-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, e8dnF75G24OXXEdRDczzfH9ZYQJ0p9okGroG8fFoykOEO3LXyRESs+ZYe7WPCqIl d0Szm+Jm2dkhYsdZc343Qw== 0000718082-95-000010.txt : 19950517 0000718082-95-000010.hdr.sgml : 19950516 ACCESSION NUMBER: 0000718082-95-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIG O TIRES INC CENTRAL INDEX KEY: 0000718082 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MOTOR VEHICLES & MOTOR VEHICLE PARTS & SUPPLIES [5010] IRS NUMBER: 870392481 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12964 FILM NUMBER: 95538234 BUSINESS ADDRESS: STREET 1: 11755 E PEAKVIEW AVE CITY: ENGLEWOOD STATE: CO ZIP: 80111 BUSINESS PHONE: 3037902800 MAIL ADDRESS: STREET 1: 11755 E PEAKVIEW AVENUE CITY: ENGLEWOOD STATE: CO ZIP: 80111 FORMER COMPANY: FORMER CONFORMED NAME: TIRES INC DATE OF NAME CHANGE: 19870101 FORMER COMPANY: FORMER CONFORMED NAME: VENTURE CONSOLIDATED INC DATE OF NAME CHANGE: 19841021 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1995 OR TRANSITION REPORT PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ____________. Commission File Number: 1-8833 BIG O TIRES, INC. (Exact name of registrant as specified in its charter) Nevada 87-0392481 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 11755 East Peakview Avenue Englewood, Colorado 80111 (Address of Principal Executive Offices) (303) 790-2800 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares of registrant's common stock outstanding on May 10, 1995 was 3,312,143. The total number of pages is 30. BIG O TIRES, INC. CONSOLIDATED BALANCE SHEETS (000s)
March 31, 1995 December 31, ASSETS Unaudited 1994 ----------- ------------ CURRENT ASSETS: Cash and cash equivalents $ 343 $ 4,882 Trade accounts receivable, net of allowance for doubtful accounts 10,200 8,165 Other receivables 659 2,905 Current portion of notes receivable: 769 733 Inventories 18,191 14,219 Deferred income taxes 2,165 2,126 Other current assets 826 688 --------- --------- Total current assets 33,153 33,718 --------- --------- NOTES RECEIVABLE, net of current portion: 3,340 3,193 --------- --------- PROPERTY, PLANT AND EQUIPMENT 26,743 17,177 Less accumulated depreciation and amortization (5,400) (5,146) --------- --------- 21,343 12,031 --------- --------- INTANGIBLE AND OTHER ASSETS: Distribution rights 9,008 9,077 Equity in joint ventures and unconsolidated subsidiaries 1,032 1,129 Other 2,859 2,820 --------- --------- 12,899 13,026 --------- --------- TOTAL ASSETS $ 70,735 $ 61,968 --------- --------- --------- ---------
-See notes to consolidated financial statements- 2 BIG O TIRES, INC. CONSOLIDATED BALANCE SHEETS (000s)
March 31, 1995 December 31, Unaudited 1994 --------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 3,133 $ 650 Accrued expenses 2,031 2,485 Warranty reserve 3,975 3,850 Current portion of long-term debt and capital lease obligations 2,009 2,066 --------- --------- Total current liabilities 11,148 9,051 --------- --------- LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, net of current portion 22,144 15,906 --------- --------- OTHER LONG-TERM LIABILITIES 1,428 1,433 --------- --------- EMPLOYEE STOCK OWNERSHIP PLAN OBLIGATIONS 180 449 --------- --------- SHAREHOLDERS' EQUITY: Common stock 334 334 Capital contributed in excess of par 15,424 15,418 Retained earnings 20,708 20,419 --------- --------- 36,466 36,171 Less: Employee stock ownership plan obligations (180) (449) Deferred stock grant compensation (330) (472) Treasury stock (121) (121) --------- --------- 35,835 35,129 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 70,735 $ 61,968 --------- --------- --------- ---------
-See notes to consolidated financial statements- 3 BIG O TIRES, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (000s except for share and per share amounts)
For the three months ended March 31, 1995 1994 ----------------------- SALES, net $ 29,153 $ 26,393 COST OF SALES 22,413 20,108 --------- --------- GROSS PROFIT 6,740 6,285 --------- --------- EXPENSES, net: Selling and administrative 4,579 4,934 Product delivery expense 851 525 Shareholder proposal expense 321 99 Interest expense 396 272 Loss on sale or closure of retail stores 95 98 --------- --------- 6,242 5,928 --------- --------- INCOME BEFORE INCOME TAXES 498 357 --------- --------- PROVISION FOR INCOME TAXES: Current 248 214 Deferred (39) (62) --------- --------- 209 152 --------- --------- NET INCOME $ 289 $ 205 --------- --------- --------- --------- EARNINGS PER SHARE $ .09 $ .06 --------- --------- --------- --------- WEIGHTED AVERAGE SHARES AND COMMON STOCK EQUIVALENTS OUTSTANDING 3,381,330 3,238,104 --------- --------- --------- ---------
-See notes to consolidated financial statements- 4 BIG O TIRES, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (000s)
For the three months ended March 31, 1995 1994 -------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 289 $ 205 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 299 299 Amortization of intangibles 99 102 Other 52 (45) Cash flows from changes in working capital (1,942) (544) --------- --------- Total adjustments (1,492) (188) --------- --------- NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (1,203) 17 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Increase in notes receivable -- (84) Payments received on notes receivable 128 234 Proceeds from sales of property and equipment 26 1 Equity investments in affiliates (2) (95) Purchase of property and equipment (8,420) (992) Increase in retail store construction in progress (1,174) -- Purchase of retail stores (122) (410) --------- --------- NET CASH USED BY INVESTING ACTIVITIES (9,564) (1,346) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings on long-term debt 6,850 2,300 Principal payments on long-term debt and capital lease obligations (700) (853) Other 78 65 --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 6,228 1,512 --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,539) 183 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,882 1,113 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 343 $ 1,296 --------- --------- --------- ---------
-See notes to consolidated financial statements- 5 BIG O TIRES, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (000s)
For the three months ended March 31, 1995 1994 ---------------------- SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 378 $ 284 Income taxes -- -- SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Accounts receivable transferred to long-term notes receivable 311 130 Inventories received in satisfaction of long-term notes receivable -- 454 Decrease in employee stock ownership plan obligations 269 555
-See notes to consolidated financial statements- 6 BIG O TIRES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 UNAUDITED NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES: REFERENCE TO ANNUAL REPORT: These financial statements should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 1994, since certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). These interim financial statements reflect all adjustments which are, in the opinion of Management, necessary for a fair presentation of the financial position, results of operations and cash flows of the Company for the interim periods. Such adjustments are of a normal recurring nature. Operating results for the three months ended March 31, 1995, are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. STOCK OPTION PLAN: On January 1, 1995, the Company granted options for 4,943 shares of the Company's $.10 par value common stock to certain directors and employees who elected to participate in the Big O Tires, Inc. Director and Employee Stock Option Plan ("Plan"). As of March 31, 1995, the liability for the options granted on January 1, 1995 pursuant to the Plan was approximately $3,000. STOCK APPRECIATION RIGHTS: In February 1995, the Company's Board of Directors granted Stock Appreciation Rights ("SAR") to each of the three members of the Office of the Chief Executive. Each SAR agreement provides that each member receive a grant of 100,000 share equivalent units, each of which represents an equal undivided interest in the future appreciation in the value of a share of the Company's Common Stock. The SAR agreement provides, subject to certain vesting requirements, that each unit shall entitle each member to receive, in cash only, the difference between the base value (as defined in the agreement) and the market value of a share of Common Stock on the exercise date. As of March 31, 1995, no liability has been accrued pursuant to this agreement. CREDIT FACILITY: On January 23, 1995 the Company replaced its previously existing credit facility with a $20 million Revolving Credit Agreement which expires January 22, 1998. Borrowings under the agreement (limited to a portion of eligible collateral) were $9,615,000 at March 31, 1995. The agreement contains various covenants and restrictions (including a restriction which precludes the payment of cash dividends or the return of capital to shareholders) with which the Company was in compliance at March 31, 1995. SENIOR SECURED NOTES: In April 1994, the Company sold 8.71% Senior Secured Notes in the aggregate principal amount of $8,000,000, at par, which will mature in 2004. The notes are collateralized by restricted cash and a deed of trust on land and buildings located in California and Idaho. Approximately $3,577,000 of the proceeds were used for the repayment of long-term debt and $300,000 of the proceeds were used for payment of the costs associated with the issuance of the notes. The remaining proceeds of approximately $4,123,000 were invested in 7 U.S. Treasury obligations until February 1995 when they were used for the acquisition of the Las Vegas distribution center which opened in March 1995. UNEARNED STOCK COMPENSATION: On August 5, 1994, the Company made restricted stock grants for 28,986 shares (net of subsequent cancellation of 4,680 shares) of the Company's $.10 par value common stock and granted options for an additional 41,942 shares of the Company's common stock to certain officers in accordance with the Big O Tires, Inc. Long Term Incentive Plan (LTI Plan). These grants were made in lieu of previous option grants for 264,824 shares of the Company's common stock which occurred in April 1994. The previous grants were cancelled subsequent to the Annual Shareholders Meeting when a proposal to provide additional shares of common stock for issuance pursuant to the LTI Plan was not approved by the shareholders. In connection with the restricted stock grant, unearned stock compensation of $520,000 was recorded which represents the non- vested portion of the restricted stock grants based upon the market price of the stock at the grant date. Compensation expense is being recognized over a vesting period of three to five years in accordance with the provisions of the LTI Plan. SHAREHOLDER PROPOSAL EXPENSE: At the Annual Meeting of Shareholders held in June 1994, the shareholders adopted a resolution calling for the Company to engage an investment banker to evaluate all alternatives for enhancing the value of the Company. The cost associated with the implementation of the shareholder proposal for the three months ended March 31, 1995 was $321,000. EARNINGS PER SHARE: Earnings per share is computed using the weighted-average number of outstanding shares during each period presented. Common stock equivalents are included but did not have a material effect on the computation. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: LIQUIDITY AND CAPITAL RESOURCES: Shareholder Proposal In June 1994, the shareholders adopted a proposal requesting the Company to engage an investment banker to evaluate all alternatives to enhance the value of the Company. In implementing this shareholder proposal, the Board of Directors established the Investment Committee of the Board which retained PaineWebber Incorporated (PaineWebber) to fulfill this shareholder proposal. The result of this process has led to three offers to acquire the Company, none of which has been successful as of May 10, 1995. However, an offer for the Company may be received in the future and, if accepted by the shareholders, could result in a significant change in the Company's liquidity and need for capital resources. In the meantime, management of the Company has been restructured, creating the Office of the Chief Executive. The purpose of this restructuring is to achieve aggressive growth and to enhance the value of the Company. As these strategies are currently being developed, their impact on the liquidity and capital resources of the Company has not been determined. However, management of the 8 Company is aware of the limited capital resources available and will act prudently and conservatively in establishing and implementing growth plans and operating strategies. Working Capital At March 31, 1995, the Company had $22,005,000 in working capital (defined as current assets less current liabilities), which represented a net decrease of $2,662,000 from December 31, 1994. Working capital was used for the purchase of the Las Vegas distribution center, expenditures on retail store construction in progress and principal payments on long term debt and capital lease obligations. These decreases in working capital were partially offset by increases from borrowings on long term debt and working capital provided by operations. The Company's net trade receivables at March 31, 1995 increased by $2,035,000 as compared to December 31, 1994. This increase resulted from the effect of opening five new stores during the first three months of 1995 and normal seasonal increases. Inventories at March 31, 1994 increased by $3,972,000 as compared to inventories at December 31, 1994. This increase resulted primarily from higher inventory levels needed to support the increased sales due to the impact of the Company's "Cost-U-LessTM" program which was implemented in July 1994 and the five new stores opened during the first three months of 1995. Increases also resulted from the normal, seasonal increase in stocking levels to provide an adequate supply of products to meet anticipated higher sales volumes which normally occur during the second quarter of each year. Accounts payable at March 31, 1995 increased $2,483,000 from December 31, 1994, as a result of the increased inventory levels. Las Vegas RSC Conversion In May 1994, the Company closed its RSC in Vacaville, California and consolidated its operations into the Ontario RSC. The Vacaville warehouse was leased to an unrelated third party, which lease continues until March 2000. The Company has accepted an offer for the sale of the warehouse and lease, which is scheduled for closing in August 1995. Upon the sale, the cash proceeds will be used to reduce the outstanding loan balance with First National Bank of Chicago (First Chicago). In March 1995, the Company closed its RSC in Denver, Colorado and consolidated its operations into the newly opened Las Vegas RSC. The Denver RSC was sold to an unrelated third party in December 1994 (See discussion under "Financial Commitments" below). It is presently anticipated that the Ontario RSC operations will be fully converted to the new Las Vegas RSC by May 1995. While the Company is obligated under the lease for the Ontario warehouse through May 1998, it has subleased this property to an unrelated third party for the remainder of the lease term starting June 1995. During the first six months of 1995, selling and administrative expense is anticipated to remain approximately at levels comparable to the prior year. After all operations have been successfully consolidated at the new Las Vegas RSC in the second quarter, 1995, selling and administrative expense is anticipated to be reduced. Real Estate Development The Company has implemented a real estate development program. This program involves Big O retail store site selection and development by one of the Company's subsidiaries, and the subsequent sale of these store sites to Franchisees that qualify for Small Business Administration (SBA) guaranteed loans. Significant financing will be required by the Company, which is planned to be repaid if the financing through the SBA guaranteed source is obtained by the prospective Franchisee. As of May 10, 1995, permanent financing has been approved for seven development projects through AT&T Capital Corporation (AT&T). Approval for five additional projects has been withheld pending the outcome of the Shareholder Proposal described above. The Company anticipates 9 funding these projects through its line of credit, however, future development may be postponed until this permanent financing issue is settled. Capital Expenditures At March 31, 1995, the Company's subsidiary that is implementing the real estate development program and financing through the SBA had approximately $3.2 million invested in construction in progress for Big O retail store sites, an increase of $1.2 million since 12/31/94. Additional capital expenditures are anticipated in connection with these real estate development activities, which are subject to the limitations of the financing commitments for real estate development as described below. In February 1995, the Company acquired the Las Vegas RSC at a total cost of approximately $7,972,000. New equipment, including computer hardware and software to operate this facility, will require approximately $1,200,000 in additional 1995 capital expenditures. The Company is currently evaluating strategies to finance this equipment including operating and capital financing lease scenarios in addition to financing through its existing line of credit. Financial Commitments The Company's current operations are funded through its revolving line of credit with a new primary lender - The First National Bank of Chicago (First Chicago). First Chicago provided a $20 million revolving credit line which was used to pay off the previous credit facility in January 1995. The First Chicago credit line has a 1995 sub-limit of $6 million which can be used for construction and permanent financing pursuant to the Company's real estate development program. Limited financing for the Company's real estate development is provided by AT&T Capital Corporation (AT&T) through an $11.75 million revolving credit line. Prepayment penalties apply to this credit line during the first three years of such financing unless an SBA guaranteed loan is placed with AT&T's Small Business Lending unit. In the fourth quarter of 1994, the Company sold approximately $3 million of long term notes receivable. The Company is currently negotiating the sale of an additional $1 million of long term notes receivable. Management's discretion with respect to certain business matters is limited by financial and other covenants contained in loan agreements with First Chicago, AT&T, the senior note holders, and Kelly-Springfield. These covenants, among other things, limit or prohibit the Company from (i) paying dividends on its capital stock, (ii) incurring additional indebtedness, (iii) creating liens on or selling certain assets, (iv) making certain loans, investments, or guarantees, (v) violating certain financial ratios (vi) repurchasing shares of its common stock, and (vii) making certain capital expenditures. At March 31, 1995, the Company was either in compliance with all of these covenants or had received waivers from the appropriate lender. The Company's continuing guarantees at March 31, 1995 were comprised principally of the following: Retail Store Financing $ 4.5 million Notes receivable guarantees 1.5 million Real Estate Lease guarantees 4.6 million Employee Stock Ownership Plan .2 million Denver, RSC Mortgage Loan 2.8 million Seasonality The franchised and Company-owned retail stores experience some seasonal variation in product sales because the sale of tires, wheels, and related automotive products are generally greater during the summer months than in the winter months. The Company generally experiences some seasonality, although not to the same 10 extent as the retail stores, since the Company maintains sales to certain retail stores on a regional basis (e.g., snow tires and chains) that offset the trend on a national basis. Environmental Issues The Company and its franchisees are subject to federal and state environmental regulations regarding the disposal of tires and used oil, and the handling and storage of certain other substances. Such regulations have not previously had a material effect on the Company's operations, and Management does not believe that they will have a material effect in the future since the Company has adopted a policy of requiring Phase I environmental studies associated with any new projects or the acquisition of any existing locations before such transactions are consummated. RESULTS OF OPERATIONS: Revenues Net sales for the first quarter of 1995 increased $2,760,000 as compared to the first quarter of 1994. The sale of Big O brand units increased by approximately 89,000 units (an increase of 9.7%) during the first quarter of 1995 as compared to the first quarter of 1994. The sale of other new tires decreased by approximately 34,000 units (a decrease of 23%) during the same period. The average selling price of Big O brand units decreased by $2.97 per unit (a decrease of 5.0%) for the first quarter of 1995 as compared to the first quarter of 1994. This decrease was primarily due to the Company's "Cost-U-LessTM" program which was implemented in July 1994. The average selling price of other new tires decreased by $1.22 per unit (a decrease of 3.2%) during this same period. The increase in sales for the first quarter of 1995 as compared to the first quarter of 1994 resulted from an increase in sales of $1,980,000 to existing dealers, additional sales to new franchisee owned stores of $1,330,000, and an increase in royalty revenues of $114,000. These increases were partially offset by a decrease of $428,000 which resulted from the closing of franchisee and Company- owned retail stores which were operating during the first quarter of 1994 but not 1995 and a decrease of $147,000 from the sale of Company-owned retail stores. Gross Profit Gross profit for the first quarter 1995 increased by $455,000 as compared to the first quarter of 1994. The Company's gross margin was 23.1% for the first quarter of 1995 which represented a 0.7% decrease as compared to the first quarter of 1994. An increase in gross profit of $638,000 was attributable to the higher sales volume, however, this increase was partially offset by a decrease in gross profit of $183,000 due to the 0.7% decrease in gross margin. The decrease in gross margin was primarily due to the Company's "Cost-U-LessTM" program which was implemented in July 1994. Additional gross profit was realized from increased royalty income, the elimination of costs associated with a volume bonus program offered to franchisees during the first quarter of 1994 and a decrease in warranty adjustment costs. Net Expenses Net expenses for the first quarter of 1995 increased by $314,000 from the first quarter of 1994. Product delivery expenses increased by $326,000 primarily due to increased sales and the increased delivery expenses associated with the Las Vegas RSC. In addition, net expenses increased by $222,000 for expenses related to the implementation of the shareholder proposal which was approved at the June 1994 Shareholders Meeting. Selling and administrative expenses decreased by $355,000 during the first quarter of 1995 as compared to the first quarter of 1994. This decrease was primarily due to a decrease of $411,000 related to the sale or closure of Company-owned retail stores. Other decreases included a decrease in bad debt expense of $53,000 and a decrease in the Company's proportionate share in joint venture losses of $100,000. These decreases were offset by selling and 11 administrative expenses associated with closing the Denver RSC and start up of the new Las Vegas RSC in the first quarter of 1995. Interest expense increased by $124,000 for the first quarter of 1995 as compared to the same period for 1994. This increase was primarily due to increased borrowing under the Company's line of credit during the first quarter of 1995 due to financing needs for the consolidation of three of the Company's RSC's into the new Las Vegas RSC and higher interest rates. PART II OTHER INFORMATION Item 5. OTHER INFORMATION. None Item 6. EXHIBITS AND REPORTS ON FORM 8-K. a. Exhibits. (10.1) Purchase Agreement dated March 22, 1995 effective March 31, 1995 by and between Tire Marketers Association, a division of Big O Tires, Inc. and Carr's Tire Service, Inc., a Virginia corporation. (27.1) Big O Tires, Inc.'s Financial Data Schedule. b. Reports on Form 8-K On April 10, 1995, the Company filed a Current Report on Form 8-K dated April 6, 1995, which announced, under Item 5, that the Company received a proposal, subject to a number of conditions, from a group of the Company's franchisees and selected members of the Company's management (the "Acquisition Group") to acquire the Company for a cash price of $16 per share (the "Acquisition Proposal"). The Company also filed under Item 7, a copy of the Acquisition Proposal submitted to the Company's Investment Committee of the Board of Directors. On April 14, 1995, a Current Report on Form 8-K was filed announcing, under Item 5, that on April 13, 1995, the Company requested further negotiations with the Acquisition Group regarding the Acquisition Proposal. The Company also announced that the Investment Committee of the Board of Directors declined to reimburse the Acquisition Group for certain expenses incurred by the Acquisition Group in pursuing the proposal. The Acquisition Proposal which contained a number of conditions, including a request for advancement or reimbursement of certain expenses incurred by the Acquisition Group, expired by its terms at 5:00 p.m. on April 13, 1995. The Company also reported the adoption of certain amendments to the Company's bylaws, and filed the Second Amended and Restated Bylaws of the Company under Item 7. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 12, 1995 BIG O TIRES, INC. By: /s/ John B. Adams ---------------------------- John B. Adams Executive Vice President and Principal Financial Officer By: /s/ John B. Adams ---------------------------- John B. Adams Principal Accounting Officer 13 EXHIBIT INDEX Exhibit Page No. (10.1) Purchase Agreement dated March 22, 1995 15 effective March 31, 1995 by and between Tire Marketers Association, a division of Big O Tires, Inc. and Carr's Tire Service, Inc., a Virginia corporation. (27.1) Big O Tires, Inc.'s Financial Data Schedule. 30 14 EX-10 2 PURCHASE AGREEMENT THIS PURCHASE AGREEMENT ("Agreement") is made and entered into this as of the 22nd day of March, 1995, to be effective as of March 31, 1995, by and among TIRE MARKETERS ASSOCIATION, a division of Big O Tires, Inc., a Nevada corporation, having an address at 11755 East Peakview Avenue, Englewood, Colorado 80111 ("TMA") and CARR S TIRE SERVICE, INC., a Virginia corporation, having an address at 4040 Early Road, Harrisonburg, Virginia 22801 ("Carr"). RECITALS A. TMA operates a wholesale, private brands buying group, the members of which purchase private brand tires from TMA. B. TMA desires to sell and transfer to Carr and Carr desires to purchase and acquire from TMA certain assets, properties and trademarks used in the operation of the wholesale, private brands buying group. AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants, promises and agreements contained herein and other good and valuable consideration, the receipt, adequacy and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 1. AGREEMENT TO SELL Section 1.1. TMA Agreement to Sell; Contract Rights; Property to be Sold. TMA hereby agrees to sell and, at the Closing (as defined herein), will transfer and deliver to Carr good and marketable title, free and clear of all liens or encumbrances, except "Permitted Encumbrances" (as hereinafter set forth), in and to the following tangible and intangible property of TMA owned or used by TMA in connection with the operation of the wholesale, private brands buying group (such tangible and intangible property hereinafter sometimes collectively referred to as "Purchased Assets"): (1) Lease deposits and other prepaid expenses as set forth on Exhibit A, Schedule of Prepaid Expenses and Deposits, attached hereto and incorporated herein by this reference, all of which have been incurred pursuant to TMA's business; (2) All equipment and furniture, fixtures and fixed assets of TMA's business as more particularly set forth on Exhibit B, Schedule of Furniture and Equipment, attached hereto and incorporated herein by this reference, located at and used in TMA's business; and (3) All ownership rights and interests in and to the trademarks "Sonic " and all other trademarks and proprietary rights held by TMA in the conduct of its business, including, without limitation, those set forth in Exhibit C, Trademarks, attached hereto and incorporated herein by this reference. Section 1.2 Receivables Excluded. It is the intention of the parties hereto that any of TMA's accounts receivables arising on or before the Closing Date, are hereby expressly excluded from this sale and purchase. As for discounts and annual volume bonuses from manufacturers and vendors of TMA, for periods that include January 1 through March 31, 1995, Big O Tires, Inc. will cash the checks covering such payments, hold the funds in trust for the TMA members and/or Carr and shall disburse such funds to the members of TMA, pursuant to the allocations and instructions Carr. 15 Section 1.3. Permitted Encumbrances. All of the Purchased Assets shall be sold, conveyed, transferred and assigned by TMA to Carr free and clear of all liens and encumbrances except for those set forth on Exhibit D, Schedule of Permitted Encumbrances (all of which are sometimes hereinafter collectively referred to as "Permitted Encumbrances"), attached hereto and incorporated by reference herein. Carr shall be permitted to conduct a UCC-1 Search of all public records to verify that only the Permitted Encumbrances exist as liens and encumbrances to the Purchased Assets. 2. AGREEMENT TO PURCHASE AND PURCHASE PRICE Section 2.1. Agreement to Purchase. Carr hereby agrees to purchase and will purchase, upon the terms and subject to the conditions of this Agreement, the Purchased Assets and will pay for the same in the manner and subject to the adjustment hereinafter set forth. Section 2.2. Calculation of Total Purchase Price. The total purchase price to be paid for the Purchased Assets hereunder calculated as of the date of this Agreement shall be the sum of the following: Trade Names "Tire Marketers Association" and "TMA"/ U.S. $ 500.00 Prepaid expenses and Lease Deposits U.S. $ 1,022.56 Furniture, Fixtures, Equipment, and Leasehold Improvements U.S. $ 16,000.00 Trademarks U.S. $ 47,477.44 Total U.S. $ 65,000.00 __________ Carr is taking whatever right, title, and interest that Big O Tires, Inc. ("Big O") has or may have in these trade names, with the understanding that Big O first used these trade names on or about June 1, 1993 and that such trade names are not registered. The parties hereto hereby agree to allocate for tax purposes the purchase price among the Purchased Assets in the manner provided above. Section 2.3. Payment of Purchase Price. The Purchase Price shall be U.S. $65,000.00, which shall be payable by Carr at Closing (as hereinafter defined), in cash or other immediate funds. Section 2.4 Closing Costs. TMA and Carr shall pay their own respective closing costs at Closing, except as otherwise provided herein. TMA and Carr shall sign and complete all customary or required documents. 3. REPRESENTATIONS, WARRANTIES, AND COVENANTS Section 3.1. Representations, Warranties, and Covenants of TMA. TMA represents, warrants and covenants to Carr as follows: (1) Corporate Organization, Good Standing, and Approval. TMA is a division of Big O, a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, with all necessary corporate power and authority to own and operate its properties and assets and to engage in the business or businesses in which it is engaged as and in the places where such business and/or properties now are operated, owned or leased. TMA has full power and authority to enter into this Agreement and effect the transactions contemplated to be effected by it under the terms of this Agreement and all necessary corporate acts have been taken to authorize the execution, delivery and performance of this Agreement. 16 (2) Absence of Undisclosed Liabilities. As of the Closing, there will be no creditors, liabilities or obligations of any nature, whether accrued, absolute, contingent, or otherwise, which relate to the Purchased Assets, except for Permitted Encumbrances. It is the intention of the parties that all liabilities and obligations of TMA, other than Permitted Encumbrances, related to the Purchased Assets shall either terminate or be paid and satisfied by TMA prior to or at the time of Closing. (3) Required Consents. All approvals and consents required for TMA and Big O to consummate the transactions contemplated hereby have been obtained or will be obtained by Closing. (4) Purchased Assets. TMA shall have and convey good, marketable and indefeasible title to the Purchased Assets, subject to the Permitted Encumbrances, to Carr on the Closing Date (as hereinafter defined). The equipment, furniture and fixtures are being sold and assigned to Carr hereunder in an "AS IS, WHERE IS" condition, without any warranties of any kind, express or implied or otherwise. Carr acknowledges that it has inspected and satisfied itself before Closing of the quality and condition of the Purchased Assets for all purposes and Carr accepts the same in their present condition without adjustments. (5) Proprietary Rights. Exhibit C, Trademarks, contains a listing of all of TMA's patents and applications therefore, registrations and applications for trademarks, service marks, and copyrights, as well as TMA's trade names ("Proprietary Rights"). The Proprietary Rights transferred pursuant to this Agreement constitute all proprietary rights necessary to the conduct of the TMA business being transferred to Carr, as presently conducted. Big O owns all such right, title and interest in and to all of such intangible property and, except as is specified in Exhibit C, Trademarks, there have been no claims made against Big O/TMA for the assertion of the invalidity, abuse, misuse or unenforceability of any of such rights and, to Big O s knowledge, there are no grounds for the same. Big O has made no claims against third parties relating to the Proprietary Rights transferred pursuant to this Agreement, Big O has not sent or received a notice of conflict with the asserted rights of others, and Big O/TMA have no such claims against third parties under consideration or evaluation. Except as disclosed in Exhibit C, Trademarks, TMA has no licenses of any proprietary rights to or from third parties and TMA knows of no unlicensed use of the intangible property transferred hereunder. To Big O's knowledge, the proprietary rights transactions contemplated by this Agreement will not impair any of the Proprietary Rights set forth on Exhibit C, Trademarks. Big O is not aware of any Permitted Encumbrances on any intangible property transferred hereunder. TMA has acted and prevented all known unlicensed uses of its property of which it was aware. The registrations and applications for registrations listed on Exhibit C, Trademarks are valid and subsisting. (6) Insurance. TMA now has in full force and effect fire, liability, casualty and such other insurance with respect to the business and assets of TMA, and TMA agrees pending Closing there will be no change or decrease in such insurance without express written consent of Carr. (7) No Other Commitment to Sell. None of the Purchased Assets are directly or indirectly in any manner subject to any written or oral commitment or arrangement, in whole or in part, for sale, transfer, assignment or disposition other than as contemplated by this Agreement. (8) Approvals/Enforceability. The board of directors of Big O has approved and authorized TMA's conveyance, assignment, transfer, and delivery of the Purchased Assets to Carr, as set forth in this Agreement, upon the terms and conditions provided herein, and have authorized the execution of this Agreement by its officers. Each and every term and provision of this Agreement and any other instruments and documents executed in connection herewith, including all Exhibits annexed hereto, constitute the valid and legally binding obligations of TMA and Big O and are enforceable against TMA and Big O in accordance with the terms thereof, except to the extent that enforceability thereof may be limited by general principles of equity and by bankruptcy, insolvency or other similar debtor relief laws affecting the enforceability of creditors' rights generally, may affect the same from time to time. 17 (9) No Unusual Promotional Activities. Between the date hereof and the Closing Date, except as contemplated by this Agreement, without the prior written consent of Carr, TMA will not undertake, beyond the normal and historical course of TMA's business, any special promotions or promotional activities (whether or not premiums, prizes or other inducements are offered or made available and whether or not any such activities have previously been conducted or undertaken by TMA), provided that nothing in this paragraph shall prevent solicitations or promotional activities or inducements which are conducted with Carr's consent. (10) Litigation. There are no outstanding judgments against TMA, which would materially adversely affect, or attach to create a lien upon the Purchased Assets being transferred and sold hereunder. There is no litigation, proceeding, or investigation pending or, to the knowledge of TMA and/or Big O, threatened against TMA or which TMA is a party, and which in the aggregate might result in any materially adverse change in the Purchased Assets being sold, assigned and conveyed hereunder, or which disputes the validity of any action to be taken pursuant to or in connection with the provisions of this Agreement. TMA does not have any reasonable grounds to know of any basis for such litigation, proceedings or investigations. (11) Affirmative Covenants as to Future Operations. Pending Closing, Big O/TMA will: (a) Access. Give Carr and its representatives full access during normal business hours to the property, books and records of TMA related to the Purchased Assets and furnish Carr with such information concerning the Purchased Assets as Carr may reasonably request. In the event the transactions herein contemplated are not consummated, Carr will return to Big O/TMA all materials and records supplied by Big O/TMA and will keep confidential allinformation which Carr has gathered with respect to the business of TMA. (b) Preservation of Business. Use its commercially reasonable efforts to preserve and expand the business of TMA, and to preserve the goodwill of the customers, suppliers and others having business relations with such TMA's business and to keep available to Carr the services of the present management personnel and employees of the TMA's business. (c) Obtain All Consents and Approvals. Obtain all consents and approvals required to consummate the transactions contemplated by this Agreement. (d) Timely Payment of Taxes/Filing of Returns. Timely pay any taxes accrued or incurred from and after the date hereof (which may attach to, or affect the Purchased Assets) and timely file or submit any returns and documents with respect thereto. (e) No Negotiations with Others. So long as Carr is reasonably pursuing the completion of the transactions contemplated by this Agreement, Big O will not afford any third party a similar right of access, or discuss with anyone other than Carr and its representatives, nor will Big O discuss or negotiate with, or solicit a bid from, anyone else involving the sale of the Purchased Assets or furnish financial or other information as to the business or operations of TMA to anyone for the purpose of any such discussions or negotiations or solicitation. 18 (f) Delivery of Documents. Deliver to Carr all agreements, contracts, deeds, bills of sale, indentures, agreements, contracts, mortgages, leases, licenses, files, correspondence, memoranda and other documents of like character and all required consents pertaining to the Purchased Assets. (g) Creditors/Waiver of Bulk Sales. Big O/TMA shall at or before Closing pay in full all creditors with respect to the TMA's business, except for those creditors as set forth on Exhibit D, Permitted Encumbrances. Big O/TMA and Carr acknowledge that each has waived and by this provision each does hereby waive any protections or rights which either may have or be entitled to pursuant to any provision of a bulk sale or bulk transfer, code, act, law, statute or uniform commercial code in effect pursuant to the laws of Virginia, Florida and Colorado as may be enacted or amended from time to time. Notwithstanding the foregoing affirmative covenants contained in this Section 3.1 (10)(a) through (g), all operations from the date hereof to Closing shall be for the sole benefit of TMA and not for Carr, and Big O shall not be liable to Carr for the operation of the TMA's business. Section 3.2. Carr's Representations, Warranties, and Covenants. Carr represents, warrants and covenants to TMA and Big O that: (1) Corporate Organization, Good Standing, and Approval. Carr is a corporation duly organized, validly existing, and in good standing under the laws of the State of Virginia, with all necessary corporate power and authority to own and operate its properties and assets and to engage in the business or businesses in which it is engaged as and in the places where such business and/or properties now are operated, owned or leased. Carr has full power and authority to enter into this Agreement and effect the transactions contemplated to be effected by it under the terms of this Agreement and all necessary corporate acts have been taken to authorize the execution, delivery and performance of this Agreement. (2) Capacity. This Agreement and all Exhibits attached hereto, and all other documents and instruments executed to consummate this Agreement, constitute valid, legal and binding obligations of Carr, enforceable in accordance with their respective terms except to the extent that enforceability thereof may be limited by general principles of equity and by bankruptcy, insolvency or other similar debtor relief laws affecting the enforceability of creditors' rights generally. (3) Performance of Executory Contracts. Carr will perform all of its assigned obligations after the Closing as required by this Agreement and each and every agreement or instrument executed and delivered in connection with the transaction to be consummated hereunder, except to the extent such are limited by general principles of equity and by bankruptcy, insolvency or other similar debtor relief laws. (4) Sales or Use Tax. Carr shall pay and hold Big O/TMA harmless from any sales or use tax due in respect of the purchase of the Purchased Assets. 19 4. CLOSING PROVISIONS Section 4.1. The Closing and Closing Date. The consummation of the purchase of the Purchased Assets described in Section I shall constitute the "Closing," and the date upon which such consummation takes place shall be the "Closing Date." The Closing shall take place at such time and place as mutually agreed upon by Carr and TMA, but in no case later than March 31, 1995, unless such Closing Date is extended by mutual agreement between the parties hereto. Section 4.2. Time of Essence/Remedies. Time is of the essence hereof. If any payment due hereunder is not paid, honored or tendered when due, or if any other obligation hereunder is not performed or waived as herein provided, there shall be the following remedies. If the Carr is in default, Big O may elect to treat this Agreement as canceled, in which case all payments and things of value received hereunder shall be forfeited and retained on behalf of TMA. If Big O is in default, Carr may elect to treat this Agreement as canceled, in which case all payments and things of value received hereunder shall be returned. Section 4.3. Documents, Certificates, Opinions, Etc., to be Delivered by TMA at the Closing. At the Closing, TMA shall deliver to Carr the following: (1) Delivery of Transfer Documents. A bill of sale, assignment, trademark assignments or such other documents conveying title to the Purchased Assets, as counsel for Carr may reasonably require, for the full transfer, conveyance, assignment, and delivery to Carr of all the Purchased Assets to be acquired by Carr hereunder. (2) Consents. All the consents, corporate resolutions, certificates, lists, opinions, and other matters required as conditions precedent hereunder. (3) Office Lease. Landlord shall consent to the assignment or sublease of TMA s offices at 19321 U.S. 19 North, Suite 410, Clearwater, Florida. (4) Other Agreements and Instruments. The execution and delivery of any other agreements and/or instruments as may be reasonably required to consummate this Agreement. (5) Certificate. A certificate executed by an appropriate officer of Big O/TMA certifying that all representations, warranties and covenants contained herein made by, or to be performed by, TMA are true, complete and correct, and fully performed as of Closing. Section 4.4. Documents to be Delivered by Carr at the Closing. At the Closing, Carr shall deliver to TMA the following: (1) Payment of Purchase Price. Cash, certified or bank cashier's checks or by wire transfer to the account of Big O Tires, Inc. the amount required to be paid under Section 2.3 hereof. (2) Assignment or Sublease of TMA s Office. Carr shall provide evidence satisfactory to TMA that it has been able to take assignment or sublease TMA's office from TMA, with landlord s consent. (3) Other Agreements and Instruments. The execution and delivery of the other agreements and instruments as may be reasonably required to consummate this Agreement. 20 (4) Consents. All the consents, corporate resolutions, certificates, lists, opinions, and other matters required as conditions precedent hereunder. (5) Certificate. A certificate executed by Carr certifying that all representations, warranties and covenants contained herein made by, or to be performed by Carr are true, complete and correct and fully performed as of Closing. 5. CONDITIONS PRECEDENT Section 5.1. Conditions Precedent to Carr's Obligation to Consummate this Transaction. The obligations of Carr hereunder are, at the option of Carr, subject to compliance with, at or prior to Closing, each of the following conditions precedent: (1) Delivery of Transfer Documents. Big O/TMA shall have delivered at Closing all conveyances and other transfer documents and other instruments required hereunder. (2) Compliance With Agreement. Big O/TMA shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by it prior to or at Closing. (3) Representations True. All the representations, warranties and covenants of TMA contained in this Agreement shall be substantially true and without material change adverse to Carr as of Closing. (4) Consents and Approvals. TMA and Carr shall have received any approvals or consents to the transfer or assignment (without material adverse changes in terms and conditions to those now held by TMA) of any and all of the Purchased Assets to be transferred to Carr hereunder and which are not assignable at the sole instance of Big O/TMA and which require the consent or agreement of third parties. (5) Other Agreements and Instruments. Big O/TMA shall have executed and delivered at Closing the other agreements and/or instruments as are reasonably required to consummate this Agreement. (6) Carr's Satisfaction With Due Diligence Review. Carr shall have finalized, and in its sole and absolute discretion be satisfied in all respects with, its review of all financial statements provided to Carr by TMA relating to the TMA's business and the condition of all Purchased Assets and Carr shall have reviewed and in its sole and absolute discretion be satisfied in all respects with the disclosures set forth in Big O s/TMA's disclosures and other documents delivered in connection therewith. Section 5.2. Condition Precedent to the Obligations of TMA to Consummate this Transaction. The obligations of Big O/TMA under this Agreement are, at the option of Big O/TMA, subject to compliance with, at or prior to Closing, each of the following conditions precedent: (1) Compliance With Agreement. Carr shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with prior to or at Closing. (2) Other Agreements and Instruments. Carr shall have executed and delivered at Closing all other agreements and/or instruments as reasonably required to consummate this Agreement, including without limitation, the assignment or sublease of TMA s office space, with landlord's consent. 21 (3) Payment of Purchase Price. Carr shall have delivered at Closing cash, certified or bank cashier's checks or by wire transfer to Big O s account the amounts required to be paid under Section 2.3 hereof. (4) Representations True. All representations, warranties and covenants of Carr shall be substantially true and without change material adverse to TMA as of Closing. 6. TERMINATION Section 6.1. Non-Performance. Either Carr or Big O/TMA shall have the right to terminate this Agreement at or prior to Closing in the event that the other shall default in the performance of any of its material obligations to be performed hereunder, or should any covenant, warranty, or representation made by the other party in this Agreement prove to be incorrect in any material sense, provided, however, that the party against whom such termination is to be imposed shall have the right, for ten (10) days after receiving written notice from the other of the alleged default, to correct or satisfy any condition or covenant necessary to consummation of this Agreement. Section 6.2. Risk of Loss. Any loss for fire, explosion, earthquake, windstorm, accident, flood, act of God, war, seizure or activities of the Armed Forces, or other casualty, reasonable wear and tear excepted, until Closing hereunder, shall be the responsibility of Big O/TMA. Big O/TMA shall immediately notify Carr of the inability to complete restoration of any of the Purchased Assets that may be so lost and Carr, at any time within fifteen (15) days after such notice, may elect to either (1) accept the proceeds of any insurance coverage and consummate the transaction or (2) terminate this Agreement, in which event all parties hereto shall stand fully released and discharged of any and all obligations hereunder. 7. SURVIVAL OF WARRANTIES AND INDEMNIFICATION Section 7.1. Survival of Covenants, Representations, and Warranties. The covenants, representations, warranties, and agreements contained herein are and shall be deemed and construed to be continuing covenants, representations, warranties and agreements, of TMA, on the one hand, and Carr, on the other hand. 8. MISCELLANEOUS PROVISIONS Section 8.1. Commissions. Big O/TMA shall indemnify Carr against any claims for the payment of brokerage commissions or finder's fees in connection with negotiations with Carr leading up to the execution of this Agreement and arising out of any alleged agreement, commitment, or obligation of TMA. Carr, in like manner shall indemnify Big O/TMA against similar claims arising out of any alleged agreement, commitment, or obligation made or entered into by it or on its behalf. Section 8.2. Further Assurances. From time to time after the Closing Date, TMA shall, if requested by Carr, make, execute, and deliver to Carr such additional assignments, bills of sale and other instruments of transfer as may be necessary or proper to transfer to Carr all TMA's right, title and interest in and to the Purchased Assets, and obtain for Carr any consents to any such instruments by third parties necessary to make the same valid and effective. Carr shall likewise execute and deliver to TMA any instruments or documents necessary to carry out the intent and purpose of this Agreement. Section 8.3. Notices. Any notice, request, consent and demand which is required or given hereunder shall be in writing and shall be deemed effective and received (a) upon personal delivery to the proper party, (b) on the day transmitted by telecopier, if on a business day, and if not transmitted on a business day, the first business day thereafter, to the proper party via the 22 telecopier number stated below, three (3) business days after deposit in the United States mail by registered or certified mail, postage prepaid, return receipt requested, addressed to the proper party at the address stated below, or (d) one (1) business day after deposit with an air express carrier, fare prepaid, addressed to the proper party at the address stated below. Each of the parties hereto may designate such other address and/or telecopier number as either of such parties may hereafter specify in writing to the other party. (1) If to Big O/TMA: John B. Adams Executive Vice President Big O Tires, Inc. 11755 East Peakview Avenue Englewood, Colorado 80111 (303) 790-2800 (303) 790-0225 Telecopier Number With copies to: Don Dominguez, Executive Vice President Tire Marketers Association 19321 U.S. Highway 19, North, Suite 410 Clearwater, Florida 34624-3142 (813) 530-5090 (813) 535-6693 Telecopier Number (2) If to Carr: Terry W. Bowman President Carr's Tire Service, Inc. 4040 Early Road Harrisburg, Virginia 22801 (800) 289-2445 (703) 434-5744 Telecopier Number With copies to: Michael L. Layman, Esq. and/or Steven C. Rhodes, Esq. Layman & Nichols 268 Newman Avenue Harrisonberg, Virginia 22801 (703) 433-2121 (703) 433-7296 Telecopier Number or to such other address or addresses as may hereafter be specified by notice given by any of the above to the others. Section 8.4. Applicable Law. The parties hereto agree that this Agreement shall be deemed to have been executed and delivered in the state of Colorado and it shall be governed and construed and enforced in accordance with the laws of the state of Colorado. Section 8.5. Parties in Interest. All agreements made and entered into in connection with this transaction shall be binding upon and inure to the benefit of the parties hereto, their heirs, personal representatives, successors and assigns. Section 8.6. Attorneys Fees and Court Costs. In the event of any dispute between the parties hereto with respect to the terms and conditions hereof or performance hereunder, the prevailing party shall be entitled to all costs of enforcement including court costs, attorneys' and accountants' fees and costs of arbitration. 23 Section 8.7. Taxes and Expenses. Carr shall pay all sales, use, or other transfer taxes payable in connection with or as a result of the sale and transfer contemplated by this Agreement; otherwise each party shall bear its own expenses and costs in connection with its performance and/or compliance with the terms of this Agreement. Section 8.8. Captions. The captions of Articles and of Sections are for convenience only and shall not control or affect the meaning or construction of any of the provisions of this Agreement. Section 8.9. Entire Agreement--Alteration or Amendment. This Agreement merges all previous negotiations between the parties hereto and constitutes the entire agreement and understanding between the parties with respect to the subject matter of this Agreement. No alteration, modification or change of this Agreement shall be valid except by like instrument. Section 8.10. Counterparts. This Agreement may be signed in any number of counterparts with the same effect as if the signatures to each counterpart were not on the same instrument. WITNESS the due execution hereof as of the date first above written. "TMA": TIRE MARKETERS ASSOCIATION, a division of Big O Tires, Inc., a Nevada corporation By: /s/ Steven P. Cloward ------------------------------------ Steven P. Cloward, President Big O Tires, Inc. "CARR": CARR'S TIRE SERVICE, INC. a Virginia corporation By: /s/ Terry W. Bowman ----------------------------------- Terry W. Bowman, President Its: President 24 EXHIBIT A SCHEDULE OF PREPAID EXPENSES AND DEPOSITS Lease Deposit for TMA s office $947.87 Facsimile Machine Deposit 74.69 $1,022.56 25 EXHIBIT B SCHEDULE OF FURNITURE AND EQUIPMENT BIG O TIRES, INC. BIG O TIRES, INC. ID NO. 87-0392481 Page 1 27. Location Book Depreciation Report Calculated to: 12/31/94 Time: 01:03:09 PM Date: 02/07/95 ================================================================= Asset Date Date Asset Location Class Acquired Disposed Number Description ================================================================= 2180 1615 06/08/93 943 4 DRWR METAL FILE CB 2180 1615 06/08/93 944 4 DRWR METAL FILE CB 2180 1615 06/08/93 945 4 DRWR METAL FILE CB 2180 1615 06/08/93 946 4 DRWR METAL FILE CB 2180 1615 06/08/93 947 5 DRWR METAL FILE CB 2180 1615 06/08/93 948 5 DRWR METAL FILE CB 2180 1615 06/08/93 949 2 DRWR METAL FILE CB 2180 1615 06/08/93 950 CONFERENCE TABLE 7' 2180 1615 06/08/93 952 PADDED SWIVEL CHAIR 2180 1615 06/08/93 953 PADDED SWIVEL CHAIR 2180 1615 06/08/93 954 PADDED SWIVEL CHAIR 2180 1615 06/08/93 955 PADDED SWIVEL CHAIR 2180 1615 06/08/93 956 PADDED SWIVEL CHAIR 2180 1615 06/08/93 957 PADDED SWIVEL CHAIR 2180 1615 06/08/93 958 PADDED SWIVEL CHAIR 2180 1615 06/08/93 959 PADDED SWIVEL CHAIR 2180 1615 06/08/93 960 PADDED SWIVEL CHAIR 2180 1615 06/08/93 961 SECRETARY CHAIR 2180 1615 06/08/93 962 SECRETARY CHAIR 2180 1615 06/08/93 963 EXECUTIVE WOOD DESK 2180 1615 06/08/93 964 DESK/TYPEWRITER TABL 2180 1615 06/08/93 965 6 DRWR DESK(SECRTRY) 2180 1615 06/08/93 966 SECRETARY DESK 2180 1615 06/08/93 967 WOOD OCTAGON TABLE 2180 1615 06/08/93 968 WOOD TABLE (SQUARE) 2180 1615 06/08/93 969 REFRIGERATOR 2180 1615 06/08/93 970 2 DRWR FILE CABINET 2180 1615 06/08/93 971 RICOH COPY MACHINE 2180 1615 06/08/93 972 LANIER COPY MACHINE 2180 1615 06/08/93 973 PANASONIC TYPEWRITER 2180 1615 06/08/93 974 PANASONIC TYPEWRITER 2180 1615 06/08/93 975 STAMP MACH-PIT BOWES 2180 1615 06/08/93 976 MAILING MACHINE 2180 1615 06/08/93 977 DUOFONE ANSWER MACH. 2180 1615 06/08/93 1,044 TELEPHONE SYSTEM 2180 1615 06/08/93 1,217 CANNON 6030 COPIER 2180 1625 09/23/94 1,241 PRESARIO 486SX 2180 1625 09/23/94 1,242 DESKJET 560C PRINTER 2180 1625 09/27/94 1,244 HP SCANJET COLOR 2180 1627 09/23/94 1,243 EXCEL 5.0 ================================================================= ASSET STATE BOOK BOOK BOOK DEPR BOOK DEPRECIATION NET NUMBER LOCATION LIFE COST MONTH YTD LTD VALUE ================================================================== 943 FL 10 50 0 5 8 42 944 FL 10 50 0 5 8 42 945 FL 10 50 0 5 8 42 946 FL 10 50 0 5 8 42 947 FL 10 50 0 5 8 42 948 FL 10 50 0 5 8 42 949 FL 10 100 1 10 16 84 950 FL 10 300 3 30 47 253 951 FL 10 30 0 3 5 25 952 FL 10 30 0 3 5 25 953 FL 10 30 0 3 5 25 954 FL 10 30 0 3 5 25 955 FL 10 30 0 3 5 25 956 FL 10 30 0 3 5 25 957 FL 10 30 0 3 5 25 958 FL 10 30 0 3 5 25 959 FL 10 30 0 3 5 25 960 FL 10 30 0 3 5 25 961 FL 10 50 0 5 8 42 962 FL 10 50 0 5 8 42 963 FL 10 400 3 40 63 337 964 FL 10 100 1 10 16 84 965 FL 10 200 2 20 32 168 966 FL 10 100 1 10 16 84 967 FL 10 200 2 20 32 168 968 FL 10 200 2 20 32 168 969 FL 10 100 1 10 16 84 970 FL 10 100 1 10 16 84 971 FL 3 2,000 56 667 1,056 944 972 FL 3 2,000 56 667 1,056 944 973 FL 3 100 3 33 52 48 974 FL 3 100 3 33 52 48 975 FL 3 100 3 33 52 48 976 FL 3 200 6 67 106 94 977 FL 3 200 6 67 106 94 1,044 FL 10 1,839 15 184 245 1,594 1,217 FL 5 7,383 124 739 739 6,644 --------------------------------------------- Location Total 16,422 289 2,740 3,864 12,558 --------------------------------------------- --------------------------------------------- Class Total 16,422 289 2,740 3,864 12,558 --------------------------------------------- 1,241 FL 3 1,837 51 153 153 1,684 1,242 FL 3 568 16 47 47 521 1,244 FL 3 1,068 30 89 89 979 --------------------------------------------- Location Total 3,573 100 322 341 3,232 --------------------------------------------- --------------------------------------------- Class Total 3,573 100 322 341 3,232 --------------------------------------------- 1,243 FL 3 321 9 27 27 294 --------------------------------------------- Location Total 321 9 27 27 294 --------------------------------------------- --------------------------------------------- Class Total 321 9 27 27 294 --------------------------------------------- --------------------------------------------- GRAND TOTALS 20,316 398 3,089 4,232 16,084 LESS: DISPOSITIONS 0 0 0 0 0 --------------------------------------------- NET TOTALS 20,316 398 3,089 4,232 16,084 ============================================= 26 & 27 EXHIBIT C SCHEDULE OF TRADEMARKS MARK REGISTRATION # REGISTRATION DATE/ APPLICATION # APPLICATION DATE PROTECTORS OF SAFETY SAXON & DESIGN REG. # 1,024,138 NOVEMBER 4, 1975 SONIC VAGABOND REG. # 996,459 OCTOBER 22, 1974 MAXIMA REG. # 926,329 DECEMBER 28, 1971 SONIC & DESIGN REG. # 890,380 MAY 5, 1970 SONIC REG. # 891,936 JUNE 2, 1970 WINTER SONIC REG. # 805,581 MARCH 15, 1966 SONIC COMMERCIAL REG. # 805,578 MARCH 15, 1966 ULTRA SONIC REG. # 805,577 MARCH 15, 1966 SONIC REG. # 805,575 MARCH 15, 1966 SUPER SONIC REG. # 805,574 MARCH 15, 1966 28 EXHIBIT D PERMITTED ENCUMBRANCES None 29 EX-27 3
5 3-MOS DEC-31-1995 MAR-31-1995 343,000 0 11,658,000 799,000 18,191,000 33,153,000 26,743,000 5,400,000 70,735,000 11,148,000 0 334,000 0 0 35,501,000 70,735,000 29,153,000 29,153,000 22,413,000 22,413,000 5,846,000 0 396,000 498,000 209,000 289,000 0 0 0 289,000 .09 .09
-----END PRIVACY-ENHANCED MESSAGE-----