STANDSTILL AGREEMENT
This Standstill Agreement, dated as of June 30, 2003 (this "Agreement"), is
entered into by and among AutoCorp Equities, Inc., a Nevada corporation (the
"Company"), and the stockholder named on the signature page hereto (the
"Holder").
RECITALS
A. Pursuant to the terms of an Agreement and Plan of Merger dated as of
June 20, 2003 (the "Merger Agreement"), PAG Acquisition Corp., a wholly owned
subsidiary of the Company, has merged with and into Pacific Auto Group, Inc., a
former wholly-owned subsidiary of the Holder. As consideration for the merger,
the Holder has received 100,000,000 shares of common stock, par value $.001 per
share, of the Company (the "Common Stock") and 4,086,856 shares of Series A
Convertible Preferred Stock, par value $.001 per share, of the Company (the
"Series A Preferred Stock").
B. As a condition precedent to the transactions contemplated by the Merger
Agreement, the Holder has agreed to the restrictions with respect to securities
of the Company set forth herein, including any shares of Common Stock or Series
A Preferred Stock currently owned by the Holder and any other shares hereafter
acquired by the Holder.
AGREEMENT
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound, hereto agree as
follows:
1. Definitions.
(a) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(b) "Person" means any natural person, corporation, limited liability
company, general partnership, limited partnership, proprietorship, other
business organization, trust, association or other entity.
(c) "Securities Act" means the Securities Act of 1933, as amended.
(d) "Voting Securities" means the Common Stock and any other security
of the Company entitled to vote generally for the election of directors,
and any security, warrant or other right convertible into, or exercisable
or exchangeable for, any Common Stock or any such other security.
2. Holder Commitments.
(a) For a period of one year from the date hereof or, if earlier, until
such time as the Holder beneficially owns less than 4.9% of the total
outstanding Voting Securities (as calculated pursuant to Rule 13d-3 under the
Exchange Act), without the prior written consent of the Company, the Holder
shall not, directly or indirectly, sell or transfer more than 1% of the total
outstanding Voting Securities to any Person or "group" (within the meaning of
Section 13(d)(3) of the Exchange Act), or sell or transfer any Voting Securities
to any such Person or group who or which, after the consummation of such sale or
transfer, would beneficially own more than 4.9% of the total outstanding Voting
Securities (as calculated pursuant to Rule 13d-3 under the Exchange Act), except
pursuant to:
(i) any merger or consolidation in which the Company is acquired,
or any plan of liquidation of the Company;
(ii) a tender or exchange offer for outstanding Voting Securities
that the Board of Directors of the Company does not oppose and that
does not violate Section 2(a); or
(iii) a sale or transfer in a "brokers' transaction" pursuant to
Rule 144(f) under the Securities Act; provided that any sales pursuant
to this clause (iii) shall be subject to the volume limitations set
forth in Rule 144(e) under the Securities Act (regardless of whether
such volume limitations are applicable to such sale); provided further
that, to the Holder's knowledge, no Person acquiring any Voting
Securities pursuant to such brokers' transaction shall acquire such
Voting Securities with the purpose or with the effect of changing or
influencing the control of the Company.
(b) Notwithstanding the restrictions set forth in subparagraph (a) above,
the Holder shall have the right to sell or convey up to 20,000,000 shares of
Common Stock to one or more unaffiliated third parties without restriction,
subject to compliance with applicable state and federal securities laws.
(c) For a period of two years from the date hereof, the Holder shall vote
or cause to be voted all Voting Securities of which the Holder is the beneficial
owner for three (3) nominees (designated by Holder) of the Board of Directors of
the Company for election to the Board of Directors (it being understood that, on
all other matters, Voting Securities of which the Holder is the beneficial owner
may be voted as it may determine in its sole discretion).
3. Legend; Transfer Instructions. The Holder hereby authorizes and
requests the Company to notify any transfer agent for the Company securities
that this Agreement places limits on the transfer of its shares of Voting
Securities. Certificates for such shares (whether issued before, on or after the
date hereof) shall be endorsed with a restrictive legend which shall read
substantially as follows:
THE TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO RESTRICTIONS ARISING UNDER A STANDSTILL
AGREEMENT, DATED AS OF JUNE 30, 2003, WHICH AMONG OTHER
THINGS RESTRICTS THE TRANSFER AND VOTING THEREOF. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT
CHARGE UPON RECEIPT BY THE COMPANY OF A WRITTEN REQUEST
THEREFOR.
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4. Enforcement. The Holder agrees that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the Company shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any Federal court of the United
States located in the Northern District of Texas or in a Texas state court
located in Dallas County, Texas, this being in addition to any other remedy to
which it is entitled at law or in equity. In addition, the Holder hereby (i)
consents to the personal jurisdiction of any Federal court located in the
Northern District of Texas or any Texas state court in Dallas County, Texas, in
the event any dispute arises out of this Agreement, (ii) agrees that the Holder
will not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that the Holder will not
bring any action relating to this Agreement in any court other than a Federal
court sitting in the Northern District of Texas or Texas state court located in
Dallas County, Texas, and (iv) waives any right to trial by jury with respect to
any claim or proceeding related to or arising out of this Agreement.
5. Notices. All notices, requests and other communications hereunder must
be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to the Company, to:
AutoCorp Equities, Inc.
0000 Xxxxxx Xx., Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
If to the Holder, to:
Pacific Holdings Group
0000 X. Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
All such notices, requests and other communications will (i) if
delivered personally to the address as provided in this Section 5, be deemed
given upon delivery, (ii) if delivered by facsimile transmission to the
facsimile numbIer as provided in this Section 5, be deemed given upon receipt,
and (iii) if delivered by mail in the manner described above to the address as
provided in this Section 5, be deemed given upon receipt. Any party from time to
time may change its address, facsimile number or other information for the
purpose of notices to that party by giving notice specifying such change to the
other party hereto.
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6. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any breach of agreement hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent breach
or affect in any way any rights arising by virtue of any prior or subsequent
breach. No failure or delay by a party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
7. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns.
8. Governing Law. This Agreement shall be construed in accordance with and
governed by the internal laws (without reference to choice or conflict of laws
that would apply any other law) of the State of Nevada.
9. Counterparts. This Agreement may be signed in any number of counterparts
and the signatures delivered by telecopy, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument.
10. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements, understandings and negotiations, both written and oral,
between the parties with respect to the subject matter of this Agreement.
11. Captions. The captions herein are included for convenience of reference
only and shall be ignored in the construction or interpretation hereof. All
references to an Article or Section include all subparts thereof.
12. Severability. If any provision of this Agreement, or the application
thereof to any Person, place or circumstance, shall be held by a court of
competent jurisdiction to be invalid, unenforceable or void, the remainder of
this Agreement and such provisions as applied to other Persons, places and
circumstances shall remain in full force and effect only if, after excluding the
portion deemed to be unenforceable, the remaining terms shall provide for the
consummation of the transactions contemplated hereby in substantially the same
manner as originally set forth at the later of the date this Agreement was
executed or last amended.
13. Third Party Beneficiaries. No provision of this Agreement shall create
any third party beneficiary rights in any Person.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
AUTOCORP EQUITIES, INC.
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: President
PACIFIC HOLDINGS GROUP
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Chief Executive Officer
