OPTION AGREEMENT
AGREEMENT, dated as of October 10, 1995, by and between Xxxxxx
Xxxxx (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. Xxxxxx Xxxxx
0000 Xxxx Xxxxx Xxxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
If to Company, to: Automobile Protection Corporation - APCO
00 Xxxxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
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:
XXXXXX XXXXX, AS HOLDER
