Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-3473
PROSPECTUS
AUTOMOBILE PROTECTION CORPORATION -- APCO
1,388,000 Shares of Common Stock
This Prospectus relates to up to 1,388,000 shares ("Shares") of Common
Stock, par value $.001 per share, of Automobile Protection Corporation - APCO
("Company") that may be offered for sale for the account of certain shareholders
of the Company as stated herein under the heading "Selling Shareholders." No
period of time has been fixed within which the Shares covered by this Prospectus
may be offered or sold. The Company has agreed to keep the Registration
Statement, of which this Prospectus is a part, effective until all the Shares
are sold.
All 1,388,000 Shares offered hereby are being registered for the
account of the Selling Shareholders. The Company will not receive any of the
proceeds from the sale of the Shares. However, all the Shares being offered
hereby are issuable upon exercise of outstanding options and warrants of the
Company. If such warrants and options are fully exercised, the Company will
receive an aggregate of $3,236,620 in gross proceeds. See "Capitalization," "Use
of Proceeds" and "Selling Shareholders."
All costs, expenses and fees in connection with the registration of the
Shares offered by this Prospectus will be borne by the Company. Such expenses
are estimated at $17,000. Brokerage commissions and discounts, if any,
attributable to the sale of the Shares for the accounts of the Selling
Shareholders will be borne by them.
The Common Stock of the Company is quoted in the Nasdaq SmallCap Market
under the symbol "APCO."
SEE "RISK FACTORS." THIS OFFERING INVOLVES SIGNIFICANT RISKS, INCLUDING THE
FOLLOWING:
o The introduction into the market of the Shares offered hereby may have
an adverse effect on the market price and liquidity of the Common
Stock.
o The Company has had a history of losses in fiscal years prior to 1994.
o The operations of the Company are dependent on the availability of
insurance coverage at favorable rates for dealers.
o The Company's success is substantially dependant on the abilities and
services of its two principal executive officers.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is May 16, 1996
<PAGE>
No person has been authorized to give any information or to make any
representations not contained or incorporated by reference in this Prospectus in
connection with the offer described in this Prospectus and, if given or made,
such information and representations must not be relied upon as having been
authorized by the Company or any of the Selling Shareholders. Neither the
delivery of this Prospectus nor any sale made under this Prospectus shall under
any circumstances create any implication that there has been no change in the
affairs of the Company since the date hereof or since the date of any documents
incorporated herein by reference. This Prospectus does not constitute an offer
or solicitation in any state to any person to whom it is unlawful to make such
offer in such state.
TABLE OF CONTENTS
Page
Available Information...................................................... 2
Documents Incorporated by Reference........................................ 3
The Company................................................................ 3
Risk Factors............................................................... 4
Use of Proceeds............................................................ 7
Capitalization............................................................. 7
Selling Shareholders....................................................... 8
Plan of Distribution....................................................... 9
Legal Matters.............................................................. 9
Experts.................................................................... 9
Indemnification............................................................ 9
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission
("Commission"), in Washington, D.C., a Registration Statement on Form S-3
("Registration Statement") under the Securities Act of 1933, as amended
("Securities Act") with respect to the Shares offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement
and exhibits thereto. For further information with respect to the Company and
the Shares, reference is hereby made to the Registration Statement and exhibits.
The statements contained in this Prospectus as to the contents of any contract
or other document filed as an exhibit are not complete and the description of
such contract or document is qualified in its entirety by reference to such
contract or document. The Registration Statement, together with the exhibits,
may be inspected at the Commission's principal office in Washington, D.C. and
copies may be obtained upon payment of the fees prescribed by the Commission.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Copies of such information, reports, proxy statements and other
information filed by the Company under the Exchange Act may be examined without
charge at the public reference facilities of the Commission, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the following
Regional Offices: 7 World Trade Center, New York, NY 10048; and 500 West Madison
Street, Suite 1400, Chicago, IL 60661-2511. Copies can also be obtained at
prescribed rates from the Commission's Public Reference Section, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
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DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995 filed with the Commission pursuant to
Section 13(a) of the Exchange Act;
(b) All other reports filed by the Company with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act; and
(c) The description of the Company's Common Stock, par value $.001
per share (the "Common Stock"), contained in the Registrant's
8-A Registration Statement filed with the Commission pursuant
to Section 12(b) of the Exchange Act, including any subsequent
amendment(s) or report(s) filed for the purpose of updating
such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all Shares offered have been sold
or which de-registers all Shares then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the respective date of filing of such documents. Any statement contained in
a document incorporated by reference herein is modified or superseded for all
purposes to the extent that a statement contained in this Registration Statement
or in any other subsequently filed document which is incorporated by reference
modifies or replaces such statement.
The Company will furnish without charge, upon oral or written request,
to each person to whom this Prospectus is delivered, a copy of any or all of the
documents incorporated by reference herein other than exhibits to such documents
not specifically incorporated by reference thereto. Such request should be
directed to Automobile Protection Corporation -- APCO, 15 Dunwoody Park Drive,
Atlanta, Georgia 30338, telephone number (770) 394- 7070, Attention: Investor
Relations.
THE COMPANY
General
The Company and its subsidiaries are engaged principally in the
marketing and administration of extended vehicle service contracts and extended
vehicle warranty programs sold by automobile dealers of new and used vehicles
(hereinafter referred to as "Dealers") located throughout the United States. The
Company also offers insurance brokerage services to the automotive industry.
Extended Vehicle Service Contracts and Extended Vehicle Warranties
The Company derives the majority of its revenues from the marketing and
administration of extended vehicle service contracts and extended vehicle
warranties (hereinafter referred to as "VSCs"). A consumer purchases a VSC from
a Dealer to provide for the repair or replacement of designated parts of a
vehicle for the term of the agreement, which can extend to seven years and
100,000 miles depending on vehicle eligibility. A VSC augments and enhances the
original warranty provided by the manufacturer of the vehicle and is available
on new, used and leased vehicles.
Dealers often engage a third party administrator, such as the Company,
to design a VSC program, arrange for insurance to limit their financial risk,
and to perform all of the related administrative functions associated therewith.
A principal function of the Company is to arrange for insurance to cover the
Dealer's obligations to pay all future claims. Since 1991, coverage has been
provided primarily by certain Underwriters at Lloyd's of London ("Lloyd's). The
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Company's wholly-owned subsidiary, The Aegis Group, Inc. ("Aegis"), has been
appointed by Lloyd's as the administrator of VSCs insured by Lloyd's. Aegis'
duties include, but are not limited to the following: (a) Collection of revenues
from Dealers; (b) Disbursement and reporting of premiums and taxes to Lloyd's,
brokers and state agencies; (c) Product design; (d) Production of contract forms
and advertising materials; (e) Record keeping; (f) Claims adjusting and payment;
and (g) Appointment of sales agents to market such programs to Dealers.
During 1995, the Company obtained insurance agreements with Greenwich
Insurance Company and Indian Harbor Insurance Company, both of which are
subsidiaries of NAC Re Corporation, which currently is rated "A" (Excellent) by
A.M. Best. These insurers will provide insurance coverage for certain Dealer
programs starting in 1996. The agreements expire on December 31, 1999.
The Company markets its products under the trade name, EasyCare(R).
There are EasyCare products for new, used and leased vehicles, which provide
either total mechanical breakdown coverage or stated coverage. EasyCare products
include various benefits such as trip interruption, rental reimbursement and
emergency roadside assistance. The Company also offers limited warranties,
powertrain warranties, and administers programs under private labels for large
customers such as American Honda Finance Corporation.
The Company's price of the VSC to the Dealer includes: (a) the
Company's fee for its administrative services, and (b) the cost of insurance
obtained for the Dealer, brokerage fees and taxes. The underlying insurance cost
is determined by the VSC term and coverage, in addition to the repair profile of
the specific vehicle. The Company also receives a fee for each claim processed,
which is paid by the insurer.
Insurance Brokerage Services Division
In addition to being a third party administrator for VSCs, Aegis
includes an Insurance Brokerage Services Division which markets and administers
automotive related insurance products. This division markets its products
through Dealers, financial institutions and leasing companies.
Seasonality
The VSC industry is subject to the seasonality of the automobile
industry. It is anticipated that the Company's revenue will be lower during the
first and fourth quarters due to lower sales of motor vehicles during the winter
months as compared to other times of the year.
Company
The Company was incorporated in Georgia on September 10, 1984, and has
its executive offices at 15 Dunwoody Park Drive, Atlanta Georgia 30338. The
Company's telephone number is (770) 394-7070.
RISK FACTORS
The Shares being offered hereby are speculative and should not be
purchased by anyone who cannot afford a loss of their entire investment. Before
making an investment in the Company, prospective investors should give careful
consideration to the following risk factors inherent in and affecting the
business of the Company and this offering.
1. History of Revenues, Profits and Losses. The Company's revenues for
the twelve months ended August 31, 1994 (the Company's previous year end) and
December 31, 1995 (the Company's new year end) were $26,553,554 and $49,210,774,
respectively. For the same periods the Company's net income was $912,528 and
$1,525,582, respectively. In fiscal years prior to these periods, the Company
experienced fluctuating revenues and
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net income and losses. Although the Company has experienced a substantial
increase in revenues and has net income for each of the twelve months ended
August 31, 1994 and December 31, 1995, no assurance can be given that this trend
will continue over the long term. A decline in the sale of motor vehicles or
VSCs and unexpected changes in insurance carriers willing to insure VSCs on
favorable terms, or at all, would have a material adverse impact on the business
of the Company and on the revenues and net income of the Company.
2. Dependence on Independent Dealers and Sales Agents. The Company
utilizes a number of independent agents to develop its Dealer base. Many of the
agents have substantial contacts among and long established relationships with
Dealers apart from activities related to the Company. To the extent any of these
agents decide to no longer represent the Company, Dealers may decide to
terminate their relationship with the Company, the result of which could be a
material, adverse impact on the Company's business and financial position. The
Company has entered into non-exclusive administrative service agreements with a
large number of Dealers. The Company, however, derives revenues under such
agreements only in the event and to the extent that such entities enter into a
VSC with a vehicle consumer that is administered by the Company. The Dealers are
under no obligation to market the Company's VSCs. Accordingly, the Company's
revenues are dependent upon the ability of Dealers to successfully market these
VSCs. The successful marketing of VSCs by Dealers depends upon many factors
beyond the Company's control, including, among other things, economic factors
affecting foreign or domestic motor vehicle sales, the availability of insurance
covering claims under these contracts and the existence of competitive programs.
3. Dependence on Availability of Insurance Coverage and Insurance
Available at Favorable Rates. A principal obligation of the Company as
administrator is to assist the Dealer in obtaining insurance to limit the
Dealer's financial risk on a VSC. Although the Company believes there are a
number of insurance companies which provide this type of coverage, typically the
Company maintains a primary relationship with only one or two insurance
companies at a time. There can be no assurance given that the Company will be
able to continue to obtain the required insurance coverage for the Dealers from
the insurance companies with which it currently does business or any other
insurance company in the future, in which case the Company's business would be
materially, adversely affected. Even if the Company locates a new insurance
carrier, the transition from one insurance carrier to another requires the
Company to expend effort and capital for new documentation and additional
marketing. Moreover, any transition is often accompanied by a loss of Dealers
unwilling to issue VSCs insured by the new insurance carrier. Thus, if the
Company cannot enter into new agreements with the Dealers who have ended the
services of the Company or with Dealers to replace them, the business and
revenues of the Company may be materially, adversely affected. Further, the
Company's profitability depends to a great extent on the availability of
insurance coverage at favorable rates for the VSCs it administers. From time to
time there may be increases in these rates, which could have adverse impact on
the Company's gross margin and net income if the Company for competitive or
other reasons is unable to increase its fees to compensate for the increased
cost of insurance. To the extent that the Company is unable to obtain favorable
insurance rates or pass on rate increases, its business and net income will be
materially, adversely affected.
4. Competition. The VSC industry is highly competitive and is dominated
by the major automobile manufacturers and several large third party
administrators. Management believes the Company is competitive against both the
factory products and other third party administrators. In order to be
competitive, the Company designs products which enhance a Dealer's Customer
Satisfaction Index, provides training to Dealer personnel and obtains insurance
for the Dealers to provide comprehensive coverage at reasonable prices.
5. Government Regulation. Although the Company does not operate as an
insurance company, the sale of VSCs by Dealers is regulated by the insurance
laws of most states and the Company's ability to market and perform its services
is affected by such insurance laws. It is possible that some states in which the
Company now conducts business free of regulation may change their laws to
regulate the activities of the Company. In such event, the Company would have to
comply with the regulatory requirements of those states or cease its business
activities in those states. The Company is not aware of any proposed legislative
change which will materially affect its business as it is currently conducted.
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6. Dependence on Key Personnel. The success of the Company is largely
dependent on the efforts of Messrs. Larry I. Dorfman and Martin J. Blank and
certain other key personnel. Should any of these persons cease to be affiliated
with or employed by the Company before qualified replacements are found, there
could be a material, adverse effect on the Company's business and prospects. The
Company's continued growth is also dependent upon its ability to hire additional
qualified marketing and service personnel. There can be no assurance given that
the Company will be able to hire or retain necessary personnel. The Company does
not have written employment agreements with either of Messrs. Dorfman or Blank
and has key-man life insurance only on Mr. Dorfman.
7. Broad Discretion in Application of Proceeds. Any proceeds received
by the Company from the exercise of the outstanding options and warrants by the
Selling Shareholders will be applied to the working capital and general
corporate purposes of the Company. Accordingly, the management of the Company
will have broad discretion as to the application of such proceeds. See "Use of
Proceeds."
8. Control of the Company by Management. As of the date of this
Prospectus, the current directors and officers of the Company and their
affiliates, in the aggregate, own beneficially approximately 22.3% of the Common
Stock. In addition Messrs. Dorfman and Blank own the 300 shares of Class C
Preferred Stock currently outstanding. The holders of the Class C Preferred
Stock are entitled only to vote in the election of directors and are entitled to
elect the smallest number of directors that will constitute a majority of the
Board of Directors through September 11, 1998. As a result of this stock
ownership, for the foreseeable future Messrs. Dorman and Blank will be able to
influence the Company's management, policies and operations.
9. Effect of Authorization and Discretionary Issuance of Preferred
Stock on Holders of Common Stock and as an Anti-Takeover Measure. The Company's
Certificate of Incorporation authorizes the issuance of "blank check" preferred
stock with such designations, rights and preferences as may be determined from
time to time by the Board of Directors. Accordingly, the Board of Directors is
empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights that could affect adversely the
voting power or other rights of the holders of the Company's Common Stock. In
the event of issuance, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. Although the Company has no present intention to issue
any additional shares of its preferred stock, there can be no assurance that the
Board of Directors of the Company will not do so in the future.
10. Shares Eligible for Future Sale. Other than the Shares offered
herein, 1,713,336 of the 9,687,238 shares of Common Stock currently issued and
outstanding are "restricted securities," as that term is defined under Rule 144
promulgated under the Securities Act. All of these shares of Common Stock are
eligible for public sale under Rule 144 subject to the volume limitations
described below. In general, under Rule 144, a person who has owned restricted
shares of Common Stock for at least two years is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the total number of outstanding shares of Common Stock or the average weekly
trading volume during the four calendar weeks preceding the sale. A person who
has not been an affiliate of a company for at least three months immediately
preceding the sale and who beneficially has owned shares of common stock for at
least three years is entitled to sell such shares under Rule 144 without regard
to any of the limitations described above. No prediction can be made as to the
effect, if any, that sales of such shares of Common Stock of the Company or the
availability of such shares for sale will have on the market prices of the
Company's securities prevailing from time to time. Nevertheless, the possibility
that substantial amounts of Common Stock may be sold in the public market may
affect adversely prevailing market prices for the securities of the Company and
could impair the Company's ability to raise capital through the sale of its
equity securities.
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<PAGE>
USE OF PROCEEDS
The Company is unable to estimate the number of outstanding options and
warrants that may be exercised. The Company believes that the exercise of
options and warrants primarily will be dependent on the market price of a share
of Common Stock at the time of exercise and its relation to the option and
warrant exercise price.
All 1,388,000 Shares offered hereby are being registered for the
account of the Selling Shareholders. The Company will not receive any of the
proceeds from the sale of the Shares. However, all the Shares being offered
hereby are issuable upon exercise of outstanding options and warrants of the
Company. If such warrants and options are fully exercised, the Company will
receive an aggregate of $3,236,620 in gross proceeds. See "Capitalization" and
"Selling Shareholders."
The Company intends to use the net proceeds from the exercise of any
options and warrants for working capital and general corporate purposes. Pending
application of the proceeds, the Company intends to place the funds in
interest-bearing investments such as bank accounts, certificates of deposit and
United States government obligations.
CAPITALIZATION
The following table sets forth the Company's capitalization as of
December 31, 1995. It has been adjusted on a pro forma basis to reflect the
issuance of the Shares which are the subject of this Prospectus upon exercise of
all the outstanding options and warrants by the Selling Shareholders
December 31, 1995
---------------------------
Pro forma as
Actual adjusted(1)(2)
------------ ------------
Shareholders' equity:
Common Stock, $.001 par value, 40,000,000
authorized, 9,614,616 and 11,075,238 issued
and outstanding............................. $ 9,614 $ 11,075
Additional paid-in capital..................... 12,102,172 15,421,809
Retained earnings.............................. 2,582,220 2,582,220
---------- ----------
Total shareholders' equity.................. $14,694,006 $18,015,104
========== ==========
(1) Adjusted to reflect the exercise of all the outstanding options and
warrants of the Selling Shareholders the Shares of which are registered
under the Registration Statement of which this Prospectus is a part and
the receipt of proceeds therefrom.
(2) Includes 72,622 shares of Common Stock issued between January 1, 1996
and April 30, 1996, upon exercise of outstanding options.
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SELLING SHAREHOLDERS
The 1,388,000 Shares offered hereby consist of Common Stock currently
outstanding or issuable upon exercise of various options and warrants granted by
the Company from time to time in the past. The following table sets forth
certain information as of May 10, 1996, and is adjusted to reflect the issuance
of the Shares upon exercise of the outstanding options and warrants and the sale
of all of the Shares offered hereby. Unless otherwise indicated, the Selling
Shareholders each possess sole voting and investment power with respect to the
Shares shown.
<TABLE>
<CAPTION>
Before Offering After Offering
------------------------- Number -------------------------
Number of of Shares Number of
Shares Percentage Offered Shares Percentage
---------- ---------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
Rodger Anderson 21,000 -- 21,000 -- --
Jack Atkin 12,000 -- 12,000 --
Automotive Development Group 21,000 -- 21,000 -- --
Bix Brown 15,000 -- 15,000 -- --
Cartel Marketing 21,000 -- 21,000 -- --
John Clarke(2) 60,000 -- 60,000 -- --
Corporate Securities Group, Inc. 50,000 -- 50,000 -- --
David Cowherd(2) 60,000 -- 60,000 -- --
The Dealer Group 21,000 -- 21,000 -- --
^Robert D. Goldstein 200,000 2.0% 200,000 -- --
- --------------------
Robert Flaherty 10,000 -- 10,000 -- --
Frank Follari 12,000 -- 12,000 -- --
Joe Gibbs 50,000 -- 50,000 -- --
David Golden 12,000 -- 12,000 -- --
Jerry Henley 12,000 -- 12,000 -- --
John Jameson 30,000 -- 30,000 -- --
Joe Kuboff 12,000 -- 12,000 -- --
Bobby Labonte 5,000 -- 5,000 -- --
Ladenburg Thalmann & Co. 27,500 -- 25,000 -- --
Marshall Leeds(1) 175,000 1.8% 175,000 -- --
Charles Mann 12,000 -- 12,000 -- --
Paul Mannion(2) 60,000 -- 60,000 -- --
Cory McClenathan 5,000 -- 5,000 -- --
Max Morgulis(2) 20,000 -- 20,000 -- --
Cruz Pedregon 5,000 -- 5,000 -- --
The Providence Group 21,000 -- 21,000 -- --
Frank Shoop 37,500 -- 37,500 -- --
Josephine Shoop 37,500 -- 37,500 -- --
Leonard J. Sokolow 275,000 2.8% 275,000 -- --
Sutherland, Asbill & Brennan,
as escrow agent for John
Clarke, Paul Mannion, David
Cowherd and Max Morgulis(4) 50,000 -- 50,000 -- --
TASA 12,000 -- 12,000 -- --
Mark Wachs 4,000 -- 4,000 -- --
Ronnie Wohl(3) 22,500 -- 25,000 -- --
--------- ---------
1,388,000 1,388,000
<FN>
(1) Officer, director and principal of Corporate Securities Group, Inc., a
Selling Shareholder.
(2) Employee and affiliate of Corporate Securities Group, Inc., a Selling
Shareholder.
(3) Employee, director and affiliate of Ladenburg Thalmann & Co., a Selling
Shareholder.
(4) Each of the beneficial owners is an employee and affiliate of Corporate
Securities Group, Inc., a Selling Shareholder.
</FN>
</TABLE>
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The registration rights granted to certain of the Selling Shareholders
generally provide that the Company and the Selling Shareholders indemnify each
other against certain liabilities, including liabilities under the Securities
Act. In the opinion of the Commission, such indemnification is against public
policy and is, therefore unenforceable. See "Indemnification."
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that sales of the
Shares may be effected from time to time in transactions (which may include
block transactions) on the Nasdaq SmallCap Market, in negotiated transactions,
or a combination of such methods of sale, at fixed prices which may be changed,
at market prices prevailing at the time of sale, or at negotiated prices. The
Selling Shareholders have advised the Company that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their Shares. The Selling Shareholders may
effect such transactions by selling their Shares directly to purchasers or
through broker-dealers (including JW Charles Clearing Corp. and/or JW Charles
Securities, Inc.), which may act as agents or principals. Such broker-dealers
may receive compensation in the form of discounts, concessions, or commissions
from the Selling Shareholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions). The Selling Shareholders and any broker-dealers that act
in connection with the sale of the Shares might be deemed to be "underwriters'
within the meaning of Section 2(11) of the Securities Act. The Selling
Shareholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the securities against certain
liabilities, including liabilities arising under the Securities Act.
The Company has agreed to keep the Registration Statement, of which
this Prospectus is a part, effective until all the Shares are sold.
LEGAL MATTERS
Certain matters with respect to the legality of the issuance and sale
of the Shares offered hereby will be passed upon for the Company by Graubard
Mollen & Miller, New York, New York.
EXPERTS
The financial statements incorporated in this Prospectus by reference
to the Annual Report on Form 10-K of Automobile Protection Corporation - APCO
for the year ended December 31, 1995 have been so incorporated in reliance on
the report of Price Waterhouse, LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the provisions described above, or otherwise, the
Company has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable. In the event that a claim for indemnification
against such liabilities is asserted by such director, officer or controlling
person in connection with the registration of the Shares, the Company will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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