3,675,000 SHARES
CROSS-CONTINENT AUTO RETAILERS, INC.
COMMON STOCK, PAR VALUE $.01 PER SHARE
UNDERWRITING AGREEMENT
September __, 1996
September __, 1996
Morgan Stanley & Co. Incorporated
Furman Selz LLC
Rauscher Pierce Refsnes, Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Cross-Continent Auto Retailers, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters named in
Schedule I hereto (the "Underwriters"), an aggregate of 3,675,000 shares of
common stock, par value $.01 per share, of the Company (the "Firm Shares").
Certain stockholders of the Company (the "Selling Stockholders") named
in Schedule II hereto propose to sell not more than an aggregate of 551,250
shares of common stock, par value $.01 per share of the Company (together, the
"Additional Shares"), each Selling Stockholder selling up to the amount set
forth opposite such Selling Stockholder's name in Schedule II hereto, if and to
the extent that you, as Managers of the offering, shall have determined to
exercise, on behalf of the Underwriters, the right to purchase such shares of
common stock granted to the Underwriters in Section 3 hereof. The Firm Shares
and the Additional Shares are hereinafter collectively referred to as the
"Shares." The shares of common stock, par value $.01 per share, of the Company
to be outstanding after giving effect to the sales contemplated hereby are
hereinafter referred to as the "Common Stock." The Company and the Selling
Stockholders are hereinafter sometimes collectively referred to as the
"Sellers."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it becomes effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement"; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the "Prospectus."
If the Company files a registration statement to register a portion of the
Shares and relies on Rule 462(b) for such registration statement to become
effective upon filing with the Commission (the "Rule 462(b) Registration
Statement"), then any reference to the "Registration Statement" shall be deemed
to refer to both the registration statement referred to above and the Rule
462(b) Registration Statement, in each case as amended from time to time.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.
(b) (i) The Registration Statement, when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading, (ii) the Registration Statement and the Prospectus comply
and, as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and regulations
of the Commission thereunder and (iii) the Prospectus does not contain and,
as amended or supplemented, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph (b) do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of Delaware, has the corporate
power and authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole.
(d) Each of Lynn Hickey Dodge, Inc., Midway Chevrolet, Inc., Plains
Chevrolet, Inc., Westgate Chevrolet, Inc., Quality Nissan, Inc.,
Performance Nissan, Inc., Performance Dodge, Inc., Working Man's Credit
Plan, Inc. and Allied 2000 Collision Center, Inc. has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole.
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(e) This Agreement has been duly authorized, executed and delivered
by the Company.
(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.
(g) The shares of Common Stock (including the Shares to be sold by
the Selling Stockholders) outstanding prior to the issuance of the Shares
to be sold by the Company have been duly authorized and are validly issued,
fully paid and non-assessable.
(h) The Shares to be sold by the Company have been duly authorized
and, when issued and delivered in accordance with the terms of this
Agreement, will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or similar
rights.
(i) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the certificate of incorporation or by-
laws of the Company or any agreement or other instrument binding upon the
Company or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement).
(k) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or to
which any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
(l) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424
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or Rule 462 under the Securities Act, complied when so filed in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(m) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of the proceeds thereof as described
in the Prospectus, will not be an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(n) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(o) There are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement.
(p) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (1) the Company and
its subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (2) the Company has not purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any
dividend or distribution of any kind on its capital stock; and (3) there
has not been any material change in the capital stock, short-term debt or
long-term debt of the Company and its consolidated subsidiaries, except in
each case as described in or contemplated by the Prospectus and except, in
the case of a change in short-term debt relating to a corresponding change
in inventory, as occurs in the ordinary course of the Company's business.
(q) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all
personal property owned by them which is material to the business of the
Company and its subsidiaries, in each case free and clear of all liens,
encumbrances and defects except such as are described in the Prospectus or
such as do not materially affect the value of such
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property and do not interfere with the use made and proposed to be made of
such property by the Company and its subsidiaries; and any real property
and buildings held under lease by the Company and its subsidiaries are held
by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to
be made of such property and buildings by the Company and its subsidiaries,
in each case except as described in or contemplated by the Prospectus.
(r) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, or, to the knowledge of the Company, is
imminent; and the Company is not aware of any existing, threatened or
imminent labor disturbance by the employees of any of its principal
suppliers, manufacturers (other than with respect to the upcoming contract
negotiations between General Motors Corporation and Chrysler Corporation
and representatives of the International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America (UAW) as described
in the Prospectus) or contractors that would reasonably be expected to
result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and
its subsidiaries, taken as a whole.
(s) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company nor any such subsidiary has been refused
any insurance coverage sought or applied for; and neither the Company nor
any such subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or
to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely
affect the condition, financial or otherwise, or the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus.
(t) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses, except where the lack of such certificates, authorizations and
permits would not, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole, and neither
the Company nor any such subsidiary has received any notice of proceedings
relating to the revocation or modification of any such certificate,
authorization or permit which, singly or in the aggregate, if the subject
of an unfavorable decision, ruling or finding, would result in a material
adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries, taken
as a whole, except as described in or contemplated by the Prospectus.
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(u) Neither the Company nor any of its subsidiaries is in violation
of any federal or state law or regulation relating to occupational safety
and health and the Company and its subsidiaries have received all permits,
licenses or other approvals required of them under applicable federal and
state occupational safety and health laws and regulations to conduct their
respective businesses, and the Company and each such subsidiary is in
compliance with all terms and conditions of any such permits, licenses or
approvals, except any such violation of law or regulation, failure to
receive required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals which
would not, singly or in the aggregate, result in a material adverse change
in the condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, except as
described in or contemplated by the Prospectus.
(v) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's general
or specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (3)
access to assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(w) As of the date the Registration Statement becomes effective, the
Common Stock will be authorized for listing on the New York Stock Exchange
(the "NYSE"), subject to official notice of issuance.
(x) The Company and its subsidiaries are in compliance with any and
all applicable foreign, federal, state and local laws and regulations,
except where such non-compliance would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken
as a whole; the franchise agreements, in each case between a subsidiary of
the Company and General Motors Corporation, Chrysler Corporation, or Nissan
Motor Corporation U.S.A. (collectively, the "Manufacturers"), have been
duly authorized by the Company and such subsidiaries and are valid and
binding agreements of the Company and such subsidiaries, enforceable in
accordance with their terms; and the Company has obtained all consents,
authorizations and approvals from the Manufacturers required to conduct the
public offering of Common Stock as contemplated hereby.
(y) The Company has complied with all provisions of Section 517.075,
Florida Statutes relating to doing business with the Government of Cuba or
with any person or affiliate located in Cuba.
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2. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS AND
THE EXECUTIVE SELLING STOCKHOLDERS.
(a) Each of the Selling Stockholders represents and warrants to and
agrees with each of the Underwriters that:
(i) Each Selling Stockholder which is a limited partnership has
been duly formed, is validly existing as a limited partnership under
the laws of Texas and has the power and authority to execute, deliver
and perform its respective obligations under this Agreement and the
Irrevocable Power of Attorney and Custody Agreement signed by such
Selling Stockholder and the Company, as Custodian, relating to the
deposit of the Additional Shares to be sold by such Selling
Stockholder, appointing certain individuals as such Selling
Stockholder's attorneys-in-fact to the extent set forth therein, and
relating to the transactions contemplated hereby and by the
Registration Statement (the "Power of Attorney and Custody
Agreement").
(ii) This Agreement has been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder.
(iii) The execution and delivery by such Selling Stockholder
of, and the performance by such Selling Stockholder of its obligations
under, this Agreement and the Power of Attorney and Custody Agreement
will not contravene any provision of applicable law, or the agreement
of limited partnership of such Selling Stockholder (if such Selling
Stockholder is a limited partnership), or any agreement or other
instrument binding upon such Selling Stockholder or any judgment,
order or decree of any governmental body, agency or court having
jurisdiction over such Selling Stockholder, and no consent, approval,
authorization or order of, or qualification with, any governmental
body or agency is required for the performance by such Selling
Stockholder of its obligations under this Agreement or the Power of
Attorney and Custody Agreement of such Selling Stockholder, except
such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Shares.
(iv) Such Selling Stockholder has, and on the Option Closing
Date (as defined below) will have, valid title to the Additional
Shares to be sold by such Selling Stockholder and the legal right and
power, and all authorization and approval required by law, to enter
into this Agreement, the Power of Attorney and Custody Agreement and
to sell, transfer and deliver the Additional Shares to be sold by such
Selling Stockholder.
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(vi) The Power of Attorney and Custody Agreement has been duly
authorized, executed and delivered by such Selling Stockholder and is
a valid and binding agreement of such Selling Stockholder.
(vii) Delivery of the Additional Shares to be sold by such
Selling Stockholder pursuant to this Agreement will pass title to such
Additional Shares free and clear of any security interests, claims,
liens, equities and other encumbrances.
(b) Each of the stockholders of the Company (the "Executive Selling
Stockholders") named in Schedule IV hereto represents and warrants to and
agrees with each of the Underwriters that: (i) The Registration Statement,
when it became effective, did not contain and, as amended or supplemented,
if applicable, will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) the Registration Statement
and the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and (iii) the
Prospectus does not contain and, as amended or supplemented, if applicable,
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this paragraph 2(b) do not
apply to statements or omissions in the Registration Statement or the
Prospectus based upon information relating to any Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use
therein.
3. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell to
the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company at $______ a share (the "Purchase Price") the respective numbers of Firm
Shares (subject to such adjustments to eliminate fractional shares as you may
determine) set forth in Schedule I hereto opposite the name of such Underwriter.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, each Selling Stockholder,
severally and not jointly, agrees to sell to the Underwriters the Additional
Shares (PROVIDED that if the Underwriters elect to purchase less than all of the
Additional Shares, the number of Additional Shares to be sold by each Selling
Stockholder shall be reduced PRO RATA (subject to such adjustment to eliminate
fractional shares as you may determine) based upon the maximum number of
Additional Shares that may be sold by the Selling Stockholders), and the
Underwriters shall have a one-time right to purchase, severally and not jointly,
up to 551,250 Additional Shares at the Purchase Price. If you, on behalf of the
Underwriters, elect to exercise such option, you shall so notify the Selling
Stockholders in writing not later than 30 days after the date of
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this Agreement, which notice shall specify the number of Additional Shares to be
purchased by the Underwriters and the date on which such shares are to be
purchased. Such date may be the same as the Closing Date (as defined below) but
not earlier than the Closing Date nor later than ten business days after the
date of such notice. Additional Shares may be purchased as provided in Section
5 hereof solely for the purpose of covering over-allotments made in connection
with the offering of the Firm Shares. If any Additional Shares are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase the
number of Additional Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the total number
of Additional Shares to be purchased as the number of Firm Shares set forth in
Schedule I hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.
Each Seller hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period commencing on the date hereof and ending 180 days after the
date of the Prospectus, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (provided that such shares
or securities are either now owned by such Selling Stockholder or are hereafter
acquired prior to or in connection with the public offering of the Shares) or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the Shares to be sold
hereunder (B) any options or similar securities issued pursuant to the Company's
1996 Stock Option Plan, as such plan is in effect on the date hereof, and (C)
any shares of Common Stock issued by the Company upon the exercise of any option
outstanding on the date hereof as disclosed in the Prospectus; PROVIDED,
HOWEVER, that any shares acquired by a Seller upon the exercise of such options
within such 180 day period shall become subject to such agreement. In addition,
each Selling Stockholder agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period commencing on the date hereof and ending 180 days after the
date of the Prospectus, make any demand for, or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock.
4. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Sellers are further
advised by you that the Shares are to be offered to the public initially at
$__________ a share (the "Public Offering Price") and to certain dealers
selected by you at a price that represents a concession not in excess of $______
a share under the Public Offering Price, and that any Underwriter may allow, and
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such dealers may reallow, a concession, not in excess of $_____ a share, to any
Underwriter or to certain other dealers.
5. PAYMENT AND DELIVERY. Payment for the Firm Shares to be sold by
the Company shall be made to the Company in Federal or other funds immediately
available in New York City against delivery of such Firm Shares for the
respective accounts of the several Underwriters at the office of Shearman &
Sterling, 599 Lexington Avenue, New York, New York, at 10:00 A.M., local time,
on [Pricing Date + 3 business days or 4 business days if pricing occurs after
4:30 P.M.], 1996, or at such other time on the same or such other date, not
later than [Closing Date + 5 business days], 1996, as shall be designated in
writing by you. The time and date of such payment are hereinafter referred to
as the "Closing Date."
The Underwriters agree to reserve a maximum of 183,750 of the Firm
Shares for offering and sale to certain employees of the Company and its
subsidiaries (and to certain other persons designated by the Company) at the
public offering price (the "Directed Share Program"). Any such shares not
purchased by such persons by the end of the first business day after either (a)
the date on which the Registration Statement has become effective, or (b) if the
Company has elected to rely upon Rule 430A, the date of this Agreement, will be
offered to the public by the Underwriters as set forth in the Prospectus.
Payment for any Additional Shares shall be made to the Selling
Stockholders in Federal or other funds immediately available in New York City
against delivery of such Additional Shares for the respective accounts of the
several Underwriters at the office of Shearman & Sterling, 599 Lexington Avenue,
New York, New York, at 10:00 A.M., local time, on the date specified in the
notice described in Section 3 or on such other date, in any event not later than
[Exercise Date + 10 business days], 1996, as shall be designated in writing by
you. The time and date of such payment are hereinafter referred to as the
"Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the Purchase Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Sellers to sell the Shares to the Underwriters and the several obligations
of the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than the date hereof.
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The several obligations of the Underwriters are subject to the
following further conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential downgrading or
of any review for a possible change that does not indicate the
direction of the possible change, in the rating accorded any of the
Company's securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or operations of
the Company and its subsidiaries, taken as a whole, from that set
forth in the Prospectus (exclusive of any amendments or supplements
thereto subsequent to the date of this Agreement) that, in your
judgment, is material and adverse and that makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in clause (a)(i) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.
The officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date a
certificate from each Selling Stockholder, dated the Closing Date and
signed by such Selling Stockholder, or by an Attorney-in-Fact thereof on
behalf of such Selling Stockholder, to the effect that the representations
and warranties of such Selling Stockholder contained in this Agreement are
true and correct as of the Closing Date and that such Selling Stockholder
has complied with all of the agreements and satisfied all of the conditions
on its part to be performed or satisfied hereunder on or before the Closing
Date.
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(d) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, in the form of Exhibit E hereto.
(e) The Underwriters shall have received on the Closing Date an
opinion of Howard, Darby & Levin, outside counsel for the Company, dated
the Closing Date, in the form of Exhibit B hereto.
(f) The Underwriters shall have received on the Closing Date (i) an
opinion of Sprouse, Mozola, Smith & Rowley, P.C., special Texas and
Oklahoma counsel for the Company, dated the Closing Date, in the form of
Exhibit C hereto.
(g) The Underwriters shall have received on the Closing Date an
opinion of Mullin, Hoard & Brown, LLP, counsel for the Selling
Stockholders, dated the Closing Date, to the effect set forth on Exhibit D
hereto.
(h) The Underwriters shall have received on the Closing Date an
opinion of Shearman & Sterling, counsel for the Underwriters, dated the
Closing Date, with respect to the Registration Statement and the Prospectus
and such other related matters as you may reasonably request, and such
counsel shall have received such documents and information as they may
reasonably request to enable them to pass upon such matters.
With respect to subparagraph (xi) of Exhibit B, Howard, Darby & Levin
and Shearman & Sterling may state that their opinion and belief are based
upon their participation in the preparation of the Registration Statement
and Prospectus and any amendments or supplements thereto and review and
discussion of the contents thereof, but are without independent check or
verification, except as specified. With respect to Exhibit D, Mullin,
Hoard & Brown, LLP may rely, with respect to factual matters and to the
extent such counsel deems appropriate, upon the representations of each
Selling Stockholder contained herein and in the Power of Attorney and
Custody Agreement of such Selling Stockholder and in other documents and
instruments; PROVIDED that copies of such Power of Attorney and Custody
Agreements and of any such other documents and instruments shall be
delivered to you and shall be in form and substance reasonably satisfactory
to your counsel.
(i) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance reasonably satisfactory to the
Underwriters, from Price Waterhouse LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus dated the date hereof or the
Closing Date.
12
(j) The "lock-up" agreements, each substantially in the form of
Exhibit A hereto, between you and the stockholders, officers and directors
of the Company listed on Schedule III hereto relating to sales and certain
other dispositions of shares of Common Stock or certain other securities,
delivered to you on or before the date hereof, shall be in full force and
effect on the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the delivery to you on the Option Closing Date
of such documents and legal opinions as you may reasonably request with respect
to the good standing of the Company, the valid title to the Additional Shares
sold by the Selling Stockholders and other matters related to the sale of the
Additional Shares.
7. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, four signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and, during the period mentioned in paragraph
(c) below, as many copies of the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request. In the case of the Prospectus, to use its reasonable best efforts
to furnish to you copies of the Prospectus in New York City prior to 5:00
p.m., on the business day next succeeding the date of this Agreement, in
such quantities as you reasonably request.
(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to
which you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of counsel for the Underwriters
the Prospectus is required by law to be delivered in connection with sales
by an Underwriter or dealer, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Underwriters, it is necessary to amend or
supplement the Prospectus to comply with applicable law, forthwith to
prepare, file with the Commission and furnish, at its own expense, to the
Underwriters and to the dealers (whose names and addresses you will furnish
to the Company) to which Shares may have been sold by you on behalf of the
Underwriters and to any other dealers upon
13
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in
light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; PROVIDED, HOWEVER, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign
corporation in any jurisdiction in which it is not so qualified.
(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder covering a twelve-month period
beginning after the effective date of the Registration Statement but not
later than the first day of the Company's fiscal quarter next following
such twelve-month period.
(f) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid
all expenses incident to the performance of its obligations and the
obligations of the Selling Stockholders (other than expenses agreed to be
paid by the Selling Stockholders under Section 8) under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's
counsel and the Company's accountants in connection with the registration
and delivery of the Shares under the Securities Act and all other fees or
expenses in connection with the preparation and filing of the Registration
Statements and the Registration Statement on Form 8-A, any preliminary
prospectus, the Prospectus and amendments and supplements to any of the
foregoing, including all printing costs associated therewith, and the
mailing and delivering of copies thereof to the Underwriters and dealers,
in the quantities hereinabove specified, (ii) all costs and expenses
related to the transfer and delivery of the Shares to the Underwriters,
including any transfer or other taxes payable thereon, (iii) the cost of
printing or producing any Blue Sky or Legal Investment memorandum in
connection with the offer and sale of the Shares under state securities
laws and all expenses in connection with the qualification of the Shares
for offer and sale under state securities laws as provided in Section 7(d)
hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky or Legal Investment memorandum, (iv) all
filing fees and disbursements of counsel to the Underwriters incurred in
connection with the review and qualification of the offering of the Shares
by the National Association of Securities Dealers, Inc., (v) all costs and
expenses incident to listing the Shares on the NYSE or other securities
exchange or quotation system, (vi) the cost of printing certificates
representing the Shares, (vii) the costs and charges of any transfer agent,
registrar or depositary, (viii) the costs and expenses of the
14
Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Shares, including,
without limitation, expenses associated with the production of road show
slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior approval of the
Company, travel and lodging expenses of the representatives and officers of
the Company and any such consultants, and the cost of any aircraft
chartered in connection with the road show, and (ix) all other costs and
expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section. It is
understood, however, that except as provided in this Section, Section 9
entitled "Indemnity and Contribution," and the last paragraph of Section 11
below, the Underwriters will pay all of their costs and expenses, including
fees and disbursements of their counsel, stock transfer taxes payable on
resale of any of the Shares by them and any advertising expenses connected
with any offers they may make.
8. EXPENSES OF SELLING STOCKHOLDERS. Each Selling Stockholder,
severally and not jointly, agrees to pay or cause to be paid (i) all taxes, if
any, on the transfer and sale of the Shares being sold by such Selling
Stockholder and (ii) the fees, disbursements and expenses of counsel for the
Selling Stockholders.
9. INDEMNITY AND CONTRIBUTION. (a) Each of the Company and the
Executive Selling Stockholders, jointly and severally, agrees to indemnify and
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), from and against any and all losses, claims, damages and liabilities
(including, without limitation, any legal or other expenses reasonably incurred
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use therein; PROVIDED, HOWEVER, that
any indemnification for which the Executive Selling Stockholders are liable
pursuant to this Section 9(a) shall be limited, with respect to each such
Executive Selling Stockholder, to the net proceeds (after deducting the
underwriting commission and before deducting expenses) received by such
Executive Selling Stockholder from any sale of Additional Shares pursuant
hereto.
(b) Each Selling Stockholder agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who sign
the Registration
15
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or any amendment thereof, any preliminary prospectus
or the Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but only with
reference to information relating to such Selling Stockholder furnished in
writing by or on behalf of such Selling Stockholder expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto; PROVIDED, HOWEVER, that any indemnification
for which the Selling Stockholders are liable pursuant to this Section 9(b)
shall be limited, with respect to each such Selling Stockholder, to the net
proceeds (after deducting the underwriting commission and before deducting
expenses) received by such Selling Stockholder from any sale of Additional
Shares pursuant hereto.
(c) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Selling Stockholders, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment thereof,
any preliminary prospectus or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to paragraph (a), (b) or (c) of this Section 9, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees
16
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the indemnifying party and the indemnified party shall have mutually
agreed to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in respect of the
legal expenses of any indemnified party in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition to any local counsel) for
(i) all Underwriters and all persons, if any, who control any Underwriter within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, (ii) the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either such Section and (iii) all Selling Stockholders and all
persons, if any, who control any Selling Stockholder within the meaning of
either such Section, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Underwriters
and such control persons of the Underwriters, such firm shall be designated in
writing by Morgan Stanley & Co. Incorporated. In the case of any such separate
firm for the Company, and such directors, officers and control persons of the
Company, such firm shall be designated in writing by the Company. In the case
of any such separate firm for the Selling Stockholders and such controlling
persons of the Selling Stockholders, such firm shall be designated in writing by
the persons named as attorneys-in-fact for the Selling Stockholders under the
Power of Attorney and Custody Agreements. The indemnifying party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(e) To the extent the indemnification provided for in paragraph (a),
(b) or (c) of this Section 9 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities referred
to therein, then each indemnifying party under such paragraph, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
17
damages or liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party or parties on the other hand from the offering of the
Shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Sellers on the one hand and the Underwriters on the other hand in connection
with the offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before
deducting expenses) received by each Seller and the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate Public Offering
Price of the Shares. The relative fault of the Sellers on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Sellers or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 9 are several in proportion to the respective number of
Shares they have purchased hereunder, and not joint.
(f) The Sellers and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 9 were determined by PRO
RATA allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (e) of this Section 9. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 9 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this
Section 9 and the representations, warranties and other statements of the
Company and the Selling
18
Stockholders contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any termination of this Agreement, (ii) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter, any Selling Stockholder or any person controlling any Selling
Stockholder, or the Company, its officers or directors or any person controlling
the Company and (iii) acceptance of and payment for any of the Shares.
10. TERMINATION. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a) (i) through (iv) such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.
11. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it has or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I bears to the
aggregate number of Firm Shares set forth opposite the names of all such non-
defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase on such date; PROVIDED that in no event shall the
number of Shares that any Underwriter has agreed to purchase pursuant to this
Agreement be increased pursuant to this Section 11 by an amount in excess of
one-ninth of such number of Shares without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares
with respect to which such default occurs is more than one-tenth of the
aggregate number of Firm Shares to be purchased, and arrangements satisfactory
to you, the Company and the Selling Stockholders for the purchase of such Firm
Shares are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter, the
Company or the
19
Selling Stockholders. In any such case either you or the relevant Sellers shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. If, on the Option Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase Additional Shares and the aggregate number of
Additional Shares with respect to which such default occurs is more than one-
tenth of the aggregate number of Additional Shares to be purchased, the non-
defaulting Underwriters shall have the option to (i) terminate their obligation
hereunder to purchase Additional Shares or (ii) purchase not less than the
number of Additional Shares that such non-defaulting Underwriters would have
been obligated to purchase in the absence of such default. Any action taken
under this paragraph shall not relieve any defaulting Underwriter from liability
in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of any Seller to comply with
the terms or to fulfill any of the conditions of this Agreement, or if for any
reason any Seller shall be unable to perform its obligations under this
Agreement, the Sellers will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
12. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
13. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK.
20
14. HEADINGS. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
Very truly yours,
CROSS-CONTINENT AUTO RETAILERS, INC.
By ________________________________________________
Name:
Title:
The Stockholders named in Schedules II and IV hereto,
acting severally
By _________________________________________________
Ezra P. Mager,
individually and as Attorney-in-Fact
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
FURMAN SELZ LLC
RAUSCHER PIERCE REFSNES, INC.
Acting severally on behalf
of themselves and the
several Underwriters named
herein.
By Morgan Stanley & Co.
Incorporated
By ______________________
21
SCHEDULE I
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Morgan Stanley & Co. Incorporated
Furman Selz LLC
Rauscher Pierce Refsnes, Inc.
[NAMES OF OTHER UNDERWRITERS]
-------------
Total ................... 3,675,000
-------------
-------------
SCHEDULE II
Number of
Additional Shares
Selling Stockholder To Be Sold
------------------ ----------
Bill A. Gilliland. . . . . . . . . . . . . . . . . . . . . . 388,631
Twenty-Two Ten, Ltd., a Texas limited partnership. . . . . . 97,020
Benji Investments, Ltd., a Texas limited partnership . . . . 56,779
KAPL, Ltd., a Texas limited partnership. . . . . . . . . . . 8,820
----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . 551,250
SCHEDULE III
CERTAIN STOCKHOLDERS, OFFICERS AND DIRECTORS
Thomas A. Corchado
John W. Gaines
Robert W. Hall
Ezra P. Mager
Emmett M. Rice, Jr.
Jerry L. Pullen
Benjamin J. Quattrone
Charles D. Winton
Xaris, Ltd.
SCHEDULE IV
EXECUTIVE SELLING STOCKHOLDERS
Bill A. Gilliland
Twenty-Two Ten, Ltd., a Texas limited partnership
Benji Investments, Ltd., a Texas limited partnership
EXHIBIT A
FORM OF LOCK-UP CONTRACT
August __ , 1996
Morgan Stanley & Co. Incorporated
Furman Selz LLC
Rauscher Pierce Refsnes, Inc.
1251 Avenue of the Americas
New York, NY 10020
Dear Sirs:
The undersigned understands that Morgan Stanley & Co. Incorporated
("Morgan Stanley"), as Representative of the several Underwriters, proposes to
enter into an Underwriting Agreement (the "Underwriting Agreement") with Cross-
Continent Auto Retailers, Inc., a Delaware corporation (the "Company") providing
for the public offering (the "Public Offering") by the several Underwriters,
including Morgan Stanley (the "Underwriters"), of shares of common stock, par
value $.01 per share, of the Company (the "Common Stock").
To induce the Underwriters that may participate in the Public Offering
to continue their efforts in connection with the Public Offering, the
undersigned hereby agrees that, without the prior written consent of Morgan
Stanley on behalf of the Underwriters, it will not, during the period commencing
on the date hereof and ending 180 days after the date of the final prospectus
relating to the Public Offering (the "Prospectus"), (1) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock (provided that such shares or securities are either now owned by
the undersigned or are hereafter acquired prior to or in connection with the
Public Offering), or (2) enter into any swap or similar arrangement that
transfers, in whole or in part, any of the economic consequences of ownership of
the Common Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to the sale of any
Shares to the Underwriters pursuant to the Underwriting Agreement [or to the
exercise of any options to purchase shares of Common Stock granted to the
undersigned and outstanding as of the date of the Underwriting Agreement;
PROVIDED, HOWEVER, that any shares acquired by the undersigned upon the exercise
of such options within such 180 day period shall become subject to this
agreement]. In addition, the undersigned agrees that, without the prior written
consent of Morgan Stanley on behalf of the Underwriters, it will not, during the
period commencing on the date hereof and ending 180
days after the date of the Prospectus, make any demand for or extend any right
with respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number
of factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
agreement between the Company and the Underwriters.
Very truly yours,
___________________________________
(Name)
___________________________________
(Address)
Accepted as of the date
first set forth above:
MORGAN STANLEY & CO. INCORPORATED
By: ______________________________
EXHIBIT B
FORM OF OPINION OF HOWARD, DARBY & LEVIN
Pursuant to Section 6(e) of the Underwriting Agreement, Howard, Darby &
Levin, counsel to the Company and, with respect to paragraph (xii), counsel to
the Selling Stockholders, shall furnish an opinion to the effect that:
(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of Delaware, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole;
(ii) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;
(iii) the shares of Common Stock (including the Shares to be
sold by the Selling Stockholders) outstanding prior to the issuance of
the Shares to be sold by the Company have been duly authorized and are
validly issued, fully paid and non-assessable;
(iv) the Shares to be sold by the Company have been duly
authorized and, when issued and delivered in accordance with the terms
of this Agreement, will be validly issued, fully paid and non-
assessable, and the issuance of such Shares will not be subject to any
preemptive or similar rights;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or, to such counsel's
knowledge, any agreement or other instrument binding upon the Company
or any of its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or, to such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with,
any
governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Shares;
(vii) the statements (A) in the Prospectus under the caption
"Business--Vehicle and Parts Suppliers," "Shares Eligible for Future
Sale," "Management--Stock Option Plan," "Description of Capital Stock"
and "Underwriters" and (B) in the Registration Statement in Items 14
and 15, in each case insofar as such statements constitute summaries
of the legal matters, documents or proceedings referred to therein,
fairly present the information called for with respect to such legal
matters, documents and proceedings and fairly summarize the matters
referred to therein;
(viii) such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject that are required to be
described in the Registration Statement or the Prospectus and are not
so described or of any statutes, regulations, contracts or other
documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required;
(ix) the Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds
thereof as described in the Prospectus, will not be an "investment
company" as such term is defined in the Investment Company Act of
1940, as amended;
(x) to such Counsel's knowledge, the Company and its
subsidiaries (A) are in compliance with any and all applicable
Environmental Laws, (B) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (C) are in compliance with all
terms and conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to receive
required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect
on the Company and its subsidiaries, taken as a whole; and
(xi) such counsel (A) is of the opinion that the Registration
Statement and Prospectus (except for financial statements and
schedules and notes thereto and other financial data included therein
as to which such counsel need not express any opinion) comply as to
form in all material respects with
the Securities Act and the applicable rules and regulations of the
Commission thereunder, (B) has no reason to believe that (except for
the statements in Prospectus under the caption "Principal
Stockholders" provided by the Selling Stockholders in writing to the
Company and except for the financial statements and schedules and
notes thereto and other financial data as to which such counsel need
not express any belief) the Registration Statement and the prospectus
included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and (C) has no reason to
believe that (except for the statements in Prospectus under the
caption "Principal Stockholders" provided by the Selling Stockholders
in writing to the Company and except for financial statements and
other financial data as to which such counsel need not express any
belief) the Prospectus contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
With respect to paragraph (xi), Howard, Darby & Levin may state that their
opinion and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof, but are without independent
check or verification, except as specified.
EXHIBIT C
FORM OF OPINION OF SPROUSE, MOZOLA, SMITH & ROWLEY, P.C.
Pursuant to Section 6(f) of the Underwriting Agreement, Sprouse, Mozola,
Smith & Rowley, P.C., special Texas and Oklahoma counsel to the Company, shall
furnish an opinion to the effect that:
(i) Each of Midway Chevrolet, Inc., Plains Chevrolet, Inc.,
Westgate Chevrolet, Inc., Quality Nissan, Inc., Working Man's Credit
Plan, Inc. and Allied 2000 Collision Center, Inc. (each, a "Texas
Subsidiary") has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Texas, has
the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole;
(ii) Each of Lynn Hickey Dodge, Inc., Performance Nissan, Inc.
and Performance Dodge, Inc. (each, an "Oklahoma Subsidiary" and
together with the Texas Subsidiaries, the "Subsidiaries") has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the State of Oklahoma, has the corporate
power and authority to own its property and to conduct its business as
described in the Prospectus and is duly qualified to transact business
and is in good standing in each jurisdiction in which the conduct of
its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole;
(iii) the statements in the Prospectus under the caption
"Business -- Governmental Regulations" and "Business -- Litigation,"
insofar as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents
and proceedings and fairly summarize the matters referred to therein;
and
(iv) after due inquiry, such counsel does not know of any legal
or governmental proceedings pending or threatened to which any of the
Subsidiaries is a party or to which any of the properties of the
Subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or of any
statutes, regulations or, to such counsel's knowledge, contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement that are not described or filed as required.
EXHIBIT D
FORM OF OPINION OF MULLIN, HOARD & BROWN, LLP
Pursuant to Section 6(g) of the Underwriting Agreement, Mullin, Hoard &
Brown, LLP, counsel to the Selling Stockholders, shall furnish an opinion to the
effect that:
(i) each Selling Stockholder which is a limited partnership has
been duly formed, is validly existing as a limited partnership under
the laws of Texas and has the power and authority to execute, deliver
and perform its respective obligations under this Agreement and the
Power of Attorney and Custody Agreement;
(ii) this Agreement has been duly authorized, executed and
delivered by or on behalf of each of the Selling Stockholders;
(iii) the execution and delivery by each Selling Stockholder
of, and the performance by such Selling Stockholder of its obligations
under, this Agreement and the Power of Attorney and Custody Agreement
of such Selling Stockholder will not contravene any provision of
applicable law, or the agreement of limited partnership of such
Selling Stockholder (if such Selling Stockholder is a limited
partnership), or, to such counsel's knowledge, any agreement or other
instrument binding upon such Selling Stockholder or, to such counsel's
knowledge, any judgment, order or decree of any governmental body,
agency or court having jurisdiction over such Selling Stockholder, and
no consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance
by such Selling Stockholder of its obligations under this Agreement or
the Power of Attorney and Custody Agreement of such Selling
Stockholder, except such as may be required by the securities or Blue
Sky laws of the various states in connection with offer and sale of
the Shares;
(iv) each of the Selling Stockholders has valid title to the
Shares to be sold by such Selling Stockholder and the legal right and
power, and all authorization and approval required by law, to enter
into this Agreement and the Power of Attorney and Custody Agreement of
such Selling Stockholder and to sell, transfer and deliver the Shares
to be sold by such Selling Stockholder;
(v) the Power of Attorney and Custody Agreement of each Selling
Stockholder has been duly authorized, executed and delivered by such
Selling Stockholder and is a valid and binding agreement of such
Selling Stockholder;
(vi) delivery of the Shares to be sold by each Selling
Stockholder pursuant to this Agreement will pass title to such Shares
free and clear of any security interests, claims, liens, equities and
other encumbrances; and
(vii) such counsel (A) has no reason to believe that the
statements in the Prospectus under the caption "Principal
Stockholders" at the time that the Registration Statement became
effective contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make such statements not misleading and (B) has no reason to believe
that the statements in the Prospectus under the caption "Principal
Stockholders" contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make such statements,
in the light of the circumstances under which they were made, not
misleading.
Mullin, Hoard & Brown may rely, with respect to factual matters and to the
extent such counsel deems appropriate, upon the representations of each Selling
Stockholder contained herein and in the Power of Attorney and Custody Agreement
of such Selling Stockholder and in other documents and instruments.
EXHIBIT E
CROSS-CONTINENT AUTO RETAILERS, INC.
CERTIFICATE AS TO DIRECTED SHARES
I, Charles D. Winton, Vice President, Chief Financial Officer and
Secretary of Cross-Continent Auto Retailers, Inc. (the "Company"), do hereby
certify that (a) certain officers and employees of the Company (collectively,
the "Purchasers") purchased an aggregate of ________ shares (the "Shares") of
the 3,675,000 shares of Common Stock, par value $.01 per share, of the Company
offered by the Company as described in the Company's Prospectus, dated September
___, 1996, relating to such 3,675,000 shares, and (b) the list attached hereto
as Exhibit A accurately sets forth the name of each Purchaser and the respective
number of the Shares purchased by such Purchaser.
In connection with the sale of stock by the Company and based upon
information provided to me by each Purchaser and to my knowledge, I hereby
certify that no such Purchaser or any member of the Purchaser's immediate family
is an officer, director, general partner, employee or agent of any securities
broker/dealer, or a person associated with any securities broker/dealer; a
senior officer of a bank, savings and loan institution, insurance company,
registered investment company, registered investment advisory firm or other
institutional type account, domestic or foreign; or a person in the securities
department of, or an employee or other person who may influence or whose
activities directly or indirectly involve or are related to the function of
buying or selling securities for, any bank, savings and loan institution,
insurance company, registered investment company, registered investment advisory
firm, or other institutional type account, domestic or foreign.
IN WITNESS WHEREOF, I have hereunto set my hand this ___th day of
September, 1996.
__________________________________
Charles D. Winton
Vice President,
Chief Financial Officer
and Secretary
Exhibit A
CROSS-CONTINENT AUTO RETAILERS, INC.
DIRECTED SHARE PROGRAM
Name Number of Shares
- ---- ----------------
[Name of Purchaser]
_______
Total