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EXHIBIT (c)(2)
EXECUTION COPY
STOCK OPTION AND TENDER AGREEMENT, dated as of June
10, 1999 (the "Agreement"), between FORD MOTOR COMPANY, a
Delaware corporation ("Parent"), and Xxxxxx X. Xxxxx
("Stockholder").
WHEREAS, Parent, Automobile Protection Corporation - APCO, a
Georgia corporation (the "Company"), and AM1 Acquisition Company, a Georgia
corporation and a wholly owned subsidiary of Parent ("Sub"), are, concurrently
with the execution and delivery of this Agreement, entering into an Agreement
and Plan of Merger, dated as of the date hereof (the "Merger Agreement";
capitalized terms used without definition herein having the meanings assigned to
them in the Merger Agreement), pursuant to which Sub agrees to make a tender
offer (the "Offer") for all outstanding shares of common stock, par value $.001
per share ("Company Common Stock"), of the Company, at $13.00 per share, net to
the seller in cash, to be followed by a merger (the "Merger") of Sub with and
into the Company;
WHEREAS, as of the date hereof, Stockholder beneficially owns
directly the number of shares of Company Common Stock (the "Existing Shares",
together with any shares of Company Common Stock beneficial ownership of which
is acquired after the date hereof and prior to the termination hereof, whether
upon the exercise of options, conversion of convertible securities or otherwise,
collectively, referred to herein as the "Shares") set forth on Annex A hereto;
WHEREAS, Parent and Stockholder desire to deposit a portion of
the consideration to be paid to Stockholder pursuant to the Offer and the Merger
into an escrow fund for the purpose of securing the indemnification of Parent,
Sub, the Surviving Corporation and certain other persons after the expiration of
the Offer against certain Losses (as defined herein); and
WHEREAS, as a condition to their willingness to enter into the
Merger Agreement and make the Offer, Parent and Sub have required that
Stockholder agree, and Stockholder has agreed, among other things, to tender in
the Offer, grant to Parent a proxy to vote and grant to Parent an option to
purchase all of the Shares owned by Stockholder on the terms and conditions
provided for herein.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
Agreement to Tender and Vote; Proxy.
SECTION 1.01 Tender. Subject to the provisions of Article II,
Stockholder hereby agrees to validly tender (or cause the record owner to
validly tender), pursuant to and in accordance with the terms of the Offer, as
soon as practicable after commencement of the Offer but in no event later than 2
business days prior to the then scheduled expiration date of the Offer, all of
the Shares by physical delivery of the certificates therefor (or by book entry
or appropriate
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instructions to brokers or custodians thereof, as the case may be) and to not
withdraw such Shares, except following termination of this Agreement pursuant to
Section 6.01 hereof. Stockholder hereby acknowledges and agrees that Parent's
and Sub's obligation to accept for payment and pay for the Shares is subject to
the terms and conditions of the Offer. Stockholder hereby permits Parent and Sub
to publish and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) his identity and ownership of
the Shares and the nature of his commitments, arrangements and understandings
under this Agreement.
SECTION 1.02 Voting. Subject to the provisions of Article II,
Stockholder hereby agrees that, during the time this Agreement is in effect, at
any meeting of the stockholders of the Company, however called, or pursuant to
any action by written consent, Stockholder shall (a) vote (or cause to be voted)
the Shares in favor of the Merger, the Merger Agreement, the approval of the
terms thereof and all the transactions contemplated thereby, and any other
transaction proposed by Parent; (b) vote (or cause to be voted) the Shares
against any action or agreement that would result in a breach in any material
respect of any covenant, representation or warranty or any other obligation or
agreement of the Company under the Merger Agreement or this Agreement; and (c)
vote (or cause to be voted) the Shares against any of the following (other than
the Merger Agreement (including as it may have been, or may have been proposed
by Parent to be, amended) or the transactions contemplated thereby) (i) any
extraordinary corporate transaction, such as a merger, consolidation or other
business combination involving the Company or its subsidiaries (including a
Company Takeover Proposal) or (ii) a sale or transfer of a material amount of
assets of the Company and its subsidiaries or a reorganization, recapitalization
or liquidation of the Company (any matter under clauses (a), (b) or (c), a
"Subject Proposal").
SECTION 1.03 Proxy. (a) Subject to the provisions of Article
II, during the time this Agreement is in effect, Stockholder hereby irrevocably
grants to, and appoints, Parent and Sub, or any of them, and any individual
designated in writing by any of them, and each of them individually, as the
Stockholder's proxy, agent and attorney-in-fact (with full power of
substitution), for and in the name, place and stead of Stockholder, to vote (or
cause to be voted) the Shares, or grant a consent or approval in respect of the
Shares, in each case, with respect to a Subject Proposal, in a manner consistent
with Section 1.02 above. Parent and Sub agree that Stockholder is not granting
any proxy with respect to any matter to be voted on by stockholders of the
Company other than a Subject Proposal.
(b) Stockholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon Stockholder's execution and
delivery of this Agreement. Stockholder hereby affirms that the irrevocable
proxy set forth in this Section 1.03 is given in connection with the execution
of the Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of Stockholder under this Agreement. Stockholder
hereby further affirms that the irrevocable proxy is coupled with an interest
and may under no circumstances be revoked prior to the expiration of this
Agreement. Stockholder hereby ratifies and confirms all that such irrevocable
proxy may lawfully do or cause to be done by virtue hereof. Such irrevocable
proxy is executed and intended to be irrevocable in accordance with the
provisions of 722 of the Georgia Business Corporation Code (the "GBCC").
Stockholder will
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take such further action or execute such other instruments as may be necessary
to effectuate the intent of this proxy and hereby revokes any proxy previously
granted by him with respect to the Shares that would be inconsistent with the
proxy granted pursuant to Section 1.03(a). Stockholder shall not hereafter,
unless and until this Agreement terminates pursuant to Section 6.01 hereof,
purport to vote (or execute a consent with respect to) the Shares with respect
to any Subject Proposal (other than through this irrevocable proxy) or grant any
other proxy or power of attorney with respect to any Shares to vote with respect
to any Subject Proposal, deposit any Shares into a voting trust or enter into
any agreement (other than this Agreement), arrangement or understanding with any
person, directly or indirectly, to vote with respect to any Subject Proposal,
grant any proxy or give instructions with respect to the voting of such Shares
with respect to any Subject Proposal.
ARTICLE II
Option to Purchase Shares.
SECTION 2.01 Grant of Option. Without limiting any other
rights or remedies of Parent, Stockholder hereby grants to Parent an
irrevocable, unconditional option to purchase all (and not less than all) the
Shares, on the terms and subject to the conditions set forth herein (the
"Option").
SECTION 2.02 Exercise of Option. (a) The Option may be
exercised by Parent, at any time, or from time to time, commencing upon the
Exercise Date and prior to the Expiration Date. As used herein, the term
"Exercise Date" means the date on which any of the following first occurs:
(i) any corporation (including the Company or any of
its subsidiaries or affiliates), partnership, person, other entity or
group (as defined in Section 13(d)(3) of the Securities Exchange Act of
1934, as amended (the "Exchange Act")) other than Parent or any of its
affiliates (collectively, "Persons") shall have made, or proposed,
communicated or disclosed in a manner which is or otherwise becomes
public prior to or during the pendency of the Offer (including being
known by stockholders of the Company) an intention to make a Company
Takeover Proposal;
(ii) it shall have been publicly disclosed or Parent
shall have otherwise learned that beneficial ownership (determined for
the purposes of this paragraph as set forth in Rule 13d-3 promulgated
under the Exchange Act) of more than 35% of the outstanding shares of
the Company Common Stock has been acquired by any Person;
(iii) (A) any event as a result of which Parent is
entitled to terminate the Merger Agreement pursuant to Section 9.01(d)
of the Merger Agreement or (B) the termination of the Merger Agreement
by the Company pursuant to Section 9.01(e) of the Merger Agreement; or
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(iv) Stockholder shall breach or fail to perform or
comply with in any material respect any of its obligations, covenants
or agreements contained in Article I or in Section 4.01(a) of this
Agreement or the Company shall breach or fail to perform or comply with
in any material respect any of its obligations, covenants or agreements
contained in the first sentence of Section 2.02(b), the second sentence
of Section 7.01(b) or Sections 6.02, 9.02 or 9.05(b) of the Merger
Agreement.
As used herein, the term "Expiration Date" means the first to
occur of
(i) the Effective Time,
(ii) written notice of termination of this Agreement
by Parent to Stockholder,
(iii) the termination of the Merger Agreement
pursuant to Sections 9.01(a) or 9.01(b)(ii) thereof, or
(iv) the date that is twelve months from the date of
termination of the Merger Agreement; provided that if the Option has
not become exercisable on or prior to the date of termination of the
Merger Agreement, then the Expiration Date shall be the date of
termination of the Merger Agreement.
(b) In the event Parent wishes to exercise the Option, Parent
shall send a written notice to Stockholder of its intention to so exercise the
Option (a "Notice"), specifying the place in the United States, time and date of
the closing of such purchase (the "Closing Date" or the "Closing"), which date
shall not be less than two business days nor more than ten business days from
the date on which a Notice is delivered; provided, that the Closing shall be
held only if (i) such purchase would not otherwise violate or cause the
violation of, any applicable law or regulations (including, without limitation,
the HSR Act or the rules of the National Association of Securities Dealers, Inc.
("NASD")) and (ii) no statute, rule, regulation, decree, order or injunction
shall have been promulgated, enacted, entered into, or enforced by any
Governmental Entity which prohibits delivery of the Shares, whether temporary,
preliminary or permanent (provided, however, that the parties hereto shall use
commercially reasonable efforts to have any such order, decree or injunction
vacated or reversed). In the event the Closing is delayed pursuant to clause (i)
or (ii) above, the Closing Date shall be within five business days following the
cessation of such restriction, violation, potential violation, order, decree or
injunction, as the case may be; provided, further, that, notwithstanding any
prior notice of intention to exercise the Option, Parent shall be entitled to
rescind such notice and shall not be obligated to purchase any Shares in
connection with such exercise upon written notice to such effect to Stockholder.
(c) At any Closing, Stockholder shall deliver to Parent all of
the Shares to be purchased by delivery of certificates evidencing such Shares,
properly endorsed by Stockholder and accompanied by such stock powers and other
documents as may be necessary to transfer record ownership of the Shares into
Parent's name on the stock transfer books of the Company,
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together with evidence of payment of all applicable transfer and documentary
stamp taxes and other fees.
SECTION 2.03 Payments (a) The purchase and sale of the Shares
pursuant to Section 2.02 of this Agreement shall be at a purchase price per
Share equal to the price per Share offered by Sub in the Offer, but in any event
shall not be less than the highest price paid by Sub for any shares of Company
Common Stock, if any, purchased pursuant to the Offer (the "Exercise Price"). At
any Closing, Parent shall pay to Stockholder by wire transfer of immediately
available funds to an account specified by Stockholder an amount equal to the
Exercise Price multiplied by the number of Shares purchased pursuant to this
Article II.
(b) In the event that Parent exercises the Option and
purchases the Shares pursuant to the Option (the "Purchased Shares") and prior
to the Expiration Date the Company enters into a definitive agreement to
consummate a Company Takeover Proposal or transactions contemplated by a Company
Takeover Proposal are consummated and the price per share paid in such Company
Takeover Proposal exceeds the Exercise Price, then upon the consummation of such
Company Takeover Proposal, Parent shall pay to Stockholder by wire transfer of
immediately available funds to an account specified by Stockholder an amount in
cash equal to such excess multiplied by the number of Purchased Shares.
ARTICLE III
Representation and Warranties.
SECTION 3.01 Representation and Warranties of Parent. Parent
hereby represents and warrants to Stockholder that any Shares acquired by Parent
upon exercise of the Option will not be taken with a view to the public
distribution thereof and will not be transferred or otherwise disposed of except
in a transaction registered or exempt from registration under the Securities
Act.
SECTION 3.02 Representations and Warranties of Stockholder.
Stockholder hereby represents and warrants to Parent and Sub as follows:
(a) Ownership of Shares and Options. Subject to Section
4.01(c), Stockholder (or accounts or trusts controlled or beneficially
owned by Stockholder) is the owner of the Existing Shares and options
to acquire Shares ("Stock Options") set forth on Annex A hereto and has
the power to vote and dispose of such Shares. To Stockholder's
knowledge, the Existing Shares are, and the other Shares upon issuance
will be, validly issued, fully paid and nonassessable. On the date
hereof, the Existing Shares are owned of record and beneficially by
Stockholder and, on the date hereof, the Existing Shares constitute all
of the shares of Company Common Stock owned of record or beneficially
by Stockholder. Stockholder has, with respect to the Existing Shares,
or will have, with respect to any other Shares, sole voting power and
sole power of disposition with respect to all of the Shares, with no
restrictions, subject to applicable federal securities laws, on
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Stockholder's rights of disposition pertaining thereto. On the date
hereof, Stockholder has, and on the date of any Closing hereunder
Stockholder will have with respect to Shares to be sold on such date,
good, valid and marketable title to the Shares, other than the Shares
tendered and purchased pursuant to the Offer, free and clear of all
claims, liens, encumbrances, security interests and charges of any
nature whatsoever (other than the encumbrance created by this
Agreement), and shall not be subject to any preemptive right of any
stockholder of the Company. The sale of the Shares to Parent hereunder
will transfer to Parent good, valid and marketable title to the Shares,
free and clear of all claims, liens, encumbrances, security interests
and charges of any nature whatsoever.
(b) Power; Binding Agreement. Stockholder has the legal
capacity, power and authority to enter into and perform all of its
obligations under this Agreement, including, without limitation, power
and authority to sell, assign, transfer and deliver the Shares to
Parent pursuant to the terms and conditions of this Agreement. To the
knowledge of Stockholder, the execution, delivery and performance of
this Agreement by Stockholder will not violate any other agreement to
which Stockholder is a party including, without limitation, any voting
agreement, stockholders agreement or voting trust. This Agreement has
been duly and validly executed and delivered by Stockholder and
constitutes a valid and binding agreement of Stockholder, enforceable
against Stockholder in accordance with its terms.
(c) No Conflicts. Except for (i) filings under the HSR Act,
if applicable, (ii) the applicable requirements of the Exchange Act and
the Securities Act and (iii) filings under the Auto Warranty Laws of
the States as set forth in Schedule 2.02(c) to the Company Stock
Option Agreement, (A) to the knowledge of Stockholder, no filing with,
and no permit, authorization, consent or approval of, any Governmental
Entity is necessary for the execution of this Agreement by Stockholder
and the consummation by Stockholder of the transactions contemplated
hereby and (B) neither the execution and delivery of this Agreement by
Stockholder nor the consummation by Stockholder of the transactions
contemplated hereby nor compliance by Stockholder with any of the
provisions hereof shall (1) conflict with or result in any breach of
any provision of the certificate of incorporation, by-laws, trust or
charitable instruments (or similar documents), if any, of Stockholder,
(2) result in a violation or breach of, or constitute (with or without
notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which Stockholder is a party or by which it
or any of its properties or assets may be bound or (3) violate any
order, writ, injunction, decree, statute, rule or regulation applicable
to Stockholder or any of its properties or assets.
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ARTICLE IV
Certain Covenants of Stockholder
SECTION 4.01 Certain Covenants of Stockholder. Stockholder
hereby covenants and agrees as follows:
(a) No Solicitation. Stockholder shall not, and shall not
permit any representative or agent of Stockholder to, directly or
indirectly, solicit (including by way of furnishing information),
facilitate, participate in or initiate any inquiries or the making of
any proposal by any person or entity (other than Parent or any
affiliate of Parent) which constitutes, or may reasonably be expected
to lead to, a Company Takeover Proposal or any sale of any of the
Shares. If Stockholder or any representative or agent of Stockholder
receives an inquiry or proposal with respect to any sale of Shares,
then Stockholder shall promptly inform Parent of the terms and
conditions, if any, of such inquiry or proposal and the identity of the
person making it; provided that, if such inquiry or proposal
constitutes a Company Takeover Proposal, compliance by the Company with
Section 6.02(c) of the Merger Agreement shall constitute compliance by
Stockholder with this sentence. Stockholder shall, and shall cause its
representatives or agents to, immediately cease and cause to be
terminated any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing.
Notwithstanding anything in this Section 4.01(a) to the contrary, the
covenants and agreements set forth in Section 4.01(a) shall not be
deemed to prevent Stockholder from taking any action, subject to the
applicable provisions of the Merger Agreement, while acting in his
capacity as director or officer of the Company and other than with
respect to this Agreement, to the extent permitted by the Merger
Agreement.
(b) Restriction on Transfer, Proxies and Non-Interference.
Stockholder hereby agrees, while this Agreement is in effect, and
except as contemplated hereby, not to (i) except for pledges of
Existing Shares as described in Annex A, sell, transfer, pledge,
encumber, assign or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the sale,
transfer, pledge, encumbrance, assignment or other disposition of, any
of the Shares (provided that Stockholder may sell up to an aggregate of
150,000 Shares in bona fide brokers transactions, as that term is
described in Rule 144(g) under the Securities Act) or (ii) grant any
proxies with respect to any Shares, except with respect to the election
of one director and the approval of the 1998 Performance Equity Plan to
be voted on at the Company's 1999 annual meeting of stockholders, or
deposit any Shares into a voting trust or enter into a voting agreement
with respect to any Shares or (iii) take any action that would make any
representation or warranty of Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling Stockholder
from performing his obligations under this Agreement.
(c) Legending of Certificates; Nominees Shares. Stockholder
agrees to submit to Parent contemporaneously with or as promptly as
practicable following execution of this
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Agreement all certificates representing the Shares (other than Shares
pledged as described on Annex A) so that Parent may note thereon a
legend referring to the proxy and other rights granted to it by this
Agreement. If any of such Shares beneficially owned by Stockholder are
held of record by a brokerage firm in "street name" or in the name of
any other nominee (a "Nominee", and, as to such Shares, "Nominee
Shares"), Stockholder agrees that Stockholder will within five days of
the date of this Agreement execute and deliver to Parent a limited
power of attorney in such form as shall be reasonably satisfactory to
Parent enabling Parent to require the Nominee to (i) grant to Parent an
irrevocable proxy to the same effect as Section 1.03 hereof with
respect to the Nominee Shares held by such Nominee, (ii) tender such
Nominee Shares in the Offer pursuant to Section 1.01 hereof, and (iii)
submit to Parent the certificates representing such Nominee Shares for
notation of the above-referenced legend thereon.
(d) Additional Shares. Stockholder hereby agrees, while this
Agreement is in effect, to promptly notify Parent of the number of any
new Shares acquired by Stockholder, if any, after the date hereof.
(e) Cooperation. Stockholder will not take any action which
could reasonably result in preventing the consummation of the
transactions contemplated by the Merger Agreement, including the Offer
and the Merger, the Company Option Agreement or this Agreement.
SECTION 4.02 Holdback Amount. (a) Stockholder hereby
irrevocably authorizes and directs the depositary for the Offer to withhold
payment to Stockholder of an amount of the aggregate purchase price payable in
the Offer for shares of Company Common Stock tendered by Stockholder in the
Offer equal to $500,000 (the "Holdback Amount") and to deposit such amount in
trust with the escrow agent (the "Escrow Agent") pursuant to an escrow agreement
among Parent, Sub, Stockholder, Xxxxx X. Xxxxxxx (the "Other Stockholder") and
the Escrow Agent substantially in the form of Schedule 4.02 hereto, with such
changes thereto as the Escrow Agent may propose (the "Escrow Agreement").
Without limiting any other provision contained herein, if Stockholder fails to
tender in the Offer a number of shares of Company Common Stock sufficient to
result in an amount at least equal to the Holdback Amount being deposited with
the Escrow Agent, then Stockholder hereby irrevocably authorizes and directs the
Paying Agent to withhold payment to Stockholder of an amount of Merger
Consideration payable to Stockholder pursuant to the Merger equal, when taken
together with the amount withheld pursuant to the first sentence of this Section
4.02(a), to the Holdback Amount and to deposit such amount in trust with the
Escrow Agent pursuant to the Escrow Agreement. All amounts deposited with the
Escrow Agent pursuant to this Section 4.02(a) and all amounts deposited with the
Escrow Agent by the Other Stockholder, together with all interest thereon, and
as such amounts may be disbursed from time to time in accordance with the terms
of the Escrow Agreement, are referred to herein as the "Escrow Fund."
(b) All matters relating to the Escrow Fund, to the extent
not provided in this Agreement, shall be governed by the Escrow Agreement. The
Escrow Agent shall hold, invest, reinvest and disburse the Escrow Fund, together
with any interest thereon, in accordance with the
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terms of the Escrow Agreement. The right of Stockholder to receive any payment
from the Escrow Fund shall not be transferable or assignable in any manner
whatsoever, except by will or the laws of intestate succession.
SECTION 4.03 Indemnification. (a) Indemnification by
Stockholder. Subject to Section 4.03(b), Stockholder, jointly and severally with
the Other Stockholder, shall indemnify Parent, Sub, the Surviving Corporation,
their affiliates and their respective officers, directors, employees, agents and
representatives (the "Indemnified Parties") against, and shall hold them
harmless from, any and all losses, liabilities, debts, damages, claims, demands,
payments, judgments, settlements, expenses (including reasonable legal fees and
expenses) and costs of any kind ("Losses"), including in respect of third party
claims, but only out of and to the extent of the Escrow Fund, for or on account
of or arising from or in connection with or otherwise with respect to any breach
on the part of the Company of any representation or warranty made by it
contained in Article IV of the Merger Agreement; provided that (i) in
determining whether there has been a breach on the part of the Company of any
such representation or warranty, matters that would represent a debit for
balance sheet purposes may be offset to the extent that there are previously
undisclosed credits relating to the same subject matter as that of the debit,
(ii) solely for purposes of this Section 4.03, the representations and
warranties set forth in the second sentence of Section 4.04(b), Section 4.05
(other than clause (i) of the first sentence thereof), Section 4.06 (other than
the first sentence of Section 4.06(a), Section 4.07, Section 4.08 (other than
clauses (ii) and (iii) thereof), Section 4.09, Section 4.10, Section 4.11, the
first two sentences of Section 4.12, Section 4.13(a) (other than the first
sentence thereof), Section 4.14, Section 4.15, Section 4.16, Section 4.17 and
Section 4.19 of the Merger Agreement shall be deemed to be true and correct if,
to the knowledge (as such term is defined in the Merger Agreement, provided that
for purposes hereof such definition shall be deemed only to refer to the
knowledge of Stockholder) of Stockholder, such representations and warranties
that are qualified as to materiality are true and correct and those not so
qualified are true and correct in all material respects, as the case may be, at
the time each such representation and warranty was made or was required to be
true and correct (or true and correct in all material respects, as the case may
be) pursuant to the terms of the Merger Agreement and (iii) the Company has
supplemented or amended the Company Disclosure Letter pursuant to Section
6.01(c)(ii) of the Merger Agreement and Parent has consented (or is deemed to
have consented to such supplement or amendment pursuant to such Section), then
the Company Disclosure Letter, as so supplemented or amended, shall be deemed to
qualify the representations and warranties of the Company for purposes of this
Section 4.03, unless Stockholder had knowledge of the subject matter of the
amendment or supplement at the date of the execution of the Merger Agreement.
The procedures for the payment of claims for indemnification shall be as set
forth in the Escrow Agreement.
(b) Limitations Upon Indemnification. Notwithstanding
anything in this Section 4.03 to the contrary:
(i) Stockholder shall not be obligated to provide any
indemnification under Section 4.03 unless and until the aggregate
amount of Losses for which it is obligated to provide such
indemnification exceeds the sum of $500,000, after which Stockholder
and
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the Other Stockholder shall each be obligated, on a joint and several
basis, to provide indemnification for one-half of the entire amount of
such Losses; and
(ii) in no event shall the aggregate liability of
Stockholder together with the aggregate liability of the Other
Stockholder under this Section 4.03 exceed the entire amount of the
Escrow Fund.
SECTION 4.04 Survival of Representations and Warranties. For
purposes of Section 4.03 of this Agreement, all of the representations and
warranties of the Company set forth in Article IV of the Merger Agreement shall
survive the Effective Time of the Merger for a period of one year; provided,
however, that the termination of the survival of such representations and
warranties shall not affect any claim for breaches of representations or
warranties if written notice thereof is given to Stockholder and the Escrow
Agent in accordance with the terms of the Escrow Agreement prior to such
termination date.
ARTICLE V
Additional Agreements
SECTION 5.01 Covenant Not to Compete. (a) Stockholder's
Acknowledgment. Stockholder acknowledges that the covenants in this Section 5.01
are given in consideration for and in connection with this Agreement and the
Merger Agreement. Stockholder agrees and acknowledges that in order to assure
the Company, Parent and Sub that the Company will retain its value as a going
concern, it is necessary that Stockholder undertake not to utilize his special
knowledge of the Business (as defined below) and his relationships with customer
and suppliers to compete with the Company or the Surviving Corporation.
Stockholder further acknowledges that:
(i) the Company is and the Company and the Surviving
Corporation will be engaged in the business of the design, sale and
administration of extended service contracts and extended warranty
programs for motor vehicles (the "Business");
(ii) Stockholder's relationship with the Company has
given him, and can be expected to continue to give him, access to and
possession of trade secrets and confidential information concerning the
Company and the Business;
(iii) the agreements and covenants contained in this
Section 5.01 are essential to protect the business and goodwill of the
Company and the Surviving Corporation;
(iv) Parent would not enter into this Agreement or
the Merger Agreement but for these agreement and covenants; and
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(v) upon consummation of the transactions
contemplated by the Merger Agreement, including the Offer and the
Merger, and this Agreement, Stockholder will have adequate means of
support other than by engaging in the Business and the provisions of
this Section 5.01 will not impair such ability.
Accordingly, the parties hereto agree that the covenant not to
compete contained in this Section 5.01 is a reasonable covenant under the
circumstances, and further agree that if in the opinion of any court of
competent jurisdiction, such restraint is not reasonable in any respect, such
court shall have the right, power and authority to excise or modify such
provision or clause of this covenant as to the court shall appear not reasonable
and to enforce the remainder of the covenant as so amended.
(b) Competitive Activities. Stockholder hereby agrees that for
a period commencing on the date hereof and ending on the sixth year anniversary
of the Effective Time (the "Restricted Period"), he will not, on behalf of
himself, or on behalf of any other person, company, corporation, partnership or
other entity or enterprise, directly or indirectly, as an employee, proprietor,
stockholder, partner, consultant, or otherwise, engage in any business or
activity competitive with the Business, anywhere in the United States (the
"Territory"); provided that (x) Stockholder may have up to a 25% ownership
interest in, and be a member of the board of directors of, Safeguard Products
International, Inc. ("Safeguard"), so long as (i) Stockholder may not have any
control over (other than the control as a member of the board of directors of
Safeguard) or involvement with the operations or management of Safeguard, (ii)
no resources of the Company may be used or directed toward activities of
Safeguard, except for brokerage services provided by the Aegis Group
Incorporated, a subsidiary of the Company, to Safeguard on an arms'-length
basis, consistent with past practice, and (iii) no business opportunities of the
Company of which the Stockholder is aware, may be directed to Safeguard and (y)
nothing contained herein shall be construed to prevent Stockholder from
investing in the stock of any competing corporation listed on a national
securities exchange or traded in the over-the-counter market, but only if
Stockholder is not involved in the business of said corporation and if
Stockholder and his associates (as such term is defined in Regulation 14(A)
promulgated under the Exchange Act), collectively, do not own more than an
aggregate of two percent of the stock of such corporation. With respect to the
Territory, Stockholder specifically acknowledges that the Company has conducted
or plans to conduct the Business throughout those areas comprising the Territory
and the Company intends to continue to expand the Business throughout the
Territory.
(c) Solicitation of Employees. Without limiting the generality
of the provisions of Section 5.01(b) above, Stockholder agrees that during the
Restricted Period he shall not on behalf of himself or on behalf of any other
person, company, corporation, partnership or other entity or enterprise (except
on behalf of the Company or the Surviving Corporation), directly or indirectly,
solicit employees, agents or consultants of the Company or the Surviving
Corporation to become employees, agents or consultants for him or for such
businesses to the extent such businesses are engaged in activities that compete
with the Business.
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(d) Interference with Relationships. During the Restricted
Period, Stockholder shall not, directly or indirectly, as employee, agent,
consultant, stockholder, director, co-partner or in any other individual or
representative capacity intentionally solicit or encourage any present or future
customer, agent or supplier of the Company or the Surviving Corporation to
terminate or otherwise alter his, her or its relationship with the Company or
the Surviving Corporation in any manner adverse to the Company or the Surviving
Corporation.
SECTION 5.02 Stop Transfer Order. In furtherance of this
Agreement, concurrently herewith, Stockholder shall and hereby does authorize
the Company's counsel to notify the Company's transfer agent that there is a
stop transfer order with respect to all of the Existing Shares (and that this
Agreement places limits on the voting and transfer of such shares).
SECTION 5.03 Public Announcements. Parent and Sub, on the one
hand, and Stockholder, on the other hand, shall consult with each other before
issuing, and provide each other the opportunity to review and comment upon, any
press release or other public statements with respect to the Offer, the Merger,
the Option and the other Transactions and shall not issue any such press release
or make any such public statement prior to such consultation, except as may be
required by applicable law, court process or by obligations pursuant to any
listing agreement with any national securities exchange.
SECTION 5.04 Commercially Reasonable Efforts; Further
Assurances. (a) Stockholder shall use commercially reasonable efforts to take,
or cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger and the other Transactions;
(b) Stockholder shall, from time to time, execute and deliver,
or cause to be executed and delivered, such additional or further consents,
documents and other instruments and shall take all such further actions as
Parent may reasonably request for the purpose of effectively carrying out the
transactions contemplated by this Agreement and the other Transaction
Agreements.
SECTION 5.05 Cooperation as to Regulatory Matters. If so
requested by Parent, promptly after the date hereof, Stockholder will use
commercially reasonable efforts to, and to cause the Company (if required) to,
make all filings which are required under the HSR Act and applicable
requirements and to seek all regulatory approvals required in connection with
the transactions contemplated hereby. The parties shall furnish to each other
such necessary information and reasonable assistance as may be requested in
connection with the preparation of filings and submissions to any governmental
agency, including, without limitation, filings under the provisions of the HSR
Act. Stockholder shall also use commercially reasonable efforts to cause the
Company to supply Parent with copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between the
Company and its representatives and the Federal Trade Commission, the Department
of Justice and any other governmental agency or authority and members of their
respective staffs with respect to this Agreement and the transactions
contemplated hereby.
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SECTION 5.06 Adjustments to Prevent Dilution, Etc.. In the
event of a stock dividend or distribution, or any change in the Company Common
Stock by reason of any stock dividend, split-up, reclassification,
recapitalization, combination or the exchange of shares, the term "Shares" shall
be deemed to refer to and include the Shares as well as all such stock dividends
and distributions and any shares into which or for which any or all of the
Shares may be changed or exchanged. In such event, the amount to be paid per
share by Purchaser shall be proportionately adjusted, as shall the number of
shares referred to in the proviso to clause (i) of Section 4.01(b).
ARTICLE VI
Miscellaneous
SECTION 6.01 Termination; Survival of Representations and
Warranties. This Agreement (other than the provisions of Article III, Article V
and Article VI), shall terminate on the Expiration Date. Upon such termination,
this Agreement (other than the provisions of Article III, Article V and Article
VI) shall terminate and be of no further force and effect. The respective
representations and warranties of Stockholder and Parent contained herein or in
any certificates or other documents delivered at or prior to any Closing shall
not be deemed waived or otherwise affected by any investigation made by the
other party hereto, shall survive the exercise in full of the Option for one
year. The provisions of Articles V and VI shall survive the exercise in full of
the Option indefinitely in accordance with their terms; provided that the
provisions of Sections 5.01(a) and (b) shall terminate, notwithstanding that the
Restricted Period may not have terminated, three years following the termination
of Stockholder's employment with Company or its successor.
SECTION 6.03 Amendments. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 6.04 Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
deemed given upon receipt by the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Parent, to
Ford Motor Company
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx, Esq.
with a copy to:
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Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
(b) if to Stockholder, to
Xxxxxx X. Xxxxx
c/o Automobile Protection Corporation - APCO
00 Xxxxxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxxx Mollen & Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
SECTION 6.05 Descriptive Headings; Interpretation. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation".
SECTION 6.06 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule or
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible.
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SECTION 6.07 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties. Delivery of an
executed counterpart of this Agreement by facsimile shall be effective to the
fullest extent permitted by applicable law.
SECTION 6.08 Entire Agreement. This Agreement, together with
the other Transaction Agreements, constitute the entire agreement, and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and the Transaction.
SECTION 6.09 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 6.10 Assignment Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by any of the parties without
the prior written consent of the other parties, provided that Parent may assign
its rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations. Any
purported assignment without such consent shall be void. Subject to the
preceding sentences, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 6.11 Enforcement. (a) The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in any New York
state court or any Federal court located in the State of New York, this being in
addition to any other remedy to which they are entitled at law or in equity. In
addition, each of the parties hereto (i) consents to submit itself to the
personal jurisdiction of any New York state court or any Federal court located
in the State of New York in the event any dispute arises out of this Agreement
or any Transaction, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that it will not bring any action relating to this Agreement or any
Transaction in any court other than any New York state court or any Federal
court sitting in the State of New York and (iv) waives any right to trial by
jury with respect to any action related to or arising out of this Agreement or
any Transaction.
(b) Notwithstanding Section 6.11(a), if a dispute arises
between the parties relating to Sections 4.02 or 4.03 of this Agreement or the
terms of the Escrow Agreement, then the following procedure shall be implemented
before either party pursues other available remedies except that either party
may seek injunctive relief from a court of competent jurisdiction where
appropriate in order to maintain the status quo while this procedure is being
followed:
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(i) The parties shall hold a meeting promptly,
attended by persons with decision-making authority regarding the
dispute, to attempt in good faith to negotiate a resolution of the
dispute; provided, however, that no such meeting shall be deemed to
vitiate or reduce the obligations and liabilities of the parties or be
deemed a waiver by a party hereto of any remedies to which such party
would otherwise be entitled.
(ii) If within 30 days after such meeting, the
parties have not succeeded in negotiating a resolution of the dispute,
then the parties agree to submit the matter to binding arbitration in
accordance with the Center for Public Resources Rules for Non-
Administered Arbitration of Business Disputes, by a sole arbitrator.
(iii) Arbitration shall take place in the City of New
York unless otherwise agreed by the parties. The substantive and
procedural law of the State of New York shall apply to the proceedings.
Equitable remedies shall be available in any arbitration. Punitive
damages shall not be awarded. This Section 6.11(b) is subject to the
Federal Arbitration Act, 9 U.S.C.A. ss. 1 et seq. and judgment upon the
award rendered by the arbitrator, if any, may be entered by any court
having jurisdiction thereof.
The parties agree to keep confidential the fact that a dispute
subject to the provisions of this Section 6.11(b) has arisen and the subject
matter thereof, except to the extent permitted by this Section 6.11(b) or to the
extent necessary to comply with applicable law, judicial or regulatory process
or stock exchange rules or regulations.
IN WITNESS WHEREOF, Parent and Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
----------------------------------------------
FORD MOTOR COMPANY
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Business Manager, Ford Customer
Service Division
