WARRANT AGREEMENT
AGREEMENT, dated as of __________, 1994, by and between
Xxxxxxxxx Xxxxx (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 Xxxxx Xxxxx 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
Xxx Xxxxx, Xxxxx Xxxxx and Xxxxxxxxx Xxxxx 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: Xx. Xxxxxxxxx Xxxxx
c/o 0000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, 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:
XXXXXXXXX XXXXX, AS HOLDER
