<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
<TABLE>
<S> <C>
Filed by the Registrant [X]
Filed by a Party other than the
Registrant [ ]
</TABLE>
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for the Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec. 240.14a-11(c) or
sec. 240.14a-12
GROUP 1 AUTOMOTIVE, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11: (Set forth the amount on which
the filing fee is calculated and state how it was determined:)
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
number, or the Form or Schedule and the date of its filings.
1) Amount Previously Paid:
----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
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<PAGE> 2
GROUP 1 AUTOMOTIVE, INC.
HOUSTON, TEXAS
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 28, 1998
To the Stockholders:
The 1998 Annual Meeting of Stockholders (the "Annual Meeting") of Group 1
Automotive, Inc. (the "Company") will be held on Thursday, May 28, 1998 at 10:00
a.m., local time, at Chase Bank of Texas, Mezzanine Level, 707 Travis Street,
Houston, Texas, for the following purposes:
1. To elect two directors to serve until the 2001 Annual Meeting of
Stockholders;
2. To ratify the appointment of Arthur Andersen LLP as independent
accountants of the Company for the year ended December 31, 1998;
and
3. To consider and act upon such other business as may properly come
before the meeting or any adjournments thereof.
The close of business on April 8, 1998, has been fixed as the record date
for the determination of stockholders entitled to receive notice of, and to vote
at, the Annual Meeting or any adjournment(s) thereof.
You are cordially invited to attend the Annual Meeting. WHETHER OR NOT YOU
PLAN TO ATTEND THE ANNUAL MEETING, WE ASK THAT YOU SIGN AND RETURN THE ENCLOSED
PROXY AS PROMPTLY AS POSSIBLE. A SELF-ADDRESSED, POSTAGE PAID ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE. RETURNING THE PROXY WILL NOT LIMIT YOUR RIGHT TO
VOTE IN PERSON OR TO ATTEND THE MEETING, BUT WILL ENSURE YOUR REPRESENTATION IF
YOU DO NOT ATTEND.
By Order of the Board of Directors
/s/ JOHN S. WATSON
John S. Watson
Secretary
Houston, Texas
April 21, 1998
<PAGE> 3
GROUP 1 AUTOMOTIVE, INC.
950 ECHO LANE, SUITE 350
HOUSTON, TEXAS 77024
APRIL 21, 1998
PROXY STATEMENT
GENERAL INFORMATION
PROXY SOLICITATION
This proxy statement is furnished to the stockholders of Group 1
Automotive, Inc., a Delaware corporation (the "Company"), in connection with the
solicitation of proxies by the Board of Directors of the Company (the "Board").
The proxies are to be voted at the 1998 Annual Meeting of Stockholders (the
"Annual Meeting") to be held on May 28, 1998 at 10:00 a.m., local time, at Chase
Bank of Texas, Mezzanine Level, 707 Travis Street, Houston, Texas, and any
adjournments thereof, for the purposes set forth in the accompanying notice. The
Board is not aware of any other matters to be presented at the meeting. If any
other matter should be presented at the meeting upon which a vote properly may
be taken, shares represented by all duly executed proxies received by the
Company will be voted with respect thereto in accordance with the best judgment
of the persons designated as the proxies.
The solicitation of proxies by the Board will be conducted primarily by
mail. In addition, officers, directors and employees of the Company may solicit
proxies personally or by telephone, telegram or other forms of wire or facsimile
communication. The Company will reimburse brokers, custodians, nominees and
fiduciaries for reasonable expenses incurred by them in forwarding proxy
material to beneficial owners of common stock of the Company ("Common Stock").
The costs of the solicitation will be borne by the Company. This proxy statement
and the accompanying form of proxy have been mailed to stockholders on or about
April 21, 1998.
RECORD DATE AND VOTING RIGHTS
As of April 8, 1998, the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting, there were outstanding
16,928,278 shares of Common Stock. Each share of Common Stock entitles the
holder to one vote on each matter presented at the meeting. Common Stock is the
only class of outstanding securities of the Company entitled to notice of, and
to vote at, the Annual Meeting. A majority of the outstanding shares of Common
Stock will constitute a quorum at the meeting. Abstentions and "broker
non-votes" are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. A broker non-vote occurs if a broker or
other nominee does not have discretionary authority and has not received
instructions with respect to a particular item. Abstentions are counted in
tabulations of the votes cast on proposals presented to stockholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
VOTING OF PROXY; REVOCABILITY
Proxies will be voted in accordance with the directions specified thereon
and otherwise in accordance with the judgment of the persons designated as
proxies. Any proxy on which no direction is specified will be voted FOR the
election of the nominees named herein to the Board and FOR the ratification of
the appointment of Arthur Andersen LLP as the Company's independent accountants.
Any proxy may be revoked at any time prior to its exercise by delivery to the
Secretary of the Company of written notice of revocation or a duly executed
proxy bearing a later date, or by voting in person at the meeting.
ANNUAL REPORT
The Company's annual report on Form 10-K for the year ended December 31,
1997 (the "1997 10-K") as filed with the Securities and Exchange Commission
including the financial statements and the financial statement schedules
thereto, accompanies this Proxy Statement. Stockholders are referred to that
report for financial and other information about the activities of the Company.
1
<PAGE> 4
ITEM 1
ELECTION OF DIRECTORS
NOMINEES
Two directors are to be elected at the Annual Meeting. The Company's
Certificate of Incorporation provides for a classified Board. Thus, the Board is
divided into Classes I, II and III, the terms of office of which are currently
scheduled to expire on the dates of the Company's Annual Meetings of
Stockholders in 2000, 1998 and 1999, respectively. Sterling B. McCall, Jr. and
Bennett E. Bidwell have been nominated to serve as Class II Directors and, if
elected, will serve until the Company's 2001 Annual Meeting of Stockholders and
until their respective successors shall have been elected and qualified. Each of
the nominees for director currently serves as a director of the Company. The
remaining four directors named below will not be required to stand for election
at the Annual Meeting because their present terms expire in either 1999 or 2000.
A plurality of the votes cast in person or by proxy by the holders of Common
Stock is required to elect a director. Accordingly, abstentions and broker
non-votes will have no effect on the outcome of the election of directors
assuming a quorum is present or represented by proxy at the Annual Meeting.
Stockholders may not cumulate their votes in the election of directors.
Unless otherwise instructed or unless authority to vote is withheld, the
enclosed proxy will be voted for the election of the nominees listed below.
Although the Board does not contemplate that any of the nominees will be unable
to serve, if such a situation arises prior to the Annual Meeting, the persons
named in the enclosed proxy will vote for the election of such other persons(s)
as may be nominated by the Board.
The following table sets forth certain information, as of the date of this
Proxy Statement, regarding the nominees and the other directors of the Company.
<TABLE>
<CAPTION>
DIRECTOR
POSITION AND OFFICES WITH THE COMPANY SINCE AGE
------------------------------------- -------- ---
<S> <C> <C> <C>
CLASS II NOMINEES
Sterling B. McCall, Jr.............. Director, President of McCall Group 1996 63
Bennett E. Bidwell.................. Director 1997 70
CLASS I DIRECTORS
B.B. Hollingsworth, Jr.............. Chairman, President and Chief Executive Officer 1996 55
Robert E. Howard, II................ Director, President of Howard Group 1997 51
CLASS III DIRECTORS
Charles M. Smith.................... Director, President of Smith Group 1995 52
John H. Duncan...................... Director 1997 70
</TABLE>
CLASS II NOMINEES
STERLING B. MCCALL, JR. has served as Director of the Company since August
1996. Mr. McCall has served as President of McCall Group since November 1997.
Mr. McCall has over 29 years experience in the automotive retailing industry
and, prior to November 1997, was Chairman of Sterling McCall Toyota and Sterling
McCall Lexus, both subsidiaries of the Company that were acquired by the Company
in November 1997. He served as President or Chairman of Sterling McCall Toyota
and Sterling McCall Lexus since their inception in 1969 and 1989, respectively.
He is a former Director of the American International Automobile Dealers
Association, a former Director and Chairman of the Houston Automobile Dealers
Association, a former Chairman of the Gulf States Toyota Dealer Council, and a
former Director of the Texas Automobile Dealers Association. Mr. McCall has won
the Time Magazine Quality Dealer Award and the Sports Illustrated Dealer of
Distinction Award.
BENNETT E. BIDWELL has served as Director of the Company since June 1997.
Mr. Bidwell joined Chrysler Corporation as Executive Vice President in 1983 and
was elected to its board of directors in that same year. He was named Vice
Chairman of Chrysler Corporation in 1985, Vice Chairman of Chrysler Motors
Corporation in 1987 and President -- Product and Marketing of Chrysler Motors
Corporation in 1988. From
2
<PAGE> 5
1988 to 1990, Mr. Bidwell served as Chairman of Chrysler Motors Corporation. Mr.
Bidwell retired from Chrysler Corporation in 1993. Prior to joining Chrysler,
Mr. Bidwell spent 27 years with Ford Motor Company, and from 1981 to 1983 he was
President and Chief Operating Officer of The Hertz Corporation. His past
directorships include National Steel Corporation (1981-1983) and McDonald &
Company Securities, Inc. (1992-1995). Mr. Bidwell currently serves as a director
for International Management Group, Budd Company and Kelly Management Group.
CLASS I DIRECTORS
B.B. HOLLINGSWORTH, JR. has served as Chairman of the Company since March
1997 and as President and Chief Executive Officer of the Company since August
1996. Mr. Hollingsworth has been a director of the Company since August 1996.
Prior to joining the Company, Mr. Hollingsworth spent nineteen years with
Service Corporation International ("SCI"), where he directed an acquisition
program that established SCI as the world's leading consolidator of the funeral
industry. He joined SCI in 1967, was then named Vice President for Corporate
Development, was named Vice President and Chief Financial Officer in 1972, and
was elected President and named Director in 1975. He served as President and
Director of SCI from 1975 until retirement in 1986. From 1986 to 1996, Mr.
Hollingsworth served as a consultant to SCI. Prior to November 1997, Mr.
Hollingsworth was a shareholder and director of Foyt Motors, Inc., a subsidiary
of the Company that was acquired by the Company in November 1997. He has served
as a director of several public and private companies.
ROBERT E. HOWARD, II has served as a Director of the Company since April
1997. Mr. Howard has served as President of Howard Group since November 1997.
Mr. Howard has more than 28 years experience in the automotive retailing
industry. From 1969 to 1977, he served in various management positions at
franchised dealerships. From 1978 to November 1997, he served as Chairman of
Howard Pontiac-GMC, Inc., a franchised dealership acquired by the Company in
November 1997. Prior to November 1997, Mr. Howard was also Chairman of the
following companies acquired by the Company in November 1997: Bob Howard
Chevrolet, Bob Howard Honda/Acura, Bob Howard Toyota and Bob Howard Dodge. He
was a recipient of the 1997 Time Magazine Quality Dealer Award and presently
serves as Chairman of the Oklahoma Motor Vehicle Commission and as a Director of
the Oklahoma City Metropolitan Automobile Dealers Association.
CLASS III DIRECTORS
CHARLES M. SMITH has served as Director of the Company since its formation
in December 1995. Mr. Smith has served as President of Smith Group since
November 1997. Mr. Smith has more than 29 years experience in the automotive
retailing industry. From 1968 to 1980, he served in various capacities in
dealerships owned and operated by the Smith family. From 1980 to 1985, he owned
and operated his own automobile dealership. From 1985 to November 1997, he
served as managing partner of Smith & Liu Management Company, the management
entity for the Smith Group dealerships, which were acquired by the Company in
November 1997. He is the former Chairman of the American International
Automobile Dealers Association and is Vice Chairman of the Texas Automobile
Dealers Association. He has won the Time Magazine Quality Dealer Award and the
Sports Illustrated All-Star Dealer Award.
JOHN H. DUNCAN has served as Director of the Company since June 1997. Since
1988, Mr. Duncan has been a private investor with holdings in the automotive,
oil and gas and real estate industries. From 1958 to 1968, Mr. Duncan served as
President of Gulf & Western Industries, a company which he co-founded. Mr.
Duncan currently serves as a director, Chairman of the Executive Committee and
member of the Compensation Committee of Enron Corporation and a director and
Chairman of the Compensation Committee of Enron Oil Trading & Transportation.
Mr. Duncan also serves on the Board of Trustees of Southwestern University, the
Board of Trustees of the Texas Heart Institute and the Board of Visitors of the
University of Texas (M.D. Anderson) Cancer Foundation.
THE BOARD RECOMMENDS A VOTE FOR EACH OF THE PROPOSED NOMINEES.
3
<PAGE> 6
EXECUTIVE OFFICERS
Set forth below are the Company's executive officers together with their
positions and ages.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
B.B. Hollingsworth, Jr............... 55 Chairman, President and Chief Executive Officer
John T. Turner....................... 54 Senior Vice President -- Corporate Development
Scott L. Thompson.................... 39 Senior Vice President -- Chief Financial Officer and
Treasurer
Frank R. Todaro...................... 51 Vice President -- Corporate Services
</TABLE>
A description of Mr. Hollingsworth's work experience is set forth above
under "-- Nominees." Set forth below is a brief description of the business
experience of Messrs. Turner, Thompson and Todaro.
JOHN T. TURNER has served as the Company's Senior Vice
President -- Corporate Development since December 1996. Prior to joining the
Company, Mr. Turner functioned as Managing Director -- Corporate Development,
Europe for SCI. From 1990 to 1993, Mr. Turner served as Senior Vice
President -- Operations and Director of The Loewen Group, Inc. From 1986 to
1990, he served as President and Director of Paragon Family Services, Inc. From
1981 to 1986, he served as Senior Vice President -- Corporate Development for
SCI. Mr. Turner was a partner in Arthur Young & Company from 1977 to 1981.
Currently, he is a director of Metamor Worldwide, Inc.
SCOTT L. THOMPSON has served as Senior Vice President -- Chief Financial
Officer and Treasurer of the Company since December 1996. From 1991 to 1996, Mr.
Thompson served as Executive Vice President, Operations and Finance for KSA
Industries, Inc., a diversified enterprise with interests in automotive
retailing, energy and professional sports. Among Mr. Thompson's other
responsibilities within the KSA group of companies, he served as a Vice
President and director of three Houston-area automobile dealerships with
aggregate annual revenues of $180 million. Additionally, in connection with his
position at KSA Industries, Inc. he served as a director of Adams Resources
Energy, Inc., a public oil and gas company. He is a Certified Public Accountant,
and from 1980 to 1991 he held various positions with Arthur Andersen LLP.
FRANK R. TODARO has served as Vice President -- Corporate Services of the
Company since March 1997. From 1993 to 1997, Mr. Todaro served as a
self-employed consultant providing marketing and management consulting services.
From 1985 to 1993, Mr. Todaro was a Principal with Ernst & Young where he served
as the Director of General Management Consulting and later the Director of
Marketing. From 1972 to 1985, Mr. Todaro served in various managerial and sales
positions with engineering consulting firms.
4
<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Common Stock as of March 31, 1998 by (i) each person known by the
Company to own beneficially more than five percent of its outstanding Common
Stock, (ii) the Company's Chief Executive Officer and each of the Company's
other executive officers who are named in the Summary Compensation table, (iii)
each of the Company's directors and (iv) all executive officers and directors as
a group. All persons listed have an address c/o of the Company's principal
executive offices and have sole voting and dispositive power over the shares of
Common Stock indicated as owned by such person unless otherwise indicated.
<TABLE>
<CAPTION>
BENEFICIAL
OWNERSHIP(1)
----------------------
NAME OF BENEFICIAL OWNERS SHARES PERCENT
- ------------------------- --------- -------
<S> <C> <C>
B.B. Hollingsworth, Jr...................................... 579,868 3.4%
John T. Turner.............................................. 55,110 *
Scott L. Thompson........................................... 46,080 *
Robert E. Howard, II........................................ 2,998,805(2) 17.8
Sterling B. McCall, Jr...................................... 1,461,031(3) 8.7
Charles M. Smith............................................ 712,481 4.2
John H. Duncan.............................................. 198,368 1.2
Bennett E. Bidwell.......................................... -- *
James S. Carroll............................................ 1,052,267(4) 6.2
All directors and executive officers as a group (9 persons
including the directors and executive officers named
above).................................................... 6,052,163 35.6
</TABLE>
- ---------------
* Less than 1%
(1) Under the regulations of the Securities Exchange Commission (the
"Commission"), shares are deemed to be "beneficially owned" by a person if
he directly or indirectly has or shares the power to vote or dispose of such
shares, whether or not he has any pecuniary interest in such shares, or if
he has the right to acquire the power to vote or dispose of such shares
within 60 days, including any right to acquire such power through the
exercise of any option, warrant or right. The shares beneficially owned by
Messrs. Hollingsworth, Turner and Thompson include 33,400, 55,110 and 40,080
shares, respectively, that may be acquired by such person within 60 days
through the exercise of stock options. The shares owned by the executive
officers and directors as a group include 128,590 shares that may be
acquired by such persons within 60 days through the exercise of stock
options.
(2) Includes (i) 592,303 shares held in escrow with Chase Bank of Texas pending
the approval by General Motors Corporation of an acquisition by the Company
of a Chevrolet dealership in Tulsa, Oklahoma from Mr. Howard, (ii) 780,000
shares held by Howard Investments, L.L.C., which is controlled by Mr. Howard
and (iii) 25,450 shares held by Century Reinsurance Company, Inc., which is
controlled by Mr. Howard.
(3) Includes (i) 637,475 shares owned by SMC Investment, Inc., which is
controlled by Mr. McCall; (ii) 250,248 shares owned by Gulf Coast Family
Limited Partnership, which is controlled by Mr. McCall, (iii) 106,041 shares
owned by SBM-T Family Limited Partnership, which is controlled by Mr. McCall
and (iv) 30,629 shares owned by Mr. McCall's spouse.
(4) Includes 1,052,267 shares held by J. C. World Limited Partnership, which is
indirectly controlled by Mr. Carroll.
DIRECTORS' MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The Board met four times in 1997. Each Board member attended all of the
meetings of the Board (held during the period for which he was a director) and
all of the meetings of the committees on which he served.
The Board has established an Audit Committee and a Compensation Committee
to act on behalf of the Board and to advise the Board with respect to specific
matters. The Board does not have a standing nominating
5
<PAGE> 8
committee or a committee that performs a similar function. The responsibilities
of the Audit Committee and Compensation Committee are as follows:
AUDIT COMMITTEE. The Audit Committee is comprised entirely of directors who
are not officers of the Company. The Audit Committee has been established to
discuss the scope and plan of the annual audit of the books and records of the
Company; to review, evaluate and advise the Board with respect to the engagement
of independent public accountants; to review the adequacy of internal accounting
procedures, and to review audit results. Messrs. Bidwell and Duncan are members
of the Audit Committee, which held no meetings in 1997.
COMPENSATION COMMITTEE. The Compensation Committee is comprised entirely of
directors who are not officers of the Company. The Compensation Committee's
function is to review the compensation levels of the Company's executive
officers, to administer the Company's stock option and incentive stock plans and
to authorize bonuses, awards under such plans and any other form of
remuneration. Messrs. Bidwell and Duncan are members of the Compensation
Committee, which held two meetings in 1997.
EXECUTIVE COMPENSATION
The following table sets forth annual and long term compensation for
services in all capacities to the Company and its subsidiaries for the years
ended December 31, 1996 and 1997 of those persons who were, at December 31,
1997, the Chief Executive Officer and the other most highly compensated
executive officers of the Company who earned more than $100,000 in 1997
(collectively, the "named executive officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION(1) ------------------
------------------ SECURITIES
FISCAL SALARY UNDERLYING OPTIONS
YEAR ($) (#)
------ -------- ------------------
<S> <C> <C> <C>
B.B. Hollingsworth, Jr.................................... 1997 $360,000 200,000
Chairman, President and Chief Executive Officer 1996 60,000 --
John T. Turner............................................ 1997 250,000 205,000
Senior Vice President -- Corporate Development 1996 12,097 125,000
Scott L. Thompson......................................... 1997 180,000 160,000
Senior Vice President -- Chief Financial Officer and
Treasurer............................................ 1996 8,710 80,000
</TABLE>
- ---------------
(1) Amounts exclude perquisites and other personal benefits because such
compensation did not exceed the lesser of $50,000 or 10% of the total annual
salary reported.
6
<PAGE> 9
STOCK OPTIONS GRANTED IN 1997
The following table contains certain information concerning stock options
granted to the named executive officers in 1997.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------- POTENTIAL REALIZABLE VALUE
NUMBER OF AT ASSUMED ANNUAL RATES
SECURITIES EXERCISE OR OF STOCK PRICE APPRECIATION
UNDERLYING BASE PRICE FOR OPTION TERMS(3)
OPTIONS PER EXPIRATION ---------------------------
NAME GRANTED(1) SHARE(2) DATE 5% 10%
---- ---------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C>
B.B. Hollingsworth, Jr. ............... 100,000 $ 2.90 3/25/07 $182,000 $ 462,000
100,000 12.00 10/29/07 755,000 1,912,000
John T. Turner......................... 80,000 2.90 3/25/07 145,600 369,600
125,000 12.00 10/29/07 943,750 2,390,000
Scott L. Thompson...................... 80,000 2.90 3/25/07 145,600 369,600
80,000 12.00 10/29/07 604,000 1,529,600
</TABLE>
- ------------------
(1) The options expire 10 years from the date of grant. The options vested 16.7%
on December 31, 1997 and will vest in 16.7% increments each year thereafter.
(2) The exercise price of the options was based upon the fair market value of
the Common Stock on the date of grant.
(3) Calculated based upon the indicated rates of appreciation, compounded
annually, from the date of grant to the end of each option term. Actual
gains, if any, on stock option exercises and Common Stock holdings are
dependent on the future performance of the Common Stock and overall stock
market conditions. There can be no assurance that the amounts reflected in
this table will be achieved. The calculation does not take into account the
effects, if any, of provisions of the option plan governing termination of
options upon employment termination, transferability or vesting.
STOCK OPTION EXERCISES AND FISCAL YEAR-END VALUES
The following table contains certain information concerning the value of
unexercised options at December 31, 1997. None of the named executive officers
exercised any stock options during 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
OPTIONS AT DECEMBER 31, 1997 DECEMBER 31, 1997(1)
---------------------------- ----------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
B.B. Hollingsworth, Jr. .................. 33,400 166,600 $102,872 $ 513,128
John T. Turner............................ 55,110 274,890 210,888 1,051,912
Scott L. Thompson......................... 40,080 199,920 164,595 821,005
</TABLE>
- ---------------
(1) The value of each unexercised in-the-money stock option is equal to the
difference between the closing price of the Common Stock on the New York
Stock Exchange on December 31, 1997 of $9.06 and the per share exercise
price of the stock option.
COMPENSATION OF DIRECTORS
Board members other than those employed by the Company receive an annual
fee of $6,000 and a fee of $1,500 for attendance at each meeting of the Board.
Directors also receive the use of one company vehicle or the economic
equivalent. In addition, directors are eligible for grants of stock options and
other awards pursuant to the 1996 Stock Incentive Plan. In 1997, Messrs. Duncan
and Bidwell each received options to purchase 10,000 shares of Common Stock of
the Company for $12.00 per share under the 1996 Stock Incentive Plan.
7
<PAGE> 10
EMPLOYMENT AGREEMENTS
Each of the named executive officers have entered into employment
agreements with the Company dated November 3, 1997. The employment agreements
provide for the following annual base salaries: B.B. Hollingsworth,
Jr. -- $360,000; John T. Turner -- $250,000 and Scott L. Thompson -- $200,000.
The employment agreements also provide that such officers' participation in
bonus plans will be governed by the bonus and incentive plans adopted by the
Board in which the officer is a participant.
Each employment agreement is for a term of five years, and unless
terminated or not renewed by the Company or the employee, the term will continue
thereafter on a month-to-month basis terminable at any time by either the
Company or the employee, with or without cause, upon thirty days notice. In the
event of a termination of employment by the Company without cause or by the
employee due to an uncorrected material breach of the employment agreement by
the Company, the employee is entitled to receive his or her base salary paid
bi-weekly until the end of his contract term. In the event of an involuntary
termination of employment following a merger, consolidation or dissolution of
the Company or a sale of all its assets, the employee is entitled to a lump sum
payment equal to the amount or base pay he is entitled to under the remainder of
his contract. The Company is not obligated to pay any amounts to the employee
other than his pro rata base salary through the date of his or her termination
upon (i) voluntary termination of employment by the employee; (ii) termination
of employment by the Company for cause (as defined); (iii) death of the
employee; or (iv) long-term disability of the employee. During the period of
employment and for a period of three years after termination of employment, the
employees are generally prohibited from competing or assisting others to compete
with the Company. In addition, during the period of employment and for a period
of five years after termination of employment, the employees are generally
prohibited form inducing any other employee to terminate employment with the
Company.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee's primary responsibilities include reviewing and
approving the compensation plans of the officers and certain other employees of
the Company and administering the Company's stock option plan.
EXECUTIVE COMPENSATION. The Compensation Committee believes that
compensation of executive officers should not only be adequate to attract,
motivate and retain competent executive personnel, but should also serve to
align the interests of the executive officers with those of the stockholders. To
achieve this goal the Company has adopted both short-term and long-term
incentive compensation plans that are dependent upon the Company's performance.
BASE SALARY. The Company and Compensation Committee have established a
pay-for-performance philosophy by generally providing conservative base salaries
while emphasizing incentive compensation programs. Executive salary levels have
been and will continue to be based on market salary levels, individual
performance and the financial performance of the Company.
INCENTIVE COMPENSATION. The Compensation Committee has adopted an incentive
compensation program for its executive officers that is based on the earnings
growth of the Company. Dependent upon the performance of the Company, these
individuals could earn bonuses up to, but not exceeding, the amount of their
base compensation.
STOCK OPTION PLAN. Stock options are granted to employees, including
executive officers, to align their long-term interests with those of the
stockholders. Additionally, it allows them to develop and maintain a potentially
significant, equity ownership position in the Company.
EMPLOYEE STOCK PURCHASE PLAN. Generally, under this plan, all employees,
including the executive officers, are offered the opportunity to purchase the
Company's Common Stock at a 15% discount to market. This is an additional equity
incentive the Company has offered to its employees to further promote the
enhancement of stockholder value.
8
<PAGE> 11
CHIEF EXECUTIVE OFFICER COMPENSATION. As described above, the Company's
executive compensation philosophy is based on providing conservative base
salaries with emphasis placed on incentive compensation programs, including the
compensation of the Company's Chief Executive Officer, B.B. Hollingsworth, Jr.
The following discussion summarizes the actions taken with respect to Mr.
Hollingsworth's compensation for 1997.
Base Salary. Mr. Hollingsworth's base salary remained unchanged in 1997 as
the Company only recently completed its acquisitions of the Founding Groups and
its initial public offering.
Incentive Compensation. Mr. Hollingsworth received no incentive
compensation during 1997 as the Company only recently completed its acquisitions
of the Founding Groups and its initial public offering.
Stock Option Plan. Mr. Hollingsworth was granted options to purchase
200,000 shares of the Company's Common Stock, pursuant to the 1996 Stock
Incentive Plan. These awards were based on the factors described above under
"Executive Compensation - Stock Option Plan".
DEDUCTIBILITY. Section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"), generally disallows a tax deduction to a public company
for compensation paid to its chief executive officer and four other most highly
compensated executive officers if the compensation of any of such officers
exceeds $1 million in a particular year. Qualifying performance-based
compensation is not subject to the deduction limit if certain requirements are
met. The Company has structured portions of its performance-based compensation
of executive officers (such as stock option grants) in a manner that excludes
such compensation from the deduction limit. Awards under the Company's Incentive
Compensation Plan do not qualify for exclusion from the deduction limit.
The Compensation Committee does not currently intend to award levels of
compensation that would result in a limitation on the deductibility of a portion
of such compensation for federal income tax purposes pursuant to Section 162(m)
of the Code. However, the Compensation Committee may authorize compensation that
results in such limitations in the future if it determines that such
compensation is in the best interest of the Company.
Respectfully submitted by the Compensation Committee of the Board of
Directors of the Company,
Bennett E. Bidwell
John H. Duncan
9
<PAGE> 12
PERFORMANCE GRAPH
As required by applicable rules of the Securities and Exchange Commission,
the performance graph shown below was prepared based upon the following
assumptions:
1. $100 was invested in the Company's Common Stock, the S&P 500 and
the Peer Group (as defined below) on October 29, 1997 at the initial public
offering price of the Company's Common Stock of $12 per share and the
closing price of the stocks comprising the S&P 500 and the Peer Group,
respectively, on such date. The Company's Common Stock began trading on the
New York Stock Exchange on October 30, 1997.
2. Peer Group investment is weighted based upon the market
capitalization of each individual company within the Peer Group at the
beginning of the Period.
3. Dividends are reinvested on the ex-dividend dates.
The companies that comprise the Company's current Peer Group are as
follows: CarMax Group, Cross-Continent Auto Retailers, Inc., Lithia Motors,
Inc., Republic Industries, Inc., Sonic Automotive, Inc. and United Auto Group,
Inc.
COMPARISON OF CUMULATIVE TOTAL RETURN
<TABLE>
<CAPTION>
GROUP 1
MEASUREMENT PERIOD AUTOMOTIVE, PEER GROUP
(FISCAL YEAR COVERED) INC. S&P 500 ONLY
<S> <C> <C> <C>
10/97 100 100 100
12/97 75.52 102.87 70.94
</TABLE>
RELATED TRANSACTIONS
Set forth below is a description of certain transactions entered into
between the Company and certain of its officers, directors and stockholders.
John S. Watson, Secretary of the Company, is a partner in the law firm of
Vinson & Elkins L.L.P., which is the Company's principal outside counsel. The
Company paid $1,575,000 in legal fees to Vinson & Elkins L.L.P. for legal
services rendered in 1997.
10
<PAGE> 13
THE INITIAL ACQUISITIONS
In November 1997, the Company acquired, in separate simultaneous
transactions, in exchange for $5.4 million, in cash, and 9,074,915 shares of
Common Stock, 13 corporations that own automobile dealerships and related
operations that were originally part of four separate dealership groups (the
"Acquisitions"). The Howard Group consisted of Acura, Chevrolet, Chrysler,
Dodge, Eagle, GMC, Honda, Isuzu, Jeep, Mazda, Plymouth, Pontiac and Toyota
dealership franchises located in Oklahoma City. The McCall Group consisted of
Toyota and Lexus dealership franchises in Houston, Texas. The Smith Group
consisted of an Acura dealership franchise in Houston, Honda, GMC, Oldsmobile,
Mitsubishi, Lincoln, Mercury and Kia dealership franchises in Beaumont, Texas, a
Nissan dealership franchise in Richardson, Texas and two Nissan dealership
franchises, one Mitsubishi dealership franchise and one Suzuki dealership
franchise in Austin, Texas. The Kingwood Group consisted of Honda and Isuzu
dealership franchises in Kingwood, Texas.
In connection with the Acquisitions, the following directors and officers
with their spouses and affiliates received shares of Common Stock as follows:
Mr. Hollingsworth -- 196,368 shares of Common Stock; Mr. Howard -- 2,956,955
shares of Common Stock; Mr. McCall -- 1,461,031 shares of Common Stock; Mr.
Smith -- 679,181 shares of Common Stock and Mr. Duncan -- 196,368 shares of
Common Stock. In addition, Mr. Howard received $2.3 million in cash in the
Acquisitions.
Bob Howard Automotive-East, Inc. ("Bob Howard East"), a corporation
wholly-owned by Mr. Howard, has entered into an agreement to purchase a
Chevrolet dealership franchise in Tulsa, Oklahoma (the "Tulsa Dealership") for
approximately $2.5 million. This purchase price was funded by a $2.5 million
loan, bearing interest at the prime rate plus 100 basis points, from Mr. Howard
to Bob Howard East. General Motors Corporation ("GM") has denied its approval of
Bob Howard East's acquisition of the Tulsa Dealership due to the Howard Group's
failure to meet GM's required CSI score levels. The Company has entered into an
agreement to purchase Bob Howard East for the assumption of all Bob Howard
East's liabilities, which consist of the $2.5 million loan from Mr. Howard to
Bob Howard East. These acquisitions will be consummated immediately upon GM's
approval of such acquisitions. Mr. Howard received 592,303 shares of Common
Stock in the Acquisitions as consideration for the Tulsa Dealership. These
shares will be held in escrow pending the acquisition of the Tulsa Dealership.
Upon consummation of Bob Howard East's acquisition of the Tulsa Dealership
and the Company's acquisition of Bob Howard East, the escrowed shares will be
released to Mr. Howard. In this event, the consideration to be paid to Mr.
Howard for the Tulsa Dealership will be (i) the 592,303 shares of Common Stock
and (ii) the assumption of Bob Howard East's $2.5 million liability to Mr.
Howard. This consideration will be paid to Mr. Howard by the Company.
If these two acquisitions are not consummated with GM's approval by
November, 1999: (i) the Company will not acquire the Tulsa Dealership, (ii) Bob
Howard East's $2.5 million liability to Mr. Howard will not be assumed by the
Company, (iii) Bob Howard East will retain the right to acquire the Tulsa
Dealership and (iv) rather than being distributed solely to Mr. Howard, the
escrowed shares will be distributed pro rata to the founding stockholders of the
Company.
THE CARROLL ACQUISITION
On March 16, 1998, the Company closed its acquisition of two Ford
dealership franchises in Florida and one Ford dealership franchise in Georgia,
all of which were controlled by Mr. Carroll. In consideration of Mr. Carroll's
interests in such corporations, he received 1,052,267 shares of the Company's
Common Stock or approximately 6.2% of the outstanding shares of the Company's
Common Stock and approximately $12.4 million in cash, plus additional contingent
consideration based upon the performance, over the five-year period beginning
January 1, 1999, of the Company's dealerships for which Mr. Carroll is
responsible. The maximum additional consideration to be paid by the Company to
Mr. Carroll is $5.3 million ($1.8 million of which is guaranteed), payable in
cash and Common Stock in the same proportion as in the initial payment described
above. If Mr. Carroll sells in the public market any of the shares of Common
Stock received by Mr. Carroll as part of the acquisition consideration between
March 16, 2000 and March 19, 2003, the
11
<PAGE> 14
Company is obligated to pay Mr. Carroll in cash the amount, if any, by which the
sale price of Common Stock received by Mr. Carroll in connection with such sale
is less than $14 per share.
LEASES
North Broadway Real Estate, an Oklahoma limited liability company owned 50%
by Mr. Howard and 50% by an unrelated third party leases the real estate and
facilities of the Howard collision repair center to the Company. This lease
provides for a five-year term ending July 1, 1999 and a monthly rental rate of
$9,000, and requires the Company to pay all applicable property taxes, maintain
adequate insurance and repair or replace the leased building if necessary.
Koons Ford, a subsidiary of the Company, has entered into a lease agreement
with World Partner Enterprises Ltd, a Florida limited partnership controlled by
Mr. Carroll to lease certain land and the facilities that are currently being
constructed thereon located in Hollywood, Florida for a monthly rental payment
of approximately $167,000 based on the expected cost to construct the
facilities. The initial term, which commences upon completion of construction of
the facilities, is for ten years and Koons Ford has the right to extend the term
of the lease for four five year periods. The initial rent is subject to
adjustment based on increases in the Consumer Price Index at the end of the
initial term and each five years thereafter. The lease grants Koons Ford a right
of first refusal on the property subject to the lease and an option to purchase
the property at an independently appraised value.
Koons Ford is a party to a sublease agreement with Koons Development
Company, a Florida general partnership controlled by Mr. Carroll, to lease
certain land and facilities located in Hollywood, Florida used by Koons Ford as
a Ford dealership. Koons Development Company is the tenant under the main lease,
which has a 99 year term. The sublease agreement provides for an initial monthly
rental rate of $62,500 per month. The initial term of the sublease, which
commenced on March 16, 1998, is for ten years and Koons Ford has the right to
extend the term of the sublease for four five year periods. The initial rent is
subject to adjustment based on increases in the Consumer Price Index at the end
of the initial term and each five years thereafter. The sublease grants Koons
Ford a right of first refusal on Koons Development Company's leasehold interest
and an option to purchase the same at an independently appraised value.
Courtesy Ford, a subsidiary of the Company, is a party to a lease agreement
with K.C. Partnership, a Florida general partnership controlled by Mr. Carroll
to lease certain land and facilities located in Miami, Florida used by Courtesy
Ford as a Ford dealership. The agreement provides for an initial monthly rental
rate of $67,000 per month. The initial term of the lease, which commenced on
March 16, 1998, is for ten years and Courtesy Ford has the right to extend the
term of the lease for four five year periods. The initial rent is subject to
adjustment based on increases in the Consumer Price Index at the end of the
initial term and each five years thereafter. The lease grants Courtesy Ford a
right of first refusal on the property and an option to purchase the same at an
independently appraised value.
Perimeter Ford, a subsidiary of the Company, is a party to a lease
agreement with K.C. Partnership to lease certain land and facilities located in
Atlanta, Georgia used by Perimeter Ford as a Ford dealership. The agreement
provides for an initial monthly rental rate of $57,250 per month. The initial
term of the lease, which commenced on March 16, 1998, is for ten years and
Perimeter Ford has the right to extend the term of the lease for four five year
periods. The initial rent is subject to adjustment based on increases in the
Consumer Price Index at the end of the initial term and each five years
thereafter. The lease grants Perimeter Ford a right of first refusal on the
property and an option to purchase the same at an independently appraised value.
The Company also leases several other facilities from officers, directors
and large stockholders of the Company. The Company leases these other facilities
under uniform lease agreements (the "Related Party Leases"). The term of the
Related Party Lease is for 30 years and is cancelable at the Company's option
ten years from execution of the lease and at the end of each subsequent five
year period. Additionally, the Company has a right of first refusal to acquire
the property. Each Related Party Lease requires the Company to be responsible
for taxes, insurance and, in certain circumstances, maintenance. Each of the
Related Party
12
<PAGE> 15
Leases and the rents payable thereunder are described below. Under each of the
Related Party Leases, the rent is subject to increases every five years based on
increases in the Consumer Price Index.
Sterling McCall Toyota, a subsidiary of the Company, leases property owned
by SMC Investment, Inc. ("SMC Investment") and used by Sterling McCall Toyota as
a repair center in Houston, Texas. Mr. McCall and his affiliates own all of the
stock of SMC Investment. The lease provides for a monthly rental of $9,000 per
month.
Sterling McCall Toyota, a subsidiary of the Company, leases property that
is owned by a partnership of which Mr. McCall is a partner and that is used by
Sterling McCall Toyota as a storage lot in Houston, Texas. The lease provides
for a monthly rental of $7,000.
Sterling McCall Toyota, a subsidiary of the Company, leases property that
is owned by two partnerships of which Mr. McCall is a partner and that is used
by Sterling McCall Toyota as an automobile dealership in Houston, Texas. The
lease provides for a monthly rental of $70,000.
Sterling McCall Lexus, a subsidiary of the Company, leases property that is
owned by a partnership of which Mr. McCall is a partner and that is used by SMC
Luxury Cars as an automobile dealership in Houston, Texas. The lease provides
for a monthly rental of $70,000.
Sterling McCall Lexus, a subsidiary of the Company, leases property that is
owned by Mr. McCall and that is used by Sterling McCall Lexus as a repair center
in Houston, Texas. The lease provides for a monthly rental of $6,500.
Mike Smith Autoplaza, a subsidiary of the Company, leases property owned by
a general partnership, of which the children of Mr. Smith are partners. The
property is used by Mike Smith Autoplaza as an automobile dealership in
Beaumont, Texas. The lease provides for monthly rental payments of $46,500.
Round Rock Nissan, a subsidiary of the Company, leases property owned by
SKLR Round Rock, L.L.C., a Texas limited liability corporation in which Mr.
Smith has an ownership interest. The property is used by Round Rock Nissan as an
automobile dealership in Round Rock, Texas. The lease provides for monthly
rental payments of $32,000.
Bob Howard Automall, a subsidiary of the Company, leases two properties
owned by Mr. Howard and used by Bob Howard Automall as automobile dealerships in
Oklahoma City, Oklahoma. These leases relating to these properties provide for
aggregate monthly rentals of $85,862.
Bob Howard Chevrolet, a subsidiary of the Company, leases property owned by
Mr. Howard and used by Bob Howard Chevrolet as an automobile dealership in
Oklahoma City, Oklahoma. The lease relating to this property provides for a
monthly rental of $48,500.
Bob Howard Toyota, a subsidiary of the Company, leases property owned by
Mr. Howard and used by Bob Howard Toyota as an automobile dealership in Oklahoma
City, Oklahoma. The lease relating to this property provides for a monthly
rental of $33,500.
OTHER
Sterling McCall Toyota and Sterling McCall Lexus have entered into an
agreement with Dealer Solutions, L.L.C. ("DSL") pursuant to which DSL is to
provide management information systems software and related services to the
dealerships. Pursuant to the agreement, the dealerships will pay a monthly
maintenance fee of approximately $2,500 until the earlier of the time the
dealerships' existing contract for such services with a different vendor
terminates or March 1999, at which time the monthly maintenance fee will
increase to approximately $12,500 per month for the remainder of the five year
term of the agreement. After an initial five-year term, this agreement is
subject to successive automatic one-year extensions with the same terms and fees
unless terminated by either party with thirty days notice. In addition, upon
installation of the software system at Sterling McCall Lexus, an installation
fee of $20,000 will be paid to DSL. No installation fee has been paid by
Sterling McCall Toyota. Mr. McCall, his affiliates and family members own
approximately 18% of DSL. The Company is only committed to implement this system
in Sterling McCall
13
<PAGE> 16
Toyota and Sterling McCall Lexus. The Company does not currently have any plans
to implement this system in its other dealerships. The Company believes that the
Company will acquire these systems from DSL on terms, taken as a whole, that are
no less favorable than those that could be obtained from non-affiliated third
parties.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Duncan, who is on the Compensation Committee, was a stockholder of one
of the corporations (Foyt Motors, Inc.) that was acquired by the Company in the
Acquisitions in November 1997. In consideration for his interest in Foyt Motors,
Inc., he received 196,368 shares of the Company's Common Stock.
ITEM 2
PROPOSAL TO RATIFY THE SELECTION OF
INDEPENDENT ACCOUNTANTS
APPOINTMENT OF ARTHUR ANDERSEN LLP
The Board, upon recommendation of the Audit Committee, has appointed Arthur
Andersen LLP, Certified Public Accountants, as the Company's independent
accountants for the year ended December 31, 1998, subject to ratification of
this appointment by the stockholders of the Company. Arthur Andersen LLP
performed audit services in connection with the examination of the financial
statements of the Company and its subsidiaries for the year ended December 31,
1997 and is considered by management of the Company to be well qualified. If
this proposal does not receive a majority vote at the meeting, the Board will
reconsider the appointment. Representatives of Arthur Andersen LLP will be
present at the Annual Meeting. They will have an opportunity to make a statement
if they desire to do so and to answer appropriate questions.
THE BOARD RECOMMENDS A VOTE FOR RATIFICATION OF THE SELECTION OF ARTHUR
ANDERSEN LLP AS INDEPENDENT ACCOUNTANTS OF THE COMPANY.
ITEM 3
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for action at the Annual Meeting. However, if any other matter should
be presented at the meeting upon which a vote properly may be taken, shares
represented by all duly executed proxies received by the Company will be voted
with respect thereto in accordance with the best judgment of the persons
designated as the proxies.
OTHER INFORMATION
STOCKHOLDERS PROPOSALS
Pursuant to various rules promulgated by the Commission, any stockholder
who wishes to submit a proposal for inclusion in the proxy material and for
presentation at the 1999 Annual Meeting of Stockholders must forward such
proposal to the Secretary of the Company, at the address indicated on page 1 of
this proxy statement so that the Secretary receives it no later than December
22, 1998.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company believes that, except as set forth below, during the year ended
December 31, 1997, all Section 16(a) filing requirements applicable to the
Company's directors, executive officers and greater than 10 percent beneficial
owners were complied with. Mr. Hollingsworth mistakenly reported the purchase of
100 shares of Common Stock acquired on October 30, 1997 on a Form 5 dated
February 9, 1998 instead of on a Form 4.
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<PAGE> 17
VOTING OF SHARES COVERED BY PROXIES
The persons designated to vote shares covered by proxies intend to exercise
their judgment in voting such shares on other matters that may come before the
Annual Meeting. Management does not expect, however, that any matters other than
those referred to in this Proxy Statement will be presented for action at the
Annual Meeting.
By Order of the Board of Directors
/s/ JOHN S. WATSON
John S. Watson
Secretary
Houston, Texas
April 21, 1998
15
<PAGE> 18
- --------------------------------------------------------------------------------
PROXY
GROUP 1 AUTOMOTIVE, INC.
950 ECHO LANE, SUITE 350
HOUSTON, TEXAS 77024
ANNUAL MEETING OF STOCKHOLDERS -- MAY 28, 1998
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned stockholder(s) of Group 1 Automotive, Inc. a Delaware
corporation (the "Company"), hereby appoints B.B. Hollingsworth, Jr., and Scott
L. Thompson, and each of them, attorneys-in-fact and proxies of the
undersigned, with full power of substitution, to represent and to vote all
shares of common stock of the Company that the undersigned is entitled to vote
at the Annual Meeting of Stockholders to be held at the Chase Bank of Texas,
707 Travis, Mezzanine Level, Houston, Texas 77002, at 10:00 A.M., local time,
on Thursday, May 28, 1998, and at any adjournment thereof.
(CONTINUED ON REVERSE SIDE)
- --------------------------------------------------------------------------------
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<PAGE> 19
<TABLE>
<S> <C>
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE UNDERSIGNED. PLEASE MARK
IF NO DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1 AND 2. YOUR VOTE AS [X]
INDICATED IN
THIS EXAMPLE.
1. Election of Directors Nominees: Sterling B. McCall, Jr., and Bennett E. Bidwell
FOR all nominees WITHHOLD INSTRUCTION: To withhold authority to vote for any individual nominee, write
(except as noted AUTHORITY that nominee's name in the space provided below.
to the contrary) to vote for all nominees
[ ] [ ] ----------------------------------------------------------------------------
2. Ratification of the appointment of Arthur Andersen LLP In their discretion, such attorneys-in-fact and proxies are
as independent accountants of the Company for the authorized to vote upon such other business as properly may come
fiscal year ending December 31, 1998. before the meeting.
FOR AGAINST ABSTAIN
[ ] [ ] [ ] I will [ ] will not [ ] be attending the meeting
YOU ARE REQUESTED TO COMPLETE, DATE, SIGN, AND
RETURN THIS PROXY PROMPTLY. ALL JOINT OWNERS
MUST SIGN. PERSONS SIGNING AS EXECUTORS,
ADMINISTRATORS, TRUSTEES, CORPORATE OFFICERS,
OR IN OTHER REPRESENTATIVE CAPACITIES SHOULD
SO INDICATE.
Date:___________________________________, 1998
----------------------------------------------
Signature
----------------------------------------------
Signature
</TABLE>
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