These payments shall be made to the
Holders as soon as practicable after the receipt of the dividends.
Instead of receiving cash dividends and paying them to the Holders, the
Trustee may instruct the Company in writing to pay the dividends
directly to the Holders. When these instructions are given to the
Company, all liability of the Trustee with regard to the dividends
shall cease, until the instructions are revoked. The Trustee may at any
time revoke the instructions and by written notice to the Company
direct it to make dividend payments to the Trustee.
4.02 Share Distributions. If the Trustee receives as a
dividend or other distribution on any Shares or other voting securities
held by him under this Agreement, any additional Shares or other voting
securities, the Trustee shall hold them subject to this Agreement for
<PAGE>
the benefit of the Holders, and the Shares or other voting securities
shall become subject to all of the terms and conditions of this
Agreement to the same extent as if they were originally deposited under
it. The Trustee may, in his discretion, issue Voting Trust Certificates
in respect of these Shares or other voting securities to the Holders.
4.03 Other Distributions. If at any time during the term of
this Agreement the Trustee shall receive or collect any moneys
(including payment of cash dividends) through a distribution by the
Company to its shareholders or shall receive any property (other than
nonvoting securities) through a distribution by the Company to its
security holders, the Trustee shall distribute same to the Holders.
The Trustee may withhold from the distribution the deductions provided
for in Paragraph 4.04. Any voting securities received by the Trustee
through any such distribution shall be retained by the Trustee as part
of the assets of the Voting Trust, pursuant to Paragraphs 2.01 and
4.02 above.
4.04 Deductions for Distributions. There shall be deducted and
withheld from every distribution of every kind under this Agreement any
taxes, assessments, or other charges that may be required by law to be
deducted or withheld, as well as expenses and charges incurred pursuant
to Paragraph 3.07, to the extent that the expenses and charges remain
unpaid or unreimbursed.
4.05 Subscription Rights. If the Trustee shall receive notice
of an offer by the Company of additional securities for subscription,
the Trustee shall promptly mail a copy of the notice to the Holders. On
receipt by the Trustee, at least three (3) days prior to the last date
fixed by the Company for subscription, of a request from a Holder to be
subscribed in its behalf, accompanied by the sum of money required to
be paid for the securities, the Trustee shall make the subscription and
payment on behalf of such Holder.
On receiving from the Company the certificate for the
securities subscribed for, if the securities are voting securities, the
Trustee shall issue to the subscribing Holder a Voting Trust
Certificate in respect of those securities, and, if they are nonvoting
securities, the Trustee shall deliver the certificate to the
subscribing Holder.
4.06 Record Date for Distributions. The Trustee may, if he
deems it advisable, fix a date not exceeding ten (10) days preceding
any date for the payment or distribution of dividends, or for the
distribution of assets or rights, as a record date for the
determination of the Voting Trust Certificate Holders entitled to
receive the payment or distribution, and the Voting Trust Certificate
Holders of record on that date shall be exclusively entitled to
participate in the payment or distribution. If the Trustee fails to fix
a record date, the date three (3) days prior to the date of payment or
distribution of dividends or the distribution of assets or rights shall
constitute the record date for the determination of the Voting Trust
Certificate Holders entitled to receive the payment or distribution.
<PAGE>
ARTICLE 5
BOOKS AND RECORDS
5.01 Record of Shares. It shall be the duty of the Trustee to
maintain a record of all share certificates of the Company that are
transferred to the Trustee, indicating the name in which the stock was
held, the date of issuance of the stock, the class of the stock, the
number of Shares, and the number of the certificates representing those
Shares. The Trustee shall also maintain a record of the date on which
he received any share certificates and the date on which they were
delivered to the Company for transfer to the Trustee, and shall obtain
a receipt for any certificates so delivered. The Trustee shall receive
and hold the new share certificates issued by the Company in the name
of the Trustee and shall maintain a record indicating the date of
issuance of the certificates, the date of receipt of the certificates,
and the place in which he is holding the certificates.
5.02 Record of Voting Trust Certificates. The Trustee shall
maintain a record showing the names and addresses of the Holders. The
record shall show the number of Certificates held by each person. The
record shall show the dates on which the Voting Trust Certificates were
issued, canceled, transferred, or replaced. The record shall be known
as the Voting Trust Certificate Register and shall be open to
inspection by any of the parties to this Agreement or their successors
at any reasonable time. The first Voting Trust Certificate Holder to
appear in such Register shall be the Certificate Holders who are
signatories to this Agreement. The record shall show any subsequent
transfer, assignment, pledge, attachment, execution, and any other
matter affecting the title to the Voting Trust Certificates that comes
to the attention of the Trustee. Any documents purporting to affect the
title of the Voting Trust Certificates shall also be kept in the Voting
Trust Certificate Register, together with a sample copy of the Voting
Trust Certificate.
5.03 Books of Account. The Trustee or his agent shall maintain
books of account that shall be in the form prescribed from time to time
by the Trustee. In addition to other matters that the Trustee may
insert in the record, the record shall show all sums of money received
by the Trustee, all disbursements made by the Trustee, and all
obligations incurred by the Trustee that are unpaid. Information
concerning these accounts shall be posted at least monthly.
5.04 Other Records. The Trustee shall maintain such other
books and records and shall perform the duties required of him to be
performed elsewhere in this Agreement.
<PAGE>
5.05 Inspection of Records. The parties to this Agreement
shall deposit a counterpart of this Agreement with the Company at its
registered office, and the Agreement shall be subject to the same right
of examination by a shareholder of the Company, in person or by agent
or attorney, as are the books and records of the Company.
ARTICLE 6
TERM OF TRUST
6.01 Irrevocability of Trust. The trust created by this
Agreement is expressly declared to be irrevocable, except as otherwise
provided in this Agreement.
6.02 Termination. This Agreement shall terminate upon the
earlier to happen of the following events;
(a) The conversion of 3,500,000 Shares of Series A
Non-Cumulative Convertible Preferred Stock of the
Company;
(b) The mutual agreement evidenced in writing of (i) the
Holders of all Voting Trust Certificates, (ii) the
Company, and (iii) AutoPrime, Inc. or their
successor(s) in interest;
(c) December 30, 2013, subject to extension as provided in
Nevada Revised Statues, Section 78.365(2).
6.03 Distribution of Share Certificates After Termination. Within
thirty (30) days after the termination of this Agreement, the Trustee shall
distribute to the Voting Trust Certificate Holders, subject to Paragraphs 3.07
and 4.04 above, share certificates representing the number of Shares in respect
of which the Voting Trust Certificates were issued, in exchange for the
surrender of the Voting Trust Certificates properly endorsed and on payment by
the persons entitled to receive the share certificates of a sum sufficient to
cover (a) any governmental charge on the transfer or delivery of the share
certificates, and (b) any items described in Paragraphs 3.07 and 4.04 to the
extent they remain unpaid or unreimbursed, subject, however, to the liens
benefitting AutoPrime.
<PAGE>
6.04 Final Accounting. Within sixty (60) days after termination of this
Agreement, the Trustee shall render a final accounting to the Voting Trust
Certificate Holders and to the Company and shall distribute any funds or other
assets held by him to the parties entitled to them.
ARTICLE 7
CERTAIN DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings assigned to them below, unless the context otherwise requires:
Company shall mean AutoCorp Equities, Inc., a Nevada corporation, and
any other entity which may become a successor to AutoCorp Equities, Inc. or the
business and assets of AutoCorp Equities, Inc. through conversion, sale of
assets, merger, consolidation, plan of share exchange, reorganization, or
otherwise.
Beneficial Interest shall mean the right, title, and interest of the
Holders in and to the Voting Trust and shall be divided into Shares and
evidenced as provided in Paragraph 2.04.
Holder shall mean a Voting Trust Certificate Holder.
Shares and shares shall mean, unless the context otherwise requires,
(a) the Shares of Common Stock of AutoCorp Equities, Inc. being deposited by the
Certificate Holders pursuant to this Agreement in connection with the execution
and delivery of this Agreement; (b) any additional Shares of Common Stock or
other voting securities of the Company subsequently deposited by the Certificate
Holders pursuant to Paragraph 2.01 of this Agreement; and (c) any Shares of
Common Stock or other voting securities of the Company which are received by the
Trustee as a dividend or other distribution (including a liquidating
distribution), or otherwise.
Voting Trust Certificate Holder, Certificate Holder, or Holder shall
mean a holder of a Voting Trust Certificate. The initial Voting Trust
Certificate Holders shall be the Certificate Holders who are signatories to this
Agreement. When there is more than one Voting Trust Certificate Holder, action
by such Holders may be authorized by them in the manner provided in Paragraph
4.07.
<PAGE>
ARTICLE 8
MISCELLANEOUS
8.01 Place of Performance. This Agreement is made, executed, and
entered into at Dallas, Dallas County, Texas, and it is mutually agreed that the
performance of all parts of this contract shall be made at Dallas, Dallas
County, Texas, and any dispute arising hereunder must be resolved in the United
States District Court for the Northern District of Texas, Dallas Division, or a
Civil District Court, in and for Dallas County, Texas.
8.02 Governing Law. This Agreement is intended by the parties to be
governed and construed in accordance with the laws of the State of Texas, except
that all matters considered to be internal corporate matters of the Company,
including requirements of the formation and operation of voting trusts for
Nevada corporations shall be governed by Nevada law.
8.03 Construction by Trustee. The Trustee is authorized and empowered
to construe this Agreement. His reasonable construction made in good faith shall
be conclusive and binding on all parties to this Agreement and on any Voting
Trust Certificate Holders.
8.04 Notices to Parties. If given to a party to this Agreement, any
notice, demand, waiver, or consent required or permitted under this Agreement or
a Voting Trust Certificate shall be in writing and shall be given by personal
delivery, courier, overnight service, facsimile transmission, prepaid telegram
or prepaid registered or certified mail, with return receipt requested,
addressed to the pertinent address set forth on the signature page hereof.
The date of any such notice and of service thereof shall be deemed to
be the day of its receipt by the party to whom it is addressed. Any party hereto
may at any time and from time to time change its address for the receipt of
notice pursuant to this Agreement by giving notice to the other parties hereto
in the manner set forth herein for the giving of notice.
8.05 Notice to Holders. Any notice to be given to a Voting Trust
Certificate Holder other than the Certificate Holders shall be sufficiently
given if mailed, postage prepaid, to him or her at the address of the Voting
Trust Certificate Holder appearing in the Voting Trust Certificate Register to
be maintained by the Trustee. Every notice so given shall be effective whether
or not received, and such notice shall for all purposes be deemed to have been
given on the date of its mailing.
<PAGE>
8.06 Notice and Reports from Company. Each Holder shall have the right
to:
(a) Receive from the Company, in the same manner and at the
same time as if the Holder were a shareholder, copies
of such reports, financial statements, notices, proxy
statements, and other documents as the Company shall
distribute to its shareholders.
(b) Receive from the Company notice of each annual and
special meeting of shareholders, in the same manner and
at the same time as if the Holder were a shareholder.
8.07 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which, taken
together, shall constitute one and the same instrument.
8.08 Amendment of Agreement. This Agreement may be amended by the
agreement in writing of the Company and the Trustee, together with approval by
the Voting Trust Certificate Holders obtained in accordance with the provisions
of Paragraphs 4.07, 4.08 and this Paragraph 8.09. If the Trustee deems it
advisable, he shall call a special meeting of Voting Trust Certificate Holders
for the purpose of obtaining the approval of the Holders. The notice of the
meeting shall contain a copy of the proposed amendment.
8.09 Advice of Counsel. Each of the parties agrees and represents that
he or she has been represented by his or her own counsel with regard to the
execution of this Agreement or, if acting without counsel, that he or she has
had adequate opportunity and has been encouraged to take the advice of his or
her own counsel prior to the execution of this Agreement.
8.10 Duplicate of this Agreement. A duplicate of this Agreement shall
be filed in the registered office of the Company in the State of Nevada. Such
duplicate shall at all times during the term of this Agreement be open to
inspection by any stockholder or his attorney.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
this Agreement to be duly executed on their behalf as of the day and year first
above written.
ADDRESSES:
THE COMPANY
AutoCorp Equities, Inc. AUTOCORP EQUITIES, INC.
5949 Sherry Lane
Suite 525
Dallas, Texas 75225 By:/s/ Charles Norman
-------------------------------
Charles Norman
President and
Chief Executive Officer
THE TRUSTEE
Charles Norman, Trustee
5949 Sherry Lane
Suite 525
Dallas, Texas 75225 /s/ Charles Norman
----------------------------------
Charles Norman, Trustee
THE VOTING TRUST
CERTIFICATE HOLDERS
APPROVED:
AUTOPRIME, INC.
By:/s/ Robert A. Baker
-------------------------------
Robert A. Baker
<PAGE>
EXHIBIT A
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT AND SUCH LAWS. AS A CONDITION TO SALE OR OTHER TRANSFER
OF THIS SECURITY, THE COMPANY MAY, AT ITS OPTION, REQUIRE THE PROPOSED
TRANSFEROR HEREOF TO DELIVER TO THE COMPANY AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT
REQUIRED FOR SUCH PROPOSED SALE OR OTHER TRANSFER.
AUTOCORP EQUITIES, INC.
VOTING TRUST CERTIFICATE
ISSUED UNDER VOTING TRUST Agreement II
(Management of AutoCorp)
Certificate Number ______
This Voting Trust Certificate (Certificate) evidences that
_________________ (referred to in this Certificate as the Certificate Holder) is
the owner and holder of _______ Shares of Beneficial Interest in Voting Trust II
(the Voting Trust) created pursuant to that certain Voting Trust Agreement II
(Voting Trust Agreement II) dated as of December 30, 1998, by and among certain
Certificate Holders, AutoCorp Equities, Inc. (the Company), and Charles Norman,
as Trustee (the Trustee).
Capitalized terms used herein, which are not defined herein, shall have
the same meanings when used herein as they do when used in Voting Trust
Agreement II.
This Certificate is issued by the Trustee to the Certificate Holder on
the following terms and conditions:
<PAGE>
1. Rights of Certificate Holder. The Certificate Holder hereby accepts
and ratifies all of the terms, conditions, and covenants of the Voting Trust
Agreement. A counterpart of this Agreement is on file at the registered office
of the Company in the State of Nevada and is incorporated by reference in this
Certificate as though set forth in full herein.
This Certificate evidences ownership of only a Beneficial Interest in
the Voting Trust. Pursuant to Voting Trust Agreement II, the Trustee is the
owner and holder of the legal title of all Shares of Common Stock of the Company
deposited pursuant to the Agreement. The Certificate Holder has rights with
respect to the Shares of stock of the Company deposited pursuant to Voting Trust
Agreement II only as provided in the Agreement.
2. Voting Rights. The undersigned Trustee during the term of this
Voting Trust Agreement is the legal owner of the Shares of stock of the Company
deposited pursuant to this Voting Trust Agreement for all purposes relating to
Voting Trust Agreement and in all matters of the Company for which the Shares
may be voted. No voting rights of Shares deposited pursuant to this Voting Trust
Agreement are granted to the Certificate Holder by this Certificate. Only the
rights as a Holder of a Beneficial Interest in Voting Trust provided to the
Certificate Holder in this Voting Trust Agreement are represented by this
Certificate.
3. Dividends and Distributions. The Certificate Holder is entitled to
receive, subject to the limitations in this Voting Trust Agreement, all cash
dividends or other distributions of non-voting securities of the Company
received by the undersigned Trustee. In the event of share dividends, the
Trustee shall receive and hold them pursuant to the terms of Voting Trust
Agreement I and may, in his discretion, issue to the Certificate Holder
additional Voting Trust Certificates representing the share dividends.
4. Termination. The Voting Trust shall terminate upon the earlier to
happen of the following events;
(a) The conversion of all then-outstanding Shares of Series
A Non-Cumulative Convertible Preferred Stock of the
Company;
(b) The mutual agreement evidenced in writing of (i) the
Holders of all Voting Trust Certificates, (ii) the
Company and (iii) AutoPrime, Inc. or its successor(s)
in interest;
<PAGE>
(c) December 30, 2012, subject to extension as provided in
Nevada Revised Statutes, Section 78.365(2).
5. Distribution of Share Certificates After Termination. Subject to the
terms and provisions of Voting Trust Agreement II, within thirty (30) days after
the termination of Voting Trust Agreement II, the Trustee shall distribute to
the Certificate Holder, subject to Paragraphs 3.07 and 4.04 of Voting Trust
Agreement II, certificates for Shares representing the number of Shares in
respect of which this Certificate was issued, in exchange for the surrender of
this Certificate properly endorsed and on payment by the Certificate Holder of a
sum sufficient to cover (a) any governmental charge on the transfer or delivery
of the share certificates, and (b) the pro rata share attributable to this
Certificate of any items described in Paragraphs 3.07 and 4.04 of Voting Trust
Agreement II to the extent they remain unpaid or unreimbursed.
6. Transfer of Certificates. Subject to the terms of Voting Trust
Agreement II and the lien rights of AutoPrime, Inc., this Certificate is
transferable in the same manner as any other security. Any transfer shall be on
the books of the Trustee or his agent and shall be made only on the surrender of
this Certificate by the Certificate Holder or his or her attorney endorsed in
blank or to the transferee. The Trustee may treat the registered Certificate
Holder or, at the election of the Trustee in his sole and absolute discretion,
when presented duly endorsed in blank, the bearer of this Certificate as its
absolute owner and as the owner of all rights and interests in the Voting Trust
represented by this Certificate for all purposes whatsoever. The Trustee shall
not be bound or affected by any notice to the contrary.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Voting
Trust Certificate as of the ______ day of ___________________, 199__.
TRUSTEE
------------------------------------
Charles Norman, Trustee
<PAGE>
ASSIGNMENT
For value received, the undersigned hereby sells, assigns, and
transfers to ___________________ this Voting Trust Certificate and the
Beneficial Interest in the Voting Trust represented by this Voting Trust
Certificate. The undersigned irrevocably appoints _________________ his or her
attorney with full power of substitution to transfer this Certificate on the
books of the Trustee.
Dated: ______________, 19____. ________________________________________
(Please sign exactly as name appears on
Certificate)
________________________________________
(Typed or Printed Name)
Taxpayer ID No.______________________
SIGNATURE GUARANTEED
________________________________________
(Name of Bank, trust company or broker)
By: ___________________________________
Name:___________________________________
Its: ___________________________________
Address: _______________________________
________________________________________
<PAGE>
EXHIBIT B
FORM OF INVESTMENT LETTER
To: Charles Norman, Trustee
5949 Sherry Lane
Suite 525
Dallas, Texas 75225
In connection with the transfer to the undersigned of Shares of
Beneficial Interest in the Voting Trust established by that certain Voting Trust
Agreement II dated December 30, 1998, by and among certain Certificate Holders,
AutoCorp Equities, Inc., and Charles Norman (the Trustee), the undersigned
hereby represents that he/she/it is acquiring such Shares of Beneficial Interest
(as evidenced by one or more certain Voting Trust Certificate(s) issued pursuant
to Voting Trust Agreement II) for his/her/its own account for investment and not
with a view to or for sale in connection with any distribution of said Shares.
Capitalized terms used herein, which are not defined herein, shall have
the same meanings when used herein as they do when used in Voting Trust
Agreement II.
Dated:______________________ ____________________________________
By:_________________________________
(Signature)
____________________________________
(Printed or Typed Name)
EXHIBIT 9.3
EXCHANGE TRUST AGREEMENT
This Exchange Trust Agreement (Agreement) is made and entered into as
of the 30th day of December, 1998, by and among Consumer Investment Corporation
("CIC"), AutoCorp Equities, Inc., a Nevada corporation ("AutoCorp"), Charles
Norman, a resident of Collin County, Texas, as trustee (the "Trustee"), and
AutoPrime, Inc., a Delaware corporation ("AutoPrime"), to create an Exchange
Trust (the "Exchange Trust") to hold certain Shares of Common Stock, $0.001 par
value (the "Common Stock"), of AutoCorp for the benefit of (i) CIC to be used
for the benefit of the Holders of certain issued and outstanding debentures of
CIC (the "Debentures"), for the purpose of enabling CIC to offer to the Holders
of Debentures an exchange of herein described Shares for Debentures, and (ii)
for the benefit of AutoPrime to be used in conjunction with the terms and
conditions of a certain "Unconditional Tender of AutoCorp Preferred and Common
Stock" listed as an "Additional Document" on Exhibit "A" to the "Master
Agreement", on the terms and conditions set forth in this Agreement and the
Master Agreement between the foregoing parties and others of even date (the
"Master Agreement"), including the "Additional Documents" as that term is
defined in the Master Agreement.
R E C I T A L S
A. CIC, AutoCorp, AutoPrime and various other parties have entered into a
Master Agreement of even date providing for the restructuring and
refinancing of AutoCorp.
B. CIC covenants and agrees in the Master Agreement to use its best efforts,
along with the efforts of others, to effect, prior to December 31, 1999, an
exchange of Shares of Common Stock of AutoCorp for outstanding Debentures
of CIC at the exchange rate of one (1) Share for each $4.00 in principal
amount of Debentures.
C. Toward this end, AutoCorp agrees in the Master Agreement to place 1,425,887
Shares of Common Stock in this Exchange Trust for the benefit of CIC. Any
of such 1,425,887 Common Stock remaining in this Exchange Trust at the
close of business December 31, 1999, shall be returned to AutoCorp.
D. In that certain Pledge Agreement of even date, CIC pledges to AutoPrime the
Certificates of Beneficial Interest issued and to be issued to CIC pursuant
<PAGE>
to this Exchange Trust Agreement. The purpose of the pledge is to secure
certain of its obligations to AutoPrime, as well as the obligations of
others.
E. AutoPrime has agreed to release from the pledge and return to CIC, prior to
the termination of the Exchange Trust, certificates evidencing such number
of shares of Beneficial Interest as may be necessary to effect any
exchanges of the nature described above. Such certificates are to be
returned within a timeframe that will facilitate such exchanges.
F. In addition, pursuant to the Master Agreement and the Unconditional Tender
of AutoCorp Preferred and common Stock, AutoCorp has tendered 1,091,113
Shares of its Common Stock to AutoPrime in full satisfaction of
$1,091,113.00 of indebtedness owed by AutoCorp to AutoPrime. In order to
assure AutoPrime that is interests in such tendered common Stock are fully
protected and preserved, AutoCorp has delivered such 1,091,113 shares, in
trust, to the Trustee hereof, subject to and in accordance with the
Unconditional Tender of AutoCorp Preferred and common stock which is
referred to and incorporated herein. Any of such 1,091,113 Shares of Common
Stock remaining in this Exchange Trust at the close of business on December
1, 1999, shall be returned to AutoCorp, although it is anticipated that,
prior to such date, AutoPrime will accept AutoCorp's tender of such common
Stock, in which event the 1,091,113 shares shall be promptly delivered to
AutoPrime.
F. The purpose of this Exchange Trust Agreement is to implement the foregoing
agreements.
G. Certain terms used in this Agreement shall have the meanings assigned to
them in Article 7 of this Agreement, including, without limitation, the
terms 'Shares' and "AutoCorp".
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises contained herein, the parties agree as follows:
<PAGE>
ARTICLE 1
TRUSTEE
1.01 Number and Term of Trustees. There will be one (1) Trustee of this
Exchange Trust. The initial Trustee is the individual named above. His
successor, as Trustee, will be appointed as provided in Paragraph 1.05. The
Trustee will serve for the entire term of this Exchange Trust in the absence of
his resignation, removal, incapacity or death.
1.02 Death, etc. of Trustee. The Trustee is serving in a representative
capacity only. The powers, authority, rights, and duties of the Trustee shall
terminate on his death, incapacity, or bankruptcy, and no interest in any of the
property owned or held by the Exchange Trust nor any of the powers, authority,
rights, or duties of the Trustee may be transferred by will, devise, succession,
incapacity, divorce, or bankruptcy, in any other manner, except as provided in
this Agreement. The heirs, administrators, executors, successors and assigns for
the Trustee shall, however, have the right and duty to convey any property held
by the Trustee to the successor Trustee. No creditor or creditors of the Trustee
shall have any interest in or rights whatsoever with respect to any property
owned or held by the Exchange Trust.
1.03 Resignation. The Trustee may resign by giving notice of his
resignation to CIC , AutoPrime and to AutoCorp. When the Trustee resigns, either
CIC or AutoPrime or AutoCorp may settle any account or transaction with the
resigning Trustee.
1.04 Removal. The Trustee may be removed for cause at any time by any
of CIC. AutoPrime or AutoCorp. The Trustee may also be removed at any time
without cause by the mutual agreement of CIC, AutoPrime and AutoCorp.
1.05 Successor Trustees. Subject to Paragraph 1.01 above, in the event
of the resignation, removal, incapacity or death of the Trustee (or any
successor Trustee), a successor Trustee shall be elected by the mutual agreement
of CIC and AutoPrime or, in the event of disagreement, by AutoPrime.
<PAGE>
ARTICLE 2
DEPOSIT AND TRANSFER OF SHARES;
ISSUANCE AND TRANSFER OF
EXCHANGE TRUST CERTIFICATES;
PLEDGE AND RELEASE OF TRUST CERTIFICATES
2.01 Deposit of Shares. On the execution of this Agreement, AutoCorp
shall deposit with the Trustee two share certificates, one for 1,425,887 Shares
and one for 1,091,113 Shares of AutoCorp Common Stock, in trust for the benefit
of (i) CIC (1,425,887 Shares and (ii) one for AutoPrime (1,091,113 Shares) to be
utilized only as agreed under the terms of this Exchange Trust Agreement and the
Master Agreement. All of such share certificates shall be endorsed in blank or
to the Trustee and be accompanied by instruments of transfer that will enable
the Trustee to cause the share certificates to be transferred into the name of
the Trustee.
CIC, in its capacity as beneficiary, hereby and in order to encourage
the exchange of Common Stock for Debenture debt, hereby covenants and agrees to
deposit in a like manner any additional certificates evidencing Common Stock of
AutoCorp which may be registered in its name in the future, regardless of the
capacity or manner in which such shares of Common Stock are received or
registered in its name. This includes Common Stock registered in CIC's name in a
representative capacity, as well as Common Stock registered in the names of CIC
and one or more other persons.
Any shares of Common Stock which are received by the Trustee during the
term of this Agreement, whether received pursuant to the paragraph above,
Paragraph 4.02, Paragraph 4.05, or otherwise, shall become part of the assets of
the Exchange Trust and shall be subject to all the terms and conditions of this
Agreement.
2.02 Transfer of Shares to Trustee. All share certificates delivered to
the Trustee shall be surrendered by the Trustee to AutoCorp and canceled. New
share certificates shall be issued in the name of the Trustee. The new share
certificates shall state that they are issued pursuant to this Agreement. That
fact shall also be noted in AutoCorp's stock transfer records as part of the
entry of the Trustees' ownership of the Shares. The Trustee shall hold all share
certificates for all Common Stock subject to the terms of this Agreement. Such
share certificates shall be and remain in the possession of the Trustee.
<PAGE>
2.03 CIC Pledge of Trust CIC Certificate. The Trust Certificate being
issued to CIC for 1,425,887 Shares is being pledged to AutoPrime, Inc., a
Delaware corporation, pursuant to a certain Pledge Agreement of even date. CIC
is executing and delivering the Pledge Agreement concurrently with the execution
and delivery of this Agreement in order to pledge such Trust Certificate and all
subsequently acquired Trust Certificates to AutoPrime, Inc., to secure the
performance of CIC's obligations under the Pledge Agreement. In connection
therewith, CIC are also delivering possession of all now or hereafter issued
Trust Certificates to AutoPrime, Inc. in pledge to perfect the security interest
granted to AutoPrime, Inc. in the Pledge Agreement.
CIC also covenants and agrees to deliver to AutoPrime, Inc. any
additional certificates evidencing shares of Common Stock which may come into
its possession during the term of the Pledge Agreement, whether received
pursuant to Paragraph 4.02, Paragraph 4.05, or otherwise.
The parties understand and acknowledge that in the event of an Event of
Default as defined in the Pledge Agreement, AutoPrime, Inc., or its successor in
interest, may foreclose on such securities.
2.04 Transfer of Shares to Successor Trustees. Notwithstanding any
changes in the identity of the Trustee, the Certificates for Common Stock
standing in the name of the Trustee may be endorsed and transferred by any
successor Trustee with the same effect as if endorsed and transferred by the
Trustee who has ceased to act. The Trustee is authorized and empowered to cause
any further transfer of the Common Stock that may be necessary because of any
change of persons holding the office of Trustee.
2.05 No Mortgage or Sale of Assets of the Exchange Trust. The Trustee
has no authority to sell or otherwise dispose of or mortgage, pledge or encumber
in any manner any of the Common Stock deposited pursuant to the provisions of
this Agreement, or any other shares or securities received by the Trustee during
the term of this Agreement, except for the benefit of AutoPrime as set forth in
this Trust Agreement and the Master Agreement.
2.06 Trust Certificates. All right, title, and interest of the Trust
Certificate Holders in and to the Exchange Trust shall be divided into Shares of
Beneficial Interest. One share of Beneficial Interest shall correspond to one
share of Common Stock deposited pursuant to this Agreement. Trust Certificates
shall evidence Shares of Beneficial Interest in the Exchange Trust. The Trustee
shall issue and deliver to (i) CIC, against receipt of the shares initially
deposited pursuant to Paragraph 2.01 above, one Trust Certificate in
substantially the form of Exhibit "A-1" attached to this Agreement evidencing
the same number of Shares of Beneficial Interest as the number of shares of
Common Stock have been deposited for the benefit of CIC, and (ii) AutoPrime,
against receipt of the shares initially deposited pursuant to Paragraph 2.01
above, on Trust Certificate in substantially the form of Exhibit "A-2" attached
to this Agreement evidencing the same number of Shares of Beneficial Interest as
<PAGE>
the number of shares of Common Stock have been deposited for the benefit of
AutoPrime. The aggregate number of Shares of Beneficial Interest represented by
all Trust Certificates shall at all times equal the aggregate number of all
shares of Common Stock deposited pursuant to this Agreement.
Each Trust Certificate shall contain a statement that the shares of
Common Stock represented by the certificate are subject to the provisions of
this Exchange Trust Agreement and shall contain a statement that a counterpart
of the Exchange Trust Agreement has been deposited with AutoCorp at its
registered office.
2.07 Fractional Trust Certificates. If an interest in this trust that
is owned by a Holder cannot be fully represented by whole Trust Certificates,
the Trustee may issue fractional share Trust Certificates, scrip, or other
evidence of ownership of the fractional part of one Trust Certificate that in
his discretion properly indicates ownership of the fractional interest. When
such an issue is made, the fractional interest shall not under any circumstances
have any greater rights or lesser liabilities than any other Trust Certificate.
2.08 Transfer of Trust Certificates. Trust Certificates shall be
transferable only as provided in the Certificates and in this Agreement, and on
payment of any charges payable at the time of transfer. All transfers shall be
recorded in the Trust Certificate Register provided for in Paragraph 5.02. Any
transfer made of any Trust Certificate shall vest in the transferee all rights
of the transferor and shall subject the transferee to the same limitations as
those imposed on the transferor by the terms of the Trust Certificate and by
this Agreement and the perfected lien rights of AutoPrime.
During the term of the Pledge Agreement (see Paragraph 2.03), Trust
Certificates are transferable only upon the transferee executing and becoming a
party to the Pledge Agreement and delivering possession of any Trust Certificate
to be registered in his name to AutoPrime, Inc. or its successor(s) in pledge to
secure the performance of the obligations of CIC under the Pledge Agreement.
In addition, during the term of the Pledge Agreement, the Trustee shall
deliver all Trust Certificates to AutoPrime, Inc. or its successor(s) (instead
of to the transferee) to be held in pledge to secure the performance of CIC's
obligations under the Pledge Agreement, for the number of shares of Common Stock
represented by the Trust Certificate so transferred. Thereafter, the Trustee
shall deliver to the transferee Trust Certificates for the number of shares of
Common Stock represented by the Trust Certificate so transferred.
<PAGE>
2.09 Proof of Ownership. The Trustee shall not be required to recognize
any transfer of a Trust Certificate not made in accordance with the provisions
of this Agreement unless the persons claiming ownership have produced indicia of
title satisfactory to the Trustee, and shall have deposited with the Trustee
indemnity satisfactory to him.
2.10 Holder of Certificate as Owner. The Trustee may treat any
Trust Certificate Holder as the absolute owner and Holders of the Trust
Certificates registered in his or her name and as having all of the rights and
interests represented by them for all purposes, and the Trustee shall not be
bound or affected by any notice to the contrary.
2.11 Replacement of Certificates. If a Trust Certificate becomes
mutilated or is destroyed, stolen, or lost, the Trustee, in his discretion, may
issue a new Trust Certificate of like tenor and denomination in exchange and
substitution for and on cancellation of the mutilated Trust Certificate, or in
substitution for the Certificate so destroyed, stolen, or lost. The applicant
for a substituted Trust Certificate shall furnish to the Trustee evidence of the
destruction, theft, or loss of the Certificate satisfactory to him in his sole
discretion. The applicant shall also furnish indemnity satisfactory to the
Trustee and to his agents.
2.12 Securities Law Matters. The Trust Certificates will be issued
without registration under the Securities Act of 1933, as amended (the "1933
Act"), or the Texas Securities Act, in reliance on exemptions contained in such
statutes or in the rules and regulations promulgated by the Securities and
Exchange Commission under the 1933 Act.
There will not be any public market for the Trust Certificates, and the
sale or transfer of Trust Certificates will be subject to significant
restrictions on transferability.
Trust Certificate Holders may not resell or transfer the Trust
Certificates except in accordance with the provisions of the 1933 Act and the
Texas Securities Act. A Trust Certificate Holders may be required to bear the
economic risk of holding such securities for an indefinite period of time unless
they are subsequently registered under applicable securities laws, or an
exemption from such registration is available. The Trustee does not intend to
cause any of such securities to be so registered or such an exemption to be made
available.
As a condition to sale or other transfer of Trust Certificates, the
Trustee may, at his option, require:
<PAGE>
(a) The proposed transferor or transferee to deliver to the Trustee
an opinion of counsel satisfactory to the Trustee, to the effect
that such registration or qualification is not required for such
proposed sale or other transfer; and/or
(b) The proposed transferee to deliver to the Trustee an investment
letter in substantially the form of either Exhibit "B-1" or
Exhibit "B-2" attached hereto.
2.13 Legends. All Trust Certificates, whether original issue or issued
upon transfer of a Trust Certificate, will have the following legend imprinted
on them:
"THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND
MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND SUCH LAWS. AS
A CONDITION TO SALE OR OTHER TRANSFER OF THIS SECURITY, THE COMPANY
MAY, AT ITS OPTION, REQUIRE THE PROPOSED TRANSFEROR HEREOF TO DELIVER
TO AutoCorp AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED FOR SUCH
PROPOSED SALE OR OTHER TRANSFER.
(For the Exhibit "A-1" Certificate (CIC only):
IN ADDITION, THIS TRUST CERTIFICATE IS SUBJECT TO A SECURITY INTEREST
IN FAVOR OF AUTOPRIME, INC. SUCH SECURITIES HAVE BEEN PLEDGED TO
AUTOPRIME, INC. PURSUANT TO THAT CERTAIN PLEDGE AGREEMENT DATED
DECEMBER 30, 1998, TO SECURE THE OBLIGATIONS OF CONSUMER INVESTMENT
CORPORATION AND LENDERS LIQUIDATION CENTERS, INC. CONTAINED IN THAT
CERTAIN PLEDGE AGREEMENT DATED DECEMBER 30, 1998, BETWEEN SUCH
CORPORATIONS AND AUTOPRIME, INC.; IN THE EVENT OF AN EVENT OF DEFAULT,
AS DEFINED IN THE PLEDGE AGREEMENT, AUTOPRIME, INC. MAY FORECLOSE ON
THE PLEDGED SECURITIES. DURING THE TERM OF THE PLEDGE AGREEMENT, THIS
TRUST CERTIFICATE MAY BE TRANSFERRED ONLY UPON THE TRANSFEREE EXECUTING
AND BECOMING A PARTY TO THE PLEDGE AGREEMENT AND DELIVERING POSSESSION
OF THIS TRUST CERTIFICATE TO AUTOPRIME, INC. IN PLEDGE FOR THE PURPOSE
DESCRIBED ABOVE."
<PAGE>
2.14 Exchange of CIC Beneficial Shares for CIC Debentures. CIC,
AutoCorp, AutoPrime and various other parties have entered into a Master
Agreement of even date providing in part for the restructuring and refinancing
of AutoCorp. CIC covenants and agrees in the Master Agreement, and reaffirms
here in this Trust Agreement, to use its best efforts to effect, prior to
December 31, 1999, an exchange of Shares of Common Stock for indebtedness due
under the outstanding Debentures of CIC at the exchange rate of one (1) shares
of Common Stock for each $4.00 in principal amount of Debentures.
2.15. Return of Shares. All parties to this Agreement agree that one
of the two purposes of the Exchange Trust is to effect the exchanges described
in this Agreement and that any of the 1,425,887 Shares held for the benefit of
CIC which remain in this Exchange Trust at the close of business on December 31,
1999, shall be returned to AutoCorp, free and clear of the provisions and
conditions of this Exchange Trust and free and clear of all liens, claims,
encumbrances and taxes. In addition, pursuant to the Unconditional Tender of
AutoCorp Preferred and Common Stock, any of the 1,091,113 Shares held for the
benefit of AutoPrime which remain in this Exchange Trust at the close of
business on December 1, 1999, shall be returned to AutoCorp, free and clear of
the provisions and conditions of this Exchange Trust and free and clear of all
liens, claims, encumbrances and taxes.
2.16. Pledge and Release of CIC Beneficial Interests. In that certain
Pledge Agreement of even date, (see Paragraph 2.03) CIC pledges to AutoPrime all
Certificates of Beneficial Interest issued and to be issued to it pursuant to
the Exchange Trust Agreement. The purpose of the pledge is to secure certain of
its obligations to AutoPrime. AutoPrime has agreed, and reaffirms here in this
Agreement, that it will release from the pledge of the Pledge Agreement and
return to CIC prior to the termination of this Agreement, certificates
evidencing such number of shares of Beneficial Interest as may be necessary to
effect any exchanges of the nature described in this Agreement. AutoPrime agrees
to return such certificates within a timeframe that will facilitate exchanges.
<PAGE>
ARTICLE 3
ACTION BY TRUSTEE
3.01 Exchange of Shares. While the Trustee holds Common Stock deposited
pursuant to the provisions of this Agreement, he shall, subject to Paragraph
2.05, possess and shall be entitled to exercise in person or by his nominee(s),
agent(s), attorney(s)-in-fact, or proxies all rights and powers of an absolute
owner and to vote, assent, or consent with respect to those rights and powers
and to take part in and consent to any corporate or shareholders' actions, and
to receive dividends and distributions on such Common Stock. No other person
shall have any rights in respect to the such Common Stock so long as this
Agreement is in effect and the shares are registered in the name of the Trustee.
On any issue presented to shareholders of AutoCorp, the Trustee shall
vote the shares deposited pursuant to this Agreement, or consent with respect to
them, in his sole and absolute discretion.
3.02 Voting in Interest of Company. Subject to the requirements of
Paragraph 3.01 above, in doing any act not subject to Paragraph 3.01 above
regarding the control or management of AutoCorp or its affairs, as Holders of
stock deposited pursuant to this Agreement, the Trustee shall exercise his best
judgment in the interest of AutoCorp to the end that its affairs shall be
properly managed, but he shall assume no responsibility regarding management or
any action taken by management or taken by AutoCorp in pursuance of his consent
to it as a shareholder or in pursuance of his vote so cast.
3.03 Action of Trustee. All action to be taken on any question
presented to the Trustee, except as otherwise expressly provided in this
Agreement, shall from time to time be determined by a signed writing of the
Trustee. The Trustee may provide for the authentication of evidence of any
action taken by him.
3.04 Meeting with Certificate Holders. On any issue presented to the
shareholders of AutoCorp for vote, upon which the Trustee desires the opinion of
either Trust Certificate Holders, the Trustee may call a meeting for this
purpose. At the meeting, the Holders may opine concerning the manner in which it
desires the Trustee to act, but the Trustee shall be bound to act in the manner
designated. The Trustee shall not be called upon or expected to take any action
as a result of this meeting unless and until he has been fully indemnified
against all loss, damage, claim, or injury to which he might be subjected,
either by reason of his action or by reason of his position as Trustee under
this Agreement.
<PAGE>
3.05 Trustee's Relationship with Company. The Trustee, his employees or
agents, and any firm, corporation, trust, or association of which he may be a
trustee, stockholder, director, officer, member, agent, or employee may contract
with or be or become pecuniarily interested, directly or indirectly, in any
matter or transaction to which AutoCorp or AutoPrime, Inc., or any subsidiary or
controlled or affiliated corporation, may be a party or in which he may be
concerned, as fully and freely as thought the Trustee were not a Trustee
pursuant to this Agreement. The Trustee, his employees, or agents may act as
directors or officers of AutoCorp or AutoPrime, Inc., or of any subsidiary or
controlled or affiliated corporation.
3.06 Compensation of Trustee. The Trustee shall serve without
compensation, except as may be agreed, from time to time, by AutoCorp, AutoPrime
and the Trustee.
3.07 Expenses. The Trustee is expressly authorized to incur and pay
those reasonable charges and expenses that he may deem necessary and proper for
the administration of this Agreement. CIC or AutoPrime, as may be appropriate as
the two Trust Certificate Holders, shall reimburse and indemnify the Trustee for
all claims, expenses, and liabilities incurred by him in connection with the
discharge of his duties under this Agreement. Any such claims, expenses, or
liabilities shall be charged to the Trust Certificate Holders, pro rata, and may
be deducted from dividends or other assets available to (i) CIC or AutoPrime, as
appropriate, and for (ii) to the corpus of this Exchange Trust, or may be made a
charge payable following termination of the Exchange Trust as a condition to the
delivery of shares of Common Stock in exchange for Trust Certificates, pursuant
to Paragraph 6.03, and the Trustee shall be entitled to a lien for this charge
on the share certificates, the shares, the common Stock, all funds or other
property in his possession.
3.08 Trustee's Liability. The Trustee shall be free from liability in
acting upon any paper, document, or signature believed by him to be genuine and
to have been signed by the proper party. The Trustee shall not be liable for any
error of judgment, nor for any act done or omitted, nor for any mistake of fact
or law, nor for anything that he may do or refrain from doing in good faith, nor
generally shall the Trustee have any accountability pursuant to this Agreement,
except that the Trustee shall be liable for his own intentional misconduct or
gross negligence. The Trustee may be advised by legal counsel, and any action
under this Agreement taken or suffered in good faith by him in accordance with
the opinion of counsel shall be conclusive on the parties to this Agreement, and
the Trustee shall be fully protected and be subject to no liability in respect
to any action taken or suffered under this Agreement.
<PAGE>
ARTICLE 4
DIVIDEND, DISTRIBUTION AND SUBSCRIPTION RIGHTS
OF CERTIFICATE HOLDERS
4.01 Cash Dividends. The Holders shall be entitled to receive from time
to time payments equal to the amount of cash dividends, if any, collected or
received by the Trustee on the Common Stock in regard to which Trust
Certificates were issued, less the deductions provided for in Paragraph 4.05.
These payments shall be made to the Holders as soon as practicable after the
receipt of the dividends. Instead of receiving cash dividends and paying them to
the Holders, the Trustee may instruct AutoCorp in writing to pay the dividends
directly to the Holders. When these instructions are given to AutoCorp, all
liability of the Trustee with regard to the dividends shall cease, until the
instructions are revoked. The Trustee may at any time revoke the instructions
and by written notice to AutoCorp direct it to make dividend payments to the
Trustee.
4.02 Share Distributions. If the Trustee receives as a dividend or
other distribution on any securities held by him under this Agreement, any
additional Common Stock or other securities, the Trustee shall hold them subject
to this Agreement for the benefit of the Holders, and the securities shall
become subject to all of the terms and conditions of this Agreement to the same
extent as if they were originally deposited under it. The Trustee may, in his
discretion, issue Trust Certificates in respect of these securities to the
appropriate Holder. If so, such newly-issued Trust Certificates issued for the
benefit of CIC shall be delivered to AutoCorp for purposes of the pledge
described in Paragraph 2.03.
4.03 Other CIC Distributions. If at any time during the term of this
Agreement the Trustee shall receive or collect any moneys (including payment of
cash dividends) for the benefit of CIC through a distribution by AutoCorp to its
shareholders or shall receive any property through a distribution by AutoCorp to
its security holders, the Trustee shall distribute same to CIC, which, in turn,
shall pledge such property as additional collateral to secure the obligations
described in the Pledge Agreement. The Trustee may withhold from the
distribution the deductions provided for in Paragraph 4.04. Any securities
received by the Trustee through any such distribution for the benefit of either
or both of CIC and AutoPrime shall be retained by the Trustee as part of the
assets of the Exchange Trust, pursuant to Paragraphs 2.01 and 4.02 above.
4.04 Deductions for Distributions. There shall be deducted and withheld
from every distribution of every kind under this Agreement any taxes,
assessments, or other charges that may be required by law to be deducted or
<PAGE>
withheld, as well as expenses and charges incurred pursuant to Paragraph 3.07,
to the extent that the expenses and charges remain unpaid or unreimbursed.
4.05 Subscription Rights. If the Trustee shall receive notice of an
offer by AutoCorp of additional securities for subscription, the Trustee shall
promptly mail a copy of the notice to the Holders. On receipt by the Trustee, at
least three (3) days prior to the last date fixed by AutoCorp for subscription,
of a request from a Holders to be subscribed in its behalf, accompanied by the
sum of money required to be paid for the securities, the Trustee shall make the
subscription and payment on behalf of such Holders.
With respect to, and during the term of the Pledge Agreement, on being
entitled to receive the certificate for the securities subscribed for, if the
securities are voting securities, AutoCorp shall retain possession of the
certificate, to hold it in pledge to secure the performance of CIC's obligations
under the Pledge Agreement, the Trustee shall issue in the name of the
subscribing Holders a Trust Certificate in respect of those securities and shall
deliver same to AutoCorp, also to be held in pledge to secure the performance of
CIC's obligations under the Pledge Agreement. If the securities subscribed are
nonvoting securities, AutoCorp shall deliver the certificate for the subscribed
securities to the Trustee, and the Trustee shall deliver them to the respective
subscribing Holders.
If the Pledge Agreement is not in effect, on receiving from AutoCorp
the certificate for the securities subscribed for, if the securities are voting
securities, the Trustee shall issue to the subscribing Holders a Trust
Certificate in respect of those securities, and, if they are nonvoting
securities, the Trustee shall deliver the certificate to the subscribing
Holders.
4.06 Record Date for Distributions. The Trustee may, if he deems it
advisable, fix a date not exceeding ten (10) days preceding any date for the
payment or distribution of dividends, or for the distribution of assets or
rights, as a record date for the determination of the Trust Certificate Holders
entitled to receive the payment or distribution, and the Trust Certificate
Holders of record on that date shall be exclusively entitled to participate in
the payment or distribution. If the Trustee fails to fix a record date, the date
three (3) days prior to the date of payment or distribution of dividends or the
distribution of assets or rights shall constitute the record date for the
determination of the Trust Certificate Holders entitled to receive the payment
or distribution.
<PAGE>
ARTICLE 5
BOOKS AND RECORDS
5.01 Record of Shares. It shall be the duty of the Trustee to maintain
a record of all AutoCorp share certificates that are transferred to the Trustee,
indicating the name in which the stock was held, the date of issuance of the
stock, the class of the stock, the number of shares, and the number of the
certificates representing those shares. The Trustee shall also maintain a record
of the date on which he received any share certificates and the date on which
they were delivered to AutoCorp for transfer to the Trustee, and shall obtain a
receipt for any certificates so delivered. The Trustee shall receive and hold
the new share certificates issued by AutoCorp in the name of the Trustee and
shall maintain a record indicating the date of issuance of the certificates, the
date of receipt of the certificates, and the place in which he is holding the
certificates.
5.02 Record of Trust Certificates. The Trustee shall maintain a record
showing the names and addresses of the Holders. The record shall show the number
of Certificates held by each such Holders. The record shall show the dates on
which the Trust Certificates were issued, canceled, transferred, or replaced.
The record shall be known as the Trust Certificate Register and shall be open to
inspection by any of the parties to this Agreement or their successors at any
reasonable time. The first Trust Certificate Holders to appear in such Register
shall be CIC and the second shall be AutoPrime. The record shall show any
subsequent transfer, assignment, pledge, attachment, execution, and any other
matter affecting the title to the Trust Certificates that comes to the attention
of the Trustee. Any documents purporting to affect the title of the Trust
Certificates shall also be kept in the Trust Certificate Register, together with
a sample copy of the Trust Certificate.
5.03 Books of Account. The Trustee or his agent shall maintain books of
account that shall be in the form prescribed from time to time by the Trustee.
In addition to other matters that the Trustee may insert in the record, the
record shall show all sums of money received by the Trustee, all disbursements
made by the Trustee, and all obligations incurred by the Trustee that are
unpaid. Information concerning these accounts shall be posted at least monthly.
5.04 Other Records. The Trustee shall maintain such other books and
records and shall perform the duties required of him to be performed elsewhere
in this Agreement.
5.05 Inspection of Records. The parties to this Agreement shall deposit
a counterpart of this Agreement with AutoCorp at its registered office, and the
<PAGE>
Agreement shall be subject to the same right of examination by a shareholders of
AutoCorp, in person or by agent or attorney, as are the books and records of
AutoCorp.
ARTICLE 6
TERM OF TRUST
6.01 Irrevocability of Trust. The trust created by this Agreement is
expressly declared to be irrevocable, except as otherwise provided in this
Agreement.
6.02 Termination. This Agreement shall terminate upon the earlier to
happen of the following events;
(a) December 31, 1999;
(b) All Debentures have been exchanged, and no Debentures
remain outstanding and the 1,091,113 shares held for
the benefit of AutoPrime have been either returned to
AutoCorp or delivered to AutoPrime, as provided in the
Unconditional Tender of AutoCorp Preferred and Common
Stock
(c) The conversion to Common Stock of 3,500,000 shares of
then-outstanding Shares of AutoCorp Series A
Non-Cumulative Convertible Preferred Stock and the
1,091,113 Shares held for the benefit of AutoPrime have
been either returned to AutoCorp or delivered to
AutoPrime, as provided in the Unconditional Tender of
AutoCorp Preferred and Common Stock.
(d) The mutual agreement evidenced in writing of (i) the
Holders of all Trust Certificates, (ii) AutoCorp, and
(iii) AutoPrime, Inc. or their respective successors in
interest; or
(e) At the election of AutoPrime Inc., upon the occurrence
of an Event of Default under the Master Agreement or
any of the Additional Documents.
<PAGE>
6.03 Distribution of Share Certificates After Termination. Within
thirty (30) days after the termination of this Agreement, the Trustee shall
distribute to the Trust Certificate Holders, subject to Paragraphs 3.07 and 4.04
above, share certificates representing the number of shares of Common Stock in
respect of which Trust Certificates were issued, in exchange for the surrender
of the Trust Certificates properly endorsed and on payment by the persons
entitled to receive the share certificates of a sum sufficient to cover (a) any
governmental charge on the transfer or delivery of the share certificates, and
(b) any items described in Paragraphs 3.07 and 4.04 to the extent they remain
unpaid or unreimbursed.
6.04 Final Accounting. Within sixty (60) days after termination of this
Agreement, the Trustee shall render a final accounting to the Trust Certificate
Holders, to AutoCorp and to AutoPrime and shall distribute any funds or other
assets held by him to the parties entitled to them.
ARTICLE 7
CERTAIN DEFINITIONS
When used in this Agreement, the following terms shall have the
meanings assigned to them below, unless the context otherwise requires:
"Beneficial Interest" shall mean the right, title, and interest of the
Holders in and to the Exchange Trust and shall be divided into Shares and
evidenced as provided in Paragraph 2.04.
"Debentures" shall mean those certain outstanding and issued of
Debentures issued by CIC.
"Holder" shall mean a Trust Certificate Holder.
"Pledge Agreement" shall mean that certain Pledge Agreement of even
date executed by CIC and LLIC, pursuant to which they have granted AutoPrime
certain security interests, including a security interest in all shares of
Common Stock deposited pursuant to this Agreement in order to secure CIC and
LLIC's obligations under the Pledge Agreement.
<PAGE>
"Shares" shall mean, unless the context otherwise requires, (a) the
Shares of Common Stock of AutoCorp Equities, Inc. being initially deposited
pursuant to this Agreement in connection with the execution and delivery of this
Agreement;
"Trust Certificate Holder", "Certificate Holder", or "Holder" shall
mean a holder of a Trust Certificate. The first Trust Certificate Holder shall
be CIC and the second shall be AutoPrime.. When there is more than one Trust
Certificate Holder, action by all Holders may be authorized by them in the
manner provided in Paragraph 4.07.
ARTICLE 8
MISCELLANEOUS
8.01 Place of Performance. This Agreement is made, executed, and
entered into at Dallas, Dallas County, Texas, and it is mutually agreed that the
performance of all parts of this contract shall be made at Dallas, Dallas
County, Texas, and any dispute arising hereunder must be resolved in the United
States District Court for the Northern District of Texas, Dallas Division, or a
Civil District Court, in and for Dallas County, Texas.
8.02 Governing Law. This Agreement is intended by the parties to be
governed and construed in accordance with the laws of the State of Texas, except
that all matters considered to be internal corporate matters of AutoCorp,
including requirements of the formation and operation of all trusts for shall be
governed by Nevada law.
8.03 Construction by Trustee. The Trustee is authorized and empowered
to construe this Agreement. His reasonable construction made in good faith shall
be conclusive and binding on all parties to this Agreement and on any Trust
Certificate Holders.
8.04 Notices to Parties. If given to a party to this Agreement, any
notice, demand, waiver, or consent required or permitted under this Agreement or
a Trust Certificate shall be in writing and shall be given by personal delivery,
courier, overnight service, facsimile transmission, prepaid telegram or prepaid
registered or certified mail, with return receipt requested, addressed to the
last address know to the Trustee.
The date of any such notice and of service thereof shall be deemed to
be the day of its receipt by the party to whom it is addressed. Any party hereto
may at any time and from time to time change its address for the receipt of
notice pursuant to this Agreement by giving notice to the other parties hereto
in the manner set forth herein for the giving of notice.
<PAGE>
8.05 Notice to Holders. Any notice to be given to a Trust Certificate
Holder other than CIC shall be sufficiently given if mailed, postage prepaid, to
him or her at the address of the Trust Certificate Holder appearing in the Trust
Certificate Register to be maintained by the Trustee. Every notice so given
shall be effective whether or not received, and such notice shall for all
purposes be deemed to have been given on the date of its mailing.
8.06 Notice and Reports from Company. Each Holder shall have the right
to:
(a) Receive from AutoCorp, in the same manner and at the
same time as if the Holder were a shareholder, copies
of such reports, financial statements, notices, proxy
statements, and other documents as AutoCorp shall
distribute to its shareholders.
(b) Receive from AutoCorp notice of each annual and special
meeting of shareholders, in the same manner and at the
same time as if the Holder were a shareholder.
8.07 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original but all of which, taken
together, shall constitute one and the same instrument.
8.08 Amendment of Agreement. This Agreement may be amended by the
agreement in writing by AutoCorp and the Trustee.
8.09 Advice of Counsel. Each of the parties agrees and represents that
he or she has been represented by his or her own counsel with regard to the
execution of this Agreement or, if acting without counsel, that he or she has
had adequate opportunity and has been encouraged to take the advice of his or
her own counsel prior to the execution of this Agreement.
8.10 Duplicate of this Agreement. A duplicate of this Agreement shall
be filed in the registered office of AutoCorp in the State of Nevada. Such
duplicate shall at all times during the term of this Agreement be open to
inspection by any stockholder or his attorney.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
this Agreement to be duly executed on their behalf as of the day and year first
above written.
ADDRESSES:
AutoCorp Equities, Inc. AUTOCORP EQUITIES, INC.
5949 Sherry Lane
Suite 525
Dallas, Texas 75225 By: /s/ Hunter Ennis
------------------------------
Hunter Ennis
Secretary
THE "TRUSTEE"
Charles Norman, Trustee
5949 Sherry Lane
Suite 525
Dallas, Texas 75225 /s/ Charles Norman
------------------------------
Charles Norman, Trustee
THE TRUST
CERTIFICATE HOLDER
Consumers Investment Corporation CONSUMERS INVESTMENT
2980 E. Northern Avenue CORPORATION)
Phoenix, AZ 85028 By: /s/ William O. Merritt
------------------------------
Name: William O. Merritt
Title: President
No. of Shares: 1,425,887
OTHER PARTIES
AutoPrime, Inc. AUTOPRIME, INC.
200 Crescent Court, Suite 1900
Dallas, Texas 75201 By: /s/ Robert A. Baker
------------------------------
Name: Robert A. Baker
Title: President
<PAGE>
EXHIBIT "A- 1"
(CIC)
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT AND SUCH LAWS. AS A CONDITION TO SALE OR OTHER TRANSFER
OF THIS SECURITY, THE COMPANY MAY, AT ITS OPTION, REQUIRE THE PROPOSED
TRANSFEROR HEREOF TO DELIVER TO AUTOCORP AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT
REQUIRED FOR SUCH PROPOSED SALE OR OTHER TRANSFER.
IN ADDITION, THIS TRUST CERTIFICATE IS SUBJECT TO A SECURITY INTEREST
IN FAVOR OF AUTOPRIME, INC. SUCH SECURITIES HAVE BEEN PLEDGED TO AUTOPRIME, INC.
PURSUANT TO THAT CERTAIN PLEDGE AGREEMENT DATED DECEMBER 30, 1998, TO SECURE THE
OBLIGATIONS OF CONSUMER INVESTMENT CORPORATION AND LENDERS LIQUIDATION CENTERS,
INC. CONTAINED IN THAT CERTAIN PLEDGE AGREEMENT DATED DECEMBER 30, 1998, BETWEEN
SUCH CORPORATIONS AND AUTOPRIME, INC.; IN THE EVENT OF AN EVENT OF DEFAULT, AS
DEFINED IN THE PLEDGE AGREEMENT, AUTOPRIME, INC. MAY FORECLOSE ON THE PLEDGED
SECURITIES.
DURING THE TERM OF THE PLEDGE AGREEMENT, THIS TRUST CERTIFICATE MAY BE
TRANSFERRED ONLY UPON THE TRANSFEREE EXECUTING AND BECOMING A PARTY TO THE
PLEDGE AGREEMENT AND DELIVERING POSSESSION OF THIS TRUST CERTIFICATE TO
AUTOPRIME, INC. IN PLEDGE FOR THE PURPOSE DESCRIBED ABOVE.
TRUST CERTIFICATE
AUTOCORP EQUITIES, INC.
Certificate Number
_______
<PAGE>
This Trust Certificate ("Certificate") evidences that _________________
(referred to in this Certificate as the "Certificate Holder") is the owner and
holder of _______ Shares of Beneficial Interest in the Exchange Trust (the
"Exchange Trust") created pursuant to that certain Exchange Trust Agreement (the
Exchange Trust Agreement) dated as of December 30, 1998, by and among certain
Certificate Holders, AutoCorp Equities, Inc. (the "Company"), AutoPrime, Inc.,
("AutoPrime") and Charles Norman, as Trustee (the "Trustee").
Capitalized terms used herein, which are not defined herein, shall have
the same meanings when used herein as they do when used in the Exchange Trust
Agreement.
This Certificate is issued by the Trustee to the Certificate Holder on
the following terms and conditions:
1. Rights of Certificate Holder. The Certificate Holders hereby accepts
and ratifies all of the terms, conditions, and covenants of the Exchange Trust
Agreement. A counterpart of this Agreement is on file at the registered office
of AutoCorp at 2980 E. Northern Avenue, Phoenix, AZ 85028 and is incorporated by
reference in this Certificate as though set forth in full herein.
This Certificate evidences ownership of only a Beneficial Interest in
the Exchange Trust. Pursuant to the Exchange Trust Agreement, the Trustee is the
owner and holder of the legal title of all Shares of Common Stock of AutoCorp
deposited pursuant to the Agreement. The Certificate Holders has rights with
respect to the Shares of stock of AutoCorp deposited pursuant to the Exchange
Trust Agreement only as provided in the Agreement.
THE CERTIFICATE HOLDER UNDERSTANDS AND ACKNOWLEDGES THAT (A) THESE
SHARES OF BENEFICIAL INTEREST IN THE EXCHANGE TRUST HAVE BEEN PLEDGED TO
AUTOPRIME, INC. TO SECURE THE OBLIGATIONS OF CONSUMER INVESTMENT CORPORATION AND
LENDERS LIQUIDATION CENTERS, INC. CONTAINED IN THAT CERTAIN PLEDGE AGREEMENT
DATED DECEMBER 30, 1998, BETWEEN SUCH CORPORATIONS AND AUTOPRIME, INC.; AND (B)
IN THE EVENT OF AN EVENT OF DEFAULT UNDER THE PLEDGE AGREEMENT, AUTOPRIME, INC.
MAY FORECLOSE ON SUCH SECURITIES.
<PAGE>
2. Voting Rights. The undersigned Trustee during the term of the
Exchange Trust Agreement is the legal owner of the Shares of stock of AutoCorp
deposited pursuant
to the Exchange Trust Agreement for all purposes relating to the Exchange Trust
Agreement and in all matters of AutoCorp for which the Shares may be voted. No
voting rights of Shares deposited pursuant to the Exchange Trust Agreement are
granted to the Certificate Holder by this Certificate. Only the rights as a
Holder of a Beneficial Interest in the Exchange Trust provided to the
Certificate Holder in the Exchange Trust Agreement are represented by this
Certificate.
3. Dividends and Distributions. The Certificate Holder is entitled to
receive, subject to the limitations in the Exchange Trust Agreement, all cash
dividends or other distributions of non-voting securities of AutoCorp received
by the undersigned Trustee. In the event of share dividends, the Trustee shall
receive and hold them pursuant to the terms of the Exchange Trust Agreement and
may, in his discretion, issue to the Certificate Holder additional Trust
Certificates representing the share dividends.
4. Termination. The Exchange Trust shall terminate upon the earlier to
happen of the following events;
(a) December 31, 1999;
(b) All Debentures have been exchanged, and no Debentures
remain outstanding and the 1,091,113 shares held for
the benefit of AutoPrime have been either returned to
AutoCorp or delivered to AutoPrime, as provided in the
Unconditional Tender of AutoCorp Preferred and Common
Stock
(c) The conversion to Common Stock of 3,500,000 shares of
then-outstanding Shares of AutoCorp Series A
Non-Cumulative Convertible Preferred Stock and the
1,091,113 Shares held for the benefit of AutoPrime have
been either returned to AutoCorp or delivered to
AutoPrime, as provided in the Unconditional Tender of
AutoCorp Preferred and Common Stock.
(d) The mutual agreement evidenced in writing of (i) the
Holders of all Trust Certificates, (ii) AutoCorp, and
(iii) AutoPrime, Inc. or their respective successors in
interest; or
<PAGE>
(e) At the election of AutoPrime Inc., upon the occurrence
of an Event of Default under the Master Agreement or
any of the Additional Documents.
5. Distribution of Share Certificates After Termination. Subject to the
terms and provisions of the Exchange Trust Agreement, within thirty (30) days
after the termination of the Exchange Trust Agreement, the Trustee shall
distribute to the Certificate Holder, subject to Paragraphs 3.07 and 4.04 of the
Exchange Trust Agreement, certificates for Shares representing the number of
Shares in respect of which this Certificate was issued, in exchange for the
surrender of this Certificate properly endorsed and on payment by the
Certificate Holder of a sum sufficient to cover (a) any governmental charge on
the transfer or delivery of the share certificates, and (b) the pro rata share
attributable to this Certificate of any items described in Paragraphs 3.07 and
4.04 of the Exchange Trust Agreement to the extent they remain unpaid or
unreimbursed.
6. Transfer of Certificates. Subject to the terms of the Exchange Trust
Agreement, this Certificate is transferable in the same manner as any other
security. Any transfer shall be on the books of the Trustee or his agent and
shall be made only on the surrender of this Certificate by the Certificate
Holder or his or her attorney endorsed in blank or to the transferee. The
Trustee may treat the registered Certificate Holder or, at the election of the
Trustee in his sole and absolute discretion, when presented duly endorsed in
blank, the bearer of this Certificate as its absolute owner and as the owner of
all rights and interests in the Exchange Trust represented by this Certificate
for all purposes whatsoever. The Trustee shall not be bound or affected by any
notice to the contrary.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Trust
Certificate as of the 30th day of December, 1998.
TRUSTEE
___________________________________
Charles Norman, Trustee
<PAGE>
ASSIGNMENT
For value received, the undersigned hereby sells, assigns, and
transfers to ___________________ this Trust Certificate and the Beneficial
Interest in the Exchange Trust represented by this Trust Certificate. The
undersigned irrevocably appoints _________________ his or her attorney with full
power of substitution to transfer this Certificate on the books of the Trustee.
Dated: ______________, 19____. ________________________________________
(Please sign exactly as name appears on
Certificate)
________________________________________
(Typed or Printed Name)
Taxpayer ID No._________________________
SIGNATURE GUARANTEED
________________________________________
(Name of Bank, trust company or broker)
By: ________________________________
Name: ________________________________
Its: ________________________________
Address:________________________________
________________________________________
<PAGE>
EXHIBIT "A- 2"
(CIC)
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SUCH ACT AND SUCH LAWS. AS A CONDITION TO SALE OR OTHER TRANSFER
OF THIS SECURITY, THE COMPANY MAY, AT ITS OPTION, REQUIRE THE PROPOSED
TRANSFEROR HEREOF TO DELIVER TO AUTOCORP AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY, TO THE EFFECT THAT SUCH REGISTRATION OR QUALIFICATION IS NOT
REQUIRED FOR SUCH PROPOSED SALE OR OTHER TRANSFER.
TRUST CERTIFICATE
AUTOCORP EQUITIES, INC.
Certificate Number
_________
This Trust Certificate ("Certificate") evidences that _________________
(referred to in this Certificate as the "Certificate Holder") is the owner and
holder of _______ Shares of Beneficial Interest in the Exchange Trust (the
"Exchange Trust") created pursuant to that certain Exchange Trust Agreement (the
Exchange Trust Agreement) dated as of December 30, 1998, by and among certain
Certificate Holders, AutoCorp Equities, Inc. (the "Company"), AutoPrime, Inc.,
("AutoPrime") and Charles Norman, as Trustee (the "Trustee").
Capitalized terms used herein, which are not defined herein, shall have
the same meanings when used herein as they do when used in the Exchange Trust
Agreement.
This Certificate is issued by the Trustee to the Certificate Holder on
the following terms and conditions:
<PAGE>
1. Rights of Certificate Holder. The Certificate Holders hereby accepts
and ratifies all of the terms, conditions, and covenants of the Exchange Trust
Agreement. A counterpart of this Agreement is on file at the registered office
of AutoCorp at 2980 E. Northern Avenue, Phoenix, AZ 85028 and is incorporated by
reference in this Certificate as though set forth in full herein.
This Certificate evidences ownership of only a Beneficial Interest in
the Exchange Trust. Pursuant to the Exchange Trust Agreement, the Trustee is the
owner and holder of the legal title of all Shares of Common Stock of AutoCorp
deposited pursuant to the Agreement. The Certificate Holders has rights with
respect to the Shares of stock of AutoCorp deposited pursuant to the Exchange
Trust Agreement only as provided in the Agreement.
2. Voting Rights. The undersigned Trustee during the term of the
Exchange Trust Agreement is the legal owner of the Shares of stock of AutoCorp
deposited pursuant to the Exchange Trust Agreement for all purposes relating to
the Exchange Trust Agreement and in all matters of AutoCorp for which the Shares
may be voted. No voting rights of Shares deposited pursuant to the Exchange
Trust Agreement are granted to the Certificate Holder by this Certificate. Only
the rights as a Holder of a Beneficial Interest in the Exchange Trust provided
to the Certificate Holder in the Exchange Trust Agreement are represented by
this Certificate.
3. Dividends and Distributions. The Certificate Holder is entitled to
receive, subject to the limitations in the Exchange Trust Agreement, all cash
dividends or other distributions of non-voting securities of AutoCorp received
by the undersigned Trustee. In the event of share dividends, the Trustee shall
receive and hold them pursuant to the terms of the Exchange Trust Agreement and
may, in his discretion, issue to the Certificate Holder additional Trust
Certificates representing the share dividends.
4. Termination. The Exchange Trust shall terminate upon the earlier to
happen of the following events;
(a) December 31, 1999;
(b) All Debentures have been exchanged, and no Debentures
remain outstanding and the 1,091,113 shares held for
the benefit of AutoPrime have been either returned to
AutoCorp or delivered to AutoPrime, as provided in the
Unconditional Tender of AutoCorp Preferred and Common
Stock
<PAGE>
(c) The conversion to Common Stock of 3,500,000 shares of
then-outstanding Shares of AutoCorp Series A
Non-Cumulative Convertible Preferred Stock and the
1,091,113 Shares held for the benefit of AutoPrime have
been either returned to AutoCorp or delivered to
AutoPrime, as provided in the Unconditional Tender of
AutoCorp Preferred and Common Stock.
(d) The mutual agreement evidenced in writing of (i) the
Holders of all Trust Certificates, (ii) AutoCorp, and
(iii) AutoPrime, Inc. or their respective successors in
interest; or
(e) At the election of AutoPrime Inc., upon the occurrence
of an Event of Default under the Master Agreement or
any of the Additional Documents.
5. Distribution of Share Certificates After Termination. Subject to the
terms and provisions of the Exchange Trust Agreement, within thirty (30) days
after the termination of the Exchange Trust Agreement, the Trustee shall
distribute to the Certificate Holder, subject to Paragraphs 3.07 and 4.04 of the
Exchange Trust Agreement, certificates for Shares representing the number of
Shares in respect of which this Certificate was issued, in exchange for the
surrender of this Certificate properly endorsed and on payment by the
Certificate Holder of a sum sufficient to cover (a) any governmental charge on
the transfer or delivery of the share certificates, and (b) the pro rata share
attributable to this Certificate of any items described in Paragraphs 3.07 and
4.04 of the Exchange Trust Agreement to the extent they remain unpaid or
unreimbursed.
6. Transfer of Certificates. Subject to the terms of the Exchange Trust
Agreement, this Certificate is transferable in the same manner as any other
security. Any transfer shall be on the books of the Trustee or his agent and
shall be made only on the surrender of this Certificate by the Certificate
Holder or his or her attorney endorsed in blank or to the transferee. The
Trustee may treat the registered Certificate Holder or, at the election of the
Trustee in his sole and absolute discretion, when presented duly endorsed in
blank, the bearer of this Certificate as its absolute owner and as the owner of
all rights and interests in the Exchange Trust represented by this Certificate
for all purposes whatsoever. The Trustee shall not be bound or affected by any
notice to the contrary.
<PAGE>
IN WITNESS WHEREOF, the Trustee has executed and delivered this Trust
Certificate as of the 30th day of December, 1998.
TRUSTEE
------------------------------------
Charles Norman, Trustee
ASSIGNMENT
For value received, the undersigned hereby sells, assigns, and
transfers to ___________________ this Trust Certificate and the Beneficial
Interest in the Exchange Trust represented by this Trust Certificate. The
undersigned irrevocably appoints _________________ his or her attorney with full
power of substitution to transfer this Certificate on the books of the Trustee.
Dated: ______________, 19____. _______________________________________
(Please sign exactly as name appears on
Certificate)
_______________________________________
(Typed or Printed Name)
Taxpayer ID No.________________________
SIGNATURE GUARANTEED
________________________________________
(Name of Bank, trust company or broker)
By: __________________________________
Name:__________________________________
Its: __________________________________
Address: ______________________________
<PAGE>
EXHIBIT "B-1"
FORM OF INVESTMENT LETTER
To: Charles Norman, Trustee
5949 Sherry Lane
Suite 525
Dallas, Texas 75225
In connection with the transfer to the undersigned of Shares of
Beneficial Interest in the Exchange Trust established by that certain Exchange
Trust Agreement dated December 30, 1998, by and among certain Certificate
Holders, AutoCorp Equities, Inc., and Charles Norman (the "Trustee"), the
undersigned hereby represents that he/she/it is acquiring such Shares of
Beneficial Interest (as evidenced by one or more certain Trust Certificates
issued pursuant to the Exchange Trust Agreement) for his/her/its own account for
investment and not with a view to or for sale in connection with any
distribution of said Shares.
THE CERTIFICATE HOLDER UNDERSTANDS AND ACKNOWLEDGES THAT (A) THESE
SHARES OF BENEFICIAL INTEREST IN THE EXCHANGE TRUST HAVE BEEN PLEDGED TO
AUTOPRIME, INC. TO SECURE THE OBLIGATIONS OF CONSUMER INVESTMENT CORPORATION AND
LENDERS LIQUIDATION CENTERS, INC. CONTAINED IN THAT CERTAIN PLEDGE AGREEMENT
DATED DECEMBER 30, 1998, BETWEEN SUCH CORPORATIONS AND AUTOPRIME, INC.; AND (B)
IN THE EVENT OF AN EVENT OF DEFAULT UNDER THE PLEDGE AGREEMENT, AUTOPRIME, INC.
MAY FORECLOSE ON SUCH SECURITIES.
Capitalized terms used herein, which are not defined herein, shall have
the same meanings when used herein as they do when used in the Exchange Trust
Agreement.
Dated:_______________________________ _______________________________
By:_______________________________
(Signature)
_______________________________
(Printed or Typed Name)
<PAGE>
EXHIBIT "B-2"
FORM OF INVESTMENT LETTER
To: Charles Norman, Trustee
5949 Sherry Lane
Suite 525
Dallas, Texas 75225
In connection with the transfer to the undersigned of Shares of
Beneficial Interest in the Exchange Trust established by that certain Exchange
Trust Agreement dated December 30, 1998, by and among certain Certificate
Holders, AutoCorp Equities, Inc., and Charles Norman (the "Trustee"), the
undersigned hereby represents that he/she/it is acquiring such Shares of
Beneficial Interest (as evidenced by one or more certain Trust Certificates
issued pursuant to the Exchange Trust Agreement) for his/her/its own account for
investment and not with a view to or for sale in connection with any
distribution of said Shares.
Capitalized terms used herein, which are not defined herein, shall have
the same meanings when used herein as they do when used in the Exchange Trust
Agreement.
Dated:_______________________________ __________________________________
By:__________________________________
(Signature)
__________________________________
(Printed or Typed Name)
EXHIBIT 99.1 TO FORM 8-K
CHARLES NORMAN
RESUME OF EXPERIENCE
1992 TO PRESENT
- --------------------------------------------------------------------------------
1998
AutoCorp Equities, Inc.
Industry: Non-prime, indirect consumer lending
- -----------------------------------------------
Position: Chief Executive Officer
1998
AutoPrime, Inc.
Industry: Non-prime, indirect consumer lending
- -----------------------------------------------
Position: Director of Asset Management
1997
Windsor Holdings, Inc.
Industry: Non-prime, indirect consumer lending
- ------------------------------------------------
Position: Chief Executive Officer
1995-1997
Allied Auto Credit
Industry: Non-prime finance lender/wholesale loan purchaser
- ------------------------------------------------------------
Position: President
1994-Present
Dumont Norman & Associates
Industry: Non-prime finance consulting
- ---------------------------------------
Position: Director
1994-1995
Auto Finance Express, Inc. dba Auto Express Financial
Industry: Sub-prime, indirect consumer lending
- -----------------------------------------------
Position: President
1993-1994
Leadership Financial Group
Industry: Sub-prime, indirect consumer lending
- -----------------------------------------------
Position: Vice President of Operations and Marketing
1992-1993
Union Federal Savings Bank
Industry: Conventional banking
- -------------------------------
Position: Regional Manager of Dealer Development, Dealer Banking Division
<PAGE>
Summary of Duties
Charles Norman, age 41, has been engaged in various aspects of
non-prime and sub-prime, indirect consumer lending since 1986. His experience is
primcipally in the area of automobile finance.
AutoPrime, Inc.: Position: Director of Asset Management
Industry: Commercial Capital Investing
03/98 - 08/98
Hired as a consulting work-out specialist on certain problems within the AP
portfolio. Soon after working with the President, I was offered a full time
position as the Director of Asset Management. Duties included the development of
the risk management department. Developed and implemented work-out and exit
strategies for independent automobile dealerships in default of Master Sale
Agreement. Responsible for development of underwriting criteria, inspection and
disposition of collateral, overseeing of portfolio servicing, negotiation of
on-going dealer relations, and instigating legal action. In addition, was
responsible for all hiring and training of risk management staff. Reported
directly to company President and implemented new company policies and
procedures for the management of portfolios in default.
Windsor Holdings, Inc.:Position: Chief Executive Officer
Industry: Non-Prime, Indirect Consumer Lending
1997
Responsible for the direction of all operations and policies of indirect lending
programs. Duties included the negotiations with financial sources and in the
securing of all financial conduits and maintaining strategic financial model for
future growth. Wrote and developed multi-tiered credit underwriting guidelines
and all marketing materials. Was directly involved with all marketing/dealer
development personnel and planned the market expansion into various states,
focusing on franchise dealerships. Was responsible for the overseeing and
direction of all administration staff and for the hiring and training of all key
personnel.
Allied Auto Credit: Position: President Industry: Non-Prime Finance
Lender/Wholesale Loan Purchaser 1995-1997
Served as President of Allied Auto Credit LLC which duties included designing
and developing all operational procedures for point-of-sale indirect lending for
Allied Auto Credit, including the recruitment of all key personnel, arranging
joint ventures, obtaining funding sources, and brokering in-house portfolios.
Directed administrative staff on all procedures for credit, purchasing,
collections and marketing. Responsible for regional direction of company growth,
including the strategic planning of markets for expansion. Effectively marketed
guidelines on numerous conduits and designed marketing materials to blend all
criteria. Participated daily in the direction of all marketing efforts and
staff. Worked directly with the company ownership to develop programs, design
procedures, and oversee all phases of complete start-up operation.
Dumont Norman & Associates: Position: Non-Prime Finance Consulting
Industry: Sub-Prime, Indirect Consumer Lending
1994 to Present
Contracted by numerous non-prime and sub-prime lenders to design operations
models, hire and train staff, design criteria and marketing materials, and
implement non-prime and sub-prime lending programs. Duties included the
negotiations of warehouse and credit lines for non-prime and sub-prime lenders.
Set up numerous servicing and collections departments. Was hired by financial
institutions to troubleshoot portfolio problems, underwriting guidelines,
securitizations, wholesale loan purchases and sales, liquidation of assets,
management problems, and servicing. Also contracted by franchise dealers to
<PAGE>
establish or develop non-prime finance departments and to hire and train
appropriate staff for these departments. Once departments were functional, used
alliances with non-prime and sub-prime lenders to maintain the success of the
special finance department.
Auto Finance Express, Inc. dba Auto Express Financial: Position: President
Industry: Sub-Prime, Indirect Consumer Lending
1994-1995
Responsible for day-to-day operations of sales, finance and lease contracting of
the offices and dealer locations. Established the draft line of credit and all
procedures for processing draft papers for funding of contracts. Established and
implemented all floor-plan procedures for purchasing and inventory control.
Managed operations on a daily basis. Used all major sub-standard lending
programs and portfolio purchasers for leasing and wholesale loan sales.
Leadership Financial Group: Position: Vice President of Operations and Marketing
Industry: Sub-Prime, Indirect Consumer Lending
1993-1994
Hired to workout the Company's portfolio and operational problems. Originated
Leadership's finance program and was responsible for the daily operations of the
company's indirect non-prime finance program within the state of Texas. Duties
included contracting new dealerships, training dealership finance and insurance
(F&I) personnel, and establishing dealership special finance departments.
Developed and perfected the marketing of the finance products for new and used
auto dealers. Trained all company employees in all aspects of operations
including credit underwriting, credit investigation, loan purchasing and
servicing. Responsible for yields and losses for the Texas portfolio. Changes
were initiated after hire, which increased investor yields and decreased losses.
At time of employment, program volume was at $350,000 in loans per month.
Changes were initiated to assure portfolio yields to investors and increase
volume. Within the next six months, 50 new dealerships were added to the program
and volume increased to $4,400,000 per month average. Delinquency ratios were
lowered from 25.8% to 8.6% within the first six-month period. The result was a
larger volume of loans purchased and a renewed cash flow of payments to the
investor pool
Union Federal Savings Bank: Position: Regional Manager of Dealer Development,
Dealer Banking Division
Indusry: Conventional Banking
1992-1993
Hired to co-manage an indirect lending program which had been implemented in
Texas one year prior and which was averaging $3 million in volume and had been
unable to obtain any real market share. In the first 18 months after hire date,
produced $212 million in volume with a .98% delinquency ratio in Texas. Average
volume production in Texas per month was at $15 million and average production
volume for Florida was $5 million per month. In the first six months in Florida,
produced $60 million in volume with a 1.19% delinquency ratio based on a
business base which was only for the Tampa/St. Petersburg area. Responsible for
27% of Union Federal's total production within the Dealer Banking Division.
Responsibilities also included the co-managing of day to day operations in Texas
and Florida for Union Federal's indirect lending program. Credit criteria were
aimed at the pristine credit tier (A+, B+) and competed with major credit
companies including GMAC, Ford Motor Credit, and Chrysler. Other major areas of
responsibility included underwriting, dollar amount of loan volume, number of
credit applications, number of cashed loan contracts, percentage of active
dealers, cashing ratios, net yields on performing portfolios in the region,
training of all new field employees for dealer accounts, completing marketing
plan of the finance program, and evaluating all field employees in Texas and
Florida. Assigned to the exploration and accumulation of data for Union
Federal's expansion into numerous new markets within the states of Texas and
Florida. In addition, gave significant input on making and maintaining bank
policies on credit criteria. Had the largest production of any region for Union
Federal.
