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 Xxxxxxx X. Xxxxxxx and Xxxxxx X.
Xxxxxx (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.
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 Xxxxxxx 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.
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,
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 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.
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
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
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.
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/ Xxxxxxx X. Xxxxxxx
---------------------------
Xxxxxxx X. Xxxxxxx
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxxx
---------------------------
Xxxxxx X. Xxxxxx
0000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
SECURED PARTY:
AUTOPRIME, INC.
By:/s/ Xxxxxx X. Xxxxx
-------------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
