<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For fiscal year ended December 31, 1995
Commission file number 0-17231
AUTOMOBILE PROTECTION CORPORATION - APCO
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1582432
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
15 Dunwoody Park Drive, Suite 100
Atlanta, Georgia 30338
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(Address of principal executive offices) (Zip Code)
(770) 394-7070
-----------------
Registrant's telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act: None
----------------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - Par Value $.001 per share
------------------------------------------------------------------------
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes (X) No ( )
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes (X) No ( )
Based on the average of the bid and asked prices ($3.97) at the close
of business on March 15, 1996, the aggregate market value of the Registrant's
common stock held by non-affiliates of the Registrant was approximately
$31,385,000.
The number of shares outstanding of the Registrant's common stock, $.001
par value, was 9,620,916 on March 15, 1996.
DOCUMENTS INCORPORATED BY REFERENCE: None
Exhibit index is located on page - 34.
<PAGE>
PART 1
ITEM 1. BUSINESS.
GENERAL
Automobile Protection Corporation - APCO and its subsidiaries (the
"Company") are engaged principally in the marketing and administration of
extended vehicle service contracts and extended vehicle warranty programs
sold by automobile dealers (hereinafter referred to as "Dealers") located
throughout the United States. The Company also provides 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 obligations to pay all future claims. Since 1991, coverage has been
provided primarily by certain Underwriters at Lloyd's of London ("Lloyd's").
The 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 1994, the Company entered into a production and administration
agreement with Royal Insurance Company of America, which is rated "A-"
(Excellent) by A.M. Best. Royal Insurance insured approximately 3% of the VSC
obligations for the most recent year.
During 1995, the Company entered into Program Administrator Agreements
with Greenwich Insurance Company and Indian Harbor Insurance Company, both of
which are subsidiaries of NAC Re Corporation, which is rated "A" (Excellent)
by A.M. Best. These insurers will provide insurance coverage for certain
programs starting in 1996. The Agreements expire on December 31, 1999.
The Company markets its products under the trade name, EasyCare
- - registered trademark -. 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 inter-
ruption, rental reimbursement and emergency roadside assistance. The Company
also offers limited warranties, powertrain warranties and administers programs
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,
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.
- 2 -
<PAGE>
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. This
division provided approximately 1% of the Company's total revenues for the
Company's most recent year.
MARKETING
The Company's products are sold by Dealers to consumers. The Company
markets its VSCs to Dealers through a national network of independent sales
representatives and a few employee sales representatives. The independent
sales representatives often market other automotive related insurance products
to Dealers, in addition to the Company's VSCs. The Company's agreement with
each independent sales organization and representative is terminable by the
Company if production quotas are not met or by the representative upon the
giving of written notice. Independent sales representatives are compensated
on a commission basis which is linked to sales volumes. At March 15, 1996,
116 individual sales representatives represented the Company. The Company
supports the sales representatives with a marketing department which is
available to provide proposal assistance, competitive analysis and training of
dealership personnel.
In February 1994, the Company entered into a five year agreement with
American Honda Finance Corporation to administer a VSC program for non-Honda
and non-Acura vehicles sold through participating Honda and Acura dealerships.
This agreement provided less than 10% of the Company's revenues for 1995.
The Company has entered into an associate sponsorship agreement with
Joe Gibbs Racing for 1996, whereby the Company will be sponsoring Gibbs'
National Association of Stock Car and National Hot Rod Association cars.
Additionally, Gibbs has become the national spokesperson for the Company,
appearing in national trade publications, videos and in person at Company
sponsored events. The Company is using its association with Gibbs to enhance
the recognition and value of the EasyCare trade name to Dealers.
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 Dealership personnel, and obtains insurance for
the Dealer to provide comprehensive coverage at reasonable prices.
EMPLOYEES
At March 15, 1996, the Company had 86 employees. The Company is not
subject to any collective bargaining agreements and considers its relationships
with employees to be good.
SEASONALITY
The VSC industry is subject to the seasonality of the automobile
industry. It is anticipated that the Company's revenues will be lower during
its first and fourth quarters due to lower sales of motor vehicles during the
winter months as compared to other times of the year.
GOVERNMENT REGULATION
Although the Company does not operate as an insurance company, the sale
of VSCs by Dealers and the issuance of insurance policies 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 insurance regulation
may change their insurance 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.
- 3 -
<PAGE>
PROPRIETARY RIGHTS
The Company regards its VSC administration and software as proprietary.
In order to protect its software from illegal reproduction, the Company relies
on copyright protection, trade secret laws and restrictions in its license
agreements with respect to the use and reproduction of such software. The
names "APCO -- Automobile Protection Corp. - registered trademark- ", "Easy
Care - registered trademark- " and "Perfect Profit Program - registered
trademark- " have been registered with the United States Patent and
Trademark Office. The Company uses these service marks in its sales and
marketing programs.
ITEM 2. PROPERTIES.
The Company conducts its operations from a 15,000 sq. ft. leased office
facility at 15 Dunwoody Park Drive, Suite 100, Atlanta, Georgia 30338. The
lease was renewed in January 1995 for a period ending on April 15, 2001.
ITEM 3. LEGAL PROCEEDINGS.
In November 1995, the Company filed a lawsuit against an independent
sales agent in the United States District Court for the Northern District of
Georgia, contending that the agent breached an Independent Contractor
Agreement. The Company is seeking a declaration of its rights to cancel the
agreement for cause, and damages. The agent is contesting the jurisdiction of
the Court. In January 1996, the agent filed a lawsuit against the Company,
its President, National Sales Manager and others, in the Civil District Court
for the Parish of Orleans, Louisiana, alleging that the defendants engaged in
unfair trade practices, civil conspiracy, intentional interference with
business relations, defamation, restraint of trade, violation of Uniform Trade
Secrets Act, and bad faith breach of contract. The agent is seeking damages
in excess of $5 million. The Company believes the agent's claims are without
merit and intends to vigorously challenge the jurisdiction of the Louisiana
court and to defend itself and its officers vigorously.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted during the fourth quarter of the year covered
by this report to a vote of shareholders of the Company through the solicit-
ation of proxies or otherwise.
- 4 -
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
The Company's common stock has been traded in the over-the-counter
securities market. The Company's common stock is quoted on the Nasdaq
SmallCap Market under the symbol "APCO." The following figures represent
quarterly high and low bid information related to trading in the Company's
common stock. The figures reflect inter dealer prices without retail markup,
markdown or commissions and may not be representative of actual transactions
which occurred in the market. Such information has been obtained from Nasdaq.
<TABLE>
<CAPTION>
Low Bid High Bid
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<S> <C> <C>
Fiscal year 1994:
Quarter 11/30/93 1 1/2 2
Quarter 2/28/94 1 7/8 2 9/16
Quarter 5/31/94 1 7/8 2 5/8
Quarter 8/31/94 1 13/16 2 3/8
Transition period (1):
Quarter 11/30/94 2 1/16 2 13/16
Month 12/31/94 2 1/8 2 3/8
Calendar year 1995:
Quarter 3/31/95 1 3/4 2 3/8
Quarter 6/30/95 1 5/8 2 3/8
Quarter 9/30/95 2 1/8 2 9/16
Quarter 12/31/95 2 1/4 3 5/16
Calendar year 1996:
First Quarter* 2 11/16 4 5/16
* through March 15, 1996
(1) On February 1, 1995, the Company changed its fiscal year end from August
31 to December 31. For further information, see Note 1 to the accompanying
consolidated financial statements.
</TABLE>
The closing bid price for the common stock on March 15, 1996 was $3.94.
There were approximately 250 holders of record of the Company's common
stock as of March 15, 1996. The Company believes there are approximately
3,000 beneficial owners of its common stock, which is held in street name by
brokerage firms.
No dividends have been declared or paid to date on the Company's common
stock, nor are any anticipated in the foreseeable future. The Company has
adopted a policy of reinvesting cash in the business.
- 5 -
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
Set forth below is a summary of the selected financial data of the Company:
<TABLE>
<CAPTION>
For the Four months For the For the For the For the
year ended ended year ended year ended year ended year ended
December 31, December 31, August 31, August 31, August 31, August 31,
1995 1994 1994 1993 1992 1991
------------ ------------ ------------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations:
Total revenues $ 49,210,774 $ 11,197,168 $ 26,553,554 $ 23,507,191 $ 16,087,506 $ 23,204,933
Income (loss) before
(provision) benefit for
income taxes and
cumulative effect of
accounting change 2,447,582 413,747 1,290,453 (232,047) (1,386,281) 482,563
(Provision) benefit for
income taxes (922,000) (144,000) (445,705) 439,289 (184,744)
Cumulative effect of
accounting change 67,780
- ------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 1,525,582 $ 269,747 $ 912,528 $ (232,047) $ (946,992) $ 297,819
========================================================================================================================
Per share data:
Primary
Income (loss) before
cumulative effect of
accounting change $ 0.20 $ 0.04 $ 0.15 $ (0.04) $ (0.18) $ 0.06
Cumulative effect of
accounting change 0.01
- ------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 0.20 $ 0.04 $ 0.16 $ (0.04) $ (0.18) $ 0.06
========================================================================================================================
Fully diluted
Income (loss) before
cumulative effect of
accounting change $ 0.20 $ 0.04 $ 0.14 $ (0.04) $ (0.18) $ 0.05
Cumulative effect of
accounting change 0.01
- ------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ 0.20 $ 0.04 $ 0.15 $ (0.04) $ (0.18) $ 0.05
========================================================================================================================
</TABLE
</TABLE>
<TABLE>
<CAPTION>
As of As of As of As of As of As of
December 31, December 31, August 31, August 31, August 31, August 31,
1995 1994 1994 1993 1992 1991
------------- ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance Sheet Data:
- ------------------
Working capital $ 11,270,716 $ 3,317,098 $ 3,134,005 $ 2,164,306 $ 2,124,849 $ 2,914,691
Total assets $ 19,592,461 $ 9,352,256 $ 8,398,317 $ 6,720,107 $ 6,240,327 $ 6,180,562
Total liabilities $ 4,898,455 $ 3,931,752 $ 4,150,491 $ 3,405,559 $ 2,693,432 $ 1,686,400
Shareholders' equity $ 14,694,006 $ 5,420,504 $ 4,247,826 $ 3,314,548 $ 3,546,895 $ 4,494,162
</TABLE>
- 6 -
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis of financial condition and results
of operations presents the more significant factors affecting the Company
during the periods indicated. The discussion and analysis should be read in
conjunction with the Consolidated Financial Statements and related notes, and
with the other financial information appearing herein.
Liquidity and Capital Resources
The Company believes that its current working capital and anticipated
levels of internally generated funds will be sufficient to fund its operating
and capital expenditure requirements for the next twenty four months. This
estimate is based on the Company's current level of operations and certain
assumptions relating to the Company's business and planned growth. At December
31, 1995, the Company had working capital of $11,270,716 and non-current
investment securities of $1,509,288. The Company's liquidity increased in
1995 due to the exercise of a significant number of the Company's Class A and
Class B warrants and net income from operations.
Results of Operations
Year ended December 31, 1995 ("1995") compared to year ended August 31, 1994
("1994").
Revenues for 1995 increased by 85% or $22,657,220 to $49,210,774 over
1994. The Company's largest revenue source is from the marketing and
administration of extended vehicle service contracts ("VSCs") under the
EasyCare - registered trademark - name, which provided 99% of revenues for
1995. EasyCare revenues increased due to the introduction of additional
Dealers to EasyCare by the Company's independent sales representatives and
from the contract with American Honda Finance Corporation.
The Company's gross margin decreased to 20% of revenues in 1995 from 22%
of revenues in 1994. The margin decrease is due to the increase in
commissions and incentives to independent sales representatives and the
inclusion of emergency roadside assistance benefits in the VSC. The change
in the mix of new and used, makes and models of vehicles also impacts the
gross margin.
Compensation, selling and administrative expenses for 1995 increased by
75% or $3,245,717 to $7,548,902 over 1994. The increase for 1995 is
primarily attributable to headcount and compensation for marketing personnel,
related travel, printing and advertising costs. Additional administrative
costs were incurred to support the higher volumes and resulting claims,
principally in headcount and communications. Expenses for 1994 were reduced
by approximately $340,000 from the recoupment of previously expensed legal
costs.
Interest, dividend and other income for 1995 increased by 332% or
$361,040 to $469,612 over 1994. The increase is due to the larger cash and
investment securities balances on hand from the exercise of a significant
number of the Company's Class A and Class B warrants, net income from
operations and higher cash floats resulting from the increased volume of
business.
- 7 -
<PAGE>
The Company recorded a provision for income taxes in 1995 of $922,000
compared to $445,705 for 1994. The increase is due to higher net income and
a higher combined tax rate.
Year ended August 31, 1994 ("1994") compared to year ended August 31, 1993
("1993").
Revenues for 1994 increased by 13% or $3,046,363 to $26,553,554 over
1993. The Company's largest revenue source is from the marketing and
administration of extended vehicle service contracts under the EasyCare
- - registered trademark - name, which provided 91% of revenues for 1994.
EasyCare revenues increased due to the recruitment of additional independent
sales representatives, the introduction of additional Dealers to the EasyCare
product by the Company's independent sales representatives and the strength
of vehicle sales.
The Company's gross margin increased to 22% of revenues in 1994 from 17%
of revenues in 1993. The increase is due to the increased proportion of
business from EasyCare VSCs as compared to VSCs administered under a
discontinued program. The change in the mix of new and used, makes and models
of vehicles also impacts the gross margin.
Compensation, selling and administrative expenses for 1994 increased by
11% or $440,447 to $4,303,185 over 1993. The increase is primarily
attributable to compensation, advertising and promotion, travel and printed
program materials due to the increase in sales volumes. Expenses for 1994
were reduced by approximately $340,000 from the recoupment of previously
expensed legal costs, which were approximately $200,000 in 1993.
The Company recorded a provision for income taxes in 1994 of $445,705
compared to no provision in 1993. The Company incurred a loss in 1993. The
Company adopted Statement of Financial Accounting Standards No. 109 on
September 1, 1993 and recognized income of $67,780 as the cumulative effect of
an accounting change.
Impact of Inflation
Although the Company's costs may increase from time to time as a result
of increases in some or all of the Company's costs, the precise effect of
inflation on the operations of the Company cannot be determined. The Company
believes that continuation of the general levels of inflation experienced in
recent years should not have a significant impact on the Company's current and
contemplated operations.
Recent Accounting Pronouncements
During the four month period ended December 31, 1994, the Company
adopted Statement of Financial Accounting Standards No. 115 - "Accounting for
Certain Investments in Debt and Equity Securities", which did not have a
material affect on the Company's results.
In October, 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123 - "Accounting for Stock-
Based Compensation", which the Company is required to adopt next year.
Management has not decided whether the Company will adopt the accounting
requirements or the alternative disclosure requirements. Although the effect
of this standard is indeterminable for the 1996 financial statements at this
time, it could result in a significant noncash compensation cost if the
Company issues a large number of options, although this is not presently
contemplated by management.
- 8 -
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- ---------------------------------------------------
Index to Financial Statements and Financial Statement Schedules. Page
----
Financial Statements:
- --------------------
Report of Independent Accountants 10
Consolidated Balance Sheet at December 31, 1995 11
December 31, 1994 and August 31, 1994
Consolidated Statement of Operations for the twelve months
ended December 31, 1995, four months ended December 31, 1994,
twelve months ended August 31, 1994, twelve months ended
August 31, 1993 and four months ended December 31, 1993 12
Consolidated Statement of Changes in Shareholders' Equity
for the twelve months ended December 31, 1995, four months
ended December 31, 1994, twelve months ended August 31, 1994
and twelve months ended August 31, 1993 13
Consolidated Statement of Cash Flows for the twelve months
ended December 31, 1995, four months ended December 31, 1994,
twelve months ended August 31, 1994, twelve months ended
August 31, 1993 and four months ended December 31, 1993 14
Notes to Consolidated Financial Statements 15 - 22
Financial Statement Schedules:
- ------------------------------
I. Marketable Securities - Other Investments at
December 31, 1995 23
VIII. Valuation and Qualifying Accounts for the twelve
months ended December 31, 1995, four months ended
December 31, 1994, twelve months ended August 31,
1994 and twelve months ended August 31, 1993 24
X. Supplementary Income Statement Information for the
twelve months ended December 31, 1995, four months
ended December 31, 1994, twelve months ended August
31, 1994 and twelve months ended August 31, 1993 25
All other schedules are omitted because they are not applicable or
the required information is shown in the financial statements or notes thereto.
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<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of Automobile Protection
Corporation - APCO
In our opinion, the accompanying consolidated financial statements listed in
the accompanying index present fairly, in all material respects, the
financial position of Automobile Protection Corporation - APCO and its
subsidiaries at December 31, 1995, December 31, 1994 and August 31, 1994,and
the results of their operations and their cash flows for the twelve months
ended December 31, 1995, August 31, 1994 and August 31, 1993 and for the
four months ended December 31, 1994 and December 31, 1993 in conformity with
generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
As discussed in Note 6 to the consolidated financial statements, the Company
changed its method of accounting for income taxes by adopting Statement of
Financial Accounting Standards No. 109, Accounting for Income Taxes during
the year ended August 31, 1994.
PRICE WATERHOUSE, LLP
Atlanta, Georgia
March 7, 1996
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<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
December 31, December 31, August 31,
1995 1994 1994
----------- ----------- ----------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $10,210,768 $5,383,643 $4,932,535
Trading securities, at fair value 3,582,423 802,170 1,596,982
Investment securities held to maturity 255,576
Accounts receivable, net of provision for doubtful
accounts of $36,000, $45,000 and $45,000 1,212,000 473,577 271,665
Notes receivable, net of provision for doubtful
accounts of $9,000, $16,000 and $13,000 421,882 60,482 128,910
Officer and employee receivables 133,072 81,154 58,105
Income tax refund receivable 57,000 57,000
Prepaid expenses 220,177 226,555 173,999
Deferred tax asset 110,643 85,056 45,000
----------- ----------- ----------
Total current assets 16,146,541 7,169,637 7,264,196
Property and equipment, net of accumulated
depreciation of $1,389,800, $1,086,800, and $987,800 874,718 687,798 688,367
Investment securities held to maturity 1,509,288 604,316
Deposits to secure licenses 726,319 653,250 152,500
Deferred tax asset 185,861 18,857
Other assets 149,734 218,398 293,254
----------- ----------- ----------
$19,592,461 $9,352,256 $8,398,317
=========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Premiums, fees and taxes payable $3,467,947 $3,067,925 $3,290,216
Accounts payable 886,155 558,726 474,748
Accrued liabilities 470,723 212,283 269,227
Current income taxes payable 51,000 13,605 96,000
----------- ----------- ----------
Total current liabilities 4,875,825 3,852,539 4,130,191
Deferred income taxes 22,330 78,913 20,000
Redeemable preferred stock 300 300 300
----------- ----------- ----------
4,898,455 3,931,752 4,150,491
----------- ----------- ----------
Shareholders' equity:
Common stock; $.001 par value, 40,000,000
authorized, 9,614,616, 5,679,895 and 5,183,000
issued and outstanding 9,614 5,679 5,183
Additional paid-in capital 12,102,172 4,358,187 3,455,752
Retained earnings 2,582,220 1,056,638 786,891
----------- ----------- ----------
Total shareholders' equity 14,694,006 5,420,504 4,247,826
----------- ----------- ----------
Commitments
----------- ----------- ----------
$19,592,461 $9,352,256 $8,398,317
=========== =========== ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
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<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Twelve Months Four Months Twelve Months Twelve Months Four Months
Ended Ended Ended Ended Ended
December 31, December 31, August 31, August 31, December 31,
1995 1994 1994 1993 1993
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Revenues $49,210,774 $11,197,168 $26,553,554 $23,507,191 $7,848,154
Cost of sales 39,322,773 8,771,946 20,652,166 19,626,799 6,223,248
----------- ----------- ----------- ----------- -----------
9,888,001 2,425,222 5,901,388 3,880,392 1,624,906
----------- ----------- ----------- ----------- -----------
Expenses:
Compensation, selling and administrative 7,548,902 1,914,130 4,303,185 3,862,738 1,425,101
Depreciation and amortization 361,129 117,588 416,322 378,068 144,638
Interest, dividend and other income (469,612) (20,243) (108,572) (128,367) (25,007)
----------- ----------- ----------- ----------- -----------
7,440,419 2,011,475 4,610,935 4,112,439 1,544,732
----------- ----------- ----------- ----------- -----------
Income (loss) before provision for income taxes 2,447,582 413,747 1,290,453 (232,047) 80,174
Provision for income taxes 922,000 144,000 445,705 27,761
Cumulative effect of accounting change (67,780) (67,780)
----------- ----------- ----------- ----------- -----------
Net income (loss) $1,525,582 $269,747 $912,528 ($232,047) $120,193
=========== =========== =========== =========== ===========
Net income (loss) per share:
Primary
Net income (loss) per share before cumulative
effect of accounting change $0.20 $0.04 $0.15 ($0.04) $0.01
Cumulative effect of accounting change 0.01 0.01
----------- ----------- ----------- ----------- -----------
Net income (loss) per share $0.20 $0.04 $0.16 ($0.04) $0.02
=========== =========== =========== =========== ===========
Fully diluted
Net income (loss) per share before cumulative
effect of accounting change $0.20 $0.04 $0.14 ($0.04) $0.01
Cumulative effect of accounting change 0.01 0.01
----------- ----------- ----------- ----------- -----------
Net income (loss) per share $0.20 $0.04 $0.15 ($0.04) $0.02
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
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<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Additional
--------------------- Paid-in Retained
Shares Amount Capital Earnings Total
--------- ------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Balances at August 31, 1992 5,168,000 $5,168 $3,435,017 $106,410 $3,546,595
Net loss for the period September 1, 1992
through August 31, 1993 (232,047) (232,047)
---------------------------------------------------------
Balances at August 31, 1993 5,168,000 5,168 3,435,017 (125,637) 3,314,548
Net income for the period September 1, 1993
through August 31, 1994 912,528 912,528
Issuance of common stock upon exercise
of stock options 15,000 15 20,735 20,750
---------------------------------------------------------
Balances at August 31, 1994 5,183,000 5,183 3,455,752 786,891 4,247,826
Net income for the period September 1, 1994
through December 31, 1994 269,747 269,747
Issuance of common stock upon exercise
of stock options 496,895 496 975,265 975,761
Registration costs (82,830) (82,830)
Stock compensation expense 10,000 10,000
---------------------------------------------------------
Balances at December 31, 1994 5,679,895 5,679 4,358,187 1,056,638 5,420,504
Net income for the period January 1, 1995
through December 31, 1995 1,525,582 1,525,582
Issuance of common stock upon exercise
of stock options, net of underwriting fee 3,934,721 3,935 7,459,515 7,463,450
Registration costs (19,526) (19,526)
Stock compensation expense 54,996 54,996
Tax effect of option exercise 249,000 249,000
---------------------------------------------------------
Balances at December 31, 1995 9,614,616 $9,614 $12,102,172 $2,582,220 $14,694,006
=========================================================
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
- 13 -
<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Twelve Months Four Months Twelve Months Twelve Months Four Months
Ended Ended Ended Ended Ended
December 31, December 31, August 31, August 31, December 31,
1995 1994 1994 1993 1993
----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $1,525,582 $269,747 $912,528 ($232,047) $120,193
----------- ----------- ---------- ----------- -----------
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 361,129 117,588 416,322 378,068 144,638
Cumulative effect of accounting change (67,780)
Deferred income taxes (249,174) 42,780 (55,446)
Provision for doubtful accounts 1,367 3,000 (67,549) 70,803
Tax benefit from stock option exercise 249,000
Stock compensation expense 54,996 10,000
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable (734,790) (201,912) 267,285 (203,048) (91,236)
(Increase) decrease in officer and employee receivables (51,918) (23,049) 24,972 61,213 (39,812)
(Increase) decrease in notes receivable (366,400) 65,428 36,754 (165,664) 121,859
Decrease in income tax refund receivable 57,000 19,789 412,124 70,350
Decrease (increase) in prepaid expenses and other assets 16,913 (55,998) (16,956) 125,882 (70,265)
Increase (decrease) in premiums, fees and taxes payable 400,022 (222,291) 575,800 825,899 (161,418)
Increase (decrease) in accounts payable 327,429 83,978 (14,748) 183,383 32,918
Increase (decrease) in accrued liabilities 258,440 (56,944) 197,218 (117,710) (49,306)
Increase (decrease) in income taxes payable 37,395 (82,395) 96,000
Purchases of trading securities (5,323,507) (734,235)
Sales of trading securities 2,543,254 1,424,731
----------- ----------- ---------- ----------- -----------
Total adjustments (2,418,844) 327,901 1,509,887 1,570,950 (97,718)
----------- ----------- ---------- ----------- -----------
Net cash (used in) provided by operating
activities (893,262) 597,648 2,422,415 1,338,903 22,475
----------- ----------- ---------- ----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (489,920) (98,431) (195,473) (103,185) (19,740)
Purchases of investment securities (1,160,548) (500,000) (1,689,465) (1,023,007)
Sales of investment securities 1,001,079 1,307,341 26,541
Decrease in margin loan (129,338) (179,745) (28,501)
Increase in deposits to secure licenses (73,069) (500,750) (152,500)
----------- ----------- ---------- ----------- -----------
Net cash (used in) provided by investing
activities (1,723,537) (1,099,181) (1,165,697) 1,404 (21,700)
----------- ----------- ---------- ----------- -----------
Cash flows from financing activities:
Issuance of common stock, net of underwriting fee 7,463,450 975,761 20,750
Registration Costs (19,526) (23,120) (59,710)
----------- ----------- ---------- ----------- -----------
Net cash provided by (used in) financing
activities 7,443,924 952,641 (38,960)
----------- ----------- ---------- ----------- -----------
Net increase in cash and cash equivalents 4,827,125 451,108 1,217,758 1,340,307 775
Cash and cash equivalents at beginning of period 5,383,643 4,932,535 3,714,777 2,374,470 3,714,777
----------- ----------- ---------- ----------- -----------
Cash and cash equivalents at end of period $10,210,768 $5,383,643 $4,932,535 $3,714,777 $3,715,552
=========== =========== ========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $850,000 $226,075 $370,000 $0 $0
=========== =========== ========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
- 14 -
<PAGE>
Notes to Consolidated Financial Statements
NOTE 1 NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Automobile Protection Corporation - APCO was incorporated in the State of
Georgia on September 10, 1984. APCO and its wholly-owned subsidiaries (the
"Company") are engaged primarily in the marketing and administration of
extended vehicle service contracts and extended vehicle warranty programs
sold by new and used automobile retailers located throughout the United
States. Extended vehicle service contracts augment and enhance upon the
basic warranty offered by the automobile manufacturer. The Company markets
its contracts nationally under the EasyCare - registered trademark - trade
name and also administers vehicle service contracts under a private label
program for a major automobile manufacturer. The Company has entered into
agreements with insurance companies and certain Underwriters' at Lloyd's
of London ("Lloyd's"), whereby the insurers underwrite and insure the
obligations to pay for covered mechanical repairs and benefits under all
vehicle service contract and warranty programs marketed and administered
by the Company.
The Company's subsidiary, The Aegis Group, Inc., provides a wide range of
third party administrative and insurance brokerage services to companies
serving the automotive industry.
The following is a summary of the significant accounting policies followed
by the Company:
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
Change in Reporting Period
On February 1, 1995, the Company's Board of Directors approved a change in
the Company's fiscal year end from August 31 to December 31.
Revenues
Revenues from the sale of extended vehicle service contracts and extended
warranty programs are recognized when the service contract or extended
warranty sold by the dealer is received and accepted by the Company.
Revenues are comprised of the Company's administration fee, underlying
insurance premium and tax.
Cash and Cash Equivalents
Cash and cash equivalents include all funds with an original maturity of
ninety days or less. Certain funds are considered restricted as they are
held for the benefit of the insurers and to pay claims. Restricted funds
aggregated $3,468,000, $3,068,000 and $3,384,000 at December 31, 1995,
December 31, 1994 and August 31, 1994, respectively.
Investment Securities
During the four month period ended December 31, 1994, the Company adopted
Statement of Financial Accounting Standards No. 115 - "Accounting for
Certain Investments in Debt and Equity Securities". The adoption had no
effect on retained earnings at the beginning of this period.
The Company's investments consist of trading securities and held to
maturity securities. Trading securities are stated at their fair value,
which is based on quoted market prices, and all unrealized gains and losses
are recorded in earnings as incurred. Held to maturity securities are
stated at their amortized cost. Gains and losses during the periods
encompassed by these financial statements were insignificant. The Company
had no significant concentration of credit risk at December 31, 1995.
- 15 -
<PAGE>
Property and Equipment
Property and equipment is stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are calculated using the
straight-line method for financial reporting purposes and accelerated
methods for income tax purposes over the estimated useful lives of the
assets ranging from three to seven years. Maintenance and repair costs are
charged to expense as incurred, and major renewals and betterments are
capitalized. When property and equipment is retired or sold, the related
carrying value and accumulated depreciation are removed from the accounts
and any resulting gain or loss is reflected in income.
Premiums and Taxes Payable
Premiums and taxes payable includes premiums due to the insurers or their
agents, taxes payable to various states and amounts advanced to the Company
by the insurers for payment of claims.
Income Taxes
The Company provides income taxes on income reported for financial statement
purposes. Deferred income taxes are recorded for differences in the
recognition of various items for financial reporting and income tax
purposes. The Company files a consolidated income tax return with its
subsidiaries.
Net Income (Loss) per Common Share
Net income (loss) per share has been calculated based on the weighted
average number of common shares and common share equivalents outstanding
during each period presented.
The weighted average number of common shares and common share equivalents
on a primary basis are 7,531,000, 5,818,451 and 5,168,000 for the twelve
months ended December 31, 1995, August 31, 1994 and August 31, 1993,
respectively, and 6,875,000 and 5,697,000 for the four months ended December
31, 1994 and December 31, 1993, respectively.
The weighted average number of common shares and common share equivalents
on a fully diluted basis are 7,604,000, 5,945,997 and 5,168,000 for the
twelve months ended December 31, 1995, August 31, 1994 and August 31, 1993,
respectively, and 6,875,000 and 5,697,000 for the four months ended December
31, 1994 and December 31, 1993, respectively.
Reclassifications
Certain comparative amounts have been reclassified to conform with current
year presentation.
NOTE 2 RISKS AND UNCERTAINTIES:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities
as recorded in the financial statements, and reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. The industry in which the Company operates is highly
competitive, with some competitors having significantly greater financial
resources than the Company. The Company depends on independent sales
representatives and automobile retailers to market its products. No single
sales source provides in excess of 10% of the Company's revenues. The
insurance companies, primarily certain Underwriters' at Lloyd's of London,
insure the obligations under the vehicle service contracts. The
availability of insurance coverage at competitive rates and of insurance
funds to make claims payments, including the financial condition of the
insurance carriers, are critical to the Company.
- 16 -
<PAGE>
NOTE 3 TRADING AND INVESTMENT SECURITIES:
Trading and investment securities are summarized as follows:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Trading securities (at fair value):
Municipal bonds $ 3,578,358
U.S. treasuries $ 684,501
Certificates of deposit and cash balances 4,065 117,669
------------ ------------
$ 3,582,423 $ 802,170
============ ============
Investment securities held to maturity (at amortized cost):
Municipal bonds (market value: $1,057,007; $ 103,158) $ 1,055,198 $ 104,316
Preferred stocks (market value: $ 500,000; $ 500,000) 500,000 500,000
Certificates of deposit 209,666
------------ ------------
1,764,864 604,316
Less: Current investment securities 255,576
------------ ------------
Non-Current investment securities $ 1,509,288 $ 604,316
============ ============
Marketable securities at August 31, 1994 are stated at the lower of aggregate cost
or market (which approximates fair value), which are $1,619,630 and $1,596,982,
respectively. The fair values of the municipal bonds, preferred stock and
certificates of deposit are $909,896, $614,125 and $72,961, respectively, at
August 31, 1994. The investment securities mature within five years from December 31,
1995.
</TABLE>
NOTE 4 PROPERTY AND EQUIPMENT:
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
December 31, December 31, August 31,
1995 1994 1994
------------ ------------ ------------
<S> <C> <C> <C>
Office and computer equipment $ 1,406,553 $ 1,202,271 $ 1,160,672
Furniture and fixtures 273,435 247,850 247,850
Vehicles 172,194 113,677 56,845
Leasehold improvements 412,336 210,800 210,800
------------ ------------ ------------
2,264,518 1,774,598 1,676,167
Less: Accumulated depreciation
and amortization (1,389,800) (1,086,800) (987,800)
------------ ------------ ------------
$ 874,718 $ 687,798 $ 688,367
============ ============ ============
</TABLE>
NOTE 5 DEPOSITS TO SECURE LICENSES:
Certain states require the Company to secure its financial obligations by
providing security in the form of pledged securities or bank certificates of
deposit. Additionally, one state requires the Company's subsidiary to
maintain capitalization of $500,000.
- 17 -
<PAGE>
NOTE 6 INCOME TAXES:
The components of the provision for income taxes are as follows:
<TABLE>
<CAPTION>
Four months Four months
Year ended ended Year ended ended
December 31, December 31, August 31, December 31,
1995 1994 1994 1993
------------ ----------- ---------- ------------
<S> <C> <C> <C> <C>
Current:
Federal $ 1,077,174 $ 141,000 $ 386,990 $ 24,052
State 94,000 3,000 15,935
------------ ----------- ---------- ------------
1,171,174 144,000 402,925 24,052
------------ ----------- ---------- ------------
Deferred:
Federal (232,174) 41,088 3,709
State (17,000) 1,692
------------ ----------- ---------- ------------
(249,174) 42,780 3,709
------------ ----------- ---------- ------------
Provision for income taxes $ 922,000 $ 144,000 $ 445,705 $ 27,761
============ =========== ========== ============
</TABLE>
No income tax provision (benefit) was recorded for the year ended August
31, 1993 due to net operating losses and the utilization of net operating
loss carrybacks in the prior year.
An analysis of the differences between the statutory federal income tax
rate of 34% and the effective tax rate is as follows:
<TABLE>
<CAPTION>
Year ended Year ended Year ended
December 31, August 31, August 31,
1995 1994 1993
------------ ----------- ----------
<S> <C> <C> <C>
Statutory federal taxes $ 832,178 $ 438,754 $ (78,895)
Operating losses generating
no current tax benefits 61,997
State income taxes,
net of federal tax benefit 50,729 11,634
Amortization of goodwill 16,921 16,921 16,921
Non-taxable income (26,318) (12,117) (10,455)
Non-deductible expenses 48,490 30,902 5,080
Other (40,389) 5,352
------------ ----------- ----------
$ 922,000 $ 445,705 $ -
============ =========== ==========
</TABLE>
There are no significant differences between income taxed at the statutory
federal tax rate of 34% and the Company's effective tax rate for the four
month periods ended December 31, 1994 and 1993.
- 18 -
<PAGE>
The Company recorded a benefit of $67,780 upon adoption of Statement of
Financial Accounting Standards No. 109 effective September 1, 1993.
The components of deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
December 31, December 31, August 31,
1995 1994 1994
------------ ----------- ----------
<S> <C> <C> <C>
Accounts receivable allowances $ 27,916 $ 39,602 $ 40,716
Other asset allowances 3,016 4,284
Depreciation and amortization 37,648 18,857
Non-deductible accruals 230,940 42,438
------------ ----------- ----------
Deferred tax asset $ 296,504 $ 103,913 $ 45,000
============ =========== ==========
Other liabilities $ 22,330 $ 78,913 $ 20,000
------------ ----------- ----------
Deferred tax liability $ 22,330 $ 78,913 $ 20,000
============ =========== ==========
</TABLE>
NOTE 7 STOCKHOLDERS' EQUITY:
Warrants Issued in Connection with the Company's Initial Public Offering:
On October 31, 1995, 1,564,844 unexercised warrants, issued in connection
with the 1988 initial public offering, expired. In September 1994, all of
the underwriter's unit purchase options, also issued in connection with the
initial public offering, were exercised. During the twelve months ended
December 31, 1995 and four months ended December 31, 1994, the Company
received net proceeds of $7,424,950 and $975,761, respectively, from the
exercise of 3,853,876 warrants and 75,120 underwriter's unit purchase
options. The average exercise price per share was $2.06. At December 31,
1995, no warrants or underwriter's unit purchase options remained.
Non-Plan Options(non-qualified):
The Company's Board of Directors has approved the issuance of non-plan stock
options to financial consultants, company spokespersons, independent sales
agents and certain senior executive officers. The outstanding options at
December 31, 1995 and their terms are summarized as follows:
Year Number of Exercise Expiration
of Grant Options Prices Dates
---------- ---------- ----------- -------------
1990 100,000 $0.85 1999
1992 100,000 $1.00 2000
1993 200,000 $1.93 1998
1994 826,000 $2.00-$3.00 1997 - 2001
1995 298,000 $2.44-$3.00 1998 - 2000
----------
1,524,000
===========
- 19 -
<PAGE>
The 1994 options include 100,000 options granted to two executive officers
which vest on December 31, 1996 in proportion to actual net income as a
percentage of $3,000,000.
At August 31, 1994, the Company had granted 1,655,000 non-plan options.
During the period September 1, 1994 through December 31, 1994, 590,000
options were granted; 100,000 options expired; and no options were
exercised. During the period January 1, 1995 through December 31, 1995,
298,000 options were granted; 469,000 options expired; and 450,000 options
were exercised. In connection with the options exercised, the Company
issued 315,380 shares in return for the surrender of 450,000 options in a
cashless exchange with certain senior executives and a former officer of the
Company. In connection with the issuance of certain options, the Company
recorded a non-cash stock compensation expense of $54,996 for the twelve
months ended December 31, 1995 and $10,000 for the four months ended
December 31, 1994.
1988 Stock Option Plan (qualified):
Under the 1988 Stock Option Plan, the Company has 778,000 shares of common
stock for issuance to officers, employees and persons instrumental to the
success of the Company. The exercise price of any option granted under the
1988 Stock Option Plan may not be less than the fair market value of the
shares subject to the option at the date of grant. The term of each option
and the manner in which it may be exercised are to be determined by the
Board of Directors. The options are generally subject to vesting schedules
which range from 2 years to 4 years and some are also subject to the
attainment of specified corporate goals. The 1988 Stock Option Plan was
registered in 1994.
At August 31, 1994, the Company had granted 593,053 options. During the
period September 1, 1994 through December 31, 1994, 44,000 options were
granted and none were exercised or expired. During the period January 1,
1995 through December 31, 1995, 101,813 options were granted; 35,013
options expired; and 12,000 options were exercised at an average price of
$1.12 per share. Options to purchase 10,000 shares at a price of $1.00
per share were exercised in the fiscal year ended August 31, 1994.
The following options to purchase the Company's common shares were
outstanding under this plan at December 31, 1995:
Year Number Exercise
of of Price Expiration
Grants Shares Range Date
------ ------ ---------- ----------
1991 7,500 $0.88 - $0.94 1996
1993 17,750 $0.83 - $0.89 1997 - 1998
1994 564,790 $1.50 - $2.54 1997 - 2001
1995 101,813 $2.06 - $2.25 1998 - 2003
-------
691,853
=======
Outside Directors' Stock Option Plan (qualified):
Under the Outside Directors' Stock Option Plan, the Company has 275,000
shares of common stock reserved for issuance to directors who are not
salaried employees of, or full-time consultants to the Company or its
subsidiaries. Each eligible director, as defined, will be granted an option
to purchase the maximum number of full shares having an aggregate fair
market value on the date of grant equal to $25,000 on an annual basis at an
exercise price per share equal to the fair market value of a share of common
stock on the date of grant. These options can be exercised at any time for
a ten year period from the date of grant. The Outside Directors' Stock
Option Plan was registered in 1994.
- 20 -
<PAGE>
At August 31, 1994, the Company had granted 235,033 options. During the
period September 1, 1994 through December 31, 1994, no options were
granted, exercised or expired. During the period January 1, 1995 through
December 31, 1995, 24,270 options were granted; and 25,000 options were
exercised by a former director at an average price of $1.00 per share.
The following options to purchase the Company's common shares were
outstanding under this plan at December 31, 1995:
Year Number Exercise
of of Price Expiration
Grants Shares Range Date
------ ------ ---------- ----------
1988 18,181 $1.38 1998
1990 25,510 $0.98 2000
1991 33,490 $1.44 - $1.55 2001
1992 43,244 $1.16 2002
1993 57,142 $0.88 2003
1994 32,466 $2.32 2004
1995 24,270 $2.06 2005
--------
234,303
========
NOTE 9 PREFERRED STOCK:
Class C Redeemable Preferred Stock:
The Company issued 300 shares of Class C Redeemable Preferred Stock for
$1.00 per share to its principal shareholders in 1988. The holders of the
Class C Redeemable Preferred Stock, as a class, shall be entitled to elect a
majority of the Board of Directors irrespective of any ownership of the
Company's common stock. There are no dividend rights attached to the Class
C Redeemable Preferred Stock. In the event of the Company's liquidation,
the holders of the Class C Redeemable Preferred Stock will be entitled to
$.01 per share. All the Class C Redeemable Preferred Stock is subject to
mandatory redemption by the Company at $.01 per share on September 11, 1998.
Class D Preferred Stock:
In 1987, the Board of Directors authorized the issuance of 5,000,000 shares
of Class D Preferred Stock, with a $.01 par value. The rights and
preferences of the Class D Preferred Stock are determined at the discretion
of the Board of Directors. No Class D Preferred Stock is issued or
outstanding.
NOTE 10 COMMITMENTS:
The Company leases its office space, certain office equipment and vehicles
under non-cancelable operating lease agreements. Future minimum annual
rental payments under these leases as of December 31, 1995 are:
Year Amount
---- ---------
1996 $ 289,007
1997 291,711
1998 269,542
1999 249,799
2000 249,690
Thereafter 68,064
----------
$1,417,813
==========
- 21 -
<PAGE>
Rent expense for all operating leases for the twelve months ended December
31, 1995, August 31, 1994 and August 31, 1993 was $314,000, $330,000 and
$258,000, respectively. Rent expense for the four months ended December 31,
1994 and December 31, 1993 was $108,000 and $103,000, respectively.
In December 1995, the Company entered into a one year sponsorship
agreement with Joe Gibbs Racing, Inc., whereby the Company has undertaken to
be an associate sponsor of the Joe Gibbs NASCAR and NHRA teams for 1996.
The Company may renew this sponsorship for two additional racing seasons.
NOTE 11 SUBSEQUENT EVENTS:
The Company's Board of Directors authorized the issuance of options to
various financial consultants to purchase 250,000 shares of the Company's
stock at $3.50 per share. These options expire in February 1997.
The Company established a Profit Sharing and 401(k) Plan effective
January 1, 1996. The Company has elected to voluntarily match a portion of
the employee contributions for 1996 in the form of Company stock. Employer
matching contributions vest evenly over five years.
- 22 -
<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
SCHEDULE I: Marketable Securities - Other Investments
FORM 10-K
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
- --------- -------- -------- -------- --------
Name of issuer and Number of shares Cost of Market value Amount at
title of each issue or units-principal each issue of each issue which
of bonds and notes at December 31, carried in the
1995 balance sheet
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ford Holdings, Inc.
Series N, Preferred Stock $ 500,000 $ 500,000 $ 500,000 $ 500,000
Kentucky State Turnpike Authority
Economic Development, 4.00% 45,000 45,000 45,000 45,000
Illinois State Refunding General
Obligation, 5.25% 250,000 255,116 255,360 255,116
North Carolina Housing Finance
Agency, 4.30% 15,000 14,706 14,697 14,706
Port Seattle Revenue Bonds,
Series A, 5.45% 25,000 25,560 25,605 25,560
Tulsa County General Obligation,
6.70% 100,000 104,801 105,235 104,801
Georgia Municipal Electric
Authority Series S, 6.85% 100,000 106,252 103,666 103,666
Illinois Development Finance
Authority Revenue, 5.20% 50,000 50,950 51,211 50,950
Wisconsin Health & Education
Revenue, 4.35% 250,000 249,494 250,493 249,494
Plover, WI General Obligation,
7.00% 20,000 21,152 21,295 21,152
West Allis School District
Promissory Notes, 6.80% 100,000 103,226 102,282 103,226
California Health Facilities
Financing Authority, 6.50% 55,000 57,250 56,703 57,250
Certificates of Deposit and
cash balances 233,943 233,943 233,943 233,943
</TABLE>
- 23 -
<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
SCHEDULE VIII: Valuation and Qualifying Accounts
FORM 10-K
<TABLE>
<CAPTION>
Description Balance at Charged to Deductions Balance
beginning of costs and at end of
period expenses period
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year ended December 31, 1995:
- -----------------------------
Allowance for doubtful
accounts $61,000 $1,367 $17,367 $45,000
Four months ended December 31, 1994:
- -----------------------------------
Allowance for doubtful
accounts 58,000 3,000 61,000
Year ended August 31, 1994:
- ---------------------------
Allowance for doubtful
accounts 125,549 5,728 73,277 58,000
Year ended August 31, 1993:
- ---------------------------
Allowance for doubtful
accounts 54,746 70,803 125,549
The Company changed its year end from August 31 to December 31; accordingly the
above information is presented for the four month transition period ended
December 31, 1994 and then for the year ended December 31, 1995.
</TABLE>
- 24 -
<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
SCHEDULE X: Supplementary Income Statement Information
FORM 10-K
DECEMBER 31, 1995
<TABLE>
<CAPTION>
Item Charged to costs and expenses
- ---- -----------------------------
Four months
Year ended ended Year ended Year ended
December 31, December 31, August 31, August 31,
1995 1994 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Maintenance and repairs $ 13,703 $ 2,098 $ 20,384 $ 39,697
Taxes, other than payroll
and income 57,385 19,933 14,412 23,064
Advertising costs 430,539 58,570 224,999 107,431
The Company changed its year end from August 31 to December 31; accordingly the
above information is presented for the four month transition period ended
December 31, 1994 and then for the year ended December 31, 1995.
</TABLE>
- 25 -
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Since inception, the Company has not changed accountants and has had no
disagreement on any matter of accounting principles or practices or financial
statement disclosure.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors and executive officers of the Company and their positions are
listed below, followed by a brief description of their business experience
during the past five years.
Director
Name Age Since Position
- ------------------------------------------------------------------------------
Martin J. Blank 49 1984 Chairman of the Board, Chief Operating
Officer, Secretary and Director
Larry I. Dorfman 40 1984 President, Chief Executive Officer and
Director
Anthony R. Levinson 38 - Chief Financial Officer, Treasurer
Howard C. Miller 69 1989 Director
Mechlin D. Moore 65 1991 Director
Martin J. Blank, a co-founder of the Company, has served as Secretary and
Director since its incorporation in September 1984 and as the Chairman of the
Board and Chief Operating Officer since April 1988. Mr. Blank is an attorney
admitted to the bar in the States of Georgia and California. Mr. Blank's
experience prior to co-founding the Company includes the practice of law and
representation and financial management for professional athletes.
Larry I. Dorfman, a co-founder of the Company, has served as President and
Director since its incorporation in September 1984 and as Chief Executive
Officer since April 1988. Prior to co-founding the Company, Mr. Dorfman was
Vice President-Sales for Paymaster Checkwriter Company, Inc. in Atlanta with
responsibility for the direction and supervision of its sales force.
Anthony R. Levinson has served as Chief Financial Officer and Treasurer of the
Company since November 1993. From 1982 to November 1993 Mr. Levinson served
as a business consultant and auditor to public companies, private businesses
and individuals with the accounting firm, Price Waterhouse, LLP. Mr. Levinson
is a Certified Public Accountant in the State of Georgia.
Howard C. Miller has served as Director of the Company since January 1989.
Mr. Miller currently serves on the audit committee of the United States
Olympic Committee and as a Director of Stone Container Corporation. Mr.
Miller's past experience includes President and CEO of Avis, Inc., Vice
President of ITT, President and CEO of Canteen Corporation.
Mechlin D. Moore has served as Director of the Company since June 1991. Mr.
Moore is an independent consultant in insurance communication and marketing.
Mr. Moore's past experience includes President of the Insurance Information
Institute and Senior Vice President of United Air Lines, Inc.
- 26 -
<PAGE>
Directors are elected by the stockholders at each annual meeting (or in
the case of a vacancy, are appointed by the directors then in office) to serve
until the next annual meeting or until their successors are elected and
qualified. Officers serve at the discretion of the Board of Directors.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's officers, directors and persons who beneficially own
more than ten percent of a registered class of the Company's equity securities
("ten -percent stockholders") to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC") and with the
National Association of Securities Dealers, Inc. ("NASD"). Officers,
directors and ten-percent stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it,
the Company believes that since August 31, 1994, all its officers, directors
and ten-percent stockholders complied with the Section 16(a) reporting
requirements.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth the compensation of the Company's Chief Execu-
tive Officer and Chief Operating Officer for the periods indicated.
<TABLE>
<CAPTION>
Long-term
Compensation
Name and principal Options-
position Period Salary (1) No. shares (2)
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
,
Larry I. Dorfman 12 months ended
President and Chief 12/31/95 $249,636
Executive Officer 4 months ended
12/31/94 $ 40,288
12 months ended
8/31/94 $124,723 200,000
12 months ended
8/31/93 $ 85,638
Martin J. Blank 12 months ended
Chairman and Chief 12/31/95 $249,636
Operating Officer 4 months ended
12/31/94 $ 40,288
12 months ended
8/31/94 $124,723 200,000
12 months ended
8/31/93 $ 85,638
- -------------
</TABLE>
(1) Represents base salary and compensation based upon the number of vehicle
service contracts processed each month. See Report on Executive Compensation,
Employment Arrangements (Chief Executive Officer and Chief Operating Officer).
- 27 -
<PAGE>
(2) On September 10, 1993, the Company's Board of Directors granted each
executive 100,000 non-qualified stock options to purchase 100,000 shares of
the Company's common stock at $1.93 per share, which is 110% of the market
value of one share of the Company's common stock on the date of grant. On
June 28, 1994, the Company's Board of Directors granted each executive
100,000 non-qualified stock options to purchase 100,000 shares of the
Company's common stock at $2.54 per share, which is 110% of the market value
of one share of the Company's common stock on the date of grant. See Insider
Participation in Compensation Matters.
Option Grants during past year and transition period
The following table sets forth certain information with respect to stock
options granted to executive officers during 1995 by the Company's Board of
Directors. No grants were made during the transition period of September 1,
1994 to December 31, 1994. No stock appreciation rights have been granted.
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
% of Annual Rates of
Total Options Stock Price
Granted to Appreciation for
Options Employees in Exercise Expiration Option Term
Name Granted Fiscal Year Price Date 5% 10%
- ------------------- -------- -------------- -------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Anthony R. Levinson 10,000} 16% $2.09 5/5/99 $4,600 $ 9,600 (1)
10,000} $2.09 5/5/00 $5,800 $ 12,700 (2)
- -------------
</TABLE>
(1) The assumed annual rates of appreciation of five and ten percent would
result in the price of the Company's common stock increasing to $2.55 and
$3.05, respectively, from the price on the date of grant which was $2.09.
(2) The assumed annual rates of appreciation of five and ten percent would
result in the price of the Company's common stock increasing to $2.67 and
$3.36, respectively, from the price on the date of grant which was $2.09.
Option Exercises during past year and transition period and Year-End Option
Values
Value of
Number of Unexercised
Unexercised In-the Money
Options at Options at
December 31, December 31,
1995 1995
Acquired Value Exercisable/ Exercisable/
Exercise Realized Unexercisable Unexercisable
-------- -------- ------------- -------------
(#) ($) (#)(1) ($)
Larry I. Dorfman 150,000 $211,500 138,000/50,000 $98,260/$13,500
Martin J. Blank 150,000 $211,500 138,000/50,000 $98,260/$13,500
Anthony R. Levinson - - 39,000/65,000 $26,330/$42,350
Compensation of Outside Directors
Directors who are not full time employees of the Company receive, as
compensation for their services, $2,000 for each Board of Directors meeting
attended. The amount of compensation was changed by the Board of Directors
(Mr. Miller and Mr. Moore abstained from the vote) in February 1996 to $4,000
per meeting. Each director is reimbursed for their travel expenses incurred
in connection with attendance at meetings of the Board of Directors.
- 28 -
<PAGE>
Outside Directors' Stock Option Plan
The Company has a stock option plan for the benefit of its directors who
are not salaried employees of the Company or full time consultants to the
Company or its subsidiaries (the "Outside Directors' Plan") pursuant to which
300,000 shares of the Company's common stock have been reserved for issuance
upon exercise of such options. The purpose of the Outside Directors' Plan is
to advance the interests of the Company by affording eligible directors of the
Company the opportunity to acquire an equity interest or increase their equity
interest in the Company. The Outside Directors' Plan terminates in May 1998.
Each eligible director in office on the effective date of the Outside
Directors' Plan and each director elected to a regular term as a director at
an annual meeting of stockholders thereafter at which directors are elected,
will automatically be granted an option to purchase the maximum number of full
shares having an aggregate market value on the date of grant equal to $25,000
at an exercise price per share equal to the fair market value of a share of
the Company's common stock on the date of grant. An option may be exercised
at any time for a period of 10 years from the date of grant. The number of
shares which may be purchased upon exercise of an option is subject to adjust-
ment in certain circumstances. Options are not transferable other than by
will or the laws of descent and distribution, and in the event of death, an
option may be exercised by the optionee's legatee, distributee or personal
representative. Options are granted under the Outside Directors' Plan without
regard to other forms of compensation eligible directors may receive from the
Company. At March 15, 1996, options to purchase 234,303 shares of the
Company's common stock, at prices ranging from $0.88 to $2.32 were outstanding
under the Outside Directors' Plan. During 1995, a former director exercised
an option to purchase 25,000 shares of the Company's stock at an exercise
price of $1.00 per share. No options were exercised during the transition
period of September 1, 1994 to December 31, 1994.
The following table shows the number of shares of the Company's common
stock covered by options granted under the Outside Directors' Plan to current
directors since September 1, 1994, the number of shares of the Company's
common stock acquired by current directors since that date through exercise of
options and the number of the Company's common shares subject to all
outstanding options of current directors at December 31, 1995. Additionally,
10,822 options granted to a former director of the Company, which are
exercisable at $2.32 per share and expire in 2004, are also outstanding.
Howard C. Mechlin D.
Miller Moore
--------- ----------
Granted 9/1/94 - 12/31/95:
Number of shares 12,135 12,135
Average per share option price $ 2.06 $ 2.06
Exercised 9/1/94 - 12/31/95:
Number of shares 0 0
Aggregate option price of options
exercised 0 0
Net value realized 0 0
Unexercised options at 12/31/95:
Number of shares 134,202 89,279
Average unrealized value per share
on 12/31/95 (1) $ 1.50 $ 1.41
- ---------------
(1) Calculated as the difference between the market price of one share of the
Company's common stock on December 31, 1995 and the average per share option
price.
- 29 -
<PAGE>
Insider Participation in Compensation Matters
On March 2, 1994, the Board of Directors established a compensation
committee comprised of Messrs. Miller, Moore and Dorfman which is responsible
for determining compensation levels for the executive officers of the Company.
The Board of Directors follows a policy of linking compensation of executive
officers to enhanced shareholder value.
On December 18, 1995, the Compensation Committee of the Board of
Directors (Mr. Dorfman abstained from the vote) voted to modify the vesting
schedule for the options granted to Mr. Blank, Mr. Dorfman and Mr. Levinson
in 1994, in light of the significant turnaround in the Company's operations
and profitability. The option price was not changed and was in excess of
the market price of the Company's stock on December 18, 1995. The options for
Mr. Blank and Mr. Dorfman were modified such that the option is exercisable
up to 50,000 shares on each of December 31, 1995 and 1996 for a period of
five years after it becomes exercisable based on the following formula:
(a) options exercisable on or after December 31, 1995 will be equal
to the number derived by dividing the actual net income of the Company by $2
million multiplied by 50,000 and (b) options exercisable on or after December
31, 1996 will be equal to the number derived by dividing the actual net income
of the Company by $3 million multiplied by 50,000, provided, if the fraction
resulting from the net income calculation is one or greater, then only 50,000
shares will be purchasable commencing in each year as stated above. Mr.
Levinson's options were modified in the same manner, except that Mr. Levinson
has 25,000 options which are exercisable on each of December 31, 1995 and
1996.
Report on Executive Compensation
The compensation policies of the Company have been developed to link
the compensation of the executive officers of the Company with enhanced
shareholder value. Through the establishment of short- and long-term
incentive plans and the use of base salary and performance bonus combinations,
the Company seeks to align the financial interests of its executive officers
with those of its shareholders.
Employment Arrangements (Chief Executive Officer and Chief Operating Officer)
These executives each receive a base salary of $72,000 plus additional
compensation based upon the number of vehicle service contracts processed each
month which exceed a prescribed level. Messrs. Blank and Dorfman are
eligible to participate in other employee benefit plans as generally made
available to employees of the Company.
Martin J. Blank -- Larry I. Dorfman -- Howard C. Miller -- Mechlin D.
Moore
1988 Stock Option Plan
The Company has a stock option plan ("Plan") pursuant to which 800,000
shares of the Company's common stock have been reserved for issuance upon
exercise of options designated as "incentive stock options" or "non-qualified
options" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended. The purpose of the Plan is to encourage stock ownership by
certain officers and employees of the Company, and certain other persons
instrumental to the success of the Company, and give them a greater personal
interest in the success of the Company. Persons who are directors of the
Company are not eligible to receive options under the Plan. The Plan is
- 30 -
<PAGE>
administered by the Board of Directors of the Company, or a committee
appointed by the Board of Directors, which determines among other things, the
persons to be granted options under the Plan, the number of shares subject to
each option and the option price. The exercise price of any option granted
under the Plan may not be less than the fair market value of the shares
subject to the option on the date of grant, provided however, that the
exercise price of any incentive option granted to an eligible employee owning
more than 10% of the outstanding common stock of the Company may not be less
than 110% of the fair market value of the shares underlying such option on the
date of grant. The term of each option and the manner in which it may be
exercised is determined by the Board of Directors, or a committee appointed by
the Board of Directors, provided that no option may be exercised more than 10
years after the date of grant and, in the case of an incentive option granted
to an eligible employee owning more than 10% of the Company's common stock,
not more than 5 years after the date of grant. Incentive options may be
granted only to employees. Options may be exercised as provided in the option
agreement, but no option granted to an employee may be exercised unless the
grantee is a regular employee of the Company, or a subsidiary, and has been in
such position for at least one year after the date of grant, except that in
the event of death, options may be exercised until the sooner of the
expiration date of the option or six months following the death of the
optionee. Each option not exercised expires as provided in the option
agreement. Options are non-transferable, except in the event of death of the
optionee. At March 15, 1996, options to purchase 722,853 shares of the
Company's common stock, at prices ranging from $0.83 to $2.54 per share, were
outstanding under the Plan. Between inception and March 15, 1996, 28,300
options have been exercised at an average exercise price of $1.17 per share.
Performance Graph
The following graph demonstrates the performance of the cumulative total
return to the Company's shareholders during the past five years in comparison
to the cumulative total return for the NASDAQ Market Index and the cumulative
total return for a group of companies in SIC code 641 - Insurance Agents,
Brokers and Service (the "Peer Group").
FIVE-YEAR CUMULATIVE TOTAL RETURNS
VALUE OF $100 INVESTED ON DECEMBER 31, 1990
[ID: Graphic -- Performance Graph]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
APCO 100 128.57 133.32 228.55 342.83 428.54
SIC 641 Code Index 100 116.97 126.95 116.92 118.01 138.22
NASDAQ Market Index 100 128.38 129.64 155.5 163.26 211.77
</TABLE>
- 31 -
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information regarding the
Company's common stock and Class C Redeemable Preferred Stock owned on March
15, 1996 (i) by each person who is known by the Company to own beneficially 5%
or more of the Company's outstanding common stock and Class C Redeemable
Preferred Stock; (ii) by each of the Company's directors and officers; and
(iii) by all directors and officers as a group.
Number of
Shares of
Number of Class C
Shares of Percent of Redeemable
Common Ownership Preferred
Stock of Common Stock
Name and address Beneficially Stock Beneficially
of Beneficial Owner Owned Outstanding Owned
- ----------------------------------------------------------------------------
Martin J. Blank 995,168 (1) 10.2% 150
15 Dunwoody Park Dr.
Atlanta, GA 30338
Larry I. Dorfman 1,014,168 (2) 10.4% 150
15 Dunwoody Park Dr.
Atlanta, GA 30338
Anthony R. Levinson
15 Dunwoody Park Dr.
Atlanta, GA 30338 39,000 (3) * -
Howard C. Miller 135,202 (4) 1.4% -
15 Dunwoody Park Dr.
Atlanta, GA 30338
Mechlin D. Moore 90,279 (5) 1.0% -
15 Dunwoody Park Dr.
Atlanta, GA 30338
J. Morton Davis 511,560 (6) 5.3% -
44 Wall Street
New York, NY 10005
Directors and officers as 2,273,817 (7) 22.3% 300
a group (5 persons)
* Less than 1%
(1) Includes options to purchase 138,000 shares of the Company's common stock.
which are currently exercisable. Excludes options to purchase 50,000 shares
which are not currently exercisable and Class C Redeemable Preferred Stock.
The Class C Redeemable Preferred Stock gives the holders the right to elect
the majority of the Company's Board of Directors until September 11, 1998.
- 32 -
<PAGE>
(2) Includes options to purchase 158,000 shares of the Company's common stock,
which are currently exercisable. Excludes options to purchase 70,000 shares
which are not currently exercisable and Class C Redeemable Preferred Stock.
The Class C Redeemable Preferred Stock gives the holders the right to elect
the majority of the Company's Board of Directors until September 11, 1998.
(3) Includes options to purchase 39,000 shares of the Company's common stock,
which are currently exercisable. Excludes options to purchase 65,000 shares
which are not currently exercisable.
(4) Includes options to purchase 134,202 shares of the Company's common stock,
all of which are currently exercisable.
(5) Includes options to purchase 89,279 shares of the Company's common stock,
all of which are currently exercisable.
(6) Includes securities owned by Mr. J. Morton Davis, D.H. Blair Holdings,
Inc. and D.H. Blair Investment Banking Corp., reported as of December 31,
1995.
(7) Includes 1,715,336 issued shares, 558,481 currently exercisable options
to purchase shares of the Company's common stock, but excludes 185,000
options which are not currently exercisable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- 33 -
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
The following documents are filed as part of this report under Part II Item 8:
Financial Statements and Financial Statement Schedules.
Reference is made to the Index to Financial Statements and Financial
Statement Schedules included in Item 8 of Part II hereof, where such
documents are listed.
Exhibits as required by Item 601 of Regulation S-K:
Exhibit
Number Description
- ------- -----------
3 (a) Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.1(a)
to the Registrant's Registration Statement
on Form S-1 (file number 33-22279) filed
with the Commission on June 3, 1988). *
3 (b) Certificate of Amendment to Restated Articles
of Incorporation (incorporated by reference
to Exhibit 3.1 to the Registrant's Registration
Statement on Form S-1 (file number 33-22279)
filed with the Commission on June 3, 1988). *
3 (c) By-Laws (incorporated by reference to
Exhibit 3.2 to the Registrant's Registration
Statement on Form S-1 (file number 33-22279)
filed with the Commission on June 3, 1988). *
4 (a) Certificate of Designation, Preferences and
Rights of Series 1 Class D Preferred Stock
(incorporated by reference to Registrant's
Current Report on Form 8-K filed with the
Commission on December 15, 1988). *
4 (b) Certificate of Designation, Preferences and
Rights of Series 2 Class D Preferred Stock
(incorporated by reference to Registrant's
Current Report on Form 8-K filed with the
Commission on March 15, 1989). *
10 (a) 1988 Stock Option Plan (incorporated by reference
to Exhibit 10.1 to the Registrant's Registration
Statement on Form S-1 (file number 33-22279)
filed with the Commission on June 3, 1988). *
- 34 -
PAGE>
10 (b) Outside Directors' Stock Option Plan (incorporated
by reference to Exhibit 10.2 to the Registrant's
Registration Statement on Form S-1 (file number
33-22279) filed with the Commission on June 3, 1988). *
10 (c) Cover Note Between Byas, Mosley & Co., Ltd. and
The Aegis Group, Inc. dated June 6, 1991
(incorporated by reference to Exhibit 10(h) to
the Registrant's Annual Report on Form 10-K
for the year ended August 31, 1991 as filed
with the Commission on December 13, 1991). *
10 (d) Lease Agreement between Registrant and
Dunwoody Shallowford Partners, L.P. dated
July 27, 1989 (incorporated by reference to
Exhibit 10(e) to the Registrant's Annual Report
on Form 10-K filed with the Commission on
November 30, 1989) *
10 (e) Consulting Agreement and Option and Registration
Rights Agreement dated March 29, 1994 between the
Registrant and Corporate Management Group, Inc.
(incorporated by reference to Exhibit 10(g) to the
Registrant's Post Effective Amendment No. 2 to
Form S-1 (file number 33-22279) filed with the
Commission on May 17, 1994). *
10 (f) Third Amendment to Lease Agreement between
Registrant and Dunwoody Shallowford Partners,
L.P. dated January 27, 1995
10 (g) Fourth Amendment to Lease Agreement between
Registrant and Dunwoody Shallowford Partners,
L.P. dated May 16, 1995.
10 (h) Consulting Agreement and Option and Registration
Rights Agreement dated January 2, 1996 between
the Registrant and John R. Clarke.
10 (i) Consulting Agreement and Option and Registration
Rights Agreement dated January 2, 1996 between
the Registrant and Paul T. Mannion.
10 (j) Consulting Agreement and Option and Registration
Rights Agreement dated January 2, 1996 between
the Registrant and David Cowherd.
10 (k) Consulting Agreement and Option and Registration
Rights Agreement dated January 2, 1996 between
the Registrant and Max Morgulis.
- 35 -
<PAGE>
10 (l) Consulting Agreement and Option and Registration
Rights Agreement dated January 2, 1996 between
the Registrant and John Clarke, Paul Mannion, David
Cowherd, Max Morgulis and Sutherland, Asbill &
Brennan, as escrow agent.
10 (m) Consulting Agreement and Option and Registration
Rights Agreement dated October 6, 1994 between
the Registrant and Ronnie Wohl and Ladenburg
Thalmann & Co., Inc.
10 (n) Consulting Agreement and Option and Registration
Rights Agreement dated October 6, 1994 between
the Registrant and Marshall Leeds.
10 (o) Consulting Agreement and Option and Registration
Rights Agreement dated October 6, 1994 between
the Registrant and Leonard J. Sokolow.
10 (p) Option Agreement dated October 10, 1995 between
the Registrant and Joe Gibbs.
10 (q) Option Agreement dated December 18, 1995 between
the Registrant and Bobby Labonte.
10 (r) Option Agreement dated November 30, 1995 between
the Registrant and Cruz Pedregon.
10 (s) Option Agreement dated November 30, 1995 between
the Registrant and Cory McClenathan.
10 (t) Warrant Agreement dated September 1, 1994 between
the Registrant and Bix Brown.
10 (u) Warrant Agreement dated September 1, 1994 between
the Registrant and Frank Shoop.
10 (v) Warrant Agreement dated September 1, 1994 between
the Registrant and Josephine Shoop.
10 (w) Option Agreement dated August 31, 1995 between the
Registrant and Mark Wachs.
10 (x) Option Agreement dated February 1, 1996 between the
Registrant and Mark Wachs.
10 (y) Option Agreement dated August 31, 1995 between the
Registrant and John Jameson.
10 (z) Option Agreement dated August 31, 1995 between the
Registrant and The Providence Group.
- 36 -
<PAGE>
10 (aa) Option Agreement dated August 31, 1995 between the
Registrant and The Dealer Group.
10 (bb) Option Agreement dated August 31, 1995 between the
Registrant and Automotive Development Group.
167 - 170
10 (cc) Option Agreement dated August 31, 1995 between the
Registrant and Rodger Anderson.
10 (dd) Option Agreement dated August 31, 1995 between the
Registrant and Cartel Marketing.
10 (ee) Option Agreement dated August 31, 1995 between the
Registrant and Joe Kuboff.
10 (ff) Option Agreement dated August 31, 1995 between the
Registrant and Frank Follari.
10 (gg) Option Agreement dated August 31, 1995 between the
Registrant and David Golden.
10 (hh) Option Agreement dated August 31, 1995 between the
Registrant and Jerry Henley.
10 (ii) Option Agreement dated August 31, 1995 between the
Registrant and Jack Atkin.
10 (jj) Option Agreement dated August 31, 1995 between the
Registrant and Charles Mann.
10 (kk) Option Agreement dated August 31, 1995 between the
Registrant and TASA.
11 Statement re computation of per share earnings for the
year ended December 31, 1995, four months ended
December 31, 1994 and fiscal years ended
August 31, 1994 and 1993
- 37 -
<PAGE>
22 Subsidiaries of the Registrant:
Name Of State of
Subsidiary Incorporation
---------- -------------
APCO Finance and Insurance Systems, Inc. Georgia
Aftermarket Profit Plus, Inc. Georgia
W.I.N. Systems, Inc. Georgia
The Aegis Group, Inc. Georgia
Automobile Protection Corporation - APCO Florida
23 Consent of Independent Accountants (Price Waterhouse)
27 Financial Data Schedule
* Incorporated by reference to the referenced document previously filed by the
registrant with the Commission.
Reports on Form 8-K
- 38 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Automobile Protection Corporation - APCO has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized:
AUTOMOBILE PROTECTION CORPORATION - APCO
/s/ Larry Dorfman
- ------------------------------------------------------------------------------
By: Larry I. Dorfman Date: March 27, 1996
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Larry Dorfman
- ------------------------------------------------------------------------------
Larry I. Dorfman Date: March 27, 1996
President (Principal Executive Officer)
and Director
/s/ Martin Blank
- ------------------------------------------------------------------------------
Martin J. Blank Date: March 27, 1996
Chairman of the Board, Secretary
(Principal Operating Officer) and Director
/s/ Anthony Levinson
- ------------------------------------------------------------------------------
Anthony R. Levinson Date: March 27, 1996
Chief Financial Officer (Principal
Accounting and Financial Officer)
/s/ Howard Miller
- ------------------------------------------------------------------------------
Howard C. Miller Date: March 27, 1996
Director
/s/ Mechlin Moore
- ------------------------------------------------------------------------------
Mechlin D. Moore Date: March 27, 1996
Director
- 39 -
<PAGE>
EXHIBITS
TO ANNUAL REPORT ON FORM 10-K
DECEMBER 31, 1995
EXHIBIT No.
- -----------
10 (f) Third Amendment to Lease Agreement between
Registrant and Dunwoody Shallowford Partners,
L.P. dated January 27, 1995
10 (g) Fourth Amendment to Lease Agreement between
Registrant and Dunwoody Shallowford Partners,
L.P. dated May 16, 1995.
10 (h) Consulting Agreement and Option and Registration
Rights Agreement dated January 2, 1996 between
the Registrant and John R. Clarke.
10 (i) Consulting Agreement and Option and Registration
Rights Agreement dated January 2, 1996 between
the Registrant and Paul T. Mannion.
10 (j) Consulting Agreement and Option and Registration
Rights Agreement dated January 2, 1996 between
the Registrant and David Cowherd.
10 (k) Consulting Agreement and Option and Registration
Rights Agreement dated January 2, 1996 between
the Registrant and Max Morgulis.
10 (l) Consulting Agreement and Option and Registration
Rights Agreement dated January 2, 1996 between
the Registrant and John Clarke, Paul Mannion, David
Cowherd, Max Morgulis and Sutherland, Asbill &
Brennan, as escrow agent.
10 (m) Consulting Agreement and Option and Registration
Rights Agreement dated October 6, 1994 between
the Registrant and Ronnie Wohl and Ladenburg
Thalmann & Co., Inc.
10 (n) Consulting Agreement and Option and Registration
Rights Agreement dated October 6, 1994 between
the Registrant and Marshall Leeds.
10 (o) Consulting Agreement and Option and Registration
Rights Agreement dated October 6, 1994 between
the Registrant and Leonard J. Sokolow.
10 (p) Option Agreement dated October 10, 1995 between
the Registrant and Joe Gibbs.
- 40 -
<PAGE>
EXHIBIT No.
- -----------
10 (q) Option Agreement dated December 18, 1995 between
the Registrant and Bobby Labonte.
10 (r) Option Agreement dated November 30, 1995 between
the Registrant and Cruz Pedregon.
10 (s) Option Agreement dated November 30, 1995 between
the Registrant and Cory McClenathan.
10 (t) Warrant Agreement dated September 1, 1994 between
the Registrant and Bix Brown.
10 (u) Warrant Agreement dated September 1, 1994 between
the Registrant and Frank Shoop.
10 (v) Warrant Agreement dated September 1, 1994 between
the Registrant and Josephine Shoop.
10 (w) Option Agreement dated August 31, 1995 between the
Registrant and Mark Wachs.
10 (x) Option Agreement dated February 1, 1996 between the
Registrant and Mark Wachs.
10 (y) Option Agreement dated August 31, 1995 between the
Registrant and John Jameson.
10 (z) Option Agreement dated August 31, 1995 between the
Registrant and The Providence Group.
10 (aa) Option Agreement dated August 31, 1995 between the
Registrant and The Dealer Group.
10 (bb) Option Agreement dated August 31, 1995 between the
Registrant and Automotive Development Group.
10 (cc) Option Agreement dated August 31, 1995 between the
Registrant and Rodger Anderson.
10 (dd) Option Agreement dated August 31, 1995 between the
Registrant and Cartel Marketing.
10 (ee) Option Agreement dated August 31, 1995 between the
Registrant and Joe Kuboff.
10 (ff) Option Agreement dated August 31, 1995 between the
Registrant and Frank Follari.
10 (gg) Option Agreement dated August 31, 1995 between the
Registrant and David Golden.
- 41 -
<PAGE>
EXHIBIT No.
10 (hh) Option Agreement dated August 31, 1995 between the
Registrant and Jerry Henley.
10 (ii) Option Agreement dated August 31, 1995 between the
Registrant and Jack Atkin.
10 (jj) Option Agreement dated August 31, 1995 between the
Registrant and Charles Mann.
10 (kk) Option Agreement dated August 31, 1995 between the
Registrant and TASA.
11 Statement re computation of per share earnings for the
year ended December 31, 1995, four months ended
December 31, 1994 and fiscal years ended
August 31, 1994 and 1993
23 Consent of Independent Accountants (Price Waterhouse)
27 Financial Data Schedule
- 42 -
Third Amendment to Lease
State of Georgia
DeKalb County
FOR AND IN CONSIDERATION of the sum of one and no/100 dollars each to
the other paid, the receipt and sufficiency being hereby acknowledged,
and the mutual covenants contained herein that certain lease dated the
27th day of July, 1989, as amended the 28th day of June, 1991 and as
amended the 26th day of February, 1992 among DUNWOODY SHALLOWFORD
PARTNERS, L.P., as Lessor/Landlord, and AUTOMOBILE PROTECTION
CORPORATION - APCO, as Lessee/Tenant, and WORKMAN & COMPANY, as Agent,
for premises known as 15 Dunwoody Park, Suite 100, Dunwoody, Georgia
30338, is hereby amended as follows:
The provisions of Amendment to Lease dated 28th day of June, 1991 and
Second Amendment to Lease dated 26th day of February, 1992 are deleted
in their entirety upon commencement of this Third Amendment to Lease on
April 16, 1995.
1. PREMISES
Paragraph 1.1 is amended to contain approximately 15,184 square
feet. The location and boundaries of the Demised Premises are outlined
on a floor plan and building specifications of the Building are set
forth in Exhibit "A" which is attached hereto and thereby made a part of
this Lease.
2. TERM
Paragraph 2.1 is deleted in its entirety and replaced as follows:
To have and to hold the same for an initial term beginning on April
16, 1995 and ending on April 15, 1998. The Lessee shall have the right
to extend the Lease for the period April 16, 1998 through October 15,
1999 by the giving of written notice on or before October 15, 1997 (the
"First Extension").
The Lessee shall have the right to extend the Lease for the period
October 16, 1999 through April 15, 2001 by the giving of written notice
on or before April 15, 1999 (the "Second Extension"). The Lessee shall
have the right to extend the term of this Lease for the period April 16,
2001 through April 15, 2004 by the giving of written notice on or before
October 15, 2000 (the "Third Extension"). The Lessee shall have the
right to extend the term of this Lease for the period April 16, 2004
through April 15, 2007 by the giving of written notice on or before
October 15, 2003 (the "Fourth Extension"). The rental rates
applicable to the initial term and the four extension periods are set
forth in paragraph 3 to this Third Amendment to Lease. Lessee can
immediately occupy and commence construction in the additional space,
which is approximately 2,584 square feet. Rentals will be payable
commencing on April 16, 1995.
3. TOTAL RENT
Paragraph 3.1 is deleted in its entirety and replaced as follows:
The Total Rental Rate for the initial term, the First Extension and the
Second Extension of the Lease shall be as follows:
For the period April 16, 1995 to October 15, 1996: $13.00 per
square foot/$197,392.00 annually
For the period October 16, 1996 to April 15, 1998: $13.39 per
square foot/$203,313.76 annually
For the period April 16, 1998 to October 15, 1999: $13.79 per
square foot/$209,387.36 annually
For the period October 16, 1999 to April 15, 2001: $14.20 per
square foot/$215,612.80 annually
The Total Rental Rate for the first year of the Third Extension
period shall be the Fair Market Rental Rate of the Demised Premises as
of April 16, 2001. For subsequent years of the Third Extension period
and for the Fourth Extension period, the Total Rental Rate shall be the
Fair Market Rental Rate as of April 16, 2001 multiplied by the annual
CPI change added to the prior year's calculated rate. Such rate shall
be adjusted annually on April 16 of each year during the Third and
Fourth Extension periods.
The term "Total Rental Rate" includes base rents, all utilities,
all cleaning costs, all property taxes, all property and liability
insurance, all common area maintenance and all other costs and operating
expenses incurred by the Landlord with respect to the Demised Premises.
The Lessee shall not be separately assessed or billed by the Landlord
for any costs or operating expenses in excess of the Total Rental Rate
as defined and stated in this paragraph.
The term "Fair Market Rental Rate" is based on the average Total
Rental Rates of at least three competing properties which would be
available in the market area, the boundaries of which are I-285 (South),
Chamblee Dunwoody Rd (East), Barfield Rd. (West) and Northridge Rd.
(North). The Total Rental Rates are to be adjusted to eliminate all
tenant improvement and relocation allowances from the offered rental
rates and after due consideration of the property's market rating (A, B,
C, D), age, physical condition and appearance of the interior finishes.
If the "Fair Market Rental Rate" cannot be agreed upon, both
parties then agree to a mediation process, whereby each party shall
select a licensed commercial real estate broker and the two brokers
shall jointly select a third licensed commercial real estate broker. The
determination by the third broker shall be final and binding on the
Lessor. The costs associated with this process shall be shared equally
by the Lessor and Lessee.
4. USE OF DEMISED PREMISES
Paragraph 4.3 is deleted in its entirety and replaced as follows:
Return of Premises. Lessee shall deliver the Demised Premises to
Lessor upon expiration of the initial term of this Lease. The Lessee
will not intentionally damage or destroy the Demised Premises during the
Lessee's term of occupancy.
5. LESSEE'S ACCEPTANCE
Paragraph 5 is amended as follows:
Lessee's Acceptance. Lessee accepts the Demised Premises as set
forth in Exhibit "A" to this Third Amendment to Lease.
6. REPAIRS AND ALTERATIONS
Paragraph 6.5 is added to this section of the Lease:
Lessee's Repair Rights. The Lessor's responsibility to repair the
Demised Premises is set forth in paragraph 6.1. Lessee shall promptly
notify Lessor of any items requiring repair, which are the Lessor's
responsibility. The Lessor is obligated to use its best efforts, within
commercially acceptable practice, but in no event later than 3 days
(excluding official government holidays and weekends) after receiving
notification from the Lessee, to commence the repair. Should the
Lessor not comply with this requirement, the Lessee has the right to
undertake the repair using qualified contractors of the Lessee's
selection. The Lessee may not bind the Lessor in any contract with a
qualified contractor; however, the Lessee may offset the costs it incurs
to make the required repairs against rentals payable to the Lessor.
Should the Lessee undertake the repair, it shall not have the right to
offset more than 110% of the costs the Lessor would have incurred had
the Lessor made the repair within the required period. The Lessor is
required to provide the Lessee with a written quotation from a qualified
contractor of its selection, if it disputes the amount deducted by the
Lessee.
Paragraph 6.6 is added to this section of the Lease:
Uninterruptable Power Supply. Lessee shall have the right to
install an uninterruptable power supply (fueled by propane gas or a
similar fuel source) on the exterior boundary of the Demised Premises in
the general vicinity of the central computer and telephone room. Lessee
shall abide by all building codes, fire safety codes and environmental
laws, codes and regulations as they pertain to uninterruptable power
supply equipment. Lessee shall indemnify Lessor for any losses due to
leakage caused by the uninterruptable power supply equipment and shall
also pay for the costs of removing the equipment on termination of the
Lease. Lessee shall provide landscaping screening which is uniform with
the office park as it now exists.
Paragraph 6.7 is added to this section of the Lease:
Renovation. Lessee shall have the right to renovate the Demised
Premises using contractors of its own selection. Lessor shall allow
Lessee's contractor to switch existing exterior metal doors with glass
doors or glass panels from adjoining vacant space. Lessor shall also
allow Lessee to create window and door openings in the Demised premises,
in compliance with building and fire codes, and at Lessee's own cost and
expense. Lessee shall use its best efforts not to take or omit any
actions which will cause the filing of any mechanic's, materialman's or
laborer's lien on the Demised Premises. Lessee agrees to indemnify
Lessor for the actual costs incurred by Lessor to have such liens,
which resulted from the direct actions of the Lessee, removed.
Paragraph 6.8 is added to this section of the Lease:
Heating and air conditioning. Lessor shall provide heating and air
conditioning in the expansion space (of approximately 2,584 square
feet), at Lessor's sole cost and expense. Lessor shall use its best
efforts to make the heating and air conditioning available to Lessee by
no later than March 1, 1995. Lessor shall install heating and air
conditioning which is of a standard that is at least equivalent to the
heating and air conditioning in the original space.
7. DAMAGE BY FIRE, ETC.
Paragraph 7.5 is added to this section of the Lease:
Structural or Foundational Damage. If the Demised Premises or
parking areas designated as parking for Lessee's visitors and employees
become uninhabitable or damaged by any natural or manmade causes to such
an extent that normal business operations cannot be conducted by the
Lessee, Lessee shall promptly notify Lessor. Notwithstanding any
other provisions of this Lease, if said destruction rendered to the
building is 10% or more of the leasable area, or 30% or more of the
parking area designated as parking for Lessee's visitors and employees,
Lessor shall use its best efforts to have the building and parking areas
repaired, within commercially acceptable practice, and within the time
frames set forth herein. The Lessor shall commence the repairs as soon
as possible but not later than 60 days from the date of notification by
the Lessee and complete the repairs as soon as possible but not later
than 120 days from the date of notification by the Lessee. In the event
the Lessor does not commence the repairs to the building within 60 days
from the date of notification by the Lessee or does not complete the
repairs within 120 days from the date of notification by the Lessee,
then the Lessee has the unconditional right to terminate this Lease. In
the event the Lessor does not commence the repairs to the parking area
within 60 days from the date of notification by the Lessee or does not
complete the repairs within 120 days from the date of notification by
the Lessee and the Lessor is unable to provide alternate parking space
within the property owned by Dunwoody Shallowford Partners L.P. or the
office park now known as Dunwoody Park, then the Lessee has the
unconditional right to terminate this Lease. During the period of the
repair, Lessor will make vacant office space available to Lessee, at no
cost, and permit Lessee to use vacant parking spaces wherever
available.
8. EXPENSES
Paragraph 8.2 is deleted in its entirety and replaced as follows:
Utilities. Lessee shall be responsible for paying the cost of
telephone service. Lessor shall be responsible for paying the cost of
all utilities including, but not limited to, electricity, gas, water and
sewer serving the Demised Premises. The Lessor's obligation to pay for
electricity usage is capped at $3,870.00 per month during the first year
of the Lease; $4,100.00 per month during the second year of the Lease;
$4,350.00 per month during the third year of the Lease; $4,610.00 per
month during the fourth year of the Lease; $4,900.00 per month during
the fifth year of the Lease; and $5,200.00 per month during the sixth
year of the Lease. The Lessor may bill the Lessee for any electricity
charges in excess of the aforementioned amounts.
Paragraph 8.3 is deleted in its entirety and replaced as follows:
Cleaning. Lessor shall be responsible for providing cleaning, maid
or janitorial services to the Demised Premises, at the sole cost and
expense of Lessor.
9. ASSIGNMENT AND SUBLETTING
The last sentence of Paragraph 9.1 is deleted and replaced as
follows:
Lessee shall have the unconditional right to sublease the Demised
Premises as office space in accordance with paragraph 4.1 of the Lease,
subject to the Lessee assuming complete responsibility for the
sublessee's compliance with all of the provisions of this Lease. Lessee
shall notify Lessor 5 days prior to the execution of any sublease.
13. TAXES AND INSURANCE
Paragraph 13.1 is deleted in its entirety and replaced as follows:
13.1 Taxes. Lessor shall be responsible for paying the cost of all
real estate taxes.
The first and second paragraphs of Paragraph 13.2 are deleted in
their entirety and replaced as follows:
Lessor shall be responsible for obtaining and paying the cost of
all insurance including, without limitation, "All Risk", fire and
extended coverage insurance, general liability insurance, including
rental loss insurance on the Demised Premises, except as described in
the following paragraphs of this section 13.2.
14. COMMON AREAS
The second paragraph of Paragraph 14.1 is deleted in its entirety
and replaced as follows:
Lessee shall have the primary use of sixty (60) parking spaces
which directly wrap around the Demised Premises. In the event other
tenants begin to continuously use these 60 parking spaces, Lessor
shall use its best efforts to communicate to the other tenants that
these 60 spaces are intended primarily for use by the Lessee's employees
and visitors. Additionally, Lessor shall make available to Lessee an
additional eighteen (18) parking spaces as close to the Demised Premises
as possible. Lessor shall not charge for the use of the parking area
during the term of this Lease.
15. MISCELLANEOUS
The following is added to 15.6 Attorneys Fees:
In the event that Lessee in order to obtain enforcement of any
provision(s) of this Lease, finds it necessary to retain the services of
an attorney at law, then Lessor agrees to pay reasonable attorneys fees
and all costs arising out of or connected with said enforcement.
The following is added to 15.21 Indemnity:
Lessor shall indemnify and save harmless Lessee from and against
any and all loss, cost (including reasonable attorneys fees), damage,
expense and liability in connection with any and all claims for damages
as a result of injury or death of any person or property damage to any
property sustained by Lessee, its partners, customers, invitees, agents,
employees, contractors and subcontractors and all other person's
including Lessor's agents and employees if such injury, death or
property damage arises from or in any manner grows out of any act or
neglect on or about the Demised Premises by Lessor, its partners,
agents, employees, customers, invitees, contractors or subcontractors or
which arise from or in any manner grow out of any defect in any
undertaking hereunder by Lessor or any failure of Lessor to comply with
the provisions of this Lease.
Paragraph 15.22 is added:
Lessor warrants that it has obtained the written approval of First
Union National Bank of Georgia to enter into this Lease on the terms
stated herein, except as specifically noted by First Union National Bank
of Georgia in Exhibit "B", which is an authenticated copy of such
approval.
16. AGENT
This section is deleted in its entirety and replaced as follows:
Workman & Company has acted as agent for Dunwoody Shallowford
Partners, L.P. in negotiating this transaction. Howard B. Workman,
Honey C. Workman and Carolyn Bailey are licensed real estate brokers and
principals in the partnership of the property. The Lessee is not
responsible for paying any commissions or fees to Workman & Company
relating to this Third Amendment to Lease.
17. SPECIAL STIPULATIONS
Paragraph 17.1 is added:
17.1 Lead Shielding. Lessor will provide, at its own cost, lead
shielding between the Demised Premises and the adjoining physician
office space if the x-ray equipment utilized by the physician office is
located in a room abutting or near the Demised Premises.
Paragraph 17.2 is added:
17.2 First Refusal Right. Lessor shall notify Lessee in writing
each time a vacancy of 2,000 square feet or more becomes available in
any portion of the property of Dunwoody Shallowford Partners, L.P.
(hereinafter referred to as the "Additional Space"). Lessee shall have
14 days in which to negotiate a lease for the Additional Space with the
Lessor, after which the space can be marketed to other parties without
further restrictions.
Paragraph 17.3 is added:
17.3 Successors In Interest. Nothwithstanding any provisions
contained in any other sections of the Lease, the Lessee's Repair Rights
which are described in paragraph 6.5 shall remain in full force and
effect against the Lessor and any direct or indirect successors in
interest to the Lessor. For example, if Lessee incurs repair costs
which it then deducts from rentals due to Lessor, the successors in
interest to the Lessor cannot assert any claim against the Lessee for
amounts withheld from rentals and this action by Lessee shall not
constitute a breach of this Lease or affect any other rights of Lessee
contained herein.
WHEREAS HEREIN PROVIDED, all other terms and conditions of the
within Lease shall remain in full force and effect.
Dated this 27th day of January, 1995
LANDLORD/LESSOR:
DUNWOODY SHALLOWFORD PARTNERS, L.P.
ATTEST: /s/ Carolyn Bailey BY: /s/ Howard Workman, G.P.
TENANT/LESSEE:
AUTOMOBILE PROTECTION CORPORATION -
APCO
ATTEST: /s/ Carolyn Bailey BY: /s/ Anthony Levinson, CFO
AGENT:
WORKMAN & COMPANY
ATTEST: /s/ Carolyn Bailey BY: /s/ Howard Workman,
Broker/President
Fourth Amendment to Lease
State of Georgia
DeKalb County
FOR AND IN CONSIDERATION of the sum of one and no/100 dollars each to
the other paid, the receipt and sufficiency being hereby acknowledged,
and the mutual covenants contained herein that certain lease dated the
27th day of July, 1989, as amended the 28th day of June, 1991, as
amended the 26th day of February, 1992 and as amended the 27th day of
January, 1995 among DUNWOODY SHALLOWFORD PARTNERS, L.P., as
Lessor/Landlord, and AUTOMOBILE PROTECTION CORPORATION - APCO, as
Lessee/Tenant, and WORKMAN & COMPANY, as Agent, for premises known as 15
Dunwoody Park, Suite 100, Dunwoody, Georgia 30338, is hereby further
amended.
The following changes are made to the Third Amendment to Lease dated the
27th day of January, 1995 to reflect the additional contiguous leased
space of approximately 1,250 square feet. Except for the following, no
other provisions or definitions contained in any previous amendments to
the Lease are amended in any manner by this Fourth Amendment to Lease.
1. PREMISES
Paragraph 1.1 is amended to contain approximately 16,434 square
feet (replaces 15,184 square feet).
2. TERM
Paragraph 2.1 is amended to include the following sentence:
"Rentals are payable on this additional space (of approximately 1,250
square feet) commencing on June 1, 1995". Except for the preceding, no
other provisions or definitions in paragraph 2.1 are amended.
3. TOTAL RENT
Paragraph 3.1 is amended as follows:
The Total Rental Rate for the initial term, the First Extension and the
Second Extension of the Lease shall be as follows:
For the period April 16, 1995 to October 15, 1996: $13.00 per
square foot/$213,642.00 annually
For the period October 16, 1996 to April 15, 1998: $13.39 per
square foot/$220,051.26 annually
For the period April 16, 1998 to October 15, 1999: $13.79 per
square foot/$226,624.86 annually
For the period October 16, 1999 to April 15, 2001: $14.20 per
square foot/$233,362.80 annually
Except for the above, no other provisions or definitions contained
in paragraph 3.1 are amended.
6. REPAIRS AND ALTERATIONS
Paragraph 6.8 (Heating and air conditioning) is amended to include
3,834 square feet (replaces 2,584 square feet). Except for the
preceding, no other provisions or definitions contained in paragraph 6.8
are amended.
8. EXPENSES
Paragraph 8.2 is replaced in its entirety as follows:
Utilities. Lessee shall be responsible for paying the cost of
telephone service. Lessor shall be responsible for paying the cost of
all utilities including, but not limited to, electricity, gas, water and
sewer serving the Demised Premises. The Lessor's obligation to pay for
electricity usage is capped at $4,150.00 per month during the first year
of the Lease; $4,400.00 per month during the second year of the Lease;
$4,650.00 per month during the third year of the Lease; $4,950.00 per
month during the fourth year of the Lease; $5,250.00 per month during
the fifth year of the Lease; and $5,500.00 per month during the sixth
year of the Lease. The Lessor may bill the Lessee for any electricity
charges in excess of the aforementioned amounts.
WHEREAS HEREIN PROVIDED, all other terms and conditions of the within
Lease shall remain in full force and effect.
Dated this 16th day of May, 1995
LANDLORD/LESSOR:
DUNWOODY SHALLOWFORD PARTNERS, L.P.
ATTEST: /s/ Carolyn Bailey BY: /s/ Howard Workman
TENANT/LESSEE:
AUTOMOBILE PROTECTION CORPORATION -
APCO
ATTEST: /s/ Ramona Benson BY: /s/ Anthony Levinson, CFO
AGENT:
WORKMAN & COMPANY
ATTEST: /s/ Lisa Fagg BY: /s/ Carolyn Bailey, V.P.
CONSULTING AGREEMENT
AND
OPTION AND REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated January 2, 1996, by and between JOHN R.
CLARKE (the "Holder") and AUTOMOBILE PROTECTION CORPORATION - APCO (the
"Company").
WHEREAS, the Company seeks to obtain the services of Holder
as a financial consultant.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Holder will act as financial consultant to the
Company on a non-exclusive basis for the period January 2, 1996 to
February 15, 1997. Holder shall devote such time as it determines in
its sole discretion to the provision of consulting services as requested
by the Company, such services to include, but not be limited to, general
investor relations, introducing the Company to potential market makers,
investment strategies in respect of the Company's capital and corporate
acquisition strategies.
2. In consideration of acting as financial consultant, the
Company hereby grants to the Holder the right to purchase up to 60,000
shares of the Common Stock, $0.001 par value (the Common Stock) , of the
Company as follows:
(a) The Holder has the right to purchase up to 60,000 shares
of Common Stock at a purchase price per share of $3.50 at any time from
the date of this agreement until February 15, 1997.
(b) Upon the close of business on February 15, 1997, the
rights embodied herein to purchase Common Stock shall expire and the
Holder will have no further right to purchase such Common Stock after
the expiration date. If, on February 15, 1997, the Holder has not
exercised any portion of this option then this Option shall expire and
this agreement will be null and void.
3. Payment of Exercise Price. The purchase price for the
shares of Common Stock pursuant to which the Option is exercised, will
be paid in full at the time of exercise in cash, unless otherwise agreed
to in writing by the Company. Exercise of any option hereunder shall be
by written notice to the Company at its principal place of business,
specifying the number of shares of Common Stock being purchased and
accompanied by payment of the purchase price and any withholding tax
obligations imposed on the Company by reason of the exercise of the
option. In the event that the tax obligation, if any, is not paid,
the Company will be permitted to treat as payment of any withholding tax
amount due, the exercise of that number of whole shares of Common Stock
equal to the amount of the tax due divided by the fair market value of
the Common Stock as of the date the option is exercised, and the Company
will be permitted to deduct such number of shares of Common Stock from
the total number being exercised. Certificates representing the
shares as to which the option shall have been exercised shall be
registered in the name of the person exercising the option.
4. Rights of Stockholder. The Holder shall not have any of
the rights of a stockholder with respect to the Common Stock covered by
the option until the date of the issuance of a stock certificate for
shares of Common Stock purchased hereunder.
5. Transferability. Unless consented to in writing by the
Company, which consent shall not be unreasonably withheld, this option
and the rights conferred may not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this Option or any right conferred hereby, or upon the levy
of any attachment or similar process on the rights conferred hereby,
without the written consent of the Company, this option and the rights
conferred hereby shall immediately become null and void. Before the
Company consents to any transfer, assignment, pledge or hypothecation of
this option, the transferee., assignee or pledgee of the option shall
agree to be bound by the terms of this option and deliver such
other certificates and agreements as the Company reasonably requests.
Notwithstanding the foregoing, the option may be transferred to the then
current officers, directors and shareholders of the Holder (the
"Permitted Transferees") , provided such Permitted Transferees agree to
be bound by the terms of this option and deliver such certificates and
agreements as the Company reasonably requests.
6. Restricted Nature of Securities. This option and the
shares of Common Stock receivable on the exercise of the option are not
registered under the Securities Act of 1933, as amended (the "Act") .
As a condition to the sale of Common Stock on the exercise of the
option, the person exercising such option may be required by the Company
to give it such documents, including such appropriate investment
representations as may be required by Counsel for the Company and such
additional agreements as the Counsel for the Company may determine, as a
condition to the acceptance of the exercise of any Option hereunder.
The Holder represents that it has received the Company's Annual
Report on Form 10-K for the fiscal year ended August 31, 1994. Holder
represents that it is acquiring this option solely for its own account
for the purpose of investment and not with a view to or for resale in
connection with any distribution thereof, except in compliance with the
Act, any applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that it is capable of evaluating
an investment in the option and that its financial condition is such
that it can bear the economic risks of acquiring and holding this
option.
7. Sales under Securities Act. Anything in this Agreement to
the contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by Holder upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
8. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the option hereof in the absence of registration
under the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following
legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption
therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an option agreement dated December 15, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
9. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different
number or kind of stock or securities of the Company or stock of a
different par value or without par value, through reorganization,
recapitalization, reclassifi-cation, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse
stock split, an appropriate and proportionate adjustment shall be made
in the maximum number and/or kind of securities allocated to this
option, without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent, publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
10. "Piggyback" Registration.
(a) Basic Right. If, at any time prior to February 15, 1997,
the Company proposes to register for sale by it or for the account of
others, any of its equity securities under the Act, other than in
connection with a merger, acquisition or exchange offer, and other than
an offering on Form S-8 or any successor form on which the Holder's
securities may be registered, and provided further that any person to
which the Company has granted or may in the future grant a registration
right does not object in writing to the exercise of the Holder's
registration rights hereunder in connection with any registration rights
of theirs, the Company shall at least fifteen (15) days prior to the
filing of such registration statement with the Securities and Exchange
Commission (the "Commission") , give notice of its intention to do so to
the Holder. If the Holder notifies the Company within ten (10) days
after the giving of such notice by the Company of its desire to include
any shares of Common Stock received on exercise of this option in such
proposed registration statement (which notice must state the number of
shares to be included and the proposed plan of disposition thereof), the
Company shall, subject to the provisions of subparagraph (b) below,
include the shares of Common Stock designated by said Holder in such
registration statement. The "piggyback" registration rights described
herein shall be available for exercise by the Holder on two occasions
only, and after the exercise thereof, the Company shall be under no
further obligation to give to the Holder the notice described in this
subparagraph (a) or to include any of the Holder's Common Stock received
on exercise of this option in any subsequent registration statement
pursuant to this subparagraph (a).
(b) Withdrawal of Registration Statement. Notwithstanding
the provisions of subparagraph (a) above, the Company shall at all
times have the absolute right to elect not to file any proposed
registration statement, or to withdraw the same after the filing but
prior to the effective date thereof. In addition, notwithstanding the
provisions of subparagraph (a) above, the Company may exclude from
such registration statement all or a portion of the shares of Common
Stock for which registration was requested by the Holder if, in the
written opinion of the Company's managing underwriter, if any, the
inclusion of all or a portion of such shares, when added to the
securities being registered for sale by the Company, will exceed the
maximum amount of the Company's securities which can be marketed (i) at
a price reasonably related to their then current market value, or (ii)
without otherwise materially and adversely affecting the entire
offering. If less than all of the shares of Common Stock requested for
inclusion in said registration statement are to be included pursuant to
the foregoing provision, the shares of Common Stock which are included
shall be allocated among the selling shareholders (other than the
Company) on a pro rata basis.
11. Terms and Conditions Relating to Registration of Shares.
Anything in paragraph 10 above contained to the contrary
notwithstanding, the following terms and conditions shall apply to each
registration of shares of Common Stock under the Act pursuant to the
provisions of paragraph 10 above:
(a) Registration Not Required. The Company shall not be
required to register any shares of Common Stock under the Act if, in the
written opinion of counsel for the Company, which shall be in form and
substance reasonably satisfactory to the Holder of the relevant shares
of Common Stock, said shares may be sold in the manner set forth in
the notice to the Company requesting registration without the need
for compliance with the registration provisions of the Act.
(b) Amendment of Registration Statement. The Company shall,
as expeditiously as possible, prepare and file with the Commission such
amendments and supplements to the registration statement (and to any
prospectus included therein) as may be necessary to keep such
registration statement effective until the sale of the shares of Common
Stock so registered has been completed or until the expiration of a
period of 90 days after the effective date of the registration
statement, whichever is earlier.
(c) Prospectuses, etc. The Company shall furnish to the
selling Holder, such number of prospectuses, preliminary
prospectuses and other documents as the selling Holder may
reasonably request in order to facilitate the public sale of its shares
of Common Stock.
(d) Expenses. The Company shall pay all costs, fees and
expenses in connection with the registration of the shares of Common
Stock, including, without limitation, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses; provided,
however, that the Company shall not be required to pay any (i) fees and
expenses of legal counsel for the Holder, (ii) transfer taxes, or
(iii) underwriters' or brokers' fees, discounts or commissions.
(e) Blue Sky Laws. The Company shall take all actions which
may be required in order to qualify or register the shares of Common
Stock under the securities or blue sky laws of up to five states as are
requested by the Holder; provided, however, that the Company shall not
be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(f) Indemnification.
(i) By the Company. The Company shall indemnify, to the
full extent permitted by law, the Holder, its directors and officers (if
applicable) and each person, if any, who controls the Holder within the
meaning of Section 15 of the Act, against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any omission or alleged omission
to state therein a material fact necessary to make the statements
therein (in the case of the prospectus or any preliminary prospectus,
in light of the circumstances under which they were made) not
misleading, except insofar as the same are caused by or contained in any
information with respect to the Holder furnished in writing to the
Company by the Holder expressly for use therein.
(ii) By the Holder. In connection with any
registration statement in which the Holder is participating, the Holder
shall indemnify, to the full extent permitted by law, the Company, its
directors and officers and each person who controls the Company (within
the meaning of Section 15 of the Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact or any omission or alleged omission
to state a material fact necessary to make the statements in the
registration statement or prospectus or preliminary prospectus (in the
case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, to the extent,
but only to the extent, that such untrue statement or omission is
contained in or caused by any information with respect to the Holder
furnished in writing to the Company by the Holder expressly for use
therein.
(iii) Indemnification Procedures. Any person who is
entitled to indemnification under this subparagraph 12(f) shall (i) give
prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party
shall not be subject to any liability for any settlement made without
its consent. No indemnifying party shall consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled to,
or elects not to, assume the defense of such claim will not be obligated
to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of
such additional counsel or counsels.
(iv) Contribution. If for any reason the indemni
fication provided for in the preceding subparagraph 10(f) (i) or 10(f)
(ii) is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability
or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such
loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the indemnified
party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state material fact relates
to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(v) Actions by Holder. The Holder shall, at their cost
and expense., complete, execute and deliver all questionnaires, power of
attorney, undertakings and other documents and instruments, and take all
such other actions, as are from time to time reasonably requested by the
Company.
(vi) Use of Prospectus. The Holder, upon receipt of
notice from the Company of the occurrence of an event which requires a
post-effective amendment to the registration statement or a supplement
to the prospectus included therein, shall promptly discontinue the sale
of their shares of Common Stock until they have received copies of a
supplemented or amended prospectus from the Company.
12. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: John R. Clarke
11 Piedmont Center
Atlanta, GA 30305
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
(g) Severability. Any provision of this Agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date first above written.
AUTOMOBILE PROTECTION CORPORATION - APCO
By: /s/ Larry Dorfman
Holder:
JOHN R. CLARKE
/s/ John R. Clarke
CONSULTING AGREEMENT
AND
OPTION AND REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated January 2, 1996, by and between PAUL T.
MANNION (the "Holder") and AUTOMOBILE PROTECTION CORPORATION - APCO (the
"Company").
WHEREAS, the Company seeks to obtain the services of Holder
as a financial consultant.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Holder will act as financial consultant to the
Company on a non-exclusive basis for the period January 2, 1996 to
February 15, 1997. Holder shall devote such time as it determines in
its sole discretion to the provision of consulting services as requested
by the Company, such services to include, but not be limited to, general
investor relations, introducing the Company to potential market makers,
investment strategies in respect of the Company's capital and corporate
acquisition strategies.
2. In consideration of acting as financial consultant, the
Company hereby grants to the Holder the right to purchase up to 60,000
shares of the Common Stock, $0.001 par value (the Common Stock) , of the
Company as follows:
(a) The Holder has the right to purchase up to 60,000 shares
of Common Stock at a purchase price per share of $3.50 at any time from
the date of this agreement until February 15, 1997.
(b) Upon the close of business on February 15, 1997, the
rights embodied herein to purchase Common Stock shall expire and the
Holder will have no further right to purchase such Common Stock after
the expiration date. If, on February 15, 1997, the Holder has not
exercised any portion of this option then this Option shall expire and
this agreement will be null and void.
3. Payment of Exercise Price. The purchase price for the
shares of Common Stock pursuant to which the Option is exercised, will
be paid in full at the time of exercise in cash, unless otherwise agreed
to in writing by the Company. Exercise of any option hereunder shall be
by written notice to the Company at its principal place of business,
specifying the number of shares of Common Stock being purchased and
accompanied by payment of the purchase price and any withholding tax
obligations imposed on the Company by reason of the exercise of the
option. In the event that the tax obligation, if any, is not paid,
the Company will be permitted to treat as payment of any withholding tax
amount due, the exercise of that number of whole shares of Common Stock
equal to the amount of the tax due divided by the fair market value of
the Common Stock as of the date the option is exercised, and the Company
will be permitted to deduct such number of shares of Common Stock from
the total number being exercised. Certificates representing the
shares as to which the option shall have been exercised shall be
registered in the name of the person exercising the option.
4. Rights of Stockholder. The Holder shall not have any of
the rights of a stockholder with respect to the Common Stock covered by
the option until the date of the issuance of a stock certificate for
shares of Common Stock purchased hereunder.
5. Transferability. Unless consented to in writing by the
Company, which consent shall not be unreasonably withheld, this option
and the rights conferred may not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this Option or any right conferred hereby, or upon the levy
of any attachment or similar process on the rights conferred hereby,
without the written consent of the Company, this option and the rights
conferred hereby shall immediately become null and void. Before the
Company consents to any transfer, assignment, pledge or hypothecation of
this option, the transferee., assignee or pledgee of the option shall
agree to be bound by the terms of this option and deliver such
other certificates and agreements as the Company reasonably requests.
Notwithstanding the foregoing, the option may be transferred to the then
current officers, directors and shareholders of the Holder (the
"Permitted Transferees") , provided such Permitted Transferees agree to
be bound by the terms of this option and deliver such certificates and
agreements as the Company reasonably requests.
6. Restricted Nature of Securities. This option and the
shares of Common Stock receivable on the exercise of the option are not
registered under the Securities Act of 1933, as amended (the "Act") .
As a condition to the sale of Common Stock on the exercise of the
option, the person exercising such option may be required by the Company
to give it such documents, including such appropriate investment
representations as may be required by Counsel for the Company and such
additional agreements as the Counsel for the Company may determine, as a
condition to the acceptance of the exercise of any Option hereunder.
The Holder represents that it has received the Company's Annual
Report on Form 10-K for the fiscal year ended August 31, 1994. Holder
represents that it is acquiring this option solely for its own account
for the purpose of investment and not with a view to or for resale in
connection with any distribution thereof, except in compliance with the
Act, any applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that it is capable of evaluating
an investment in the option and that its financial condition is such
that it can bear the economic risks of acquiring and holding this
option.
7. Sales under Securities Act. Anything in this Agreement
to the contrary notwithstanding, the Holder hereby agrees that it shall
not sell, transfer by any means or otherwise dispose of the option or
the Common Stock acquired by Holder upon exercise of the option
hereunder without registration under the Act, or in the event that they
are not so registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
8. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the option hereof in the absence of registration
under the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following
legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption
therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an option agreement dated December 15, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
9. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different
number or kind of stock or securities of the Company or stock of a
different par value or without par value, through reorganization,
recapitalization, reclassifi-cation, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse
stock split, an appropriate and proportionate adjustment shall be made
in the maximum number and/or kind of securities allocated to this
option, without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent, publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
10. "Piggyback" Registration.
(a) Basic Right. If, at any time prior to February 15, 1997,
the Company proposes to register for sale by it or for the account of
others, any of its equity securities under the Act, other than in
connection with a merger, acquisition or exchange offer, and other than
an offering on Form S-8 or any successor form on which the Holder's
securities may be registered, and provided further that any person to
which the Company has granted or may in the future grant a registration
right does not object in writing to the exercise of the Holder's
registration rights hereunder in connection with any registration rights
of theirs, the Company shall at least fifteen (15) days prior to the
filing of such registration statement with the Securities and Exchange
Commission (the "Commission") , give notice of its intention to do so to
the Holder. If the Holder notifies the Company within ten (10) days
after the giving of such notice by the Company of its desire to include
any shares of Common Stock received on exercise of this option in such
proposed registration statement (which notice must state the number of
shares to be included and the proposed plan of disposition thereof), the
Company shall, subject to the provisions of subparagraph (b) below,
include the shares of Common Stock designated by said Holder in such
registration statement. The "piggyback" registration rights described
herein shall be available for exercise by the Holder on two occasions
only, and after the exercise thereof, the Company shall be under no
further obligation to give to the Holder the notice described in this
subparagraph (a) or to include any of the Holder's Common Stock received
on exercise of this option in any subsequent registration statement
pursuant to this subparagraph (a).
(b) Withdrawal of Registration Statement. Notwithstanding
the provisions of subparagraph (a) above, the Company shall at all
times have the absolute right to elect not to file any proposed
registration statement, or to withdraw the same after the filing but
prior to the effective date thereof. In addition, notwithstanding the
provisions of subparagraph (a) above, the Company may exclude from
such registration statement all or a portion of the shares of Common
Stock for which registration was requested by the Holder if, in the
written opinion of the Company's managing underwriter, if any, the
inclusion of all or a portion of such shares, when added to the
securities being registered for sale by the Company, will exceed the
maximum amount of the Company's securities which can be marketed (i) at
a price reasonably related to their then current market value, or (ii)
without otherwise materially and adversely affecting the entire
offering. If less than all of the shares of Common Stock requested for
inclusion in said registration statement are to be included pursuant to
the foregoing provision, the shares of Common Stock which are included
shall be allocated among the selling shareholders (other than the
Company) on a pro rata basis.
11. Terms and Conditions Relating to Registration of Shares.
Anything in paragraph 10 above contained to the contrary
notwithstanding, the following terms and conditions shall apply to each
registration of shares of Common Stock under the Act pursuant to the
provisions of paragraph 10 above:
(a) Registration Not Required. The Company shall not be
required to register any shares of Common Stock under the Act if, in the
written opinion of counsel for the Company, which shall be in form and
substance reasonably satisfactory to the Holder of the relevant shares
of Common Stock, said shares may be sold in the manner set forth in
the notice to the Company requesting registration without the need
for compliance with the registration provisions of the Act.
(b) Amendment of Registration Statement. The Company shall,
as expeditiously as possible, prepare and file with the Commission such
amendments and supplements to the registration statement (and to any
prospectus included therein) as may be necessary to keep such
registration statement effective until the sale of the shares of Common
Stock so registered has been completed or until the expiration of a
period of 90 days after the effective date of the registration
statement, whichever is earlier.
(c) Prospectuses, etc. The Company shall furnish to the
selling Holder, such number of prospectuses, preliminary
prospectuses and other documents as the selling Holder may
reasonably request in order to facilitate the public sale of its shares
of Common Stock.
(d) Expenses. The Company shall pay all costs, fees and
expenses in connection with the registration of the shares of Common
Stock, including, without limitation, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses; provided,
however, that the Company shall not be required to pay any (i) fees and
expenses of legal counsel for the Holder, (ii) transfer taxes, or
(iii) underwriters' or brokers' fees, discounts or commissions.
(e) Blue Sky Laws. The Company shall take all actions which
may be required in order to qualify or register the shares of Common
Stock under the securities or blue sky laws of up to five states as are
requested by the Holder; provided, however, that the Company shall not
be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(f) Indemnification.
(i) By the Company. The Company shall indemnify, to the
full extent permitted by law, the Holder, its directors and officers (if
applicable) and each person, if any, who controls the Holder within the
meaning of Section 15 of the Act, against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any omission or alleged omission
to state therein a material fact necessary to make the statements
therein (in the case of the prospectus or any preliminary prospectus,
in light of the circumstances under which they were
made) not misleading, except insofar as the same are caused by or
contained in any information with respect to the Holder furnished in
writing to the Company by the Holder expressly for use therein.
(ii) By the Holder. In connection with any
registration statement in which the Holder is participating, the Holder
shall indemnify, to the full extent permitted by law, the Company, its
directors and officers and each person who controls the Company (within
the meaning of Section 15 of the Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact or any omission or alleged omission
to state a material fact necessary to make the statements in the
registration statement or prospectus or preliminary prospectus (in the
case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, to the extent,
but only to the extent, that such untrue statement or omission is
contained in or caused by any information with respect to the Holder
furnished in writing to the Company by the Holder expressly for use
therein.
(iii) Indemnification Procedures. Any person who is
entitled to indemnification under this subparagraph 12(f) shall (i) give
prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party
shall not be subject to any liability for any settlement made without
its consent. No indemnifying party shall consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled to,
or elects not to, assume the defense of such claim will not be obligated
to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of
such additional counsel or counsels.
(iv) Contribution. If for any reason the indemni
fication provided for in the preceding subparagraph 10(f) (i) or 10(f)
(ii) is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability
or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such
loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the indemnified
party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state material fact relates
to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(v) Actions by Holder. The Holder shall, at their cost
and expense., complete, execute and deliver all questionnaires, power of
attorney, undertakings and other documents and instruments, and take all
such other actions, as are from time to time reasonably requested by the
Company.
(vi) Use of Prospectus. The Holder, upon receipt of
notice from the Company of the occurrence of an event which requires a
post-effective amendment to the registration statement or a supplement
to the prospectus included therein, shall promptly discontinue the sale
of their shares of Common Stock until they have received copies of a
supplemented or amended prospectus from the Company.
12. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Paul T. Mannion
11 Piedmont Center
Atlanta, GA 30305
If to Company, to: Automobile Protection Corporation - APCO 15
Dunwoody Park Drive
Dunwoody, GA 30338
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
(g) Severability. Any provision of this Agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date first above written.
AUTOMOBILE PROTECTION CORPORATION - APCO
By: /s/ Larry Dorfman
Holder:
PAUL T. MANNION
/s/ Paul T. Mannion
CONSULTING AGREEMENT
AND
OPTION AND REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated January 2, 1996, by and between DAVID
COWHERD (the "Holder") and AUTOMOBILE PROTECTION CORPORATION - APCO (the
"Company").
WHEREAS, the Company seeks to obtain the services of Holder
as a financial consultant.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Holder will act as financial consultant to the
Company on a non-exclusive basis for the period January 2, 1996 to
February 15, 1997. Holder shall devote such time as it determines in
its sole discretion to the provision of consulting services as requested
by the Company, such services to include, but not be limited to, general
investor relations, introducing the Company to potential market makers,
investment strategies in respect of the Company's capital and corporate
acquisition strategies.
2. In consideration of acting as financial consultant, the
Company hereby grants to the Holder the right to purchase up to 60,000
shares of the Common Stock, $0.001 par value (the Common Stock) , of the
Company as follows:
(a) The Holder has the right to purchase up to 60,000 shares
of Common Stock at a purchase price per share of $3.50 at any time from
the date of this agreement until February 15, 1997.
(b) Upon the close of business on February 15, 1997, the
rights embodied herein to purchase Common Stock shall expire and the
Holder will have no further right to purchase such Common Stock after
the expiration date. If, on February 15, 1997, the Holder has not
exercised any portion of this option then this Option shall expire and
this agreement will be null and void.
3. Payment of Exercise Price. The purchase price for the
shares of Common Stock pursuant to which the Option is exercised, will
be paid in full at the time of exercise in cash, unless otherwise agreed
to in writing by the Company. Exercise of any option hereunder shall be
by written notice to the Company at its principal place of business,
specifying the number of shares of Common Stock being purchased and
accompanied by payment of the purchase price and any withholding tax
obligations imposed on the Company by reason of the exercise of the
option. In the event that the tax obligation, if any, is not paid,
the Company will be permitted to treat as payment of any withholding tax
amount due, the exercise of that number of whole shares of Common Stock
equal to the amount of the tax due divided by the fair market value of
the Common Stock as of the date the option is exercised, and the Company
will be permitted to deduct such number of shares of Common Stock from
the total number being exercised. Certificates representing the
shares as to which the option shall have been exercised shall be
registered in the name of the person exercising the option.
4. Rights of Stockholder. The Holder shall not have any of
the rights of a stockholder with respect to the Common Stock covered by
the option until the date of the issuance of a stock certificate for
shares of Common Stock purchased hereunder.
5. Transferability. Unless consented to in writing by the
Company, which consent shall not be unreasonably withheld, this option
and the rights conferred may not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this Option or any right conferred hereby, or upon the levy
of any attachment or similar process on the rights conferred hereby,
without the written consent of the Company, this option and the rights
conferred hereby shall immediately become null and void. Before the
Company consents to any transfer, assignment, pledge or hypothecation of
this option, the transferee., assignee or pledgee of the option shall
agree to be bound by the terms of this option and deliver such
other certificates and agreements as the Company reasonably requests.
Notwithstanding the foregoing, the option may be transferred to the then
current officers, directors and shareholders of the Holder (the
"Permitted Transferees") , provided such Permitted Transferees agree to
be bound by the terms of this option and deliver such certificates and
agreements as the Company reasonably requests.
6. Restricted Nature of Securities. This option and the
shares of Common Stock receivable on the exercise of the option are not
registered under the Securities Act of 1933, as amended (the "Act") .
As a condition to the sale of Common Stock on the exercise of the
option, the person exercising such option may be required by the Company
to give it such documents, including such appropriate investment
representations as may be required by Counsel for the Company and such
additional agreements as the Counsel for the Company may determine, as a
condition to the acceptance of the exercise of any Option hereunder.
The Holder represents that it has received the Company's Annual
Report on Form 10-K for the fiscal year ended August 31, 1994. Holder
represents that it is acquiring this option solely for its own account
for the purpose of investment and not with a view to or for resale in
connection with any distribution thereof, except in compliance with the
Act, any applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that it is capable of evaluating
an investment in the option and that its financial condition is such
that it can bear the economic risks of acquiring and holding this
option.
7. Sales under Securities Act. Anything in this Agreement to
the contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by Holder upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
8. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the option hereof in the absence of registration
under the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following
legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption
therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an option agreement dated December 15, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
9. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different
number or kind of stock or securities of the Company or stock of a
different par value or without par value, through reorganization,
recapitalization, reclassifi-cation, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse
stock split, an appropriate and proportionate adjustment shall be made
in the maximum number and/or kind of securities allocated to this
option, without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent, publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
10. "Piggyback" Registration.
(a) Basic Right. If, at any time prior to February 15, 1997,
the Company proposes to register for sale by it or for the account of
others, any of its equity securities under the Act, other than in
connection with a merger, acquisition or exchange offer, and other than
an offering on Form S-8 or any successor form on which the Holder's
securities may be registered, and provided further that any person to
which the Company has granted or may in the future grant a registration
right does not object in writing to the exercise of the Holder's
registration rights hereunder in connection with any registration rights
of theirs, the Company shall at least fifteen (15) days prior to the
filing of such registration statement with the Securities and Exchange
Commission (the "Commission") , give notice of its intention to do so to
the Holder. If the Holder notifies the Company within ten (10) days
after the giving of such notice by the Company of its desire to include
any shares of Common Stock received on exercise of this option in such
proposed registration statement (which notice must state the number of
shares to be included and the proposed plan of disposition thereof), the
Company shall, subject to the provisions of subparagraph (b) below,
include the shares of Common Stock designated by said Holder in such
registration statement. The "piggyback" registration rights described
herein shall be available for exercise by the Holder on two occasions
only, and after the exercise thereof, the Company shall be under no
further obligation to give to the Holder the notice described in this
subparagraph (a) or to include any of the Holder's Common Stock received
on exercise of this option in any subsequent registration statement
pursuant to this subparagraph (a).
(b) Withdrawal of Registration Statement. Notwithstanding
the provisions of subparagraph (a) above, the Company shall at all
times have the absolute right to elect not to file any proposed
registration statement, or to withdraw the same after the filing but
prior to the effective date thereof. In addition, notwithstanding the
provisions of subparagraph (a) above, the Company may exclude from
such registration statement all or a portion of the shares of Common
Stock for which registration was requested by the Holder if, in the
written opinion of the Company's managing underwriter, if any, the
inclusion of all or a portion of such shares, when added to the
securities being registered for sale by the Company, will exceed the
maximum amount of the Company's securities which can be marketed (i) at
a price reasonably related to their then current market value, or (ii)
without otherwise materially and adversely affecting the entire
offering. If less than all of the shares of Common Stock requested for
inclusion in said registration statement are to be included pursuant to
the foregoing provision, the shares of Common Stock which are included
shall be allocated among the selling shareholders (other than the
Company) on a pro rata basis.
11. Terms and Conditions Relating to Registration of Shares.
Anything in paragraph 10 above contained to the contrary
notwithstanding, the following terms and conditions shall apply to each
registration of shares of Common Stock under the Act pursuant to the
provisions of paragraph 10 above:
(a) Registration Not Required. The Company shall not be
required to register any shares of Common Stock under the Act if, in the
written opinion of counsel for the Company, which shall be in form and
substance reasonably satisfactory to the Holder of the relevant shares
of Common Stock, said shares may be sold in the manner set forth in
the notice to the Company requesting registration without the need
for compliance with the registration provisions of the Act.
(b) Amendment of Registration Statement. The Company shall,
as expeditiously as possible, prepare and file with the Commission such
amendments and supplements to the registration statement (and to any
prospectus included therein) as may be necessary to keep such
registration statement effective until the sale of the shares of Common
Stock so registered has been completed or until the expiration of a
period of 90 days after the effective date of the registration
statement, whichever is earlier.
(c) Prospectuses, etc. The Company shall furnish to the
selling Holder, such number of prospectuses, preliminary
prospectuses and other documents as the selling Holder may
reasonably request in order to facilitate the public sale of its shares
of Common Stock.
(d) Expenses. The Company shall pay all costs, fees and
expenses in connection with the registration of the shares of Common
Stock, including, without limitation, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses; provided,
however, that the Company shall not be required to pay any (i) fees and
expenses of legal counsel for the Holder, (ii) transfer taxes, or
(iii) underwriters' or brokers' fees, discounts or commissions.
(e) Blue Sky Laws. The Company shall take all actions which
may be required in order to qualify or register the shares of Common
Stock under the securities or blue sky laws of up to five states as are
requested by the Holder; provided, however, that the Company shall not
be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(f) Indemnification.
(i) By the Company. The Company shall indemnify, to the
full extent permitted by law, the Holder, its directors and officers (if
applicable) and each person, if any, who controls the Holder within the
meaning of Section 15 of the Act, against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any omission or alleged omission
to state therein a material fact necessary to make the statements
therein (in the case of the prospectus or any preliminary prospectus,
in light of the circumstances under which they were made) not
misleading, except insofar as the same are caused by or contained in any
information with respect to the Holder furnished in
writing to the Company by the Holder expressly for use therein.
(ii) By the Holder. In connection with any
registration statement in which the Holder is participating, the Holder
shall indemnify, to the full extent permitted by law, the Company, its
directors and officers and each person who controls the Company (within
the meaning of Section 15 of the Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact or any omission or alleged omission
to state a material fact necessary to make the statements in the
registration statement or prospectus or preliminary prospectus (in the
case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, to the extent,
but only to the extent, that such untrue statement or omission is
contained in or caused by any information with respect to the Holder
furnished in writing to the Company by the Holder expressly for use
therein.
(iii) Indemnification Procedures. Any person who is
entitled to indemnification under this subparagraph 12(f) shall (i) give
prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party
shall not be subject to any liability for any settlement made without
its consent. No indemnifying party shall consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled to,
or elects not to, assume the defense of such claim will not be obligated
to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of
such additional counsel or counsels.
(iv) Contribution. If for any reason the indemni
fication provided for in the preceding subparagraph 10(f) (i) or 10(f)
(ii) is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability
or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such
loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the indemnified
party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state material fact relates
to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(v) Actions by Holder. The Holder shall, at their cost
and expense., complete, execute and deliver all questionnaires, power of
attorney, undertakings and other documents and instruments, and take all
such other actions, as are from time to time reasonably requested by the
Company.
(vi) Use of Prospectus. The Holder, upon receipt of
notice from the Company of the occurrence of an event which requires a
post-effective amendment to the registration statement or a supplement
to the prospectus included therein, shall promptly discontinue the sale
of their shares of Common Stock until they have received copies of a
supplemented or amended prospectus from the Company.
12. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: David Cowherd
11 Piedmont Center
Atlanta, GA 30305
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
(g) Severability. Any provision of this Agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date first above written.
AUTOMOBILE PROTECTION CORPORATION - APCO
By: /s/ Larry Dorfman
Holder:
DAVID COWHERD
/s/ David Cowherd
CONSULTING AGREEMENT
AND
OPTION AND REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated January 2, 1996, by and between MAX MORGULIS
(the "Holder") and AUTOMOBILE PROTECTION CORPORATION - APCO (the
"Company").
WHEREAS, the Company seeks to obtain the services of Holder
as a financial consultant.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Holder will act as financial consultant to the
Company on a non-exclusive basis for the period January 2, 1996 to
February 15, 1997. Holder shall devote such time as it determines in
its sole discretion to the provision of consulting services as requested
by the Company, such services to include, but not be limited to, general
investor relations, introducing the Company to potential market makers,
investment strategies in respect of the Company's capital and corporate
acquisition strategies.
2. In consideration of acting as financial consultant, the
Company hereby grants to the Holder the right to purchase up to 20,000
shares of the Common Stock, $0.001 par value (the Common Stock) , of the
Company as follows:
(a) The Holder has the right to purchase up to 20,000 shares
of Common Stock at a purchase price per share of $3.50 at any time from
the date of this agreement until February 15, 1997.
(b) Upon the close of business on February 15, 1997, the
rights embodied herein to purchase Common Stock shall expire and the
Holder will have no further right to purchase such Common Stock after
the expiration date. If, on February 15, 1997, the Holder has not
exercised any portion of this option then this Option shall expire and
this agreement will be null and void.
3. Payment of Exercise Price. The purchase price for the
shares of Common Stock pursuant to which the Option is exercised, will
be paid in full at the time of exercise in cash, unless otherwise agreed
to in writing by the Company. Exercise of any option hereunder shall be
by written notice to the Company at its principal place of business,
specifying the number of shares of Common Stock being purchased and
accompanied by payment of the purchase price and any withholding tax
obligations imposed on the Company by reason of the exercise of the
option. In the event that the tax obligation, if any, is not paid,
the Company will be permitted to treat as payment of any withholding tax
amount due, the exercise of that number of whole shares of Common Stock
equal to the amount of the tax due divided by the fair market value of
the Common Stock as of the date the option is exercised, and the Company
will be permitted to deduct such number of shares of Common Stock from
the total number being exercised. Certificates representing the
shares as to which the option shall have been exercised shall be
registered in the name of the person exercising the option.
4. Rights of Stockholder. The Holder shall not have any of
the rights of a stockholder with respect to the Common Stock covered by
the option until the date of the issuance of a stock certificate for
shares of Common Stock purchased hereunder.
5. Transferability. Unless consented to in writing by the
Company, which consent shall not be unreasonably withheld, this option
and the rights conferred may not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this Option or any right conferred hereby, or upon the levy
of any attachment or similar process on the rights conferred hereby,
without the written consent of the Company, this option and the rights
conferred hereby shall immediately become null and void. Before the
Company consents to any transfer, assignment, pledge or hypothecation of
this option, the transferee., assignee or pledgee of the option shall
agree to be bound by the terms of this option and deliver such
other certificates and agreements as the Company reasonably requests.
Notwithstanding the foregoing, the option may be transferred to the then
current officers, directors and shareholders of the Holder (the
"Permitted Transferees") , provided such Permitted Transferees agree to
be bound by the terms of this option and deliver such certificates and
agreements as the Company reasonably requests.
6. Restricted Nature of Securities. This option and the
shares of Common Stock receivable on the exercise of the option are not
registered under the Securities Act of 1933, as amended (the "Act") .
As a condition to the sale of Common Stock on the exercise of the
option, the person exercising such option may be required by the Company
to give it such documents, including such appropriate investment
representations as may be required by Counsel for the Company and such
additional agreements as the Counsel for the Company may determine, as a
condition to the acceptance of the exercise of any Option hereunder.
The Holder represents that it has received the Company's Annual
Report on Form 10-K for the fiscal year ended August 31, 1994. Holder
represents that it is acquiring this option solely for its own account
for the purpose of investment and not with a view to or for resale in
connection with any distribution thereof, except in compliance with the
Act, any applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that it is capable of evaluating
an investment in the option and that its financial condition is such
that it can bear the economic risks of acquiring and holding this
option.
7. Sales under Securities Act. Anything in this Agreement to
the contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by Holder upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
8. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the option hereof in the absence of registration
under the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following
legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption
therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an option agreement dated December 15, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
9. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different
number or kind of stock or securities of the Company or stock of a
different par value or without par value, through reorganization,
recapitalization, reclassifi-cation, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse
stock split, an appropriate and proportionate adjustment shall be made
in the maximum number and/or kind of securities allocated to this
option, without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent, publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
10. "Piggyback" Registration.
(a) Basic Right. If, at any time prior to February 15, 1997,
the Company proposes to register for sale by it or for the account of
others, any of its equity securities under the Act, other than in
connection with a merger, acquisition or exchange offer, and other than
an offering on Form S-8 or any successor form on which the Holder's
securities may be registered, and provided further that any person to
which the Company has granted or may in the future grant a registration
right does not object in writing to the exercise of the Holder's
registration rights hereunder in connection with any registration rights
of theirs, the Company shall at least fifteen (15) days prior to the
filing of such registration statement with the Securities and Exchange
Commission (the "Commission") , give notice of its intention to do so to
the Holder. If the Holder notifies the Company within ten (10) days
after the giving of such notice by the Company of its desire to include
any shares of Common Stock received on exercise of this option in such
proposed registration statement (which notice must state the number of
shares to be included and the proposed plan of disposition thereof), the
Company shall, subject to the provisions of subparagraph (b) below,
include the shares of Common Stock designated by said Holder in such
registration statement. The "piggyback" registration rights described
herein shall be available for exercise by the Holder on two occasions
only, and after the exercise thereof, the Company shall be under no
further obligation to give to the Holder the notice described in this
subparagraph (a) or to include any of the Holder's Common Stock received
on exercise of this option in any subsequent registration statement
pursuant to this subparagraph (a).
(b) Withdrawal of Registration Statement. Notwithstanding
the provisions of subparagraph (a) above, the Company shall at all
times have the absolute right to elect not to file any proposed
registration statement, or to withdraw the same after the filing but
prior to the effective date thereof. In addition, notwithstanding the
provisions of subparagraph (a) above, the Company may exclude from
such registration statement all or a portion of the shares of Common
Stock for which registration was requested by the Holder if, in the
written opinion of the Company's managing underwriter, if any, the
inclusion of all or a portion of such shares, when added to the
securities being registered for sale by the Company, will exceed the
maximum amount of the Company's securities which can be marketed (i) at
a price reasonably related to their then current market value, or (ii)
without otherwise materially and adversely affecting the entire
offering. If less than all of the shares of Common Stock requested for
inclusion in said registration statement are to be included pursuant to
the foregoing provision, the shares of Common Stock which are included
shall be allocated among the selling shareholders (other than the
Company) on a pro rata basis.
11. Terms and Conditions Relating to Registration of Shares.
Anything in paragraph 10 above contained to the contrary
notwithstanding, the following terms and conditions shall apply to each
registration of shares of Common Stock under the Act pursuant to the
provisions of paragraph 10 above:
(a) Registration Not Required. The Company shall not be
required to register any shares of Common Stock under the Act if, in the
written opinion of counsel for the Company, which shall be in form and
substance reasonably satisfactory to the Holder of the relevant shares
of Common Stock, said shares may be sold in the manner set forth in
the notice to the Company requesting registration without the need
for compliance with the registration provisions of the Act.
(b) Amendment of Registration Statement. The Company shall,
as expeditiously as possible, prepare and file with the Commission such
amendments and supplements to the registration statement (and to any
prospectus included therein) as may be necessary to keep such
registration statement effective until the sale of the shares of Common
Stock so registered has been completed or until the expiration of a
period of 90 days after the effective date of the registration
statement, whichever is earlier.
(c) Prospectuses, etc. The Company shall furnish to the
selling Holder, such number of prospectuses, preliminary
prospectuses and other documents as the selling Holder may
reasonably request in order to facilitate the public sale of its shares
of Common Stock.
(d) Expenses. The Company shall pay all costs, fees and
expenses in connection with the registration of the shares of Common
Stock, including, without limitation, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses; provided,
however, that the Company shall not be required to pay any (i) fees and
expenses of legal counsel for the Holder, (ii) transfer taxes, or
(iii) underwriters' or brokers' fees, discounts or commissions.
(e) Blue Sky Laws. The Company shall take all actions which
may be required in order to qualify or register the shares of Common
Stock under the securities or blue sky laws of up to five states as are
requested by the Holder; provided, however, that the Company shall not
be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(f) Indemnification.
(i) By the Company. The Company shall indemnify, to the
full extent permitted by law, the Holder, its directors and officers (if
applicable) and each person, if any, who controls the Holder within the
meaning of Section 15 of the Act, against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any omission or alleged omission
to state therein a material fact necessary to make the statements
therein (in the case of the prospectus or any preliminary prospectus,
in light of the circumstances under which they were
made) not misleading, except insofar as the same are caused by or
contained in any information with respect to the Holder furnished in
writing to the Company by the Holder expressly for use therein.
(ii) By the Holder. In connection with any
registration statement in which the Holder is participating, the Holder
shall indemnify, to the full extent permitted by law, the Company, its
directors and officers and each person who controls the Company (within
the meaning of Section 15 of the Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact or any omission or alleged omission
to state a material fact necessary to make the statements in the
registration statement or prospectus or preliminary prospectus (in the
case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, to the extent,
but only to the extent, that such untrue statement or omission is
contained in or caused by any information with respect to the Holder
furnished in writing to the Company by the Holder expressly for use
therein.
(iii) Indemnification Procedures. Any person who is
entitled to indemnification under this subparagraph 12(f) shall (i) give
prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party
shall not be subject to any liability for any settlement made without
its consent. No indemnifying party shall consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled to,
or elects not to, assume the defense of such claim will not be obligated
to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of
such additional counsel or counsels.
(iv) Contribution. If for any reason the indemni
fication provided for in the preceding subparagraph 10(f) (i) or 10(f)
(ii) is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability
or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such
loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the indemnified
party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state material fact relates
to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(v) Actions by Holder. The Holder shall, at their cost
and expense., complete, execute and deliver all questionnaires, power of
attorney, undertakings and other documents and instruments, and take all
such other actions, as are from time to time reasonably requested by the
Company.
(vi) Use of Prospectus. The Holder, upon receipt of
notice from the Company of the occurrence of an event which requires a
post-effective amendment to the registration statement or a supplement
to the prospectus included therein, shall promptly discontinue the sale
of their shares of Common Stock until they have received copies of a
supplemented or amended prospectus from the Company.
12. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Max Morgulis
11 Piedmont Center
Atlanta, GA 30305
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
(f) Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
(g) Severability. Any provision of this Agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date first above written.
AUTOMOBILE PROTECTION CORPORATION - APCO
By: /s/ Larry Dorfman
Holder:
MAX MORGULIS
/s/ Max Morgulis
CONSULTING AGREEMENT
AND
OPTION AND REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated January 2, 1996, by and between John Clarke,
Paul Mannion, David Cowherd and Max Morgulis (collectively the
"Holder"), AUTOMOBILE PROTECTION CORPORATION - APCO (the "Company") and
SUTHERLAND, ASBILL & BRENNAN, AS ESCROW AGENT (the "Escrow Agent").
WHEREAS, the Company seeks to obtain the services of the
Holder as a financial consultant.
WHEREAS, the Holder has instructed the Company to issue the
options to the Escrow Agent, to be held pursuant to their arrangements
with the Escrow Agent.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Holder will act as a financial consultant to the
Company on a non-exclusive basis for the period January 2, 1996 to
February 15, 1997. Holder shall devote such time as it determines in
its sole discretion to the provision of consulting services as requested
by the Company, such services to include, but not be limited to, general
investor relations, introducing the Company to potential market makers,
investment strategies in respect of the Company's capital and corporate
acquisition strategies.
2. In consideration of acting as financial consultant, the
Company hereby grants to the Holder the right to purchase up to 50,000
shares of the Common Stock, $0.001 par value (the Common Stock) , of the
Company as follows:
(a) The Holder has the right to purchase up to 50,000 shares
of Common Stock at a purchase price per share of $3.50 at any time from
the date of this agreement until February 15, 1997.
(b) Upon the close of business on February 15, 1997, the
rights embodied herein to purchase Common Stock shall expire and the
Holder will have no further right to purchase such Common Stock after
the expiration date. If, on February 15, 1997, the Holder has not
exercised any portion of this option then this Option shall expire and
this agreement will be null and void.
(c) The Holder has instructed the Company to issue the
options herein to the Escrow Agent, to be held by the Escrow Agent for
such time as the Holder instructs, subject to the expiration provisions
of paragraph 2 (b) above.
3. Payment of Exercise Price. The purchase price for the
shares of Common Stock pursuant to which the Option is exercised, will
be paid in full at the time of exercise in cash, unless otherwise agreed
to in writing by the Company. Exercise of any option hereunder shall be
by written notice to the Company at its principal place of business,
specifying the number of shares of Common Stock being purchased and
accompanied by payment of the purchase price and any withholding tax
obligations imposed on the Company by reason of the exercise of the
option. In the event that the tax obligation, if any, is not paid,
the Company will be permitted to treat as payment of any withholding tax
amount due, the exercise of that number of whole shares of Common Stock
equal to the amount of the tax due divided by the fair market value of
the Common Stock as of the date the option is exercised, and the Company
will be permitted to deduct such number of shares of Common Stock from
the total number being exercised. Certificates representing the
shares as to which the option shall have been exercised shall be
registered in the name of the person exercising the option.
4. Rights of Stockholder. The Holder shall not have any of
the rights of a stockholder with respect to the Common Stock covered by
the option until the date of the issuance of a stock certificate for
shares of Common Stock purchased hereunder.
5. Transferability. Unless consented to in writing by the
Company, which consent shall not be unreasonably withheld, this option
and the rights conferred may not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this Option or any right conferred hereby, or upon the levy
of any attachment or similar process on the rights conferred hereby,
without the written consent of the Company, this option and the rights
conferred hereby shall immediately become null and void. Before the
Company consents to any transfer, assignment, pledge or hypothecation of
this option, the transferee., assignee or pledgee of the option shall
agree to be bound by the terms of this option and deliver such
other certificates and agreements as the Company reasonably requests.
Notwithstanding the foregoing, the option may be transferred to the then
current officers, directors and shareholders of the Holder (the
"Permitted Transferees") , provided such Permitted Transferees agree to
be bound by the terms of this option and deliver such certificates and
agreements as the Company reasonably requests.
6. Restricted Nature of Securities. This option and the
shares of Common Stock receivable on the exercise of the option are not
registered under the Securities Act of 1933, as amended (the "Act") .
As a condition to the sale of Common Stock on the exercise of the
option, the person exercising such option may be required by the Company
to give it such documents, including such appropriate investment
representations as may be required by Counsel for the Company and such
additional agreements as the Counsel for the Company may determine, as a
condition to the acceptance of the exercise of any Option hereunder.
The Holder represents that it has received the Company's Annual
Report on Form 10-K for the fiscal year ended August 31, 1994. Holder
represents that it is acquiring this option solely for its own account
for the purpose of investment and not with a view to or for resale in
connection with any distribution thereof, except in compliance with the
Act, any applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that it is capable of evaluating
an investment in the option and that its financial condition is such
that it can bear the economic risks of acquiring and holding this
option.
7. Sales under Securities Act. Anything in this Agreement to
the contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by Holder upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
8. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the option hereof in the absence of registration
under the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following
legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption
therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an option agreement dated December 15, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
9. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different
number or kind of stock or securities of the Company or stock of a
different par value or without par value, through reorganization,
recapitalization, reclassifi-cation, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse
stock split, an appropriate and proportionate adjustment shall be made
in the maximum number and/or kind of securities allocated to this
option, without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent, publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
10. "Piggyback" Registration.
(a) Basic Right. If, at any time prior to February 15, 1997,
the Company proposes to register for sale by it or for the account of
others, any of its equity securities under the Act, other than in
connection with a merger, acquisition or exchange offer, and other than
an offering on Form S-8 or any successor form on which the Holder's
securities may be registered, and provided further that any person to
which the Company has granted or may in the future grant a registration
right does not object in writing to the exercise of the Holder's
registration rights hereunder in connection with any registration rights
of theirs, the Company shall at least fifteen (15) days prior to the
filing of such registration statement with the Securities and Exchange
Commission (the "Commission") , give notice of its intention to do so to
the Holder. If the Holder notifies the Company within ten (10) days
after the giving of such notice by the Company of its desire to include
any shares of Common Stock received on exercise of this option in such
proposed registration statement (which notice must state the number of
shares to be included and the proposed plan of disposition thereof), the
Company shall, subject to the provisions of subparagraph (b) below,
include the shares of Common Stock designated by said Holder in such
registration statement. The "piggyback" registration rights described
herein shall be available for exercise by the Holder on two occasions
only, and after the exercise thereof, the Company shall be under no
further obligation to give to the Holder the notice described in this
subparagraph (a) or to include any of the Holder's Common Stock received
on exercise of this option in any subsequent registration statement
pursuant to this subparagraph (a).
(b) Withdrawal of Registration Statement. Notwithstanding
the provisions of subparagraph (a) above, the Company shall at all
times have the absolute right to elect not to file any proposed
registration statement, or to withdraw the same after the filing but
prior to the effective date thereof. In addition, notwithstanding the
provisions of subparagraph (a) above, the Company may exclude from
such registration statement all or a portion of the shares of Common
Stock for which registration was requested by the Holder if, in the
written opinion of the Company's managing underwriter, if any, the
inclusion of all or a portion of such shares, when added to the
securities being registered for sale by the Company, will exceed the
maximum amount of the Company's securities which can be marketed (i) at
a price reasonably related to their then current market value, or (ii)
without otherwise materially and adversely affecting the entire
offering. If less than all of the shares of Common Stock requested for
inclusion in said registration statement are to be included pursuant to
the foregoing provision, the shares of Common Stock which are included
shall be allocated among the selling shareholders (other than the
Company) on a pro rata basis.
11. Terms and Conditions Relating to Registration of Shares.
Anything in paragraph 10 above contained to the contrary
notwithstanding, the following terms and conditions shall apply to each
registration of shares of Common Stock under the Act pursuant to the
provisions of paragraph 10 above:
(a) Registration Not Required. The Company shall not be
required to register any shares of Common Stock under the Act if, in the
written opinion of counsel for the Company, which shall be in form and
substance reasonably satisfactory to the Holder of the relevant shares
of Common Stock, said shares may be sold in the manner set forth in
the notice to the Company requesting registration without the need
for compliance with the registration provisions of the Act.
(b) Amendment of Registration Statement. The Company shall,
as expeditiously as possible, prepare and file with the Commission such
amendments and supplements to the registration statement (and to any
prospectus included therein) as may be necessary to keep such
registration statement effective until the sale of the shares of Common
Stock so registered has been completed or until the expiration of a
period of 90 days after the effective date of the registration
statement, whichever is earlier.
(c) Prospectuses, etc. The Company shall furnish to the
selling Holder, such number of prospectuses, preliminary
prospectuses and other documents as the selling Holder may
reasonably request in order to facilitate the public sale of its shares
of Common Stock.
(d) Expenses. The Company shall pay all costs, fees and
expenses in connection with the registration of the shares of Common
Stock, including, without limitation, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses; provided,
however, that the Company shall not be required to pay any (i) fees and
expenses of legal counsel for the Holder, (ii) transfer taxes, or
(iii) underwriters' or brokers' fees, discounts or commissions.
(e) Blue Sky Laws. The Company shall take all actions which
may be required in order to qualify or register the shares of Common
Stock under the securities or blue sky laws of up to five states as are
requested by the Holder; provided, however, that the Company shall not
be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(f) Indemnification.
(i) By the Company. The Company shall indemnify, to the
full extent permitted by law, the Holder, its directors and officers (if
applicable) and each person, if any, who controls the Holder within the
meaning of Section 15 of the Act, against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any omission or alleged omission
to state therein a material fact necessary to make the statements
therein (in the case of the prospectus or any preliminary prospectus,
in light of the circumstances under which they were
made) not misleading, except insofar as the same are caused by or
contained in any information with respect to the Holder furnished in
writing to the Company by the Holder expressly for use therein.
(ii) By the Holder. In connection with any
registration statement in which the Holder is participating, the Holder
shall indemnify, to the full extent permitted by law, the Company, its
directors and officers and each person who controls the Company (within
the meaning of Section 15 of the Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact or any omission or alleged omission
to state a material fact necessary to make the statements in the
registration statement or prospectus or preliminary prospectus (in the
case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, to the extent,
but only to the extent, that such untrue statement or omission is
contained in or caused by any information with respect to the Holder
furnished in writing to the Company by the Holder expressly for use
therein.
(iii) Indemnification Procedures. Any person who is
entitled to indemnification under this subparagraph 12(f) shall (i) give
prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party
shall not be subject to any liability for any settlement made without
its consent. No indemnifying party shall consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled to,
or elects not to, assume the defense of such claim will not be obligated
to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of
such additional counsel or counsels.
(iv) Contribution. If for any reason the indemni
fication provided for in the preceding subparagraph 10(f) (i) or 10(f)
(ii) is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability
or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such
loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the indemnified
party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state material fact relates
to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(v) Actions by Holder. The Holder shall, at their cost
and expense., complete, execute and deliver all questionnaires, power of
attorney, undertakings and other documents and instruments, and take all
such other actions, as are from time to time reasonably requested by the
Company.
(vi) Use of Prospectus. The Holder, upon receipt of
notice from the Company of the occurrence of an event which requires a
post-effective amendment to the registration statement or a supplement
to the prospectus included therein, shall promptly discontinue the sale
of their shares of Common Stock until they have received copies of a
supplemented or amended prospectus from the Company.
12. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: John Clarke
If to the Escrow Agent, to: Peter J. Anderson
Sutherland, Asbill & Brennan
99 Peachtree Street
Atlanta, GA 30309
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
(g) Severability. Any provision of this Agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date first above written.
AUTOMOBILE PROTECTION CORPORATION - APCO
By: /s/ Larry Dorfman
Holder:
By:
SUTHERLAND, ASBILL & BRENNAN, Escrow Agent
By: /s/ Peter J. Anderson
CONSULTING AGREEMENT
AND
OPTION AND REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated October 6, 1994, by and between RONNIE WOHL
and LADENBURG THALMANN & CO., INC. (the "Holder") and AUTOMOBILE
PROTECTION CORPORATION - APCO (the "Company").
WHEREAS, the Company seeks to obtain the services of Holder
as a financial consultant.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Holder will act as financial consultant to the
Company on a non-exclusive basis for the period October 6, 1994 to
October 7, 1995. Holder shall devote such time as it determines in its
sole discretion to the provision of consulting services as requested by
the Company, such services to include, but not be limited to, general
investor relations, introducing the Company to potential market makers,
investment strategies in respect of the Company's capital and corporate
acquisition strategies.
2. In consideration of acting as financial consultant, the
Company hereby grants to the Holder the right to purchase up to 50,000
shares of the Common Stock, $0.001 par value (the Common Stock) , of the
Company as follows:
(a) The Holder has the right to purchase up to 50,000 shares
of Common Stock at a purchase price per share of $2.25 at any time from
the date of this agreement until February 15, 1997.
(b) Upon the close of business on February 15, 1997, the
rights embodied herein to purchase Common Stock shall expire and the
Holder will have no further right to purchase such Common Stock after
the expiration date. If, on February 15, 1997, the Holder has not
exercised any portion of this option then this Option shall expire and
this agreement will be null and void.
3. Payment of Exercise Price. The purchase price for the
shares of Common Stock pursuant to which the Option is exercised, will
be paid in full at the time of exercise in cash, unless otherwise agreed
to in writing by the Company. Exercise of any option hereunder shall be
by written notice to the Company at its principal place of business,
specifying the number of shares of Common Stock being purchased and
accompanied by payment of the purchase price and any withholding tax
obligations imposed on the Company by reason of the exercise of the
option. In the event that the tax obligation, if any, is not paid,
the Company will be permitted to treat as payment of any withholding tax
amount due, the exercise of that number of whole shares of Common Stock
equal to the amount of the tax due divided by the fair market value of
the Common Stock as of the date the option is exercised, and the Company
will be permitted to deduct such number of shares of Common Stock from
the total number being exercised. Certificates representing the
shares as to which the option shall have been exercised shall be
registered in the name of the person exercising the option.
4. Rights of Stockholder. The Holder shall not have any of
the rights of a stockholder with respect to the Common Stock covered by
the option until the date of the issuance of a stock certificate for
shares of Common Stock purchased hereunder.
5. Transferability. Unless consented to in writing by the
Company, which consent shall not be unreasonably withheld, this option
and the rights conferred may not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this Option or any right conferred hereby, or upon the levy
of any attachment or similar process on the rights conferred hereby,
without the written consent of the Company, this option and the rights
conferred hereby shall immediately become null and void. Before the
Company consents to any transfer, assignment, pledge or hypothecation of
this option, the transferee., assignee or pledgee of the option shall
agree to be bound by the terms of this option and deliver such
other certificates and agreements as the Company reasonably requests.
Notwithstanding the foregoing, the option may be transferred to the then
current officers, directors and shareholders of the Holder (the
"Permitted Transferees") , provided such Permitted Transferees agree to
be bound by the terms of this option and deliver such certificates and
agreements as the Company reasonably requests.
6. Restricted Nature of Securities. This option and the
shares of Common Stock receivable on the exercise of the option are not
registered under the Securities Act of 1933, as amended (the "Act") .
As a condition to the sale of Common Stock on the exercise of the
option, the person exercising such option may be required by the Company
to give it such documents, including such appropriate investment
representations as may be required by Counsel for the Company and such
additional agreements as the Counsel for the Company may determine, as a
condition to the acceptance of the exercise of any Option hereunder.
The Holder represents that it has received the Company's Annual
Report on Form 10-K for the fiscal year ended August 31, 1994. Holder
represents that it is acquiring this option solely for its own account
for the purpose of investment and not with a view to or for resale in
connection with any distribution thereof, except in compliance with the
Act, any applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that it is capable of evaluating
an investment in the option and that its financial condition is such
that it can bear the economic risks of acquiring and holding this
option.
7. Sales under Securities Act. Anything in this Agreement to
the contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by Holder upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
8. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the option hereof in the absence of registration
under the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following
legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold or
transferred in the absence of such registration or an exemption
therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an option agreement dated October 6, 1994, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
9. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different
number or kind of stock or securities of the Company or stock of a
different par value or without par value, through reorganization,
recapitalization, reclassifi-cation, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse
stock split, an appropriate and proportionate adjustment shall be made
in the maximum number and/or kind of securities allocated to this
option, without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent, publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
10. "Piggyback" Registration.
(a) Basic Right. If, at any time prior to February 15, 1997,
the Company proposes to register for sale by it or for the account of
others, any of its equity securities under the Act, other than in
connection with a merger, acquisition or exchange offer, and other than
an offering on Form S-8 or any successor form on which the Holder's
securities may be registered, and provided further that any person to
which the Company has granted or may in the future grant a registration
right does not object in writing to the exercise of the Holder's
registration rights hereunder in connection with any registration rights
of theirs, the Company shall at least fifteen (15) days prior to the
filing of such registration statement with the Securities and Exchange
Commission (the "Commission") , give notice of its intention to do so to
the Holder. If the Holder notifies the Company within ten (10) days
after the giving of such notice by the Company of its desire to include
any shares of Common Stock received on exercise of this option in such
proposed registration statement (which notice must state the number of
shares to be included and the proposed plan of disposition thereof), the
Company shall, subject to the provisions of subparagraph (b) below,
include the shares of Common Stock designated by said Holder in such
registration statement. The "piggyback" registration rights described
herein shall be available for exercise by the Holder on two occasions
only, and after the exercise thereof, the Company shall be under no
further obligation to give to the Holder the notice described in this
subparagraph (a) or to include any of the Holder's Common Stock received
on exercise of this option in any subsequent registration statement
pursuant to this subparagraph (a).
(b) Withdrawal of Registration Statement. Notwithstanding
the provisions of subparagraph (a) above, the Company shall at all
times have the absolute right to elect not to file any proposed
registration statement, or to withdraw the same after the filing but
prior to the effective date thereof. In addition, notwithstanding the
provisions of subparagraph (a) above, the Company may exclude from
such registration statement all or a portion of the shares of Common
Stock for which registration was requested by the Holder if, in the
written opinion of the Company's managing underwriter, if any, the
inclusion of all or a portion of such shares, when added to the
securities being registered for sale by the Company, will exceed the
maximum amount of the Company's securities which can be marketed (i) at
a price reasonably related to their then current market value, or (ii)
without otherwise materially and adversely affecting the entire
offering. If less than all of the shares of Common Stock requested for
inclusion in said registration statement are to be included pursuant to
the foregoing provision, the shares of Common Stock which are included
shall be allocated among the selling shareholders (other than the
Company) on a pro rata basis.
11. Terms and Conditions Relating to Registration of Shares.
Anything in paragraph 10 above contained to the contrary
notwithstanding, the following terms and conditions shall apply to each
registration of shares of Common Stock under the Act pursuant to the
provisions of paragraph 10 above:
(a) Registration Not Required. The Company shall not be
required to register any shares of Common Stock under the Act if, in the
written opinion of counsel for the Company, which shall be in form and
substance reasonably satisfactory to the Holder of the relevant shares
of Common Stock, said shares may be sold in the manner set forth in
the notice to the Company requesting registration without the need
for compliance with the registration provisions of the Act.
(b) Amendment of Registration Statement. The Company shall,
as expeditiously as possible, prepare and file with the Commission such
amendments and supplements to the registration statement (and to any
prospectus included therein) as may be necessary to keep such
registration statement effective until the sale of the shares of Common
Stock so registered has been completed or until the expiration of a
period of 90 days after the effective date of the registration
statement, whichever is earlier.
(c) Prospectuses, etc. The Company shall furnish to the
selling Holder, such number of prospectuses, preliminary
prospectuses and other documents as the selling Holder may
reasonably request in order to facilitate the public sale of its shares
of Common Stock.
(d) Expenses. The Company shall pay all costs, fees and
expenses in connection with the registration of the shares of Common
Stock, including, without limitation, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses; provided,
however, that the Company shall not be required to pay any (i) fees and
expenses of legal counsel for the Holder, (ii) transfer taxes, or
(iii) underwriters' or brokers' fees, discounts or commissions.
(e) Blue Sky Laws. The Company shall take all actions which
may be required in order to qualify or register the shares of Common
Stock under the securities or blue sky laws of up to five states as are
requested by the Holder; provided, however, that the Company shall not
be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business
under the laws of any such jurisdiction.
(f) Indemnification.
(i) By the Company. The Company shall indemnify, to the
full extent permitted by law, the Holder, its directors and officers (if
applicable) and each person, if any, who controls the Holder within the
meaning of Section 15 of the Act, against any losses, claims, damages,
liabilities and expenses resulting from any untrue or alleged untrue
statement of a material fact contained in any registration statement,
prospectus or preliminary prospectus or any omission or alleged omission
to state therein a material fact necessary to make the statements
therein (in the case of the prospectus or any preliminary prospectus,
in light of the circumstances under which they were made) not
misleading, except insofar as the same are caused by or contained in any
information with respect to the Holder furnished in writing to the
Company by the Holder expressly for use therein.
(ii) By the Holder. In connection with any
registration statement in which the Holder is participating, the Holder
shall indemnify, to the full extent permitted by law, the Company, its
directors and officers and each person who controls the Company (within
the meaning of Section 15 of the Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact or any omission or alleged omission
to state a material fact necessary to make the statements in the
registration statement or prospectus or preliminary prospectus (in the
case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, to the extent,
but only to the extent, that such untrue statement or omission is
contained in or caused by any information with respect to the Holder
furnished in writing to the Company by the Holder expressly for use
therein.
(iii) Indemnification Procedures. Any person who is
entitled to indemnification under this subparagraph 12(f) shall (i) give
prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such
defense is assumed by the indemnifying party, the indemnifying party
shall not be subject to any liability for any settlement made without
its consent. No indemnifying party shall consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such indemnified party of a release from all liability in respect of
such claim or litigation. An indemnifying party who is not entitled to,
or elects not to, assume the defense of such claim will not be obligated
to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim,
unless in the reasonable judgment of any indemnified party a conflict of
interest may exist between such indemnified party and any other of such
indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of
such additional counsel or counsels.
(iv) Contribution. If for any reason the indemni
fication provided for in the preceding subparagraph 10(f) (i) or 10(f)
(ii) is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability
or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such
loss, claim, damage or liability in such proportion as is appropriate
to reflect not only the relative benefits received by the indemnified
party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other
relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission to state material fact relates
to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission.
(v) Actions by Holder. The Holder shall, at their cost
and expense., complete, execute and deliver all questionnaires, power of
attorney, undertakings and other documents and instruments, and take all
such other actions, as are from time to time reasonably requested by the
Company.
(vi) Use of Prospectus. The Holder, upon receipt of
notice from the Company of the occurrence of an event which requires a
post-effective amendment to the registration statement or a supplement
to the prospectus included therein, shall promptly discontinue the sale
of their shares of Common Stock until they have received copies of a
supplemented or amended prospectus from the Company.
12. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Ronnie Wohl and
Ladenburg Thalmann & Co., Inc.
540 Madison Ave
New York, NY 10022
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
(g) Severability. Any provision of this Agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date first above written.
AUTOMOBILE PROTECTION CORPORATION - APCO
By: /s/ Larry Dorfman
Holders:
RONNIE WOHL
/s/ Ronnie Wohl
LADENBURG THALMANN & CO., INC.
/s/ Peter Graham
CONSULTING AGREEMENT
AND
OPTION AND REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated October 6, 1994, by and between MARSHALL LEEDS
(the "Holder") and AUTOMOBILE PROTECTION CORPORATION - APCO (the
"Company").
WHEREAS, the Company seeks to obtain the services of Holder as a
financial consultant.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Holder will act as financial consultant to the Company on
a non-exclusive basis for a period of twenty-four (24) months from the
date hereof. Holder shall devote such time as it determines in its sole
discretion to the provision of consulting services as requested by the
Company, such services to include, but not be limited to, general
investor relations, introducing the Company to potential market makers,
investment strategies in respect of the Company's capital and corporate
acquisition strategies.
2. In consideration of acting as financial consultant, the
Company hereby grants to the Holder the right to purchase up to 175,000
shares of the Common Stock, $.001 par value (the "Common Stock"), of the
Company as follows:
(a) The Holder has the right to purchase up to 175,000
shares of Common Stock at a purchase price per share of $2.25 at any
time from the date of this agreement until February 15, 1996.
(b) Upon the close of business on February 15, 1996, the
rights embodied herein to purchase Common Stock shall expire and the
Holder will have no further right to purchase such Common Stock after
the expiration date. If, on February 15, 1996, the Holder has not
exercised any portion of this option then this option shall expire and
this agreement will be null and void.
3. Payment of Exercise Price. The purchase price for the shares
of Common Stock pursuant to which the option is exercised, will be paid
in full at the time of exercise in cash, unless otherwise agreed to in
writing by the Company. Exercise of any option hereunder shall be by
written notice to the Company at its principal place of business,
specifying the number of shares of Common Stock being purchased and
accompanied by payment of the purchase price and any withholding tax
obligations imposed on the Company by reason of the exercise of the
option. In the event that the tax obligation, if any, is not paid, the
Company will be permitted to treat as payment of any withholding tax
amount due, the exercise of that number of whole shares of Common Stock
equal to the amount of the tax due divided by the fair market value of
the Common Stock as of the date the option is exercised, and the Company
will be permitted to deduct such number of shares of Common Stock from
the total number being exercised. Certificates representing the shares
as to which the option shall have been exercised shall be registered in
the name of the person exercising the option.
4. Rights of Stockholder. The Holder shall not have any of the
rights of a stockholder with respect to the Common Stock covered by the
option until the date of the issuance of a stock certificate for shares
of Common Stock purchased hereunder.
5. Transferability. Unless consented to in writing by the
Company, which consent shall not be unreasonably withheld, this option
and the rights conferred may not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this option or any right conferred hereby, or upon the levy
of any attachment or similar process on the rights conferred hereby,
without the written consent of the Company, this option and the rights
conferred hereby shall immediately become null and void. Before the
Company consents to any transfer, assignment, pledge or hypothecation of
this option, the transferee, assignee or pledgee of the option shall
agree to be bound by the terms of this option and deliver such other
certificates and agreements as the Company reasonably requests.
Notwithstanding the foregoing, the option may be transferred to the then
current officers, directors and shareholders of the Holder (the
"Permitted Transferees"), provided such Permitted Transferees agree to
be bound by the terms of this option and deliver such certificates and
agreements as the Company reasonably requests.
6. Restricted Nature of Securities. This option and the shares
of Common Stock receivable on the exercise of the option are not
registered under the Securities Act of 1933, as amended (the "Act"). As
a condition to the sale of Common Stock on the exercise of the option,
the person exercising such option may be required by the Company to give
it such documents, including such appropriate investment representations
as may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully
reviewed the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1994, and has been granted the opportunity to obtain
any additional, publicly available information relating to the Company
and ask questions of executives of the Company that it deems necessary
to verify the accuracy and completeness of the information provided to
it. Holder represents that it is acquiring this option solely for its
own account for the purpose of investment and not with a view to or for
resale in connection with any distribution thereof, except in compliance
with the Act, any applicable state securities laws and the rules and
regulations thereunder. Holder represents that its knowledge and
experience in financial and business matters is such that it is capable
of evaluating an investment in the option and that its financial
condition is such that it can bear the economic risks of acquiring and
holding this option.
7. Sales under Securities Act. Anything in this Agreement to
the contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
8. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the option hereof in the absence of registration under
the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be
sold or transferred in the absence of such registration or
an exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an option agreement dated October
6, 1994, a copy of which is on file with the Company, and
may not be transferred, pledged or disposed
or exempt in accordance with the terms and conditions
thereof."
9. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different
number or kind of stock or securities of the Company or stock of a
different par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent, publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive.
No fractional shares of Common Stock shall be issued under the Plan or
any such adjustment.
10. "Piggyback" Registration.
(a) Basic Right. If, at any time prior to February 15, 1996,
the Company proposes to register for sale by it or for the account of
others, any of its equity securities under the Act, other than in
connection with a merger, acquisition or exchange offer, and other than
an offering on Form S-8 or any successor form on which the Holder's
securities may be registered, and provided further that any person to
which the Company has granted or may in the future grant a registration
right does not object in writing to the exercise of the Holder's
registration rights hereunder in connection with any registration rights
of theirs, the Company shall at least fifteen (15) days prior to the
filing of such registration statement with the Securities and Exchange
Commission (the "Commission"), give notice of its intention to do so to
the Holder. If the Holder notifies the Company within ten (10) days
after the giving of such notice by the Company of its desire to include
any shares of Common Stock received on exercise of this option in such
proposed registration statement (which notice must state the number of
shares to be included and the proposed plan of disposition thereof), the
Company shall, subject to the provisions of subparagraph (b) below,
include the shares of Common Stock designated by said Holder in such
registration statement. The "piggyback" registration rights described
herein shall be available for exercise by the Holder on two occasions
only, and after the exercise thereof, the Company shall be under no
further obligation to give to the Holder the notice described in this
subparagraph (a) or to include any of the Holder's Common Stock received
on exercise of this option in any subsequent registration statement
pursuant to this subparagraph (a).
(b) Withdrawal of Registration Statement. Notwithstanding the
provisions of subparagraph (a) above, the Company shall at all times
have the absolute right to elect not to file any proposed registration
statement, or to withdraw the same after the filing but prior to the
effective date thereof. In addition, notwithstanding the provisions of
subparagraph (a) above, the Company may exclude from such registration
statement all or a portion of the shares of Common Stock for which regis
tration was requested by the Holder if, in the written opinion of the
Company's managing underwriter, if any, the inclusion of all or a
portion of such shares, when added to the securities being registered
for sale by the Company, will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to
their then current market value, or (ii) without otherwise materially
and adversely affecting the entire offering. If less than all of the
shares of Common Stock requested for inclusion in said registration
statement are to be included pursuant to the foregoing provision, the
shares of Common Stock which are included shall be allocated among the
selling shareholders (other than the Company) on a pro rata basis.
11. Terms and Conditions Relating to Registration of Shares.
Anything in paragraph 10 above contained to the contrary
notwithstanding, the following terms and conditions shall apply to each
registration of shares of Common Stock under the Act pursuant to the
provisions of paragraph 10 above:
(a) Registration Not Required. The Company shall not be
required to register any shares of Common Stock under the Act if, in the
written opinion of counsel for the Company, which shall be in form and
substance reasonably satisfactory to the Holder of the relevant shares
of Common Stock, said shares may be sold in the manner set forth in the
notice to the Company requesting registration without the need for
compliance with the registration provisions of the Act.
(b) Amendment of Registration Statement. The Company shall,
as expeditiously as possible, prepare and file with the Commission such
amendments and supplements to the registration statement (and to any
prospectus included therein) as may be necessary to keep such
registration statement effective until the sale of the shares of Common
Stock so registered has been completed or until the expiration of a
period of 90 days after the effective date of the registration
statement, whichever is earlier.
(c) Prospectuses, etc. The Company shall furnish to the
selling Holder, such number of prospectuses, preliminary prospectuses
and other documents as the selling Holder may reasonably request in
order to facilitate the public sale of its shares of Common Stock.
(d) Expenses. The Company shall pay all costs, fees and
expenses in connection with the registration of the shares of Common
Stock, including, without limitation, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses; provided,
however, that the Company shall not be required to pay any (i) fees and
expenses of legal counsel for the Holder, (ii) transfer taxes, or (iii)
underwriters' or brokers' fees, discounts or commissions.
(e) Blue Sky Laws. The Company shall take all actions which
may be required in order to qualify or register the shares of Common
Stock under the securities or blue sky laws of up to five states as are
requested by the Holder; provided, however, that the Company shall not
be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the
laws of any such jurisdiction.
(f) Indemnification.
(i) By the Company. The Company shall indemnify, to
the full extent permitted by law, the Holder, its directors and officers
(if applicable) and each person, if any, who controls the Holder within
the meaning of Section 15 of the Act, against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact necessary to make the
statements therein (in the case of the prospectus or any preliminary
prospectus, in light of the circumstances under which they were made)
not misleading, except insofar as the same are caused by or contained in
any information with respect to the Holder furnished in writing to the
Company by the Holder expressly for use therein.
(ii) By the Holder. In connection with any
registration statement in which the Holder is participating, the Holder
shall indemnify, to the full extent permitted by law, the Company, its
directors and officers and each person who controls the Company (within
the meaning of Section 15 of the Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact or any omission or alleged omission
to state a material fact necessary to make the statements in the
registration statement or prospectus or preliminary prospectus (in the
case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, to the extent,
but only to the extent, that such untrue statement or omission is
contained in or caused by any information with respect to the Holder
furnished in writing to the Company by the Holder expressly for use
therein.
(iii) Indemnification Procedures. Any person who is
entitled to indemnification under this subparagraph 12(f) shall (i) give
prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and
(ii) permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party. Whether
or not such defense is assumed by the indemnifying party, the
indemnifying party shall not be subject to any liability for any
settlement made without its consent. No indemnifying party shall
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will
not be obligated to pay the fees and expenses of more than one counsel
for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels.
(iv) Contribution. If for any reason the indemni
fication provided for in the preceding subparagraph 10(f)(i) or
10(f)(ii) is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, claim, damage,
liability or expense referred to therein, then the indemnifying party,
in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative
fault of the indemnified party and the indemnifying party, as well as
any other relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission to state material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
(v) Actions by Holder. The Holder shall, at his cost
and expense, complete, execute and deliver all questionnaires, powers of
attorney, undertakings and other documents and instruments, and take all
such other actions, as are from time to time reasonably requested by the
Company.
(vi) Use of Prospectus. The Holder, upon receipt of
notice from the Company of the occurrence of an event which requires a
post-effective amendment to the registration statement or a supplement
to the prospectus included therein, shall promptly discontinue the sale
of his shares of Common Stock until he has received copies of a
supplemented or amended prospectus from the Company.
12. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by
the laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the
subject matter hereof.
(d) Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Marshall Leeds
3000 Island Boulevard - 405
North Miami, FL 33160
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
(g) Severability. Any provision of this Agreement which
is held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date first above written.
AUTOMOBILE PROTECTION CORPORATION -
APCO
By:
President
MARSHALL LEEDS
CONSULTING AGREEMENT
AND
OPTION AND REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated October 6, 1994, by and between LEONARD J. SOKOLOW
(the "Holder") and AUTOMOBILE PROTECTION CORPORATION - APCO (the
"Company").
WHEREAS, the Company seeks to obtain the services of Holder as a
financial consultant.
NOW, THEREFORE, the parties hereto agree as follows:
1. The Holder will act as financial consultant to the Company on a
non-exclusive basis for a period of twenty-four (24) months from the
date hereof. Holder shall devote such time as it determines in its sole
discretion to the provision of consulting services as requested by the
Company, such services to include, but not be limited to, general
investor relations, introducing the Company to potential market makers,
investment strategies in respect of the Company's capital and corporate
acquisition strategies.
2. In consideration of acting as financial consultant, the Company
hereby grants to the Holder the right to purchase up to 275,000 shares
of the Common Stock, $.001 par value (the "Common Stock"), of the
Company as follows:
(a) The Holder has the right to purchase up to 275,000 shares
of Common Stock at a purchase price per share of $2.25 at any time from
the date of this agreement until February 15, 1996.
(b) Upon the close of business on February 15, 1996, the
rights embodied herein to purchase Common Stock shall expire and the
Holder will have no further right to purchase such Common Stock after
the expiration date. If, on February 15, 1996, the Holder has not
exercised any portion of this option then this option shall expire and
this agreement will be null and void.
3. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise in cash, unless otherwise agreed to in
writing by the Company. Exercise of any option hereunder shall be by
written notice to the Company at its principal place of business,
specifying the number of shares of Common Stock being purchased and
accompanied by payment of the purchase price and any withholding tax
obligations imposed on the Company by reason of the exercise of the
option. In the event that the tax obligation, if any, is not paid, the
Company will be permitted to treat as payment of any withholding tax
amount due, the exercise of that number of whole shares of Common Stock
equal to the amount of the tax due divided by the fair market value of
the Common Stock as of the date the option is exercised, and the Company
will be permitted to deduct such number of shares of Common Stock from
the total number being exercised. Certificates representing the shares
as to which the option shall have been exercised shall be registered in
the name of the person exercising the option.
4. Rights of Stockholder. The Holder shall not have any of the
rights of a stockholder with respect to the Common Stock covered by the
option until the date of the issuance of a stock certificate for shares
of Common Stock purchased hereunder.
5. Transferability. Unless consented to in writing by the Company,
which consent shall not be unreasonably withheld, this option and the
rights conferred may not be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and
shall not be subject to execution, attachment or similar process. Upon
any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this option or any right conferred hereby, or upon the levy
of any attachment or similar process on the rights conferred hereby,
without the written consent of the Company, this option and the rights
conferred hereby shall immediately become null and void. Before the
Company consents to any transfer, assignment, pledge or hypothecation of
this option, the transferee, assignee or pledgee of the option shall
agree to be bound by the terms of this option and deliver such other
certificates and agreements as the Company reasonably requests.
Notwithstanding the foregoing, the option may be transferred to the then
current officers, directors and shareholders of the Holder (the
"Permitted Transferees"), provided such Permitted Transferees agree to
be bound by the terms of this option and deliver such certificates and
agreements as the Company reasonably requests.
6. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act"). As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully
reviewed the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1994, and has been granted the opportunity to obtain
any additional, publicly available information relating to the Company
and ask questions of executives of the Company that it deems necessary
to verify the accuracy and completeness of the information provided to
it. Holder represents that it is acquiring this option solely for its
own account for the purpose of investment and not with a view to or for
resale in connection with any distribution thereof, except in compliance
with the Act, any applicable state securities laws and the rules and
regulations thereunder. Holder represents that its knowledge and
experience in financial and business matters is such that it is capable
of evaluating an investment in the option and that its financial
condition is such that it can bear the economic risks of acquiring and
holding this option.
7. Sales under Securities Act. Anything in this Agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
8. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the option hereof in the absence of registration under
the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be
sold or transferred in the absence of such registration or
an exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an option agreement dated October
6, 1994, a copy of which is on file with the Company, and
may not be transferred, pledged or disposed
or exempt in accordance with the terms and conditions
thereof."
9. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different
number or kind of stock or securities of the Company or stock of a
different par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent, publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive.
No fractional shares of Common Stock shall be issued under the Plan or
any such adjustment.
10. "Piggyback" Registration.
(a) Basic Right. If, at any time prior to February 15, 1996,
the Company proposes to register for sale by it or for the account of
others, any of its equity securities under the Act, other than in
connection with a merger, acquisition or exchange offer, and other than
an offering on Form S-8 or any successor form on which the Holder's
securities may be registered, and provided further that any person to
which the Company has granted or may in the future grant a registration
right does not object in writing to the exercise of the Holder's
registration rights hereunder in connection with any registration rights
of theirs, the Company shall at least fifteen (15) days prior to the
filing of such registration statement with the Securities and Exchange
Commission (the "Commission"), give notice of its intention to do so to
the Holder. If the Holder notifies the Company within ten (10) days
after the giving of such notice by the Company of its desire to include
any shares of Common Stock received on exercise of this option in such
proposed registration statement (which notice must state the number of
shares to be included and the proposed plan of disposition thereof), the
Company shall, subject to the provisions of subparagraph (b) below,
include the shares of Common Stock designated by said Holder in such
registration statement. The "piggyback" registration rights described
herein shall be available for exercise by the Holder on two occasions
only, and after the exercise thereof, the Company shall be under no
further obligation to give to the Holder the notice described in this
subparagraph (a) or to include any of the Holder's Common Stock received
on exercise of this option in any subsequent registration statement
pursuant to this subparagraph (a).
(b) Withdrawal of Registration Statement. Notwithstanding the
provisions of subparagraph (a) above, the Company shall at all times
have the absolute right to elect not to file any proposed registration
statement, or to withdraw the same after the filing but prior to the
effective date thereof. In addition, notwithstanding the provisions of
subparagraph (a) above, the Company may exclude from such registration
statement all or a portion of the shares of Common Stock for which regis
tration was requested by the Holder if, in the written opinion of the
Company's managing underwriter, if any, the inclusion of all or a
portion of such shares, when added to the securities being registered
for sale by the Company, will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to
their then current market value, or (ii) without otherwise materially
and adversely affecting the entire offering. If less than all of the
shares of Common Stock requested for inclusion in said registration
statement are to be included pursuant to the foregoing provision, the
shares of Common Stock which are included shall be allocated among the
selling shareholders (other than the Company) on a pro rata basis.
11. Terms and Conditions Relating to Registration of Shares.
Anything in paragraph 10 above contained to the contrary
notwithstanding, the following terms and conditions shall apply to each
registration of shares of Common Stock under the Act pursuant to the
provisions of paragraph 10 above:
(a) Registration Not Required. The Company shall not be
required to register any shares of Common Stock under the Act if, in the
written opinion of counsel for the Company, which shall be in form and
substance reasonably satisfactory to the Holder of the relevant shares
of Common Stock, said shares may be sold in the manner set forth in the
notice to the Company requesting registration without the need for
compliance with the registration provisions of the Act.
(b) Amendment of Registration Statement. The Company shall,
as expeditiously as possible, prepare and file with the Commission such
amendments and supplements to the registration statement (and to any
prospectus included therein) as may be necessary to keep such
registration statement effective until the sale of the shares of Common
Stock so registered has been completed or until the expiration of a
period of 90 days after the effective date of the registration
statement, whichever is earlier.
(c) Prospectuses, etc. The Company shall furnish to the
selling Holder, such number of prospectuses, preliminary prospectuses
and other documents as the selling Holder may reasonably request in
order to facilitate the public sale of its shares of Common Stock.
(d) Expenses. The Company shall pay all costs, fees and
expenses in connection with the registration of the shares of Common
Stock, including, without limitation, the Company's legal and accounting
fees, printing expenses, and blue sky fees and expenses; provided,
however, that the Company shall not be required to pay any (i) fees and
expenses of legal counsel for the Holder, (ii) transfer taxes, or (iii)
underwriters' or brokers' fees, discounts or commissions.
(e) Blue Sky Laws. The Company shall take all actions which
may be required in order to qualify or register the shares of Common
Stock under the securities or blue sky laws of up to five states as are
requested by the Holder; provided, however, that the Company shall not
be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the
laws of any such jurisdiction.
(f) Indemnification.
(i) By the Company. The Company shall indemnify, to
the full extent permitted by law, the Holder, its directors and officers
(if applicable) and each person, if any, who controls the Holder within
the meaning of Section 15 of the Act, against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact contained in any registration
statement, prospectus or preliminary prospectus or any omission or
alleged omission to state therein a material fact necessary to make the
statements therein (in the case of the prospectus or any preliminary
prospectus, in light of the circumstances under which they were made)
not misleading, except insofar as the same are caused by or contained in
any information with respect to the Holder furnished in writing to the
Company by the Holder expressly for use therein.
(ii) By the Holder. In connection with any
registration statement in which the Holder is participating, the Holder
shall indemnify, to the full extent permitted by law, the Company, its
directors and officers and each person who controls the Company (within
the meaning of Section 15 of the Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of a material fact or any omission or alleged omission
to state a material fact necessary to make the statements in the
registration statement or prospectus or preliminary prospectus (in the
case of the prospectus or any preliminary prospectus, in light of the
circumstances under which they were made) not misleading, to the extent,
but only to the extent, that such untrue statement or omission is
contained in or caused by any information with respect to the Holder
furnished in writing to the Company by the Holder expressly for use
therein.
(iii) Indemnification Procedures. Any person who is
entitled to indemnification under this subparagraph 12(f) shall (i) give
prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and
(ii) permit such indemnifying party to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party. Whether
or not such defense is assumed by the indemnifying party, the
indemnifying party shall not be subject to any liability for any
settlement made without its consent. No indemnifying party shall
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party of a release from all liability
in respect of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will
not be obligated to pay the fees and expenses of more than one counsel
for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels.
(iv) Contribution. If for any reason the indemni
fication provided for in the preceding subparagraph 10(f)(i) or
10(f)(ii) is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, claim, damage,
liability or expense referred to therein, then the indemnifying party,
in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such proportion as is
appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative
fault of the indemnified party and the indemnifying party, as well as
any other relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or omission to state material fact
relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
(v) Actions by Holder. The Holder shall, at his cost
and expense, complete, execute and deliver all questionnaires, powers of
attorney, undertakings and other documents and instruments, and take all
such other actions, as are from time to time reasonably requested by the
Company.
(vi) Use of Prospectus. The Holder, upon receipt of
notice from the Company of the occurrence of an event which requires a
post-effective amendment to the registration statement or a supplement
to the prospectus included therein, shall promptly discontinue the sale
of his shares of Common Stock until he has received copies of a
supplemented or amended prospectus from the Company.
12. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the entire
agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the
subject matter hereof.
(d) Execution in Counterparts. This Agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Leonard J. Sokolow
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions
of this Agreement.
(g) Severability. Any provision of this Agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date first above written.
AUTOMOBILE PROTECTION CORPORATION -
APCO
By:
President
LEONARD J. SOKOLOW
OPTION AGREEMENT
AGREEMENT, dated as of October 10, 1995, by and between Joseph
Gibbs (the "Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein
set forth as consideration for services of Holder to the Company.
NOW, THEREFORE, in consideration of the covenants herein
contained, the parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the
Company hereby grants to the Holder the right to purchase up to 50,000
shares of the Common Stock, $.001 per value ("Common Stock") of the
Company at an exercise price equivalent to $2.50 per share of Common
Stock, as follows: the Holder shall have the right to purchase one-
third of the shares of Common Stock purchasable under this agreement on
October 31 in each of 1996, 1997 and 1998, provided that on that date
and for the year immediately preceding that date Holder is then, and has
been providing, services under a sponsorship agreement between the
Company and Holder. Once Holder has the right to acquire a portion of
the shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement for a period of two
years thereafter.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise. Exercise of any option hereunder shall be
by written notice to the Company at its principal place of business,
specifying the number of shares of Common Stock being purchased and
accompanied by the purchase price and any withholding tax obligations
imposed on the Company by reason of the exercise of the option. In the
event that the tax obligation, if any, is not paid, the Company will be
permitted to treat as payment of any withholding tax amount due, the
exercise of that number of whole shares of Common Stock equal to the
amount of the tax due divided by the fair market value of the Common
Stock as of the date the option is exercised, and the Company will be
permitted to deduct such number of shares of Common Stock from the total
number being exercised. Certificates representing the shares as to
which the option shall have been exercised shall be registered in the
name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the
rights of a stockholder with respect to the Common Stock covered by the
option until the date of the issuance of a stock certificate for shares
of Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not
be transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act"). As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully
reviewed the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1994, and Annual Report to Stockholders and related
proxy materials for the Company's Annual Meeting to be held in February
1995, and has been granted the opportunity to obtain any additional,
publicly available information relating to the Company and ask questions
of executives of the Company that it deems necessary to verify the
accuracy and completeness of the information provided to it. Holder
represents that it is acquiring this option solely for its own account
for the purpose of investment and not with a view to or for resale in
connection with any distribution thereof, except in compliance with the
Act, any applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer
agent against the transfer of the shares of Common Stock issuable under
the option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issuedupon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be
sold or transferred in the absence of such registration or
an exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of October
10, 1995, a copy of which is on file with the Company, and
may not be transferred, pledged or disposed or exempt in
accordance with the terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company
are increased, decreased, changed into or exchanged for a different
number or kind of stock or securities of the Company or stock of a
different par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation of
the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent, publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the Board of
Directors, whose determination as to what adjustments shall be made, and
the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to the
sponsorship agreement between Holder and the Company or the sponsorship
agreement is terminated for any reason, then that portion of this option
that is not then exercisable on such termination shall immediately
terminate and no additional shares of Common Stock shall become
exercisable hereunder. Notwithstanding the foregoing, in the event of a
termination of this option, if the Holder, as of a time immediately
prior to such termination, has the right to acquire any shares of Common
Stock, the Holder will have the right to exercise such right pursuant to
the terms of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the laws
of the State of Georgia applicable to contracts made and to be wholly
performed therein.
(b) Amendment. This agreement may only be amended by a written
instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the
subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Mr. Joseph Gibbs
9900 Twin Lakes Parkway
Charlotte, North Carolina 28269
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions
of this agreement.
(g) Severability. Any provision of this agreement which is held by
a court of competent jurisdiction to be prohibited or unenforceable in
any jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to
the extent of such prohibition or unenforceability without invalidating
the remaining provisions of this agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all personal
pronouns used in this agreement, whether in the masculine, feminine or
neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and
delivered by the parties hereto.
AUTOMOBILE PROTECTION CORPORATION - APCO
By:
JOSEPH GIBBS, AS HOLDER
OPTION AGREEMENT
AGREEMENT, dated as of December 18, 1995, by and between BOBBY LABONTE
(the Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 5,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.50 per share of Common Stock. This
option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended. The stock option may be exercised at any time prior to
December 18, 2000.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Mr. Bobby Labonte
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of November 30, 1995, by and between CRUZ PEDREGON
(the Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 5,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $3.00 per share of Common Stock. This
option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended. The stock option may be exercised at any time prior to
November 30, 2000.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Mr. Cruz Pedregon
2575 Duval Rd.
Camarillo, CA 93012
If to Company, to: AutomobileProtection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions
of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By: /s/ Larry Dorfman
HOLDER
By: /s/ Cruz Pedregon
OPTION AGREEMENT
AGREEMENT, dated as of November 30, 1995, by and between CORY
McCLENATHAN (the Holder") and Automobile Protection Corporation - APCO
(the "Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 5,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $3.00 per share of Common Stock. This
option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with
the terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Mr. Cory McClenathan
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By: /s/ Larry Dorfman
HOLDER
By: /s/ Cory McClenathan
WARRANT AGREEMENT
AGREEMENT, dated as of September 1, 1994, by and between Bix
Brown (the "Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder is an automobile dealer in Georgetown,
Kentucky;
WHEREAS, the Holder has agreed to receive the warrant herein
set forth as consideration for services of Holder to the Company.
NOW, THEREFORE, in consideration of the covenants herein
contained, the parties hereto agree as follows:
1. In full consideration of the services of Holder to Company,
the Company hereby grants to the Holder (a) right to purchase up to
10,000 shares of the Common Stock, $.001 per value ("Common Stock") of
the Company at an exercise price of $2.00 per share of Common Stock, and
(b) the right to purchase up to 5,000 shares of Common Stock at an
exercise price of $3.00 per share of Common Stock, as set forth herein.
The right to purchase shares of Common Stock pursuant to this
agreement shall be as follows:
(a) the Holder shall have the right to
purchase one-third of the shares of Common Stock
purchasable at an exercise price of $2.00
commencing on August 31, of each of 1995, 1996 and
1997, and once purchasable, the Holder shall have
the right to acquire such shares of Common Stock,
subject to the terms of this agreement, for a period of
two years thereafter; and
(b) the Holder shall have the right to
purchase one-half of the shares of Common Stock
purchasable at an exercise price of $3.00
commencing on August 31, of each of 1998 and
1999, and once purchasable, the Holder shall have the
right to acquire such shares of Common Stock, subject
to the terms of this agreement, for a period of two
years thereafter.
2. Payment of Exercise Price. The purchase price for the
shares of Common Stock pursuant to which the warrant is exercised, will
be paid in full at the time of exercise in cash. Exercise of any
warrant hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by payment of the purchase price
and any withholding tax obligations imposed on the Company by reason of
the exercise of the warrant. In the event that the tax obligation, if
any, is not paid, the Company will be permitted to treat as payment of
any withholding tax amount due, the exercise of that number of whole
shares of Common Stock equal to the amount of the tax due divided by the
fair market value of the Common Stock as of the date the warrant is
exercised, and the Company will be permitted to deduct such number of
shares of Common Stock from the total number being exercised.
Certificates representing the shares as to which the warrant shall have
been exercised shall be registered in the name of the person exercising
the warrant.
3. Rights of Stockholder. The Holder shall not have any of
the rights of a stockholder with respect to the Common Stock covered by
the warrant until the date of the issuance of a stock certificate for
shares of Common Stock purchased hereunder.
4. Transferability. This warrant and the rights conferred may
not be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of this warrant or any
right conferred hereby, or upon the levy of any attachment or similar
process on the rights conferred hereby, this warrant and the rights con
ferred hereby shall immediately become null and void.
5. Restricted Nature of Securities. This warrant and the
shares of Common Stock receivable on the exercise of the warrant are not
registered under the Securities Act of 1933, as amended (the "Act"). As
a condition to the sale of Common Stock on the exercise of the warrant,
the person exercising such warrant may be required by the Company to
give it such documents, including such appropriate investment
representations as may be required by Counsel for the Company and such
additional agreements as the Counsel for the Company may determine, as a
condition to the acceptance of the exercise of any warrant hereunder.
The Holder represents that it has received and carefully
reviewed the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1994, and Annual Report to Stockholders and related
proxy materials for the Company's Annual Meeting to be held in February
1995, and has been granted the opportunity to obtain any additional,
publicly available information relating to the Company and ask questions
of executives of the Company that it deems necessary to verify the
accuracy and completeness of the information provided to it. Holder
represents that it is acquiring this warrant solely for its own account
for the purpose of investment and not with a view to or for resale in
connection with any distribution thereof, except in compliance with the
Act, any applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that it is capable of evaluating
an investment in the warrant and that its financial condition is such
that it can bear the economic risks of acquiring and holding this
warrant.
6. Sales under Securities Act. Anything in this Agreement to
the contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the warrant or the
Common Stock acquired by him upon exercise of the warrant hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the warrant hereof in the absence of registration under
the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to
be issued upon the exercise of the warrant may bear the following
legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be
sold or transferred in the absence of such registration or
an exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of September
1, 1994, a copy of which is on file with the Company, and
may not be transferred, pledged or disposed
or exempt in accordance with the terms and conditions
thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the
Company are increased, decreased, changed into or exchanged for a
different number or kind of stock or securities of the Company or stock
of a different par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this warrant,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding warrant.
(b) Upon the effective date of the dissolution or
liquidation of the Company, or of a reorganization, merger or
consolidation of the Company with one or more corporations in which the
Company will not survive as an independent, publicly owned corporation,
or of a transfer of substantially all the property or more than eighty
percent (80%) of the then outstanding shares of Common Stock of the
Company to another corporation, this warrant shall terminate unless
provision be made in writing in connection with such transaction for the
assumption of the warrant granted, or the substitution for the warrant
of a new warrant covering the shares of a successor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to number
and kind of stock and prices in which event the new warrant substituted
therefor, shall continue in the manner and under the terms so provided.
(C) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive.
No fractional shares of Common Stock shall be issued under the Plan or
any such adjustment.
9. Termination.
If the Holder and/or Frank Shoop Chev/Buick/Pontiac
("Dealer") fails to fulfill its obligations pursuant to that certain
letter agreement dated September 26, 1994 between the Dealer and the
Company, including but not limited to, the requirements that any one of
Bix Brown, Frank Shoop and Josephine Shoop maintain an ownership
interest in at least two automobile dealerships retailing a combined
average per calendar year of 200 vehicles per month, or such
dealerships are marketing only the EasyCare product of the Company
after September 1, 1994, then that portion of this warrant that is not
then exercisable shall immediately terminate and no additional shares of
Common Stock shall become exercisable hereunder. Notwithstanding the
foregoing, in the event of a termination of this warrant, if the Holder
as of a time immediately prior to such termination has the right to
acquire any shares of Common Stock at such time, the Holder will have
the right to exercise such right pursuant to the terms of this Warrant.
10. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by
the laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the subject
matter hereof, and supersedes all prior agreements and understandings of
the parties, oral and written, with respect to the subject matter
hereof.
(d) Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Mr. Bix Brown
c/o 1111 Cynthiana Road
Georgetown, Kentucky 40324
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
(g) Severability. Any provision of this Agreement which
is held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto.
AUTOMOBILE PROTECTION CORPORATION -
APCO
By:
BIX BROWN, AS HOLDER
WARRANT AGREEMENT
AGREEMENT, dated as of September 1, 1994, by and between Frank
Shoop (the "Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder is an automobile dealer in Georgetown,
Kentucky;
WHEREAS, the Holder has agreed to receive the warrant herein
set forth as consideration for services of Holder to the Company.
NOW, THEREFORE, in consideration of the covenants herein
contained, the parties hereto agree as follows:
1. In full consideration of the services of Holder to Company,
the Company hereby grants to the Holder (a) right to purchase up to
25,000 shares of the Common Stock, $.001 per value ("Common Stock") of
the Company at an exercise price of $2.00 per share of Common Stock, and
(b) the right to purchase up to 12,500 shares of Common Stock at an
exercise price of $3.00 per share of Common Stock, as set forth herein.
The right to purchase shares of Common Stock pursuant to this
agreement shall be as follows:
(a) the Holder shall have the right to purchase one-third
of the shares of Common Stock purchasable at an
exercise price of $2.00 commencing on August 31, of each
of 1995, 1996 and 1997, and once purchasable, the Holder
shall have the right to acquire such shares of Common
Stock, subject to the terms of this agreement, for a period
of two years thereafter; and
(b) the Holder shall have the right to purchase one-half
of the shares of Common Stock purchasable at an
exercise price of $3.00 commencing on August 31, of each
of 1998 and 1999, and once purchasable, the Holder
shall have the right to acquire such shares of Common
Stock, subject to the terms of this agreement, for a period
of two years thereafter.
2. Payment of Exercise Price. The purchase price for the
shares of Common Stock pursuant to which the warrant is exercised, will
be paid in full at the time of exercise in cash. Exercise of any
warrant hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by payment of the purchase price
and any withholding tax obligations imposed on the Company by reason of
the exercise of the warrant. In the event that the tax obligation, if
any, is not paid, the Company will be permitted to treat as payment of
any withholding tax amount due, the exercise of that number of whole
shares of Common Stock equal to the amount of the tax due divided by the
fair market value of the Common Stock as of the date the warrant is
exercised, and the Company will be permitted to deduct such number of
shares of Common Stock from the total number being exercised.
Certificates representing the shares as to which the warrant shall have
been exercised shall be registered in the name of the person exercising
the warrant.
3. Rights of Stockholder. The Holder shall not have any of
the rights of a stockholder with respect to the Common Stock covered by
the warrant until the date of the issuance of a stock certificate for
shares of Common Stock purchased hereunder.
4. Transferability. This warrant and the rights conferred may
not be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of this warrant or any
right conferred hereby, or upon the levy of any attachment or similar
process on the rights conferred hereby, this warrant and the rights con
ferred hereby shall immediately become null and void.
5. Restricted Nature of Securities. This warrant and the
shares of Common Stock receivable on the exercise of the warrant are not
registered under the Securities Act of 1933, as amended (the "Act"). As
a condition to the sale of Common Stock on the exercise of the warrant,
the person exercising such warrant may be required by the Company to
give it such documents, including such appropriate investment
representations as may be required by Counsel for the Company and such
additional agreements as the Counsel for the Company may determine, as a
condition to the acceptance of the exercise of any warrant hereunder.
The Holder represents that it has received and carefully
reviewed the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1994, and Annual Report to Stockholders and related
proxy materials for the Company's Annual Meeting to be held in February
1995, and has been granted the opportunity to obtain any additional,
publicly available information relating to the Company and ask questions
of executives of the Company that it deems necessary to verify the
accuracy and completeness of the information provided to it. Holder
represents that it is acquiring this warrant solely for its own account
for the purpose of investment and not with a view to or for resale in
connection with any distribution thereof, except in compliance with the
Act, any applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that it is capable of evaluating
an investment in the warrant and that its financial condition is such
that it can bear the economic risks of acquiring and holding this
warrant.
6. Sales under Securities Act. Anything in this Agreement to
the contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the warrant or the
Common Stock acquired by him upon exercise of the warrant hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the warrant hereof in the absence of registration under
the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to
be issued upon the exercise of the warrant may bear the following
legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be
sold or transferred in the absence of such registration or
an exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of September
1, 1994, a copy of which is on file with the Company, and
may not be transferred, pledged or disposed
or exempt in accordance with the terms and conditions
thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the
Company are increased, decreased, changed into or exchanged for a
different number or kind of stock or securities of the Company or stock
of a different par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this warrant,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding warrant.
(b) Upon the effective date of the dissolution or
liquidation of the Company, or of a reorganization, merger or
consolidation of the Company with one or more corporations in which the
Company will not survive as an independent, publicly owned corporation,
or of a transfer of substantially all the property or more than eighty
percent (80%) of the then outstanding shares of Common Stock of the
Company to another corporation, this warrant shall terminate unless
provision be made in writing in connection with such transaction for the
assumption of the warrant granted, or the substitution for the warrant
of a new warrant covering the shares of a successor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to number
and kind of stock and prices in which event the new warrant substituted
therefor, shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive.
No fractional shares of Common Stock shall be issued under the Plan or
any such adjustment.
9. Termination.
If the Holder and/or Frank Shoop Chev/Buick/Pontiac
("Dealer") fails to fulfill its obligations pursuant to that certain
letter agreement dated September 26, 1994 between the Dealer and the
Company, including but not limited to, the requirements that any one of
Bix Brown, Frank Shoop and Josephine Shoop maintain an ownership
interest in at least two automobile dealerships retailing a combined
average per calendar year of 200 vehicles per month, or such
dealerships are marketing only the EasyCare product of the Company
after September 1, 1994, then that portion of this warrant that is not
then exercisable shall immediately terminate and no additional shares of
Common Stock shall become exercisable hereunder. Notwithstanding the
foregoing, in the event of a termination of this warrant, if the Holder
as of a time immediately prior to such termination has the right to
acquire any shares of Common Stock at such time, the Holder will have
the right to exercise such right pursuant to the terms of this Warrant.
10. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by
the laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the
subject matter hereof.
(d) Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Mr. Frank Shoop
c/o 1111 Cynthiana Road
Georgetown, Kentucky 40324
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
(g) Severability. Any provision of this Agreement which
is held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto.
AUTOMOBILE PROTECTION CORPORATION -
APCO
By:
FRANK SHOOP, AS HOLDER
WARRANT AGREEMENT
AGREEMENT, dated as of __________, 1994, by and between
Josephine Shoop (the "Holder") and Automobile Protection Corporation -
APCO (the "Company").
WHEREAS, the Holder is an automobile dealer in Georgetown,
Kentucky;
WHEREAS, the Holder has agreed to receive the warrant herein
set forth as consideration for services of Holder to the Company.
NOW, THEREFORE, in consideration of the covenants herein
contained, the parties hereto agree as follows:
1. In full consideration of the services of Holder to Company,
the Company hereby grants to the Holder (a) right to purchase up to
25,000 shares of the Common Stock, $.001 per value ("Common Stock") of
the Company at an exercise price of $2.00 per share of Common Stock, and
(b) the right to purchase up to 12,500 shares of Common Stock at an
exercise price of $3.00 per share of Common Stock, as set forth herein.
The right to purchase shares of Common Stock pursuant to this
agreement shall be as follows:
(a) the Holder shall have the right to purchase one-third
of the shares of Common Stock purchasable at an
exercise price of $2.00 commencing on August 31, of each
of 1995, 1996 and 1997, and once purchasable, the Holder
shall have the right to acquire such shares of Common
Stock, subject to the terms of this agreement, for a period
of two years thereafter; and
(b) the Holder shall have the right to purchase one-half
of the shares of Common Stock purchasable at an
exercise price of $3.00 commencing on August 31, of each
of 1998 and 1999, and once purchasable, the Holder
shall have the right to acquire such shares of Common
Stock, subject to the terms of this agreement, for a period
of two years thereafter.
2. Payment of Exercise Price. The purchase price for the
shares of Common Stock pursuant to which the warrant is exercised, will
be paid in full at the time of exercise in cash. Exercise of any
warrant hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by payment of the purchase price
and any withholding tax obligations imposed on the Company by reason of
the exercise of the warrant. In the event that the tax obligation, if
any, is not paid, the Company will be permitted to treat as payment of
any withholding tax amount due, the exercise of that number of whole
shares of Common Stock equal to the amount of the tax due divided by the
fair market value of the Common Stock as of the date the warrant is
exercised, and the Company will be permitted to deduct such number of
shares of Common Stock from the total number being exercised.
Certificates representing the shares as to which the warrant shall have
been exercised shall be registered in the name of the person exercising
the warrant.
3. Rights of Stockholder. The Holder shall not have any of
the rights of a stockholder with respect to the Common Stock covered by
the warrant until the date of the issuance of a stock certificate for
shares of Common Stock purchased hereunder.
4. Transferability. This warrant and the rights conferred may
not be transferred, assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of this warrant or any
right conferred hereby, or upon the levy of any attachment or similar
process on the rights conferred hereby, this warrant and the rights con
ferred hereby shall immediately become null and void.
5. Restricted Nature of Securities. This warrant and the
shares of Common Stock receivable on the exercise of the warrant are not
registered under the Securities Act of 1933, as amended (the "Act"). As
a condition to the sale of Common Stock on the exercise of the warrant,
the person exercising such warrant may be required by the Company to
give it such documents, including such appropriate investment
representations as may be required by Counsel for the Company and such
additional agreements as the Counsel for the Company may determine, as a
condition to the acceptance of the exercise of any warrant hereunder.
The Holder represents that it has received and carefully
reviewed the Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1994, and Annual Report to Stockholders and related
proxy materials for the Company's Annual Meeting to be held in February
1995, and has been granted the opportunity to obtain any additional,
publicly available information relating to the Company and ask questions
of executives of the Company that it deems necessary to verify the
accuracy and completeness of the information provided to it. Holder
represents that it is acquiring this warrant solely for its own account
for the purpose of investment and not with a view to or for resale in
connection with any distribution thereof, except in compliance with the
Act, any applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that it is capable of evaluating
an investment in the warrant and that its financial condition is such
that it can bear the economic risks of acquiring and holding this
warrant.
6. Sales under Securities Act. Anything in this Agreement to
the contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the warrant or the
Common Stock acquired by him upon exercise of the warrant hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its
transfer agent against the transfer of the shares of Common Stock
issuable under the warrant hereof in the absence of registration under
the Act or an exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to
be issued upon the exercise of the warrant may bear the following
legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be
sold or transferred in the absence of such registration or
an exemption therefrom under said Act."
"The shares represented by this certificate have
been acquired pursuant to an agreement dated as of
September 1, 1994, a copy of which is on file with the
Company, and may not be transferred, pledged or disposed or
exempt in accordance with the terms and conditions
thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the
Company are increased, decreased, changed into or exchanged for a
different number or kind of stock or securities of the Company or stock
of a different par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this warrant,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding warrant.
(b) Upon the effective date of the dissolution or
liquidation of the Company, or of a reorganization, merger or
consolidation of the Company with one or more corporations in which the
Company will not survive as an independent, publicly owned corporation,
or of a transfer of substantially all the property or more than eighty
percent (80%) of the then outstanding shares of Common Stock of the
Company to another corporation, this warrant shall terminate unless
provision be made in writing in connection with such transaction for the
assumption of the warrant granted, or the substitution for the warrant
of a new warrant covering the shares of a successor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to number
and kind of stock and prices in which event the new warrant substituted
therefor, shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive.
No fractional shares of Common Stock shall be issued under the Plan or
any such adjustment.
9. Termination.
If the Holder and/or Frank Shoop Chev/Buick/Pontiac
("Dealer") fails to fulfill its obligations pursuant to that certain
letter agreement dated September 26, 1994 between the Dealer and the
Company, including but not limited to, the requirements that any one of
Bix Brown, Frank Shoop and Josephine Shoop maintain an ownership
interest in at least two automobile dealerships retailing a combined
average per calendar year of 200 vehicles per month, or such
dealerships are marketing only the EasyCare product of the Company
after September 1, 1994, then that portion of this warrant that is not
then exercisable shall immediately terminate and no additional shares of
Common Stock shall become exercisable hereunder. Notwithstanding the
foregoing, in the event of a termination of this warrant, if the Holder
as of a time immediately prior to such termination has the right to
acquire any shares of Common Stock at such time, the Holder will have
the right to exercise such right pursuant to the terms of this Warrant.
10. Miscellaneous Provisions.
(a) Applicable Law. This Agreement shall be governed by
the laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This Agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This Agreement constitutes the
entire agreement of the parties hereto with respect to the
subject matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to the
subject matter hereof.
(d) Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Ms. Josephine Shoop
c/o 1111 Cynthiana Road
Georgetown, Kentucky 40324
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this Agreement.
(g) Severability. Any provision of this Agreement which
is held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such
jurisdiction(s), ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this Agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto.
AUTOMOBILE PROTECTION CORPORATION -
APCO
By:
JOSEPHINE SHOOP, AS HOLDER
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between MARK WACHS (the
Holder") and Automobile Protection Corporation - APCO (the "Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for financial consulting services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company and subject to
the terms of this agreement, the Company hereby grants to the Holder the
right to purchase up to 2,000 shares of the Common Stock, $.00l per
value ("Common Stock") of the Company from the date hereof until August
31, 1998, at an exercise price equivalent to $2.44 per share of Common
Stock
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Mark Wachs
101 Jerricho Turnpike
Jerricho, NY 11753
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions
of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By: /s/ Larry Dorfman
HOLDER
By: /s/ Mark Wachs
OPTION AGREEMENT
AGREEMENT, dated as of February 1, 1996, by and between MARK WACHS (the
Holder") and Automobile Protection Corporation - APCO (the "Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for financial consulting services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company and subject to
the terms of this agreement, the Company hereby grants to the Holder the
right to purchase up to 2,000 shares of the Common Stock, $.00l per
value ("Common Stock") of the Company from the date hereof until August
31, 1998, at an exercise price equivalent to $2.44 per share of Common
Stock
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Mark Wachs
101 Jerricho Turnpike
Jerricho, NY 11753
If to Company, to: Automobile
Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By: /s/ Larry Dorfman
HOLDER
By: /s/ Mark Wachs
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between JOHN
JAMESON
(the Holder") and Automobile Protection Corporation - APCO
(the "Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 30,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 10,000 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: John Jameson
660 Griswold # 100
Northville, MI 48167
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between THE PROVIDENCE
GROUP (the Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 21,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 7,200 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: The Providence Group
121 Shockoe Slip
Richmond, VA 23219
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between THE DEALER GROUP
(the Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 21,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 7,200 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with
the terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: The Dealer Group
301 Lake Hinsdale Drive, # 407
Willowbrook, IL 60514
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between AUTOMOTIVE
DEVELOPMENT GROUP (the Holder") and Automobile Protection Corporation -
APCO (the "Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 21,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 7,200 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Automotive Development Group
48 Rolling Hills Rd #127
Mooresville, NC 28115
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between RODGER ANDERSON
(the Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 21,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 7,200 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Rodger Anderson
13610 N. Scottsdale Rd #10-317
Scottsdale, AZ 85254
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between CARTEL MARKETING
(the Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 21,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 7,200 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Cartel Marketing
9841 Airport Blvd, #1424
Los Angeles, CA 90045
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park
Drive Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between JOE KUBOFF
(the Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 12,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 4,000 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Joe Kuboff
458 Helen Drive
Hubbard, OH 44425
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions
of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between FRANK FOLLARI
(the Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 12,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 4,000 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder,to: Frank Follari
625 From Rd
Paramus, NJ 07652
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions
of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between DAVID GOLDEN (the
Holder") and Automobile Protection Corporation - APCO (the "Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 12,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 4,000 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: David Golden
4000 N.E. 33rd Terrace # 6
Kansas City, MO 64117
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between JERRY HENLEY (the
Holder") and Automobile Protection Corporation - APCO (the "Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 12,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 4,000 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the
Company are increased, decreased, changed into or exchanged for
a different number or kind of stock or securities of the
Company or stock of a different par value or without
par value, through reorganization,
recapitalization, reclassification, stock dividend, stock
split, amendment to the Company's Certificate of Incorporation or
reverse stock split, an appropriate and proportionate adjustment
shall be made in the maximum number and/or kind of securities
allocated to this option, without change in the aggregate
purchase price applicable to the unexercised portion of the
outstanding option.
(b) Upon the effective date of the dissolution or
liquidation of the Company, or of a reorganization, merger or
consolidation of the Company with one or more corporations in
which the Company will not survive as an independent publicly
owned corporation, or of a transfer of substantially all the
property or more than eighty percent (80%) of the then
outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made
in writing in connection with such transaction for the assumption
of the option granted, or the substitution for the option of a
new option covering the shares of a successor corporation, or a
parent or subsidiary thereof, with appropriate adjustments as to
number and kind of stock and prices in which event the new option
substituted therefor, shall continue in the manner and under the
terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments
shall be made, and the extent thereof, shall be final, binding
and conclusive. No fractional shares of Common Stock shall be
issued under the Plan or any such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant
to paragraph 1, then that portion of this option that is
not then exercisable on such termination shall immediately
terminate and no additional shares of Common Stock shall
become exercisable hereunder. Notwithstanding the foregoing,
in the event of a termination of this option, if the Holder,
as of a time immediately prior to such termination, has
the right to acquire any shares of Common Stock, the Holder
will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to
be wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject
matter hereof, and supersedes all prior agreements and
understandings of the parties, oral and written, with respect to
the subject matter hereof.
(d) Execution in Counterparts. This agreement may be
executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Jerry Henley
21717 Inverness Blvd # 2304
Houston, TX 77073
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between JACK ATKIN
(the Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 12,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 4,000 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Jack Atkin
2607 Palisades Court
Lake Oswego, OR 97034
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions
of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between CHARLES MANN (the
Holder") and Automobile Protection Corporation - APCO (the "Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 12,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 4,000 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or any
such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: Charles Mann
3509 Avenida Charada N.W.
Albuquerque, NM 87017
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the
sole purpose of convenience of reference, and shall not in any way limit
or affect the meaning or interpretation of any of the terms or
provisions of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
OPTION AGREEMENT
AGREEMENT, dated as of August 31, 1995, by and between TASA
(the Holder") and Automobile Protection Corporation - APCO (the
"Company").
WHEREAS, the Holder has agreed to receive the option herein set forth as
consideration for services of Holder to the Company
NOW, THEREFORE, in consideration of the covenants herein contained, the
parties hereto agree as follows:
1. In consideration of the services of Holder to Company, the Company
hereby grants to the Holder the right to purchase up to 12,000 shares of
the Common Stock, $.00l per value ("Common Stock") of the Company at an
exercise price equivalent to $2.44 per share of Common Stock, as
follows: the Holder shall have the right to purchase one-third of the
shares of Common Stock purchasable under this agreement on June 30 in
each of 1996, 1997 and 1998, provided that during the term of this
agreement the Holder sells not less than 4,000 EasyCare service
contracts during each period ending June 30 and either (a) the Holder
sells only EasyCare service contracts, or (b) if there is no EasyCare
service contract available for specific customer needs, the Holder sells
service contracts other than EasyCare service contracts not to exceed
10% of the Holder's total service contract revenues. If Holder fails
to meet any of the aforementioned conditions, this agreement will
terminate and any option that has not vested will immediately expire and
any option that has vested will no longer be exercisable. Subject to
the foregoing, once Holder has the right to acquire a portion of the
shares of Common Stock hereunder, Holder may purchase such shares of
Common Stock subject to the terms of this agreement until June 30, 1999.
This option is not granted under a stock option plan other than the plan
formed by the terms of this agreement. This is not an incentive stock
option as that term is defined in the Internal Revenue Code of 1986, as
amended.
2. Payment of Exercise Price. The purchase price for the shares of
Common Stock pursuant to which the option is exercised, will be paid in
full at the time of exercise, either in cash or in a manner to be
determined at the sole discretion of the Company. Exercise of any
option hereunder shall be by written notice to the Company at its
principal place of business, specifying the number of shares of Common
Stock being purchased and accompanied by the purchase price and any
withholding tax obligations imposed on the Company by reason of the
exercise of the option. In the event that the tax obligation, if any,
is not paid, the Company will be permitted to treat as payment of any
withholding tax amount due, the exercise of that number of whole shares
of Common Stock equal to the amount of the tax due divided by the fair
market value of the Common Stock as of the date the option is exercised,
and the Company will be permitted to deduct such number of shares of
Common Stock from the total number being exercised. Certificates
representing the shares as to which the option shall have been exercised
shall be registered in the name of the person exercising the option.
3. Rights of Stockholder. The Holder shall not have any of the rights
of a stockholder with respect to the Common Stock covered by the option
until the date of the issuance of a stock certificate for shares of
Common Stock purchased hereunder.
4. Transferability. This option and the rights conferred may not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution,
attachment or similar process. Upon any attempt to transfer, assign,
pledge, hypothecate or otherwise dispose of this option or any right
conferred hereby, or upon the levy of any attachment or similar process
on the rights conferred hereby, this option and the rights conferred
hereby shall immediately become null and void.
5. Restricted Nature of Securities. This option and the shares of
Common Stock receivable on the exercise of the option are not registered
under the Securities Act of 1933, as amended (the "Act") . As a
condition to the sale of Common Stock on the exercise of the option, the
person exercising such option may be required by the Company to give it
such documents, including such appropriate investment representations as
may be required by Counsel for the Company and such additional
agreements as the Counsel for the Company may determine, as a condition
to the acceptance of the exercise of any option hereunder.
The Holder represents that it has received and carefully reviewed the
Company's Annual Report on Form 10-K for the fiscal year ended August
31, 1994, and Annual Report to Stockholders and related proxy materials
for the Company's Annual Meeting to be held in February 1995, and has
been granted the opportunity to obtain any additional, publicly
available information relating to the Company and ask questions of
executives of the Company that it deems necessary to verify the accuracy
and completeness of the information provided to it. Holder represents
that it is acquiring this option solely for its own account for the
purpose of investment and not with a view to or for resale in connection
with any distribution thereof, except in compliance with the Act, any
applicable state securities laws and the rules and regulations
thereunder. Holder represents that its knowledge and experience in
financial and business matters is such that Holder is capable of
evaluating an investment in the option and that Holder's financial
condition is such that Holder can bear the economic risks of acquiring
and holding this option.
6. Sales under Securities Act. Anything in this agreement to the
contrary notwithstanding, the Holder hereby agrees that it shall not
sell, transfer by any means or otherwise dispose of the option or the
Common Stock acquired by him upon exercise of the option hereunder
without registration under the Act, or in the event that they are not so
registered, unless (a) an exemption from the Act is available
thereunder, and (b) the Holder has furnished the Company with notice of
such proposed transfer, and the Counsel for the Company, in its
reasonable opinion, shall deem such proposed transfer to be so exempt,
or the Holder has furnished the Company with notice of such proposed
transfer, together with an opinion of legal counsel reasonably
satisfactory to the Counsel for the Company, that in such counsel's
opinion such proposed transfer shall be so exempt.
7. Stop Transfer: Legend.
(a) The Company may place stop transfer orders with its transfer agent
against the transfer of the shares of Common Stock issuable under the
option hereof in the absence of registration under the Act or an
exemption therefrom provided herein.
(b) The certificates evidencing shares of Common Stock to be
issued upon the exercise of the option may bear the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered under the
Securities Act of 1933, as amended. The shares may not be sold
or transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been
acquired pursuant to an agreement dated as of August 31, 1995, a
copy of which is on file with the Company, and may not be
transferred, pledged or disposed or exempt in accordance with the
terms and conditions thereof."
8. Adjustment to Number of Securities.
(a) If the outstanding shares of Common Stock of the Company are
increased, decreased, changed into or exchanged for a different number
or kind of stock or securities of the Company or stock of a different
par value or without par value, through reorganization,
recapitalization, reclassification, stock dividend, stock split,
amendment to the Company's Certificate of Incorporation or reverse stock
split, an appropriate and proportionate adjustment shall be made in the
maximum number and/or kind of securities allocated to this option,
without change in the aggregate purchase price applicable to the
unexercised portion of the outstanding option.
(b) Upon the effective date of the dissolution or liquidation
of the Company, or of a reorganization, merger or consolidation of the
Company with one or more corporations in which the Company will not
survive as an independent publicly owned corporation, or of a transfer
of substantially all the property or more than eighty percent (80%) of
the then outstanding shares of Common Stock of the Company to another
corporation, this option shall terminate unless provision be made in
writing in connection with such transaction for the assumption of the
option granted, or the substitution for the option of a new option
covering the shares of a successor corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to number and kind
of stock and prices in which event the new option substituted therefor,
shall continue in the manner and under the terms so provided.
(c) Adjustments under this paragraph shall be made by the
Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final, binding and conclusive. No
fractional shares of Common Stock shall be issued under the Plan or
any such adjustment.
9. Termination.
If the Holder fails to fulfill its obligations pursuant to
paragraph 1, then that portion of this option that is not then
exercisable on such termination shall immediately terminate and no
additional shares of Common Stock shall become exercisable hereunder.
Notwithstanding the foregoing, in the event of a termination of this
option, if the Holder, as of a time immediately prior to such
termination, has the right to acquire any shares of Common Stock, the
Holder will have the right to exercise such right pursuant to the terms
of this Option.
10. Miscellaneous Provisions.
(a) Applicable Law. This agreement shall be governed by the
laws of the State of Georgia applicable to contracts made and to be
wholly performed therein.
(b) Amendment. This agreement may only be amended by a
written instrument executed by the Company and by the Holder.
(c) Entire Agreement. This agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter hereof.
(d) Execution in Counterparts. This agreement may be executed
in one or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same document.
(e) Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given when delivered by hand or mailed by registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Holder, to: TASA
9200 Montgomery Rd #9
Cincinnati, OH 45242
If to Company, to: Automobile Protection Corporation - APCO
15 Dunwoody Park Drive
Dunwoody, GA 30338
Attention: Secretary
(f) Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or
affect the meaning or interpretation of any of the terms or provisions
of this agreement.
(g) Severability. Any provision of this agreement which is
held by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction(s) shall be, as to such jurisdic
tion(s), ineffective to the extent of such prohibition or unen
forceability without invalidating the remaining provisions of this
agreement or affecting the validity or enforceability of such provision
in any other jurisdiction.
(h) Gender. Unless the context otherwise requires, all
personal pronouns used in this agreement, whether in the masculine,
feminine or neuter gender, shall include all other genders.
IN WITNESS WHEREOF, this agreement has been executed and delivered by
the parties hereto.
AUTOMOBILE PROTECTION CORPORATION
By:
HOLDER
By:
AUTOMOBILE PROTECTION CORPORATION - APCO
EXHIBIT 11 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
FORM 10-K
DECEMBER 31, 1995
<TABLE>
<CAPTION>
For the Four months For the For the
year ended ended year ended year ended
December 31, December 31, August 31, August 31,
1995 1994 1994 1993
<S> <C> <C> <C> . <C>
- ------------------------------------------------------------------------------------------
PRIMARY
Weighted average number
of shares outstanding 6,703,332 5,679,895 5,183,000 5,168,000
Net effect of dilutive stock options
based on the treasury stock method,
using average market price 827,668 1,195,105 635,451 135,000
- ------------------------------------------------------------------------------------------
7,531,000 6,875,000 5,818,451 5,303,000
- ------------------------------------------------------------------------------------------
Net income (loss) $1,525,582 $ 269,747 $ 912,528 $ (232,047)
- ------------------------------------------------------------------------------------------
Per share $ 0.20 $ 0.04 $ 0.16 $ (0.04)
- ------------------------------------------------------------------------------------------
FULLY DILUTED
Weighted average number
of shares outstanding 6,703,332 5,679,895 5,183,000 5,168,000
Net effect of dilutive stock options
based on the treasury stock method,
using the year-end market price
which was higher than the average
market price 900,668 1,195,105 762,997 527,000
- ------------------------------------------------------------------------------------------
7,604,000 6,875,000 5,945,997 5,695,000
- ------------------------------------------------------------------------------------------
Net income (loss) $1,525,582 $ 269,747 $ 912,528 $ (232,047)
- ------------------------------------------------------------------------------------------
Per share $ 0.20 $ 0.04 $ 0.15 $ (0.04)
- ------------------------------------------------------------------------------------------
The weighted average number of shares for the fiscal year ended August 31, 1993
in the above calculation is anti-dilutive.
</TABLE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-86594) of Automobile Protection
Corporation - APCO of our report dated March 7, 1996 appearing on page
10 of this Annual Report on Form 10-K.
PRICE WATERHOUSE LLP
Atlanta, GA
March 28, 1996
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 10,211
<SECURITIES> 5,092
<RECEIVABLES> 1,212
<ALLOWANCES> 36
<INVENTORY> 0
<CURRENT-ASSETS> 16,147
<PP&E> 2,264
<DEPRECIATION> 1,390
<TOTAL-ASSETS> 19,592
<CURRENT-LIABILITIES> 4,876
<BONDS> 0
<COMMON> 10
0
0
<OTHER-SE> 14,684
<TOTAL-LIABILITY-AND-EQUITY> 19,592
<SALES> 49,211
<TOTAL-REVENUES> 49,211
<CGS> 39,323
<TOTAL-COSTS> 39,323
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,448
<INCOME-TAX> 922
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,526
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
