<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________.
Commission File Number: 1-8833
BIG O TIRES, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-0392481
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
11755 East Peakview Avenue
Englewood, Colorado 80111
(Address of Principal Executive Offices)
(303) 790-2800
(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
The number of shares of registrant's common stock outstanding on
May 10, 1995 was 3,312,143.
The total number of pages is 30.
<PAGE>
BIG O TIRES, INC.
CONSOLIDATED BALANCE SHEETS
(000s)
<TABLE>
<CAPTION>
March 31,
1995 December 31,
ASSETS Unaudited 1994
----------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 343 $ 4,882
Trade accounts receivable,
net of allowance for
doubtful accounts 10,200 8,165
Other receivables 659 2,905
Current portion of notes
receivable: 769 733
Inventories 18,191 14,219
Deferred income taxes 2,165 2,126
Other current assets 826 688
--------- ---------
Total current assets 33,153 33,718
--------- ---------
NOTES RECEIVABLE, net of
current portion: 3,340 3,193
--------- ---------
PROPERTY, PLANT AND EQUIPMENT 26,743 17,177
Less accumulated depreciation
and amortization (5,400) (5,146)
--------- ---------
21,343 12,031
--------- ---------
INTANGIBLE AND OTHER ASSETS:
Distribution rights 9,008 9,077
Equity in joint ventures and
unconsolidated subsidiaries 1,032 1,129
Other 2,859 2,820
--------- ---------
12,899 13,026
--------- ---------
TOTAL ASSETS $ 70,735 $ 61,968
--------- ---------
--------- ---------
</TABLE>
-See notes to consolidated financial statements-
2
<PAGE>
BIG O TIRES, INC.
CONSOLIDATED BALANCE SHEETS
(000s)
<TABLE>
<CAPTION>
March 31,
1995 December 31,
Unaudited 1994
--------- ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,133 $ 650
Accrued expenses 2,031 2,485
Warranty reserve 3,975 3,850
Current portion of long-term debt
and capital lease obligations 2,009 2,066
--------- ---------
Total current liabilities 11,148 9,051
--------- ---------
LONG-TERM DEBT AND CAPITAL
LEASE OBLIGATIONS,
net of current portion 22,144 15,906
--------- ---------
OTHER LONG-TERM LIABILITIES 1,428 1,433
--------- ---------
EMPLOYEE STOCK OWNERSHIP
PLAN OBLIGATIONS 180 449
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock 334 334
Capital contributed in
excess of par 15,424 15,418
Retained earnings 20,708 20,419
--------- ---------
36,466 36,171
Less: Employee stock ownership
plan obligations (180) (449)
Deferred stock grant
compensation (330) (472)
Treasury stock (121) (121)
--------- ---------
35,835 35,129
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 70,735 $ 61,968
--------- ---------
--------- ---------
</TABLE>
-See notes to consolidated financial statements-
3
<PAGE>
BIG O TIRES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(000s except for share and per share amounts)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1995 1994
-----------------------
<S> <C> <C>
SALES, net $ 29,153 $ 26,393
COST OF SALES 22,413 20,108
--------- ---------
GROSS PROFIT 6,740 6,285
--------- ---------
EXPENSES, net:
Selling and administrative 4,579 4,934
Product delivery expense 851 525
Shareholder proposal expense 321 99
Interest expense 396 272
Loss on sale or closure of
retail stores 95 98
--------- ---------
6,242 5,928
--------- ---------
INCOME BEFORE INCOME TAXES 498 357
--------- ---------
PROVISION FOR INCOME TAXES:
Current 248 214
Deferred (39) (62)
--------- ---------
209 152
--------- ---------
NET INCOME $ 289 $ 205
--------- ---------
--------- ---------
EARNINGS PER SHARE $ .09 $ .06
--------- ---------
--------- ---------
WEIGHTED AVERAGE SHARES AND COMMON
STOCK EQUIVALENTS OUTSTANDING 3,381,330 3,238,104
--------- ---------
--------- ---------
</TABLE>
-See notes to consolidated financial statements-
4
<PAGE>
BIG O TIRES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(000s)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1995 1994
--------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 289 $ 205
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 299 299
Amortization of intangibles 99 102
Other 52 (45)
Cash flows from changes in
working capital (1,942) (544)
--------- ---------
Total adjustments (1,492) (188)
--------- ---------
NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES (1,203) 17
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in notes receivable -- (84)
Payments received on notes
receivable 128 234
Proceeds from sales of property
and equipment 26 1
Equity investments in affiliates (2) (95)
Purchase of property and equipment (8,420) (992)
Increase in retail store
construction in progress (1,174) --
Purchase of retail stores (122) (410)
--------- ---------
NET CASH USED BY
INVESTING ACTIVITIES (9,564) (1,346)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on long-term debt 6,850 2,300
Principal payments on long-term debt
and capital lease obligations (700) (853)
Other 78 65
--------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 6,228 1,512
--------- ---------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (4,539) 183
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 4,882 1,113
--------- ---------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 343 $ 1,296
--------- ---------
--------- ---------
</TABLE>
-See notes to consolidated financial statements-
5
<PAGE>
BIG O TIRES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(000s)
<TABLE>
<CAPTION>
For the three months
ended March 31,
1995 1994
----------------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 378 $ 284
Income taxes -- --
SUPPLEMENTAL DISCLOSURE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Accounts receivable transferred to
long-term notes receivable 311 130
Inventories received in satisfaction
of long-term notes receivable -- 454
Decrease in employee stock ownership
plan obligations 269 555
</TABLE>
-See notes to consolidated financial statements-
6
<PAGE>
BIG O TIRES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1994
UNAUDITED
NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:
REFERENCE TO ANNUAL REPORT:
These financial statements should be read in conjunction with the
Annual Report on Form 10-K for the year ended December 31, 1994,
since certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the United States
Securities and Exchange Commission ("SEC"). These interim
financial statements reflect all adjustments which are, in the
opinion of Management, necessary for a fair presentation of the
financial position, results of operations and cash flows of the
Company for the interim periods. Such adjustments are of a normal
recurring nature. Operating results for the three months ended
March 31, 1995, are not necessarily indicative of the results that
may be expected for the year ending December 31, 1995.
STOCK OPTION PLAN:
On January 1, 1995, the Company granted options for 4,943 shares of
the Company's $.10 par value common stock to certain directors and
employees who elected to participate in the Big O Tires, Inc.
Director and Employee Stock Option Plan ("Plan"). As of March 31,
1995, the liability for the options granted on January 1, 1995
pursuant to the Plan was approximately $3,000.
STOCK APPRECIATION RIGHTS:
In February 1995, the Company's Board of Directors granted Stock
Appreciation Rights ("SAR") to each of the three members of the
Office of the Chief Executive. Each SAR agreement provides that
each member receive a grant of 100,000 share equivalent units, each
of which represents an equal undivided interest in the future
appreciation in the value of a share of the Company's Common Stock.
The SAR agreement provides, subject to certain vesting
requirements, that each unit shall entitle each member to receive,
in cash only, the difference between the base value (as defined in
the agreement) and the market value of a share of Common Stock on
the exercise date. As of March 31, 1995, no liability has been
accrued pursuant to this agreement.
CREDIT FACILITY:
On January 23, 1995 the Company replaced its previously existing
credit facility with a $20 million Revolving Credit Agreement which
expires January 22, 1998. Borrowings under the agreement (limited
to a portion of eligible collateral) were $9,615,000 at March 31,
1995. The agreement contains various covenants and restrictions
(including a restriction which precludes the payment of cash
dividends or the return of capital to shareholders) with which the
Company was in compliance at March 31, 1995.
SENIOR SECURED NOTES:
In April 1994, the Company sold 8.71% Senior Secured Notes in the
aggregate principal amount of $8,000,000, at par, which will mature
in 2004. The notes are collateralized by restricted cash and a
deed of trust on land and buildings located in California and
Idaho. Approximately $3,577,000 of the proceeds were used for the
repayment of long-term debt and $300,000 of the proceeds were used
for payment of the costs associated with the issuance of the notes.
The remaining proceeds of approximately $4,123,000 were invested in
7
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U.S. Treasury obligations until February 1995 when they were used
for the acquisition of the Las Vegas distribution center which
opened in March 1995.
UNEARNED STOCK COMPENSATION:
On August 5, 1994, the Company made restricted stock grants for
28,986 shares (net of subsequent cancellation of 4,680 shares) of
the Company's $.10 par value common stock and granted options for
an additional 41,942 shares of the Company's common stock to
certain officers in accordance with the Big O Tires, Inc. Long Term
Incentive Plan (LTI Plan). These grants were made in lieu of
previous option grants for 264,824 shares of the Company's common
stock which occurred in April 1994. The previous grants were
cancelled subsequent to the Annual Shareholders Meeting when a
proposal to provide additional shares of common stock for issuance
pursuant to the LTI Plan was not approved by the shareholders.
In connection with the restricted stock grant, unearned stock
compensation of $520,000 was recorded which represents the non-
vested portion of the restricted stock grants based upon the market
price of the stock at the grant date. Compensation expense is
being recognized over a vesting period of three to five years in
accordance with the provisions of the LTI Plan.
SHAREHOLDER PROPOSAL EXPENSE:
At the Annual Meeting of Shareholders held in June 1994, the
shareholders adopted a resolution calling for the Company to engage
an investment banker to evaluate all alternatives for enhancing the
value of the Company. The cost associated with the implementation
of the shareholder proposal for the three months ended March 31,
1995 was $321,000.
EARNINGS PER SHARE:
Earnings per share is computed using the weighted-average number of
outstanding shares during each period presented. Common stock
equivalents are included but did not have a material effect on the
computation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS:
LIQUIDITY AND CAPITAL RESOURCES:
Shareholder Proposal
In June 1994, the shareholders adopted a proposal requesting the
Company to engage an investment banker to evaluate all alternatives
to enhance the value of the Company. In implementing this
shareholder proposal, the Board of Directors established the
Investment Committee of the Board which retained PaineWebber
Incorporated (PaineWebber) to fulfill this shareholder proposal.
The result of this process has led to three offers to acquire the
Company, none of which has been successful as of May 10, 1995.
However, an offer for the Company may be received in the future
and, if accepted by the shareholders, could result in a significant
change in the Company's liquidity and need for capital resources.
In the meantime, management of the Company has been restructured,
creating the Office of the Chief Executive. The purpose of this
restructuring is to achieve aggressive growth and to enhance the
value of the Company. As these strategies are currently being
developed, their impact on the liquidity and capital resources of
the Company has not been determined. However, management of the
8
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Company is aware of the limited capital resources available and
will act prudently and conservatively in establishing and
implementing growth plans and operating strategies.
Working Capital
At March 31, 1995, the Company had $22,005,000 in working capital
(defined as current assets less current liabilities), which
represented a net decrease of $2,662,000 from December 31, 1994.
Working capital was used for the purchase of the Las Vegas
distribution center, expenditures on retail store construction in
progress and principal payments on long term debt and capital lease
obligations. These decreases in working capital were partially
offset by increases from borrowings on long term debt and working
capital provided by operations.
The Company's net trade receivables at March 31, 1995 increased by
$2,035,000 as compared to December 31, 1994. This increase
resulted from the effect of opening five new stores during the
first three months of 1995 and normal seasonal increases.
Inventories at March 31, 1994 increased by $3,972,000 as compared
to inventories at December 31, 1994. This increase resulted
primarily from higher inventory levels needed to support the
increased sales due to the impact of the Company's "Cost-U-LessTM"
program which was implemented in July 1994 and the five new stores
opened during the first three months of 1995. Increases also
resulted from the normal, seasonal increase in stocking levels to
provide an adequate supply of products to meet anticipated higher
sales volumes which normally occur during the second quarter of
each year. Accounts payable at March 31, 1995 increased $2,483,000
from December 31, 1994, as a result of the increased inventory
levels.
Las Vegas RSC Conversion
In May 1994, the Company closed its RSC in Vacaville, California
and consolidated its operations into the Ontario RSC. The
Vacaville warehouse was leased to an unrelated third party, which
lease continues until March 2000. The Company has accepted an
offer for the sale of the warehouse and lease, which is scheduled
for closing in August 1995. Upon the sale, the cash proceeds will
be used to reduce the outstanding loan balance with First National
Bank of Chicago (First Chicago).
In March 1995, the Company closed its RSC in Denver, Colorado and
consolidated its operations into the newly opened Las Vegas RSC.
The Denver RSC was sold to an unrelated third party in December
1994 (See discussion under "Financial Commitments" below).
It is presently anticipated that the Ontario RSC operations will be
fully converted to the new Las Vegas RSC by May 1995. While the
Company is obligated under the lease for the Ontario warehouse
through May 1998, it has subleased this property to an unrelated
third party for the remainder of the lease term starting June 1995.
During the first six months of 1995, selling and administrative
expense is anticipated to remain approximately at levels comparable
to the prior year. After all operations have been successfully
consolidated at the new Las Vegas RSC in the second quarter, 1995,
selling and administrative expense is anticipated to be reduced.
Real Estate Development
The Company has implemented a real estate development program.
This program involves Big O retail store site selection and
development by one of the Company's subsidiaries, and the
subsequent sale of these store sites to Franchisees that qualify
for Small Business Administration (SBA) guaranteed loans.
Significant financing will be required by the Company, which is
planned to be repaid if the financing through the SBA guaranteed
source is obtained by the prospective Franchisee. As of May 10,
1995, permanent financing has been approved for seven development
projects through AT&T Capital Corporation (AT&T). Approval for
five additional projects has been withheld pending the outcome of
the Shareholder Proposal described above. The Company anticipates
9
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funding these projects through its line of credit, however, future
development may be postponed until this permanent financing issue
is settled.
Capital Expenditures
At March 31, 1995, the Company's subsidiary that is implementing
the real estate development program and financing through the SBA
had approximately $3.2 million invested in construction in progress
for Big O retail store sites, an increase of $1.2 million since
12/31/94. Additional capital expenditures are anticipated in
connection with these real estate development activities, which are
subject to the limitations of the financing commitments for real
estate development as described below.
In February 1995, the Company acquired the Las Vegas RSC at a total
cost of approximately $7,972,000. New equipment, including
computer hardware and software to operate this facility, will
require approximately $1,200,000 in additional 1995 capital
expenditures. The Company is currently evaluating strategies to
finance this equipment including operating and capital financing
lease scenarios in addition to financing through its existing line
of credit.
Financial Commitments
The Company's current operations are funded through its revolving
line of credit with a new primary lender - The First National Bank
of Chicago (First Chicago). First Chicago provided a $20 million
revolving credit line which was used to pay off the previous credit
facility in January 1995. The First Chicago credit line has a 1995
sub-limit of $6 million which can be used for construction and
permanent financing pursuant to the Company's real estate
development program.
Limited financing for the Company's real estate development is
provided by AT&T Capital Corporation (AT&T) through an $11.75
million revolving credit line. Prepayment penalties apply to this
credit line during the first three years of such financing unless
an SBA guaranteed loan is placed with AT&T's Small Business Lending
unit.
In the fourth quarter of 1994, the Company sold approximately $3
million of long term notes receivable. The Company is currently
negotiating the sale of an additional $1 million of long term notes
receivable.
Management's discretion with respect to certain business matters is
limited by financial and other covenants contained in loan
agreements with First Chicago, AT&T, the senior note holders, and
Kelly-Springfield. These covenants, among other things, limit or
prohibit the Company from (i) paying dividends on its capital
stock, (ii) incurring additional indebtedness, (iii) creating liens
on or selling certain assets, (iv) making certain loans,
investments, or guarantees, (v) violating certain financial ratios
(vi) repurchasing shares of its common stock, and (vii) making
certain capital expenditures. At March 31, 1995, the Company was
either in compliance with all of these covenants or had received
waivers from the appropriate lender.
The Company's continuing guarantees at March 31, 1995 were
comprised principally of the following:
Retail Store Financing $ 4.5 million
Notes receivable guarantees 1.5 million
Real Estate Lease guarantees 4.6 million
Employee Stock Ownership Plan .2 million
Denver, RSC Mortgage Loan 2.8 million
Seasonality
The franchised and Company-owned retail stores experience some
seasonal variation in product sales because the sale of tires,
wheels, and related automotive products are generally greater
during the summer months than in the winter months. The Company
generally experiences some seasonality, although not to the same
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extent as the retail stores, since the Company maintains sales to
certain retail stores on a regional basis (e.g., snow tires and
chains) that offset the trend on a national basis.
Environmental Issues
The Company and its franchisees are subject to federal and state
environmental regulations regarding the disposal of tires and used
oil, and the handling and storage of certain other substances.
Such regulations have not previously had a material effect on the
Company's operations, and Management does not believe that they
will have a material effect in the future since the Company has
adopted a policy of requiring Phase I environmental studies
associated with any new projects or the acquisition of any existing
locations before such transactions are consummated.
RESULTS OF OPERATIONS:
Revenues
Net sales for the first quarter of 1995 increased $2,760,000 as
compared to the first quarter of 1994. The sale of Big O brand
units increased by approximately 89,000 units (an increase of 9.7%)
during the first quarter of 1995 as compared to the first quarter
of 1994. The sale of other new tires decreased by approximately
34,000 units (a decrease of 23%) during the same period. The
average selling price of Big O brand units decreased by $2.97 per
unit (a decrease of 5.0%) for the first quarter of 1995 as compared
to the first quarter of 1994. This decrease was primarily due to
the Company's "Cost-U-LessTM" program which was implemented in July
1994. The average selling price of other new tires decreased by
$1.22 per unit (a decrease of 3.2%) during this same period.
The increase in sales for the first quarter of 1995 as compared to
the first quarter of 1994 resulted from an increase in sales of
$1,980,000 to existing dealers, additional sales to new franchisee
owned stores of $1,330,000, and an increase in royalty revenues of
$114,000. These increases were partially offset by a decrease of
$428,000 which resulted from the closing of franchisee and Company-
owned retail stores which were operating during the first quarter
of 1994 but not 1995 and a decrease of $147,000 from the sale of
Company-owned retail stores.
Gross Profit
Gross profit for the first quarter 1995 increased by $455,000 as
compared to the first quarter of 1994. The Company's gross margin
was 23.1% for the first quarter of 1995 which represented a 0.7%
decrease as compared to the first quarter of 1994. An increase in
gross profit of $638,000 was attributable to the higher sales
volume, however, this increase was partially offset by a decrease
in gross profit of $183,000 due to the 0.7% decrease in gross
margin. The decrease in gross margin was primarily due to the
Company's "Cost-U-LessTM" program which was implemented in July
1994. Additional gross profit was realized from increased royalty
income, the elimination of costs associated with a volume bonus
program offered to franchisees during the first quarter of 1994 and
a decrease in warranty adjustment costs.
Net Expenses
Net expenses for the first quarter of 1995 increased by $314,000
from the first quarter of 1994. Product delivery expenses
increased by $326,000 primarily due to increased sales and the
increased delivery expenses associated with the Las Vegas RSC. In
addition, net expenses increased by $222,000 for expenses related
to the implementation of the shareholder proposal which was
approved at the June 1994 Shareholders Meeting.
Selling and administrative expenses decreased by $355,000 during
the first quarter of 1995 as compared to the first quarter of 1994.
This decrease was primarily due to a decrease of $411,000 related
to the sale or closure of Company-owned retail stores. Other
decreases included a decrease in bad debt expense of $53,000 and a
decrease in the Company's proportionate share in joint venture
losses of $100,000. These decreases were offset by selling and
11
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administrative expenses associated with closing the Denver RSC and
start up of the new Las Vegas RSC in the first quarter of 1995.
Interest expense increased by $124,000 for the first quarter of
1995 as compared to the same period for 1994. This increase was
primarily due to increased borrowing under the Company's line of
credit during the first quarter of 1995 due to financing needs for
the consolidation of three of the Company's RSC's into the new Las
Vegas RSC and higher interest rates.
PART II
OTHER INFORMATION
Item 5. OTHER INFORMATION.
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
a. Exhibits.
(10.1) Purchase Agreement dated March 22, 1995
effective March 31, 1995 by and between Tire
Marketers Association, a division of Big O
Tires, Inc. and Carr's Tire Service, Inc., a
Virginia corporation.
(27.1) Big O Tires, Inc.'s Financial Data Schedule.
b. Reports on Form 8-K
On April 10, 1995, the Company filed a Current Report on
Form 8-K dated April 6, 1995, which announced, under Item
5, that the Company received a proposal, subject to a
number of conditions, from a group of the Company's
franchisees and selected members of the Company's
management (the "Acquisition Group") to acquire the
Company for a cash price of $16 per share (the
"Acquisition Proposal"). The Company also filed under
Item 7, a copy of the Acquisition Proposal submitted to
the Company's Investment Committee of the Board of
Directors.
On April 14, 1995, a Current Report on Form 8-K was filed
announcing, under Item 5, that on April 13, 1995, the
Company requested further negotiations with the
Acquisition Group regarding the Acquisition Proposal.
The Company also announced that the Investment Committee
of the Board of Directors declined to reimburse the
Acquisition Group for certain expenses incurred by the
Acquisition Group in pursuing the proposal. The
Acquisition Proposal which contained a number of
conditions, including a request for advancement or
reimbursement of certain expenses incurred by the
Acquisition Group, expired by its terms at 5:00 p.m. on
April 13, 1995. The Company also reported the adoption
of certain amendments to the Company's bylaws, and filed
the Second Amended and Restated Bylaws of the Company
under Item 7.
12
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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.
Date: May 12, 1995
BIG O TIRES, INC.
By: /s/ John B. Adams
----------------------------
John B. Adams
Executive Vice President and
Principal Financial Officer
By: /s/ John B. Adams
----------------------------
John B. Adams
Principal Accounting Officer
13
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EXHIBIT INDEX
Exhibit Page No.
(10.1) Purchase Agreement dated March 22, 1995 15
effective March 31, 1995 by and between Tire
Marketers Association, a division of Big O
Tires, Inc. and Carr's Tire Service, Inc.,
a Virginia corporation.
(27.1) Big O Tires, Inc.'s Financial Data Schedule. 30
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT ("Agreement") is made and entered into this
as of the 22nd day of March, 1995, to be effective as of March 31,
1995, by and among TIRE MARKETERS ASSOCIATION, a division
of Big O Tires, Inc., a Nevada corporation, having an address at
11755 East Peakview Avenue, Englewood, Colorado 80111 ("TMA") and
CARR S TIRE SERVICE, INC., a Virginia corporation, having an
address at 4040 Early Road, Harrisonburg, Virginia 22801 ("Carr").
RECITALS
A. TMA operates a wholesale, private brands buying group, the
members of which purchase private brand tires from TMA.
B. TMA desires to sell and transfer to Carr and Carr desires to
purchase and acquire from TMA certain assets, properties and
trademarks used in the operation of the wholesale, private
brands buying group.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants, promises
and agreements contained herein and other good and valuable
consideration, the receipt, adequacy and sufficiency of which is
hereby acknowledged, the parties hereto, intending to be legally
bound, agree as follows:
1. AGREEMENT TO SELL
Section 1.1. TMA Agreement to Sell; Contract Rights;
Property to be Sold. TMA hereby agrees to sell and, at the Closing
(as defined herein), will transfer and deliver to Carr good and
marketable title, free and clear of all liens or encumbrances,
except "Permitted Encumbrances" (as hereinafter set forth),
in and to the following tangible and intangible property of TMA
owned or used by TMA in connection with the operation of the
wholesale, private brands buying group (such tangible and
intangible property hereinafter sometimes collectively referred to
as "Purchased Assets"):
(1) Lease deposits and other prepaid expenses as set forth on
Exhibit A, Schedule of Prepaid Expenses and Deposits,
attached hereto and incorporated herein by this
reference, all of which have been incurred pursuant to
TMA's business;
(2) All equipment and furniture, fixtures and fixed assets of
TMA's business as more particularly set forth on Exhibit
B, Schedule of Furniture and Equipment, attached hereto
and incorporated herein by this reference, located at and
used in TMA's business; and
(3) All ownership rights and interests in and to the
trademarks "Sonic " and all other trademarks and
proprietary rights held by TMA in the conduct of its
business, including, without limitation, those set forth
in Exhibit C, Trademarks, attached hereto and
incorporated herein by this reference.
Section 1.2 Receivables Excluded. It is the intention of
the parties hereto that any of TMA's accounts receivables arising
on or before the Closing Date, are hereby expressly excluded from
this sale and purchase. As for discounts and annual volume bonuses
from manufacturers and vendors of TMA, for periods that include
January 1 through March 31, 1995, Big O Tires, Inc. will cash the
checks covering such payments, hold the funds in trust for the TMA
members and/or Carr and shall disburse such funds to the members of
TMA, pursuant to the allocations and instructions Carr.
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<PAGE>
Section 1.3. Permitted Encumbrances. All of the Purchased
Assets shall be sold, conveyed, transferred and assigned by TMA to
Carr free and clear of all liens and encumbrances except for those
set forth on Exhibit D, Schedule of Permitted Encumbrances (all of
which are sometimes hereinafter collectively referred to as
"Permitted Encumbrances"), attached hereto and incorporated by
reference herein. Carr shall be permitted to conduct a UCC-1
Search of all public records to verify that only the Permitted
Encumbrances exist as liens and encumbrances to the Purchased
Assets.
2. AGREEMENT TO PURCHASE AND PURCHASE PRICE
Section 2.1. Agreement to Purchase. Carr hereby agrees to
purchase and will purchase, upon the terms and subject to the
conditions of this Agreement, the Purchased Assets and will pay for
the same in the manner and subject to the adjustment hereinafter
set forth.
Section 2.2. Calculation of Total Purchase Price. The total
purchase price to be paid for the Purchased Assets hereunder
calculated as of the date of this Agreement shall be the sum of the
following:
Trade Names "Tire Marketers Association"
and "TMA"/<F1> U.S. $ 500.00
Prepaid expenses and Lease Deposits U.S. $ 1,022.56
Furniture, Fixtures, Equipment,
and Leasehold Improvements U.S. $ 16,000.00
Trademarks U.S. $ 47,477.44
Total U.S. $ 65,000.00
__________
<F1> Carr is taking whatever right, title, and interest that
Big O Tires, Inc. ("Big O") has or may have in these trade
names, with the understanding that Big O first used these
trade names on or about June 1, 1993 and that such trade
names are not registered.
The parties hereto hereby agree to allocate for tax purposes the
purchase price among the Purchased Assets in the manner provided
above.
Section 2.3. Payment of Purchase Price. The Purchase Price
shall be U.S. $65,000.00, which shall be payable by Carr at Closing
(as hereinafter defined), in cash or other immediate funds.
Section 2.4 Closing Costs. TMA and Carr shall pay their
own respective closing costs at Closing, except as otherwise
provided herein. TMA and Carr shall sign and complete all
customary or required documents.
3. REPRESENTATIONS, WARRANTIES, AND COVENANTS
Section 3.1. Representations, Warranties, and Covenants of
TMA. TMA represents, warrants and covenants to Carr as follows:
(1) Corporate Organization, Good Standing, and Approval. TMA
is a division of Big O, a corporation duly organized,
validly existing, and in good standing under the laws of
the State of Nevada, with all necessary corporate power
and authority to own and operate its properties and
assets and to engage in the business or businesses in
which it is engaged as and in the places where such
business and/or properties now are operated, owned or
leased. TMA has full power and authority to enter into
this Agreement and effect the transactions contemplated
to be effected by it under the terms of this Agreement
and all necessary corporate acts have been taken to
authorize the execution, delivery and performance of this
Agreement.
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<PAGE>
(2) Absence of Undisclosed Liabilities. As of the Closing,
there will be no creditors, liabilities or obligations of
any nature, whether accrued, absolute, contingent, or
otherwise, which relate to the Purchased Assets, except
for Permitted Encumbrances. It is the intention of
the parties that all liabilities and obligations of TMA,
other than Permitted Encumbrances, related to the
Purchased Assets shall either terminate or be paid and
satisfied by TMA prior to or at the time of Closing.
(3) Required Consents. All approvals and consents required
for TMA and Big O to consummate the transactions
contemplated hereby have been obtained or will be
obtained by Closing.
(4) Purchased Assets. TMA shall have and convey good,
marketable and indefeasible title to the Purchased
Assets, subject to the Permitted Encumbrances, to Carr on
the Closing Date (as hereinafter defined). The equipment,
furniture and fixtures are being sold and assigned
to Carr hereunder in an "AS IS, WHERE IS" condition,
without any warranties of any kind, express or implied or
otherwise. Carr acknowledges that it has inspected and
satisfied itself before Closing of the quality and
condition of the Purchased Assets for all purposes
and Carr accepts the same in their present condition
without adjustments.
(5) Proprietary Rights. Exhibit C, Trademarks, contains a
listing of all of TMA's patents and applications
therefore, registrations and applications for trademarks,
service marks, and copyrights, as well as TMA's trade
names ("Proprietary Rights"). The Proprietary Rights
transferred pursuant to this Agreement constitute all
proprietary rights necessary to the conduct of the TMA
business being transferred to Carr, as presently
conducted. Big O owns all such right, title and interest
in and to all of such intangible property and, except
as is specified in Exhibit C, Trademarks, there have been
no claims made against Big O/TMA for the assertion of the
invalidity, abuse, misuse or unenforceability of any of
such rights and, to Big O s knowledge, there are no
grounds for the same. Big O has made no claims against
third parties relating to the Proprietary Rights
transferred pursuant to this Agreement, Big O has not
sent or received a notice of conflict with the asserted
rights of others, and Big O/TMA have no such claims
against third parties under consideration or
evaluation. Except as disclosed in Exhibit C,
Trademarks, TMA has no licenses of any proprietary rights
to or from third parties and TMA knows of no unlicensed
use of the intangible property transferred hereunder. To
Big O's knowledge, the proprietary rights transactions
contemplated by this Agreement will not impair any of the
Proprietary Rights set forth on Exhibit C, Trademarks.
Big O is not aware of any Permitted Encumbrances on any
intangible property transferred hereunder. TMA has acted
and prevented all known unlicensed uses of its property
of which it was aware. The registrations and
applications for registrations listed on Exhibit C,
Trademarks are valid and subsisting.
(6) Insurance. TMA now has in full force and effect fire,
liability, casualty and such other insurance with respect
to the business and assets of TMA, and TMA agrees pending
Closing there will be no change or decrease in such
insurance without express written consent of Carr.
(7) No Other Commitment to Sell. None of the Purchased
Assets are directly or indirectly in any manner subject
to any written or oral commitment or arrangement, in
whole or in part, for sale, transfer, assignment or
disposition other than as contemplated by this Agreement.
(8) Approvals/Enforceability. The board of directors of Big
O has approved and authorized TMA's conveyance,
assignment, transfer, and delivery of the Purchased
Assets to Carr, as set forth in this Agreement, upon the
terms and conditions provided herein, and have authorized
the execution of this Agreement by its officers. Each
and every term and provision of this Agreement and any
other instruments and documents executed in connection
herewith, including all Exhibits annexed hereto,
constitute the valid and legally binding obligations of
TMA and Big O and are enforceable against TMA and Big O
in accordance with the terms thereof, except to the
extent that enforceability thereof may be limited by
general principles of equity and by bankruptcy,
insolvency or other similar debtor relief laws affecting
the enforceability of creditors' rights generally, may
affect the same from time to time.
17
<PAGE>
(9) No Unusual Promotional Activities. Between the date
hereof and the Closing Date, except as contemplated by
this Agreement, without the prior written consent of
Carr, TMA will not undertake, beyond the normal and
historical course of TMA's business, any special
promotions or promotional activities (whether or not
premiums, prizes or other inducements are offered or made
available and whether or not any such activities have
previously been conducted or undertaken by TMA), provided
that nothing in this paragraph shall prevent
solicitations or promotional activities or inducements
which are conducted with Carr's consent.
(10) Litigation. There are no outstanding judgments against
TMA, which would materially adversely affect, or attach
to create a lien upon the Purchased Assets being
transferred and sold hereunder. There is no litigation,
proceeding, or investigation pending or, to the
knowledge of TMA and/or Big O, threatened against TMA or
which TMA is a party, and which in the aggregate might
result in any materially adverse change in the Purchased
Assets being sold, assigned and conveyed hereunder, or
which disputes the validity of any action to be taken
pursuant to or in connection with the provisions of this
Agreement. TMA does not have any reasonable grounds
to know of any basis for such litigation, proceedings or
investigations.
(11) Affirmative Covenants as to Future Operations. Pending
Closing, Big O/TMA will:
(a) Access. Give Carr and its representatives full
access during normal business hours to the property,
books and records of TMA related to the Purchased
Assets and furnish Carr with such information
concerning the Purchased Assets as Carr may
reasonably request. In the event the
transactions herein contemplated are not
consummated, Carr will return to Big O/TMA all
materials and records supplied by Big O/TMA and will
keep confidential allinformation which Carr has
gathered with respect to the business of TMA.
(b) Preservation of Business. Use its commercially
reasonable efforts to preserve and expand the
business of TMA, and to preserve the goodwill of the
customers, suppliers and others having business
relations with such TMA's business and to
keep available to Carr the services of the present
management personnel and employees of the TMA's
business.
(c) Obtain All Consents and Approvals. Obtain all
consents and approvals required to consummate the
transactions contemplated by this Agreement.
(d) Timely Payment of Taxes/Filing of Returns. Timely
pay any taxes accrued or incurred from and after the
date hereof (which may attach to, or affect the
Purchased Assets) and timely file or submit any
returns and documents with respect thereto.
(e) No Negotiations with Others. So long as Carr is
reasonably pursuing the completion of the
transactions contemplated by this Agreement, Big O
will not afford any third party a similar right of
access, or discuss with anyone other than Carr and
its representatives, nor will Big O discuss or
negotiate with, or solicit a bid from, anyone else
involving the sale of the Purchased Assets or
furnish financial or other information as to the
business or operations of TMA to anyone for the
purpose of any such discussions or negotiations or
solicitation.
18
<PAGE>
(f) Delivery of Documents. Deliver to Carr all
agreements, contracts, deeds, bills of sale,
indentures, agreements, contracts, mortgages,
leases, licenses, files, correspondence, memoranda
and other documents of like character and all
required consents pertaining to the Purchased
Assets.
(g) Creditors/Waiver of Bulk Sales. Big O/TMA shall at
or before Closing pay in full all creditors with
respect to the TMA's business, except for those
creditors as set forth on Exhibit D, Permitted
Encumbrances. Big O/TMA and Carr acknowledge
that each has waived and by this provision each does
hereby waive any protections or rights which either
may have or be entitled to pursuant to any
provision of a bulk sale or bulk transfer, code,
act, law, statute or uniform commercial code in
effect pursuant to the laws of Virginia, Florida and
Colorado as may be enacted or amended from time to
time.
Notwithstanding the foregoing affirmative covenants contained in
this Section 3.1 (10)(a) through (g), all operations from the date
hereof to Closing shall be for the sole benefit of TMA and not for
Carr, and Big O shall not be liable to Carr for the operation of
the TMA's business.
Section 3.2. Carr's Representations, Warranties, and
Covenants. Carr represents, warrants and covenants to TMA and Big
O that:
(1) Corporate Organization, Good Standing, and Approval.
Carr is a corporation duly organized, validly existing,
and in good standing under the laws of the State of
Virginia, with all necessary corporate power and
authority to own and operate its properties and
assets and to engage in the business or businesses in
which it is engaged as and in the places where such
business and/or properties now are operated, owned or
leased. Carr has full power and authority to enter into
this Agreement and effect the transactions
contemplated to be effected by it under the terms of this
Agreement and all necessary corporate acts have been
taken to authorize the execution, delivery and
performance of this Agreement.
(2) Capacity. This Agreement and all Exhibits attached
hereto, and all other documents and instruments executed
to consummate this Agreement, constitute valid, legal and
binding obligations of Carr, enforceable in accordance
with their respective terms except to the extent that
enforceability thereof may be limited by general
principles of equity and by bankruptcy, insolvency or
other similar debtor relief laws affecting the
enforceability of creditors' rights generally.
(3) Performance of Executory Contracts. Carr will perform
all of its assigned obligations after the Closing as
required by this Agreement and each and every agreement
or instrument executed and delivered in connection with
the transaction to be consummated hereunder, except to
the extent such are limited by general principles of
equity and by bankruptcy, insolvency or other similar
debtor relief laws.
(4) Sales or Use Tax. Carr shall pay and hold Big O/TMA
harmless from any sales or use tax due in respect of the
purchase of the Purchased Assets.
19
<PAGE>
4. CLOSING PROVISIONS
Section 4.1. The Closing and Closing Date. The consummation
of the purchase of the Purchased Assets described in Section I
shall constitute the "Closing," and the date upon which such
consummation takes place shall be the "Closing Date." The Closing
shall take place at such time and place as mutually agreed upon by
Carr and TMA, but in no case later than March 31, 1995, unless such
Closing Date is extended by mutual agreement between the parties
hereto.
Section 4.2. Time of Essence/Remedies. Time is of the
essence hereof. If any payment due hereunder is not paid, honored
or tendered when due, or if any other obligation hereunder is not
performed or waived as herein provided, there shall be the
following remedies. If the Carr is in default, Big O may elect to
treat this Agreement as canceled, in which case all payments and
things of value received hereunder shall be forfeited and retained
on behalf of TMA. If Big O is in default, Carr may elect to treat
this Agreement as canceled, in which case all payments and things
of value received hereunder shall be returned.
Section 4.3. Documents, Certificates, Opinions, Etc., to be
Delivered by TMA at the Closing. At the Closing, TMA shall deliver
to Carr the following:
(1) Delivery of Transfer Documents. A bill of sale,
assignment, trademark assignments or such other documents
conveying title to the Purchased Assets, as counsel for
Carr may reasonably require, for the full transfer,
conveyance, assignment, and delivery to Carr of all the
Purchased Assets to be acquired by Carr hereunder.
(2) Consents. All the consents, corporate resolutions,
certificates, lists, opinions, and other matters required
as conditions precedent hereunder.
(3) Office Lease. Landlord shall consent to the assignment
or sublease of TMA s offices at 19321 U.S. 19 North,
Suite 410, Clearwater, Florida.
(4) Other Agreements and Instruments. The execution and
delivery of any other agreements and/or instruments as
may be reasonably required to consummate this Agreement.
(5) Certificate. A certificate executed by an appropriate
officer of Big O/TMA certifying that all representations,
warranties and covenants contained herein made by, or to
be performed by, TMA are true, complete and correct, and
fully performed as of Closing.
Section 4.4. Documents to be Delivered by Carr at the
Closing. At the Closing, Carr shall deliver to TMA the following:
(1) Payment of Purchase Price. Cash, certified or bank
cashier's checks or by wire transfer to the account of
Big O Tires, Inc. the amount required to be paid under
Section 2.3 hereof.
(2) Assignment or Sublease of TMA s Office. Carr shall
provide evidence satisfactory to TMA that it has been
able to take assignment or sublease TMA's office from
TMA, with landlord s consent.
(3) Other Agreements and Instruments. The execution and
delivery of the other agreements and instruments as may
be reasonably required to consummate this Agreement.
20
<PAGE>
(4) Consents. All the consents, corporate resolutions,
certificates, lists, opinions, and other matters required
as conditions precedent hereunder.
(5) Certificate. A certificate executed by Carr certifying
that all representations, warranties and covenants
contained herein made by, or to be performed by Carr are
true, complete and correct and fully performed as of
Closing.
5. CONDITIONS PRECEDENT
Section 5.1. Conditions Precedent to Carr's Obligation to
Consummate this Transaction. The obligations of Carr hereunder
are, at the option of Carr, subject to compliance with, at or prior
to Closing, each of the following conditions precedent:
(1) Delivery of Transfer Documents. Big O/TMA shall have
delivered at Closing all conveyances and other transfer
documents and other instruments required hereunder.
(2) Compliance With Agreement. Big O/TMA shall have
performed and complied with all agreements and conditions
required by this Agreement to be performed or complied
with by it prior to or at Closing.
(3) Representations True. All the representations,
warranties and covenants of TMA contained in this
Agreement shall be substantially true and without
material change adverse to Carr as of Closing.
(4) Consents and Approvals. TMA and Carr shall have received
any approvals or consents to the transfer or assignment
(without material adverse changes in terms and conditions
to those now held by TMA) of any and all of the Purchased
Assets to be transferred to Carr hereunder and which are
not assignable at the sole instance of Big O/TMA and
which require the consent or agreement of third parties.
(5) Other Agreements and Instruments. Big O/TMA shall have
executed and delivered at Closing the other agreements
and/or instruments as are reasonably required to
consummate this Agreement.
(6) Carr's Satisfaction With Due Diligence Review. Carr
shall have finalized, and in its sole and absolute
discretion be satisfied in all respects with, its review
of all financial statements provided to Carr by TMA
relating to the TMA's business and the condition of
all Purchased Assets and Carr shall have reviewed and in
its sole and absolute discretion be satisfied in all
respects with the disclosures set forth in Big O s/TMA's
disclosures and other documents delivered in connection
therewith.
Section 5.2. Condition Precedent to the Obligations of
TMA to Consummate this Transaction. The obligations of Big O/TMA
under this Agreement are, at the option of Big O/TMA, subject
to compliance with, at or prior to Closing, each of the following
conditions precedent:
(1) Compliance With Agreement. Carr shall have performed and
complied with all agreements and conditions required by
this Agreement to be performed or complied with prior to
or at Closing.
(2) Other Agreements and Instruments. Carr shall have
executed and delivered at Closing all other agreements
and/or instruments as reasonably required to consummate
this Agreement, including without limitation, the
assignment or sublease of TMA s office space, with
landlord's consent.
21
<PAGE>
(3) Payment of Purchase Price. Carr shall have delivered at
Closing cash, certified or bank cashier's checks or by
wire transfer to Big O s account the amounts required to
be paid under Section 2.3 hereof.
(4) Representations True. All representations, warranties
and covenants of Carr shall be substantially true and
without change material adverse to TMA as of Closing.
6. TERMINATION
Section 6.1. Non-Performance. Either Carr or Big O/TMA
shall have the right to terminate this Agreement at or prior to
Closing in the event that the other shall default in the
performance of any of its material obligations to be performed
hereunder, or should any covenant, warranty, or representation made
by the other party in this Agreement prove to be incorrect in any
material sense, provided, however, that the party against whom such
termination is to be imposed shall have the right, for ten (10)
days after receiving written notice from the other of the alleged
default, to correct or satisfy any condition or covenant necessary
to consummation of this Agreement.
Section 6.2. Risk of Loss. Any loss for fire, explosion,
earthquake, windstorm, accident, flood, act of God, war, seizure or
activities of the Armed Forces, or other casualty, reasonable wear
and tear excepted, until Closing hereunder, shall be the
responsibility of Big O/TMA. Big O/TMA shall immediately
notify Carr of the inability to complete restoration of any of the
Purchased Assets that may be so lost and Carr, at any time within
fifteen (15) days after such notice, may elect to either (1) accept
the proceeds of any insurance coverage and consummate the
transaction or (2) terminate this Agreement, in which event all
parties hereto shall stand fully released and discharged of any
and all obligations hereunder.
7. SURVIVAL OF WARRANTIES AND INDEMNIFICATION
Section 7.1. Survival of Covenants, Representations, and
Warranties. The covenants, representations, warranties, and
agreements contained herein are and shall be deemed and construed
to be continuing covenants, representations, warranties and
agreements, of TMA, on the one hand, and Carr, on the other hand.
8. MISCELLANEOUS PROVISIONS
Section 8.1. Commissions. Big O/TMA shall indemnify Carr
against any claims for the payment of brokerage commissions or
finder's fees in connection with negotiations with Carr leading up
to the execution of this Agreement and arising out of any alleged
agreement, commitment, or obligation of TMA. Carr, in like manner
shall indemnify Big O/TMA against similar claims arising out of any
alleged agreement, commitment, or obligation made or entered into
by it or on its behalf.
Section 8.2. Further Assurances. From time to time after
the Closing Date, TMA shall, if requested by Carr, make, execute,
and deliver to Carr such additional assignments, bills of sale and
other instruments of transfer as may be necessary or proper to
transfer to Carr all TMA's right, title and interest in and to the
Purchased Assets, and obtain for Carr any consents to any such
instruments by third parties necessary to make the same valid and
effective. Carr shall likewise execute and deliver to TMA any
instruments or documents necessary to carry out the intent and
purpose of this Agreement.
Section 8.3. Notices. Any notice, request, consent and
demand which is required or given hereunder shall be in writing and
shall be deemed effective and received (a) upon personal delivery
to the proper party, (b) on the day transmitted by telecopier, if
on a business day, and if not transmitted on a business day, the
first business day thereafter, to the proper party via the
22
<PAGE>
telecopier number stated below, three (3) business days after
deposit in the United States mail by registered or certified mail,
postage prepaid, return receipt requested, addressed to the proper
party at the address stated below, or (d) one (1) business day
after deposit with an air express carrier, fare prepaid, addressed
to the proper party at the address stated below. Each of the
parties hereto may designate such other address and/or telecopier
number as either of such parties may hereafter specify in writing
to the other party.
(1) If to Big O/TMA:
John B. Adams
Executive Vice President
Big O Tires, Inc.
11755 East Peakview Avenue
Englewood, Colorado 80111
(303) 790-2800
(303) 790-0225 Telecopier Number
With copies to:
Don Dominguez, Executive Vice President
Tire Marketers Association
19321 U.S. Highway 19, North, Suite 410
Clearwater, Florida 34624-3142
(813) 530-5090
(813) 535-6693 Telecopier Number
(2) If to Carr:
Terry W. Bowman
President
Carr's Tire Service, Inc.
4040 Early Road
Harrisburg, Virginia 22801
(800) 289-2445
(703) 434-5744 Telecopier Number
With copies to:
Michael L. Layman, Esq. and/or Steven C. Rhodes, Esq.
Layman & Nichols
268 Newman Avenue
Harrisonberg, Virginia 22801
(703) 433-2121
(703) 433-7296 Telecopier Number
or to such other address or addresses as may hereafter be specified
by notice given by any of the above to the others.
Section 8.4. Applicable Law. The parties hereto agree that
this Agreement shall be deemed to have been executed and delivered
in the state of Colorado and it shall be governed and construed and
enforced in accordance with the laws of the state of Colorado.
Section 8.5. Parties in Interest. All agreements made and
entered into in connection with this transaction shall be binding
upon and inure to the benefit of the parties hereto, their heirs,
personal representatives, successors and assigns.
Section 8.6. Attorneys Fees and Court Costs. In the event
of any dispute between the parties hereto with respect to the terms
and conditions hereof or performance hereunder, the prevailing
party shall be entitled to all costs of enforcement including court
costs, attorneys' and accountants' fees and costs of arbitration.
23
<PAGE>
Section 8.7. Taxes and Expenses. Carr shall pay all sales,
use, or other transfer taxes payable in connection with or as a
result of the sale and transfer contemplated by this Agreement;
otherwise each party shall bear its own expenses and costs in
connection with its performance and/or compliance with the terms of
this Agreement.
Section 8.8. Captions. The captions of Articles and of
Sections are for convenience only and shall not control or affect
the meaning or construction of any of the provisions of this
Agreement.
Section 8.9. Entire Agreement--Alteration or Amendment. This
Agreement merges all previous negotiations between the parties
hereto and constitutes the entire agreement and understanding
between the parties with respect to the subject matter of this
Agreement. No alteration, modification or change of this Agreement
shall be valid except by like instrument.
Section 8.10. Counterparts. This Agreement may be signed in
any number of counterparts with the same effect as if the
signatures to each counterpart were not on the same instrument.
WITNESS the due execution hereof as of the date first above
written.
"TMA":
TIRE MARKETERS ASSOCIATION,
a division of Big O Tires, Inc.,
a Nevada corporation
By: /s/ Steven P. Cloward
------------------------------------
Steven P. Cloward, President
Big O Tires, Inc.
"CARR":
CARR'S TIRE SERVICE, INC.
a Virginia corporation
By: /s/ Terry W. Bowman
-----------------------------------
Terry W. Bowman, President
Its: President
24
<PAGE>
EXHIBIT A
SCHEDULE OF PREPAID EXPENSES AND DEPOSITS
Lease Deposit for TMA s office $947.87
Facsimile Machine Deposit 74.69
$1,022.56
25
<PAGE>
EXHIBIT B
SCHEDULE OF FURNITURE AND EQUIPMENT
BIG O TIRES, INC.
BIG O TIRES, INC. ID NO. 87-0392481 Page 1
27. Location Book Depreciation Report
Calculated to: 12/31/94 Time: 01:03:09 PM Date: 02/07/95
=================================================================
Asset Date Date Asset
Location Class Acquired Disposed Number Description
=================================================================
2180 1615 06/08/93 943 4 DRWR METAL FILE CB
2180 1615 06/08/93 944 4 DRWR METAL FILE CB
2180 1615 06/08/93 945 4 DRWR METAL FILE CB
2180 1615 06/08/93 946 4 DRWR METAL FILE CB
2180 1615 06/08/93 947 5 DRWR METAL FILE CB
2180 1615 06/08/93 948 5 DRWR METAL FILE CB
2180 1615 06/08/93 949 2 DRWR METAL FILE CB
2180 1615 06/08/93 950 CONFERENCE TABLE 7'
2180 1615 06/08/93 952 PADDED SWIVEL CHAIR
2180 1615 06/08/93 953 PADDED SWIVEL CHAIR
2180 1615 06/08/93 954 PADDED SWIVEL CHAIR
2180 1615 06/08/93 955 PADDED SWIVEL CHAIR
2180 1615 06/08/93 956 PADDED SWIVEL CHAIR
2180 1615 06/08/93 957 PADDED SWIVEL CHAIR
2180 1615 06/08/93 958 PADDED SWIVEL CHAIR
2180 1615 06/08/93 959 PADDED SWIVEL CHAIR
2180 1615 06/08/93 960 PADDED SWIVEL CHAIR
2180 1615 06/08/93 961 SECRETARY CHAIR
2180 1615 06/08/93 962 SECRETARY CHAIR
2180 1615 06/08/93 963 EXECUTIVE WOOD DESK
2180 1615 06/08/93 964 DESK/TYPEWRITER TABL
2180 1615 06/08/93 965 6 DRWR DESK(SECRTRY)
2180 1615 06/08/93 966 SECRETARY DESK
2180 1615 06/08/93 967 WOOD OCTAGON TABLE
2180 1615 06/08/93 968 WOOD TABLE (SQUARE)
2180 1615 06/08/93 969 REFRIGERATOR
2180 1615 06/08/93 970 2 DRWR FILE CABINET
2180 1615 06/08/93 971 RICOH COPY MACHINE
2180 1615 06/08/93 972 LANIER COPY MACHINE
2180 1615 06/08/93 973 PANASONIC TYPEWRITER
2180 1615 06/08/93 974 PANASONIC TYPEWRITER
2180 1615 06/08/93 975 STAMP MACH-PIT BOWES
2180 1615 06/08/93 976 MAILING MACHINE
2180 1615 06/08/93 977 DUOFONE ANSWER MACH.
2180 1615 06/08/93 1,044 TELEPHONE SYSTEM
2180 1615 06/08/93 1,217 CANNON 6030 COPIER
2180 1625 09/23/94 1,241 PRESARIO 486SX
2180 1625 09/23/94 1,242 DESKJET 560C PRINTER
2180 1625 09/27/94 1,244 HP SCANJET COLOR
2180 1627 09/23/94 1,243 EXCEL 5.0
=================================================================
ASSET STATE BOOK BOOK BOOK DEPR BOOK DEPRECIATION NET
NUMBER LOCATION LIFE COST MONTH YTD LTD VALUE
==================================================================
943 FL 10 50 0 5 8 42
944 FL 10 50 0 5 8 42
945 FL 10 50 0 5 8 42
946 FL 10 50 0 5 8 42
947 FL 10 50 0 5 8 42
948 FL 10 50 0 5 8 42
949 FL 10 100 1 10 16 84
950 FL 10 300 3 30 47 253
951 FL 10 30 0 3 5 25
952 FL 10 30 0 3 5 25
953 FL 10 30 0 3 5 25
954 FL 10 30 0 3 5 25
955 FL 10 30 0 3 5 25
956 FL 10 30 0 3 5 25
957 FL 10 30 0 3 5 25
958 FL 10 30 0 3 5 25
959 FL 10 30 0 3 5 25
960 FL 10 30 0 3 5 25
961 FL 10 50 0 5 8 42
962 FL 10 50 0 5 8 42
963 FL 10 400 3 40 63 337
964 FL 10 100 1 10 16 84
965 FL 10 200 2 20 32 168
966 FL 10 100 1 10 16 84
967 FL 10 200 2 20 32 168
968 FL 10 200 2 20 32 168
969 FL 10 100 1 10 16 84
970 FL 10 100 1 10 16 84
971 FL 3 2,000 56 667 1,056 944
972 FL 3 2,000 56 667 1,056 944
973 FL 3 100 3 33 52 48
974 FL 3 100 3 33 52 48
975 FL 3 100 3 33 52 48
976 FL 3 200 6 67 106 94
977 FL 3 200 6 67 106 94
1,044 FL 10 1,839 15 184 245 1,594
1,217 FL 5 7,383 124 739 739 6,644
---------------------------------------------
Location Total 16,422 289 2,740 3,864 12,558
---------------------------------------------
---------------------------------------------
Class Total 16,422 289 2,740 3,864 12,558
---------------------------------------------
1,241 FL 3 1,837 51 153 153 1,684
1,242 FL 3 568 16 47 47 521
1,244 FL 3 1,068 30 89 89 979
---------------------------------------------
Location Total 3,573 100 322 341 3,232
---------------------------------------------
---------------------------------------------
Class Total 3,573 100 322 341 3,232
---------------------------------------------
1,243 FL 3 321 9 27 27 294
---------------------------------------------
Location Total 321 9 27 27 294
---------------------------------------------
---------------------------------------------
Class Total 321 9 27 27 294
---------------------------------------------
---------------------------------------------
GRAND TOTALS 20,316 398 3,089 4,232 16,084
LESS: DISPOSITIONS 0 0 0 0 0
---------------------------------------------
NET TOTALS 20,316 398 3,089 4,232 16,084
=============================================
26 & 27
<PAGE>
EXHIBIT C
SCHEDULE OF TRADEMARKS
MARK REGISTRATION # REGISTRATION DATE/
APPLICATION # APPLICATION DATE
PROTECTORS OF SAFETY
SAXON & DESIGN REG. # 1,024,138 NOVEMBER 4, 1975
SONIC VAGABOND REG. # 996,459 OCTOBER 22, 1974
MAXIMA REG. # 926,329 DECEMBER 28, 1971
SONIC & DESIGN REG. # 890,380 MAY 5, 1970
SONIC REG. # 891,936 JUNE 2, 1970
WINTER SONIC REG. # 805,581 MARCH 15, 1966
SONIC COMMERCIAL REG. # 805,578 MARCH 15, 1966
ULTRA SONIC REG. # 805,577 MARCH 15, 1966
SONIC REG. # 805,575 MARCH 15, 1966
SUPER SONIC REG. # 805,574 MARCH 15, 1966
28
<PAGE>
EXHIBIT D
PERMITTED ENCUMBRANCES
None
29
<PAGE>
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 343,000
<SECURITIES> 0
<RECEIVABLES> 11,658,000
<ALLOWANCES> 799,000
<INVENTORY> 18,191,000
<CURRENT-ASSETS> 33,153,000
<PP&E> 26,743,000
<DEPRECIATION> 5,400,000
<TOTAL-ASSETS> 70,735,000
<CURRENT-LIABILITIES> 11,148,000
<BONDS> 0
<COMMON> 334,000
0
0
<OTHER-SE> 35,501,000
<TOTAL-LIABILITY-AND-EQUITY> 70,735,000
<SALES> 29,153,000
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<INCOME-TAX> 209,000
<INCOME-CONTINUING> 289,000
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<NET-INCOME> 289,000
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