SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 27,
1995 (July 24, 1995)
BIG O TIRES, INC.
(Exact name of registrant as specified in its charter)
Nevada 1-8833 87-0392481
(State or other juris- (Commission (I.R.S.
Employer
diction of incorporation) File No.)
Identification No.)
11755 East Peakview Avenue, Englewood, Colorado 80111
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number including area code: (303)
790-2800
72 Total Pages
Item 5. Other Events.
On July 24, 1995, the Company entered into an Agreement and Plan of
Merger
("Merger Agreement") with BOTI Holdings, Inc. and BOTI Acquisition
Corp. The
Merger Agreement provides that BOTI Holdings, Inc., through its
subsidiary, BOTI
Acquisition Corp., will acquire the Company in a merger in which
the Company's
shareholders will receive a cash price of $16.50 per share. The
merger is subject
to the approval of the Company's stockholders. Among other
conditions, the
consummation of the merger also is subject to the receipt of
fairness opinions, the
acquiring corporation obtaining satisfactory financing, the
participation in the
acquiring corporation of the holders of 80% of the Company's shares
of Common
Stock held by the Company's ESOP, and the participation in the
acquiring
corporation of the Company's franchisees owning at least 85% of the
Company's
franchised tire stores.
On July 24, 1995, prior to executing the Merger Agreement, the
Company also
amended the Rights Agreement dated August 26, 1994 between the
Company
and Interwest Co., Inc., to specifically exclude from the
definition of an "Acquiring
Person", BOTI Holdings, Inc., BOTI Acquisition Corp., an entity to
be formed
directly or indirectly by persons who are currently franchisees of
the Company,
any other person who may be deemed to be the beneficial owner of
the
Company's Common Stock because of the execution and delivery of the
Merger
Agreement and any group consisting of two or more of the foregoing,
so long as
such persons are not the beneficial owners of any capital stock of
the Company
other than (a) pursuant to the Merger Agreement, (b) Common Stock
owned or
subject to stock options held by such persons prior to the date of
the Merger
Agreement,(c) Common Stock acquired by any of such persons from any
other of
such persons, (d) Common Stock or other securities acquired by such
persons in
transactions or types of transactions that are approved in advance
by the
Investment Committee of the Board of Directors of the Company and
(e) Common
Stock other than as described above not exceeding 1% of the shares
of Common
Stock then outstanding; and any other person that beneficially owns
Common
Stock as of July 24, 1995 but does not thereafter become the
beneficial owner of
any additional Common Stock not exceeding 1% of the shares of
Common Stock
then outstanding. The Rights Agreement was filed as Exhibit 1 to
the Company's
Form 8-A dated September 2, 1994.
Item 7. Financial Statements and Exhibits.
(10.1) Agreement and Plan of Merger dated July 24, 1995, between
BOTI
Holdings, Inc., a Nevada corporation, BOTI Acquisition Corp., a
Nevada
corporation and a wholly owned subsidiary of BOTI Holdings, Inc.,
and Big O Tires,
Inc.
(10.2) Amendment to Rights Agreement dated as of July 24, 1995,
is between
Big O Tires, Inc., a Nevada corporation, and Interwest Co., Inc.,
a Utah
corporation, as the Rights Agent.
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
hereunto duly authorized:
Date: July 27, 1995
BIG O TIRES, INC.
By: /s/ Philip J. Teigen
General Counsel and Secretary
EXHIBIT 10.1 TO FORM 8-K/A
DATED JULY 27, 1995
AGREEMENT AND PLAN OF MERGER
by and among
BOTI ACQUISITION CORP.,
BOTI HOLDINGS, INC.
and
BIG O TIRES, INC.
Dated as of July 24, 1995
TABLE OF CONTENTS
Page
ARTICLE I - THE MERGER
1.1 The Merger 1
1.2 Effects of the Merger 1
1.3 Consummation of the Merger 2
1.4 Articles; Bylaws; Directors and Officers; Name 2
1.5 Conversion of Shares 2
1.6 Stock Options 3
1.7 Exchange of Certificates 4
1.8 Taking of Necessary Action; Further Action 5
ARTICLE II - REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
2.1 Organization and Qualification 5
2.2 Capitalization 5
2.3 Authorization; Binding Agreement 5
2.4 Compliance 6
2.5 Brokers and Finders 6
2.6 Representations and Warranties of the Company 6
2.7 Proxy Statement, Schedule 13E-3 6
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
3.1 Organization and Qualification 7
3.2 Capitalization 7
3.3 Authorization; Binding Agreement 8
3.4 Compliance 8
3.5 Commission Filings 9
3.6 Changes 9
3.7 Fairness Opinion and Approval by Board of Directors
and Investment Committee 10
3.8 Brokers and Finders 10
3.9 Litigation 11
3.10 Material Agreements 11
3.11 Servicemarks, Trade Names 11
3.12 Taxes 11
3.13 Employee Benefit Plans 12
Page
ARTICLE IV - CONDUCT OF BUSINESS PENDING THE MERGER 13
ARTICLE V - ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement 15
5.2 Meeting of Stockholders of the Company 16
5.3 Cancellation of Stock Options 16
5.4 Fees and Expenses 17
5.5 Further Assurances 19
5.6 No Solicitation 19
5.7 Notification of Certain Matters 19
5.8 Access to Information 20
5.9 Directors' Indemnification 20
ARTICLE VI - CONDITIONS
6.1 Conditions to Obligation of Each Party to Effect the Merger
21
6.2 Additional Conditions to the Obligation of the Purchaser
to Effect the Merger 21
ARTICLE VII - TERMINATION, AMENDMENT AND WAIVER
7.1 Termination 22
7.2 Effect of Termination 24
7.3 Amendment 24
7.4 Waiver 24
ARTICLE VIII - GENERAL PROVISIONS
8.1 Public Statements 24
8.2 Notices 24
8.3 Interpretation 26
8.4 Representations and Warranties 26
8.5 Headings 26
8.6 Successors and Assigns 26
8.7 Counterparts 26
8.8 Forum 26
8.9 Miscellaneous 26
8.10 Actual Knowledge 27
ANNEX A - INDEMNIFICATION AGREEMENT
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"),
dated as of July 24, 1995, is between BOTI Holdings, Inc., a
Nevada corporation ("Parent"), BOTI Acquisition Corp., a Nevada
corporation and a wholly owned subsidiary of Parent (the
"Purchaser"), and BIG O Tires, Inc., a Nevada corporation (the
"Company").
RECITALS
A. The respective Boards of Directors of the Purchaser,
Parent and the Company have approved the acquisition of the
Company pursuant to the terms of this Agreement.
B. A special committee appointed by the Board of Directors
of the Company and consisting of the four directors who are not
employed by the Company and will not have an interest in the
Purchaser (the "Investment Committee") has recommended that the
Board of Directors of the Company approve the merger of the
Purchaser into the Company, in accordance with the General
Corporation Law of the State of Nevada (the "Corporation Law"),
upon the terms and subject to the conditions set forth herein
(the "Merger"), and has determined that the Merger is in the best
interests of and, subject to the receipt of the Fairness Opinion
(as defined in Section 6.1(f)), fair to the public stockholders
of the Company;
C. The respective Boards of Directors of the Purchaser,
Parent and the Company have duly approved the Merger, and the
Board of Directors of the Company has resolved to recommend the
Merger to the Company's stockholders.
AGREEMENT
In consideration of the premises and the mutual
covenants herein contained and for other good and valuable
consideration the receipt and adequacy of which are hereby
acknowledged, Parent, the Purchaser and the Company hereby agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in
Section 1.3 hereof), in accordance with this Agreement and the
Corporation Law, the Purchaser shall be merged with and into the
Company, the separate existence of the Purchaser (except as may
be continued by operation of law) shall cease, and the Company
shall continue as the surviving corporation (the "Surviving
Corporation"). The Company and the Purchaser are sometimes
referred to herein as the "Constituent Corporations."
1.2 Effects of the Merger. The Merger shall have the
effects set forth in the Corporation Law. As of the Effective
Time, the Company shall be a wholly owned subsidiary of Parent.
1.3 Consummation of the Merger. As soon as is
practicable after the satisfaction or waiver of the conditions
set forth in Article VI hereof, the parties hereto will cause the
Merger to be consummated by filing with the Secretary of State of
the State of Nevada a certificate of merger in such form as
required by, and executed in accordance with, the relevant
provisions of the Corporation Law and take all such further
actions as may be required by law to make the Merger effective.
The Merger shall occur immediately upon the filing of the
certificate of merger with the Secretary of State of the State of
Nevada (the date and time of such filing being referred to herein
as the "Effective Time"). The closing of the Merger shall take
place at the offices of Gibson, Dunn & Crutcher, 1801 California
Street, Suite 4200, Denver, Colorado 80202, or at such other
place as the parties may mutually agree.
1.4 Articles; Bylaws; Directors and Officers; Name.
At the Effective Time, (a) the Articles of Incorporation of the
Surviving Corporation shall be the Articles of Incorporation of
the Purchaser, as in effect immediately prior to the Effective
Time, until thereafter amended as provided by law; (b) the Bylaws
of the Surviving Corporation shall be the Bylaws of the
Purchaser, as in effect immediately prior to the Effective Time,
until thereafter amended as provided by law; (c) the directors of
the Purchaser immediately prior to the Effective Time will be the
initial directors of the Surviving Corporation, until their
successors are elected; (d) the officers of the Purchaser will be
the initial officers of the Surviving Corporation, in each case,
until their successors are elected and qualified; and (e) the
name of the Surviving Corporation shall be the corporate name of
the Company immediately prior to the Effective Time.
1.5 Conversion of Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of the
Purchaser, the Company, the Surviving Corporation or the holder
of any of the following securities:
(a) Each share of the Company's Common Stock, par
value $0.10 per share (the "Shares"), which is issued and
outstanding immediately prior to the Effective Time (other than
(i) Dissenting Shares (as defined below in Section 1.5(e)),
(ii) Shares held by, or which are under contract to be acquired
by, any shareholder of Parent or of the Purchaser, (iii) Shares
held by, or which are under contract to be acquired by, Parent,
the Purchaser, the Company or any direct or indirect subsidiary
of the Company, Parent or the Purchaser and (iv) shares held by
the ESOP (as defined below) for the benefit of any shareholder
who has elected to have such shares converted into shares of
Parent) shall be canceled and extinguished and be converted into
and become a right to receive a cash payment of $16.50 per Share,
without interest (which payment shall include $0.01 per share for
the redemption of the Rights as described in Section 6.2(e)).
Such cash payment shall hereinafter be referred to as the "Merger
Consideration."
(b) Each Share which is issued immediately prior
to the Effective Time and owned by the Company or by any direct
or indirect subsidiary of the Company immediately prior to the
Effective Time shall be canceled, and no payment shall be made
with respect thereto.
(c) Each Share which is issued and outstanding
immediately prior to the Effective Time and owned by or which is
under contract to be acquired by the parties listed in clauses
(ii), (iii) and (iv) in the parenthetical contained in
subsection (a) of this Section 1.5, shall be canceled and
retired, and no payment shall be made with respect thereto.
(d) Each share of Common Stock, par value $0.01
per share, of the Purchaser issued and outstanding immediately
prior to the Effective Time shall be converted into and become
one validly issued, fully paid and nonassessable share of Common
Stock, par value $0.10 per share, of the Surviving Corporation.
(e) Notwithstanding anything to the contrary in
this Agreement, if appraisal rights are available to holders of
the Shares pursuant to Sections 78.471-482 of the Corporation
Law, each outstanding Share, the holder of which has demanded and
perfected his rights for appraisal of such Shares in accordance
with all of the requirements of the Corporation Law and has not
effectively withdrawn or lost his right to such appraisal (the
"Dissenting Shares"), shall not be converted into the Merger
Consideration, but shall be canceled and the holders of any
Dissenting Shares shall be entitled only to such rights as are
granted by the Corporation Law.
1.6 Stock Options. The Company shall use all
reasonable efforts to cancel and settle immediately prior to the
Effective Time, by cash payment to the holders thereof, all the
outstanding options to purchase Shares or stock appreciation
rights (collectively, the "Options") which have been granted
under any stock option, stock appreciation or compensation plan
or arrangement of the Company (collectively, the "Plans") to all
current or former employees of the Company who are not Directors
of the Company unless the holder thereof and Parent or the
Purchaser have agreed to (i) convert such Options into options to
purchase the stock of Parent, the Purchaser or the Surviving
Corporation ("Exchange Options") or (ii) exchange such Options
(to the extent such Options are options to purchase Shares or
stock appreciation rights granted prior to February 1, 1995) for
shares of the stock of Parent, the Purchaser or the Surviving
Corporation, in any of which case the Company shall cancel such
converted or exchanged Options without payment. Immediately
prior to the Effective Time, the Company shall cancel and settle,
by cash payment to the holders thereof, all Options granted under
Plans to Directors of the Company other than Messrs. Steven P.
Cloward and John B. Adams. In canceling an Option by cash
payment, the Company shall make, immediately prior to the
Effective Time and as full settlement for such Options, a cash
payment to the holder of each such canceled Option, in an amount
equal to the excess, if any, of the Merger Consideration over the
per Share exercise price of such Option, multiplied by the number
of Shares for which such Option was granted, regardless of
whether such Option is then exercisable, less all deductions
required by any Plan (the "Option Settlement Amount"); provided,
however, that if the terms of any Plan or an Option allow such
Option to be canceled for an amount less than the Option
Settlement Amount, then the Company shall cancel such Option for
a cash payment of such lesser amount. Except for Options that
the Company may grant on January 1, 1996 pursuant to the Big O
Tires, Inc. Director and Employee Stock Option Plan, the Company
shall not grant, pursuant to the Plans or otherwise, any options
to purchase Shares as of and following the date hereof.
1.7 Exchange of Certificates.
(a) From and after the Effective Time, a bank or
trust company to be designated by the Purchaser and approved by
the Investment Committee (the "Exchange Agent") shall act as
exchange agent in effecting the exchange of the Merger
Consideration for certificates representing Shares entitled to
payment pursuant to Section 1.5 (the "Certificates"). As part of
the closing of the Merger, the Purchaser shall deposit with the
Exchange Agent an amount necessary to enable the Exchange Agent
to exchange the Merger Consideration for all outstanding shares
to be converted into Merger Consideration.
(b) Promptly after the Effective Time, the
Exchange Agent shall mail to each record holder of Shares a
letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the
Exchange Agent) and instructions for use in surrendering
Certificates and receiving the Merger Consideration therefor.
Upon the surrender of each Certificate, together with such letter
of transmittal duly executed and completed in accordance with the
instructions thereto, the holder of such Certificate shall be
entitled to receive in exchange therefor an amount equal to the
Merger Consideration multiplied by the number of Shares
represented by such Certificate, and such Certificate shall be
canceled. Until so surrendered and exchanged, each such
Certificate shall represent solely the right to receive an amount
equal to the Merger Consideration multiplied by the number of
Shares represented by such Certificate. No interest shall be
paid or accrued on the Merger Consideration upon the surrender of
the Certificates. If any Merger Consideration is to be paid to a
person other than the person in which the Certificate surrendered
in exchange therefor is registered, it shall be a condition to
such exchange that the person requesting such exchange shall pay
to the Exchange Agent any transfer or other taxes required by
reason of the payment of such Merger Consideration to a person
other than that of the registered holder of the Certificate
surrendered, or such person shall establish to the satisfaction
of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Exchange
Agent nor any party hereto shall be liable to a holder of Shares
for any Merger Consideration delivered to a public official
pursuant to applicable abandoned property, escheat and similar
laws.
(c) Promptly following the date which is 180 days
after the Effective Time, the Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate may
surrender Certificates to the Surviving Corporation and (subject
to applicable abandoned property, escheat and similar laws)
receive in exchange therefor an amount equal to the Merger
Consideration multiplied by the number of Shares represented by
such Certificate, without any interest thereon, but shall have no
greater rights against the Surviving Corporation than may be
accorded to general unsecured creditors of the Surviving
Corporation.
(d) After the Effective Time, there shall be no
transfers on the stock transfer books of the Surviving
Corporation of any Shares. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the
Exchange Agent, they shall be canceled and exchanged for the
applicable Merger Consideration, as provided in this Article I.
1.8 Taking of Necessary Action; Further Action. The
Purchaser and the Company shall each take all such reasonable and
lawful action as may be necessary or appropriate in order to
effectuate the Merger as promptly as possible. If, at any time
after the Effective Time, any such further action is necessary or
desirable to carry out the purposes of this Agreement and to vest
the Surviving Corporation with full right, title and possession
to all assets, property, rights, privileges, powers, and
franchises of either of the Constituent Corporations, the
officers and directors of such corporations are fully authorized
in the name of their corporation or otherwise to take, and shall
take, all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
In order to induce the Company to enter into this
Agreement, each of Parent and the Purchaser represent and warrant
to the Company as follows:
2.1 Organization and Qualification. Each of Parent
and the Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Nevada and has the requisite corporate power and authority to
carry on its business as now being conducted. Each of Parent and
the Purchaser is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of its properties, owned or leased, or the nature of
its activities makes such qualification necessary, except for
failures to be so qualified or in good standing which would not,
in the aggregate, have a material adverse effect on Parent or the
Purchaser. Each of Parent and the Purchaser has delivered to the
Company complete and correct copies of their respective
Certificates of Incorporation and Bylaws, as in effect on the
date hereof.
2.2 Capitalization. The authorized capital stock of
Parent on the Effective Date will consist of 10,000,000 shares of
Common Stock, par value $0.01 per share ("Parent Common Stock").
The authorized capital stock of the Purchaser consists of 1,000
shares of Common Stock, par value $0.01 per share ("Purchaser
Common Stock"). As of the date hereof, one share of Purchaser
Common Stock is validly issued, fully paid, nonassessable and
free of preemptive rights. The one issued and outstanding share
of Purchaser Common Stock is owned by Parent.
2.3 Authorization; Binding Agreement. Each of Parent
and the Purchaser has the requisite corporate power and authority
to enter into this Agreement and to perform its respective
obligations hereunder and to consummate the transactions
contemplated hereunder. The execution and delivery of this
Agreement by Parent and the Purchaser and the consummation by
Parent and the Purchaser of transactions contemplated hereby have
been duly and validly authorized by their respective Boards of
Directors and stockholders, and no other corporate proceeding on
the part of Parent or the Purchaser is necessary to authorize the
execution, delivery and performance of this Agreement and the
transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Parent and the Purchaser
and constitutes a legal, valid and binding obligation of Parent
and the Purchaser, enforceable against each of them in accordance
with its terms.
2.4 Compliance. Neither the execution and delivery of
this Agreement by Parent or the Purchaser nor the consummation of
the transactions contemplated hereby nor compliance by Parent or
the Purchaser with any of the provisions hereof will (i) violate,
conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result
in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of Parent or the
Purchaser under, any of the terms, conditions or provisions of
(x) the Articles of Incorporation or Bylaws of Parent or the
Purchaser, or (y) any material note, bond, mortgage, indenture,
deed of trust, license, lease, agreement or other instrument or
obligation to which Parent or the Purchaser is a party, or to
which it, or any of its properties or assets, may be subject, or
(ii) subject to compliance with the statutes and regulations
referred to in the last sentence of this paragraph, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule
or regulation applicable to Parent or the Purchaser or any of
their respective properties or assets except in the case of each
of clauses (i) and (ii) above, for such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances, which, in the
aggregate, would not have a material adverse effect on the
financial condition, business or operations of Parent or the
Purchaser and their subsidiaries taken as a whole, or which are
cured, waived or terminated prior to the Effective Time. Other
than in connection with or in compliance with the provisions of
the Corporation Law, the Exchange Act, the "takeover" or "blue
sky" laws of various states, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 and the rules and regulations thereunder
(the "Hart-Scott-Rodino Act"), no notice to, filing with, or
authorization, consent or approval of, any domestic or foreign
public body or authority is necessary for the consummation by
Parent or the Purchaser of the transactions contemplated by this
Agreement.
2.5 Brokers and Finders. Neither Parent nor the
Purchaser has engaged any broker, finder or investment banker
which engagement would require the payment of any brokerage,
finders or other fees or commissions by Parent or the Purchaser
in connection with this Agreement or the transactions
contemplated hereby or in connection with any transaction
involving the Company, except for the engagement of KPMG Peat
Marwick LLP ("KPMG"), pursuant to the letter agreements dated
October 18 and 19, 1994 and May 11, 1995, complete and accurate
copies of which have been furnished to the Investment Committee.
2.6 Representations and Warranties of the Company. As
of the date of this Agreement, neither Parent nor the Purchaser
has any actual knowledge of any representation or warranty of the
Company contained in this Agreement not being true and correct in
any material respect, and has no reason to believe that they will
not continue to be true and correct in all material respects
until the closing.
2.7 Proxy Statement, Schedule 13E-3. None of the
information supplied or to be supplied by Purchaser or any of its
representatives or affiliates for inclusion, or included or
incorporated by reference in (a) the Proxy Statement or any
amendment or supplement thereto, or (b) any Schedule 13E-3 or any
amendment or supplement thereto, or (c) any other documents to be
filed with the Securities and Exchange Commission (the
"Commission") or any other regulatory agency in connection with
the transactions contemplated hereby, will, insofar as such
schedule and documents relate to the Purchaser, its affiliates,
agents and representatives at the respective time such documents
are filed, and at the time of the meeting of the Company's
shareholders to vote upon this Agreement or at the time of
mailing of the Proxy Statement to the Company's shareholders, be
false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements
therein, at the time and in light of the circumstances under
which they were made, not false or misleading or necessary to
correct any statement in any earlier communication with respect
to the solicitation of any proxy for the Company shareholders'
meeting. The Schedule 13E-3 and any related documents, if
required in connection with the transactions contemplated
hereunder, will comply as to form in all material respects with
the requirements of law insofar as such schedule and documents
relate to Purchaser, its affiliates and agents and
representatives.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
In order to induce Parent and the Purchaser to enter
into this Agreement, the Company represents and warrants to
Parent and the Purchaser as set forth below. Under no
circumstances will Parent or the Purchaser have any claim against
the Company for any inaccuracy or incompleteness of any of the
following representations and warranties (except for the
representations and warranties contained in Section 3.7 and any
inaccuracy which is within the actual knowledge of any of the
members of the Investment Committee, the Chairman of the Board of
the Company or the Vice Chairman of the Board of the Company at
the time of execution of this Agreement), which are given for the
sole purpose of defining the scope of Section 6.2(b) of this
Agreement.
3.1 Organization and Qualification. Each of the
Company and its subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate
power and authority to carry on its business as it is now being
conducted. Each of the Company and its subsidiaries is duly
qualified as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its
properties owned or leased or the nature of its activities makes
such qualification necessary, except for failures to be so
qualified or in good standing which would not, in the aggregate,
have a material adverse effect on the Company and such
subsidiaries taken as a whole.
3.2 Capitalization. The authorized capital stock of
the Company consists of 100,000,000 shares of Common Stock, par
value $0.10 per share. As of June 30, 1995, (i) 3,348,936
Shares, were validly issued and outstanding, fully paid,
nonassessable and free of preemptive rights; (ii) 165 Shares were
to be issued as a result of the exercise of an Option prior to
June 30, 1995, (iii) 31,261 Shares were held in the treasuries of
the Company and its subsidiaries; (iv) 216,308 Shares were
reserved for issuance pursuant to outstanding Options heretofore
granted under the Plans; and (v) an additional number of Shares
were to be reserved for issuance under Options which may be
granted on January 1, 1996, under the Big O Tires, Inc. Director
and Employee Stock Option Plan. Since June 30, 1995, the Company
has not issued (i) any shares of Common Stock, except pursuant to
the exercise of Options, or (ii) any Options. Set forth on the
Disclosure Certificate is a list of all holders of Options
(including stock appreciation rights), the number of options and
rights held by each individual and the Plan under which such
options or rights existed as of June 30, 1995. All issued and
outstanding shares of capital stock of the subsidiaries of the
Company are owned by the Company or a wholly owned subsidiary of
the Company free and clear of all liens, charges, encumbrances,
claims and options of any nature. Except as contemplated by
clauses (i) through (iii) above, and except for rights
outstanding pursuant to the Rights Agreement dated as of August
26, 1994, between the Company and Interwest Co., Inc. as Rights
Agent (the "Rights"), and except as set forth in a certificate of
the Company of even date herewith (the "Disclosure Certificate"),
there are no, and at the Effective Time there will be no, other
Shares or other equity securities of the Company outstanding, and
no other outstanding options, warrants, rights to subscribe to
(including any preemptive rights), calls or commitments of any
character whatsoever to which the Company or any of its
subsidiaries is a party or may be bound, requiring the issuance
or sale of Shares or other equity securities of the Company or
any of its subsidiaries or securities or rights convertible into
or exchangeable for such shares or other equity securities, and
except as set forth on the Disclosure Certificate, there are no
contracts, commitments, understandings or arrangements by which
the Company or any of its subsidiaries is or may become bound
(x) to issue, sell or transfer additional Shares or other equity
securities or options, warrants or rights to purchase or acquire
any additional Shares or other equity securities or securities
convertible into or exchangeable for such shares or other equity
securities or (y) which restricts the transfer of or otherwise
encumbers any Shares, other than restrictions pursuant to
securities laws and restrictions in regard to 37,698 restricted
Shares issued pursuant to the Company's Long Term Incentive Plan.
3.3 Authorization; Binding Agreement. The Company has
the requisite corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and, subject to
shareholder approval, to consummate the transactions contemplated
hereunder. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by the
Board of Directors of the Company, and except for the approval of
the Merger by the Company's stockholders in accordance with the
Corporation Law, no other corporate proceeding on the part of the
Company is necessary to authorize the execution, delivery and
performance of this Agreement and the transactions contemplated
hereby. This Agreement has been duly and validly executed and
delivered by the Company and constitutes a legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms.
3.4 Compliance. Except as set forth in the Disclosure
Certificate, neither the execution and delivery of this Agreement
by the Company, nor the consummation of the transactions
contemplated hereby nor compliance by the Company with any of the
provisions hereof will (i) violate, conflict with, or result in a
breach of any provisions of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination
or acceleration under, or result in the creation of any lien,
security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its subsidiaries
under, any of the terms, conditions or provisions of (x) their
respective charters or bylaws or (y) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which the Company or any such
subsidiary is a party or to which they or any of their respective
properties or assets may be subject, or (ii) subject to
compliance with the statutes and regulations referred to in the
last sentence of this paragraph, violate any judgment, ruling,
order, writ, injunction, decree, statute or law, rule or
regulation applicable to the Company and its subsidiaries or any
of their respective properties or assets except in the case of
each of clauses (i) and (ii) above, for such violations,
conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances,
which, in the aggregate, would not have a material adverse effect
on the financial condition, business or operations of the Company
or any such subsidiary taken as a whole. Other than in
connection with or in compliance with the provisions of the
Corporation Law, the Exchange Act, the "takeover" or "blue sky"
laws of the various states, and the Hart-Scott-Rodino Act, no
notice to, filing with, or authorization, consent or approval of,
any domestic or foreign public body or authority is necessary for
the consummation by the Company of the transactions contemplated
by this Agreement.
3.5 Commission Filings. The Company has made
available to the Purchaser the Company's (i) Annual Reports on
Form 10-K for the years ended December 31, 1993 and December 31,
1994, as filed with the Commission, (ii) Quarterly Report on
Form 10-Q for the first calendar quarter of 1995, (iii) proxy
statements relating to all of the Company's meetings of
stockholders (whether annual or special) since January 1, 1994,
(iv) all other reports or registration statements filed by the
Company with the Commission since January 1, 1995, and (v) all
amendments and supplements to the foregoing (collectively, the
"SEC Filings"). As of their respective dates, the SEC Filings
(including all exhibits and schedules thereto and documents
incorporated by reference therein) did not contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements made, in light of the circumstances under which they
were made, not misleading. The audited consolidated financial
statements and unaudited consolidated interim financial
statements of the Company and its subsidiaries included or
incorporated by reference in the SEC Filings, have been prepared
in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto), and fairly present the
consolidated assets, liabilities and financial position of the
Company and its consolidated subsidiaries as of the dates thereof
and the consolidated results of their operations and changes in
financial position for the periods then ended. The audited
consolidated financial statements in the Company's Annual Report
for the year ended December 31, 1994 are hereinafter referred to
as the "Current Financial Statements."
3.6 Changes. Except as expressly contemplated by this
Agreement or as disclosed in the Disclosure Certificate or in the
SEC Filings, since December 31, 1994 none of the following has
occurred:
(a) any material adverse change, or any
development which has had, or would be likely to have, a material
adverse change, in the condition (financial or other), business
or prospects of the Company and its subsidiaries taken as a
whole;
(b) a change in accounting methods, principles or
practices by the Company materially affecting its assets,
liabilities or business;
(c) damage, destruction or loss materially
adversely affecting the condition (financial or other), business
or prospects of the Company and its subsidiaries taken as a
whole;
(d) any declaration, setting aside for payment or
payment of dividends or distributions in respect of any capital
stock of the Company or any redemption, purchase or other
acquisition of any of its securities;
(e) entering into by the Company or any of its
subsidiaries any material transactions except as expressly
permitted by this Agreement;
(f) agreement by the Company to do any of the
things described in the preceding clauses (a) through (e) other
than as expressly provided for herein.
3.7 Fairness Opinion and Approval by Board of
Directors and Investment Committee. The Board of Directors of
the Company and the Investment Committee thereof have by
resolution duly adopted (unanimously, in the case of the
Investment Committee), at meetings duly called and held, each
(i) approved and adopted this Agreement, the Merger and the other
transactions contemplated herein on the material terms and
conditions set forth herein (or, in the case of the Investment
Committee, has recommended that the Board of Directors of the
Company do so), (ii) determined that the Merger Consideration is
in the best interests of and, subject to the receipt of the
Fairness Opinion, fair to the Company's disinterested
stockholders and (iii) recommended that the Company's
stockholders approve and adopt this Agreement and the
transactions contemplated herein. The Board of Directors of the
Company has received an oral report from PaineWebber Incorporated
(the "Financial Advisor"), as financial advisor to the Investment
Committee, that it has no reason to believe, based upon
information reviewed by it as of the date of this Agreement and
subject to the assumptions and limitations summarized orally and
to be described in writing by the Financial Advisor in the
Fairness Opinion (as defined in Section 6.1(f)), that the Merger
Consideration is not fair to the disinterested stockholders of
the Company from a financial point of view, and the Board of
Directors is unaware of any reason why such oral report is not
correct and will not be confirmed in writing in the Fairness
Opinion.
3.8 Brokers and Finders. Except as set forth in the
Disclosure Certificate, neither the Company nor any subsidiary
has engaged any broker, finder or investment banker which
engagement would require the payment of any brokerage, finder's
or other fee or commission in connection with this Agreement or
the transactions contemplated hereby or in connection with any
transaction involving the Company based upon arrangements made by
or on behalf of the Company, except for the fees payable to the
Financial Advisor pursuant to a letter agreement dated as of July
12, 1994, January 20, 1995, June 9, 1995, June 16, 1995 and
June 29, 1995, copies of which have been delivered to the
Purchaser (collectively, the "Engagement Letter"). Except as
provided in this Agreement and the payment to the Financial
Advisor pursuant to such letter agreement, no claim, whether
matured or contingent, against the Company exists for payment of
any expenses or "topping," "break-up" or "bust-up" fees or
similar payments or compensation as a result of the transactions
contemplated hereby.
3.9 Litigation. Except as set forth in the Company's
Form 10-K for the year ended December 31, 1994 or in the
Disclosure Certificate, there are no actions, suits or
proceedings pending or, to the best knowledge of the Company,
threatened against the Company or any of its subsidiaries, nor is
the Company or any of its subsidiaries subject to any order,
judgment or decree, except for individual matters in which the
only relief sought is damages from the Company and its
subsidiaries which, in the aggregate, would not have a material
adverse effect on the condition (financial or other), business or
prospects of the Company and its subsidiaries, taken as a whole.
3.10 Material Agreements. Neither the Company nor any
of its subsidiaries is currently in default under any material
agreement of the Company or any of its subsidiaries except for
such defaults which have not been waived and as, in the
aggregate, would not have a material adverse effect on the
condition (financial or other), business or prospects of the
Company and its subsidiaries, taken as a whole.
3.11 Servicemarks, Trade Names. The Company or its
subsidiaries own, or are licensed to use, all servicemarks, trade
names and copyrights, know-how and processes used in the conduct
of their respective businesses as currently conducted which are
material to the condition of the Company and its subsidiaries
taken as a whole.
3.12 Taxes.
(a) Except as set forth in the Disclosure
Certificate, the Company and each of its subsidiaries have, since
December 31, 1990 (i) timely filed all tax returns, schedules and
declarations (including withholding and information returns)
required to be filed on or before the date of this Agreement by
any jurisdictions to which they are or have been subject, all of
which tax returns, schedules and declarations are complete,
accurate and correct, (ii) paid in full all taxes required to be
paid in respect of the periods covered by such returns and any
interest and penalties with respect thereto and made any deposits
of tax required by such taxing authorities, (iii) fully accrued
on the Company's March 31, 1995 balance sheet heretofore
delivered to the Purchaser all taxes for any period through that
date that are not yet due, the information in the March 31, 1995
statement of income, including the footnotes thereto, with
respect to taxes being accurate and correct and (iv) made
payments of the taxes required to be deducted and withheld from
the wages paid to their respective employees.
(b) Except as set forth in the Disclosure
Certificate, since December 31, 1990, neither the Company nor any
subsidiary has been delinquent in the payment of any tax,
assessment or governmental charge or has requested any extension
of time within which to file any tax returns that have not been
filed, and no deficiencies for any tax, assessment or
governmental charge have been claimed, proposed or assessed.
Except as disclosed in the Disclosure Certificate, neither the
Company nor any subsidiary has agreed to any currently effective
extension of time for the assessment or payment of any taxes
payable by it.
(c) Except as set forth in the Disclosure
Certificate, there are no pending or, to the best of the
Company's knowledge, threatened tax audits, investigations or
claims for or relating to any liability in respect of taxes, and
there are no matters under discussion with any governmental
authorities with respect to taxes that, in the reasonable
judgment of the Company, are likely to result in a further tax
liability.
(d) The Disclosure Certificate sets forth, since
December 31, 1990 (i) those tax years for which the tax returns
of the Company and the subsidiaries have been reviewed or audited
by applicable federal, state, local and foreign taxing
authorities, (ii) those tax years for which such tax returns have
received clearances or other indications of approval from
applicable federal, state, local and foreign taxing authorities
and (iii) those tax years which remain subject to review or audit
by applicable federal, state, local or foreign taxing
authorities. Except as set forth in the Disclosure Certificate,
since December 31, 1990, to the best knowledge of the Company, no
issue or issues have been raised in connection with any prior or
pending review or audit of such federal, state, local or foreign
tax returns that have not been resolved or which the Company
reasonably believes may be expected to be raised in the future by
such taxing authorities in connection with the audit or review of
the tax returns of the Company or any subsidiary.
(e) Neither the Company nor any of its
subsidiaries has made an election under Section 341(f) of the
Internal Revenue Code of 1986, as amended (the "Code").
3.13 Employee Benefit Plans.
(a) The Disclosure Certificate lists each
(i) employee pension benefit plan within the meaning of
Section 3(2) of the Employee Retirement Income Security Act of
1974 ("ERISA"), covered by Part 2 of Title I of ERISA and
excluding multiemployer plans within the meaning of Section 3(37)
of ERISA ("Pension Plan") in which employees of the Company or
any of its subsidiaries participate, (ii) employee welfare
benefit plan within the meaning of Section 3(1) of ERISA
("Welfare Plan") in which employees of the Company or any of its
subsidiaries participate and (iii) each other profit sharing,
group insurance, bonus, deferred compensation, stock option,
severance pay, insurance, pension or retirement plan or written
agreement relating to employment or fringe benefits for
employees, officers or directors of the Company or any subsidiary
(together with the Pension Plans and Welfare Plans, the "Employee
Benefit Plans"). There is no multiemployer plan within the
meaning of Section 3(37) of ERISA ("Multiemployer Plan") to which
the Company or any current ERISA Affiliate (as defined in
Section 3.13(i) below) currently has an obligation to contribute.
The Company has provided Purchaser with access to true and
complete copies of all such Employee Benefit Plans, including
amendments thereto. Except as disclosed in the Disclosure
Certificate, with respect to any Employee Benefit Plan listed in
the Disclosure Certificate, no individual shall accrue or receive
additional benefits, service or accelerated rights to payment of
benefits (other than additional accruals under the normal formula
in effect prior to and without regard to the transactions
contemplated hereby) as a direct result of the transactions
contemplated by this Agreement.
(b) There are no qualified defined benefit plans
(as defined in Section 414(j) of the Code) or Multiemployer Plans
in which employees of the Company or any subsidiary have
participated since January 1, 1982.
(c) None of the Employee Benefit Plans so listed
in the Disclosure Certificate has participated in, engaged in or
been a party to any prohibited transaction as defined in ERISA or
the Code, and, to the best knowledge of the Company, no officer,
director or employee of the Company or any subsidiary has
committed a material breach of any of the responsibilities or
obligations imposed upon fiduciaries by Title I of ERISA.
(d) Except as set forth in the Disclosure
Certificate, there are no claims, pending or overtly threatened,
involving any Employee Benefit Plan listed in the Disclosure
Certificate by a current or former employee (or beneficiary
thereof) of the Company or a current or former ERISA Affiliate,
nor is there any reasonable basis to anticipate any claims
involving any such plans which would likely be successfully
maintained against the Company or its subsidiaries.
(e) There are no violations of any material
reporting and disclosure requirements with respect to any
Pension, Employee Benefit and Welfare Plans listed in the
Disclosure Certificate and no such plans have violated applicable
law, including but not limited to ERISA and the Code.
(f) The Company has delivered or made available
to the Purchaser a copy of the most recently filed IRS Form 5500
and accountant's opinion, if applicable, for each Pension Plan
and Welfare Plan disclosed in the Disclosure Certificate. All
information provided by the Company or any subsidiary to any
actuary in connection with the preparation of such actuarial
valuation report was true, correct and complete in all material
respects.
(g) The Company has delivered or made available
to the Purchaser a copy of (i) in the case of each Pension Plan
described in the Disclosure Certificate intended to qualify under
Section 401(a) of the Code, the most recent Internal Revenue
Service letter as to the qualification of such Plan under
Section 401(a) of the Code and (ii) in the case of each Welfare
Plan described in the Disclosure Certificate, the most recent
Internal Revenue Service letter as to the qualification of such
Plan under Section 501(c)(9) of the Code, if applicable.
(h) For purposes of this Section 3.13, "ERISA
Affiliate" shall mean any company which, as of the relevant
measuring date under ERISA, is a member of a controlled group of
corporations or trades or businesses (as defined in
Sections 414(b) and (c) of the Code) of which the Company or any
subsidiary is a member.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
Under no circumstances will the Purchaser or Parent
have any claim against the Company for any breach of the
covenants set forth below in this Article IV, unless the action
alleged to breach, or to have resulted in a breach, of such
covenant (i) was approved by the Company's Board of Directors or
the Investment Committee and no attempt was made at a later date
by the body approving such action to prevent its occurrence, or
(ii) was known of by a member of the Investment Committee, the
Chairman of the Board of the Company or the Vice Chairman of the
Board of the Company and no attempt was made by the Investment
Committee to prevent its occurrence.
The Company covenants and agrees that, prior to the
Effective Time, unless Purchaser shall otherwise agree in
writing, or except as disclosed in the Disclosure Certificate as
of the date hereof or as otherwise expressly contemplated by this
Agreement; neither the Company nor any of its subsidiaries shall
take any action except in the ordinary course of business and
consistent with past practices, and the Company shall use its
best efforts to maintain and preserve its business organization,
assets, prospects, employees and advantageous business
relationships. Even if the action proposed to be taken would not
violate the provisions of the preceding sentence, but would
involve possible expenditures, contingent liabilities or the
acquisition or disposition of assets exceeding $100,000, any
member of a committee consisting of Messrs. John B. Adams, Steven
P. Cloward, Horst K. Mehlfeldt and John E. Siipola (the
"Management Committee") shall have the right to object in writing
to the taking of such action prior to the time the Company is
legally bound to the taking thereof. Any notice of objection
shall be delivered to all members of the Management Committee and
the contemplated action shall not be taken unless the members of
the Management Committee unanimously approve the taking of such
action or, failing such approval, the Parent and the Company
approve in writing the taking of such action. If the action
proposed to be taken would violate the provisions of the first
sentence of this paragraph and would involve expenditures or the
acquisition or disposition of assets exceeding $100,000 in value,
the Management Committee shall be given advance written notice of
all such actions. If any members of the Management Committee
objects in writing within five (5) days after written notice of
such action is given to any such noticed action, such action
shall only be taken if the members of the Management Committee
unanimously approve the taking of such action or, failing such
approval, the Parent and the Company approve in writing the
taking of such action.
(a) Neither the Company nor any of its
subsidiaries shall, directly or indirectly, do any of the
following: (i) incur any expenses in contemplation of a
reorganization or restructuring of the Company; (ii) amend its
Articles of Incorporation or Bylaws or similar organizational
documents; (iii) split, combine or reclassify any shares of its
capital stock or declare, set aside or pay any dividend or make
any distribution, payable in cash, stock, property or otherwise
with respect to its capital stock; (iv) transfer the stock of any
subsidiary to any other subsidiary or any assets or liabilities
to any new subsidiary or, except in the ordinary course of
business and consistent with past practice, to any existing
subsidiary; (v) adopt a plan of liquidation or resolutions
providing for the liquidation, dissolution, merger, consolidation
or other reorganization of the Company except the Merger;
(vi) amend, modify, change or replace the Engagement Letter; or
(vii) authorize or propose any of the foregoing, or enter into
any contract, agreement, commitment or arrangement to do any of
the foregoing.
(b) Neither the Company nor any of its
subsidiaries shall, directly or indirectly: (i) issue, sell,
pledge, encumber or dispose of, or authorize, propose or agree to
the issuance, sale, pledge, encumbrance or disposition of, any
shares of, or any options, warrants or rights of any kind to
acquire any shares of, or any securities convertible into or
exchangeable for any shares of, its capital stock or any other
equity securities, or any other securities in respect of, in lieu
of, or in substitution for Shares outstanding on the date hereof
except for Shares issuable upon exercise of Options outstanding
on the date hereof and which by their terms are or become
exercisable at or prior to the Effective Time; (ii) acquire (by
merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other business organization or
division thereof or make any material investment either by
purchase of stock or securities, contributions to capital,
property transfer or purchase of any material amount of property
or assets, in any other individual or entity; (iii) other than
indebtedness incurred from borrowings made pursuant to existing
lending arrangements and other than as set forth in the
Disclosure Schedule, incur any indebtedness for borrowed money or
issue any debt securities or assume, guarantee, endorse (other
than to a Company account) or otherwise as an accommodation
become responsible for, the obligations of any other individual
or entity, or make any loans or advances, except for advances to
dealers and guarantees of leases made in the ordinary course of
business and consistent with past practice; (iv) release or
relinquish any material contract right; (v) settle or compromise
any pending or threatened suit, action or claim by or against the
Company involving a payment by the Company exceeding $100,000; or
(vi) authorize or propose any of the foregoing, or enter into or
modify any contract, agreement, commitment or arrangement to do
any of the foregoing.
(c) Each of the Company and its subsidiaries
shall use its best efforts to keep in place its current insurance
policies, including but not limited to director and officer
liability insurance, which are material (either individually or
in the aggregate); and notwithstanding such efforts, if any such
policy is canceled, the Company shall use its best efforts to
replace such policy or policies.
(d) Except in accordance with the provisions of
this Article IV, neither the Company nor any of its subsidiaries
shall enter into any agreement or otherwise agree to do (i) any
of the things described in clauses (a) through (d) or (ii)
anything, which to the Company's best knowledge at the time of
such action, would make any representation or warranty of the
Company in this Agreement untrue or incorrect in any material
respect as of the date hereof and as of the Effective Time, as if
made on such date.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of Proxy Statement. As promptly as
practicable after receipt by the Company from the Purchaser of
one or more commitments that in the aggregate commit to provide
to the Purchaser financing that the Investment Committee in its
good faith judgment determines will permit the Purchaser to pay
the Merger Consideration and otherwise have the financial
resources available in a timely manner to complete the
transactions contemplated by this Agreement, the Company will
prepare and file a preliminary proxy statement with the
Commission and will use its best efforts to respond to any
comments of the Commission and, to cause the final proxy
statement (the "Proxy Statement") to be mailed to the Company's
stockholders at the earliest practicable time. The Company will
notify the Purchaser and the Investment Committee promptly of the
receipt of any comments from the Commission or its staff and of
any request by the Commission or its staff for amendments or
supplements to the Proxy Statement or for additional information
and will supply the Purchaser and the Investment Committee with
copies of all correspondence between the Company or any of its
representatives, on the one hand, and the Commission or its
staff, on the other hand, with respect to the Proxy Statement or
the Merger. If at any time prior to the Effective Time there
shall occur any event that should be set forth in an amendment
of, or a supplement to, the Proxy Statement, the Company will
promptly prepare and mail to its stockholders such an amendment
or supplement. The Company will not distribute or file the Proxy
Statement, or any amendment thereof or supplement thereto, to
which the Purchaser reasonably objects; provided that the Company
shall have the right to distribute or file any amendments or
supplements required in the written opinion of counsel to the
Investment Committee to be made by applicable law. The Company
and Purchaser shall prepare and file with the Commission a
Schedule 13E-3 which shall be filed together with the Proxy
Statement. The Company and Purchaser will take all reasonable
action required so that the Proxy Statement, the Schedule 13E-3,
and all amendments and supplements thereto will comply as to form
in all material respects with the provisions of the Exchange Act
and the rules and regulations promulgated thereunder. None of
the Schedule 13E-3, the Proxy Statement, nor any amendments
thereof or supplements thereto, will, on the date the Proxy
Statement is first mailed to stockholders of the Company, contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading.
5.2 Meeting of Stockholders of the Company. After
receipt by the Company from the Purchaser of one or more
commitments that in the aggregate commit to provide to the
Purchaser financing that the Investment Committee in its good
faith judgment determines will permit the Purchaser to pay the
Merger Consideration and otherwise have the financial resources
available in a timely manner to complete the transactions
contemplated by this Agreement, the Company shall promptly take
all action necessary, in accordance with the Corporation Law and
its Articles of Incorporation and Bylaws, to convene a special
meeting of the stockholders of the Company (the "Special
Meeting") as promptly as practicable to consider and vote upon
the Merger pursuant to the terms of this Agreement. Neither the
Company nor the Board of Directors shall take any action which
would make any approval of the Merger necessary, other than the
approval of the holders of Shares representing a majority of the
outstanding Shares. The Proxy Statement shall contain, at all
times up to and including the date of the Special Meeting, the
recommendation of the Board of Directors of the Company and the
unanimous recommendation of the Investment Committee that the
stockholders of the Company vote to adopt and approve the Merger,
subject to the right of the Investment Committee and the Board of
Directors to withdraw such recommendations if, by a majority
vote, the Investment Committee in the exercise of its fiduciary
duties makes a good faith judgment, based as to the legal issues
involved on the written advice of legal counsel, that failure to
withdraw such recommendation would constitute a breach of its
fiduciary duty. Subject to such right of the Investment
Committee to withdraw its recommendation of the Merger in
accordance with the exercise of its fiduciary duties, the Company
and the Board of Directors shall use their best efforts to obtain
the necessary approvals of the stockholders of the Company and
shall take all other action necessary or, in the reasonable
judgment of the Purchaser, helpful to secure the vote or consent
of stockholders of the Company.
5.3 Cancellation of Stock Options. The Company and
its subsidiaries shall cancel, settle, convert or exchange all
outstanding Options issued pursuant to the Plans or otherwise to
the extent required by Section 1.6 hereof, and shall comply with
all requirements regarding income tax withholding in connection
therewith; provided however, that the failure of the Company to
cancel, settle, convert or exchange any Option if the
requirements of Section 1.6 are met, shall not be deemed to be a
breach of this Agreement by the Company. In addition to the
foregoing, the Company shall cause the Plans to be terminated on
or prior to the Effective Time, and shall establish to the
reasonable satisfaction of the Purchaser that no person or entity
(whether or not a participant in any Plans) has or will have any
right to acquire any interest in the Company, the Surviving
Corporation or the Purchaser as a result of the exercise of
options or other rights on or after the Effective Time.
5.4 Fees and Expenses.
(a) Except as provided in paragraphs (b), (c),
and (d) of this Section 5.4, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses.
(b) If (i) this Agreement is terminated for any
reason, (ii) prior to such termination (x) any Person (as defined
below) (A) makes a written proposal to engage in any transaction
described in clauses (u), (v) or (w) of clause (iii) of this
Section 5.4(b) (an "Acquisition Proposal") to the Company or any
authorized director, officer or agent or (B) publicly announces
an Acquisition Proposal, or (y) the Company or any authorized
director, officer or agent of the Company participates in
discussions or negotiations with, or provides confidential
information to, any Person concerning an Acquisition Proposal,
either in compliance with, or in violation of, Section 5.6, and
(iii) within one year from the date of this Agreement (u) any
corporation, partnership, person, entity or "group" (as that term
is used in Section 13(d)(3) of the Exchange Act), including the
Company or any of its subsidiaries but excluding Parent, the
Purchaser or any of their affiliates and excluding any group of
which Parent, the Purchaser or any of their affiliates is a
member (a "Person"), shall have acquired all or a substantial
portion of the assets of the Company or consummated a merger or
consolidation with, or other acquisition of, the Company, (v) any
Person shall have acquired beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act) of 35% or more of the Shares
then outstanding, or (w) a "change in control" of the Company
involving a Person within the meaning of Item 1 of Form 8-K under
the Exchange Act shall have occurred, the Company shall promptly,
but in no event later than five business days after consummation
of any transaction referred to in clauses (u), (v) or (w) above,
pay to Purchaser (by transfer of same-day funds to an account
designated by Purchaser for such purpose) an amount equal to
(i) $1,000,000, less (ii) any funds paid by the Company to the
Purchaser pursuant to Section 5.4(d); provided such amount shall
be payable by the Company with respect to any such transaction
referred to in clauses (u), (v) and (w) above only if (a) the
transaction provides for the Company or the holders of any Shares
being purchased in such transaction to receive consideration per
Share having an indicated value in excess of $16.50 per Share, or
(b) the amount of consideration received in such transaction is
not readily determinable on a per Share basis and the Investment
Committee or another committee of one or more disinterested
members of the Board of Directors of the Company fails to make a
good faith determination that such transaction is less favorable
to the stockholders of the Company from a financial point of view
than the Merger (in the case of either (a) or (b), a "Higher
Offer").
(c) Prior to the execution of this Agreement, the
Company agreed to advance up to $175,000 to the organizers of
Purchaser to cover their expenses related to the formation of
Purchaser, the formulation of a proposal to acquire the Shares
and the preparation and negotiation of this Agreement. The
Company further agrees that it shall within five business days
after receipt of each notice of the incurrence thereof by the
Purchaser to the Company, advance to the Purchaser all
Reimbursable Expenses (as defined in Section 5.4(d)); provided
that the Company shall not be obligated to pay under this Section
5.4(c) in excess of an aggregate amount of $750,000 (including
the $175,000 referred to above, but excluding all funds advanced
or reimbursed with respect to Financing Fees (as defined in
Section 5.4(d)), which expenses shall not be subject to such
limit, but shall not exceed $217,000); provided further, that the
Company shall not be obligated to pay under this Section 5.4(c)
in excess of an aggregate of $500,000 (including any amounts
advanced or reimbursed under this Section 5.4(c), but excluding
all funds advanced or reimbursed with respect to Financing Fees
which expenses shall not be subject to such limit, but shall not
exceed $217,000) unless 85% of the stores owned by the franchised
dealers of the Company who directly or indirectly are
shareholders of Purchaser and whose franchise agreements expire
prior to July 1, 1999 shall have extended the term of their
franchise agreements at least through the earlier of (x) July 1,
2002, or (y) the date three years after such franchise agreement
would have expired; provided that such franchised dealers shall
not be required to pay any fees in connection with such
extension. Any franchised dealer of the Company who directly or
indirectly is a shareholder of Purchaser and whose franchise
agreement expires on or after July 1, 1999, shall have the right
to extend such agreement for up to three additional years without
the payment of any fee in connection with such extension.
(d) If this Agreement is terminated or the Merger
is not consummated for any reason, the Company will, within five
business days after notice by the Purchaser to the Company,
reimburse the Purchaser for all reasonable out-of-pocket costs
and expenses (including, without limitation, reasonable
commitment fees, reasonable termination fees, reasonable attorney
fees and expenses incurred by potential lenders which the
Purchaser is obligated to reimburse, and other fees and expenses
incurred in connection with arranging financing for the Merger
(collectively, "Financing Fees"), legal fees and expenses,
appraisal fees, fees and expenses of financial advisors and fees
and expenses of accountants) incurred by the Purchaser, Parent,
or on their behalf in connection with the preparation or
negotiation of this Agreement or of the transactions contemplated
hereby or otherwise incurred in contemplation of this Agreement,
the Merger or the other transactions contemplated by this
Agreement which have not otherwise been reimbursed by the Company
("Reimbursable Expenses"); provided that (i) the Company shall
not be obligated to pay under this Section 5.4(d) in excess of an
aggregate of $750,000 (including any amounts advanced or
reimbursed under Section 5.4(c), but excluding all funds advanced
or reimbursed with respect to Financing Fees which expenses shall
not be subject to such limit but shall not exceed $217,000),
(ii) except for the reimbursement or advance of expenses related
to Financing Fees, the Company shall not be obligated to pay any
additional amounts under this Section 5.4(d) if Purchaser has
been paid the amount provided in Section 5.4(b) above, (iii) the
Company shall have the right to review all expense receipts
(other than receipts which contain privileged or confidential
information) and (iv) the Company shall not be obligated to pay
under this Section 5.4(d) in excess of an aggregate of $500,000
(including any amounts advanced or reimbursed under Section
5.4(c), but excluding all funds advanced or reimbursed with
respect to Financing Fees which expenses shall not be subject to
such limit, but shall not exceed $217,000) unless the franchised
dealers of the Company who directly or indirectly are
shareholders of Purchaser and whose franchise agreements expire
prior to July 1, 1999 shall have extended the term of their
franchise agreements at least through the earlier of (x) July 1,
2002, or (y) the date three years after such franchise agreement
would have expired; provided that such franchised dealers shall
not be required to pay any fees in connection with such
extension.
5.5 Further Assurances. Subject to the terms and
conditions herein provided, including those contained in
Section 5.6, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement, and
to cooperate with each other in connection with the foregoing,
including, but not limited to, using reasonable efforts (a) to
obtain all necessary waivers, consents and approvals from other
parties to material loan agreements, leases and other contracts,
(b) to obtain all necessary consents, approvals and
authorizations as are required to be obtained under any federal,
state or foreign law or regulations, (c) to defend all lawsuits
or other legal proceedings challenging this Agreement, or the
transactions contemplated hereby, (d) to lift or rescind any
injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the
transactions contemplated hereby, (e) to effect all necessary
filings, including, but not limited to, filings with the
Commission, under the Hart-Scott-Rodino Act and under the rules
or regulations of any other governmental authorities, (f) to
fulfill all conditions to this Agreement and to any agreements
related to the financing contemplated by Section 6.2(c), and (g)
to keep the other parties reasonably apprised of the status of
all such efforts.
5.6 No Solicitation. Neither the Company nor any of
its subsidiaries shall, and the Company shall use its best
efforts to cause its affiliates, officers, directors, employees,
representatives and agents not to, directly or indirectly,
solicit, initiate or participate in discussions or negotiations
with, or provide any information to, any corporation,
partnership, person or other entity or group (other than the
Purchaser or an affiliate or an associate of the Purchaser)
concerning, or enter into any agreement providing for, any
merger, sale of all or substantially all assets, sale of shares
of capital stock or similar transactions involving the Company or
any subsidiary or division of the Company, provided that the
Investment Committee on behalf of the Company may furnish or
cause to be furnished information and may participate in such
discussions or negotiations and enter into such agreement if it
believes in good faith, after consultation with its Financial
Adviser and the receipt of written advice of counsel as to the
legal considerations involved, that the failure to provide such
information or participate in such discussions or negotiations or
enter into such agreement would be likely to involve the members
of the Investment Committee in a breach of their fiduciary
duties. The Investment Committee on behalf of the Company will
promptly communicate to the Purchaser the terms of any proposal
received or the fact that the Company has received inquiry with
respect to, or has participated in discussions or negotiations in
respect of, any such transaction of which a member of the
Investment Committee is aware.
5.7 Notification of Certain Matters. The Company
shall give prompt notice to the Purchaser, and the Purchaser
shall give prompt notice to the Company, of (a) the occurrence,
or failure to occur, of any event which occurrence or failure
would be likely to cause any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time,
(b) any material failure of the Company or the Purchaser or any
of their respective affiliates, as the case may be, or of any of
their respective officers, directors, employees or agents, to
comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement, (c) any
material claims, actions, proceedings or investigations commenced
or, to the best of its knowledge, threatened, involving or
affecting the Company or any of its subsidiaries or any of their
properties or assets, or, to the best of its knowledge, against
any employee, consultant, director, officer or stockholder of the
Company or any of its subsidiaries, in his, her or its capacity
as such and (d) any material adverse change in the condition
(financial or otherwise), business or prospects of the Company
and its subsidiaries, taken as a whole, or the occurrence of an
event known to the Company which, so far as reasonably can be
foreseen at the time of its occurrence, would result in any such
change; provided, however, that no such notification shall affect
the representations or warranties of the parties or the
conditions to the obligations to the parties hereunder.
5.8 Access to Information. From the date hereof to
the Effective Time, the Company shall, and shall cause its
subsidiaries, officers, directors, employees and agents to,
afford the officers, employees and agents of the Purchaser and
its affiliates and the banks, other financial institutions and
investment bankers arranging or providing the financing
contemplated by Section 6.2(c) complete access at all reasonable
times to its officers, employees, agents, properties, books,
records and contracts, and shall furnish the Purchaser and its
affiliates and the banks, other financial institutions and
investment bankers arranging or providing the financing all
financial, operating and other data and information as the
Purchaser or its affiliates and the banks, other financial
institutions and investment bankers arranging or providing the
financing, through their respective officers, employees or
agents, may reasonably request. Subject to the requirements of
law, the Purchaser and its affiliates shall, and shall use
reasonable efforts to cause their officers, employees and agents,
and the banks, other financial institutions and investment
bankers who obtain such information, to hold in confidence and
not use all such nonpublic information until such time as such
information is otherwise publicly available other than through a
breach of this Section 5.8, and, if this Agreement is terminated,
the Purchaser and its affiliates will, and will use reasonable
efforts to cause their officers, employees and agents, and the
banks, other financial institutions and investment bankers who
obtain such information, to deliver to the Company all documents,
work papers and other material (including copies, extracts and
summaries thereof) obtained by or on behalf of any of them
directly or indirectly from the Company as a result of this
Agreement or in connection herewith, whether so obtained before
or after the execution hereof. No investigation pursuant to this
Section 5.8 shall affect any representations or warranties of the
parties herein or the conditions to the obligations of the
parties hereto.
5.9 Directors' Indemnification. The Parent and the
Surviving Corporation will enter into Indemnification Agreements,
substantially in the form set forth in Annex A hereto (with such
changes to which the Company and the Purchaser may agree) with
each present director of the Company as of the Effective Time.
It is understood and agreed that the Company shall, to the
fullest extent permitted under applicable law and regardless of
whether the Merger becomes effective, indemnify and hold
harmless, each present and former director and officer of the
Company or any of its subsidiaries, including, without
limitation, each member of the Investment Committee.
ARTICLE VI
CONDITIONS
6.1 Conditions to Obligation of Each Party to Effect
the Merger. The respective obligations of each party to effect
the Merger shall be subject to the fulfillment or waiver at or
prior to the Effective Time of the following conditions:
(a) Stockholder Approval. The Merger pursuant to
the terms of this Agreement shall have been approved and adopted
by the requisite vote of the stockholders of the Company;
(b) Hart-Scott-Rodino Act. Any waiting period
(and any extension thereof) applicable to the consummation of the
Merger under the Hart-Scott-Rodino Act shall have expired or been
terminated;
(c) No Injunction. No preliminary or permanent
injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or
administrative agency or commission nor any statute, rule,
regulation or executive order promulgated or enacted by any
governmental authority shall be in effect, which would make the
acquisition or holding by the Purchaser of the Shares illegal or
would make illegal or otherwise prevent the consummation of the
Merger;
(d) Consents. The Company and the Purchaser
shall have obtained such licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Purchaser and the
Company and its subsidiaries as are necessary for consummation of
the Merger, excluding licenses, permits, consents, approvals,
authorizations, qualifications or orders, the failure to obtain
which, in the aggregate, will not have a material adverse effect
on the Purchaser or the Company and its subsidiaries taken as a
whole;
(e) New Laws. There shall have been no law,
statute, rule or regulation, domestic or foreign, enacted or
promulgated which would make consummation of the Merger illegal;
(f) Delivery of Fairness Opinion. The Company
shall have received from PaineWebber Incorporated a written
opinion addressed to the Company for inclusion in the Proxy
Statement that the Merger Consideration is fair, from a financial
point of view, to the disinterested stockholders of the Company
(the "Fairness Opinion");
(g) Delivery of ESOP Fairness Opinion. The ESOP
(as defined below) shall have received an opinion from its
financial advisor that the consideration to be received by
participants in the ESOP who elect to convert their shares held
by the ESOP into shares of Parent is fair, from a financial point
of view, to such participants.
6.2 Additional Conditions to the Obligation of the
Purchaser to Effect the Merger. The obligation of the Purchaser
to effect the Merger is also subject to the satisfaction at or
prior to the Effective Time of the following additional
conditions, unless waived by the Purchaser:
(a) Performance of Obligations of the Company.
The Company shall have performed in all material respects all
obligations and agreements required to be performed by it under
this Agreement prior to the Effective Time;
(b) Representations and Warranties. The
representations and warranties of the Company set forth in this
Agreement which are qualified as to materiality shall be true and
correct, and any such representations and warranties not so
qualified shall be true and correct in all material respects, at
and as of the Effective Time as if made at and as of such time,
except as expressly contemplated by this Agreement;
(c) Financing. The Purchaser shall have obtained
financing necessary to pay the aggregate Merger Consideration and
to replace certain of the existing indebtedness of the Company in
the aggregate amount of $77 million on terms acceptable to
Purchaser in its sole discretion;
(d) Cancellation of Stock Options. The Company
shall have canceled and settled Options to the extent required by
Sections 1.6 and 5.3;
(e) Redemption of Rights. The Company shall have
taken all necessary actions to cause the Rights to be
extinguished or redeemed effective at the Effective Date;
(f) Compliance with the Nevada Business
Combination Statute. The Purchaser shall be satisfied in its
sole discretion that the Board of Directors of the Company shall
have taken all actions required under the Nevada General
Corporation Law to render the restrictions on combinations with
interested stockholders of Section 78.438 of such Law
inapplicable to the Merger;
(g) ESOP Participation. The holders of at least
80% of the shares held by the Company's Employee Stock Ownership
Program (the "ESOP") shall have elected to "roll over" their
existing ESOP accounts into investments in the securities of
Parent; and
(h) Dealer Participation. Dealers owning at
least 85% of the Company's franchised tire stores as of the date
of this Agreement shall have elected to participate in the
acquisition.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether prior to or after
approval of the Merger by the stockholders of the Company:
(a) By mutual written consent of the Boards of
Directors of the Purchaser and the Company (which, in the case of
the Company, shall include the approval of the Investment
Committee);
(b) By the Company or the Purchaser if (i) the
Effective Time shall not have occurred on or before February 28,
1996, or (ii) any of the conditions set forth in Section 6.1
hereof shall not be met at the Effective Time; provided, however,
that the right to terminate this Agreement under this
Section 7.1(b) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on
or before such date;
(c) By the Company or the Purchaser if (i) any
Person shall have made a bona fide proposal which the Investment
Committee believes, in good faith after consultation with the
Financial Advisor, is for a Higher Offer, (ii) the Purchaser does
not make, within five business days of the Purchaser's receiving
notice of such third party proposal, an offer which is at least
as favorable to the Company's stockholders as such third party
proposal, and (iii) the Investment Committee withdraws its
recommendation of the Merger or changes its recommendation in a
manner adverse to the Purchaser;
(d) By the Company:
(i) If the Purchaser fails to perform in any
material respect any of its obligations under this
Agreement;
(ii) If the representations and warranties of
the Purchaser set forth in this Agreement are not true
and correct in any material respect at any time prior
to the Effective Time; or
(iii) On August 15, 1995, if the
Purchaser has failed to deliver to the Company prior to
August 15, 1995, one or more commitments that in the
aggregate commit to provide to the Purchaser financing
that the Investment Committee in its good faith
judgment determines will permit the Purchaser to pay
the Merger Consideration and otherwise have the
financial resources available in a timely manner to
complete the transactions contemplated by this
Agreement.
(e) By the Purchaser:
(i) If there occurs, or the Company enters
into or publicly announces its intention to enter into
an agreement with any Person to cause to occur, a
transaction of the type described in clauses (u), (v)
or (w) of Section 5.4(b)(iii) hereof, but which would
not qualify as a Higher Offer, or any Person shall have
commenced or publicly announced an intention to
commence a tender or exchange offer for the Company's
Shares;
(ii) If any of the conditions set forth in
Section 6.2 hereof shall not be satisfied on the
Effective Time; or
(iii) On August 15, 1995, if the
Purchaser has failed to deliver to the Company prior to
August 15, 1995, one or more commitments that in the
aggregate commit to provide to the Purchaser financing
that the Purchaser in its good faith judgment
determines will permit the Purchaser to pay the Merger
Consideration and otherwise have the financial
resources available in a timely manner to complete the
transactions contemplated by this Agreement.
(f) By the Company or Purchaser on September 1,
1995, if prior to September 1, 1995, the Purchaser has not
satisfied the condition set forth in Section 6.2(h) and Purchaser
has not waived, in writing, such condition.
7.2 Effect of Termination. In the event of the
termination of this Agreement as provided in Section 7.1, this
Agreement shall forthwith become void and there shall be no
liability or obligation on the part of the Company or Purchaser
or its affiliates except (i) as set forth in Sections 5.4 and
5.8, and (ii) that a party shall be liable for willful defaults
of its obligations hereunder.
7.3 Amendment. This Agreement may not be amended
except by action of the Boards of Directors of each of the
parties hereto (which, in the case of the Company, shall include
the approval of the Investment Committee) set forth in an
instrument in writing signed on behalf of each of the parties
hereto; provided, however, that after approval of the Merger by
the stockholders of the Company, no amendment may be made without
the further approval of the stockholders of the Company which
would alter or change any of the terms or conditions of this
Agreement if any of the alterations or changes, alone or in the
aggregate, would materially adversely affect the stockholders of
the Company.
7.4 Waiver. At any time prior to the Effective Time,
whether before or after the stockholder approval, any party
hereto, by action taken by its Board of Directors (which, in the
case of the Company, shall include the approval of the Investment
Committee), may (i) extend the time for the performance of any of
the obligations or other acts of any other party hereto or
(ii) subject to the provision contained in Section 7.3, waive
compliance with any of the agreements of any other party or with
any conditions to its own obligations. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of
such party by a duly authorized officer.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Public Statements. The parties agree to consult
with each other and their respective counsel prior to issuing any
public announcement or statement with respect to this Agreement
or the Merger.
8.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly given if delivered personally or sent by cable, telegram,
telecopy or telex to the parties at the following addresses or at
such other addresses as shall be specified by the parties by like
notice:
(a) If to Parent or the Purchaser:
BOTI Acquisition Corp.
11755 East Peakview Avenue
Englewood, Colorado 80111
Attn: Steven P. Cloward
Fax #: (303) 790-6064
with copies to:
Gibson, Dunn & Crutcher
1801 California Street, Suite 4100
Denver, Colorado 80202
Attn: Richard M. Russo, Esq.
Fax #: (303) 296-5310
and:
Wendel, Rosen, Black & Dean
1111 Broadway, 24th Floor
Oakland, California 94607
Attn: Richard P. Waxman, Esq.
Fax #: (510) 834-1928
(b) If to the Company:
Big O Tires, Inc.
11755 East Peakview Avenue
Englewood, Colorado 80111
Attn: Horst Mehlfeldt
Fax #: (303) 790-0225
with a copy to:
Holme Roberts & Owen
1700 Lincoln
Suite 4100
Denver, Colorado 80203
Attn: W. Dean Salter, Esq.
Fax #: (303) 866-0200
and
Hopper and Kanouff, P.C.
1610 Wynkoop Street, Suite 200
Denver, Colorado 80202
Attn: Thomas S. Smith, Esq.
Fax #: (303) 892-0457
8.3 Interpretation. When a reference is made in this
Agreement to subsidiaries of the Purchaser or the Company, the
word "subsidiaries" means any corporation more than 50 percent of
whose outstanding voting securities, or any partnership, joint
venture or other entity more than 50 percent of whose total
equity interest, is directly or indirectly owned by the Purchaser
or the Company, as the case may be. As used in the Agreement,
the masculine, feminine and neuter genders and the plural and
singular numbers shall be deemed to include the others in all
cases where they would so apply. "Includes" and "including" are
not limiting, and "or" is not exclusive.
8.4 Representations and Warranties. The respective
representations and warranties of the Company and the Purchaser
contained herein shall expire with, and be terminated and
extinguished upon, consummation of the Merger, and thereafter
neither the Company nor the Purchaser nor any officer, director
or employee thereof shall be under any liability whatsoever with
respect to any such representation or warranty. This Section 8.4
shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the consummation
of the Merger.
8.5 Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
8.6 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by
the respective successors and assigns of the parties hereto.
8.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of
which together shall constitute one and the same agreement.
8.8 Forum. The sole forum for resolving disputes
arising under or relating in any way to this Agreement are the
District Court for the City and County of Denver, Colorado, or
the United States District Court for the District of Colorado,
and all related appellate courts, and the parties hereby consent
to the jurisdiction of such courts.
8.9 Miscellaneous. This Agreement (including the
Annexes and instruments referred to herein): (i) constitutes the
entire agreement and supersedes all other prior agreements and
undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof; (ii) except for
Section 5.9 hereof, is not intended to confer upon any person
other than a party hereto any rights or remedies hereunder;
(iii) shall not be assigned, except by the Purchaser or Parent to
a directly or indirectly wholly owned subsidiary of the Purchaser
or Parent which, in a written instrument shall agree to assume
all of such party's obligations hereunder and be bound by all of
the terms and conditions of this Agreement; and (iv) shall be
governed in all respects, including validity, interpretation and
effect, by the internal laws of the State of Nevada, without
giving effect to the principles of conflict of laws thereof.
8.10 Actual Knowledge. As used herein the term "actual
knowledge" shall mean the knowledge of the individual at the time
of making a statement without any requirement that an
investigation be made prior to making such statement.
IN WITNESS WHEREOF, Parent, the Purchaser and the
Company have caused this Agreement to be executed as of the date
first written above by their duly authorized respective officers.
PARENT: BOTI HOLDINGS, INC.
By: /s/ John B. Adams
John B. Adams
Its: Treasurer
PURCHASER: BOTI ACQUISITION CORP.
By: /s/ John B. Adams
John B. Adams
Its: Treasurer
COMPANY: BIG O TIRES, INC.
By: /s/ Horst K. Mehlfeldt
Horst K. Mehlfeldt
Its: Vice Chairman
By:
Its:
EA950370.031/37+
ANNEX A
INDEMNIFICATION AGREEMENT
This Agreement is made as of the __ day of _______, 1995 by
and between Big O Tires, Inc., a Nevada corporation, and BOTI
Holdings, Inc. (collectively, the "Company"), and the undersigned
(the "Indemnitee"), with reference to the following facts:
WHEREAS, the Company and BOTI Acquisition Corp. ("Purchaser")
have entered into an Agreement and Plan of Merger pursuant to which
Purchaser will merge with and into the Company, with the Company
being the surviving corporation;
WHEREAS, pursuant to the Agreement and Plan of Merger, the
Company, as the surviving corporation, has agreed to enter into
indemnification agreements with each of the directors of the
Company;
NOW, THEREFORE, in consideration of the foregoing and other
good and valuable consideration, the receipt and adequacy of which
is hereby acknowledged, the Company hereby agrees to indemnify the
Indemnitee as follows:
1. Definitions. As used in this Agreement:
(a) the term "Proceeding" shall include any
threatened, pending or completed claim, action, suit, proceeding or
appeal, whether brought by or in the right of the Company or
otherwise, and whether of a civil, criminal, administrative or
investigative nature, in which Indemnitee was, is or may be
involved as a party or otherwise by reason of (i) the fact that
Indemnitee is or was a director of the Company, (ii) any actual or
alleged error or misstatement or misleading statement or omission
made or suffered to exist by Indemnitee while acting as a director
of the Company, (iii) any action taken by him or any omission or
neglect or breach of duty on his part while acting as a director of
the Company, or (iv) the fact that he was serving at the request of
the Company as a director, trustee, officer, employee or agent of
another corporation, partnership, joint venture, trust or other
enterprise;
(b) the term "other enterprise" shall include,
without limitation employee benefit plans and administrative
committees thereof;
(c) the term "fines" shall include, without
limitations any excise tax assessed with respect to any employee
benefit plan; and
(d) the terms "Expenses" shall include, without
limitation, all reasonable attorney's fees, retainers, court costs,
costs of attachment or similar bonds, transcript costs, fees of
experts, witness fees, travel expenses, duplicating costs, printing
and bindings costs, telephone charges, postage, delivery service
fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending,
preparing to prosecute or defend, investigating, or being or
preparing to be a witness in a Proceeding; and any of the expenses
listed above in this paragraph (d) as may be incurred in
establishing a right to indemnification under this Agreement.
2. Indemnity in Third Party Proceedings. To the fullest
extent permitted under applicable law, the Company shall indemnify
Indemnitee, his executors, heirs or administrators in accordance
with the provisions of this Paragraph 2, against all Expenses,
judgments, fines, penalties, and settlements, actually and
reasonably incurred by Indemnitee in connection with the defense or
settlement of a Proceeding (other than a Proceeding by or in the
right of the Company to procure a judgement in its favor), unless
it is determined pursuant to Paragraph 5 of this Agreement that
Indemnitee did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests
of the Company or, in the case of a criminal proceeding, had
reasonable cause to believe that his conduct was unlawful. The
termination of any proceeding by judgment, order of court,
settlement, conviction, or upon a plea of nolo contendere, or its
equivalent, shall not, of itself, create a presumption that
Indemnitee did not act in good faith and in a manner which he
reasonably believed to be in the best interests of the Company, and
with respect to any criminal proceeding, that such person had
reasonable cause to believe that his conduct was unlawful.
3. Indemnity in Proceedings By or In the Right of the
Company. To the fullest extent permitted under applicable law, the
Company shall indemnify Indemnitee in accordance with the
provisions of this Paragraph 3 against all Expenses actually and
reasonably incurred by Indemnitee in connection with the defense or
settlement of a Proceeding by or in the right of the Company,
unless it is determined pursuant to Paragraph 5 of this Agreement
that he did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests
of the Company, except that no indemnification for Expenses shall
be made under this Paragraph 3 in respect of any claim, issue or
matter as to which Indemnitee shall have been adjudged by a court
of competent jurisdiction to be liable to the Company, unless and
only to the extent that any court in which such Proceeding is
brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of
the case, Indemnitee is fairly and reasonably entitled to indemnity
for such Expenses as such court shall deem proper.
4. Notice of Claim. The Indemnitee, as a condition
precedent to his right to be indemnified under this Agreement,
shall give to the Company notice in writing as soon as practicable
of any claim made against him for which indemnity will or could be
sought under this Agreement. Notice to the Company shall be given
at its principal office and shall be directed to the Corporate
Secretary (or such other address as the Company shall designate in
writing to the Indemnitee). Notice shall be deemed received if
sent by registered mail, in return receipt requested, properly
addressed, the date of such notice being the date postmarked. In
addition, the Indemnitee shall give the Company such information
and cooperation as it may reasonably request and as shall be within
the Indemnitee's power. Upon receipt of the aforesaid notice the
Company shall have the right, at its own expense, to retain counsel
reasonably satisfactory to the Indemnitee to defend any such claim
and the right to settle the same in cooperation with any other
person who may have such right. The Company shall determine
whether it will defend such claim and shall notify the Indemnitee
of its decision in writing within 10 days of receipt of the
Indemnitee's notice of such claim. If the Company elects to defend
such claim, the Indemnitee shall be permitted to participate in
such defense only at its own expense; provided, however, that if
the Company is also a party or is threatened to be made a party to
the Proceeding and the Indemnitee reasonably concludes that there
are defenses available to him which are different than those
available to the Company, the Indemnitee may retain his own counsel
at the expense of the Company if the Indemnitee is otherwise
entitled to indemnification hereunder. In the event that the
Company shall elect not to defend such claim or shall not notify
the Indemnitee in writing of its decision within such 10-day
period, then the Indemnitee may retain counsel and conduct the
defense of such Proceeding as he may in his discretion deem proper,
at the expense of the Company if the Indemnitee is otherwise
entitled to indemnification hereunder.
5. Right of Indemnitee Upon Application; Procedure Upon
Application. Any indemnification or advance under Paragraphs 2, 3
or 10 hereof shall be made no later than 30 days after receipt of
the written request of Indemnitee, unless a determination is made
within said 30 day period by (a) the Board of Directors of the
Company by a majority vote of a quorum thereof consisting of
directors who are not parties to such Proceedings, (b) independent
legal counsel in a written opinion (which counsel shall be
appointed if such a quorum is not obtainable), or (c) by the court
before which the relevant Proceeding was brought, that the
Indemnitee has not met the relevant standards for indemnification
set forth in Paragraphs 2 and 3.
6. Subrogation. In the event of payment under this
Agreement, the Company shall be subrogated to the extent of such
payment to all of the rights of recovery of the Indemnitee, who
shall execute all papers required and shall do everything that may
be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit
to enforce such rights.
7. Indemnification Hereunder Not Exclusive. The
indemnification and advancement of expenses provided by this
Agreement shall not be deemed exclusive of any other rights to
which Indemnitee may be entitled under applicable law, insurance
policies, any agreement, or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office. However, Indemnitee shall reimburse the
Company for amounts paid to him pursuant to such other rights to
the extent such payments duplicate any payments received pursuant
to this Agreement. Nothing herein shall be deemed to diminish or
otherwise restrict the Indemnitee's right to indemnification under
any provision of the Certificate of Incorporation or Bylaws of the
Company.
8. Indemnification of Expense of Successful Party.
Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee has been successful on the merits or
otherwise in defense of any Proceeding or in defense of any claim,
issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against any and all Expenses
incurred in connection therewith.
9. Partial Indemnification. If Indemnitee is entitled
under any provision of this Agreement to indemnification by the
Company for a portion of Expenses, but not, however, for the total
amount thereof, the Company shall nevertheless indemnify Indemnitee
for the portion of such Expenses to which Indemnitee is entitled.
10. Advances of Expenses. Expenses incurred by the
Indemnitee in connection with any Proceeding, except the amount of
any settlement, shall be paid by the Company in advance upon
request of the Indemnitee that the Company pay such Expenses.
Indemnitee hereby undertakes to repay to the Company the amount of
any Expenses theretofore paid, reimbursed or advanced by the
Company, plus interest on such amount equal to the rate announced
from time to time by Colorado National Bank as its "prime" rate, to
the extent that it is ultimately determined that such Expenses were
not reasonable in nature or amount or that Indemnitee was not
otherwise entitled to indemnification.
11. Settlement of Claims. The Company shall not be liable
to indemnify the Indemnitee under this Agreement for any amounts
paid in settlement of any Proceeding effected without the Company's
written consent. The Company shall not settle any Proceeding in
any manner which would impose any penalty or limitation on the
Indemnitee without the Indemnitee's written consent. Neither the
Company nor the Indemnitee will unreasonably withhold their consent
to any proposed settlement. The Company shall pay the Indemnitee,
upon request, the amount of any settlement consented to by the
Company.
12. Insurance. The Company shall cause to be purchased an
insurance policy which, for a period of three years, shall provide
the Indemnitee with similar coverage as the Company currently
provides for its Directors (which coverage is currently
$5,000,000).
13. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall
constitute one instrument.
14. Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of Nevada.
15. Saving Clause. Wherever there is a conflict between
any provision of this Agreement and any applicable present or
future statute, law or regulation, or any judgment, decree or order
of any court or other governmental or regulatory body to which the
Company is subject contrary to which the Company and the Indemnitee
have no legal right to contract, the latter shall prevail. In such
event, however, the affected provisions of this Agreement shall be
curtailed and restricted only to the extent necessary to bring them
within applicable legal requirements and the Company shall
indemnify Indemnitee to the fullest extent permitted by the
remaining valid and enforceable provision of this Agreement or by
applicable law.
16. Coverage and Successors. The provisions of this
Agreement shall apply with respect to Indemnitee's service as a
director of the Company prior to the date of this Agreement and
with respect to all periods of such service after the date of this
Agreement, even though Indemnitee may have ceased to be a director
of the Company, when he exercises his rights hereunder. All of
Indemnitee's rights to indemnification under this Agreement shall
apply with equal force to and be enforceable by Indemnitee's
executors, heirs and administrators. This Agreement shall be
binding upon the Company and its successors and assigns, including
any transferee of all or substantially all of its assets and any
successor by merger or operation of law.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and signed as of the day and year
first above written.
BOTI Holdings, Inc.
By: _______________________
Title: ____________________
BIG O TIRES, INC.
By: ________________________
Title: _____________________
Director
EA950170.027/14+
DISCLOSURE CERTIFICATE
to
Agreement and Plan of Merger
by and among
BOTI Acquisition Corp.,
BOTI Holdings, Inc.
and
Big O Tires, Inc.
As of June 30, 1995
Section 3.2 - Options and Rights
Attached is the information required by Section 3.2 of the
Agreement and Plan of Merger.
Big O Tires, Inc. OPTIONS GRANTED FROM 01/01/80 TO 06/30/95
AND OUTSTANDING AS OF 06/30/95
DS00 PLAN
GRANT GRANT PLAN/
NAME DATE NUMBER TYPE(1) PRICE
- --------------------- -------- ------ -------- ---------
Adams, John B. 01/01/89 D00001 DS00/NQ $1.060000
Adams, John B. 01/01/90 D00040 DS00/NQ $0.843750
Adams, John B. 01/01/91 D00067 DS00/NQ $0.320315
Adams, John B. 01/01/94 D00132 DS00/NQ $1.475000
Asher, Ronald D. 01/01/89 D00002 DS00/NQ $1.060000
Asher, Ronald D. 01/01/90 D00041 DS00/NQ $0.843750
Asher, Ronald D. 01/01/91 D00068 DS00/NQ $0.320315
Asher, Ronald D. 01/01/92 D00094 DS00/NQ $0.476500
Asher, Ronald D. 01/01/93 D00108 DS00/NQ $1.350000
Asher, Ronald D. 01/01/94 D00125 DS00/NQ $1.475000
Asher, Ronald D. 01/01/95 D00148 DS00/NQ $1.625000
Becker, William C. 01/01/91 D00069 DS00/NQ $0.320315
Becker, William C. 01/01/93 D00122 DS00/NQ $1.350000
Bench, Lawrence D. 01/01/92 D00095 DS00/NQ $0.476500
Bench, Lawrence D. 01/01/93 D00120 DS00/NQ $1.350000
Bench, Lawrence D. 01/01/94 D00142 DS00/NQ $1.475000
Bench, Lawrence D. 01/01/95 D00156 DS00/NQ $1.625000
Boeke, David T. 01/01/94 D00133 DS00/NQ $1.475000
Boyenger, Ann M. 01/01/89 D00003 DS00/NQ $1.060000
Boyenger, Ann M. 01/01/90 D00042 DS00/NQ $0.843750
Carney, Frank L. 01/01/94 D00126 DS00/NQ $1.475000
Carney, Frank L. 01/01/95 D00149 DS00/NQ $1.625000
Casey, Roger L. 01/01/91 D00070 DS00/NQ $0.320315
Casey, Roger L. 01/01/92 D00096 DS00/NQ $0.476500
Casey, Roger L. 01/01/93 D00119 DS00/NQ $1.350000
Casey, Roger L. 01/01/94 D00143 DS00/NQ $1.475000
Cloward, Steven P. 01/01/91 D00071 DS00/NQ $0.320315
Cloward, Steven P. 01/01/92 D00097 DS00/NQ $0.476500
Cloward, Steven P. 01/01/94 D00131 DS00/NQ $1.475000
Combe, Michael V.W. 01/01/93 D00124 DS00/NQ $1.350000
Findlay, Brad 01/01/94 D00135 DS00/NQ $1.475000
Hatch, Gregory W. 01/01/94 D00145 DS00/NQ $1.475000
Johnston, Everett H. 01/01/94 D00127 DS00/NQ $1.475000
Johnston, Everett H. 01/01/95 D00150 DS00/NQ $1.625000
Jones, Allen E. 01/01/93 D00116 DS00/NQ $1.350000
Jones, Allen E. 01/01/94 D00139 DS00/NQ $1.475000
Jones, Allen E. 01/01/95 D00155 DS00/NQ $1.625000
Kimberlin, Gregory D. 01/01/92 D00100 DS00/NQ $0.476500
Kimberlin, Gregory D. 01/01/93 D00118 DS00/NQ $1.350000
Kimberlin, Gregory D. 01/01/94 D00140 DS00/NQ $1.475000
Big O Tires, Inc. OPTIONS GRANTED FROM 01/01/80 TO 06/30/95
AND OUTSTANDING AS OF 06/30/95
DS00 PLAN
O U T S T A N D I N G V E S T E D
AS OF 06/30/95 AS OF 06/30/95
---------------------- -------------------
NAME SHARES DOLLARS SHARES DOLLARS
- ----------------- --------- ---------- -------- -----------
Adams, John B. 521.00 $552.26 521.00 $552.26
Adams, John B. 988.00 $833.63 988.00 $833.63
Adams, John B. 3,036.00 $972.48 3,036.00 $972.48
Adams, John B. 377.00 $556.08 377.00 $556.08
Asher, Ronald D. 1,230.00 $1,303.80 1,230.00 $1,303.80
Asher, Ronald D. 2,397.00 $2,022.47 2,397.00 $2,022.47
Asher, Ronald D. 5,204.00 $1,666.92 5,204.00 $1,666.92
Asher, Ronald D. 3,498.00 $1,666.80 3,498.00 $1,666.80
Asher, Ronald D. 1,647.00 $2,223.45 1,647.00 $2,223.45
Asher, Ronald D. 1,507.00 $2,222.83 1,507.00 $2,222.83
Asher, Ronald D. 411.00 $667.88 0.00 $0.00
Becker, William C. 347.00 $111.15 347.00 $111.15
Becker, William C. 83.00 $112.05 83.00 $112.05
Bench, Lawrence D. 234.00 $111.50 234.00 $111.50
Bench, Lawrence D. 99.00 $133.65 99.00 $133.65
Bench, Lawrence D. 91.00 $134.23 91.00 $134.23
Bench, Lawrence D. 83.00 $134.88 0.00 $0.00
Boeke, David T. 113.00 $166.68 113.00 $166.68
Boyenger, Ann M. 105.00 $111.30 105.00 $111.30
Boyenger, Ann M. 132.00 $111.38 132.00 $111.38
Carney, Frank L. 754.00 $1,112.15 754.00 $1,112.15
Carney, Frank L. 1,026.00 $1,667.25 0.00 $0.00
Casey, Roger L. 347.00 $111.15 347.00 $111.15
Casey, Roger L. 280.00 $133.42 280.00 $133.42
Casey, Roger L. 107.00 $144.45 107.00 $144.45
Casey, Roger L. 91.00 $134.23 91.00 $134.23
Cloward, Steven P. 4,571.00 $1,464.16 4,571.00 $1,464.16
Cloward, Steven P. 5,829.00 $2,777.52 5,829.00 $2,777.52
Cloward, Steven P. 1,884.00 $2,778.90 1,884.00 $2,778.90
Combe, Michael V.W. 83.00 $112.05 83.00 $112.05
Findlay, Brad 189.00 $278.78 189.00 $278.78
Hatch, Gregory W. 76.00 $112.10 76.00 $112.10
Johnston, Everett H. 904.00 $1,333.40 904.00 $1,333.40
Johnston, Everett H. 548.00 $890.50 0.00 $0.00
Jones, Allen E. 330.00 $445.50 330.00 $445.50
Jones, Allen E. 302.00 $445.45 302.00 $445.45
Jones, Allen E. 274.00 $445.25 0.00 $0.00
Kimberlin, Gregory D. 234.00 $111.50 234.00 $111.50
Kimberlin, Gregory D. 83.00 $112.05 83.00 $112.05
Kimberlin, Gregory D. 91.00 $134.23 91.00 $134.23
PAGE: 1
FORM: Dscl50
DATE: 07/06/95
TIME: 16:14:58
V E S T E D V E S T E D
07/01/95 TO 06/30/96 ON OR AFTER 07/01/96
---------------------- ---------------------
NAME SHARES DOLLARS SHARES DOLLARS
- ----------------- --------- ---------- -------- -----------
Adams, John B. 0.00 $0.00 0.00 $0.00
Adams, John B. 0.00 $0.00 0.00 $0.00
Adams, John B. 0.00 $0.00 0.00 $0.00
Adams, John B. 0.00 $0.00 0.00 $0.00
Asher, Ronald D. 0.00 $0.00 0.00 $0.00
Asher, Ronald D. 0.00 $0.00 0.00 $0.00
Asher, Ronald D. 0.00 $0.00 0.00 $0.00
Asher, Ronald D. 0.00 $0.00 0.00 $0.00
Asher, Ronald D. 0.00 $0.00 0.00 $0.00
Asher, Ronald D. 0.00 $0.00 0.00 $0.00
Asher, Ronald D. 411.00 $667.88 0.00 $0.00
Becker, William C. 0.00 $0.00 0.00 $0.00
Becker, William C. 0.00 $0.00 0.00 $0.00
Bench, Lawrence D. 0.00 $0.00 0.00 $0.00
Bench, Lawrence D. 0.00 $0.00 0.00 $0.00
Bench, Lawrence D. 0.00 $0.00 0.00 $0.00
Bench, Lawrence D. 83.00 $134.88 0.00 $0.00
Boeke, David T. 0.00 $0.00 0.00 $0.00
Boyenger, Ann M. 0.00 $0.00 0.00 $0.00
Boyenger, Ann M. 0.00 $0.00 0.00 $0.00
Carney, Frank L. 0.00 $0.00 0.00 $0.00
Carney, Frank L. 1,026.00 $1,667.25 0.00 $0.00
Casey, Roger L. 0.00 $0.00 0.00 $0.00
Casey, Roger L. 0.00 $0.00 0.00 $0.00
Casey, Roger L. 0.00 $0.00 0.00 $0.00
Casey, Roger L. 0.00 $0.00 0.00 $0.00
Cloward, Steven P. 0.00 $0.00 0.00 $0.00
Cloward, Steven P. 0.00 $0.00 0.00 $0.00
Cloward, Steven P. 0.00 $0.00 0.00 $0.00
Combe, Michael V.W. 0.00 $0.00 0.00 $0.00
Findlay, Brad 0.00 $0.00 0.00 $0.00
Hatch, Gregory W. 0.00 $0.00 0.00 $0.00
Johnston, Everett H. 0.00 $0.00 0.00 $0.00
Johnston, Everett H. 548.00 $890.50 0.00 $0.00
Jones, Allen E. 0.00 $0.00 0.00 $0.00
Jones, Allen E. 0.00 $0.00 0.00 $0.00
Jones, Allen E. 274.00 $445.25 0.00 $0.00
Kimberlin, Gregory D. 0.00 $0.00 0.00 $0.00
Kimberlin, Gregory D. 0.00 $0.00 0.00 $0.00
Kimberlin, Gregory D. 0.00 $0.00 0.00 $0.00
Big O Tires, Inc. OPTIONS GRANTED FROM 01/01/80 TO 06/30/95
AND OUTSTANDING AS OF 06/30/95
DS00 PLAN
GRANT GRANT PLAN/
NAME DATE NUMBER TYPE(1) PRICE
- --------------------- -------- ------ -------- ---------
Lechman, Merna J. 01/01/91 D00076 DS00/NQ $0.320315
Lechman, Merna J. 01/01/92 D00102 DS00/NQ $0.476500
Lechman, Merna J. 01/01/93 D00115 DS00/NQ $1.350000
McSharry, Alan D. 01/01/89 D00009 DS00/NQ $1.060000
McSharry, Alan D. 01/01/90 D00051 DS00/NQ $0.843750
McSharry, Alan D. 01/01/91 D00077 DS00/NQ $0.320315
McSharry, Alan D. 01/01/92 D00103 DS00/NQ $0.476500
McSharry, Alan D. 01/01/93 D00121 DS00/NQ $1.350000
Mehlfeldt, Horst K. 01/01/93 D00109 DS00/NQ $1.350000
Mehlfeldt, Horst K. 01/01/94 D00128 DS00/NQ $1.475000
Mehlfeldt, Horst K. 01/01/95 D00151 DS00/NQ $1.625000
Siipola, John E. 01/01/89 D00019 DS00/NQ $1.060000
Siipola, John E. 01/01/90 D00056 DS00/NQ $0.843750
Siipola, John E. 01/01/91 D00084 DS00/NQ $0.320315
Siipola, John E. 01/01/93 D00110 DS00/NQ $1.350000
Siipola, John E. 01/01/94 D00129 DS00/NQ $1.475000
Siipola, John E. 01/01/95 D00152 DS00/NQ $1.625000
Snow, Renee F.A. 01/01/89 D00021 DS00/NQ $1.060000
Teigen, Philip J. 01/01/91 D00087 DS00/NQ $0.320315
Trujillo, Edward F. 01/01/94 D00138 DS00/NQ $1.475000
Walker, William R. 01/01/94 D00141 DS00/NQ $1.475000
Ware, Bruce H. 01/01/94 D00144 DS00/NQ $1.475000
Weiger, Ralph J. 01/01/94 D00147 DS00/NQ $1.475000
Weiger, Ralph J. 01/01/95 D00153 DS00/NQ $1.625000
Wernholm, C. Thomas 01/01/89 D00026 DS00/NQ $1.060000
Wernholm C. Thomas 01/01/90 D00061 DS00/NQ $0.843750
Wernholm, C. Thomas 01/01/91 D00089 DS00/NQ $0.320315
Wernholm, C. Thomas 01/01/92 D00107 DS00/NQ $0.476500
Wernholm, C. Thomas 01/01/93 D00112 DS00/NQ $1.350000
Wernholm, C. Thomas 01/01/94 D00130 DS00/NQ $1.475000
Wernholm, C. Thomas 01/01/95 D00154 DS00/NQ $1.625000
T O T A L S
Big O Tires, Inc. OPTIONS GRANTED FROM 01/01/80 TO 06/30/95
AND OUTSTANDING AS OF 06/30/95
DS00 PLAN
O U T S T A N D I N G V E S T E D
AS OF 06/30/95 AS OF 06/30/95
---------------------- -------------------
NAME SHARES DOLLARS SHARES DOLLARS
- ----------------- --------- ---------- -------- -----------
Lechman, Merna J. 347.00 $111.15 347.00 $111.15
Lechman, Merna J. 234.00 $111.50 234.00 $111.50
Lechman, Merna J. 83.00 $112.05 83.00 $112.05
McSharry, Alan D. 157.00 $166.42 157.00 $166.42
McSharry, Alan D. 132.00 $111.38 132.00 $111.38
McSharry, Alan D. 347.00 $111.15 347.00 $111.15
McSharry, Alan D. 234.00 $111.50 234.00 $111.50
McSharry, Alan D. 124.00 $167.40 124.00 $167.40
Mehlfeldt, Horst K. 1,647.00 $2,223.45 1,647.00 $2,223.45
Mehlfeldt, Horst K. 1,507.00 $2,222.83 1,507.00 $2,222.83
Mehlfeldt, Horst K. 1,368.00 $2,223.00 00.00 $0.00
Siipola, John E. 1,230.00 $1,303.80 1,230.00 $1,303.80
Siipola, John E. 400.00 $337.50 400.00 $337.50
Siipola, John E. 1,000.00 $320.32 1,000.00 $320.32
Siipola, John E. 700.00 $945.00 700.00 $945.00
Siipola, John E. 452.00 $666.70 452.00 $666.70
Siipola, John E. 411.00 $667.88 0.00 $0.00
Snow, Renee F.A. 250.00 $265.00 250.00 $265.00
Teigen, Philip J. 833.00 $266.82 833.00 $266.82
Trujillo, Edward F. 91.00 $134.23 91.00 $134.23
Walker, William R. 91.00 $134.23 91.00 $134.23
Ware, Bruce H. 302.00 $445.45 302.00 $445.45
Weiger, Ralph J. 1,356.00 $2,000.10 1,356.00 $2,000.10
Weiger, Ralph J. 411.00 $667.88 0.00 $0.00
Wernholm, C. Thomas 1,646.00 $1,744.76 1,646.00 $1,744.76
Wernholm C. Thomas 2,661.00 $2,245.22 2,661.00 $2,245.22
Wernholm, C. Thomas 7,009.00 $2,245.09 7,009.00 $2,245.09
Wernholm, C. Thomas 3,964.00 $1,888.85 3,964.00 $1,888.85
Wernholm, C. Thomas 494.00 $666.90 494.00 $666.90
Wernholm, C. Thomas 452.00 $666.70 452.00 $666.70
Wernholm, C. Thomas 411.00 $667.88 0.00 $0.00
--------- ----------- --------- ------------
70,450.00 $56,511.60 65,507.00 $48,479.20
PAGE: 1
FORM: Dscl50
DATE: 07/06/95
TIME: 16:14:58
V E S T E D V E S T E D
07/01/95 TO 06/30/96 ON OR AFTER 07/01/96
---------------------- ---------------------
NAME SHARES DOLLARS SHARES DOLLARS
- ----------------- --------- ---------- -------- -----------
Lechman, Merna J. 0.00 $0.00 0.00 $0.00
Lechman, Merna J. 0.00 $0.00 0.00 $0.00
Lechman, Merna J. 0.00 $0.00 0.00 $0.00
McSharry, Alan D. 0.00 $0.00 0.00 $0.00
McSharry, Alan D. 0.00 $0.00 0.00 $0.00
McSharry, Alan D. 0.00 $0.00 0.00 $0.00
McSharry, Alan D. 0.00 $0.00 0.00 $0.00
McSharry, Alan D. 0.00 $0.00 0.00 $0.00
Mehlfeldt, Horst K. 0.00 $0.00 0.00 $0.00
Mehlfeldt, Horst K. 0.00 $0.00 0.00 $0.00
Mehlfeldt, Horst K. 1,368.00 $2,223.00 0.00 $0.00
Siipola, John E. 0.00 $0.00 0.00 $0.00
Siipola, John E. 0.00 $0.00 0.00 $0.00
Siipola, John E. 0.00 $0.00 0.00 $0.00
Siipola, John E. 0.00 $0.00 0.00 $0.00
Siipola, John E. 0.00 $0.00 0.00 $0.00
Siipola, John E. 411.00 $667.88 0.00 $0.00
Snow, Renee F.A. 0.00 $0.00 0.00 $0.00
Teigen, Philip J. 0.00 $0.00 0.00 $0.00
Trujillo, Edward F. 0.00 $0.00 0.00 $0.00
Walker, William R. 0.00 $0.00 0.00 $0.00
Ware, Bruce H. 0.00 $0.00 0.00 $0.00
Weiger, Ralph J. 0.00 $0.00 0.00 $0.00
Weiger, Ralph J. 411.00 $667.88 0.00 $0.00
Wernholm, C. Thomas 0.00 $0.00 0.00 $0.00
Wernholm C. Thomas 0.00 $0.00 0.00 $0.00
Wernholm, C. Thomas 0.00 $0.00 0.00 $0.00
Wernholm, C. Thomas 0.00 $0.00 0.00 $0.00
Wernholm, C. Thomas 0.00 $0.00 0.00 $0.00
Wernholm, C. Thomas 0.00 $0.00 0.00 $0.00
Wernholm, C. Thomas 411.00 $667.88 0.00 $0.00
--------- ---------- --------- -------------
4,943.00 $8,032.40 0.00 $0.00
Big O Tires, Inc. OPTIONS GRANTED FROM 01/01/80 TO 06/30/95
AND OUTSTANDING AS OF 06/30/95
NQ00 PLAN
GRANT GRANT PLAN/
NAME DATE NUMBER TYPE(1)
- --------------------- -------- ------ --------
Adams, John B. 08/02/91 000002 NQ00/NQ
Adams, John B. 01/14/92 000012 NQ00/NQ
Adams, John B. 04/16/93 000023 NQ00/NQ
Adams, John B. 08/05/94 000047 NQ00/NQ
Cloward, Steven P. 08/02/91 000001 NQ00/NQ
Cloward, Steven P. 01/14/92 000011 NQ00/NQ
Cloward, Steven P. 04/16/93 000022 NQ00/NQ
Cloward, Steven P. 08/05/94 000048 NQ00/NQ
Fryer, Dennis J. 04/16/93 000027 NQ00/NQ
Johnston, Everett H. 06/09/93 000034 NQ00/NQ
Jones, Allen E. 08/02/91 000008 NQ00/NQ
Jones, Allen E. 01/14/92 000017 NQ00/NQ
Jones, Allen E. 04/16/93 000028 NQ00/NQ
Lautzenheiser, Ronald H. 01/14/92 000013 NQ00/NQ
Lautzenheiser, Ronald H. 04/16/93 000025 NQ00/NQ
Roquet, Gregory L. 08/02/91 000009 NQ00/NQ
Roquet, Gregory L. 01/14/92 000019 NQ00/NQ
Roquet, Gregory L. 04/16/93 000031 NQ00/NQ
Staker, Thomas L. 01/14/92 000014 NQ00/NQ
Staker, Thomas L. 04/16/93 000024 NQ00/NQ
Teigen, Philip J. 01/14/92 000021 NQ00/NQ
Teigen, Philip J. 04/16/93 000033 NQ00/NQ
Ware, Bruce H. 08/02/91 000010 NQ00/NQ
Ware, Bruce H. 01/14/92 000020 NQ00/NQ
Ware, Bruce H. 04/16/93 000032 NQ00/NQ
T O T A L S
(1) DS00=Big O Tires, Inc. Director and Employee Stock Option Plan
NQ00=Big O Tires, Inc. Long Term Incentive Plan
Big O Tires, Inc. OPTIONS GRANTED FROM 01/01/80 TO 06/30/95
AND OUTSTANDING AS OF 06/30/95
NQ00 PLAN
O U T S T A N D I N G
AS OF 06/30/95
-------------------------
NAME PRICE SHARES DOLLARS
- --------------------- ----------- --------- -------------
Adams, John B. $5.000000 4,060.00 $20,300.00
Adams, John B. $5.156250 6,994.00 $36,062.81
Adams, John B. $12.250000 12,197.00 $149,413.25
Adams, John B. $15.437500 16,893.00 $260,785.69
Cloward, Steven P. $5.000000 6,280.00 $31,400.00
Cloward, Steven P. $5.156250 10,675.00 $55,042.97
Cloward, Steven P. $12.250000 17,700.00 $216,825.00
Cloward, Steven P. $15.437500 25,049.00 $386,693.94
Fryer, Dennis J. $12.250000 2,496.00 $30,576.00
Johnston, Everett H. $15.880000 1,160.00 $18,420.80
Jones, Allen E. $5.000000 2,720.00 $13,600.00
Jones, Allen E. $5.156250 1,964.00 $10,126.88
Jones, Allen E. $12.250000 2,496.00 $30,576.00
Lautzenheiser, Ronald H. $5.156250 3,804.00 $19,614.38
Lautzenheiser, Ronald H. $12.250000 5,245.00 $64,251.25
Roquet, Gregory L. $5.000000 2,720.00 $13,600.00
Roquet, Gregory L. $5.156250 1,964.00 $10,126.88
Roquet, Gregory L. $12.250000 3,546.00 $43,438.50
Staker, Thomas L. $5.156250 3,681.00 $18,980.16
Staker, Thomas L. $12.250000 1,354.00 $16,586.50
Teigen, Philip J. $5.156250 1,841.00 $9,492.66
Teigen, Philip J. $12.250000 3,120.00 $38,220.00
Ware, Bruce H. $5.000000 2,720.00 $13,600.00
Ware, Bruce H. $5.156250 1,964.00 $10,126.88
Ware, Bruce H. $12.250000 3,215.00 $39,383.75
--------- ------------
145,858.00 $1,557,224.30
(1)DS00=Big O Tires, Inc. Director and Employee Stock Option Plan
NQ00=Big O Tires, Inc. Long Term Incentive Plan
Big O Tires, Inc. OPTIONS GRANTED FROM 01/01/80 TO 06/30/95
AND OUTSTANDING AS OF 06/30/95
NQ00 PLAN
V E S T E D
AS OF 06/30/95
-------------------------
NAME SHARES DOLLARS
- ----------------- -------- -------------
Adams, John B. 4,060.00 $20,300.00
Adams, John B. 6,994.00 $36,062.81
Adams, John B. 0.00 $0.00
Adams, John B. 0.00 $0.00
Cloward, Steven P. 6,280.00 $31,400.00
Cloward, Steven P. 10,675.00 $55,042.97
Cloward, Steven P. 0.00 $0.00
Cloward, Steven P. 0.00 $0.00
Fryer, Dennis J. 0.00 $0.00
Johnston, Everett H. 0.00 $0.00
Jones, Allen E. 2,720.00 $13,600.00
Jones, Allen E. 1,964.00 $10,126.88
Jones, Allen E. 0.00 $0.00
Lautzenheiser, Ronald H. 3,804.00 $19,614.38
Lautzenheiser, Ronald H. 0.00 $0.00
Roquet, Gregory L. 2,720.00 $13,600.00
Roquet, Gregory L. 1,964.00 $10,126.88
Roquet, Gregory L. 0.00 $0.00
Staker, Thomas L. 3,681.00 $18,980.16
Staker, Thomas L. 0.00 $0.00
Teigen, Philip J. 1,841.00 $9,492.66
Teigen, Philip J. 0.00 $0.00
Ware, Bruce H. 2,720.00 $13,600.00
Ware, Bruce H. 1,964.00 $10,126.88
Ware, Bruce H. 0.00 $0.00
-------- -------------
51,387.00 $262,073.62
Big O Tires, Inc. OPTIONS GRANTED FROM 01/01/80 TO 06/30/95
AND OUTSTANDING AS OF 06/30/95
NQ00 PLAN
V E S T E D
07/01/95 TO 06/30/96
-------------------------
NAME SHARES DOLLARS
- --------------------- --------- -------------
Adams, John B. 0.00 $0.00
Adams, John B. 0.00 $0.00
Adams, John B. 12,197.00 $149,413.25
Adams, John B. 0.00 $0.00
Cloward, Steven P. 0.00 $0.00
Cloward, Steven P. 0.00 $0.00
Cloward, Steven P. 17,700.00 $216,825.00
Cloward, Steven P. 0.00 $0.00
Fryer, Dennis J. 2,496.00 $30,576.00
Johnston, Everett H. 1,160.00 $18,420.80
Jones, Allen E. 0.00 $0.00
Jones, Allen E. 0.00 $0.00
Jones, Allen E. 2,496.00 $30,576.00
Lautzenheiser, Ronald H. 0.00 $0.00
Lautzenheiser, Ronald H. 5,245.00 $64,251.25
Roquet, Gregory L. 0.00 $0.00
Roquet, Gregory L. 0.00 $0.00
Roquet, Gregory L. 3,546.00 $43,438.50
Staker, Thomas L. 0.00 $0.00
Staker, Thomas L. 1,354.00 $16,586.50
Teigen, Philip J. 0.00 $0.00
Teigen, Philip J. 3,120.00 $38,220.00
Ware, Bruce H. 0.00 $0.00
Ware, Bruce H. 0.00 $0.00
Ware, Bruce H. 3,215.00 $39,383.75
--------- -------------
52,529.00 $647,691.05
PAGE: 1
FORM: Dscl50
DATE: 07/06/95
TIME: 16:15:20
V E S T E D
ON OR AFTER 07/01/96
-------------------------
NAME SHARES DOLLARS
- --------------------- --------- -------------
Adams, John B. 0.00 $0.00
Adams, John B. 0.00 $0.00
Adams, John B. 0.00 $0.00
Adams, John B. 16,893.00 $260,785.69
Cloward, Steven P. 0.00 $0.00
Cloward, Steven P. 0.00 $0.00
Cloward, Steven P. 0.00 $0.00
Cloward, Steven P. 25,049.00 $386,693.94
Fryer, Dennis J. 0.00 $0.00
Johnston, Everett H. 0.00 $0.00
Jones, Allen E. 0.00 $0.00
Jones, Allen E. 0.00 $0.00
Jones, Allen E. 0.00 $0.00
Lautzenheiser, Ronald H. 0.00 $0.00
Lautzenheiser, Ronald H. 0.00 $0.00
Roquet, Gregory L. 0.00 $0.00
Roquet, Gregory L. 0.00 $0.00
Roquet, Gregory L. 0.00 $0.00
Staker, Thomas L. 0.00 $0.00
Staker, Thomas L. 0.00 $0.00
Teigen, Philip J. 0.00 $0.00
Teigen, Philip J. 0.00 $0.00
Ware, Bruce H. 0.00 $0.00
Ware, Bruce H. 0.00 $0.00
Ware, Bruce H. 0.00 $0.00
--------- -------------
41,942.00 $647,479.63<PAGE>
Supplemental Executive Retirement Plan ("SERP")
and
Stock Appreciation Rights ("SARs")
Name of Holder # of SARs # of SERP/SARs Grant
Value
or
Base
Price
John B. Adams 203 $15.25
Steven P. Cloward 502 $15.25
Steven P. Cloward 100,000 $13.875
Horst K. Mehlfeldt 100,000 $13.875
John E. Siipola 100,000 $13.875
<PAGE>
Section 3.4 - Compliance
i. The First National Bank of Chicago Revolving
Credit Agreement. The Revolving Credit Agreement between the
Company, and certain of its subsidiaries, and The
First National Bank of Chicago ("First
Chicago"),
contains a covenant restricting the Company, or
its
subsidiary companies, from being able to merge
or
consolidate with or into any other person
except that
the Company and its subsidiaries may merge with
each
other. A violation of this covenant
constitutes an
event of default under the revolving credit
agreement
unless First Chicago consents to such a
transaction.
Also, a change in control of the Company (20%
change)
constitutes an event of default under the
revolving
credit agreement unless First Chicago waives
the
default.
ii. Senior Secured Notes. The Indenture, Mortgage,
Deed
of Trust, Security Agreement and Financing
Statement
(fixture filing) between the Company, certain
of its
subsidiaries, and the Bank of Cherry Creek,
N.A., as
indenture trustee, and Kenneth Buckius, as
individual
trustee, dated as of April 27, 1994, as amended
on
January 30, 1995, for the benefit of the
holders of
the Company's 8.71% Senior Secured Notes due
2004,
restricts the Company and its subsidiaries from
entering into any transaction or merger or
consolidation with any other corporation,
except that:
(i) The Company may merge with one
or
more of its subsidiaries
(provided
the Company is the surviving
corporation); and
(ii) Any subsidiary may sell, lease,
transfer or otherwise dispose of
its
assets to the Company or any
other
subsidiary; and
(iii) The Company may merge or
consolidate
with any other corporation
or sell
all or substantially all of
its
assets provided that:
1) The continuing or surviving
entity expressly assumes
the
punctual payment of the
notes
and observance of all of
the
covenants of the notes;
2) The surviving entity shall
be
incorporated in the United
States;
3) An Event of Default with
regard to the surviving
entity
shall not have occurred
immediately after the
merger
and be continuing on the
Notes; and
4) The surviving entity can
incur
at least $1 of additional
Debt.
(iv) A violation of this covenant
constitutes a default under the
indenture unless the trustees
and
note holders consent to such a
transaction.
iii. Various Store/Office Leases in Chandler,
Arizona;
Glendale, Arizona; Corona, California;
Porterville,
California; Vacaville, California; Colorado
Springs,
Colorado; Renton, Washington, and Seattle,
Washington.
These leases covering the Company's regional
offices
or store sites contain provisions that a change
in
control of lessee shall constitute an
assignment
requiring lessor's consent.
iv. Loan with AT&T. The Trust Deed, Grant of
Easement and
Security Agreement (including fixture filing
and
assignment of rents) given to AT&T Commercial
Finance
Corporation to secure payment and performance
of
various loans for equipment and real estate,
contains
a provision which states:
"If Grantor or any guarantor of the obligations
secured hereby (hereinafter called "Guarantor") is a
corporation, the sale, pledge or assignment by the
shareholders of Grantor or Guarantor of any shares of
stock of Grantor or Guarantor without the prior
written consent of noteholder or the transfer of more
than 20% of the value of Grantor's or Guarantor's
assets not in the ordinary course of Grantor's or
Guarantor's business, the merger or consolidation of
Grantor or Guarantor with another company or entity,
[constitutes a default]."
Without the prior written consent of noteholder, the Merger
would
constitute a default.
In its loan commitment to the Company, AT&T Commercial Finance
Corporation indicates that the commitment is being issued in
reliance on
the present management and financial condition of Borrower and
Guarantor. If there is any material change in either the
management or
financial conditions, lender may, at its option, void the
commitment and
the Company believes that this may occur.
v. The loan agreement and guarantee with Key Bank
of
Wyoming, covering the Big O Tire, Inc. Employee
Stock
Ownership Plan contains the following provision
stating:
"Ownership. Make or permit any material change in the
composition, executive management or form of business
activity of the borrower or guarantor, or the
ownership of the Stock, except as allowed or required
by the ESOP."
This is a negative covenant that will require the consent
and/or waiver
of Key Bank of Wyoming.
vi. Equitable Insurance of Iowa and Republic
Western.
Equitable Insurance of Iowa, holder of
approximately
$5MM in Senior Secured Notes and Republic
Western
Insurance Company, holder of approximately $3MM
in
Senior Secured Notes will be unable to hold
notes of
the Company after the Merger because the Merger
will
cause the Company's investment rating to drop
below
what is required by regulation. As a result,
the
Company will be required to call the Notes
pursuant to
their terms. Verbal notice has been given to
Equitable Insurance of Iowa.
<PAGE>
Section 3.6 - Changes
(a) Business Prospects
(1) AT&T Commercial Finance Corporation
has
agreed to fund certain existing real
estate
projects, but as a result of the
contemplated
Merger intends to retract any commitment
in
excess of such projects.
(2) Because the Merger will cause the
Company's investment rating to drop, and
because
of regulatory concerns, the Company will
be
forced to call approximately $8MM of
Senior
Secured Notes held by Equitable Insurance
of
Iowa and Republic Western Insurance
Company.
(3) U.S. Bancorp had given a loan
commitment
to assist in the financing of the Las
Vegas
Equipment Lease. Upon learning of the
Merger,
U.S. Bancorp has withdrawn its commitment.
(4) The Company has consolidated three of
its
warehouses into one warehouse located in
the
area surrounding Las Vegas, Nevada.
(5) The Company has changed its
management
structure, renaming the positions of
Chairman of
the Board, Vice-Chairman of the Board and
President as a committee of three
individuals,
known as the Office of the Chief
Executive.
(6) The Company plans to report a charge
against earnings of approximately $320,000
during the quarter ended June 30, 1995, as
a
result of final expenses incurred in
connection
with the Company's warehouse consolidation
project.
(7) A franchisee of the Company has
settled a
proceeding with the California Bureau of
Automotive Repair, the publicity of which
might
negatively impact the Company's sales in
California and elsewhere.
(8) The Company has become aware that
Small
Business Administration financing for
current or
prospective franchisees of the Company
could be
delayed or curtailed which could adversely
effect franchisee store openings and real
estate
development of stores by the Company.
(9) From December 31, 1994, through June
30,
1995, the Company and/or its franchisees
closed
five stores and opened eleven stores.
(10) The Company is aware that a majority
of
its tire suppliers have announced price
increases of approximately 3% to take
effect in
July, 1995.
(11) The Company periodically records
reserves
for losses associated with leases in which
the
Company is a tenant or guarantor.
(b) Accounting
The Company has changed the method in which it reports
the
profits, losses, income and expenses from its real estate
holdings. This change will result in the reporting of
real estate
transactions as additional transactions and cost of sales
as
opposed to the present reporting of the net gain or loss
as a
component of selling and administrative expense.
(c) Loss
American General Financial, Inc., a provider of the Big
Card,
alleges fraud in connection with credit applications
generated by
one California franchisee through two retail tire store
outlets.
American General claims approximately $300,000 in
damages due
from the Company pursuant to the Company's obligations
under
repurchase agreements. (See Section 3.8 - Potential
Litigation)
The Company has reserved for a liability of approximately
$60,000
that will be expensed for the quarter ended June 30,
1995, such
liability having been incurred in connection with an
environmental
matter in Huntington Beach, California.
(d) Transactions
(1) Under the Company's Incentive Management Purchase
Contract
program, management of Company-owned retail stores are
entitled to
a percentage of profits, and then are eligible to buy the
store by
paying to the Company 25% of the net worth of the store,
and
giving a promissory note for the remainder of the
purchase price.
The manager of the Orem, Utah store entered into this
program
between December 31, 1994, and June 30, 1995.
(2) An agreement in principle has been negotiated with
the co-
joint venturer in the Big O/CSB Joint Venture (relating
to 8
stores in California) for the purchase of the Company's
joint
venture interest prior to the Effective Time. (See
Section 4 -
Assets to be Sold)
(3) The co-joint venturer in the Big O/[Jackson] Joint
Venture
has purchased the Company's joint venture interest as of
December
31, 1994 and closed on the transaction on May 20, 1995.
(See
Section 4 - Assets to be Sold)
(4) The Company's real estate transactions connected to
business
development are ongoing. As of June 30, 1995, the
Company had 4
sites under construction, 13 sites under contract to
acquire the
real estate and 8 real estate sites for which the Company
is
negotiating the acquisition. The Company will continue
this
activity.
(5) The Company has entered into a sublease of its
warehouse in
Ontario, California with Bridgestone/Firestone for the
remaining
term of the Company's original lease.
(6) The Company has entered into a contract for the sale
of its
warehouse in Vacaville, California to Simpson
Manufacturing Co.,
Inc. for a purchase price of $2,343,000. (See Section 4
- - Assets
to be Sold)
(7) The Company sold two retail tire store properties in
Ogden,
Utah in June, 1995.
(8) The Company will continue to attempt to sell Company
owned
stores prior to the Effective Time.
(9) The Company will continue to pursue the sale/lease
back of
its warehouse in Las Vegas, Nevada, the sale/lease back
of its
warehouse in Boise, Idaho and the sale of the vacant land
in
Boise, Idaho, all on terms deemed acceptable by the Board
of
Directors of the Company, in its sole discretion.
(10) The Company sold its 51% interest in a company
owning a
franchised store in American Fork, Utah, during the
second quarter
ended June 30, 1995.
(11) The Company may chose to sell its joint venture
interest in
the Big O/Herb Hawley joint venture prior to the exercise
of its
three (3) year put option.
(e) Other Agreements
(1) The Company is seeking a buyer for two Company-owned
stores
in Lexington, Kentucky. A buyer has been identified, but
no
contract has been signed. (See Section 4 - Assets to be
Sold)
(2) The Company might (together with others) retain
George K.
Baum & Company to provide the Company's Employee Stock
Ownership
Plan with a fairness opinion regarding the Merger, which
will be
executed and delivered before the Effective Time,
together with an
Indemnification Agreement between the Company and George
K. Baum &
Company regarding the same.
(3) The Board of Directors of the Company has authorized
amendments to the agreements with John E. Siipola, Horst
K.
Mehlfeldt and Steven P. Cloward as described in Section
3.13
hereof.
<PAGE>
Section 3.8 - Brokers and Finders
The Company might (together with others) retain George K. Baum &
Company to provide the Company's Employee Stock Ownership Plan with
a fairness opinion
regarding the Merger, which will be executed and delivered before
the
Effective Time, together with an Indemnification Agreement between
the Company
and George K. Baum & Company regarding the same.
Section 3.9 - Litigation
(1) See attached log of current pending litigation and known
claims.
BIG O TIRES, INC.
LITIGATION DOCKET
June 30, 1995
Anderson, Barbara Lee et al vs. Big O Tires, Inc. et al;
Case No. 94C08989; Municipal Court of California, County of
Sacramento. Plaintiff seeks judgment for general damages,
medical
expenses, lost earnings, damages to vehicle, pre-judgment
interest, costs of suit incurred and other and further relief
as
the Court deems just and proper. Plaintiff claims breach of
implied warranty, negligence and strict liability. Plaintiff
alleges that brakework done by a Big O Tires store in North
Highlands was not of good quality and/or parts used were not
the
type or quality required. Plaintiff's brakes failed and
caused an
accident, in which Plaintiff suffered injuries and damages.
Big O
has forwarded the complaint to TransAmerica Insurance with the
request that it retain counsel on Big O's behalf. (Big O is
Defendant and is covered by insurance.)
Big O Tires, Inc. v. Apollo Tire, Inc., C.T. Bar Enterprises, Inc.
and Henry
J. Heeber III;
Case No. LC010476; Superior Court of California, County of Los
Angeles.
Big O seeks damages of past rent and costs from all three
above-named
Defendants. Apollo Tire, Inc. subleased from C.T. Bar
Enterprises, Inc.
and Henry J. Heeber, III in October, 1984. C.T. Bar
Enterprises, Inc.
and Henry J. Heeber, III had subleased from Security/Cal,
Inc., which
was a predecessor in interest to Big O Tires, Inc. Apollo
continued
with the landlord after Big O's lease expired and Apollo was
evicted on
January, 1992 for delinquent rent. Apollo has now filed
bankruptcy
under Chapter 11. Landlord states that it has a bid of $9,000
to clean
up pollution on the property which is the result of oil
draining into a
clarifier. Landlord states the $9,000 bid is only to test and
clean up
what is visible, will be getting additional bids and will be
contacting
the appropriate parties for reimbursement. This case has been
dropped
by Big O and consideration whether to refile is continuing.
(Big O is
Plaintiff)
Big O Tires / Big 10 Tires;
Trademark Dispute - Big O Tires, Inc. has filed an opposition
to Big 10
Tires' application for a national trademark registration.
This case
originated when Big O Tires considered opening several retail
stores in
the Atlanta, Georgia area, an area where Big 10 Tires is
strong. Big 10
objected to the opening of these stores on the basis that
there would be
a likelihood of confusion because of similar names and logos.
Prior to
Big 10's objection, their trademark registration had lapsed.
Upon
discovering this, Big 10 attempted to apply for a national
trademark
registration, which Big O is opposing on the grounds of
likelihood of
confusion. Big 10 now argues that there is no likelihood of
confusion.
Counsel in this matter is Sheridan, Ross & McIntosh.
Discovery in this
case has been ongoing. The proceedings in this case were
suspended
pending settlement negotiations which had been reinstated.
However, Big
O has submitted a proposed settlement agreement to Big 10 and
has
received no comment in return. Big 10 did not accept Big O's
first
settlement proposal. (Big O is Plaintiff)
Big O Tires, Inc. v. Fresh Tire, Incorporated, a California
corporation;
Robert Michael Freshly, an individual; Patricia Edwards, an
individual; and
Does 1 through 20, inclusive;
Case No. 662364; Superior Court of the State of California for
the
County of Los Angeles. Big O is seeking a collection of
accounts
receivables and to foreclose on its security interest in
connection with
Defendant's operation of a Big O Tires retail store.
Defendant has
cross-complained against Plaintiff, alleging that Plaintiff
caused
Defendant to participate in illegal activity by requiring that
Defendant
participate in an advertising trust, and that when Defendant
ceased to
pay the advertising trust because he knew its activities were
illegal,
his retail store was not included in advertising thereby
causing him to
go out of business. Defendant recently amended its
cross-complaint
claiming damages for exposure to toxic substances due to
leaking
hydraulic lifts. Trial occurred in August, 1994 and Big O
obtained a
judgment for $52,691.75, interest and attorneys' fees and
costs, yet to
be determined, but estimated to be $50,000. Big O received
directed
verdict on cross claims. Defendeant and Cross Claimant has
now filed
notices of appeal. (Big O is Plaintiff and Cross Defendant.
Some of
the cross-claims against Big O may be covered by insurance.)
Bostic, Richard Jr. v. Big O Tire
HRC # 07-94-0825; EEOC #24H940268; Lexington-Fayette Urban
County Human
Rights Commission. Mr. Bostic has alleged that he was
terminated from
his sales position on July 17, 1994 in violation of the Age
Discrimination in Employment Act due to his age of 51 years
old. Bud
Brandon, manager of the Lexington, Kentucky store located at
1116
Winchester Road, stated that Mr. Bostic was terminated due to
the
elimination of his position. (Big O is Defendant and is not
covered by
insurance.)
Brown, Eileen v. Big O Tires, Inc., a Nevada corporation, Uniroyal
Goodrich
Tire Co., a Delaware corporation, and Does I through X, Inclusive
Case No. A318654; District Court, Clark County, Nevada.
Plaintiff seeks
judgment for general and consequential damages, pain and
suffering and
for medical expenses due to an automobile accident allegedly
caused by
the tread separating from one of the tires on the automobile.
Plaintiff
claims the tread wrapped around the axle and caused the wheel
of the
vehicle to lock up, resulting in the vehicle rolling over
several times.
This lawsuit has been referred to Big O's insurance with the
request
that they retain counsel in defense of Big O. (Big O is
Defendant and
covered by insurance.)
Carver, Robert vs. Uniroyal, Inc. et al incl. Big "O" Tire Store.
Case No. N64081. Superior Court of California, County of San
Diego.
Plaintiff alleges that he sustained personal injuries as a
direct result
of an accident caused by a tire produced by Uniroyal, Inc.
Big O has
forwarded the complaint to TransAmerica Insurance with the
request that
it retain counsel on Big O's behalf. (Big O is Defendant and
is covered
by insurance.)
Chenault, Minnie v. Big O Tires, Inc.;
No. 93CI03401. Circuit Court of the County of Jefferson,
Commonwealth of
Kentucky. Plaintiff alleges that Big O's agents, servants
and/or
employees were negligent and/or grossly negligent in the use,
maintenance, ownership, operation, occupation and control of
its
premises located and known as 3930 Can Run Road, Louisville,
Kentucky,
which is a franchised Big O Tire store. Although the
complaint is
sketchy, it appears that the franchisee should be named in
this case
rather than Big O. Big O has forwarded the complaint to
TransAmerica
Insurance with the request that it retain counsel on Big O's
behalf.
The franchisee involved has agreed to accept Big O's tender of
defense.
(Big O is Defendant and is covered by insurance.)
Danford, Jeffrey and Jessica v. Big O Tires, Inc.
Case No. 39D01-9405-CT-82; The Jefferson Superior Court, State
of
Indiana. Plaintiff purchased two tires from a franchised Big
O retail
tire store. Plaintiff alleges that the tires were not
properly
installed which caused one of the tires to fall off and
subsequently
cause an accident. Boehl, Stopher & Graves have agreed to
tender our
defense. (Big O is Defendant and is covered by insurance.)
Davis, Debra Pltf. vs. The Uniroyal Goodrich Tire Company et. al.
including
Big O Tires, Inc., et. al. Defendants.
Case No. A333429; District Court, Clark County, Nevada.
Plaintiff
alleges that a tire produced by Uniroyal Goodrich and sold to
her by Big
O Tires was defective. The tire blew out which caused
Plaintiff to lose
control of her vehicle resulting in severe injuries. Big O
has
forwarded the complaint to TransAmerica Insurance with the
request that
it retain counsel on Big O's behalf. (Big O is Defendant and
is covered
by insurance.) Insurance company has tendered this to
Uniroyal for
representation, defense and indemnify.
Dishneau, Ruby E. and Garneau D. Dishneau, husband and wife,
Plaintiffs vs.
Big O Tires, Inc., a Nevada corporation; ABC Corporation I-X; XYZ
Partnerships
I-X; John and Jane Does I-X, husbands and wives, respectively,
Defendants.
Case No. CV 95-02493; Superior Court of the State of Arizona
in and for
the County of Maricopa. Claim shows that on or about March 1,
1993,
Ruby Dishneau went to the Big O Tires store in Kingman,
Arizona to
purchase tires. She alleges that she entered the restroom and
fell in a
hole which was nine to ten inches deep. She is claiming she
suffered
damages including medical expenses, future medical expenses
for
indeterminate period of time, paine, suffering, annoyance,
embarrassment, permanent and residual disabilities and a loss
of
consortium. Based upon the allegations of this claim, it
would appear
that Big O Tires, Inc. should not be a defendant in this case
and
therefore, a copy of the claim was sent to the franchisee,
asking that
they notify their insurance company of this claim. (Big O is
Defendant
and is covered by insurance.)
Ford, Andoria v. Kumho U.S.A., Inc., D & C Tires, Inc., d/b/a Big
O Tires, and
Does 1 to 20;
Case No. 519317; Municipal Court, County of Alameda - Oakland
- - Piedmont
- Emeryville Judicial District. Complaint seeks unspecified
damages for
wage loss, hospital and medical expenses, property damages,
loss of use
of property, general damage and $10,000 in punitive and
exemplary
damages from Kumho U.S.A. D & C Tires, Inc. counsel stated
that damage
limit for municipal court is $25,000. Counsel has requested
that Kumho
tender a defense. (Big O is Defendant and covered by
insurance.)
Frader v. Big O Tires, Inc.;
Case No. CV93-16114; Superior Court of the State of Arizona in
and for
the County of Maricopa. Plaintiffs' daughter was involved in
an
accident in a Ford Bronco allegedly caused by tread separation
of a Big
O branded tire which resulted in her death. Plaintiffs allege
wrongful
death due to the negligence of defendants. Case has been
forwarded to
Big O's insurer with the request that they assign counsel to
provide
defense. (Big O Defendant and covered by insurance.)
Gallivan, Daniel T., Pltf. vs. Big O Tires, Inc., Def.
Case No. CV95-00372 SC; Tempe Justice Court. Mr. Gallivan
filed a Small
Claims Complaint and is seeking to recover $898.97 because he
alleges
that while his car was in the shop for an oil change, damage
was done to
his vehicle. He claims that he has an invoice with a
statement signed
by the manager stating the damages they did. This complaint
was sent to
the attention of Chris Phillips, representative for the
managing partner
of Big O/C.S.B., requesting that he or someone on his behalf
appear to
defend this case. (Big O is Defendant and is covered by
insurance.)
<PAGE>
Graham, Deborah and Robert v. Big O/CSB Joint Venture dba Big O
Tire Stores,
J.M.C., Inc., a California Corporation; Four Kyles, Inc., a
California
corporation; Someday, Inc., a California corporation; C.E.P.
Developments,
Inc., a California corporation; Big O Retail Enterprises, Inc., a
business
entity, form unknown; Big O Tires/C.S.B. Partnership, a business
entity, form
unknown, and Does 7-10, Inclusive;
Case No. EC008223; Superior Court of the State of California,
County of
San Diego, El Cajon Judicial District. Plaintiff alleges that
she broke
her ankle after stepping in a floor drain in the restroom of
a Big O
Tires retail store. Complaint seeks damages due to negligence
and
premises liability. (Big O is Defendant and covered by
insurance).
Hart, Jack and Kentucky Farm Bureau Mutual Insurance Company,
Plaintiffs vs.
Bradley Turner and Big O Tires, Inc., Defendants;
Case No. 95C-00136; Jessamine District Court, Civil Branch.
On April
10, 1995, Big O was served through agent for service.
Plaintiff alleges
that on October 22, 1994, an employee of the Big O Retail
store located
in Nicholasville, Kentucky, negligently operated a motor
vehicle and
collided with a vehicle owned by Mr. Jack Hart, causing
$557.62. It
would appear that Plaintiff's claim is really against the
franchisee
that owns and operates that store. (Big O is Defendant and
covered by
insurance).
Hightower, Deann and Mercedes Hightower, a minor by and through her
Guardian
ad Litem, Deann Hightower, Plaintiffs, vs. Big O Tire, Form
Unknown, Ameri
Tech, Form Unknown, and Does 1 through 100, inclusive, Defendants;
Case No. BCV 01526, Superior Court of the State of California
for the
County of San Bernardino. Plaintiff alleges that she
purchased a tire
from one of our franchised dealers and it "explodes", causing
personal
injury and damages. Plaintiff seeks judgment for general
damages
according to proof, special damages according to proof,
interest and
prejudgment interest according to law, attorneys' fees and
costs,
exemplary damages in sums sufficient to punish Defendants and
to set an
example, civil penaltiespursuant to California Civil Code
S1794
according to proof and further relief as the court shall deem
just and
proper. This case should be indemnified by the manufacturer
of the
tire. AIG Claims Services has taken over defense on behalf of
their
insured, Rancho Sierra Tires, Inc. (Big O is Defendant and
covered by
insurance.)
Jeantete, Denise v. Todd Martinez, John Doe, an unknown and Big O
Tires, Inc.,
a Nevada corporation;
Case No. 93-168CV; Eight Judicial District Court, County of
Taos, State
of New Mexico. Plaintiff was involved in an accident that was
allegedly
caused by Defendant Martinez, an employee of a Big O Tire
store.
Defendant Martinez was not employed by Big O Tires, Inc., and
it is,
therefore, assumed that he was employed by a franchised Big O
Tire
location. This case has been forwarded to the insurance
carrier with
the request that counsel be assigned for defense. (Big O is
Defendant
and covered by insurance.)
Kerr, John Timothy and Karla v. Kenny D. Raley and Jane Doe Raley;
RBO, Inc.;
Big O Tires, Inc.; Uniroyal Goodrich Tire Company; John Does I
through V and
XYZ Corporations I through V;
Case No. 296134; Arizona Superior Court, Pima County.
Plaintiffs were
involved in a rollover accident shortly after having their Big
O tires
inspected at a Big O Tire store in Arizona. Plaintiffs allege
that
tread separated on one of the Big O branded tires causing the
rollover
accident. Big O has submitted this claim to its insurance
carrier,
TransAmerica Insurance, for handling. (Big O is defendant and
covered
by insurance.)
Robert Kessler, Plaintiff, v. Toyota Motor Corporation; Toyota
Motor Sales,
U.S.A., Inc., a corporation; Hertz Rent-a-Car Sales, a corporation;
Big O
Tires, Inc.; Big O Tires #05-058; Does 1 - 100 inclusive, Superior
Court of
the State of California, for the County of Los Angeles, Case No.
YC015086;
Plaintiff claims general damages, according to proof, in
excess of
$50,000 and medical and related expenses, loss of earnings and
earning
capacity, and economic losses, all according to proof,
reimbursement for
cost of the suit and for prejudgment interest, due to the fact
that on
February 8, 1992 the Plaintiff, as a passenger in a Toyota
pickup 4 X 4
suddenly and without warning veered across the roadway and up
onto an
embankment and rolled. This matter has been referred to Big
O's insurer
for representation. As soon as the manufacturer of the tires
is
determined, Big O will ask its insurer to refer this matter to
the
manufacturer for its protection and indemnification. It
appears that
there was not a tire failure. Instead, Plaintiff is claiming
the size
of the tires installed were not the correct size and, if this
is the
case, then the Big O franchisee's acts or omissions may be the
focus of
this case. The Big O franchisee has also been named in this
lawsuit and
has referred the summons and complaint to its insurer. (Big
O is
Defendant and is covered by insurance.)
Larry Kelley, Pam Kelley, April Kelley, a Minor, and Jonathan
Kelley, a Minor,
by and through their Guardian ad Litem, Larry Kelley v. Sherry
Vonne Washburn,
Big O Tires, Marvin Moreece Benson, United Couriers and Does 3 to
10,
Inclusive in the Superior Court of California, County of San
Joaquin, Case No.
253848;
Damages are being sought on the basis that defendants, and
each of them,
did so negligently and carelessly repair, inspect, remove,
replace, and
test the left front tire on defendant Washburn's automobile as
to cause
the wheel to become detached, removed, and separated from
defendant's
automobile, causing the automobile to obstruct the highway so
that
plaintiffs were unable to avoid a collision with defendant's
automobile.
Based on the circumstances claimed, it is clear that Big O
Tires, Inc.,
should not be defendant in this case. It is assumed that they
are
really after one of Big O's franchisees in the Stockton,
California
area. This case has been forwarded to our insurance carrier
with the
request that they assign counsel for defense and that steps be
taken to
dismiss Big O Tires, Inc. from this case. (Big O is Defendant
and is
covered by insurance.)
Lodermeier, Matt, an individual v. Big O Tires, Inc.; C.S.B.
Partnership, a
General Partnership, C.E.P. Development, Inc.; Chris Phillips, an
individual;
and DOES 1 through 200, inclusive.
Case No. 733071. Plaintiff alleges fraud, deceit and
misrepresentation
under Civil Code Section 3294. Plaintiff claims that pursuant
to an
oral agreement between Plaintiff and all Defendants, Plaintiff
was to
move into a location at 345 W. Whittier Boulevard, La Habra,
California
as a new Big O franchisee but then claims that the Defendants
never
intended to abide by the terms of the oral agreement. (Big O
is
Defendant and not covered by insurance.)
McGuire, Kate v. Anthony Benedetti, Don Benedetti, David Randall,
General
Motors Corporation, Napa Valley Glass Co., Inc., Uniroyal Goodrich
Tire
Company, Big O Tires, Inc. and Does 1 to 100, Inclusive;
Case No. 64861, Superior Court of California, County of Napa.
Plaintiff
seeks compensatory damages for an accident involving a 1984
Chevrolet
Blazer 4 x 4 with Big O branded tires. The complaint provides
only the
date and place of the accident but provides no other facts of
the case.
The case has been forwarded to our insurance carrier with the
request
that they assign counsel for defense. (Big O is Defendant and
covered
by insurance.)
Mondragon, Jason, et al vs. Uniroyal, Inc., et al incl. Big "O"
Tire, Inc.
Case No. N64378; Superior Court of California, County of San
Diego.
Plaintiff alleges strict liability and negligence involving a
tire
apparently manufactured by Uniroyal-Goodrich which caused an
accident
resulting in personal injuries and wrongful death. The
Plaintiff asks
for judgment against the defendants. (Big O is Defendant and
is covered
by insurance.)
Mustafa, Khalid J. v. Enrique L. Rodriguez; Barbara Lee Anderson;
Big O Tires,
Inc., a Nevada corporation; Big O Tires Store #42; Gene D. Misket,
Individually d/b/a Big O Tires Store #42 and Does #1-20.
Case No. 95AS02553; Sacramento County Superior Court.
Plaintiff claims
that brakes and the pertinent systems and assemblies were
installed,
assembled, tested and manufactured by the defendants and that
the brake
system failed and contributed substantially to an automobile
accident.
Big O Tires, Inc. would not have any legal responsibility for
a claim of
this nature; it would appear that the Plaintiff should look to
the
vendor/supplier of the Big O Tires Store #42. (Big O is
Defendant and
is covered by insurance.)
Nevil, Jill Mock and Jamie v. Ford Motor Company and General Tire,
Inc.;
Case No. CV294-15, United States District Court, Southern
District of
Georgia. The Company is not a party to this lawsuit. The
President,
the National Director - Quality Assurance and the Company have
been
subpoenaed to produce documents on warranty claims experience
with
regard to products manufactured by General Tire, Inc. The
Company is
contesting the subpoenas as it is believed that this
information is not
relevant to this lawsuit and the effort and cost to produce
such
information would be prohibited. (Big O is not Defendant and
will look
to General Tire, Inc. to reimburse it for legal costs.)
Newsome, Larry vs. Big O Tires, Inc., and Does 1 to 25;
Case No. SCV 17524; Superior Court of the State of California,
County of
San Bernardino. Plaintiff is seeking damages for alleged
negligence
resulting in personal injuries. Plaintiff alleges that on May
11, 1994
at Big O Tire store in San Bernardino, California, he had lift
kit, 4
wheels and 4 tires installed on 1990 Jeep Wrangler. Said
installation
was negligent and careless in that after installation the left
rear
wheel violently wobbled. Plaintiff returned vehicle to store
on May
12th and again on May 13th for adjustment and repair and work
again was
negligent so as to cause the left rear wheel to fall off while
being
operated on a freeway, which incident caused Plaintiff severe
personal
injuries and damages. Big O has forwarded copy of complaint
to
insurance company and to owner of retail store, Jerry Rogers.
Jerry
Rogers' carrier has agreed to defend and indemnify Big O
Tires, Inc.
(Big O is Defendant and is covered by insurance.)
Nguyen, Do, Plaintiff, v. Big O Tires, Inc., a Nevada corporation;
Ohtsu Tire
and Rubber Co., Ltd., a foreign corporation doing business in
Arizona and Does
I-XX, Defendant;
Case No. CV 95042722, Superior Court of the State of Arizona
in and for
the County of Pinal. Plaintiff alleges that a tire produced
by Ohtsu
and sold to her by Big O Tires was defective and as a result
caused a
blow-out on June 17, 1993. Plaintiff claims that as a result,
he
sustained permanent personal injuries, suffering and
inconvenience,
medical expenses, loss of earnings and damage to property.
The suit
does not state which Big O Tires store this tire was purchased
from.
Ohtsu produced a few lines of tires for Big O Tires, Inc.
between the
years of 1988 and 1991. (Big O is Defendant and is covered by
insurance.)
Charles A. Phipps, an individual v. Big O Tires, Inc., a
corporation; Greg
Hatch, an individual, and Does 1 through 200, inclusive.
Superior Court of the State of California for the County of
Orange, Case
No. 742157. On March 8, 1995, Big O received a summons and
complaint
for this lawsuit, whereby the Plaintiff, Phipps, is alleging
fraud,
deceit and misrepresentation, breach of contract, negligent
infliction
of emotion distress, intentional infliction of emotion
distress and
intentional interference with protected property rights on the
part of
Big O and Big O's employee, Mr. Hatch. Plaintiff apparently
thought he
was purchasing from our existing Big O Tires franchisee a Big
O Tires
store in La Habra, California and was precluded from doing so.
Big O
had mutually agreed with the existing franchisee to terminate
the
existing Big O Tires franchise agreement, and was not aware of
the
intentions of Plaintiff. Plaintiff is seeking damages of an
unspecified
amount. Big O intends to vigorously defend against this
lawsuit on the
basis that it is wholly without merit. (Big O is Defendant
and may not
be covered by insurance.)
Ramos, Rito v. Salvador Joe Artola, Big O Tires;
Case No. 92C01599; Municipal Court of California, Pamona
Judicial
District, County of Los Angeles, California. Plaintiff seeks
$2,500 for
injuries, property loss and compensation due to an automobile
accident
involving a Big O Tire truck and Big O Tire employee. Case
has been
forwarded to insurance carrier with a request to assign
counsel and
tender a defense. (Big O is Defendant and covered by
insurance.)
Roffoni, John A., Plaintiff vs. Big O Tire (Nevada Corporation);
Case No. 066398; Northern Santa Barbara County Municipal
Court, Santa
Maria Division. Plaintiff is seeking $5,000 due to breach of
contract
and misrepresentation. A letter has been sent to the
Plaintiff seeking
information on this case. No details were given on the
complaint.
Schulz, Dana and Barbara v. Big O Tires, Inc., et al.;
Case No. 92003231CV; Third Circuit Court for Salt Lake County,
Utah,
filed March 5, 1992. Plaintiff claims damages of $4,539 as
follows:
$2,839 to properly correct franchisee's improper engine repair
and
$1,700 for rental car expenses. All work was done by one of
Big O's
independent franchisees. Counsel for Big O has prepared and
filed a
motion to dismiss. (Big O is Defendant and covered by
insurance.)
Signet Partners v. Big O Tires, Inc. a/k/a Big "O" Tire Dealers,
Inc.
Case No. 95CV230, District Court, Arapahoe County, Colorado.
The
Company decided to terminate operations of a Big O Tires store
in
Littleton, Colorado, because of a declining neighborhood and
major
construction about to occur. The Company found a subtenant,
but was not
able to obtain the Landlord's consent to sublease the
premises. After
repeated unsuccessful efforts, to gain the Landlord's
response, either
to consent to the sublease or permit the Company to buy out
the
remaining lease term, the Company declared the lease
terminated due to
the default of the Landlord. Landlord has since lost the
property
through foreclosure and Signet Partners is the court-appointed
receiver.
Signet seeks $123,000 in rentals for the balance of the lease,
and
$184,562.77 in damages for violation of a continuous operation
requirement in the lease. As to the former, the Company was
relieved of
these obligations due to the default of Landlord. As to the
latter, it
is clear from the language in the lease that this penalty
provision is
in lieu of percentage rent and the lease does not call for
percentage
rent.
Sorkhabi, Sultana v. Mike Lenzi, Big O Tires, Does 1 - 25;
Superior Court of California, County of Contra Costa, Case No.
C91-
04258. This is apparently the result of an accident which
occurred on
September 7, 1990 wherein the Defendant's vehicle (Mike Lenzi)
allegedly
ran into the back of the Plaintiff's vehicle, causing the
Plaintiff to
strike another vehicle. This case has been referred to Big
O's insurer
with a request to retain counsel. Big O was named in this
suit even
though Lenzi was an employee of an independent franchisee.
Franchisee's
insurance company is reviewing the indemnity agreement and
then should
agree to tender defense. (Big O is Defendant and covered by
insurance.)
Stewart, Pauline v. Big O Tire Corp;
Case No. SCDS48198; Municipal Court of California, Small
Claims
Division, County of Contra Costa. Plaintiff claims that she
is owed
$5,000 for defective auto work. In researching this matter,
it has been
determined that Plaintiff had air shocks installed on her
vehicle in
1990 at the Pittsburg, California Big O Tires franchised
retail store.
Seven months after the air shocks were installed, the battery
in
Plaintiff's vehicle failed and, allegedly, this was the first
of many
batteries to fail. Plaintiff claims that the failure of the
batteries
was due to the air shock fill mechanism operating at all
times. The
representative at the Big O Tires retail store disagrees and
has
evidence that this mechanism was installed in such a way that
it is
impossible that it would continue to run after the car is
turned off.
As required under the Franchise Agreement, the franchisee for
the Big O
Tires retail store has agreed to attend the hearing in this
case and to
defend Big O Tires, Inc. (Big O is defendant and covered by
insurance.)
Taylor, Melissa Jan v. Big O Tires, Inc.;
Case No. CJ94 490-64; District Court, 7th Judicial District,
Oklahoma
County, State of Oklahoma. Plaintiff seeks damages resulting
from an
accident which was allegedly caused by tread separation of the
right
front tire on Plaintiff's Toyota pickup truck. It is unclear
whether or
not the tire was Big O branded or where it was purchased,
although it
appears that the tire was purchased at a Big O retail store.
(Big O is
defendant and covered by insurance.)
Thurman, Karen L. v. Big O Tires, Inc.;
Case No. CR92-01; Civil Rights Division, Department of
Regulatory
Agencies, State of Colorado. This case arises from the
termination of a
former black employee of Big O for violation of company
polici
EXHIBIT 10.2 TO FORM 8-K/A
DATED JULY 27, 1995
Execution Version
AMENDMENT TO RIGHTS AGREEMENT
THIS AMENDMENT, dated as of July 24, 1995, is between BIG O
TIRES, INC.,
a Nevada corporation (the "Company"), and INTERWEST CO., INC., a
Utah
corporation (the "Rights Agent").
Recitals
A. The Company and the Rights Agent are parties to a
Rights Agreement
dated as of August 26, 1994 (the "Rights Agreement").
B. Pursuant to Section 26 of the Rights Agreement, the
Company and
the Rights Agent desire to amend the Rights Agreement as set forth
below.
Accordingly, the parties agree that Section 1(a) of the Rights
Agreement
is amended to read in its entirety as follows:
"(a) 'Acquiring Person' means that any Person that,
together
with all Affiliates and Associates of such Person, is the
Beneficial Owner of
15% or more of the shares of Common Stock then outstanding, but
shall not
include the following:
(i) the Company, any Subsidiary of the Company,
any
employee benefit plan of the Company or of any Subsidiary of the
Company, or
any Person or entity organized, appointed or established by the
Company for or
pursuant to the terms of any such plan; or
(ii) any Person who would otherwise become an
Acquiring
Person solely as a result of a reduction in the number of shares of
Common
Stock outstanding due to the repurchase of shares of Common Stock
by the
Company, unless and until such Person shall purchase or otherwise
become the
Beneficial Owner of additional shares of Common Stock constituting
1% or more
of the then outstanding shares of Common Stock other than pursuant
to a
Qualifying Offer; or
(iii) BOTI Holdings, Inc., a Nevada corporation,
BOTI
Acquisition Corp., a Nevada corporation, an entity to be formed
directly or
indirectly by Persons who are currently franchisees of the Company,
any other
Person who may be deemed to be the Beneficial Owner of Common Stock
because of
the execution and delivery of the Agreement and Plan of Merger of
even date
herewith between BOTI Holdings, Inc., BOTI Acquisition Corp. and
the Company
(the "Merger Agreement") and any Group (as defined under the
Exchange Act)
consisting of two or more of the foregoing, so long as such Persons
are not
the Beneficial Owners of any Capital Stock of the Company other
than (A)
pursuant to the Merger Agreement, (B) Common Stock owned or subject
to stock
options held by such Persons prior to the date of the Merger
Agreement, (C)
Common Stock acquired by any of such Persons from any other of such
Persons,
(D) Common Stock or other securities acquired by such Persons in
transactions
or types of transactions that are approved in advance by the
Investment
Committee of the Board of Directors of the Company and (E) Common
Stock other
than as described above in this clause (iii) not exceeding 1% of
the shares of
Common Stock then outstanding; and
(iv) any other Person that Beneficially Owns Common
Stock as of
the date of this amendment but does not thereafter become the
Beneficial Owner
of any additional Common Stock not exceeding 1% of the shares of
Common Stock
then outstanding."
EXECUTED as of the date set forth above.
Attest: BIG O TIRES, INC.
/s/ Susan D. Hendee By: /s/ Horst K. Mehlfeldt
Name: Susan D. Hendee Name: Horst K. Mehlfeldt
Title: Assistant Secretary Title: Vice-Chairman
Attest: INTERWEST CO., INC.
/s/ Shirrell W. Hughes By: /s/ Kurtis D. Hughes
Name: Name:
Title: Title: V.P.
