EXHIBIT 10.19
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT, ("Agreement"), is made and entered into
effective this 30th day of December, 1998 (this "Agreement"), by and among
AutoCorp Financial Services, Inc., a Texas corporation, and Ace Motor Company, a
Texas corporation (collectively, the "Buyer") and Lenders Auto Resale Centers of
Texas, Inc., an Arizona corporation, and Lenders Liquidation Centers, Inc., an
Arizona corporation, d/b/a Lenders Auto Resale Centers (collectively, the
"Seller").
R E C I T A L S:
Seller is a used automobile dealer in Xxxxxx, Xxxxxx County, Texas, and
has five (5) locations in Austin, Texas, three of which are used automobile
lots, one of which is a reconditioning center and one of which is a finance
office. In connection with Seller's business, Seller is the holder and owner of
(i) automobile retail installment contracts (the "Retail Installment Contracts")
arising from the sale of automobiles from Seller's places of business, and (ii)
certain furniture, fixtures, software, good will and equipment located at
Seller's five (5) locations (the "Personal Property"). Seller desires to sell
the Retail Installment Contracts and Personal Property, all as more particularly
described on Exhibit "A" attached hereto and incorporated herein (collectively,
the "Assets") to Buyer, and Buyer desires to purchase such Assets from Seller,
on the terms and subject to the conditions set forth in this Agreement.
Now therefore, for and in consideration of the foregoing and the
respective representations, warranties, covenants, and agreements set forth in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. For purposes of this agreement, the following
capitalized terms shall have the respective meanings set forth below:
(1) Agreement. This Asset Purchase Agreement.
(2) Assets. Assets, as used herein, shall include, but not be limited
to, (i) all Personal Property of Seller whether or not located at
any of Seller's five (5) locations located in Xxxxxx, Xxxxxx
County, Texas (the "Locations"), which Personal Property shall
include all furniture, equipment, computer software and hardware,
accounts receivable, notes receivable, credits, parts, work in
process, records, phone numbers, and Seller's leasehold interest
in, to and under the five (5) Locations, (ii) the Retail
Installment Contracts and all rights to receive monies on and
after the Cut-Off Date, and (iii) all rights and obligations
under that certain Servicing Agreement between Seller, as
Servicer and AutoPrime, as Owner, covering the retail installment
contracts transferred to AutoPrime by Lipshy Motor Cars, Inc. All
Assets shall be transferred free and clear of all liabilities,
claims, liens or encumbrances, which, by execution hereof, Seller
hereby retains and assumes.
(3) Business Day. Any day other than a Saturday or Sunday, or a day
in which banking institutions in Texas are authorized or
obligated by law or executive order to be closed.
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(4) Certificate of Title. The original Certificate of Title showing
the correct name of the owner of the Vehicle and Obligor under
each of the Retail Installment Contracts, naming Seller as the
first, prior and sole lienholder with respect to the Vehicle and
correctly identifying the Vehicle make, model, year and VIN,
together with all other information as required by law or that
may be customary for similarly situated businesses. In the
alternative, a Certificate of Title shall refer to the original
Certificate of Title for all Vehicles owned or possessed by
Seller as of the Closing Date which Certificate of Title shall
identify Seller as the sole and unencumbered owner of each such
Vehicle.
(5) Closing Date. December 30, 1998.
(6) Closing Documents. The documents required to be delivered on the
Closing Date pursuant to Article VI of this Agreement.
(7) Cut-Off Date. November 10, 1998, which date shall precede the
Closing Date.
(8) Deleted Retail Installment Contract. A Retail Installment
Contract repurchased by Seller in accordance with the terms and
conditions set forth in this Agreement.
(9) Due Date. The day on which the monthly payment is due on a Retail
Installment Contract, exclusive of any days of grace or cure.
(10) Guaranty. The Unconditioned Guaranty to be executed by Consumer
Investment Corporation, a Nevada corporation ("CIC"), at Closing,
guarantying all of Seller's obligations arising hereunder or in
connection herewith, including, but not limited to, the Note.
(11) Locations. (i) 0000 Xxxxxx Xxxx, Xxxxxx, Xxxxx 00000, (ii) 19,017
square feet located at Highland Mall Shopping Center, Austin,
Texas, (iii) 0000 Xxxxxxx Xxxxxxxxx, Xxxxxx, Xxxxx, (iv) 0000
Xxxxxx Xxxxxxx Xxxx, Xxxxxx, Xxxxx 00000, and (v) 0000 Xxxxx
Xxxxxx, Xxxxxx, Xxxxx.
(12) Monthly Payment. With respect to any Retail Installment Contract,
the scheduled combined payment of principal and interest payable
by the owner of the Vehicle under the Retail Installment Contract
on each Due Date.
(13) Note. The Promissory Note to be delivered by Seller to Buyer at
the Closing, in the original principal amount of $2,520,919.22,
bearing interest at ten percent (10%) per annum, and being due
and payable in accordance with the terms and conditions set forth
herein.
(14) Obligor. The purchaser of the subject Vehicle who is obligated to
make payments under the Retail Installment Contract in accordance
with the terms and conditions set forth therein.
(15) Person. An individual, corporation, partnership, joint venture,
association, limited liability company, trust, unincorporated
organization or any government or any agency or political
subdivision thereof.
(16) Repurchase Price. With respect to any Retail Installment
Contract, a price equal to the outstanding principal balance of
the Note, plus accrued interest at the rate set forth in the
Retail Installment Contract from and including the Due Date
through which interest has been paid on behalf of Obligor to and
including the date of repurchase of the Retail Installment
Contract by Seller.
(17) Retail Installment Contract. The written agreement between
Obligor and Seller governing the purchase and sale of a Vehicle
and the financing terms and conditions more particularly
described therein. Any reference herein to Retail Installment
Contract shall include the Retail Installment Contract and all
documentation in the Retail Installment Contract Package and
Certificate of Title.
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(18) Retail Installment Contract Package. Certificate of Title, Retail
Installment Contract, completed and executed credit report of
Vehicle owner (Obligor), if available, credit application of
Obligor, copy of current, non-expired drivers license of Obligor
and certificate of insurance of Obligor, and all information
required to be identified on the Retail Installment Contract
Schedule with respect to the subject Vehicle, together with any
additional instruments or documents as may be customary for
similarly situated businesses.
(19) Retail Installment Contract Schedule. The Schedule of Retail
Installments Contracts to be attached hereto as Exhibit "A" on
the Closing Date, setting forth the following information with
respect to every Retail Installment Contract: (1) Seller's loan
number; (2) name, address and phone numbers of Obligor under
Retail Installment Contract; (3) VIN; (4) make, model and year of
Vehicle; (5) original purchase price; (6) down payment; (7) Note
amount; (8) the origination date and maturity date of the Note
and Retail Installment Contract; (9) monthly payments of
principal and interest under the Note; (10) outstanding balance
on the Note; (11) the date of each month the Note payment is due;
and (12) whether Obligor has been more than fifteen (15) days
delinquent in any of its obligations under the Retail Installment
Contract.
(20) Subleases. The Sublease Agreements to be duly executed by Seller,
Buyer and the Landlord of each Location and delivered by Seller
at or prior to Closing covering each of the Locations.
(21) UCC Lien Search. A UCC lien search prepared by an entity approved
by Buyer, at Seller's expense, showing that there are no liens or
encumbrances against any of the Assets being transferred
hereunder.
(22) Vehicle. Any automobile or truck secured by a Retail Installment
Contract executed by an Obligor as of the Closing Date.
(23) VIN. The vehicle identification number.
ARTICLE II
PURCHASE OF ASSETS
2.01. Purchase of Assets. At the Closing (hereinafter defined), Seller
agrees to sell, transfer, convey and deliver to Buyer, all right, title and
interest in, to and under the Assets, and Buyer agrees to purchase and take the
Assets, on the terms and subject to the conditions set forth in this Agreement.
2.02. No Liabilities Assumed. Except as otherwise expressly provided
herein, Buyer shall not assume or become responsible for any liabilities of
Seller relating to the Assets or Seller's business. Buyer shall not assume any
direct or indirect debts, obligations, warranties, or liabilities of Seller or
any other person of any nature, whether absolute, accrued, contingent,
liquidated or otherwise, and whether due or to become due, asserted or
unasserted, known or unknown.
2.03. Seller's Existing Obligations. Seller acknowledges and agrees
that it has been previously advanced all monies set forth on Exhibit "D"
attached hereto and incorporated herein (the "Advanced Funds"), which Advanced
Funds are due and payable on demand, which demand has been made by the persons
that delivered the Advanced Funds and Seller also acknowledges full recourse
liability on Retail Installment Contracts previously conveyed to AutoPrime, Inc.
2.04. Consideration. The aggregate purchase price (the "Purchase
Price") for the Assets shall consist of the following, payable on the Closing
Date:
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(a) Acceptance by Buyer of the Note in the amount of the
Advanced Funds more particularly described on Exhibit "D" attached
hereto in lieu of immediate demand of repayment of the Advanced Funds.
(b) Assumption of Seller's recourse obligations owed to
AutoPrime, Inc. ("AutoPrime") relating to retail installment contracts,
having an aggregate value of $3,541,393.63 as of December 28, 1998,
purchased by AutoPrime from Seller and predecessors-in-interest to
Seller (not including any obligations relating to Lipshy Motor Cars,
Inc.), all such retail installment contracts being more particularly
described on Exhibit "E" attached hereto and incorporated herein; and
(c) Seller's delivery to Buyer of the Note.
2.04. Allocation of Purchase Price. The parties hereto acknowledge and
agree that the Purchase Price shall be allocated among the Assets for all
purposes (including financial, accounting and tax purposes) as determined by
Buyer in its sole and absolute discretion. Further, the parties hereto
acknowledge and agree that the two Buyers named herein will divide and allocate
the Assets and liabilities being transferred hereunder subsequent to Closing.
2.05. Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the office of Buyer (or such other
place as the parties may agree) on the Closing Date or such other date as may be
mutually agreeable by Seller and Buyer. Notwithstanding the foregoing, the
Closing will not take place unless all of the conditions set forth in Article VI
have been satisfied or waived on the Closing Date.
2.06. Further Assurances. At or after the Closing, and without further
consideration, Seller and Buyer will execute and deliver to each other such
further instruments of conveyance and transfer as any party may reasonably
request in order to more effectively convey and transfer the Assets to Buyer, or
aid and assist the collecting and reducing to possession of any of the Retail
Installment Contracts and Vehicles and exercising rights with respect to any of
the Retail Installment Contracts, provided that no such instruments will subject
any party to any loss, cost, liability, obligation, expense, or risk not
contemplated by this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to consummate the transactions contemplated
by this Agreement, Seller hereby jointly and severally represents and warrants
to Buyer as follows:
3.01. Organization and Qualification. Each Seller is a corporation duly
formed, validly existing, and in good standing under the laws of its state of
incorporation, has all requisite power and authority to own, lease, and operate
its properties and to carry on its business as it is now being conducted, and is
duly qualified and in good standing to do business in each jurisdiction in which
the nature of the business conducted by it or the ownership or leasing of its
properties makes such qualification necessary.
3.02. Authority. Each Seller has all requisite corporate power and
authority to execute and deliver this Agreement and the other documents
contemplated by this Agreement (the "Ancillary Agreements") to which it is a
party, to perform its obligations hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Ancillary Agreements to which Seller is a party and the
consummation by Seller of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action, corporate or otherwise. This
Agreement and the Ancillary Agreements have been duly executed and delivered by
Seller and constitute the legal, valid, and binding obligations of Seller,
enforceable in accordance with their respective terms.
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3.03. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement and the
Ancillary Agreements by Seller does not, and the consummation of the
transactions contemplated hereby and thereby will not, (i) conflict
with or violate the articles of incorporation, bylaws, or any other
organizational document of Seller, as amended or restated as of the
date of this Agreement; (ii) conflict with or violate in any respect
any federal, state, foreign, or local law, statute, ordinance, rule,
regulation, order, judgment, or decree, including, without limitation,
laws relating to employment discrimination, fair employment practices,
fair labor standards, equal employment opportunity, individual or
collective employee rights, and occupational health and safety
(collectively, the "Laws") applicable to Seller or by which any of its
properties is bound or subject; or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or give to any other Person any
rights of termination, amendment, acceleration, or cancellation of, or
require payment under, or result in the creation of a lien or
encumbrance on any of the properties or assets of Seller pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise, or other instrument or obligation to which
Seller is a party or by or to which Seller or any of Seller's
properties is bound or subject.
(b) The execution and delivery of this Agreement and the
Ancillary Agreements by Seller do not, and consummation of the
transactions contemplated hereby and thereby will not, require Seller
to obtain any consent, license, permit, approval, waiver,
authorization, or order of, or to make any filing with or notification
to, any governmental or regulatory authority, domestic or foreign
(collectively, "Governmental Entities").
3.04. Permits; Compliance. Each Seller is in possession of all
franchise grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates (including, without limitation, certificate
of occupancy), approvals, and orders necessary to own, lease, and operate its
properties and to carry on its business as it is now being conducted and
currently proposed to be conducted (collectively, the "Permits"), and there is
no action, proceeding, or investigation pending or threatened regarding
suspension or cancellation of any of Permits. Seller is not in conflict with or
in default or violation of (a) any Law applicable to Seller or by or to which
any of its properties is bound or to which they may be subject or (b) any of
Permits. Seller has not received any written notice with respect to possible
conflicts, defaults, or violations of Laws from any Governmental Entity.
3.05. Title to Assets. Each Seller has good and marketable title to all
of the Assets and owns all of the Assets free and clear of any liabilities,
obligations, liens, claims, security interests or, encumbrances of any nature
(collectively, "Liens"), other than statutory liens securing current taxes and
other obligations that are not yet due and payable. The execution and delivery
of this Agreement and the Ancillary Agreements by Seller at the Closing will
convey to and vest in Buyer good and marketable title to the Assets, free and
clear of any Liens or claims whatsoever.
3.06. Financial Statements. Seller has previously delivered to Buyer,
correct, and complete copies of (a) the audited financial statements of each
Seller as of and for the year ended December 31, 1997, including balance sheets
and statements of income and cash flow, and (b) the interim financial statements
of Seller as of and for the period ended _________________, 19__, including a
balance sheet as of such date and statements of income and cash flow as of such
dates prepared by an independent certified public accounting firm (collectively,
the "Financial Statements"). To the best of Seller's knowledge, the Financial
Statements present fairly, in all material respects, the financial position of
Seller at the dates shown and the results of operations and cash flows for the
periods covered in accordance with generally accepted accounting principles
applied on a consistent basis. Seller has no present knowledge of any
liabilities of any sort, whether absolute or contingent, due or to become due,
known or unknown, asserted or unasserted, which could impair Seller's right,
title or interest in, to an under the Assets or Seller's ability to convey same
hereunder.
3.07. Absence of Litigation. There is no claim, action, suit,
litigation, proceeding, arbitration, or investigation of any kind, at law or in
equity (including actions or proceedings seeking injunctive relief), pending or
threatened against or involving Seller or any of the Assets, or relating to this
Agreement or the transactions contemplated by this Agreement, and with respect
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to the Assets or relating to the operation of Seller's business, Seller is not
subject to any continuing order of, consent decree, settlement agreement, or
other similar written agreement with, or continuing investigation by, any
Governmental Entity, or any judgment, order, writ, injunction, decree, or award
of an Governmental Entity or arbitrator, including, without limitation,
cease-and-desist or other orders.
3.08. Taxes.
(a) All returns and reports of or with respect to any tax that
are required to be filed by or with respect to each Seller or its
business or activities have been duly and timely filed. All items of
income, gain, loss, deduction, and credit or other items required to be
included in each such tax returns have been included, and all
information provided in each such tax return is true, correct, and
complete. All taxes that have been or are due have been timely paid in
full. Seller is not subject to taxation by any jurisdiction where
Seller does not file tax returns.
(b) Seller has timely paid and delivered to the appropriate
governmental authorities all sales taxes and licensing fees relating to
the sale of Vehicles to the Obligors pursuant to the Retail Installment
Contracts and all applicable laws, rules and regulations or Seller has
paid all sales tax payments on Vehicles identified in all of the Retail
Installment Contracts or has set aside adequate reserves to pay same,
and, in this regard, at the Closing, Seller shall deliver to Buyer an
amount equal to all sales taxes due or that will become due under the
Retail Installment Contracts (6.25% x outstanding balance on Retail
Installment Contracts). Buyer shall be responsible for delivering the
sales tax payments becoming due and payable after the Closing Date to
the applicable regulatory authorities out of monies delivered by Seller
to Buyer at Closing only to the extent of funds actually received by
Buyer from Seller.
(c) There are no pending audits, actions, proceedings,
investigations, disputes, or claims with respect to or against Seller
for or with respect to any taxes; no assessment, deficiency, or
adjustment has been assessed or proposed with respect to any tax return
of or with respect to Seller; and there is no reasonable basis on which
any claim for material taxes can be asserted against Seller.
None of Seller's tax returns has been audited by any taxing authority.
(d) To the best of Seller's knowledge, except for inchoate
statutory liens for current taxes not yet due, no liens for taxes exist
upon the assets of Seller.
3.09. Brokers; Other Transactions. Seller will be responsible for the
payment of any brokerage, finder's, or other fees or commissions incurred in
connection with the transactions contemplated by this Agreement or based upon
arrangements made by or on behalf of Seller. Seller represents and warrants to
Buyer that it is not party or subject to any actual or prospective agreement,
arrangement, or understanding, written or oral, express or implied, involving
any transaction that is inconsistent with their execution and delivery of this
Agreement.
3.10. Environmental Matters. The Assets, operations and activities of
Seller with respect to such Assets and Seller's business, comply currently with,
and have at all times complied with, all applicable Environmental Laws (as
defined below). Seller (or its properties or operations) is not subject to any
existing, pending, or threatened action, suit, claim, investigation, inquiry, or
proceeding by or before any Governmental Entity under any Environmental Law.
There are no physical or environmental conditions existing on any of the
Locations or resulting from Seller's operations or activities thereon, past or
present, at any location, that would give rise to any on-site or off-site
remedial obligations or other liabilities imposed under any Environmental Laws
or that would affect the soil, groundwater, surface water, or human health.
There has been no exposure of any Person or property to hazardous substances or
any pollutant or contaminant, nor has there been any release of hazardous
substances or any pollutant or contaminant into the environment, by Seller or in
connection with Seller's business at the Locations.
For purposes of this Agreement, the term "Environmental Laws" means any
and all laws, statutes, ordinances, rules, regulations, or orders of any
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Governmental Entity pertaining to health or the environment currently in effect
in any and all jurisdictions in which Seller owns property or conducts business,
including without limitation, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 ("CERCLA") as amended; the Resource
Conservation and Recovery Act of 1976 ("RCRA"), as amended; any state laws
implementing the foregoing federal laws; and all other environmental
conservation or protection laws. For purposes of this Agreement, the terms
"hazardous substance" and "release" have the meanings specified in CERCLA and
RCRA, and the term "disposal" has the meaning specified in RCRA; provided,
however, that to the extent the laws of the state in which the Locations are
located establish a meaning for "hazardous substance," "release," or "disposal"
that is broader than that specified in either CERCLA or RCRA, such broader
meaning will apply.
3.11. Retail Installment Contracts. As to each Retail Installment
Contract secured by first priority liens on Vehicles, each Seller jointly and
severally represents and warrants that:
(a) the Retail Installment Contract is in form and substance in
compliance with all applicable governmental requirements;
(b) the Retail Installment Contract is the only instrument executed by
Seller for the purchase of the Vehicle described therein and is and will
continue to be free from defenses, offsets and counterclaims;
(c) all statements contained in each Retail Installment Contract are
true and correct and the unpaid balance as shown therein and on Exhibit "A"
attached hereto is correct;
(d) any down payment in any Retail Installment Contract has been made
in cash and not its equivalent unless otherwise stated in the Retail
Installment Contract;
(e) no part of the down payment described in any Retail Installment
Contract and reflected as paid has been loaned or given directly or
indirectly by Seller to Obligor on the Retail Installment Contract;
(f) the financed Vehicle described in the Retail Installment Contract
has been delivered;
(g) each sale evidenced by said Retail Installment Contract was
completed in accordance with all governmental requirements affecting such
sale, including, but not limited to, the Federal Truth-in-Lending Act, the
Xxxxxxxx and Xxxx Warranty Federal Trade Commission Improvement Act and
Warrant Act, Federal Equal Credit Opportunity Act, The Federal Trade
Commission Act, and all applicable state and local laws, rules and
regulations;
(h) all required disclosures to the Obligor on the Retail Installment
Contract were made in accordance with all governmental requirements;
(i) the Obligor in each Retail Installment Contract had the legal
capacity to enter into said Retail Installment Contract;
(j) the names and signatures on each Retail Installment Contract are
not forged, fictitious or assumed and are true and correct;
(k) each Retail Installment Contract is valid, binding and fully
enforceable in the jurisdiction in which it was executed;
(l) no payment under any Retail Installment Contract is past due by
fifteen (15) days or more and all Retail Installment Contracts have been
paid current through and until the Cut-Off Date and the Closing Date;
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(m) all information in the Retail Installment Contract Packages is
complete, true and correct;
(n) all Retail Installment Contracts are fully enforceable in
accordance with the terms and conditions set forth therein;
(o) there are no other liens effecting the Vehicles that are the
collateral under the Retail Installment Contracts other than the first and
prior lien of Seller as evidenced on the Certificate of Title;
(p) no Obligor has filed for bankruptcy or protection from creditors
prior to or following the date of each Obligor's respective Retail
Installment Contract; and
(q) there is no fact or circumstance, whether known or unknown, that
would impair the value of the Retail Installment Contracts or Buyer's
ability to sell, transfer or dispose of same for value in the ordinary
course of business.
3.12. Effective Dates of Representations and Warranties. All
representations and warranties shall be deemed to be effective as of the
effective date hereof, the Cut-Off Date and the Closing Date. Seller covenants
and agrees to use its best efforts to supplement all information delivered to
Buyer, including, but not limited to, all information, documents and instruments
included in the Retail Installment Contract Packages, if any of the information
relating to these representations and warranties becomes untrue or inaccurate
subsequent to the effective date of this Agreement.
3.13. Survival; Remedies. All representations and warranties made in or
pursuant to this Agreement are joint and several as to each Seller and will
survive the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby for a period of two (2) years following the
Closing Date. All statements and information contained in any Retail Installment
Contract Package, schedules, exhibits, certificate, or other writing delivered
in connection with this Agreement or the Ancillary Agreements or the
transactions contemplated by this Agreement or the Ancillary Agreements will
constitute representations and warranties of Seller under this Agreement. Seller
agrees that Buyer will have no duty, express or implied, to make any
investigation of any representation or warranty made by Seller or contained in
any Retail Installment Contract Package, and that no failure to so investigate
will be considered negligent or unreasonable. All remedies under this Agreement
will be cumulative and not exclusive.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Buyer hereby represents and warrants to Seller as follows:
4.01. Organization. Each Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the state of its incorporation,
and is duly qualified to do business as a foreign corporation in each
jurisdiction in which the failure to be so qualified would affect the validity
or enforceability of this Agreement.
4.02. Authority. Each Buyer has all requisite corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which it is a party, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary Agreements to which it is a party
by Buyer and the consummation by Buyer of the transactions contemplated hereby
and thereby have been duly authorized by all necessary corporate action and no
other corporate proceedings on the part of any of Buyer are necessary to
authorize this Agreement and the Ancillary Agreements to which it is a party or
to consummate the transactions contemplated hereby and thereby. This Agreement
and the Ancillary Agreements have been duly executed and delivered by Buyer and,
assuming the due authorization, execution, and delivery of this Agreement and
the Ancillary Agreements by Seller, constitute the legal, valid, and binding
obligations of the Buyer, enforceable in accordance with their respective terms.
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ARTICLE V
INDEMNIFICATION; SELLER'S REPURCHASE OBLIGATION
5.01. Indemnification of Buyer. Seller will jointly and severally
indemnify and hold Buyer, its subsidiaries and its respective directors,
officers, employees, and agents (collectively, the "Buyer Parties") harmless
from any and all claims, losses, liabilities, and expenses that Buyer may suffer
or incur as a result of or relating to the breach or inaccuracy of any of the
representations, warranties, covenants, or agreements made by Seller in this
Agreement or pursuant to the Ancillary Agreements.
5.02. Indemnification of Seller. Buyer will indemnify and hold Seller
harmless from any and all claims, losses, liabilities, and expenses that any
Seller may suffer or incur as a result of or relating to the breach or
inaccuracy, or any alleged breach or inaccuracy, of any of the representations,
warranties, covenants, or agreements made by the Buyer in this Agreement or
pursuant to the Ancillary Agreements.
5.03. Notice. Any party entitled to receive indemnification under this
Article V (the "Indemnified Party") agrees to give prompt written notice to the
party or parties required to provide such indemnification (the "Indemnifying
Parties") upon the occurrence of any indemnifiable claim or the assertion of any
claim or the commencement of any action or proceeding in respect of which such a
claim may reasonably be expected to occur (a "Loss Claim"), but the Indemnified
Party's failure to give such notice will not affect the obligations of the
Indemnifying Party under this Article V except to the extent that the
Indemnifying Party is materially prejudiced thereby and will not affect the
Indemnifying Party's obligations or liabilities otherwise than under this
Article V. Such written notice will set forth a reference to the event or events
forming the basis of such Loss or Loss Claim and the estimated amount involved,
unless such amount is uncertain or contingent, in which event the Indemnified
Party will give a later written notice when the amount becomes fixed.
5.04. Repurchase Obligation. Notwithstanding the indemnification
obligation of Seller described in Section 5.01 above, in the event Buyer
discovers that any of the representations and warranties of Seller are
inaccurate or there has been any fraud by Seller with respect to the Assets,
including any one or more of the Retail Installment Contracts, Buyer shall
notify the Seller of such discovery and Seller shall have the period of five (5)
days of the discovery of any breach of a representation or warranty or existence
of fraud by Seller with respect to the Assets, including the Retail Installment
Contracts, to use its best efforts to cure such breach or fraud by Seller in all
respects and, if such breach or fraud cannot be cured, the Seller immediately
shall repurchase such Retail Installment Contract at the Repurchase Price
defined in Section 1.01 above. Upon the delivery of the Repurchase Price by
Seller to Buyer, Seller shall promptly deliver the Retail Installment Contract
Package to Seller at the address set forth herein. The amount of the Repurchase
Price shall be delivered by Seller to Buyer in the form of wire transfer or
cashier's check within one (1) Business Day from the expiration of the five (5)
day cure period described above in this Section 5.04. Upon such repurchase, any
such Retail Installment Contract shall be deemed a Deleted Retail Installment
Contract and Exhibit "A" attached hereto and incorporated herein shall be
modified accordingly.
ARTICLE VI
CLOSING CONDITIONS
6.01. (a) Conditions to Closing. The obligations of Buyer to
purchase the Retail Installment Contracts and to consummate the other
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing Date of the following conditions, any or all of which
may be waived in writing in the sole and absolute discretion of Buyer, in whole
or in part:
(i) Each of the representations and warranties of Seller
contained in this Agreement and all instruments and information
contained in the Retail Installment Contract Packages and the Retail
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Installment Contract Schedule must be true, complete and correct in all
respects as of the Cut-Off Date and Closing Date as though made on and
as of such dates.
(ii) Seller must have performed and complied with all
agreements and covenants required by this Agreement to be performed and
complied with by Seller on or prior to the Closing Date.
(iii) There must be no pending or threatened litigation in any
court or any proceeding before or by any governmental entity against
Seller or Buyer to restrain or prohibit or obtain damages or other
relief with respect to this Agreement or the Ancillary Agreements or
the consummation of the transactions contemplated by this Agreement or
the Ancillary Agreements.
(iv) Buyer shall have received the UCC Lien Search showing
that there are no claims or liens against the Assets being transferred
hereunder.
(v) Seller shall have delivered to Buyer originals of all
Retail Installment Contract Packages identified on the Retail
Installment Contract Schedule and all Certificates of Title for the
Vehicles being transferred from Seller to Buyer, and same shall be
true, accurate and complete as of the Closing Date, and Buyer shall
have an adequate amount of time to review all such information;
provided that Buyer shall have no obligation to do so and Buyer shall
be entitled to rely solely on Seller's representations, warranties and
covenants set forth herein.
6.02. Closing Deliveries.
(a) At the Closing, Seller shall deliver to Buyer the following:
(i) an executed Xxxx of Sale conveying the Assets to Buyer,
substantially in the form of Exhibit "B" attached hereto;
(ii) an originally executed (by Seller) Allonge for each
Retail Installment Contract to be attached to each Retail
Installment Contract substantially in the form of Exhibit "C"
attached hereto incorporated herein;
(iii) certified authorizing resolutions of Seller's Board of
Directors and shareholders authorizing the consummation of the
transactions contemplated hereby (the "Resolutions");
(iv) endorsed Certificates of Title transferring the
Vehicles to Buyer;
(v) the executed Subleases;
(vi) the Note;
(vii) the Unconditional Guaranty of CIC; and
(viii) the amount of funds necessary to satisfy Seller's
sales tax obligations under the Retail Installment Contracts as
more particularly described in Section 3.08(b).
(b) At the Closing, Buyer shall deliver to Seller the following:
(i) Seller acknowledges prior delivery and receipt of the
Advanced Funds; and
(ii) Buyer shall assume Seller's recourse obligations to
AutoPrime as more particularly described on Exhibit "E" attached
hereto.
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6.03. Termination of Employees by Seller. Prior to the Closing, Seller
shall terminate all employees, independent contractors, and service contracts.
Buyer shall be entitled to hire any such persons or no such persons in its sole
and absolute discretion.
6.04. Post-Closing Matters. From and after the Cut-Off Date, all
payments on the Retail Installment Contracts received by Seller shall be held in
trust for the benefit of Buyer and Seller shall immediately deliver all such
amounts to Buyer at the address set forth herein. In the event Buyer receives
payments under the Retail Installment Contracts made payable to Seller, Buyer
shall be permitted to endorse all such payments for the benefit of and to be
deposited by Buyer. Seller hereby covenants and agrees to promptly assist Buyer
in notifying all Obligors under the Retail Installment Contracts of the purchase
and sale contemplated by this Agreement.
6.05. Power of Attorney. By execution hereof, with respect to the
Retail Installment Contracts and the Vehicles being transferred hereunder,
Seller hereby makes, constitutes and appoints Buyer, and Buyer's successors and
assigns, with full power of substitution and resubstitution, as Seller's true
and lawful attorney-in-fact for Seller and in Seller's name, place and stead for
Buyer's use and benefit, to sign, endorse, execute, certify, acknowledge, swear
to, file, and record all instruments, checks, money orders, cashier's checks,
Certificates of Title, assignments and documents as may be necessary to
effectuate the consummation of the transactions contemplated by this Agreement,
including, but not limited to, effectuating the receipt by Buyer of all payments
under the Retail Installment Contracts arising or accruing from and after the
Cut-Off Date.
6.06. Resignation of Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx. By
execution hereof, Xxxxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxx hereby resign from any
and all positions as officers directors and employees of AutoCorp Equities,
Inc., except that Xxxxxxx X. Xxxxxxx shall continue as a director.
ARTICLE VII
MISCELLANEOUS
7.01. Notices. All notices that are required or may be given pursuant
to this Agreement must be in writing and delivered personally, by a recognized
courier service, by a recognized overnight delivery service, by telecopy or by
registered or certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other address as any
party may provide to the other parties by notice in accordance with this Section
7.01) in accordance with the following:
If to Buyer:
AutoCorp Financial Services, Inc.
Ace Motor Company
0000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxxxxx Xxxxxx, President
Telecopy: (000) 000-0000
with a copy to:
Xxxxx, Xxxxxxx & Xxxxx, L.L.P.
0000 Xxxxxx xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
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If to Seller:
Lenders Auto Resale Centers of Texas, Inc.
Lenders Liquidation Centers, Inc.
d/b/a Lenders Auto Resale Centers
Attn: Xxxxxxx X. Xxxxxxx
Telecopy: (_____)
Any such notice or other communication will be deemed to have been given and
received (whether actually received or not) on the day it is personally
delivered or delivered by courier or overnight delivery service or sent by
telecopy or, if mailed, when actually received.
7.02. Attorneys= Fees and Costs. If attorneys= fees or other costs are
incurred to secure performance of any obligations under this Agreement, or to
establish damages for the breach thereof or to obtain any other appropriate
relief, whether by way of prosecution or defense, the prevailing party will be
entitled to recover reasonable attorneys= fees and costs incurred in connection
therewith.
7.03. Counterparts. This Agreement may be executed in one or more
counterparts for the convenience of the parties to this Agreement, each of which
shall be deemed an original and all of which together will constitute one and
the same instrument.
7.04. Assignment. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement will be assigned or delegated by
any party, without the prior written consent of the other parties; provided,
that Buyer may assign its rights and obligations under this Agreement to any
affiliate of or successor-in-interest to Buyer. This Agreement is not intended
to confer any rights or benefits to any Person other than the parties to this
Agreement.
7.05. Entire Agreement. This Agreement and the related documents
contained as Exhibits and Schedules to this Agreement or expressly contemplated
by this Agreement contain the entire understanding of the parties relating to
the subject matter hereof and supersede all prior written or oral and all
contemporaneous oral agreements and understandings relating to the subject
matter hereof. This Agreement cannot be modified or amended except in writing
signed by the party against whom enforcement is sought. The Exhibits and
Schedules to this Agreement are hereby incorporated by reference into and made a
part of this Agreement for all purposes.
7.06. Governing Law; Venue; Jurisdiction. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE OBLIGATIONS,
RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF.
THIS AGREEMENT IS PERFORMABLE IN DALLAS COUNTY, TEXAS, AND VENUE FOR RESOLUTION
OF ANY DISPUTE ARISING HEREUNDER OR IN CONNECTION HEREWITH SHALL LIE EXCLUSIVELY
IN DALLAS COUNTY, TEXAS. EACH OF THE PARTIES EXPRESSLY CONSENTS TO THE PERSONAL
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, each of the parties to this Agreement has caused
this Agreement to be executed as of the date and year first written above by
their respective officers thereunto duly authorized.
Buyer:
-----
AUTOCORP FINANCIAL SERVICES, INC.,
a Texas corporation
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By: /s/ Xxxxxxx Xxxxxx
-------------------------
Xxxxxxx Xxxxxx, President
ACE MOTOR COMPANY, a Texas corporation
By: /s/ Xxxxxxx Xxxxxx
-------------------------
Xxxxxxx Xxxxxx, President
Seller:
------
LENDERS LIQUIDATION CENTERS, INC.,
an Arizona corporation, d/b/a
Lenders Auto Resale Centers
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx, President
LENDERS AUTO RESALE CENTERS OF
TEXAS, INC., an Arizona corporation
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Xxxxxxx X. Xxxxxxx, President
/s/ Xxxxxxx X. Xxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxx, an individual
/s/ Xxxxxx Xxxxxx
---------------------------------
Xxxxxx Xxxxxx, an individual
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