MASTER AGREEMENT
This Master Agreement ("Agreement") is made and entered into by and
between Pacific Financial Group, Inc. a Delaware corporation ("PFG"), AutoPrime,
Inc., a Delaware corporation and wholly owned subsidiary of PFG ("AP"), and
AutoCorp Equities, Inc., a Nevada corporation ("ACE"), ACE Motor Company, Inc.,
a Texas corporation and AutoCorp Financial Services, Inc. a Texas corporation,
(collectively ("ACE") effective as of October 1, 2000 (the "Effective Date").
PFG and AP are collectively referred to herein as "Pacific".
RECITALS
A. ACE is indebted to Pacific for (i) approximately $23,000,000 (the
"ACE Direct Debt") secured by certain retail installment contracts, as such ACE
Direct Debt is described on Exhibit A attached hereto (the "Exhibit A
Contracts"), and (ii) a variety of recourse contractual, and other obligations
and liabilities described in part, on Exhibit H attached hereto (collectively,
the "ACE Additional Debt").
B. Portions of the ACE Direct Debt and the ACE Additional Debt are
guaranteed by some or all of CIC (defined below), LLCI (defined below) and the
Xxxxxxx Group (defined below) (collectively, the "Guarantors").
C. Pacific and ACE have agreed that, pursuant to the terms of this
Agreement, they will enter into, and by this Agreement do enter into, a plan by
which ACE shall be re-capitalized and Pacific shall no longer be able to require
payment by ACE of the ACE Direct Debt and the ACE Additional Debt.
E. It is the intention of Pacific and ACE to modify, in substantial
part, their respective rights and obligations arising under the Prior
Transaction in order to simplify their shareholder ownership interests in ACE
and to strengthen ACE financially, so that ACE may go forward as a profitable
entity with future growth potential, all for the benefit of ACE and its
shareholders.
F. The parties have agreed upon a number of business terms which will
support the achievement of their mutual goals of enhancing the value and future
profitability of ACE, all of which terms are incorporated into a certain
Supplemental Agreement attached hereto as Exhibit B.
Master Agreement Page 1
AGREEMENT
NOW, THEREFORE, in consideration of the agreements, covenants and
representations of the parties herein described (including the Recitals), the
sufficiency of all of which are expressly acknowledged by the parties hereto, it
is agreed as follows:
1. Covenant Not to Xxx. As detailed in the Mutual Covenant Not to
Xxx attached hereto as Exhibit C, Pacific hereby agrees not to xxx ACE
to recover any part or all of the ACE Direct Debt and Ace hereby agrees
not to xxx Pacific for any claims or causes of action related to
dealings between ACE and Pacific prior to the Effective Date
2. Recourse Release. As detailed in the Mutual Recourse Release
attached hereto as Exhibit D, Pacific hereby releases ACE of and from
all of the ACE Additional Debt and ACE hereby releases Pacific of and
from any and all liabilities, claims or causes of action related to
dealings between ACE and Pacific prior to the Effective Date.
3. Issuance of ACE Stock to PFG. ACE hereby agrees to issue and
promptly deliver to PFG or its designee 1,612,083 shares of its Series
B Preferred Stock.
4. Xxxx of Sale. Pursuant to the Xxxx of Sale attached hereto as
Exhibit E, Pacific hereby assigns, transfers and conveys to ACE all of
its rights, title, interest, liens, claims and encumbrances in and to
the following:
(a) the Repossessed Inventory described on Exhibit E-1.
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(b) the Active Contracts described on Exhibit E-2.
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(c) the Written-Off Contracts, including all of its
rights under the related guaranties with respect to
such Contracts, described on Exhibit E-3.
5. Preferred Stock Attributes. The attributes and conversion
provisions pertaining to the Series B Preferred Stock are detailed in
the Amended Certificate of Designation attached hereto as Exhibit F.
Pacific hereby acknowledges its understanding and acceptance of all
such attributes and provisions.
Master Agreement Page 2
6. Supplemental Agreement. As provided in more detail in the
Supplemental Agreement attached hereto as Exhibit B.
(a) PFG shall:
(i) along with Pacific USA Holdings Corp, a
Texas corporation, indemnify ACE and its
subsidiaries, officers and directors against any
claims for those obligations more specifically
described in a separate indemnity agreement, to be
executed, as of the Effective Date, and to contain
terms and provisions reasonably agreeable to the
parties.
(ii) sublease or become the primary tenant of the
office space currently occupied by ACE at 000 Xxxxxx
Xxxx, Xxxxx 000, Xxxxx, Xxxxx, as of the Effective
Date;
(iii) give ACE an exclusive right of first refusal
to purchase all vehicles repossessed by PFG at an
agreed upon liquidation value from and after the
Effective Date. If PFG and ACE cannot agree upon the
liquidation value of any repossessed vehicle, then
three (3) appraisers shall be selected, one by PFG,
one by ACE, and one by two appraisers so selected,
and the overage of their appraisals shall be
determinative; and
(iv) promptly supply for ACE's use, by
assignment, lease or sublease, all furniture and
fixtures reasonably designated by ACE and agreed to
by PFG and presently located at the Xxxxxx Road
office and release certain designated furniture and
fixtures located at the 0000 Xxxxx Xxxxxx Xxxxxxx,
Xxxxx 000, Xxxxx, Xxxxx, facility, including, without
limitation, those items described on Exhibit F
attached hereto.
(v) reimburse ACE for any and all costs of
repossessing collateral (a) securing contracts
described on Exhibit E-2 and (b) securing contracts
described in the Servicing Agreement referred to in
(c), below.
(vi) PFG and AP shall assign and transfer to ACE, and, at
ACE's request, shall provide technical support
equipment described on at no cost to ACE, for a
period not to exceed one (1) year after the date of
the Effective Date, with respect to the computer
equipment described on Exhibit G.
Master Agreement Page 3
(b) ACE shall:
(i) use its best efforts to effectuate ACE's
Business Plan, as generally described in the
Supplemental Agreement;
(ii) store each repossession for Pacific, on a
space available basis, at no cost to Pacific, for up
to forty-five (45) days after the date of each such
repossession;
(iii) have the right to purchase PFG's interest in
any repossessed vehicle securing a contract listed on
Exhibit E-2, by paying to PFG 50% of the agreed
liquidation value (determined in the method described
in paragraph 6(a)(iv) above) of each such repossessed
vehicle less 100% of all repossession costs provided,
however, that PFG reserves the right to review and
approve from time to time the vendors selected by ACE
to execute the repossessions, which approval shall
not be unreasonably withheld;
(iv) render such accountings to PFG as PFG may
reasonably require from time to time; and
(v) provide those collection services detailed
in the Supplemental Agreement on the terms and
conditions therein stated.
(vi) indemnify PFG, and its respective officers,
directors and affiliates against any claims for those
obligations more specifically described in a separate
indemnity agreement, to be executed, as of the
Effective Date, and to contain terms and provisions
reasonably agreeable to the parties.
(vii) assume all lease payments on computer
equipment described on Exhibit G.
Master Agreement Page 4
(c) PFG and ACE shall enter into the Servicing Agreement
attached hereto as Exhibit H by the terms of which
ACE shall service the contracts therein described.
7. Authorizations. Each of PFG, AP and ACE are corporations in
good standing and each has have the requisite power and authority to
enter into this Agreement, as well as the Supplemental Agreement, both
of which agreements have been duly executed and delivered and each of
which agreements constitutes legal, valid and binding obligations of
the parties, enforceable in accordance with their terms, except as may
be limited by bankruptcy, reorganization, insolvency and similar laws
of general application relating to or affecting the enforcement of
rights of creditors.
8. Capitalization. ACE represents that its capitalization, as of
the Effective Date, is not materially inconsistent with the
Capitalization Schedule attached hereto as Exhibit I.
9. Binding Effect. The execution, delivery and performance of
this Agreement and the Supplemental Agreement by any party hereto does
not and will not constitute a violation of any statute, judgment,
order, decree or regulation or rule of any governmental body applicable
or relating to the them, or (b) conflict with, or constitute a breach
or default under, or give rise to any right of termination,
cancellation or acceleration under, any term or provision of any
contract, agreement, lease, mortgage, deed of trust, commitment,
license, franchise, permit, authorization or any other instrument or
obligation to which any of them is a party or by which their respective
assets are bound, or an event which, with notice, lapse of time, or
both, would result in any conflict, breach, default or right or other
than those breaches, defaults or violations which the subject party
shall have cured on or before the Effective Date
10. Litigation, Investigations, Etc. There are no pending or
threatened claims, actions, suits or proceedings or governmental or
administrative investigations pending, or to the best knowledge and
belief of any party hereto, which would have any material and adverse
effect on this Agreement nor the transactions contemplated by either
this Agreement or the Supplemental Agreement.
11. Taxes and Tax Liens. There are no federal, state or local tax
liens or related notices filed against any of the parties, nor have any
of them been notified of any fact or circumstance which would give any
federal, state or local taxing authority the right to file any such
lien or notice.
Master Agreement Page 5
12. Consents. No consent, approval, authorization, filing or
declaration of any third party or any governmental authority is
required of any of the parties in connection with the execution of this
Agreement or the consummation of the transactions contemplated by this
Agreement and the Supplemental Agreement.
13. Access to Counsel. All parties to this Agreement have engaged
separate legal firms to assist them with this Agreement and the
transactions contemplated by this Agreement. Each party acknowledges
that in consultation with their respective counsel, each has read and
fully understands this Agreement and its legal effect, that it has
executed his Agreement freely and without coercion, and that each has
the ability, legal capacity and intention to fully perform all duties
and obligations required under this Agreement and the Supplemental
Agreement.
14. Transaction. All fees and other related costs incurred in
connection with the preparation and consummation of this Agreement
shall be borne solely by PFG and PFG will be issued Preferred Stock as
reimbursement for such fees and costs as a portion of the 1,612,083
shares of Series B Preferred Stock of ACE to be received by PFG
pursuant to paragraph 3 of this Agreement
15. Issuances of Securities. All shares of securities which are to
be issued pursuant to this Agreement shall be issued in accordance with
the Investment Letter attached hereto as Exhibit J.
16. Incorporation of Exhibits. All Exhibits attached hereto are
incorporated by reference into this Agreement and are integral parts
hereof.
17. Further Actions. From time to time, as and when requested by
any party to this Agreement, each party shall execute and deliver, or
cause to be executed and delivered, such documents and instruments, and
shall take or cause to be taken such further or other actions, as may
be reasonably necessary to consummate and effect the various
transactions required or intended to be performed by any party to this
Agreement and the Supplemental Agreement.
18. Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants in this Agreement and in the
supplemental Agreement shall survive Closing.
19. Waivers and Consents. No waiver of compliance with any term,
provision or condition of this Agreement or of the Supplemental
Agreement and no consent provided for in this Agreement or in the
Supplemental Agreement shall be effective unless evidenced by an
instrument in writing duly executed by the party hereto sought to be
charged with such waiver or consent. No waiver of any breach of any
representation, warranty or covenant or the term or provision of this
Agreement shall be deemed to be a waiver of any preceding or succeeding
breach of the same nor any other representation, warranty, covenant,
term or provision. No extension of time for, or consent to, the
performance of any obligation or act shall be deemed to be an extension
of the time for, or consent to, the performance of any other obligation
or act.
Master Agreement Page 6
20. Construction and Jurisdiction This Agreement shall be governed
by and construed and enforced in accordance with the laws of the State
of Texas, regardless of the jurisdiction in which litigation relating
to the subject matter hereof shall be initiated or continued. Venue for
any such action shall be any court of competent jurisdiction of the
State of Texas located in Dallas County, Texas.
21. Entire Agreement. This Agreement, together with the attached
Exhibits and the Supplemental Agreement, contain the entire agreement
between the parties with respect to the transactions contemplated
hereby and supersede all prior agreements, discussions and
understandings among them with respect to such transactions. Neither
this Agreement nor the Supplemental Agreement may be amended, modified
or changed in any respect except by an instrument in writing signed by
all of the parties hereto.
22. Third Party Rights. Notwithstanding any other provision of
this Agreement, this Agreement shall not create benefits on behalf of
any person or entity which is not a party to this Agreement and this
Agreement shall be effective only as between the parties hereto, their
successors and permitted assigns.
23. No Release of Guarantors. None of the parties hereto, by entering
into or performing in accordance with this Agreement, intend to, nor do
any of them, release or otherwise adversely affect any rights of any of
them against any of the Guarantors, or any obligations, claims of
liabilities owed directly or indirectly to AP by any of them.
24. Assignability. This Agreement shall not be assignable in whole
or in part by any party to this Agreement without the prior written
consent of all other parties and any purported assignment by any party
without such prior written consent shall be void.
25. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors
and permitted assigns.
26. Counterparts. This Agreement may be executed in any number of
counterparts and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall
constitute but one agreement.
Master Agreement Page 7
27. Legal Fees and Costs. If any party shall breach any provision
of this Agreement or the Supplemental Agreement, or shall fail to
timely and promptly perform as required then, the breaching party shall
be liable to all other parties for all damages directly or indirectly
arising from or related to such breach, including, as damages, all
attorneys fees, costs and expenses paid or incurred by the
non-breaching party(ies) in the protection, preservation or prosecution
of any rights or benefits directly or indirectly arising under or
related to this Agreement and the Supplemental Agreement.
28. Controlling Document. If there shall be any conflict between
the language or effect of any document used to consummate the
transactions described in this Agreement, and the Supplemental
Agreement, then the terms of this Agreement shall control.
IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed on their behalf by a duly authorized officer or
representative, as of the Effective Date.
PACIFIC FINANCIAL GROUP, INC.
By:_________________________________
Xxxx Xxxxxxx
President
AUTOPRIME, INC.
By:_________________________________
Xxxxx Xxxx
Chief Executive Officer
AUTOCORP EQUITIES, INC.
By:_________________________________
Xxxxxxx Xxxxxx
President
