ASSET PURCHASE AGREEMENT
This asset purchase agreement (the "Agreement") is entered into as of
the 21st day of May, 2001, by and between AutoCorp Equities, a Nevada
corporation (the "Seller") and JMACE, Inc., a Texas Corporation, (herein
referred to as "Buyer"). The parties have previously agreed that the effective
date of this transaction will be January 1, 2000.
Whereas, Seller owns one hundred percent of the assets of Ace Motor
Co., Inc., including Angelina Motor Company dba Circus Motors, Inc. (both of
which are herein referred to as Ace), of which assets are owned by Seller, and
Buyers are willing to buy and Seller is willing to sell, one hundred
percent (100%) of the assets of ACE for a purchase /selling price of $716,190.
Now, therefore, in consideration of the agreements, covenants and
representations contained herein, the sufficiency of all of which are expressly
acknowledged by the parties hereto, it is agreed as follows:
1. Purchase of Ace Assets: Seller will sell and Buyers will buy
ninety percent (100%) of the assets of Ace Motor Co., Inc for a price
of $716,190 for the aggregate shares payable as follows;
a. A promissory note (Exhibit A) in the original face
amount of $419,490 payable in monthly Installments together
with interest over a period of eighteen months. Such
promissory note will bear an annual interest rate of twelve
percent (12%) per annum, and
b. A promissory note (Exhibit B) in the amount of
$296,190 payable in monthly installments together with
interest until paid in full. Such promissory note will bear an
annual interest rate of twelve percent (12%) per annum.
2. Assets as Collateral: In consideration of any of 1a and 1b
above, Buyers hereby grant a security interest to Seller in the Ace
assets. Upon any default, as hereinunder defined, all indebtedness of
Buyers to Seller shall become immediately due and payable,
notwithstanding any credit or extension of time allowed to Buyers by
Seller as may be evidenced from time to time by Seller, Seller has all
of the rights and remedies of a secured party under the Uniform
Commercial Code of the State of Texas.
3. Delivery of Assets: Seller agrees to Deliver to Buyers at
closing a Xxxx of Sale representing one hundred percent (100%) of the
assets of Ace in proper form for transfer. Seller shall have received
all executed notes or other documents relating to the transaction as a
condition of delivery of the shares.
4. Additional Agreements: The parties additionally agree as
follows:
a. Transaction Price: The transaction price as detailed
in Exhibit C is the sole basis for completion of this
transactions and agree that the price will not change without
prior written agreement by the parties.
b. Automobile Finance Contracts: Seller will make its
finance subsidiary, AutoCorp Financial Services, available to
Ace as a source for financing automobile sales subject to
AutoCorp Financial Services' underwriting guidelines and Ace's
execution of a Dealer Agreement with AutoCorp Financial
Services.
c. Covenant not to Xxx: As detailed in the Mutual
Covenant Not to Xxx attached hereto as Exhibit D, Buyers agree
not to xxx Seller for any events occurring after the effective
date and Seller agrees not to xxx Buyer's for any events
occurring prior to the effective date.
d. Xxxx of Sale: Pursuant to the Xxxx of Sale attached
hereto as Exhibit E, Seller hereby assigns, transfers and
conveys to Buyers all of its rights, interests (other than
continuing interest in net operating loss carryforwards),
liens, claims and encumbrances in and to its ownership of the
Ace assets.
e. Prohibited Activities: So long as there exists an
ownership interest in Ace by AutoCorp Equities, Buyers shall
not permit any of the following acts by Ace without the
express written consent of AutoCorp Equities:
(i.) borrow any additional money or encumbering
ny assets of Ace;
(ii.) expand or extend any line of credit or
indebtedness owed or guaranteed by Ace;
(iii.) sell, transfer or convey any assets of Ace
not in the ordinary course of business;
(iv.) terminate or modify any agreement relating
to the used car lot operated by Ace.
Should Buyer permit or cause to be permitted, any of the
prohibited activities mentioned above without the prior
written consent of AutoCorp, then AutoCorp may, at its sole
option, terminate this agreement with thirty (30) day written
notice and all notes under this agreement will become due and
payable together with any accrued interest thereon.
f. Operating Profits of Ace: For so long as there exists
an ownership interest in Ace by AutoCorp, Buyers, as majority
owners of Ace, hereby covenant and agree that Ace will give,
transfer, assign, set over, convey and deliver unto AutoCorp
and AutoCorp hereby agrees to accept from Ace, ten percent
(10%), or such percentage of the as the parties may agree upon
from time to time, of the Operating Profits of Ace. Such
amounts shall be paid by Ace to AutoCorp on or before the 25th
day of each calendar quarter for Operating Profits from the
prior calendar quarter. For the purpose of the Agreement,
Operating Profits shall mean total revenue derived from the
business operations of Ace less routine operating expenses
normally incurred in the day-to-day operation of the business.
Permitted expenses for purposes of this calculation shall not
include depreciation, taxes or operating expenses in excess of
those considered to be routine. If, for any reason, Ace fails
to remit said share of Operating Profits on or before the 25th
day of each calendar quarter for the prior calendar quarter or
if any remitted funds are dishonored, this agreement shall
become null and void and the Notes hereunder will become due
and payable together with any accrued interest thereon.
g. Net Operating Losses: Nothing in this Agreement shall
preclude AutoCorp from retaining all its rights to and
interest in any Net Operating Losses incurred by Ace prior to
the effective date of this transaction. Buyers and Ace hereby
release any rights to or interests in any said Net Operating
Losses incurred by Ace prior to the effective date.
h. Monthly and Quarterly Financial Forecasts: On or
before the 25th day of each calendar month and calendar
quarter, Buyers will deliver to AutoCorp monthly and quarterly
income statements and balance sheets of Ace with a comparison
of all line items to the results of operations for the same
period from the prior calendar quarter, when available,
certified by Buyers. All such statements shall be in form and
content satisfactory to AutoCorp and shall be prepared in
accordance with generally accepted accounting principles
consistently applied. In addition, Buyers will deliver
evidence to AutoCorp that all property, franchise and federal
taxes have been paid where applicable.
i. Annual Financial Reports: On or before March 1 of
each calendar year, Buyers will deliver to AutoCorp annual
financial statements (balance sheet and income statement) in
form and content satisfactory to AutoCorp which statements
will be reviewed by Ace's outside accounting firm and prepared
in accordance with generally accepted accounting principles
consistently applied. In addition, Buyers will deliver copies
to AutoCorp of all franchise, sales tax and Federal income tax
returns, together with evidence of payment of all such tax
obligations.
j. Board of Directors, Indemnification: For so long as
there exists an ownership interest in Ace by AutoCorp, Buyers
and Ace covenant and agree to appoint a representative
designated by AutoCorp to serve as a member of the Board of
Directors of Ace. Without the prior written consent of
AutoCorp, there will be no other members of Ace's Board of
Directors other than Buyers and AutoCorp's designated
representative. To the greatest extent permitted by applicable
law, Buyers and Ace hereby covenant and agree to indemnify,
defend and hold harmless AutoCorp and its Ace board
representative for all actions, claims, costs, liabilities and
obligations arising or in any way related to this Agreement
and/or the transactions contemplated hereby. At AutoCorp's
election, Buyers and/or Ace shall provide at their expense,
director and officer liability insurance for AutoCorp's
designated representative on the Ace board, which policy shall
have such limits and contain such provisions and riders as
determined by AutoCorp in its reasonable discretion.
k. Assignment: Neither party may assign its rights or
delegate its obligations under this agreement, in whole or in
part, without the prior written consent of the other party
other than an assignment by either party of this Agreement by
merger, acquisition, or sale of all or substantially all of
its assets. Any attempted assignment or delegation without
such prior consent will be null and void. The rights and
liabilities of the parties' under this Agreement will be
binding upon and inure to the benefit of the parties'
respective successors and permitted assigns.
l. Notices: Any notice or payment required or permitted
to be made or given by either party hereto pursuant to this
Agreement will be deemed delivered on the date of issuance if
sent by such party to the other party by certified mail,
return receipt requested, commercial courier, personal
delivery, addressed to the addresses set forth above or to
such other address as a party shall designate by written
notice given to the other party, Electronic mail and facsimile
may be used; provided, that the person delivering such notice
receives a written confirmation of the addressee's receipt
thereof or any document so delivered is also reduced to hard
copy and delivered by one of the foregoing methods.
m. Governing Law: THIS AGREEMENT SHALL BE CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
WITHOUT REFERENCE TO OR APPLICATION OF CONFLICT OF LAW RULES,
IS FULLY PERFOMABLE IN DALLAS COUNTY, TEXAS AND VENUE FOR
RESOLUTION OF ANY DISPUTE ARISING HEREUNDER OR IN CONNECTION
HEREWITH SHALL BE EXCLUSIVELY IN DALLAS COUNTY, TEXAS. THIS
AGREEMENT SHALL NOT BE GOVERNED BY THE UNITED NATIONS
CONVENTION FOR INTERNATIONAL SALES OF GOODS.
n. Severability: If any part of this Agreement is found
to be invalid or unenforceable by a court of competent
jurisdiction, then it will be enforced to the maximum extent
permitted by law and the remaining provisions shall remain in
full force and effect. Furthermore the parties agree to
substitute for the invalid or unenforceable provision a valid
and enforceable provision which most closely approximates the
intent and economic effect of the invalid or unenforceable
provision.
o. Waiver: The waiver of any breach of any provision of
this Agreement or the Exhibits incorporated herein by
reference shall not constitute a waiver of any subsequent
breach of the same or other provisions herein. To be
effective, a waiver must be in writing and signed by the
waiving party or parties.
p. Rights of Third Parties: Nothing contained in this
Agreement, express or implied, shall be deemed to confer any
rights or remedies upon, nor obligate any of the parties
hereto, to any person or entity other than such parties,
unless expressly stated to the contrary.
q. Counterparts: This Agreement may be executed in
multiple counterparts, each of which shall be deemed an
original and all of which together shall constitute one and
the same instrument.
r. Entire Agreement: This Agreement, including the
Exhibits hereto and documents referenced herein (as may be
amended by the parties hereto from time to time), which are
expressly incorporated herein by reference, constitutes the
complete and exclusive understanding and agreement between the
parties and supersedes all prior understandings and
agreements, whether written or oral, with respect to the
subject matter hereof. This Agreement may not be altered,
modified, amended, changed, rescinded or discharged, in whole
or in part, except by written agreement executed by both
parties.
Executed effective as of the date and year first above written.
JMACE, Inc.
A Texas Corporation
By:_______________________
Xxxxxxx X. Xxxxxxx
President
AutoCorp Equities, Inc
A Nevada Corporation
By:_______________________
Xxxxxxx Xxxxxx
President
