CONSULTING AGREEMENT
AND
OPTION AND REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated October 6, 1994, by and between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(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: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Company, to: Automobile Protection Corporation - APCO
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇