SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
SCHEDULE 13-D
Under the Securities Exchange Act of 1934
AUTOCORP EQUITIES, INC.
(Name of Issuer)
COMMON STOCK, $.001 PAR VALUE
(Title of Class of Securities)
052764206
(CUSIP Number)
Charles Norman
AutoCorp Equities, Inc.
5949 Sherry Lane, Suite 525
Dallas, Texas 75225
(214) 378-8271
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
(December 30, 1998)
(Date of Event which Requires the Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
[_].
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
<PAGE>
SCHEDULE 13-D
CUSIP NO. 052764206
1 Names of Reporting Persons. S.S. or I.R.S. Identification Nos. of Above
Persons
Charles Norman, Trustee IRS. ID No. 75-6542723
2 Check the Appropriate Box if a Member of a Group (a) [_] (b) [_]
3 SEC Use Only
4 Source of Funds OO
5 Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
6 Citizenship or Place of Organization
USA
Number of Shares Beneficially Owned by Each Reporting Person With
7 SOLE VOTING POWER
3,217,000
8 SHARED VOTING POWER
-0-
9 SOLE DISPOSITIVE POWER
3,217,000
10 SHARED DISPOSITIVE POWER
-0-
11 Aggregate Amount Beneficially Owned by Each Reporting Person
3,217,000
12 Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
13 Percent of Class Represented by Amount in Row (11)
53%
14 Type of Reporting Person
EP, OO
<PAGE>
Item 1. Security and Issuer.
The title and class of equity securities to which this statement relates is
the Common Stock, $.001 par value (the "Common Stock"), of AutoCorp Equities,
Inc., a Nevada corporation (AAutoCorp@). AutoCorp's principal executive offices
are located at 5949 Sherry Lane, Suite 525, Dallas, Texas 75225.
Item 2. Identity and Background.
(a) - (c) This statement is being filed by Charles Norman, as Trustee
under three trusts for the benefit of various parties. The trusts are described
below. Mr. Norman=s business address is 5949 Sherry Lane, Suite 525, Dallas,
Texas 75225. His principal occupation or employment is President and Chief
Executive Officer of AutoCorp. He is also a Director of AutoCorp.
AutoCorp is a subprime indirect purchaser of automobile contracts. In
this capacity, it purchases subprime automobile loan portfolios, which it then
manages and services. AutoCorp also owns and operates automobile retail sales
locations.
As part of the transaction described in Item 5 below, AutoCorp entered
into three trust agreements dated as of December 30, 1998, with Mr. Norman, as
Trustee under Voting Trust Agreement I, Voting Trust Agreement II and Exchange
Trust Agreement. 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 AutoCorp to 350,000 Common Shares
be named in the future
Voting Trust II Executive officers of AutoPrime, 350,000 Common Shares
Inc. (AAuto Prime@) to be named
in the future
The Exchange Trust (a) Consumer Investment Corporation up to 1,425,887 Common Shares
(ACIC@) (for the benefit of the (all unused shares will first
holders of the CIC debentures) be available to AutoPrime
for satisfaction of AutoCorp
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
awfully accept prior to receipt
of approval from the Office
of Thrift Supervision)
</TABLE>
<PAGE>
See also Item 5 below.
(d) - (e) During the last five years Mr. Norman has not been convicted
in a criminal proceeding (excluding traffic violations or similar misdemeanors).
In addition, during the last five years, he has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction which
resulted in, or subjected him to, a judgment, decree or final order enjoining
future violations, etc., of federal or state securities laws or finding any
violations with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
See Item 5 below.
Item 4. Purpose of Transaction.
(a)-(j)
The Acquisition:
Mr. Norman made the acquisition of securities of AutoCorp reported in
this report as part of the transaction described in Item 5 below.
Changes in Management:
The Directors of AutoCorp at the time of the transaction were
Messrs. Charles Norman, William O. Merritt and Dennis W. Miller. Messrs. Norman
and Merritt are continuing as Directors, and Mr. Miller resigned at the closing
on December 30, 1998. Messrs. Merritt and Miller also resigned as officers of
AutoCorp at the closing.
Contemplated Changes in AutoCorp's Business:
AutoCorp is in the process of expanding its automobile retail
operations and financial services operations on a national basis.
Item 5. Interest in Securities of the Issuer.
See Item 1 of Form 8-K of AutoCorp filed (without exhibits) as Exhibit
99.2 to this Schedule 13D.
<PAGE>
Except as set forth in this Schedule 13D, including Item 6 below, there
have been no transactions by Charles Norman in the Common Stock of AutoCorp
within the last 60 days.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
See Item 5 above.
Except as set forth in this Schedule 13D, there are no presently
existing contracts or other agreements between Mr. Norman and any other person
regarding the securities of AutoCorp.
Item 7. Material to Be Filed as Exhibits
Attached as Exhibits are the following documents:
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@ in the Form 8-K filed as
Exhibit 99.2)*
99.2 Form 8-K of AutoCorp Equities, Inc. filed March 11, 1999 (without
exhibits). (Item 1 of this Form 8-K contains portions of Items 2,
3, 4, 5 and 6 of this Schedule 13D.)
- -----------------------------
* Incorporated by reference to the exhibit with the same name and
number attached to the Form 8-K filed by AutoCorp Equities, Inc.
on March 11, 1999.
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
------- -----------
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@ in the Form 8-K filed as
Exhibit 99.2)*
99.2 Form 8-K of AutoCorp Equities, Inc. filed March 11, 1999 (without
exhibits). (Item 1 of this Form 8-K contains portions of Items 2,
3, 4, 5 and 6 of this Schedule 13D.)
- -----------------------------
* Incorporated by reference to the exhibit with the same name and
number attached to the Form 8-K filed by AutoCorp Equities, Inc.
on March 11, 1999.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Schedule 13D is true, complete
and correct.
Date: March 23, 1999 /s/ Charles Norman
----------------------------------------------
Charles Norman, Trustee under Voting Trust
Agreement I, Voting Trust Agreement II and
Exchange Trust Agreement, each dated as of
December 30, 1998
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
1
<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.
2
<PAGE>
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
3
<PAGE>
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
4
<PAGE>
(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:
5
<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>
6
<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.
7
<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
8
<PAGE>
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)
9
<PAGE>
(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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(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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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
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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