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
2. 1,425,887 shares of Beneficial Interest issued by Xxxxxxx
Xxxxxx, 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.
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,
xxx 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.
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.
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.
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.
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/ Xxxxxxx X. Xxxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
LENDERS LIQUIDATION CENTER, INC.
By:/s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
SECURED PARTY:
AUTOPRIME, INC.
By:/s/ Xxxxxx X. Xxxxx
----------------------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
