<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________
Commission File Number 333-06585
CROSS-CONTINENT AUTO RETAILERS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2653095
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1201 S. TAYLOR
AMARILLO, TEXAS 79101
(Address of principal executive offices) (Zip Code)
(806) 374-8653
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
Number of shares outstanding of each of the issuer's classes of common stock, as
of August 14, 1997.
Class Shares Outstanding
- -------------------------- -------------------------
$.01 Par Value 14,205,703
1
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CROSS-CONTINENT AUTO RETAILERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS - EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues:
Vehicle sales $119,411 $ 61,891 $196,965 $125,900
Other operating revenue 15,976 8,121 27,444 15,341
-------- -------- -------- --------
Total Revenues 135,387 70,012 224,409 141,241
Cost of sales 111,856 60,025 185,695 119,921
-------- -------- -------- --------
Gross Profit 23,531 9,987 38,714 21,320
-------- -------- -------- --------
Operating Expenses:
Selling, general and administrative 17,742 8,158 28,643 15,695
Depreciation and amortization 617 279 998 549
Employee stock compensation - 1,099 - 1,099
Loss from sale of dealerships 347 - 347 -
-------- -------- -------- --------
18,706 9,536 29,988 17,343
-------- -------- -------- --------
Operating income 4,825 451 8,726 3,977
Other income (expense)
Interest income 96 308 832 527
Interest expense (1,735) (1,057) (2,946) (2,251)
-------- -------- -------- --------
Income before income (loss) taxes 3,186 (298) 6,612 2,253
Income tax provision 1,320 272 2,600 1,224
-------- -------- -------- --------
Net Income (loss) $ 1,866 $ (570) $ 4,012 $ 1,029
-------- -------- -------- --------
-------- -------- -------- --------
Net income per average common share $ .13 $ .29
-------- --------
-------- --------
Weighted average common shares outstanding 14,049 13,925
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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CROSS-CONTINENT AUTO RETAILERS, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
ASSETS
<TABLE>
JUNE 30, 1997 DECEMBER 31,1996
------------- ----------------
(UNAUDITED)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 6,671 $ 36,946
Accounts receivable 20,962 18,629
Inventories 72,708 48,168
--------- ---------
Total current assets 100,341 103,743
Property and equipment, at cost, less
accumulated depreciation 23,654 13,391
Goodwill, net 58,410 22,094
Other assets and deferred charges 5,666 3,218
--------- ---------
Total assets $ 188,071 $ 142,446
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Floor plan notes payable $ 69,311 $ 46,282
Current maturities of long-term debt 8,063 1,345
Accounts payable 7,016 8,623
Due to affiliates 1,016 5,478
Accrued expenses and other liabilities 11,170 7,408
Deferred income taxes 1,211 1,914
--------- ---------
Total current liabilities 97,787 71,050
Long-term debt 21,816 10,568
Deferred warranty revenue - long-term portion 1,222 2,310
--------- ---------
Total long-term liabilities 23,038 12,878
Stockholders' equity
Preferred stock, $.01 par value, 10,000,000
shares authorized, none issued - -
Common stock, $.01 par value, 100,000,000 shares
authorized, 14,079,720 and 13,800,000
respectively, issued and outstanding 141 138
Paid-in capital 52,474 47,761
Retained earnings 14,631 10,619
--------- ---------
Total stockholders' equity 67,246 58,518
--------- ---------
Commitments and contingencies
Total liabilities and stockholders' equity $ 188,071 $ 142,446
--------- ---------
--------- ---------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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CROSS-CONTINENT AUTO RETAILERS, INC.
COMBINED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
----------------------
1997 1996
--------- ---------
Cash flows from operating activities
Net income $ 4,012 $ 1,029
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 998 549
Employee stock compensation - 1,099
Deferred taxes and other (748) -
(Increase)decrease in
Accounts receivable 4,722 (1,281)
Inventory (6,540) 5,315
Other assets (2,110) (968)
Increase (decrease) in
Accounts payable - trade (4,717) (50)
Accrued expenses and other liabilities (2,811) 107
--------- ---------
Net cash provided by (used in)
operating activities (7,194) 5,800
--------- ---------
Cash flows from investing activities
Acquisition of property and equipment (1,941) (565)
Acquisition of dealerships (34,007) -
--------- ---------
Net cash provided by (used in)
investing activities (35,948) (565)
--------- ---------
Cash flows from financing activities
Change in floor plan notes payable 8,637 (2,911)
Due to affiliates (6,280) (1,334)
Proceeds from borrowing on long-term debt 28,037 -
Long-term debt repayments (17,527) (710)
Proceeds from common stock issuance - 250
--------- ---------
Net cash provided by (used in)
financing activities 12,867 (4,705)
--------- ---------
Increase (Decrease) in cash and cash equivalents (30,275) 530
Cash and cash equivalents at beginning of period 36,946 8,362
--------- ---------
Cash and cash equivalents at end of period $ 6,671 $ 8,892
--------- ---------
--------- ---------
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
CROSS-CONTINENT AUTO RETAILERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1997
NOTE 1. UNAUDITED INTERIM FINANCIAL INFORMATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the six months ended June 30, 1997 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1997. This interim report should be read in conjunction with the
consolidated financial statements and notes related thereto, and management's
discussion and analysis of results of operations and financial condition
included in Cross-Continent Auto Retailers, Inc.'s ("C-CAR" or the "Company")
Annual Report on Form 10-K for the year ended December 31, 1996. The
accompanying, unaudited, condensed consolidated financial statements have
been subject to review by the Company's independent accountants, whose report
is included herein.
NOTE 2. INITIAL PUBLIC OFFERING
In September 1996, the Company sold 3,675,000 shares of its common stock
(the "Common Stock") in an initial public offering for $14.00 per share (the
"Offering"). Net proceeds from the Offering, after considering underwriting
commissions, printing costs, professional fees, and other direct expenses,
were $45.5 million.
NOTE 3. NET INCOME PER COMMON SHARE
Earnings per share data are not presented for the three or six month
periods ended June 30, 1996 because the historical capital structure prior to
the Company's Offering is not comparable to the capital structure existing
after the Offering.
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Financial Accounting Standard No. 128, Earnings Per Share ("FAS 128"),
which is effective for financial statements issued for periods ending after
December 15, 1997, including interim periods. Effective December 31, 1997,
the Company will adopt FAS 128, which establishes standards for computing and
presenting earnings per share ("EPS"). The statement requires dual
presentation of basic and diluted EPS on the face of the income statement for
entities with complex capital structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation, to the numerator and
denominator of the diluted EPS computation. Basic EPS excludes the effect of
potentially dilutive securities while diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised, converted, or resulted in the issuance of common stock
that would then share in the earnings of the entity.
Pro-forma basic and diluted EPS as computed pursuant to FAS 128 would
not have differed from the reported $0.13 and $0.29 per common share as
presented on the face of the consolidated statement of operations, for the
three and six month periods ended June 30, 1997, respectively.
NOTE 4. RELATED PARTY TRANSACTIONS
In connection with its business travel, the Company from time to time
uses an airplane that is owned and operated by Plains Air, Inc. Plains Air,
Inc. is owned by Bill A. Gilliland and Robert W. Hall, Chairman and Senior
Vice Chairman, respectively. Currently, the Company pays Plains Air, Inc.
$13,050 per month plus
5
<PAGE>
a fee of approximately $488 per hour for use of the airplane. During the
three and six month periods ended June 30, 1997 the Company paid Plains Air,
Inc. an aggregate of $156,000 and $269,000, respectively, for the use of the
airplane, compared to $50,000 and $120,000 for the three and six month
periods ended June 30, 1996.
In general, the Company is required to pay for all vehicles purchased
from the automakers upon delivery of the vehicles to the Company. General
Motors Acceptance Corporation ("GMAC"), Chrysler Financial Credit ("CFC") and
Toyota Motor Credit Corporation ("TMCC") provide financing for all new
vehicles and used vehicles that are less than five years old and have been
driven less than 70,000 miles. This type of financing is known as "floor
plan financing" or "flooring." Under this arrangement with GMAC, CFC and
TMCC, the Company may deposit funds with both financial institutions in an
amount up to 75% of the amount of the floor plan financing. Such funds earn
interest at the same rate charged by GMAC, CFC and TMCC to the Company for
its flooring. From time to time, the control group and other affiliates will
advance funds to the Company primarily for the purpose of investing their
excess cash with GMAC, CFC and TMCC. The Company acts only as an
intermediary in this process. At June 30, 1997, funds advanced and
outstanding from affiliates approximated $900,000. Such amounts outstanding
pursuant to these arrangements are included in Due to Affiliates in the
accompanying balance sheet. The amount of interest accrued pursuant to these
arrangements during the three and six month periods ended June 30, 1997
approximated $80,000 and $193,000, respectively, compared to $151,000 and
$191,000 for the three and six month periods ended June 30, 1996.
Gilliland Group Family Partnership ("GGFP") was the contracting agent
for the construction of certain facilities for the Company during the first
six months of 1997. The total cost of the facilities approximated $585,000
during the first six months of 1997. Such amount included approximately
$75,000 as payment to GGFP for architectural and construction management fees.
NOTE 5. ACQUISITIONS
Effective April 1, 1997, the Company acquired Toyota West Sales and
Service, Inc. and Douglas Toyota, Inc. (collectively "Spedding Toyota").
Spedding Toyota is engaged in the retail sales of new and used vehicles and
in the retail and wholesale of replacement parts and vehicle servicing. The
total purchase price of approximately $40.5 million was funded with $28.5
million in cash, $6 million of which was financed with bank debt maturing in
2000, 279,720 shares of the Company's common stock, and a prime rate based,
seller financed note in the amount of $7 million which matures in 2002. The
acquisition has been accounted for as a purchase and the operating results of
Spedding Toyota have been included in the accompanying consolidated
statements of operations since the date of the acquisition. The cost of the
acquisition, including acquisition cost, has been allocated on the basis of
the estimated fair market value of the assets acquired and the liabilities
assumed.
A summary of the purchase price allocation for Spedding Toyota is
presented below (in thousands):
Net working capital $ 2,734
Property and equipment 1,264
Goodwill 36,549
-------
Total $40,547
-------
-------
Effective October 1, 1996, the Company acquired Lynn Hickey Dodge
("Hickey"). Hickey is engaged in the retail sales of new and used
automobiles and in the retail and wholesale of replacement parts and vehicle
servicing. The total purchase price of approximately $20 million was
financed with proceeds from the Company's initial public offering. The
acquisition has been accounted for as a purchase, and the operating results
of Hickey have been included in the accompanying consolidated statements of
operations since the date of the acquisition. The cost of the acquisition
has been allocated on the basis of the estimated fair market value of the
assets acquired and the liabilities assumed.
6
<PAGE>
A summary of the purchase price allocation for Hickey is presented below
(in thousands):
Net working capital $ 4,760
Property and equipment 430
Goodwill and other intangible assets 14,862
-------
Total $20,052
-------
-------
The unaudited consolidated statement of operations data is presented
below on a pro forma basis as though the Company's 1996 reorganization and
Offering, and the Hickey and Spedding Toyota acquisitions had all occurred
as of the beginning of each period presented (in thousands, except per share
data).
SIX MONTHS ENDED JUNE 30,
1997 1996
(UNAUDITED)
-------------------------
Pro forma revenue $274,432 $315,548
Pro forma net income 4,443 7,162
Pro forma net income per share 0.32 0.51
The adjustments to arrive at pro forma revenue include the historic
revenue of Spedding Toyota and Hickey prior to the acquisition of each.
Adjustments to net income to arrive at pro forma net income include estimated
additional administrative expenses as a publicly owned company, additional
amortization expense related to purchased goodwill, increased interest
expense associated with the debt incurred in the purchase of Spedding Toyota,
and the tax effects of these adjustments. The pro forma per share amounts
assume that 14,079,720 shares were outstanding at the beginning of each
period.
The pro forma results of operations information is not necessarily
indicative of the operating results that would have occurred had the
reorganization, acquisition and the Offering been consummated as of the
beginning of each period, nor is it necessarily indicative of future
operating results.
NOTE 6. DISPOSITION
On June 18, 1997, the Company anounced the proposed sale of Performance
Dodge and Performance Nissan, both in the Oklahoma City area, to the
Company's former Chief Operating Officer (also a shareholder and former
Director of the Company), pending approval of the sale by the related
manufacturers. The transaction is expected to close during the third quarter
of fiscal 1997. The Company is planning to sell 100% of the stock in both of
the Performance stores in exchange for 760,000 shares of the Company's stock
valued at a total of $8.74 million based on the average closing share price
on the four (4) days following June 16, 1997. The Company has recorded an
estimated loss on the planned disposition of $347,000, which includes
estimated selling expenses. In preparation for the sale, the Company repaid
$4.3 million in long term debt associated with the acquisition of these
dealerships. The combined revenue and operating income (loss) for these
dealerships for the three and six month periods ended June 30, 1997 and 1996
are presented below:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
1997 1996 1997 1996
------------------ -----------------
Revenue $16,960 $16,411 $37,285 $37,541
Operating
Income (861) 178 (239) 996
7
<PAGE>
NOTE 7. REVOLVING CREDIT FACILITY
Effective June 26, 1997, the Company entered into a three year $40
million revolving credit facility ("Credit Facility") with a certain bank,
bearing variable interest rates based generally on the prime rate or the
LIBOR rate plus certain premiums on each depending on the company's average
leverage ratio. The premium on the prime based rates ranges from 0.5% to
.75% and the premium on the LIBOR based rates ranges from 1.25% to 2%. The
interest rate as of June 30, 1997 was 8.750%. On July 7, 1997, the Company
elected the LIBOR based rate which was equal to 7.6875%. A commitment fee
ranging from .25% to .50% (0.5% at June 30, 1997), depending on the Company's
average leverage ratio is charged on the unused portion of the facility. As
of June 30, 1997, the Company had drawn down $15 million, $13 million of
which was used to refinance borrowings used in the acquisition of Toyota
West, Inc. and Douglas Toyota, Inc. and $2 million on other debt. Interest
on the outstanding balances is payable monthly; the principal balances may be
repaid any time, but are due in full on June 26, 2000. The Credit Facility
requires the Company to maintain certain financial ratios and limits the
Company's capital expenditures for maintenance (excludes acquisitions and
certain store relocations) to $3 million annually. The Company was in
compliance with these requirements at June 30, 1997. The Credit Facility
also requires the Company to provide detailed financial information in a
timely manner with a compliance certificate at the end of each quarter and an
audit by an independent accounting firm at the end of each calendar year.
The Company is negotiating to increase the Credit Facility by an additional
$35 million, which will bring the total Credit Facility to $75 million and,
is subject to syndication on a best-efforts basis by the agent bank.
NOTE 8. SUBSEQUENT EVENTS
On July 2, 1997, the Company purchased all of the outstanding capital
stock of Sahara Nissan, Inc., a Las Vegas corporation (the "Sahara
Acquisition"). The dealership was purchased in exchange for an aggregate
consideration consisting of 125,983 shares of the Company's common stock with
certain registration rights, cash in the amount of $12,225,000, $600,000 in
seller financed notes, bearing a 6.45% rate of interest and payable on July
1, 2002. The Company financed $9 million of the cash portion of the Purchase
Price with borrowings on the Company's Credit Facility.
The Company has filed a current report on Form 8-K in connection with
this acquisition, including audited financial statements for Sahara Nissan,
Inc. as of and for the year ended December 31, 1996, unaudited interim
financial information as of March 31, 1997 and for the three month period
ended March 31, 1997 and 1996, and the required pro-forma information.
On August 11, 1997, the Company announced the termination of the
previously announced acquisition of certain assets of JRJ Investments, Inc.,
d/b/a Chaisson Motor Cars and Chaisson BMW ("Chaisson"), a multiple-franchise
auto dealership group, operating in Las Vegas, Nevada and Henderson, Nevada.
The agreement provided for the purchase to occur on or before August 4, 1997,
and the Company and Chaisson were unable to reach an agreement to extend the
asset purchase agreement. Aggregate consideration for the acquisition, as
announced on April 17, 1997, and subsequently amended, was approximately
$25.0 million. In the third quarter of 1997, the Company will recognize
expenses approximating $143,000 related to the acquisition.
8
<PAGE>
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
The Board of Directors
Cross-Continent Auto Retailers, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Cross-Continent Auto Retailers, Inc. and its subsidiaries (the "Company") as
of June 30, 1997, and the condensed consolidated statements of income for the
three and six month periods ended June 30, 1997 and 1996, and cash flows for
the six month periods ended June 30, 1997 and 1996. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying consolidated financial statements referred
to above for them to be in conformity with generally accepted accounting
principles.
We previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet information of the Company as of
December 31, 1996, and the related consolidated statements of income,
shareholders' equity, and cash flows for the year then ended (not presented
herein) and in our report dated February 13, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1996, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
PRICE WATERHOUSE, LLP
Fort Worth, Texas
July 30, 1997
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Cross-Continent Auto Retailers, Inc. ("C-CAR" or the "Company")
currently owns and operates a group of franchised automobile dealerships in
the Amarillo, Texas, Oklahoma City, Oklahoma, Denver, Colorado and Las Vegas,
Nevada markets. The financial condition and results of operations reported
herein are based solely upon the results of the nine dealerships owned by
C-CAR at June 30, 1997. The Company generates its revenues from sales of new
and used vehicles, fees for repair and maintenance services, sales of
replacement parts, and fees and commissions from arranging financing,
extended warranties, and credit insurance in connection with vehicle sales.
In October 1996, the Company acquired Lynn Hickey Dodge, in Oklahoma
City, Oklahoma. In April 1997, the Company completed the acquisition of two
dealerships, Toyota West, Inc., located in Las Vegas, Nevada, and Douglas
Toyota, Inc. located just outside Denver, Colorado, from owner R. Douglas
Spedding. All of the aforementioned acquisitions were accounted for as
purchases and, accordingly, the operating results of the acquired dealerships
have been included in the operating results of the Company since their
respective dates of acquisition. Because of the significant growth of the
Company since its formation, as a result of the aforementioned acquisitions,
the Company's historical results of operations, its period-to-period
comparisons of such results and certain financial data may not be comparable,
meaningful or indicative of future results.
In July 1997, the Company acquired Sahara Nissan, Inc. in Las Vegas,
Nevada, (the "Sahara Acquisition"). In June 1997, the Company announced the
proposed divestiture of its Oklahoma City dealerships, Performance Nissan and
Performance Dodge, to a former officer and director of the Company, Emmett M.
Rice, Jr.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Certain matters discussed herein are forward-looking statements about
the business, financial condition and prospects of the Company. The actual
results could differ materially from those indicated by such forward-looking
statements because of various risks and uncertainties. Such risks and
uncertainties may include, but are not limited to, regional and national
economic conditions, changes in consumer demand for products offered by the
Company, auto manufacturer employee strikes and other matters that may
adversely affect the availability of products and pricing, state and federal
regulatory environment, and other risks indicated in the Company's previous
filings with the Commission. The Company cannot control these risks and
uncertainties and, in many cases, cannot predict the risks and uncertainties
that could cause its actual results to differ materially from those indicated
by the forward-looking statements.
10
<PAGE>
CROSS-CONTINENT AUTO RETAILERS, INC.
CONSOLIDATED MARGIN STATISTICS
JUNE 30, 1997
<TABLE>
Qtr Ended Qtr Ended YTD YTD
June 30, 1997 June 30, 1996 June 30, 1997 June 30, 1996
------------- ------------- ------------- -------------
(IN THOUSANDS, EXCEPT UNITS AND PERCENTAGES)
<S> <C> <C> <C> <C>
New Vehicle Sales
Units 2,903 1,479 4,502 3,130
Revenue $ 63,412 $ 31,493 $ 98,290 $ 66,142
Average Selling Price $ 21.8 $ 21.3 $ 21.8 $ 21.1
Used Vehicle Sales
Units 3,779 1,558 6,576 3,241
Revenue $ 44,770 $ 20,884 $ 78,445 $ 42,065
Average Selling Price $ 11.8 $ 13.4 $ 11.9 $ 13.0
Wholesale Used Vehicle Sales
Units 2,523 1,776 4,364 3,490
Revenue $ 11,229 $ 9,514 $ 20,230 $ 17,693
Average Selling Price $ 4.5 $ 5.4 $ 4.6 $ 5.1
Other Operating Revenue
Finance and Insurance $ 5,083 $ 2,135 $ 8,548 $ 4,337
Parts and Service 9,614 5,964 16,834 10,495
Other Revenue 1,279 22 2,062 509
-------- -------- -------- --------
Total Revenue $135,387 $ 70,012 $224,409 $141,241
-------- -------- -------- --------
-------- -------- -------- --------
Gross Profit
New Vehicles $ 6,726 $ 3,237 $ 10,766 $ 7,497
Used Vehicles 6,396 2,509 10,359 5,507
Wholesale Used Vehicles (618) (19) (868) (359)
Finance and Insurance 4,554 1,403 7,625 2,856
Parts and Service 5,194 2,850 8,770 5,328
Other Revenue 1,279 7 2,062 491
-------- -------- -------- --------
Total Gross Profit $ 23,531 $ 9,987 $ 38,714 $ 21,320
-------- -------- -------- --------
-------- -------- -------- --------
Gross Profit Percentages
New Vehicles 10.6% 10.3% 11.0% 11.3%
Used Vehicles 14.3% 12.0% 13.2% 13.1%
Wholesale Used Vehicles -5.5% -0.2% -4.3% -2.0%
Finance and Insurance 89.6% 65.7% 89.2% 65.9%
Parts and Service 54.0% 47.8% 52.1% 50.8%
Other Revenue 100.0% 31.8% 100.0% 96.7%
Total Gross Profit Margin 17.4% 14.3% 17.3% 15.1%
-------- -------- -------- --------
-------- -------- -------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
11
<PAGE>
RESULTS OF OPERATIONS FOR THE
THREE MONTHS ENDED JUNE 30, 1997
The Company's total revenue increased 93.4% to $135.4 million for the
second quarter ended June 30, 1997 from $70.0 million for the second quarter
ended June 30, 1996.
New vehicle sales revenue increased approximately 101.4% to $63.4
million for the second quarter of 1997, compared with $31.5 million in the
second quarter ended of 1996. The increase in new vehicle sales for the
second quarter was due to the acquisition of Hickey acquired in October,
1996, and Spedding Toyota acquired in April, 1997. New unit sales increased
by 1,424 units in the quarter to 2,903 units compared to 1,479 in the second
quarter of 1996. The Hickey and Spedding acquisitions accounted for 102.3%
of the increase.
Comparable store new vehicle sales increased 11 units in the Company's
Amarillo market, and decreased 44 units at the Performance dealerships in the
Oklahoma City market. The lower demand for new vehicles in the Company's
Oklahoma City market is consistent with new vehicle sales trends in the
Oklahoma City trade area and the Chrysler engine plant strike which affected
the supply of new vehicles at Performance Dodge. The average selling price
of a new vehicle was $21,843, a 1.7% increase.
The Company does not anticipate a significant increase in revenue for
the second half of 1997 in comparision with 1996. The Company believes
additional revenue generated by the Sahara Acquisition will be offset by the
disposition of Performance Nissan and Performance Dodge. Additionally, the
demand for new vehicles in the markets in which the Company has dealerships
has decreased at a faster rate than the national average.
Gross margins on new vehicle sales were 10.6%, an increase of .3
percentage point over last year. The increase was due to higher inventory
costs in the second quarter of 1996 because of the GM parts plant strike in
March, 1996, which required the Company to purchase at a premium new vehicles
from other dealers.
Used vehicle retail sales revenue increased approximately 114.4% in the
second quarter of 1997 to $44.8 million, compared with $20.9 million in the
second quarter of 1996. The inclusion of the Hickey and Spedding
acquisitions accounted for 93.5% of the increase in retail used vehicle
sales. The remaining increase in retail used vehicle sales was generated by
same store sales growth. Same store used retail unit sales increased 14.7% to
1,787 for the quarter.
The Company attributes the increase in same store used vehicle sales to
its market strategy for used vehicle inventory management and increasing
demand for used vehicles. Average used car selling prices decreased by 6.4%
to $11,847, reflecting the Hickey and Spedding acquisitions which have lower
used car selling prices.
Used vehicle retail gross profit margins of 14.3% represent an increase
of 2.3 percentage points from the second quarter of 1996. The increase was
primarily attributable to the higher gross margins at Spedding Toyota.
The Company's other operating revenue increased 96.7% to $16.0 million
for the quarter compared to $8.1 million for last year. Specifically, other
operating revenue increased due to finance and insurance revenue increasing
138.1% to $5.1 million and parts and service revenue increasing 61.2% to $9.6
million.
The majority of the increase in finance and insurance revenue was due to
the Hickey and Spedding acquisitions. The remaining portion of this increase
can be largely attributed to the Company, since July 1996, selling third
party vendor extended warranties at its dealerships rather than its own
extended warranties. Historically, the Company principally sold its own
in-house extended warranty at its dealerships and recognized the resulting
revenue over the term of the
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warranties. In contrast, upon the sale of third party extended warranties
the Company receives and immediately recognizes commission income at the time
of sale as the Company has no further obligation pursuant to the extended
warranty contracts.
The Company's increased parts and service revenue was due to
acquisitions. This increase was offset by a 5.3% decrease in same store parts
and service sales. Lower wholesale parts sales led to this decrease.
The majority of the increase in other revenue can be attributed to
miscellaneous documentary fees at the Hickey and Spedding acquisitions. The
amount that can be charged for these fees are usually governed by state
regulatory agencies. The Company expects this component of other operating
revenue to increase as more dealerships are acquired.
Gross profit margin on finance and insurance of 89.6% represents an
increase of 23.9 percentage points over last year. This was mainly
attributable to the Company selling third party warranties in 1997. The
Company also decreased in-house warranty repair costs by 37%, further
contributing to the gross margin increase.
Gross profit margin on parts and service revenue of 54% represents an
increase of 6.2 percentage points. This was due to the variance in the
retail to wholesale parts sales mix at Spedding Toyota and lower wholesale
parts sales in the Company's existing stores.
Gross profit increased 135.6 percentage points for the quarter to $23.5
million from $10.0 for 1996. The Hickey and Spedding acquisitions accounted
for 91.3% of the increase. The remainder of the increase was generated by
increased gross profits on finance and insurance revenue.
Gross profit as a percentage of sales increased to 17.4% for the quarter
from 14.3% for the second quarter of 1996. The increase in gross profit as a
percentage of sales is primarily attributable to higher gross margins on
other operating revenue and higher used vehicle margins at Spedding Toyota.
The Company anticipates a reduction in overall gross profit as a
percentage of revenue for the remainder of 1997. The Company believes new
vehicle margins may decline if the trend of lower demand for new vehicles
continues. Also, slower vehicle sales would directly affect finance and
insurance revenue, which is the Company's highest gross margin revenue item.
The amount of revenue recognized related to the in-house warranties sold
in prior periods, which was deferred and amortized over the contractual
service period of the warranty contracts, will decline each quarter and will
eventually cease at the expiration of the warranty periods. As a result,
gross margin will be negatively impacted during future periods.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The Company's selling, general and administrative expenses increased to
$17.7 million, or 13.1% of the Company's revenues for the second quarter
ended June 30, 1997 from $8.2 million, or 11.7% of total revenues for the
second quarter ended June 30, 1996. The primary reason for the increase in
expenses was the Hickey and Spedding acquisitions. Expenses as a percentage
of sales also increased for the quarter due to inclusion of the Hickey and
Spedding acquisitions. These dealerships have historically reflected a
higher expense to sales ratio due to a different sales mix in comparison to
existing company dealerships. This ratio also increased for same store sales
comparison for the quarter due to higher than expected dealership
assimilation and corporate overhead costs.
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INTEREST EXPENSE
The Company's interest expense, net of interest income, increased
approximately 113.6% to $1.6 million for the quarter ended June 30, 1997
compared to $749,000 for the quarter ended June 30, 1996. The increase for
the quarter ended June 30, 1997 is primarily attributable to the addition of
the Hickey and Spedding acquisitions.
INCOME TAXES
The Company's effective tax rate for the quarter ended June 30, 1997
approximated 41.4%. The actual tax rate for the quarter was 37.4%, excluding
the loss recorded on the sale of Performance Nissan and Performance Dodge.
The unusual tax rate for the same quarter of 1996 was attributable to certain
non-deductible expenses incurred during the quarter prior to the Company's
Offering. Management expects the effective tax rate in 1997 to approximate
37.4% to 38.0%.
NET INCOME
The Company's net income from operations increased to $1.9 million for
the quarter ended June 30, 1997 compared to a loss of $570,000 for the
quarter ended June 30, 1996. Included in the 1997 second quarter earnings
are operating losses incurred at the Performance stores of approximately
$753,000 and a one-time charge for the loss on the sale of the Performance
dealerships of $347,000. The provision primarily reflects the anticipated
costs, fees and expenses of the transaction.
The overall increase in net income was primarily attributable to the
Company's Hickey and Spedding acquisitions, collectively accounting for
67.4% of the quarter increase. The second quarter of 1996 also included the
non-cash expense relating to employee stock compensation of approximately
$1.1 million and compensation expense of $600,000 relating to the executive
bonus. The remaining increase in net income was attributable to increased
gross profits, offset by increased net interest expense and income taxes.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997
The Company's total revenue increased approximately 58.9% to $224.4
million for the period ended June 30, 1997 as compared with total revenue of
$141.2 million last year.
New vehicle sales revenue increased approximately 48.6% to $98.3
million, compared with $66.1 million in 1996. The increase in new vehicle
sales for the period was primarily due to acquisitions. This increase was
offset by 10.6% decrease in same store comparative new vehicle sales. The
majority of this decrease occurred in the Company's Performance Nissan and
Performance Dodge dealerships. The remaining decrease was caused by a 6.2
percentage points decrease in new vehicle sales in the Company's Amarillo
market.
New unit sales increased 1,372 for the six month period to 4,502 units
compared to 3,130 for the same six month period in 1996. Acquisitions
accounted for 128.6% of the increase. This increase was partially offset by
a 392 unit decrease in same store new vehicle sales. The Company attributes
the lower demand for new vehicles to trends consistent within the automotive
retail industry. The average selling price of a new vehicle was $21,833, a
2.2% increase.
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New vehicle retail margins decreased slightly for the period due to
higher margins in the first quarter of 1996. The higher margins in the first
quarter of 1996 were caused by a better inventory supply of new vehicles.
Used vehicle retail sales revenue increased approximately 86.5% to $78.4
million, compared to $42.1 million in 1996. Acquisition growth accounted for
92.1% of the increase in used vehicle retail sales. Same store sales unit
volume increased by 350 units or 10.8%, accounting for the remainder of the
increase in used vehicle retail sales. As with the quarter, lower average
selling prices at Spedding Toyota reduced the retail used vehicle average
selling price to $11,929, compared to $12,979 last year. For the remainder of
1997 the Company will continue to place an increased emphasis on used vehicle
retail sales because of customer buying patterns and the higher gross margins
associated with used vehicle sales.
Gross margins on used retail sales were flat in comparison with last
year. This was due to a 36.6% decrease in the margins at the Company's
Performance Nissan and Performance Dodge dealerships. This was offset by
higher margins at Spedding Toyota.
For the six months ended June 30, 1997 other operating revenue increased
78.9% to $27.4 million compared to $15.3 million last year. Finance and
insurance revenue increased 97.1% to $8.5 million and parts and service
revenue increased 60.4% to $16.8 million for the six months ended June 30,
1997.
As with the quarter, acquisitions accounted for the majority of the
increase in finance and insurance revenue. The remaining portion of this
increase can be largely attributed to third party extended warranty sales.
The Company's increased parts and service revenue was mainly due to
acquisitions. Overall parts and service sales in the Company's existing
stores were consistent with last year.
Acquisitions accounted for the majority of the increase in other
revenue. As mentioned earlier, the Company expects this component of other
operating revenue to continue to increase.
Gross margin on parts and service revenue increased for the period
because of the retail to wholesale sales mix at Spedding Toyota. The margin
also increased because of lower wholesale parts sales in the Company's
Amarillo market.
Gross profit increased 81.6 percentage points to $38.7 million for the
six month period compared to $21.3 million for 1996. The Hickey and Spedding
acquisitions accounted for primarily all of the increase.
Gross profit as a percentage of sales increased to 17.3% for the period
compared to 15.1% for the comparable period in 1996. As with the quarter
ended June 30, margins were increased through higher margins on other
operating revenue and stronger used vehicle margins at Spedding Toyota.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the six months ended
June 30, 1997 increased to $28.6 million, or 12.8% of the Company's revenues
compared to $15.7 million, or 11.9% of the Company's revenues for the six
months ended June 30, 1996. Acquisitions accounted for 91.7% of the increase
in expenses for the six month period. Expenses as a percentage of sales
increased for the six month period due to higher than expected dealership
assimilation and corporate overhead costs.
15
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INTEREST EXPENSE
Net interest expense for the six months ended June 30, 1997 increased
22.6% to $2.1 million compared to $1.7 million for the six months ended June
30, 1996. The Hickey and Spedding acquisitions accounted for a 50% increase
in interest expense. This increase is partially offset by interest income
earned on proceeds from the offering. For the six months ended June 30, 1997
this income approximated $595,000.
Net interest expense is expected to increase throughout 1997 as the
Company uses borrowings to acquire additional dealerships and due to
increased floor plan financing associated with the newly acquired dealerships.
INCOME TAXES
The Company's effective income tax rate for the six months ended June
30, 1997 approximated 39.3% as compared to 54.3% for the comparable period of
1996. The decrease in the effective rates relates to certain non-deductible
expenses incurred during the first six months of 1996. The actual tax rate
for the period ended June 30, 1997 was 37.4, excluding the loss recorded on
the sale of Performance Nissan and Performance Dodge. Management expects the
effective tax rate in 1997 to approximate 37.4% to 38.0%.
NET INCOME
Net income from operations for the six months ended June 30, 1997
increased 323.6% to $4.0 million compared to $1.0 million for the six months
ended June 30, 1996. The increase was primarily attributable to the
Company's Hickey and Spedding acquisitions, collectively accounting for 63.4%
of the year to date increase. The increase in net income was partially
offset by the operating losses at the Performance dealerships and the
$347,000 loss provision for the sale of the Performance dealerships. The
remaining increase in net income was due to increased gross profits and
one-time compensastion expenses recorded in 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires cash primarily for financing its inventory of new
and used vehicles and replacement parts, acquisitions of additional
dealerships, capital expenditures and transition expenses in connection with
its acquisitions. Historically, the Company has met these liquidity
requirements primarily through cash flow generated from operating activities,
floor plan financing and borrowings under credit agreements with GMAC, CFC
and TMCC. Floor plan financing from GMAC currently represents the primary
source of financing for vehicle inventories.
The Company currently finances its purchases of new vehicle inventory
with GMAC, CFC and TMCC. The Company also maintains lines of credit with
GMAC, CFC and TMCC for the financing of used vehicles, pursuant to which
GMAC, CFC and TMCC provide financing for up to 80% of the cost of used
vehicles that are less than five years old and that have been driven fewer
than 70,000 miles. GMAC, CFC and TMCC receive a security interest in all
inventory they finance. The Company makes monthly interest payments on the
amounts financed by GMAC, CFC and TMCC. The Company must repay the principal
amount of indebtedness with respect to any vehicle generally within two days
of the sale of such vehicle by the Company. The Company periodically
renegotiates the terms of its financing with GMAC, CFC and TMCC, including
the interest rate. As of June 30, 1997, the Company had outstanding floor
plan debt of $69.3 million and paid an average annual interest rate of 9.0%.
The Company plans to use borrowings against its new $40 million credit
facility to finance the major portion of any future acquisitions. At June
30, the Company had $25 million available under this credit agreement. The
Company
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believes this facility will be sufficient to fund any acquisitions during the
remainder of the year.
During the first six months of 1997, the Company used net cash of $7.2
million for operating activities, compared to $5.8 million generated for the
six months ended June 30, 1996. The decrease is primarily attributable to
fluctuations in inventory levels and decreased accounts payable, partially
offset by decreased accounts receivable. The fluctuation in inventory levels
is primarily determined by timing of new vehicle deliveries from the
automakers, seasonal factors and changes in the optimal level of inventory as
determined by management based on inventory management strategies.
Cash used in investing activities of $36.0 million during the first six
months of 1997 were primarily expenditures relating to the purchase of
Spedding Toyota. The Company expects to spend an additional $12.5 million (a
total of $20 million, including land and construction costs) to construct two
new dealership facilities to relocate Toyota West and Douglas Toyota. Funds
will be provided by cash on hand and interim financing. The Company plans to
convert interim financing to permanent financing when construction is
completed in the second quarter of 1998. The Company currently anticipates
that any future acquisitions will be financed with a combination of debt,
stock and to a lesser extent, cash.
Cash generated from financing activities amounted to $12.9 million for
the six months ended June 30, 1997. The increase was mainly attributable to
the $15.0 million borrowed from the TCB revolving line of credit for debt
repayment and the Sahara Acquisition. The increase from the TCB funds was
slightly offset by the payment of long-term debt in conjunction with the sale
of Performance Nissan and Performance Dodge. An increase in floor plan debt
related to increased inventory levels, offset by a decrease due to affiliates
also contributed to the increase in cash generated from finance activities.
The Company believes that its existing capital resources, including cash
on hand, cash from operations, and funds available under its line of credit
will be sufficient to run the Company's operations in the ordinary course and
fund its debt service requirements. The Company estimates that it will incur
a tax liability of approximately $4 million in connection with the change in
its tax basis of accounting for inventory from LIFO to FIFO. The Company is
required to pay this liability in six equal annual installments, which
commenced in March 1997, and believes that it will be able to pay such
obligation with cash provided by operations.
SEASONALITY
The Company generally experiences a higher volume of new and used
vehicle sales in the second and third quarters of each year. If the Company
acquires dealerships in other markets, it may be affected by other seasonal
or consumer buying trends.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is named in claims involving the
manufacture of automobiles, contractual disputes and other matters arising in
the ordinary course of the Company's business. Currently, no legal
proceedings are pending against or involve the Company that, in the opinion
of management, could be expected to have a material adverse effect on the
business, financial condition or results of operations of the Company.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) LISTING OF EXHIBITS
(Exhibits followed by an (*) constitute management contracts or
compensatory plans or arrangements.)
EXHIBIT
NUMBER DESCRIPTION
- ------- ---------------------------------------------------
2.1 Asset Purchase Agreement dated as of June 17, 1996, among Lynn Hickey
Dodge, Inc., Lynn Hickey, and Cross Country Dodge, Inc. (1)
2.2 Stock Purchase Agreement, dated as of January 23, 1997, by and between
Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding (2)
2.3 Amendment to Stock Purchase Agreement dated as of April 1, 1997, by
and between Cross-Continent Auto Retailers, Inc. and R. Douglas
Spedding (3)
2.4 Stock Purchase Agreement dated as of February 28, 1997, among Cross-
Continent Auto Retailers, Inc., Jack Biegger, Dale Edwards, and Sahara
Datsun, Inc., d/b/a Jack Biegger Nissan, as amended by the Amendment
to Stock Purchase Agreement dated as of March 17, 1997, among Cross-
Continent Auto Retailers, Inc., Jack Biegger, Dale Edwards, and Sahara
Nissan, Inc., d/b/a Jack Biegger Nissan (4)
2.5 Second Amendment to Stock Purchase Agreement dated as of April 30,
1997, by and between Cross-Continent Auto Retailers, Inc., Jack
Biegger, Dale Edwards, and Sahara Datsun, Inc., d/b/a Jack Biegger
Nissan, as amended by the Amendment to Stock Purchase Agreement dated
as of March 17, 1997, among Cross-Continent Auto Retailers, Inc., Jack
Biegger, Dale Edwards, and Sahara Nissan, Inc., d/b/a Jack Biegger
Nissan
2.6 Asset Purchase Agreement dated as of April 16, 1997, by and between
JRJ Investments, Inc., a Nevada corporation, as seller, The Chaisson
Family Trust-R501, the shareholders and the Company, as buyer
2.6.1 Consent to Termination of Agreements dated as of August 5, 1997,
among Cross-Continent Auto Retailers, Inc., JRJ Investments, Inc.,
and The Chaisson Family Trust R-501.
2.7 Purchase Agreement dated as of March 1, 1997, between RDS, Inc. and
Cross-Continent Auto Retailers, Inc.(omitting exhibits thereto, which
will be furnished supplementally to the Commission upon request) (3)
2.8 Purchase Agreement dated as of March 1, 1997, between R. Douglas
Spedding and Cross-Continent Auto Retailers, Inc.(omitting exhibits
thereto, which will be furnished supplementally to the Commission upon
request) (3)
2.9 Third Amendment to Stock Purchase Agreement, dated as of May 9, 1997,
among Cross-Continent Auto Retailers, Inc., The Jack Biegger Revocable
Living Trust, The Dale M. Edwards Revocable Family Trust, and Sahara
Nissan, Inc. d/b/a Jack Biegger Nissan. (11)
2.10 Stock Purchase Agreement dated as of June 20, 1997 between Cross-
Continent Auto Retailers, Inc. and Benji Investments, Ltd. (omitting
exhibits thereto, which will be furnished supplementally to the
Commission upon request)
3.1 Amended and Restated Certificate of Incorporation of Cross-Continent
Auto Retailers, Inc. (5)
3.3 Amended and Restated Bylaws of Cross-Continent Auto Retailers, Inc.
(5)
4.1 Specimen Common Stock Certificate (5)
4.2 Rights Agreement between Cross-Continent Auto Retailers, Inc. and The
Bank of New York, as rights agent (5)
4.3 Amended and Restated 1996 Stock Option Plan of Cross-Continent Auto
Retailers, Inc. (6)
4.4 Registration Rights Agreement dated as of April 1, 1997, by and
between Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding
(3)
10.1 Dealer Sales and Service Agreement dated November 1, 1995, between the
Chevrolet Division of General Motors Corporation and Plains
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Chevrolet, Inc., as amended by Supplemental Agreement dated as of
July 29, 1996 (1)(7)
10.2 Sales and Service Agreement between Performance Dodge, Inc. and
Chrysler Corporation, dated as of October 1, 1996 (1)
10.3 Dealer Sales and Service Agreement dated September 23, 1996, between
the Nissan Division of Nissan Motor Corporation, U.S.A., Quality
Nissan, Inc. and Cross-Continent Auto Retailers, Inc. (8)
10.4 Dealer Sales and Service Agreement dated September 23, 1996, between
the Nissan Division of Nissan Motor Corporation, U.S.A., Performance
Nissan and Cross-Continent Auto Retailers, Inc. (5)
10.4 Dollar Volume Contract dated March 31, 1994, between Plains Chevrolet,
Inc., Westgate Chevrolet, Inc., Midway Chevrolet, Inc., Quality
Nissan, Inc. and Amarillo Globe News (1)
10.5 Sublease Agreement dated June 1, 1995, between Gilliland Group Family
Partnership and Performance Nissan, Inc. (1)
10.6 Lease Agreement dated March 1, 1994, among John W. Adams, Eleanore A.
Braly as Trustee of the Eleanore A. Braly Trust, Romie G. Carpenter,
Melody Lynn Goff, and Selden Simpson and Quality Nissan, Inc. (1)
10.7 Office Lease dated June 1, 1996, between Gilliland Group Family
Partnership and Cross-Country Auto Retailers, Inc.(now named Cross-
Continent Auto Retailers, Inc.) (1)
10.8 Wholesale Security Agreement, as amended, dated December 4, 1995,
between General Motors Acceptance Corporation and Performance Dodge,
Inc. (1)(9)
10.9 Corporation and Shareholders' Agreement of Xaris Management Co. (1)
10.10 Documents dated December 4, 1995, relating to $5,550,000 loan by
General Motors Acceptance Corporation to Performance Dodge, Inc. (1)
10.10.1 Promissory Note by Performance Dodge, Inc. to General Motors
Acceptance Corporation, in the amount of $1,850,000 (4)
10.10.2 Promissory Note by Performance Dodge, Inc. to General Motors
Acceptance Corporation, in the amount of $3,700,000 (4)
10.10.3 Cross-Default and Cross-Collateralization Agreement between General
Motors Acceptance Corporation and Performance Dodge, Inc. (4)
10.10.4 Security Agreement between General Motors Acceptance Corporation and
Performance Dodge, Inc. (4)
10.10.5 Mortgage, Assignment and Security Agreement between General Motors
Acceptance Corporation and Performance Dodge, Inc. (4)
10.11 Documents relating to loan by General Motors Acceptance Corporation
to Midway Chevrolet, Inc. (1)
10.11.1 Promissory Note dated December 15, 1989, by Midway Chevrolet, Inc. to
General Motors Acceptance Corporation, in the amount of $977,249.74
(4)
10.11.2 Renewal, Extension and Modification Agreement dated February 20, 1995,
between General Motors Acceptance Corporation and Midway Chevrolet,
Inc. (4)
10.11.3 Security Agreement dated February 20, 1995, between General Motors
Acceptance Corporation and Midway Chevrolet, Inc. (4)
10.12 Documents dated December 4, 1995, relating to $1,350,000 loan by
General Motors Acceptance Corporation to Performance Nissan,
L.L.C. (1)
10.12.1 Promissory Note by Performance Nissan, L.L.C. to General Motors
Acceptance Corporation, in the amount of $1,350,000 (4)
10.12.2 Cross-Default and Cross-Collateralization Agreement between General
Motors Acceptance Corporation and Performance Nissan, L.L.C. (4)
10.12.3 Security Agreement between General Motors Acceptance Corporation and
Performance Nissan, L.L.C. (4)
10.13 Documents relating to used vehicle inventory financing agreements
between General Motors Acceptance Corporation and Cross-Continent
Auto Retailers, Inc. dealership subsidiaries (1)
10.13.1 Used Vehicle Wholesale Borrowing Base Credit Line Loan Agreement dated
June 7, 1996, between General Motors Acceptance Corporation and
Performance Dodge, Inc. (4)(9)
10.13.2 Promissory Note dated June 7, 1996, by Performance Dodge, Inc. to
General Motors Acceptance Corporation, in the amount of $3,000,000
(4)(10)
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<PAGE>
10.13.3 Cross-Default and Cross-Collateralization Agreements between General
Motors Acceptance Corporation and Performance Nissan, Inc.,
Performance Dodge, Inc., Midway Chevrolet, Inc., Plains Chevrolet,
Inc., Quality Nissan, Inc., and Westgate Chevrolet, Inc. (4)
10.14(*) Employment Contract dated February 21, 1997, by and between Cross-
Continent Auto Retailers, Inc. and James F. Purser (4)
10.15(*) Employment Contract dated February 18, 1997, by and between Cross-
Continent Auto Retailers, Inc. and R. Wayne Moore
10.16(*) Employment Agreement dated as of April 1, 1997, by and between R.
Douglas Spedding and Cross-Continent Auto Retailers, Inc. (3)
10.17(*) Employment Agreement dated as of April 1, 1997, by and between Douglas
J. Spedding and Cross-Continent Auto Retailers, Inc. (3)
10.18 Promissory Note dated April 1, 1997, by Cross-Continent Auto
Retailers, Inc. to the order of R. Douglas Spedding in the
principal amount of $7,000,000 (3)
10.19 Promissory Note dated April 4, 1997, by Cross-Continent Auto
Retailers, Inc. to Amarillo National Bank in the principal amount
of $8,000,000 (3)
10.20 Documents dated April 10, 1997, relating to promissory note by
Cross-Continent Auto Retailers, Inc. to the order of RDS, Inc. in
the principal amount of $2,000,000 (3)
10.20.1 Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
of RDS, Inc. (3)
10.20.2 Security Agreement between Cross-Continent Auto Retailers, Inc. and
RDS, Inc. (3)
10.20.3 Deed of Trust between Cross-Continent Auto Retailers, Inc. and RDS,
Inc. (3)
10.21 Documents dated April 10, 1997, relating to promissory note by
Cross-Continent Auto Retailers, Inc. to the order of R. Douglas
Spedding in the principal amount of $5,500,000 (3)
10.21.1 Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
of R. Douglas Spedding (3)
10.21.2 Security Agreement between Cross-Continent Auto Retailers, Inc. and R.
Douglas Spedding (3)
10.21.3 Deed of Trust between Cross-Continent Auto Retailers, Inc. and R.
Douglas Spedding (3)
10.22 Release and Indemnification Agreement dated as of April 10, 1997,
between Cross-Continent Auto Retailers, Inc. And R. Douglas
Spedding (3)
10.23 Unsecured Promissory Note, dated July 1, 1997, by Cross-Continent
Auto Retailers, Inc. to The Jack Biegger Revocable Living Trust,
in the principal amount of $360,000.00. (11)
10.24 Unsecured Promissory Note, dated July 1, 1997, by Cross-Continent
Auto Retailers, Inc. to The Dale M. Edwards Revocable Family
Trust, in the principal amount of $240,000.00. (11)
10.25 Unsecured Promissory Note, dated July 1, 1997, by Sahara Nissan,
Inc. to The Jack Biegger Revocable Living Trust, in the principal
amount of $275,000.00.(11)
10.26 Unsecured Promissory Note, dated July 1, 1997, by Sahara Nissan,
Inc. to The Dale M. Edwards Revocable Family Trust, in the
principal amount of $125,000.00. (11)
10.27 Documents, dated as of June 26, 1997, relating to line of credit
for Cross-Continent Auto Retailers, Inc. with Texas Commerce Bank
National Association, individually and as agent. (11)
10.27.1 Revolving Credit Agreement between Cross-Continent Auto Retailers,
Inc., and Texas Commerce Bank National Association. (11)
10.27.2 Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
subsidiaries to the order of Texas Commerce Bank National Association.
(11)
10.27.3 Pledge and Security Agreement between Cross-Continent Auto Retailers,
Inc. and Texas Commerce Bank National Association. (11)
10.28 Dealer Sales and Service Agreement dated July ___, 1997, between
the Nissan Division of Nissan Motor Corporation, U.S.A., Sahara
Nissan, Inc., Cross-Continent Auto Retailers, Inc., and Bill A.
Gilliland. (11)
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10.29 Environmental Agreement dated July 1, 1997 between Cross-
Continent Auto Retailers, Inc. and The Jack Biegger Revocable
Living Trust. (11)
10.30 Separation Agreement dated as of June 20, 1997 between Cross-
Continent Auto Retailers, Inc. and Emmett M. Rice, Jr.
10.31 Management Agreement dated as of June 1, 1997 among Cross-
Continent Auto Retailers, Inc., Performance Nissan, Inc.,
Performance Dodge, Inc., and Emmett M. Rice, Jr.
27.1 Financial Data Table
- -------------------
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 333-0685), incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, incorporated herein by
reference.
(3) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated April 10, 1997, incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, incorporated herein by
reference.
(5) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the Quarterly Period Ended September 30, 1996, incorporated herein
by reference.
(6) Previously filed as an exhibit to the Company's Registration Statement on
Form S-8, filed with the Securities and Exchange Commission on March 7,
1997, incorporated herein by reference.
(7) Substantially identical agreements exist between the Chevrolet Division and
each of Midway Chevrolet, Inc. and Westgate Chevrolet, Inc.
(8) Substantially identical Agreement exists between the Nissan Division and
Performance Nissan, Inc.
(9) Substantially identical Agreements exist between General Motors Acceptance
Corporation and each of Midway Chevrolet, Inc., Plains Chevrolet, Inc.,
Westgate Chevrolet, Inc., Quality Nissan, Inc., and Performance Nissan,
Inc.
(10) Substantially identical Promissory Notes have been executed by Midway
Chevrolet, Inc., Plains Chevrolet, Inc., Westgate Chevrolet, Inc., Quality
Nissan, Inc., and Performance Nissan, Inc., in the amounts indicated for
each dealership subsidiary in the Cross-Default and Cross-Collateralization
Agreement (Exhibit 10.13.3)
(11) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated July 15, 1997, incorporated herein by reference.
(b) REPORTS ON FORM 8-K
(1) A Form 8-K was filed on April 25, 1997 reporting the purchase of
all the outstanding capital stock of each of Douglas Toyota,
Inc., a Colorado corporation, and Toyota West Sales & Service,
Inc., a Nevada corporation, together with certain real estate to
be used in connection with both dealerships.
(2) A Form 8-K/A No. 1 was filed on June 24, 1997 completing Item 7
Financial Statements and Pro Forma Financial Information.
(3) A Form 8-K was filed on July 15, 1997 reporting the purchase of
all the outstanding capital stock of Sahara Nissan, Inc., a
Nevada corporation.
(4) A Form 8-K/A No. 1 was filed on August 13, 1997 completing Item 7
Financial Statements and Pro Forma Financial Information.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CROSS-CONTINENT AUTO RETAILERS, INC.
Date: August 13, 1997 By: /s/ BILL GILLILAND
----------------------------------
Bill Gilliland, Chairman and
Chief Executive Officer
Date: August 13, 1997 By: /s/ JAMES F. PURSER
-----------------------------------
James F. Purser,
Chief Financial Officer
Date: August 13, 1997 By: /s/ CHARLES D. WINTON
-----------------------------------
Charles D. Winton, Vice President
and Chief Accounting Officer
22
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- ---------------------------------------------------
2.1 Asset Purchase Agreement dated as of June 17, 1996, among Lynn Hickey
Dodge, Inc., Lynn Hickey, and Cross Country Dodge, Inc. (1)
2.2 Stock Purchase Agreement, dated as of January 23, 1997, by and between
Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding (2)
2.3 Amendment to Stock Purchase Agreement dated as of April 1, 1997, by
and between Cross-Continent Auto Retailers, Inc. and R. Douglas
Spedding (3)
2.4 Stock Purchase Agreement dated as of February 28, 1997, among Cross-
Continent Auto Retailers, Inc., Jack Biegger, Dale Edwards, and Sahara
Datsun, Inc., d/b/a Jack Biegger Nissan, as amended by the Amendment
to Stock Purchase Agreement dated as of March 17, 1997, among Cross-
Continent Auto Retailers, Inc., Jack Biegger, Dale Edwards, and Sahara
Nissan, Inc., d/b/a Jack Biegger Nissan (4)
2.5 Second Amendment to Stock Purchase Agreement dated as of April 30,
1997, by and between Cross-Continent Auto Retailers, Inc., Jack
Biegger, Dale Edwards, and Sahara Datsun, Inc., d/b/a Jack Biegger
Nissan, as amended by the Amendment to Stock Purchase Agreement dated
as of March 17, 1997, among Cross-Continent Auto Retailers, Inc., Jack
Biegger, Dale Edwards, and Sahara Nissan, Inc., d/b/a Jack Biegger
Nissan
2.6 Asset Purchase Agreement dated as of April 16, 1997, by and between
JRJ Investments, Inc., a Nevada corporation, as seller, The Chaisson
Family Trust-R501, the shareholders and the Company, as buyer
2.6.1 Consent to Termination of Agreements dated as of August 5, 1997,
among Cross-Continent Auto Retailers, Inc., JRJ Investments, Inc.,
and The Chaisson Family Trust R-501.
2.7 Purchase Agreement dated as of March 1, 1997, between RDS, Inc. and
Cross-Continent Auto Retailers, Inc.(omitting exhibits thereto, which
will be furnished supplementally to the Commission upon request) (3)
2.8 Purchase Agreement dated as of March 1, 1997, between R. Douglas
Spedding and Cross-Continent Auto Retailers, Inc.(omitting exhibits
thereto, which will be furnished supplementally to the Commission upon
request) (3)
2.9 Third Amendment to Stock Purchase Agreement, dated as of May 9, 1997,
among Cross-Continent Auto Retailers, Inc., The Jack Biegger Revocable
Living Trust, The Dale M. Edwards Revocable Family Trust, and Sahara
Nissan, Inc. d/b/a Jack Biegger Nissan. (11)
2.10 Stock Purchase Agreement dated as of June 20, 1997 between Cross-
Continent Auto Retailers, Inc. and Benji Investments, Ltd. (omitting
exhibits thereto, which will be furnished supplementally to the
Commission upon request)
3.1 Amended and Restated Certificate of Incorporation of Cross-Continent
Auto Retailers, Inc. (5)
3.3 Amended and Restated Bylaws of Cross-Continent Auto Retailers, Inc.
(5)
4.1 Specimen Common Stock Certificate (5)
4.2 Rights Agreement between Cross-Continent Auto Retailers, Inc. and The
Bank of New York, as rights agent (5)
4.3 Amended and Restated 1996 Stock Option Plan of Cross-Continent Auto
Retailers, Inc. (6)
4.4 Registration Rights Agreement dated as of April 1, 1997, by and
between Cross-Continent Auto Retailers, Inc. and R. Douglas Spedding
(3)
10.1 Dealer Sales and Service Agreement dated November 1, 1995, between the
Chevrolet Division of General Motors Corporation and Plains Chevrolet,
Inc., as amended by Supplemental Agreement dated as of July 29, 1996
(1)(7)
10.2 Sales and Service Agreement between Performance Dodge, Inc. and
Chrysler Corporation, dated as of October 1, 1996 (1)
10.3 Dealer Sales and Service Agreement dated September 23, 1996, between
the Nissan Division of Nissan Motor Corporation, U.S.A., Quality
Nissan, Inc. and Cross-Continent Auto Retailers, Inc. (8)
23
<PAGE>
10.4 Dealer Sales and Service Agreement dated September 23, 1996, between
the Nissan Division of Nissan Motor Corporation, U.S.A., Performance
Nissan and Cross-Continent Auto Retailers, Inc. (5)
10.4 Dollar Volume Contract dated March 31, 1994, between Plains Chevrolet,
Inc., Westgate Chevrolet, Inc., Midway Chevrolet, Inc., Quality
Nissan, Inc. and Amarillo Globe News (1)
10.5 Sublease Agreement dated June 1, 1995, between Gilliland Group Family
Partnership and Performance Nissan, Inc. (1)
10.6 Lease Agreement dated March 1, 1994, among John W. Adams, Eleanore A.
Braly as Trustee of the Eleanore A. Braly Trust, Romie G. Carpenter,
Melody Lynn Goff, and Selden Simpson and Quality Nissan, Inc. (1)
10.7 Office Lease dated June 1, 1996, between Gilliland Group Family
Partnership and Cross-Country Auto Retailers, Inc.(now named Cross-
Continent Auto Retailers, Inc.) (1)
10.8 Wholesale Security Agreement, as amended, dated December 4, 1995,
between General Motors Acceptance Corporation and Performance Dodge,
Inc. (1)(9)
10.9 Corporation and Shareholders' Agreement of Xaris Management Co. (1)
10.10 Documents dated December 4, 1995, relating to $5,550,000 loan by
General Motors Acceptance Corporation to Performance Dodge, Inc. (1)
10.10.1 Promissory Note by Performance Dodge, Inc. to General Motors
Acceptance Corporation, in the amount of $1,850,000 (4)
10.10.2 Promissory Note by Performance Dodge, Inc. to General Motors
Acceptance Corporation, in the amount of $3,700,000 (4)
10.10.3 Cross-Default and Cross-Collateralization Agreement between General
Motors Acceptance Corporation and Performance Dodge, Inc. (4)
10.10.4 Security Agreement between General Motors Acceptance Corporation and
Performance Dodge, Inc. (4)
10.10.5 Mortgage, Assignment and Security Agreement between General Motors
Acceptance Corporation and Performance Dodge, Inc. (4)
10.11 Documents relating to loan by General Motors Acceptance Corporation
to Midway Chevrolet, Inc. (1)
10.11.1 Promissory Note dated December 15, 1989, by Midway Chevrolet, Inc. to
General Motors Acceptance Corporation, in the amount of $977,249.74
(4)
10.11.2 Renewal, Extension and Modification Agreement dated February 20, 1995,
between General Motors Acceptance Corporation and Midway Chevrolet,
Inc. (4)
10.11.3 Security Agreement dated February 20, 1995, between General Motors
Acceptance Corporation and Midway Chevrolet, Inc. (4)
10.12 Documents dated December 4, 1995, relating to $1,350,000 loan by
General Motors Acceptance Corporation to Performance Nissan,
L.L.C. (1)
10.12.1 Promissory Note by Performance Nissan, L.L.C. to General Motors
Acceptance Corporation, in the amount of $1,350,000 (4)
10.12.2 Cross-Default and Cross-Collateralization Agreement between General
Motors Acceptance Corporation and Performance Nissan, L.L.C. (4)
10.12.3 Security Agreement between General Motors Acceptance Corporation and
Performance Nissan, L.L.C. (4)
10.13 Documents relating to used vehicle inventory financing agreements
between General Motors Acceptance Corporation and Cross-Continent
Auto Retailers, Inc. dealership subsidiaries (1)
10.13.1 Used Vehicle Wholesale Borrowing Base Credit Line Loan Agreement dated
June 7, 1996, between General Motors Acceptance Corporation and
Performance Dodge, Inc. (4)(9)
10.13.2 Promissory Note dated June 7, 1996, by Performance Dodge, Inc. to
General Motors Acceptance Corporation, in the amount of $3,000,000
(4)(10)
10.13.3 Cross-Default and Cross-Collateralization Agreements between General
Motors Acceptance Corporation and Performance Nissan, Inc.,
Performance Dodge, Inc., Midway Chevrolet, Inc., Plains Chevrolet,
Inc., Quality Nissan, Inc., and Westgate Chevrolet, Inc. (4)
10.14(*) Employment Contract dated February 21, 1997, by and between Cross-
Continent Auto Retailers, Inc. and James F. Purser (4)
24
<PAGE>
10.15(*) Employment Contract dated February 18, 1997, by and between Cross-
Continent Auto Retailers, Inc. and R. Wayne Moore
10.16(*) Employment Agreement dated as of April 1, 1997, by and between R.
Douglas Spedding and Cross-Continent Auto Retailers, Inc. (3)
10.17(*) Employment Agreement dated as of April 1, 1997, by and between Douglas
J. Spedding and Cross-Continent Auto Retailers, Inc. (3)
10.18 Promissory Note dated April 1, 1997, by Cross-Continent Auto
Retailers, Inc. to the order of R. Douglas Spedding in the
principal amount of $7,000,000 (3)
10.19 Promissory Note dated April 4, 1997, by Cross-Continent Auto
Retailers, Inc. to Amarillo National Bank in the principal amount
of $8,000,000 (3)
10.20 Documents dated April 10, 1997, relating to promissory note by
Cross-Continent Auto Retailers, Inc. to the order of RDS, Inc. in
the principal amount of $2,000,000 (3)
10.20.1 Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
of RDS, Inc. (3)
10.20.2 Security Agreement between Cross-Continent Auto Retailers, Inc. and
RDS, Inc. (3)
10.20.3 Deed of Trust between Cross-Continent Auto Retailers, Inc. and RDS,
Inc. (3)
10.21 Documents dated April 10, 1997, relating to promissory note by
Cross-Continent Auto Retailers, Inc. to the order of R. Douglas
Spedding in the principal amount of $5,500,000 (3)
10.21.1 Promissory Note by Cross-Continent Auto Retailers, Inc. to the order
of R. Douglas Spedding (3)
10.21.2 Security Agreement between Cross-Continent Auto Retailers, Inc. and R.
Douglas Spedding (3)
10.21.3 Deed of Trust between Cross-Continent Auto Retailers, Inc. and R.
Douglas Spedding (3)
10.22 Release and Indemnification Agreement dated as of April 10, 1997,
between Cross-Continent Auto Retailers, Inc. And R. Douglas
Spedding (3)
10.23 Unsecured Promissory Note, dated July 1, 1997, by Cross-Continent
Auto Retailers, Inc. to The Jack Biegger Revocable Living Trust,
in the principal amount of $360,000.00. (11)
10.24 Unsecured Promissory Note, dated July 1, 1997, by Cross-Continent
Auto Retailers, Inc. to The Dale M. Edwards Revocable Family
Trust, in the principal amount of $240,000.00. (11)
10.25 Unsecured Promissory Note, dated July 1, 1997, by Sahara Nissan,
Inc. to The Jack Biegger Revocable Living Trust, in the principal
amount of $275,000.00.(11)
10.26 Unsecured Promissory Note, dated July 1, 1997, by Sahara Nissan,
Inc. to The Dale M. Edwards Revocable Family Trust, in the
principal amount of $125,000.00. (11)
10.27 Documents, dated as of June 26, 1997, relating to line of credit
for Cross-Continent Auto Retailers, Inc. with Texas Commerce Bank
National Association, individually and as agent. (11)
10.27.1 Revolving Credit Agreement between Cross-Continent Auto Retailers,
Inc., and Texas Commerce Bank National Association. (11)
10.27.2 Revolving Note by Cross-Continent Auto Retailers, Inc. and all of its
subsidiaries to the order of Texas Commerce Bank National Association.
(11)
10.27.3 Pledge and Security Agreement between Cross-Continent Auto Retailers,
Inc. and Texas Commerce Bank National Association. (11)
10.28 Dealer Sales and Service Agreement dated July ___, 1997, between
the Nissan Division of Nissan Motor Corporation, U.S.A., Sahara
Nissan, Inc., Cross-Continent Auto Retailers, Inc., and Bill A.
Gilliland. (11)
10.29 Environmental Agreement dated July 1, 1997 between Cross-
Continent Auto Retailers, Inc. and The Jack Biegger Revocable
Living Trust. (11)
10.30 Separation Agreement dated as of June 20, 1997 between Cross-
Continent Auto Retailers, Inc. and Emmett M. Rice, Jr.
25
<PAGE>
10.31 Management Agreement dated as of June 1, 1997 among Cross-
Continent Auto Retailers, Inc., Performance Nissan, Inc.,
Performance Dodge, Inc., and Emmett M. Rice, Jr.
27.1 Financial Data Table
- -------------------
(1) Previously filed as an exhibit to the Company's Registration Statement on
Form S-1 (Registration No. 333-0685), incorporated herein by reference.
(2) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, incorporated herein by
reference.
(3) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated April 10, 1997, incorporated herein by reference.
(4) Previously filed as an exhibit to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996, incorporated herein by
reference.
(5) Previously filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the Quarterly Period Ended September 30, 1996, incorporated herein
by reference.
(6) Previously filed as an exhibit to the Company's Registration Statement on
Form S-8, filed with the Securities and Exchange Commission on March 7,
1997, incorporated herein by reference.
(7) Substantially identical agreements exist between the Chevrolet Division and
each of Midway Chevrolet, Inc. and Westgate Chevrolet, Inc.
(8) Substantially identical Agreement exists between the Nissan Division and
Performance Nissan, Inc.
(9) Substantially identical Agreements exist between General Motors Acceptance
Corporation and each of Midway Chevrolet, Inc., Plains Chevrolet, Inc.,
Westgate Chevrolet, Inc., Quality Nissan, Inc., and Performance Nissan,
Inc.
(10) Substantially identical Promissory Notes have been executed by Midway
Chevrolet, Inc., Plains Chevrolet, Inc., Westgate Chevrolet, Inc., Quality
Nissan, Inc., and Performance Nissan, Inc., in the amounts indicated for
each dealership subsidiary in the Cross-Default and Cross-Collateralization
Agreement (Exhibit 10.13.3)
(11) Previously filed as an exhibit to the Company's Current Report on Form 8-K
dated July 15, 1997, incorporated herein by reference.
(b) REPORTS ON FORM 8-K
(1) A Form 8-K was filed on April 25, 1997 reporting the purchase of
all the outstanding capital stock of each of Douglas Toyota,
Inc., a Colorado corporation, and Toyota West Sales & Service,
Inc., a Nevada corporation, together with certain real estate to
be used in connection with both dealerships.
(2) A Form 8-K/A No. 1 was filed on June 24, 1997 completing Item 7
Financial Statements and Pro Forma Financial Information.
(3) A Form 8-K was filed on July 15, 1997 reporting the purchase of
all the outstanding capital stock of Sahara Nissan, Inc., a
Nevada corporation.
(4) A Form 8-K/A No. 1 was filed on August 13, 1997 completing Item 7
Financial Statements and Pro Forma Financial Information.
26
<PAGE>
EXHIBIT 2.6.1
CONSENT TO TERMINATION OF AGREEMENTS
The undersigned parties to that certain Amended and Restated Asset Purchase
Agreement, dated as of May 19, 1997 ("Purchase Agreement"), do hereby consent to
the termination of the Purchase Agreement and all agreements (between any of the
undersigned parties) that are related to the transactions contemplated in the
Purchase Agreement.
BUYER: CROSS-CONTINENT AUTO RETAILERS, INC.,
a Delaware corporation
By: /s/ Robert W. Hall
---------------------------------------
Robert W. Hall, Senior Vice Chairman
Date: August 5, 1997
SELLER: JRJ INVESTMENTS, INC.,
a Nevada corporation
By: /s/ James J. Chaisson, Sr.
---------------------------------------
James J. Chaisson, Sr., President
Date: August 5, 1997
SHAREHOLDER: THE CHAISSON FAMILY TRUST R-501
By: /s/ James J. Chaisson, Sr.
---------------------------------------
James J. Chaisson, Sr., Trustee
Date: August 5, 1997
<PAGE>
Exhibit 2.10
- -------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
DATED AS OF JUNE 20, 1997
BY AND BETWEEN
CROSS-CONTINENT AUTO RETAILERS, INC.
AND
BENJI INVESTMENTS, LTD.
Relating to All of the Outstanding
Capital Stock of Each of
PERFORMANCE NISSAN, INC.
AND
PERFORMANCE DODGE, INC.
- -------------------------------------------------------------------------------
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of
June 20, 1997, is by and between CROSS-CONTINENT AUTO RETAILERS, INC.
("Seller"), a Delaware corporation and the sole shareholder of each of
PERFORMANCE NISSAN, INC., an Oklahoma corporation ("Performance Nissan") and
PERFORMANCE DODGE, INC., an Oklahoma corporation ("Performance Dodge")
(Performance Dodge and Performance Nissan being sometimes hereinafter referred
to collectively as the "Companies" and individually as a "Company"), and Benji
Investments, Ltd. ("Purchaser"), a Texas limited partnership, with Benji
Investments Management Company, Inc., a Texas corporation, as its sole general
partner.
W I T N E S S E T H :
WHEREAS, Seller is the owner of all of the issued and outstanding
shares of capital stock (the "Stock") of each of the Companies; and
WHEREAS, Seller desires to sell, and Purchaser desires to
acquire, through an exchange intended to qualify for tax free treatment under
Section 355 of the Internal Revenue Code of 1986, as amended (the "Code"), the
Stock pursuant to this Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be
derived and the representations and warranties, conditions and promises herein
contained, and intending to be legally bound hereby, the parties hereto agree as
follows:
ARTICLE I
SALE OF STOCK
Section 1 SALE OF STOCK. Subject to the terms and conditions
herein stated, Seller agrees to sell, assign, transfer, and deliver the Stock to
Purchaser, and Purchaser agrees to purchase the Stock from Seller.
Section 2 PURCHASE PRICE. In consideration of the purchase by
Purchaser of the Stock, on the Initial Closing Date (hereinafter defined),
Purchaser shall deliver to Winstead Sechrest & Minick P.C. (the "Escrow Agent")
a number of shares of common stock, par value $.01 per share, of Seller (the "C-
CAR Common Stock") having an aggregate Fair Market Value (hereinafter defined)
equal to $9,000,000, subject to the provisions of Article I, Section 3 below
(the shares of C-CAR Common Stock delivered by Purchaser to Escrow Agent on the
Initial Closing Date being herein referred to as the "C-CAR Shares"). For
purposes of this Agreement, the per share Fair Market Value of the C-CAR Shares
will be an amount equal to the average of the closing sale price of the C-CAR
2
<PAGE>
Common Stock on the New York Stock Exchange for the four days beginning Monday,
June 16, 1997, and ending on Thursday, June 19, 1997.
Section 3 MAXIMUM C-CAR SHARES. Notwithstanding the provisions
of Article I, Section 2 above, the maximum number of shares of C-CAR Common
Stock that Purchaser shall be required to deliver to Seller in consideration of
the purchase of the Stock shall be 760,000 shares (the "Maximum C-CAR Shares").
If the number of shares of C-CAR Common Stock which Purchaser is obligated to
deliver to Seller in consideration of the purchase of the Stock is 760,000
shares, and the Fair Market Value of 760,000 shares of C-CAR Common Stock is
less than $9,000,000, Seller shall have no obligation to sell the Stock to
Purchaser unless Seller delivers to Purchaser, within five (5) days of the date
of this Agreement, Seller's written election to accept the Maximum C-CAR Shares
as the purchase price for the Stock. In the event no such written election is
so delivered by Seller, this Agreement shall automatically terminate and be of
no further force and effect.
Section 4 INITIAL CLOSING. The initial closing (the "Initial
Closing") shall occur at such time and on such date as the conditions to the
Initial Closing set forth in Articles V and VI hereof shall have been satisfied
or waived in writing (such date being herein referred to as the "Initial Closing
Date"). On the Initial Closing Date, (i) Seller shall deliver certificates
evidencing the Stock, duly endorsed, to the Escrow Agent, and (ii) Purchaser
shall deliver certificates evidencing the C-CAR Shares, duly endorsed, to the
Escrow Agent, such Stock and C-CAR Shares to be held by the Escrow Agent until
the Final Closing Date (hereinafter defined) pursuant to the terms of an Escrow
Agreement (herein so called) to be entered into between Purchaser, Seller and
the Escrow Agent on the Initial Closing Date, in substantially the form of
EXHIBIT A hereto.
Section 5 FINAL CLOSING. The final closing of the sale of the
Stock (the "Final Closing") shall take place at 9:00 a.m. on August 15, 1997, or
on such earlier date as the conditions to the Final Closing set forth in
Articles V and VI hereof shall have been satisfied or waived, or on such other
date as the parties hereto shall by written instrument designate. Such time and
date are herein referred to as the "Final Closing Date."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
Section 1 OWNERSHIP OF STOCK. Except as set forth on Schedule
2.3 hereto, Seller is the lawful owner of the Stock, free and clear of all
liens, encumbrances, restrictions and claims of every kind. Seller has the full
legal right, power and authority to sell, assign, transfer and convey the Stock
in accordance with the terms and subject to the conditions of this Agreement.
The delivery to Purchaser of the Stock pursuant to the provisions of this
Agreement will transfer to Purchaser valid title thereto, free and clear of any
and all adverse claims.
3
<PAGE>
Section 2 EXISTENCE AND GOOD STANDING OF THE COMPANIES;
SUBSIDIARIES. Except as set forth on Schedule 2.2 hereto, each Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and each has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted. Except as set forth on Schedule 2.2 hereto,
each Company is duly qualified or licensed as a foreign corporation to do
business, and is in good standing in each jurisdiction in which the character or
location of the property owned, leased, or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so duly qualified or licensed would not have a material adverse
effect on the business, financial condition, or results of operations of the
Companies, taken as a whole. Neither of the Companies has any subsidiaries.
The term "subsidiary," as used in this Agreement, means any Person (as defined
in Article VIII, Section 6 hereof) of which another Person (either alone or
together with other subsidiaries of such other Person), owns directly or
indirectly, more than 50% of the stock or other equity interests that are
generally entitled to vote for the election of the board of directors or
governing body of the Person.
Section 3 CAPITAL STOCK. Performance Nissan has an authorized
capitalization consisting of 50,000 shares of common stock, par value $1.00 per
share, of which 10,000 shares are issued and outstanding. Performance Dodge has
an authorized capitalization consisting of 100,000 shares of common stock, par
value $.10 per share, of which 1,000 shares are issued and outstanding. All
outstanding shares of capital stock of each of the Companies are owned by
Seller and have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in Schedule 2.3 attached hereto, there are no
outstanding subscriptions, options, warrants, rights, calls, commitments,
conversion rights, rights of exchange, plans or other agreements providing for
the purchase, issuance or sale of any shares of the capital stock of either
Company, other than as contemplated by this Agreement.
Section 4 FINANCIAL STATEMENTS. Seller has heretofore furnished
Purchaser with a balance sheet of each Company (each a "Balance Sheet" and
collectively, the "Balance Sheets") as of May 31, 1997 (the "Balance Sheet
Date"), with adjustments to eliminate debt and transfer real estate as set forth
in Schedule 2.4 attached hereto, and the related statements of income,
shareholders equity and cash flows for the period then ended. Such financial
statements, including the footnotes thereto, except as indicated therein and
subject to the adjustments described on Schedule 2.4 hereto, have been prepared
in accordance with generally accepted accounting principles and fairly present
in all material respects the financial condition and results of the operations
of the Companies and the changes in their financial positions at such date and
for such period.
Section 5 TITLE TO PROPERTIES; ENCUMBRANCES. Except as set
forth in Schedule 2.5 attached hereto, each Company has good title to all its
material properties and assets, including, without limitation, all the material
properties and assets reflected in the Balance Sheets, subject to no
encumbrance, lien, charge or other restriction of any kind or character, except
for
(a) liens reflected on the Balance Sheets or on
Schedule 2.5,
4
<PAGE>
(b) liens consisting of zoning or planning restrictions,
easements, permits and other restrictions or
limitations on the use of real property or
irregularities in title thereto which do not materially
detract from the value of, or impair the use of, such
property by either Company in the operation of its
business,
(c) liens for taxes, assessments or governmental charges or
levies on property not yet due and delinquent, and
(d) liens which do not materially affect the business,
financial condition or operation of either of the
Companies.
(Liens of the type described in clauses (a) through (d) above, inclusive, are
sometimes referred to as "Permitted Liens"). Except as set forth in Schedule
2.5, the Company's material properties and assets are in good working order and
condition, ordinary wear and tear excepted.
Section 6 LEASES. Schedule 2.6 attached hereto contains a list
of all leases of real property to which either Company is a party. Each lease
set forth in Schedule 2.6 is in full force and effect; all rents and additional
rents due to date on each such lease have been paid; in each case, neither
Company has received notice that it is in material default thereunder; and there
exists no material event, occurrence, condition or act (including the purchase
of the Stock hereunder) which, with the giving of notice, the lapse of time or
the happening of any further event or condition, would become a material default
by either Company under such lease.
Section 7 MATERIAL CONTRACTS. To the knowledge of Seller,
except as set forth in Schedule 2.6, 2.7 or 2.12 attached hereto, neither
Company has or is bound by
(a) any material agreement, contract or commitment relating
to the employment of any Person by either Company,
(b) any agreement, contract or commitment limiting the
freedom of either Company to engage in any line of
business or to compete with any other Person, or
(c) any agreement, contract or commitment which involves
payment by either Company of $100,000 or more in any
calendar year and is not cancelable without penalty
within 30 days.
Neither Company has violated any term or condition of any contract or agreement
set forth in Schedule 2.7 in any material respect, and, to the knowledge of
Seller, there exists no material event, occurrence, condition, or act which,
with the giving of notice, the lapse of time, or the happening of any further
event or condition, would become a material default by either Company under any
such contract or agreement, and the sale of the Stock hereunder shall not
constitute a default under any such contract or agreement (except for dealer
sales and service agreements with Nissan Motor Corporation, U.S.A. and Chrysler
Corporation). Contracts made in the ordinary course of business
5
<PAGE>
involving an obligation or commitment on the part of a Company of less than
$100,000 in any calendar year shall be deemed not to be material for purposes
of this Article II, Section 7 and shall not be required to be disclosed on
Schedule 2.7.
Section 8 NO VIOLATIONS. Except as set forth in Schedule 2.8
attached hereto and assuming all filings required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), if any, are duly
made and the waiting period thereunder has been terminated or has expired, the
execution and delivery of this Agreement by Seller and the consummation of the
transactions contemplated hereby
(a) will not violate any provision of the Articles of
Incorporation or By-Laws of either Company,
(b) to the knowledge of Seller will not violate any
statute, rule, regulation, order or decree of any
public body or authority by which either Company is
bound or binding upon any of their respective
properties or assets, and
(c) to the knowledge of Seller, will not result in a
violation or breach of, or constitute a default under,
any material license, franchise, permit, indenture,
agreement or other instrument to which either Company
is a party, or by which either Company or any of their
respective assets or properties is bound,
excluding from the foregoing clauses (b) and (c) violations, breaches or
defaults which, either individually or in the aggregate, would not have a
material adverse effect on the business, financial condition or results of
operations of either of the Companies.
Section 9 LITIGATION. Except as set forth in Schedule 2.9
attached hereto, there is no action, suit or proceeding at law or in equity by
any Person or any arbitration or any administrative or other proceeding by or
before any governmental or other instrumentality or agency, pending, or, to the
knowledge of Seller, threatened against either Company which would have a
material adverse effect on the business, financial condition or results of
operations of such Company.
Section 10 TAXES. Each Company has filed or caused to be filed,
or will file or cause to be filed on or prior to the Final Closing Date (as
necessary), all federal, state, local and foreign income tax returns and tax
reports which are required to be filed by, or with respect to, either Company
respecting periods ending on or prior to the Final Closing Date (taking into
account any extension of time to file granted to or on behalf of either Company)
(collectively, the "Returns"), except for Returns the failure to file which
would not, in the aggregate, have a material adverse effect on the business,
financial condition or results of operations of either of the Companies. Except
as set forth in Schedule 2.10 attached hereto, all federal, state, local and
foreign income taxes (including interest and penalties) ("Taxes") shown to be
due and payable on the Returns by or with respect to either Company have been,
or prior to the Final Closing Date will be, paid. Except as disclosed on
Schedule 2.10, (a) there are no waivers in effect of the applicable statutory
period of limitation for federal income taxes of either Company for any taxable
period, and (b) no deficiency assessment or proposed
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adjustment with respect to any tax liability of either Company for any
taxable period is pending or, to the knowledge of Seller, threatened.
Neither Company has entered into any tax allocation agreement with Seller or
any of Seller's other subsidiaries.
Section 11 CONDUCT OF BUSINESS. Since the Balance Sheet Date,
and except as set forth in Schedule 2.11 attached hereto or as contemplated or
expressly required or permitted by this Agreement, neither Company has taken any
action which, if taken subsequent to the execution of this Agreement and on or
prior to the Initial Closing Date, would constitute a breach of Seller's
agreements set forth in Article IV, Section 1.
Section 12 INTELLECTUAL PROPERTIES. Set forth in Schedule 2.12
attached hereto is a list of the material domestic and foreign patents, patent
applications, patent licenses, software licenses, trade names, trademarks,
service marks, trademark registrations and applications, service mark
registrations and applications, copyright registrations and applications owned
by either Company (collectively, the "Intellectual Property"). Unless otherwise
indicated in Schedule 2.12, a Company owns the entire right, title and interest
in and to the Intellectual Property (including, without limitation, the
exclusive right to use and license the same) and each item constituting part of
the Intellectual Property has been, to the extent indicated in Schedule 2.12,
duly registered with, filed in or issued by, as the case may be, the United
States Patent and Trademark Office or such other government entity, domestic or
foreign, as is indicated in Schedule 2.12 and, to the knowledge of Seller, such
registrations, filings and issuances remain in full force and effect. To the
knowledge of Seller, except as stated in Schedule 2.12, there are no pending
proceedings or litigation or other adverse claims made in writing affecting or
with respect to the Intellectual Property.
Section 13 COMPLIANCE WITH LAWS. Except as set forth in
Schedule 2.13 attached hereto, each Company is, to the knowledge of Seller, in
compliance with all applicable laws, regulations, orders, judgments and decrees
except where the failure to so comply would not have a material adverse effect
on the business, financial condition or results of operations of either of the
Companies.
Section 14 EMPLOYEE BENEFIT PLANS. Each material employee
benefit plan within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained or adopted by a
Company (collectively, the "Plans") is set forth in Schedule 2.14 attached
hereto, is in substantial compliance with applicable law and has been
administered and operated in all material respects in accordance with its terms.
Each Plan which is intended to be "qualified" within the meaning of
Section 401(a) of the Code, has received a favorable determination letter from
the Internal Revenue Service, or application for such determination has been
made and is currently pending and, to the knowledge of Seller, no event has
occurred and no condition exists which could reasonably be expected to result in
the revocation of any such determination or disqualification of any Plan. No
Plan is subject to Title IV of ERISA. Full payment has been made of all amounts
which either Company was required under the terms of the Plans to have paid as
contributions to such Plans on or prior to the date hereof (excluding any
amounts not yet due) and no Plan which is subject to Part 3 of Subtitle B of
Title 1 of ERISA has incurred any "accumulated funding deficiency" (within the
meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived. Neither Company nor, to the knowledge of Seller, any other
"disqualified person," or "party in interest" (as
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defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA,
respectively) has engaged in any transactions in connection with any Plan
that could reasonably be expected to result in the imposition of a material
penalty pursuant to Section 502(i) of ERISA, damages pursuant to Section 409
of ERISA, or a tax pursuant to Section 4975(a) of the Code. No material
liability, claim, action or litigation, has been made, commenced or, to the
knowledge of Seller, threatened with respect to any Plan (other than for
benefits payable in the ordinary course and PBGC insurance premiums). No
Plan or related trust owns any securities in violation of Section 407 of
ERISA. Neither Company has ever maintained, contributed to, or participated
or agreed to participate in any "multiemployer plan," as such term is defined
in Section 4001(a)(3) of ERISA.
Section 15 INSURANCE. Schedule 2.15 attached hereto contains a
list of the major policies and contracts for property and casualty insurance
maintained by the Companies. All such policies are in full force and effect.
Seller shall cause each Company to use its reasonable efforts to keep or cause
to be kept such policies (or substantial equivalents) in such amounts duly in
force until the Final Closing Date and shall give Purchaser notice of any
material change in such policies.
Section 16 BROKER'S OR FINDER'S FEES. No agent, broker, Person
or firm acting on behalf of Seller or either Company is, or will be, entitled to
any commission or broker's or finder's fees from any of the parties hereto, or
from any Person controlling, controlled by or under common control with any of
the parties hereto, in connection with any of the transactions contemplated
herein, except for Furman Selz LLC, whose fees and expenses will be paid by
Seller.
Section 17 PURCHASE FOR OWN ACCOUNT. Seller will acquire the
C-CAR Shares for its own account, and not with a view toward any resale or
distribution thereof.
ARTICLE III
REPRESENTATIONS OF PURCHASER
Purchaser represents and warrants as follows:
Section 1 EXISTENCE OF PURCHASER. Purchaser is a limited
partnership duly organized and validly existing under the laws of the State of
Texas. The general partner and each of the limited partners of Purchaser, and
the percentage ownership interests of each of them, are listed on Schedule 3.1
hereto. Purchaser has the power and authority to make, execute, deliver, and
perform this Agreement, and this Agreement has been duly authorized and approved
by all required action of Purchaser. The Person shown as general partner of
Purchaser on Schedule 3.1 hereto has the requisite power and authority to make,
execute and deliver this Agreement on behalf of Purchaser. This Agreement is a
valid and binding obligation of Purchaser enforceable against Purchaser in
accordance with its terms.
Section 2 OWNERSHIP OF STOCK. Purchaser is the lawful owner of
the C-CAR Shares, free and clear of all liens, encumbrances, restrictions
(except for restrictions on the public sale of such Shares)
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and claims of every kind. Purchaser has the full legal right, power and
authority to sell, assign, transfer and convey the C-CAR Shares in accordance
with the terms and subject to the conditions of this Agreement. The delivery
to Seller of the C-CAR Shares pursuant to the provisions of this Agreement
will transfer to Seller valid title thereto, free and clear of any and all
adverse claims.
Section 3 NO RESTRICTIONS. Assuming all filings required by the
HSR Act, if any, are duly made and the waiting period thereunder has been
terminated or expired, the execution and delivery of this Agreement by Purchaser
and the consummation of the transactions contemplated hereby
(a) will not violate any provision of the Certificate of
Limited Partnership or the Partnership Agreement of
Purchaser,
(b) to the knowledge of Purchaser will, not violate any
statute, rule, regulation, order or decree of any
public body or authority by which Purchaser or any of
its properties or assets is bound, and
(c) to the knowledge of Purchaser will, not result in a
violation or breach of, or constitute a default under,
any license, franchise, permit, indenture, agreement or
other instrument to which Purchaser is a party, or by
which Purchaser or any of its properties or assets is
bound,
excluding from the foregoing clauses (b) and (c) violations, breaches or
defaults which, either individually or in the aggregate, would not prevent
Purchaser from performing its obligations under this Agreement or consummation
of the transactions contemplated by this Agreement.
Section 4 PURCHASE FOR INVESTMENT. Purchaser will acquire the
Stock for its own account for investment and not with a view toward any resale
or distribution thereof. Purchaser is (i) an "accredited investor," as such
term is defined in Rule 501(a) of Regulation D promulgated under the Securities
Act of 1933, (ii) sophisticated and has such knowledge and experience as is
necessary to enable Purchaser to evaluate the merits and risks of an investment
in the Stock, and (iii) able to bear the economic risk of an investment in the
Stock for an indefinite period.
Section 5 FINANCING. Purchaser has sufficient shares of C-CAR
Common Stock available to it to purchase all of the Stock pursuant to this
Agreement.
Section 6 BROKER'S OR FINDER'S FEES. No agent, broker, Person
or firm acting on behalf of Purchaser is, or will be, entitled to any commission
or broker's or finder's fees from any of the parties hereto, or from any Person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein.
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ARTICLE IV
CONDUCT OF BUSINESS; EXCLUSIVE DEALING; REVIEW, ETC.
Section 1 CONDUCT OF BUSINESS OF THE COMPANIES. During the
period from the date of this Agreement to the Final Closing Date, Seller agrees
to use its reasonable efforts to cause the Companies to conduct their respective
operations in the ordinary course of business. Notwithstanding the immediately
preceding sentence, pending the Final Closing Date and except as may be first
approved by Purchaser (such approval not to be unreasonably withheld) or as is
otherwise permitted or required by this Agreement, Seller agrees to use its
reasonable efforts to cause
(a) each Company's Articles of Incorporation and By-Laws to
be maintained in their respective forms on the date of
this Agreement,
(b) the compensation payable or to become payable by each
Company to any director, officer or employee being paid
$150,000 per year or more to be maintained at the
amount existing on the date of this Agreement,
(c) each Company to refrain from making any bonus, pension,
retirement or insurance payment or arrangement to or
with any Persons except those that have been accrued or
accrue in the ordinary course of business,
(d) each Company to refrain from entering into any contract
or commitment, except contracts and commitments in the
ordinary course of business for aggregate amounts of
less than $50,000 per fiscal year,
(e) each Company to refrain from increasing its
indebtedness for borrowed money, except current
borrowings in the ordinary course of business under the
General Motors Acceptance Corporation ("GMAC") floor-
plan financing facility,
(f) each Company to refrain from canceling or waiving any
claims or rights of substantial value which
individually or in the aggregate are material to the
Companies, taken as a whole,
(g) each Company to refrain from declaring or paying any
dividends,.
(h) each Company to collect its contracts in transit that
are in existence on the date of this Agreement,
(i) each Company to file any existing claims under the
Company's insurance policies and to obtain the
insurance company's defense of claims made against the
Company, particularly those disclosed in Schedule 2.9,
(including
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assistance from Seller's legal staff and
counsel to enforce insurance coverage in effect and
make claims prior to the Final Closing Date), and
(j) the reconciliation of Seller's payables with each
Company's receivables.
Notwithstanding anything else herein to the contrary, Seller shall not be
responsible for the obligations in Article IV, Section 1 (a) through (j) above,
to the extent Purchaser or its representatives (including Mr. Rice pursuant to
the Management Agreement attached hereto as EXHIBIT B) have taken actions
inconsistent therewith.
Section 2 EXCLUSIVE DEALING. During the period from the date of
this Agreement to August 15, 1997, Seller shall not take any action to, directly
or indirectly, encourage, initiate or engage in discussions or negotiations
with, or provide any information to, any Person other than Purchaser, concerning
any purchase of the Stock or any merger, sale of substantial assets or similar
transaction involving either Company.
Section 3 REVIEW OF THE COMPANY. Purchaser may, prior to the
Final Closing Date, through its representatives, review the properties, books,
and records of the Companies to familiarize itself with such properties and the
businesses of the Companies. Seller shall cause the Companies to permit
Purchaser and its representatives to have reasonable access to the premises and
to the books and records of the Companies during normal working hours and to
furnish Purchaser with such financial and operating data and other information
with respect to the businesses and properties of the Companies as Purchaser
shall from time to time reasonably request. Purchaser may make copies of such
books, records and other information and retain such copies after the Initial
Closing Date. Seller will use its reasonable efforts to provide Purchaser with
copies of any books, records or other information relating to the Companies
requested by Purchaser after the Initial Closing Date. The parties hereto
acknowledge that Purchaser (or an affiliate of Purchaser) and Furman Selz LLC
(on behalf of Seller and the Companies) have entered into a Confidentiality
Agreement dated _______________, 1997 (the "Confidentiality Agreement") and
Purchaser confirms that it and its affiliates will comply with their respective
obligations thereunder.
Section 4 REASONABLE EFFORTS. Each of the parties agrees to use
its reasonable, good faith efforts to take, or cause to be taken, all action to
do, or cause to be done, and to assist and cooperate with the other parties
hereto in doing, all things necessary, proper or advisable to consummate and
make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including, but not limited to:
(a) compliance with the HSR Act, if applicable, in all
respects (including the filing of a notification and
report form to the extent necessary),
(b) obtaining all necessary waivers, consents and approvals
from governmental or regulatory agencies or authorities
and making all necessary registrations and filings
(including, but not limited to, filings with
governmental or regulatory agencies or authorities, if
any) and taking all reasonable steps as
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may be necessary to obtain any approval or waiver from,
or to avoid any action or proceeding by, any
governmental agency or authority,
(c) obtaining all necessary consents, approvals or waivers
from third parties, and
(d) defending any lawsuits or any other legal proceedings
whether judicial or administrative, challenging this
Agreement or the consummation of the transactions
contemplated hereby including, without limitation,
seeking to have any temporary restraining order entered
by any court or administrative authority vacated or
reversed.
Section 5 INTERIM USE OF COMPUTER SYSTEM. Seller will provide
Purchaser with access to the Reynolds + Reynolds computer system currently in
place at the Companies after the Initial Closing Date. Purchaser shall use its
best efforts to cause Reynolds + Reynolds to install a new system to Purchaser's
specifications after the Final Closing Date or purchase the existing equipment
as provided below. Until such installation or purchase of the existing
equipment, Purchaser agrees to reimburse Seller on a monthly basis, beginning on
the Initial Closing Date, for the costs of the equipment lease, support,
licensing fees, and data lines relating to such system and allocated to the
Companies by Seller and as shown on Schedule 3.7. If Purchaser chooses to
purchase the existing equipment, it will do so on such terms and conditions,
including purchase price, that are mutually agreed upon by the parties. Seller
will not be liable for any losses or damages caused by system, hardware,
software, and/or data lines malfunctions or failures. Purchaser shall pay, or
cause to be paid, the costs of all custom programming, reports, and forms
ordered by either Company for the Reynolds + Reynolds system.
Section 6 PARTNERSHIP WITH PREMIER AUTO FINANCE. Purchaser will
enter into a separate partnership with Premiere Auto Finance (if Purchaser
desires to continue a financing arrangement similar to the one between Seller
and Premiere) and Purchaser agrees not to sell any contracts to the partnership
between Seller and Premiere Auto Finance.
ARTICLE V
CONDITIONS TO PURCHASER'S OBLIGATIONS
Section 1 CONDITIONS TO INITIAL CLOSING. The purchase of the
Stock by Purchaser is conditioned upon the satisfaction or waiver, at or prior
to the Initial Closing Date, of the following conditions:
(a) BOARD APPROVAL. Seller shall have delivered to
Purchaser resolutions of the Board of Directors of
Seller certified by the Secretary or an Assistant
Secretary of Seller authorizing the execution, delivery
and performance by Seller of this Agreement and the
transactions contemplated hereby.
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(b) NO MATERIAL ADVERSE CHANGE. From the date of this
Agreement to the Initial Closing Date, there shall not
have been a material adverse change in the business,
financial condition or results of operations of either
of the Companies.
(c) MANAGEMENT AGREEMENT. Seller and Emmett M. Rice, Jr.
shall have entered into a Management Agreement in
substantially the form of EXHIBIT B hereto.
(d) TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in
this Agreement or in any Schedule delivered pursuant
hereto shall be true and correct in all material
respects on and as of the Initial Closing Date with the
same effect as though such representations and
warranties had been made on and as of such date, and
Seller shall have delivered to Purchaser a certificate,
dated the Initial Closing Date, to such effect.
(e) PERFORMANCE OF AGREEMENTS. Each and all of the
agreements of Seller to be performed at or prior to the
Initial Closing Date pursuant to the terms hereof shall
have been duly performed in all material respects and
Seller shall have delivered to Purchaser a certificate,
dated the Initial Closing Date, to such effect.
(f) ESCROW AGREEMENT. Seller and Purchaser shall have
entered into an Escrow Agreement in substantially the
form of EXHIBIT A, hereto.
Section 2 CONDITIONS TO FINAL CLOSING. Purchaser's obligation
to purchase the Stock and to consummate the Final Closing is conditioned upon
the satisfaction or waiver, at or prior to the Final Closing Date, of the
following conditions:
(a) OPINION OF SELLER'S COUNSEL. Purchaser shall have
received an opinion, dated the Final Closing Date, of
Winstead Sechrest & Minick P.C., to the effect set
forth in EXHIBIT C hereto.
(b) LEASE AGREEMENT. Purchaser and Seller shall have
entered into a lease agreement relating to the
Performance Dodge dealership containing the terms and
provisions set forth in EXHIBIT D hereto.
(c) ADJUSTMENTS TO ELIMINATE DEBT AND TRANSFER REAL ESTATE.
The following transactions necessary to make the
adjustments reflected on the Balance Sheets to
eliminate debt and transfer real estate must have
occurred:
(1) Seller must have assumed or transferred the
Companies' respective General Motors Acceptance
Corporation ("GMAC") capital loans in
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the amounts of $3,171,429 (Performance Dodge) and
$1,080,000 (Performance Nissan) as of May 31,
1997.
(2) Seller must have contributed to the Companies'
capital the intercompany debt of the Companies to
Seller and its affiliates in the amounts of
$2,025,000 (Performance Dodge) and $2,050,000
(Performance Nissan) as of May 31, 1997.
(3) The intercompany accounts of the Companies to
Seller or its affiliates, including those to C-CAR
Wholesaler, must have been eliminated.
(4) The real estate on which Performance Dodge
currently operates must have been transferred to
Seller and Seller must have assumed the related
GMAC mortgage (and have obtained Performance
Dodge's release from the mortgage) at their May
31, 1997 book values.
(d) ACCOUNTING FOR AON PARTNERSHIP. Seller must perform a
final accounting of each Company's investment in the
partnership between Seller and Premiere Auto Finance
(including an accounting relating to dealer reserves
retained) and must remit the full amount of the balance
of each Company's investment in that partnership
(including the 50% of the Companies' share of the
partnership's profits and capital that have been
credited to Seller). Purchaser will cooperate with and
assist Seller in reconciling amounts due from the
partnership to the parties' mutual satisfaction.
(e) RELEASE OF LIABILITIES. Purchaser shall have obtained
the release of the Companies, Emmett M. Rice, Jr., the
Purchaser, and their affiliates from any and all
liability for any indebtedness or obligation of Seller
and its affiliates (excluding the Companies), including
without limitation the release of Emmett M. Rice, Jr.,
from his obligations as a Chevrolet dealer and the
release of Emmett M. Rice, Jr., from his obligations
pursuant to his guaranty of the amounts owed under the
floor plan indebtedness of Seller and its affiliates
(other than the Companies) as of the Final Closing Date
to GMAC.
(f) NO MATERIAL ADVERSE CHANGE; TRUTH OF REPRESENTATIONS
AND WARRANTIES. From the Initial Closing Date to the
Final Closing Date as a result of actions taken by
Seller, there shall not have been (i) a material
adverse change in the business, financial condition or
results of operations of either of the Companies or
(ii) a breach of a representation or warranty
hereunder.
(g) PERFORMANCE OF AGREEMENTS. Each and all of the
agreements of Seller to be performed at or prior to the
Final Closing Date pursuant to the terms hereof (other
than those performed at or prior to the Initial Closing
Date) shall have
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been duly performed in all material respects, and
Seller shall have delivered to Purchaser a certificate,
dated the Final Date, to such effect.
(h) NO INJUNCTION. No court or other governmental body or
public authority shall have issued an order which shall
then be in effect restraining or prohibiting the
completion of the transactions contemplated hereby.
(i) APPROVALS. All consents and approvals, if any,
necessary to permit the consummation of the
transactions contemplated by this Agreement shall have
been received, including without limitation all
necessary licences and permits required for the
companies to continue to transact business in the State
of Oklahoma and all necessary consents of
manufacturers. All time periods under the HSR Act, if
applicable, shall have expired.
(j) CERTAIN REIMBURSEMENTS. Seller shall have reimbursed
the Purchaser for all deductibles paid or accrued by
the Companies for vehicles included on the Balance
Sheets that were not included in prepaid amounts on the
Balance Sheets for vehicles reported as stolen.
ARTICLE VI
CONDITIONS TO SELLER'S OBLIGATIONS
Section 1 CONDITIONS TO INITIAL CLOSING. The sale of the Stock
by Seller on the Initial Closing Date is conditioned upon satisfaction or
waiver, at or prior to the Initial Closing Date, of the following conditions:
(a) BOARD APPROVAL. Purchaser shall have delivered to
Seller resolutions of the Board of Directors of
Purchaser's general partner certified by the Secretary
or an Assistant Secretary of Purchaser's general
partner authorizing the execution, delivery and
performance by Purchaser of this Agreement and the
transactions contemplated hereby.
(b) TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Purchaser contained
in this Agreement shall be true and correct in all
material respects on and as of the Initial Closing Date
with the same effect as though such representations and
warranties had been made on and as of such date, and
Purchaser shall have delivered to Seller a certificate,
dated the Initial Closing Date to such effect.
(c) PERFORMANCE OF AGREEMENTS. Each and all of the
agreements of Purchaser to be performed at or prior to
the Initial Closing Date pursuant to the terms hereof
shall have been duly performed in all material
respects, and Purchaser
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shall have delivered to Seller a certificate, dated the
Initial Closing Date, to such effect.
Section 2 CONDITIONS TO FINAL CLOSING. Seller's obligation to
consummate the Final Closing is conditioned upon the satisfaction or waiver, at
or prior to the Final Closing Date, of the following conditions:
(a) OPINIONS OF PURCHASER'S COUNSEL. Purchaser shall have
furnished Seller with an opinion, dated the Closing
Date, of Mullin Hoard & Brown, LLP, to the effect set
forth in EXHIBIT E hereto.
(b) FAIRNESS OPINION. In the event it has been requested
by Seller, Seller shall have received an opinion from
Furman Selz LLC addressed to the Board of Directors of
Seller, that the purchase price to be received by
Seller for the Stock is fair, from a financial point of
view, to Seller.
(c) RELEASE OF LIABILITIES. (a) Purchaser shall have
either (i) paid in full the floor-plan indebtedness
(the "Floor-Plan Indebtedness") owed by the Companies
as of the Final Closing Date to GMAC, or (ii) obtained
from GMAC the full release of each of Bill Gilliland,
Sandra Gilliland, and Gilliland Group Family
Partnership, Seller and any and all of their
affiliates, from their obligations pursuant to their
guaranties of the Floor-Plan Indebtedness, and
(b) Seller and its affiliates shall have been released
from any and all other liability for any indebtedness
or obligation of either Company, including without
limitation the liability of Seller pursuant to its
guaranty of the obligations of Performance Nissan under
the lease agreement between Performance Nissan and the
Hudiburg family trusts.
(d) LICENSES AND PERMITS. Purchaser shall have provided
Seller with evidence that it has notified the Oklahoma
Motor Vehicle Commission and the Oklahoma Used Motor
Vehicle and Parts Commission of the transactions
contemplated hereby, and obtained all necessary
licenses and permits required for the Companies to
transact business in the State of Oklahoma.
(e) NO INJUNCTION. No court or other governmental body or
public authority shall have issued an order which shall
then be in effect restraining or prohibiting the
completion of the transactions contemplated hereby.
(f) APPROVALS. All consents and approvals, if any,
necessary to permit the consummation of the
transactions contemplated by this Agreement shall have
been received, including without limitation all
necessary consents of manufacturers. All time periods
under the HSR Act, if applicable, shall have expired.
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ARTICLE VII
NO SURVIVAL OF REPRESENTATIONS;
EVENTS OF TERMINATION
Section 1 NO SURVIVAL OF REPRESENTATIONS. Except for the
representations and warranties set forth in Article II, Sections 1 and 16 and
Article III, Section 6 which shall survive until the applicable statute of
limitations has expired, the representations and warranties of Seller and
Purchaser contained in this Agreement shall survive the purchase and sale of the
Stock contemplated hereby for a period of one year from the Initial Closing
Date.
Section 2 EVENTS OF TERMINATION. This Agreement may be
terminated (a) by mutual written agreement of Purchaser and Seller or (b) by
Purchaser by written notice to Seller, if the conditions to the Initial Closing
set forth in Article V hereof shall not have been complied with or performed on
or prior to the Initial Closing Date in any material respect, or (c) by Seller
by written notice to Purchaser, if the conditions to the Initial Closing set
forth in Article VI hereof shall not have been complied with or performed on or
prior to the Initial Closing Date in any material respect, and, in either case,
such noncompliance or nonperformance shall not have been cured or eliminated (or
by its nature cannot be cured or eliminated) on or before August 15, 1997.
Section 3 EFFECT OF TERMINATION. In the event that this
Agreement shall be terminated pursuant to Article VII, Section 2, all further
obligations of the parties hereto under this Agreement (other than pursuant to
Article VII, Section 4 and Article VIII, Section 2 and as provided in the
Confidentiality Agreement) shall terminate without further liability or
obligation of either party to the other party hereunder.
Section 4 FAILURE TO CLOSE. (a) If Purchaser fails to
consummate the transactions contemplated on its part to occur on the Initial
Closing Date, in circumstances whereby this Agreement has not been terminated
and all conditions of the Initial Closing set forth in Article V have been
satisfied in all material respects or waived, Purchaser shall be liable to
Seller for Seller's actual damages.
(b) If Seller fails to consummate the transactions
contemplated on its part to occur on the Initial Closing Date, in circumstances
whereby this Agreement has not been terminated and all conditions of the Initial
Closing set forth in Article VI have been satisfied in all material respects or
waived, Seller shall be liable to Purchaser for Purchaser's actual damages.
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ARTICLE VIII
MISCELLANEOUS
Section 1 KNOWLEDGE. As used in this Agreement, the term "to
the knowledge of Seller" shall mean the actual knowledge of Seller (excluding
the actual knowledge of Emmett M. Rice, Jr.), and the term "to the knowledge of
"Purchaser" shall mean the actual knowledge of Purchaser. Seller has relied on
certain information provided by Emmett M. Rice, Jr. in preparing certain of the
schedules to this Agreement. Seller shall have no liability for any breach of
any representation or warranty contained in this Agreement as a result of (i)
any incomplete or inaccurate information of which Mr. Rice had actual knowledge
and was not disclosed to Seller at the time the representation or warranty was
made, or (ii) any material information inaccurately disclosed by Mr. Rice to the
Company.
Section 2 EXPENSES. The parties hereto shall pay all of their
own expenses relating to the transactions contemplated by this Agreement,
including, without limitation, the fees and expenses of their respective counsel
and advisor; except that HSR filing fees, if any, will be paid one-half ( 1/2)
by Seller and one-half ( 1/2) by Purchaser.
Section 3 TRANSFER TAXES. All stamp, transfer, documentary,
sales, use, registration and other such taxes and fees (including any penalties
and interest) incurred in connection with this Agreement and the transactions
contemplated hereby (other than those imposed on or measured by the income of
Seller or Purchaser) (collectively, the "Transfer Taxes") shall be paid:
(a) regarding those imposed on the transfer of the Stock,
by Purchaser, and Purchaser shall, at its own expense,
procure any stock transfer stamps required by, and
properly file on a timely basis all necessary tax
returns and other documentation with respect to, any
Transfer Tax and provide to Seller evidence of payment
of all Transfer Taxes.
(b) regarding those imposed on the transfer of the C-CAR
Shares, by Seller and Seller shall, at its own expense,
procure any stock transfer stamps required by, and
properly file on a timely basis all necessary tax
returns and other documentation with respect to, any
Transfer Tax and provide to Purchaser evidence of
payment of all Transfer Taxes.
Section 4 NOTIFICATION. Until the Closing, Purchaser shall
promptly inform Seller in writing of any material variances discovered by
Purchaser or its representatives in the representations and warranties of Seller
contained in this Agreement.
Section 5 GOVERNING LAW. The interpretation and construction of
this Agreement, and all matters relating hereto, shall be governed by the laws
of the State of Texas applicable to contracts made and to be performed entirely
within the State of Texas.
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Section 6 "PERSON" DEFINED. "Person" shall mean and include an
individual, a partnership, a limited liability company, a joint venture, a
corporation, a trust, an unincorporated organization and a government or other
department or agency thereof.
Section 7 CAPTIONS. The Article and Section captions used
herein are for reference purposes only, and shall not in any way affect the
meaning or interpretation of this Agreement.
Section 8 PUBLICITY. Except as otherwise required by law or
regulation, none of the parties hereto shall issue any press release or make any
other public statement, in each case relating to or connected with or arising
out of this Agreement or the matters contained herein, without obtaining the
prior approval of the other party hereto to the contents and the manner of
presentation and publication thereof, except that Seller may make disclosure
relating to the matters contained herein according to Seller's normal disclosure
practices. The requirements of this Article VIII, 8 shall be in addition to
those included in the Confidentiality Agreement.
Section 9 CONTINUATION OF INDEMNIFICATION; INSURANCE.
(a) Purchaser agrees that subsequent to the Initial Closing Date each Company,
and Seller agrees that subsequent to the Initial Closing Date Seller and each of
its current subsidiaries other than the Companies, shall continue to indemnify
and hold harmless each of its present and former directors, officers, employees
and agents, in their capacities as such (the "Indemnified Persons"), from and
against all damages actually incurred or suffered in connection with any
threatened or pending action, suit or proceeding at law or in equity by any
Person or any arbitration or any administrative or other proceeding relating to
the business of either Company, or of the Seller or any of its subsidiaries
other than the Companies, to the fullest extent permitted under each of their
respective charter documents. In addition, subsequent to the Initial Closing
Date, Purchaser shall not, and shall not permit either Company to, and Seller
shall not, and shall not permit any of its subsidiaries to, amend or modify its
charter documents, except as required by law, if the effect of such amendment or
modification would be to lessen or otherwise adversely affect the
indemnification rights of the Indemnified Persons as provided therein. In
addition, Purchaser shall permit the Companies to, and Seller shall, and shall
permit its subsidiaries to, advance expenses to each such Indemnified Person to
the fullest extent so permitted upon receipt of any undertaking required by law.
In the event that either Company, or that Seller or any of its subsidiaries,
transfers all or substantially all of its properties and assets to any Person,
then and in each such case, proper provisions shall be made so that the
transferee shall assume the obligations of such Company, Seller, or each of
Seller's subsidiaries under this Article VIII, Section 9(a).
(b) Purchaser shall cause to be maintained for a period of six
years after the Final Closing Date each Company's current policies of directors
and officers liability insurance; and Seller shall cause to be maintained for a
period of six years after the Final Closing Date Seller's and each of Seller's
subsidiaries' current policies of directors and officers liability insurance.
The obligation to maintain insurance includes the obligation to purchase all
available extended reporting periods with respect to pre-existing insurance
should the procurement of insurance meeting the above-described conditions not
be achieved.
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(c) This Article VIII, Section 9 is intended to benefit each of
the Indemnified Persons, each of whom shall be entitled to enforce the
provisions hereof.
Section 10 MEMORANDUM; DISCLAIMER OF PROJECTIONS. Seller makes
no representation or warranty to Purchaser except as specifically made in this
Agreement. In particular, unless Seller has made the representation or warranty
in this Agreement, Seller makes no representation or warranty to Purchaser with
respect to (a) the information set forth in the Confidential Memorandum
distributed by Furman Selz LLC in connection with the offering of the Companies
or (b) any financial projection or forecast relating to the Companies. With
respect to any such projection or forecast delivered by or on behalf of Seller
to Purchaser, Purchaser acknowledges that (1) there are uncertainties inherent
in attempting to make such projections and forecasts, (2) it is familiar with
such uncertainties, (3) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts so
furnished to it and (4) it shall have no claim against Seller with respect
thereto.
Section 11 INDEMNIFICATION. (a) Seller shall indemnify, hold
harmless and defend Purchaser, its subsidiaries, affiliates, and its general
partner's and affiliates' officers, directors, partners, employees, agents,
advisors and representatives against any and all damages including costs,
expenses, claims, suits, damages, fines, deficiencies, liabilities, and losses
(including out of pocket expenses, reasonable attorneys' fees and accountants'
fees) of any nature ("Losses") suffered, incurred or paid by Purchaser which
result from (i) the material breach of any covenant or agreement with Purchaser,
or the material inaccuracy of any representation or warranty to Purchaser by
Seller in this Agreement or any certificate, instrument or agreement delivered
to Purchaser hereunder, (ii) any and all taxes of Seller, and all affiliates not
relating to or arising out of the businesses of the Companies, (iii) the amounts
of all refunds a Company makes to GMAC regarding contracts in transit that arose
before the Initial Closing Date and become uncollectible after the Initial
Closing Date because GMAC cannot maintain its security interest because of late
filing of title for which GMAC does not return the collateral to the Company,
(iv) the cost of defending and amount of any liability regarding claims made
against a Company for actions or inactions occurring before the Initial Closing
Date for which the Company's insurance company will not provide a defense or
coverage, or (v) any Environmental Liabilities (as hereinafter defined) arising
out of the ownership and operation before the Final Closing Date of the real
estate currently owned by Performance Dodge (except for Environmental
Liabilities caused by Purchaser or its representatives after the Initial Closing
Date).
(b) Purchaser shall indemnify, hold harmless and defend Seller
and its affiliates, directors, officers, employees and agents against any and
all Losses suffered, incurred or paid by Seller or its affiliates, directors,
officers, employees or agents which result from (i) the material breach of any
covenant or agreement with Seller or the material inaccuracy of any
representation or warranty to Seller by Purchaser in this Agreement or any
certificate, instrument or agreement executed and delivered to Seller hereunder;
or (ii) the ownership and operation of the Companies after the Final Closing
Date.
(c) "Environmental Liabilities" means any and all liabilities,
current or future, accrued or contingent, arising in connection with or relating
to the real estate currently owned by Performance
20
<PAGE>
Dodge which arise under or relate to Environmental Laws. "Environmental
Laws" means any and all applicable laws relating to the environment or the
effect of the environment on human health, or relating to emissions,
discharges, handling, management, disposal, use or releases of pollutants,
contaminants, petroleum or petroleum products, asbestos, PCBs, chemicals or
industrial, toxic, radioactive or hazardous substances or wastes into the
environment, including ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants, petroleum or petroleum products, asbestos, PCBs, chemicals or
industrial, toxic, radioactive or hazardous substances or wastes or the
clean-up or other remediation thereof.
Section 12 NOTICES. Any notice or other communications required
or permitted hereunder shall be sufficiently given if delivered in Person or
sent by telecopy or by registered or certified mail, postage prepaid, addressed
as follows: if to Purchaser, to Benji Investments, Ltd., 2605 Teckla, Amarillo,
Texas 79106, Attention: Emmett Rice, with a copy to its counsel, Mullin Hoard &
Brown, LLP, 800 Amarillo National Plaza Two, 5th & Taylor, Amarillo Texas 79101,
Telecopy No. (806) 372-5086, Attention: J.F. Howell III, Esq., and if to Seller,
to Cross-Continent Auto Retailers, Inc., 1201 South Taylor Street, Amarillo,
Texas 79109, Telecopy No. (806) 374-3818, Attention: Robert W. Hall, with a
copy to Winstead Sechrest & Minick P.C., 1201 Elm Street, Suite 5400, Dallas,
Texas 75270, Telecopy No. (214) 745-5390, Attention: Thomas W. Hughes, Esq.; or
such other address or number as shall be furnished in writing by any such party,
and such notice or communication shall be deemed to have been given as of the
date received.
Section 13 PARTIES IN INTEREST. This Agreement may not be
transferred, assigned, pledged or hypothecated by any party hereto, other than
by operation of law. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns.
Section 14 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, all of which taken together shall constitute one
instrument.
Section 15 ENTIRE AGREEMENT. This Agreement, including the
Exhibits, Schedules and other documents referred to herein which form a part
hereof, and the Confidentiality Agreement, contain the entire understanding of
the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter other than the
Confidentiality Agreement.
Section 16 AMENDMENTS. This Agreement may not be changed
orally, but only by an agreement in writing signed by the parties hereto. Any
provision of this Agreement can be waived, amended, supplemented or modified by
written agreement of the parties hereto.
Section 17 SEVERABILITY. In case any provision in this
Agreement shall be held invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof will not in any
way be affected or impaired thereby.
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Section 18 THIRD PARTY BENEFICIARIES. Except as otherwise set
forth in Article V, Sections 7, Article VI, Section 4, and Article VIII, Section
9, each party hereto intends that this Agreement shall not benefit or create any
right or cause of action in or on behalf of any Person other than the parties
hereto.
IN WITNESS WHEREOF, Seller has caused its corporate name to be
hereunto subscribed by its officer thereunto duly authorized, and Purchaser has
caused it name to be hereunto subscribed by it general partner thereunto duly
authorized, all as of the day and year first above written.
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Bill Gilliland
-------------------------------------
Name: Bill Gilliland
----------------------------
Title: Chairman and CEO
----------------------------
BENJI INVESTMENTS, LTD.
By: Benji Investments Management Company,
Inc.
By: /s/ Emmett M. Rice, Jr.
-------------------------------------
Name: Emmett M. Rice, Jr.
----------------------------
Title: President
----------------------------
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Exhibit 10.30
SEPARATION AGREEMENT AND RELEASE
THIS SEPARATION AGREEMENT AND RELEASE (the "Agreement") is made and entered
into as of the 20th day of June, 1997 by and between CROSS-CONTINENT AUTO
RETAILERS, INC. ("C-CAR" or "Company") and EMMETT M. RICE, JR. ("Mr. Rice").
RECITALS
A. WHEREAS, Mr. Rice intends to voluntarily resign from employment with
C-CAR, and C-CAR intends to accept his resignation as of the date hereof.
B. WHEREAS, C-CAR and Mr. Rice desire to resolve all existing or
potential disputes, claims, or causes of action, known or unknown, that have
arisen or may arise between them and growing out of any act or omission of C-CAR
or any of its affiliated entities, including but not limited to, any act or
omission relating to Mr. Rice's employment with C-CAR, or his resignation
therefrom, and any other positions and activities that Mr. Rice held or
continues to hold with C-CAR or any of its affiliated entities.
C. WHEREAS, C-CAR and Mr. Rice have negotiated in good faith and desire
to enter into an agreement resolving all such existing or potential disputes,
claims, and causes of action, known or unknown, as of the date of this Agreement
upon the terms set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto voluntarily agree as follows:
1. SETTLEMENT COMPENSATION. Upon the valid execution of this
Agreement by both parties hereto, C-Car shall grant to Mr. Rice a non-qualified
option to purchase one-hundred thousand (100,000) shares of Cross-Continent Auto
Retailers, Inc. common stock at $10.00 per share. This option will vest on the
date this Agreement is executed by both parties and may be exercised within a
period of ten (10) years after the date this Agreement is executed by both
parties.
2. PAYMENT OF ATTORNEYS' FEES. Both parties agree to pay their own
legal fees and expenses incurred by them for legal services rendered with
respect to the review and negotiation of this Agreement.
3. CONTINUATION OF INDEMNIFICATION RIGHTS
a. In addition to any other rights Mr. Rice may have under this
Agreement or otherwise, Mr. Rice shall be entitled and continue
to be entitled, as a matter of separate contract, and without
duplication of payment or compensation, to mandatory
indemnification and advancement of expenses to the full extent
indemnification and advancement of expenses
<PAGE>
(whether mandatory or permissive) may be available to Eligible
Persons (as hereinafter defined) under the Indemnification
Provisions (as hereinafter defined), regardless of any amendments
thereto, restatements thereof, or repeal thereof or any adoption
of new or superseding bylaws or statutory provisions, any of
which may hereafter occur.
b. C-CAR expressly agrees that Mr. Rice is and shall continue
to be an Eligible Person for purposes of all Indemnification
Provisions and for all purposes of this Agreement. C-CAR
expressly agrees that the right of indemnification and
advancement of expenses and the other rights provided hereunder
shall continue indefinitely as to any proceedings now pending or
threatened or which may hereafter be brought or threatened. The
rights provided hereunder shall not be deemed exclusive of any
other rights that Mr. Rice may now or hereafter have under any
law, statute, or regulation, the Certificate of Incorporation or
Bylaws of C-CAR, any agreement or any resolution of the Board of
Directors of C-CAR, any committee thereof or appointed thereby,
or the shareholders of C-CAR, or otherwise.
c. For purposes of this Paragraph 3:
(1) "Eligible Person" shall mean any present, former, or
future director, officer, agent, or employee of C-CAR or any
person presently serving, who formerly served or who in the
future may serve as a director, officer, agent, employee,
partner, venturer, proprietor, trustee, or similar
functionary of another corporation or of a partnership,
joint venture, sole proprietorship, trust, employee benefit
plan, or other enterprise at C-CAR's request. For purposes
of this definition, service in any such capacity with or for
any present or former subsidiary or other affiliated
enterprise of C-CAR and service in any such capacity with
any trust or employee benefit plan for employees of C-CAR or
its affiliated companies shall be deemed to have been at C-
CAR's request.
(2) "Indemnification Provisions" shall mean: (a) the
Certificate of Incorporation of C-CAR as amended or restated
and in effect as of the date of execution of this Agreement,
(b) the Bylaws of C-CAR as amended or restated and in effect
as of the date of execution of this Agreement, and (c)
Section 145 of the Delaware General Corporation Law ("DGCL")
as amended and in effect as of the date of execution of this
Agreement.
(3) To the extent any term used in this Paragraph 3 is not
defined herein, such term shall have the meaning specified
in Section 145
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<PAGE>
of the DGCL, as amended and in effect on the date of
execution hereof.
4. RELEASE OF C-CAR. In consideration of the above stated
compensation and agreements by C-CAR, Mr. Rice forever and unconditionally
releases and discharges C-CAR and any of its affiliate companies or divisions
and each of their owners, directors, officers, employees, assigns,
representatives, or agents ("Releasees") from any and all claims, complaints, or
causes of action, known or unknown, of any nature whatsoever that have arisen or
may arise from any act or omission of C-CAR or any of its affiliated entities
including, but not limited to, any act or omission relating to or arising out of
Mr. Rice's employment with C-CAR or his resignation therefrom. Such release
encompasses, but is not limited to, any and all claims of any type or nature by
Mr. Rice for wages, salary, bonuses, or other benefits of active employment with
C-CAR. Such release also encompasses, but is not limited to, claims of any type
or nature under federal or state tort or common law, alleged contract or any
federal, state, or local statutes, including Title VII of the Civil Rights Act
of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act,
the Americans with Disabilities Act, the Texas Workers Compensation Act, and the
Texas Commission on Human Rights Act.
THIS RELEASE INCLUDES, BUT IS NOT LIMITED TO, ANY CLAIM OF ANY TYPE OR
NATURE ARISING OUT OF MR. RICE'S ACTIVE EMPLOYMENT WITH C-CAR AND ANY
BENEFITS OF ANY KIND OR NATURE WHATSOEVER ASSOCIATED WITH MR. RICE'S
EMPLOYMENT. NOTWITHSTANDING THE FOREGOING, NEITHER THIS RELEASE NOR ANY
OTHER PROVISION OF THIS AGREEMENT SHALL BE DEEMED A WAIVER OR RELEASE BY
MR. RICE OF ANY OF (I) HIS RIGHTS UNDER THIS AGREEMENT, (II) ANY RIGHTS HE
MAY HAVE UNDER ANY ERISA EMPLOYEE BENEFIT PLANS OF C-CAR OR ITS AFFILIATES
(the "Plans"), (III) HIS RIGHTS TO COBRA CONTINUATION COVERAGE, OR (IV) HIS
RIGHTS OR CLAIMS AS A PARTNER UNDER THE STOCK PURCHASE AGREEMENT AS DEFINED
BELOW.
5. INSURANCE COVERAGE. C-CAR agrees that it will continue all Mr.
Rice's insurance coverages until that certain Stock Purchase Agreement dated
June 20, 1997, by and between C-CAR and Mr. Rice, terminates or the final
closing of the transaction contemplated by the Stock Purchase Agreement occurs.
The costs of such coverages shall be borne by the parties as such costs are
currently borne.
6. AGREEMENT TO RESIGN FROM THE BOARD OF DIRECTORS. In further
consideration of the above payments and agreements by C-CAR, Mr. Rice agrees
that he will resign his position on the Board of Directors which he now holds
with C-CAR. Mr. Rice shall submit his resignation from the Board of Directors,
in writing, effective as of the date of this Agreement.
7. AGREEMENT NOT TO FILE COMPLAINT. As further inducement for C-CAR
to enter this Agreement, Mr. Rice agrees that he will not file any complaint,
petition, lawsuit, charge
3
<PAGE>
or claim against C-CAR or any of the Releasees regarding or involving any and
all claims, complaints, or causes of action, known or unknown, of any nature
whatsoever that have arisen or may arise from any act or omission of C-CAR or
any of its affiliated entities including, but not limited to, any act or
omission relating to Mr. Rice's active employment with C-CAR or his
resignation therefrom with any local, state, or federal agency or court,
except for any such lawsuit specifically required for Mr. Rice's enforcement
of his rights under this Agreement or his rights under the Plans. If Mr. Rice
or anyone acting on his behalf files any lawsuit, petition, complaint, or
charge, not specifically related to enforcement of this Agreement, his rights
under the Plans, or his right to COBRA continuation coverage, against C-CAR
or any of the Releasees regarding or involving Mr. Rice's active employment
with C-CAR, Mr. Rice will immediately request such agency or court to
withdraw from the matter and dismiss such action, and, subject to the ten-day
opportunity to obtain the withdrawal or dismissal thereof as set forth in the
following sentence, Mr. Rice will reimburse C-CAR and the Releasees for any
and all costs, including attorneys' fees, incurred as a result of such
complaint, petition, lawsuit, or charge. In the event any such lawsuit,
petition, complaint, or charge is filed against C-CAR or any of the
Releasees, Mr. Rice shall have ten days after receipt of written notice from
C-CAR of such filing, in which to obtain the withdrawal or dismissal thereof
before he shall become liable to C-CAR or the Releasees for reimbursement as
set forth above.
8. NO ADMISSION BY C-CAR. This Agreement shall not in any way be
construed as an admission by C-CAR of any illegal act or violation of any
federal, state, or local statute, law, ordinance, or any right whatsoever
against Mr. Rice or any other person. Further, C-CAR specifically disclaims any
such illegal act or violation against Mr. Rice or any other person.
9. CONFIDENTIALITY AGREEMENT. The parties hereto agree that (a)
except as provided for herein, or as may be required by law or judicial process,
they will keep the terms, amount, and fact of this Agreement completely
confidential, and (b) they will not make any public disparaging statements
about the other to any third person or party.
10. REMEDIES FOR BREACH. The parties hereto agree that if any party
breaches this Agreement, the breaching party must reimburse the non-breaching
party for any and all loss, cost, damage, or expense, including, without
limitation, attorneys' fees arising out of any such breach of this Agreement.
In addition, any breach of this Agreement will entitle the non-breaching party
to seek injunctive relief and to recover any actual damages incurred as a result
of such breach.
11. NO RELIANCE ON REPRESENTATIONS BY C-CAR. Mr. Rice represents and
acknowledges that in executing this Agreement, he does not rely and has not
relied upon any prior representation made by C-CAR, the Releasees or any of
their employees, officers, agents, representatives, or attorneys concerning the
subject matter of this Agreement.
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<PAGE>
12. BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of Mr. Rice and C-CAR, and their heirs, third party
beneficiaries, administrators, representatives, executors, successors, and
assigns.
13. GOVERNING LAW AND CHOICE OF VENUE. This Agreement is made within
the State of Texas and shall, in all respects, be interpreted, enforced, and
governed in accordance with the law of the State of Texas, and shall, in all
cases, be construed as a whole, according to its fair meaning, and not strictly
for or against a party hereto. C-CAR and Mr. Rice agree that any disputes
between them or their heirs, third party beneficiaries, administrators,
representatives, executors, successors, and assigns arising out of this
Agreement, on any subject covered by this Agreement and which results in
litigation, shall be adjudicated, as is appropriate, in either a United States
District Court for the District of Texas encompassing Potter County, Texas or a
Texas State District Court within Potter County, Texas.
14. SEVERABILITY PROVISION. Should any provision of this Agreement
be declared to be or determined to be illegal or invalid, the validity of the
remaining parts of this Agreement will not be affected. Moreover, if any one or
more of the provisions of this Agreement shall be held to be excessively broad
as to duration, activity, or subject, such provision(s) shall be construed by
limiting and reducing them so as to be enforceable to the maximum extent allowed
by applicable law.
15. REPRESENTATION OF MR. RICE. By Mr. Rice's signature below, he
represents and confirms that he: (a) has read this Agreement carefully and
completely; (b) has been advised to consult with legal and financial counsel
concerning this Agreement, has had ample opportunity to do so and has, in fact,
either done so or decided, solely of his own volition, not to do so; (c)
understands all of the provisions contained in this Agreement; and (d) executes
this Agreement voluntarily and of his own free will.
SIGNED in Amarillo, Texas on this 20th day of June, 1997.
/s/ Emmett M. Rice, Jr.
- -------------------------------------
Emmett M. Rice, Jr.
CROSS-CONTINENT AUTO RETAILERS, INC.
By /s/ Bill Gilliland
- -------------------------------------
Bill Gilliland, Chairman & CEO
5
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Exhibit 10.31
MANAGEMENT AGREEMENT
This Management Agreement (the "Agreement") is entered into effective as of
the 1st day of June, 1997, by and among CROSS-CONTINENT AUTO RETAILERS, INC., a
Delaware corporation ("C-CAR"); PERFORMANCE NISSAN, INC., an Oklahoma
corporation ("Performance Nissan"); PERFORMANCE DODGE, INC., an Oklahoma
corporation ("Performance Dodge"); and EMMETT M. RICE, JR. ("Rice").
RECITALS
A. Performance Nissan owns and operates a Nissan franchised automobile
dealership located at 8029 S.E. 29th Street, Midwest City, Oklahoma 73110.
B. Performance Dodge owns and operates a Dodge franchised automobile
dealership located at 7609 S.E. 29th Street, Midwest City, Oklahoma 73110.
C. The dealerships that are owned and operated by Performance Nissan and
Performance Dodge shall hereinafter be individually referred to as a
"Dealership" and collectively as the "Dealerships."
D. Performance Nissan and Performance Dodge desire for Rice to manage the
Dealerships, and Rice desires to manage the Dealerships, for the consideration
and upon the terms set forth in this Agreement.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, C-CAR, Performance Nissan, Performance Dodge, and Rice
agree as follows:
1. MANAGEMENT OF THE DEALERSHIPS. Performance Nissan and Performance
Dodge hereby engage Rice as an independent contractor to manage the Dealerships.
Rice shall assume management responsibilities of the Dealerships effective as
of June 1, 1997 (the "Effective Date").
2. TERM. The term of this Agreement shall begin on the Effective Date
and shall terminate (the "Termination Date") upon the earlier of (a) the final
closing of the transaction contemplated by that certain Stock Purchase Agreement
dated June 20, 1997, by and between Cross-Continent Auto Retailers, Inc. and
Benji Investments, Ltd. (the "Stock Purchase Agreement"), or (b) the termination
of the Stock Purchase Agreement.
3. CONDUCT OF THE BUSINESS OF THE DEALERSHIPS. Rice shall conduct the
Dealerships' business according to the ordinary and usual course of the
Dealerships' business reasonably consistent with past and current practices;
shall maintain and preserve the Dealerships' assets, properties, insurance
policies, and business relationships; and shall not allow the Dealerships to
<PAGE>
engage in any practice, take any action, or enter into any transaction outside
of the ordinary course of business. C-CAR authorizes Mr. Rice to endorse aged
contracts in transit of Performance Nissan and Performance Dodge without
recourse, and with recourse with the prior written consent of C-CAR. Mr. Rice
is authorized to endorse (on behalf of Performance Nissan and Performance Dodge)
the contracts in transit of Performance Nissan and Performance Dodge (a) without
recourse, and (b) with recourse if Mr. Rice obtains C-CAR's prior written
consent.
4. MANAGEMENT FEE. As consideration for Rice managing the Dealerships
during the term of this Agreement, Rice shall be entitled to any net income
before income taxes ("Net Income") resulting from the business and operation of
the Dealerships during the term of this Agreement; provided that Rice shall be
liable for any net loss before income taxes ("Net Loss") resulting from the
business and operation of the Dealerships during the term of this Agreement.
Net Income and Net Loss shall be calculated (a) on a calendar month basis
(prorated for any partial calendar month), and (b) on a consolidated basis for
both Dealerships. It is understood and agreed that Performance Nissan and
Performance Dodge shall not pay Rice any Net Income for any month or partial
month nor shall Rice pay Performance Nissan and Performance Dodge for any Net
Loss for any month or partial month, until after the Termination Date. If the
final closing of the transaction contemplated by the Stock Purchase Agreement
does not occur, Performance Nissan and Performance Dodge shall pay Rice the
amount by which the Net Income made during the term of this Agreement exceeds
the Net Losses incurred during the term of this Agreement, or Rice shall pay
Performance Nissan and Performance Dodge the amount by which the Net Losses
incurred during the term of this Agreement exceed the Net Income made during the
term of this Agreement, within fifteen (15) days after the Stock Purchase
Agreement terminates.
5. C-CAR EXPENSES. Notwithstanding anything contained in this Agreement
to the contrary, the parties to this Agreement agree that none of the following
items shall be charged to Performance Nissan or Performance Dodge in determining
Net Income or Net Loss:
(a) any fee for C-CAR corporate overhead, including any C-CAR
management fees;
(b) any expenses for airplane use by C-CAR or any of its affiliates
(other than expenses incurred by Performance Nissan or
Performance Dodge);
(c) any travel or entertainment expense for C-CAR or any of its
affiliates (other than expenses incurred by Performance Nissan or
Performance Dodge);
(d) any depreciation or interest expense related to the real property
on which Performance Dodge is located;
(e) any interest expense related to the GMAC capital related loans;
(f) any expense related to the Reynolds UPS 72;
2
<PAGE>
(g) any legal or accounting expenses for C-CAR or any of its
affiliates (other than expenses incurred by Performance Nissan or
Performance Dodge);
(h) any expenses for insurance for C-CAR or any of its affiliates
(other than insurance expenses directly attributable to
Performance Nissan or Performance Dodge).
Notwithstanding anything contained in this Agreement to the contrary, the
parties to this Agreement agree that $21,114,89 per month (the lease payment)
shall be charged to Performance Dodge in determining Net Income or Net Loss.
6. LICENSES OF THE DEALERSHIPS. The Dealerships agree to allow Rice to
use the Dealerships' dealer numbers, dealer licenses, and dealer tags.
7. COOPERATION. Performance Nissan and Performance Dodge shall cause
the Dealerships to fully cooperate with Rice in connection with Rice's operation
of the Dealerships.
8. CORPORATE EXISTENCE OF THE DEALERSHIPS. C-CAR shall maintain the
existence of Performance Nissan and Performance Dodge in good standing in the
state of Oklahoma.
9. INDEMNIFICATION BY RICE. Rice shall indemnify, defend and hold
harmless C-CAR, Performance Nissan and Performance Dodge from and against all
claims, damages, actions, suits, proceedings, demands, assessments, adjustments,
costs and expenses, including reasonable attorneys' fees, arising out of, or
occasioned by, any act, omission or event occurring during the term of this
Agreement with respect to the operation, condition, or ownership of the
Dealerships, unless caused by the negligence or willful misconduct of C-CAR.
10. INDEMNIFICATION BY C-CAR. C-CAR shall indemnify, defend and hold
harmless Rice from and against all claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses, including reasonable
attorneys' fees, arising out of, or occasioned by, any act, omission, or event
occurring during the term of this Agreement with respect to the operation,
condition, or ownership of the Dealerships that is caused by the negligence or
willful misconduct of C-CAR.
11. ASSISTANCE BY C-CAR. C-CAR shall assist Mr. Rice in (a) collecting
on the contracts in transit of Performance Nissan and Performance Dodge that
were executed prior to the Effective Date, and (b) dealing with any insurance
company of Performance Nissan or Performance Dodge in order to obtain the
insurance company's defense of any claims made against Performance Dodge or
Performance Nissan.
12. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Oklahoma.
3
<PAGE>
(b) LITIGATION. If this Agreement or any term or provision hereof
becomes the subject of litigation, the prevailing party in such litigation shall
be entitled to recover from the non-prevailing party court costs and reasonable
attorneys' fees.
(c) ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the transaction contemplated
herein and supersedes all prior agreements, arrangements and understandings,
whether written or oral, relating to the subject matter hereof.
(d) INVALIDITY. If any provision contained in this Agreement shall
for any reason be held to be invalid, illegal, or unenforceable in any respect,
such provision shall be deemed modified so as to constitute a provision
conforming as nearly as possible to such invalid, illegal, or unenforceable
provision while still remaining valid and enforceable; and the remaining terms
and provisions contained herein shall not be affected thereby.
(e) ASSIGNMENT. Rice shall not be allowed to assign this Agreement
and its duties hereunder without the prior written consent of Performance
Nissan, Performance Dodge, and C-CAR.
(f) AMENDMENT. This Agreement may not be amended by any oral
agreement or understanding, but only by an amendment in writing, executed by the
parties hereto.
(g) BINDING AGREEMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns.
(h) ACCOUNTING TERMS. The terms "cost of sales," "operating
expenses," "costs or expenses of operating," "net income before income taxes,"
and "net loss before income taxes," as used in this Agreement, shall have the
meanings given such terms under generally accepted accounting principles, except
as modified hereby. Only those income taxes which are the direct legal
obligation of the Dealerships resulting from operations are included in the
determination of "net income before income taxes" and "net loss before income
taxes".
(i) INSURANCE. Performance Nissan and Performance Dodge will name
Mr. Rice as additional named insured under all of its liability, casualty or any
other insurance policies.
PERFORMANCE NISSAN, INC.
By: /s/ Bill Gilliland
-----------------------------
Bill Gilliland, President
PERFORMANCE DODGE, INC.
4
<PAGE>
By: /s/ Bill Gilliland
-------------------------------
Bill Gilliland, President
CROSS-CONTINENT AUTO RETAILERS, INC.
By: /s/ Bill Gilliland
-------------------------------
Bill Gilliland, Chairman and
Chief Executive Officer
/s/ Emmett M. Rice, Jr.
-------------------------------
EMMETT M. RICE, JR.
5
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 6,671
<SECURITIES> 0
<RECEIVABLES> 20,962
<ALLOWANCES> 0
<INVENTORY> 72,708
<CURRENT-ASSETS> 100,341
<PP&E> 30,737
<DEPRECIATION> 7,083
<TOTAL-ASSETS> 188,071
<CURRENT-LIABILITIES> 97,787
<BONDS> 21,816
0
0
<COMMON> 141
<OTHER-SE> 67,105
<TOTAL-LIABILITY-AND-EQUITY> 188,071
<SALES> 224,409
<TOTAL-REVENUES> 224,409
<CGS> 185,695
<TOTAL-COSTS> 185,695
<OTHER-EXPENSES> 29,988
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,114
<INCOME-PRETAX> 6,612
<INCOME-TAX> 2,600
<INCOME-CONTINUING> 4,012
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,012
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
