SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of l934
For the fiscal year ended April 1, 1995. Commission File No. 0-6882
URT INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Florida 59-1167907
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3451 Executive Way, Miramar, Florida 33025
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (305) 432-4200
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, par value $.01 per share
Class B Common Stock, par value $.01 per share
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 l934 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
---------- -----------
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
YES NO X
---------- -----------
The aggregate market value (based on the average high and low, bid and asked
prices) of the voting stock held by non-affiliates of the registrant was, as of
May 30, 1995, approximately $1,935,800.
At May 30, 1995, the registrant's transfer agent reported as issued and
outstanding:
11,191,293 Shares of Class A Common Stock
1,365,589 Shares of Class B Common Stock
<PAGE>
PART I
Item 1. BUSINESS
URT Industries, Inc. ("URT" or the "Company"), a Florida corporation,
was incorporated in 1967, the year it succeeded to the business of two companies
which had commenced operations in 1961 and 1965, respectively. Its executive
offices are located at 3451 Executive Way, Miramar, Florida 33025. Its telephone
number is 305-432-4200.
Since 1981, URT has been engaged in the operation of retail stores
which sell prerecorded music, videos, and related products (the "Retail
Business") in the Southeastern part of the United States under the name
"PEACHES". Such business is operated by its subsidiary, Peaches Entertainment
Corporation ("PEC"), a Florida corporation. URT owns all of PEC's issued and
outstanding shares of preferred stock and approximately 87% of its issued and
outstanding shares of common stock. The remaining approximately 13% of such
common stock is owned by non-affiliated persons.
The Peaches Stores
The following table sets forth the number of stores which were open at
the beginning of the year, which opened during the year, which closed during the
year and which were open at the end of the year, with respect to URT's last five
complete fiscal years ended April 1, 1995:
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
Number of stores:
At beginning of period .......... 20 21 22 21 20
Opened during period ............ 1 0 0 2 2
Closed during period ............ (2) (1) (1) (1) (1)
-- -- -- -- --
At end of period ................ 19 20 21 22 21
Between April 1, 1995 and the date of this filing, PEC closed two
additional stores, leaving, at present, a total of 17 "Peaches" stores (the
"'Peaches' stores") in operation in five states. Such states are Florida (10
stores), Virginia (3
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<PAGE>
stores), North Carolina (2 stores), South Carolina (1 store) and Alabama (1
store). PEC does not have any present plans to open any additional stores during
the 1996 fiscal year.
PEC leases all but one of its stores. It has options to renew most of its
leases for various periods. The utilized space of the stores ranges from
approximately 7,000 square feet to approximately 14,000 square feet. Each store
either has its own parking area or is located in a shopping center which
provides parking.
Two of the Florida stores, one in Fort Lauderdale and the other in
Orlando, are currently leased from the Chairman of URT and his brother, a former
director of URT. The store in North Miami Beach, Florida is leased from two
directors and two children of such former director. See "Certain Relationships
and Related Transactions".
For information concerning real property owned by PEC, see "Properties".
Trademarks
PEC is the registered owner of and owns nationwide rights to the
tradename, service mark and trademark "PEACHES" (the "Trademarks") in connection
with the operation of the Retail Business.
Operation of the Peaches Stores
The "Peaches" stores are all similar in appearance. They have distinct,
wood panelled interiors, are decorated in a manner which identifies them as
"Peaches" stores and carry a wide selection of prerecorded music as well as
recorded and blank video tapes, accessory items and specialty items such as
T-shirts and crates. Some stores are free standing and others are contiguous to
other stores in shopping centers. At present, each "Peaches" store is managed by
an individual director who is responsible for ordering, pricing and displaying
merchandise sold in the store, hiring and firing personnel and other matters
relating to store administration. PEC has implemented a computerized inventory
control system at each of its stores.
As of May 15, 1995, PEC purchased merchandise from approximately 54
suppliers, among whom the principal ones were BMG, CEMA, PGD, SONY, UNI and WEA.
Approximately 77% of the
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<PAGE>
merchandise purchased during the fiscal year ended April 1, 1995 (the "1995
fiscal year") came from such six principal suppliers. Purchases from given
suppliers are, to a great extent, determined by which of them are manufacturing
or distributing the most popular prerecorded music products at a given time. PEC
is not obligated to purchase merchandise from any supplier. It has numerous
alternate sources of supply for inventory. The loss of any particular supplier
would not have a materially negative effect on PEC's results of operations,
although in some cases, the expenses would be greater if such alternate sources
were utilized. Merchandise is generally delivered directly by suppliers to the
stores.
The usual terms received from suppliers provide for payment to be made
within 60 days from the end of the month in which a purchase is made. In
addition, PEC normally receives an additional 30 to 120 days to pay for certain
purchases during the course of the year. Such terms are usual in the industry.
Under current industry practice, PEC is able to return merchandise,
without limitation, to all suppliers, who charge a slight penalty if returns
exceed certain percentages of the dollar amounts of gross purchases. Up to the
present time, the suppliers' return policies have not had any adverse effect on
PEC's business.
Advertising in local newspapers and media is determined by consultation
between each store director and PEC management. PEC also engages in cooperative
advertising with suppliers who pay a portion of the cost. In addition to the
director, each "Peaches" store is staffed with managers, cashiers and sales and
stock room personnel. The stores are open seven days a week. Based on
management's experience to date, retail business sales fluctuate during the year
and are generally at their highest levels during the holiday season, i.e.,
between October and December. During the last three fiscal years, sales between
January and March were approximately 24% of total sales for each year; sales
between April and June were approximately 23% of total sales; sales between July
and September were approximately 22% of total sales; and sales between October
and December were approximately 31% of total sales.
Competition
The retail sale of prerecorded music and video products is highly
competitive. There are hundreds of retail stores and department, discount and
variety stores and supermarkets which
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<PAGE>
offer such merchandise to the public. PEC's share of the retail market in the
Southeastern United States is not significant. Recently, in addition to usual
competition, there has been a proliferation of non-traditional music outlets,
such as appliance and computer retailers and superbookstores, some of whom have
used very aggresive price cutting tactics including selling some products below
actual cost in order to attract customers and sell non-music and video products.
Employees
As of May 5, 1995, URT and PEC employed 340 persons in all capacities.
Neither URT nor PEC is a party to any collective bargaining agreements.
Relations with employees have been satisfactory and there have been no work
stoppages.
Management Agreement Between URT and PEC
On April 3, 1994, when the 1995 fiscal year began, a management agreement
was in effect between URT and PEC (hereinafter, collectively, the "URT
Companies"). Such agreement provided that it would remain in effect through
March 30, 1996; that PEC would pay URT an annual fee of 3-1/2% of its net sales,
subject to a maximum amount of $1,400,000; that URT would provide PEC with the
services of Allan Wolk as president and chairman of PEC; that URT would pay PEC
for certain accounting and administrative services performed by PEC at the rate
of $39,600 per annum (subject to periodic equitable adjustment depending upon
the amount of such services); and that so long as URT and PEC filed consolidated
income tax returns, their respective liabilities for such taxes would be
equitably apportioned as provided in such agreement. Such agreement was amended
as of October 2, 1994 to provide that for the above described services, instead
of the compensation described above, PEC would be required to pay URT, in equal
weekly installments, a fee of $500,000 during the period from October 2, 1994
through April 1, 1995 and a fee at the rate of $750,000 per annum for the period
from April 2, 1995 until March 30, 1996. During both the 1994 and 1995 fiscal
years, Mr. Wolk devoted approximately 75% of his working time to the business of
PEC. As a result of the above-described arrangements, PEC paid URT a management
fee of $1,024,386 for the 1995 fiscal year, as compared to $1,263,010 for the
1994 fiscal year, and URT paid expenses as described above of approximately
$39,600 for each of such fiscal years.
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<PAGE>
Item 2. PROPERTIES
The URT Companies' headquarters are located in Miramar, Florida in a
building which is leased by PEC. Such building contains a total of approximately
26,000 square feet, approximately 11,000 square feet of which is office space
and approximately 15,000 square feet of which is warehouse space.
PEC owns real property in Mobile, Alabama on which it constructed and
operates a "Peaches" store. Such property is subject to a first mortgage. All
other "Peaches" stores are leased. For information concerning such other stores
operated by PEC, see "Business--The Peaches Stores".
During the 1995 fiscal year, PEC purchased land in Lafayette,
Louisiana, with the intention of constructing a store. However, it subsequently
decided not to construct a store and, after the end of such fiscal year, sold
the land for an amount approximately equal to its original purchase price.
Item 3. LEGAL PROCEEDINGS
In April, 1991, Service Merchandise Company, Inc. ("Service") commenced
an action against PEC in the North Carolina General Court of Justice, Superior
Court Division, Mecklenburg County, based on PEC's closing of a store which it
had leased in Charlotte, North Carolina and its refusal to pay rent with respect
to such store from and after February, 1991. Before closing the store, PEC had
attempted to sublease it to a subtenant, but Service refused to consent to the
sublease. In such action, Service sought a judgment for rent arrears plus its
reasonable attorneys' fees and expenses, and for an order requiring PEC to pay
the rent required to be paid under the lease through July 31, 1997, less any
amounts recovered from a current tenant or any subsequent occupant of such
premises. PEC asserted various defenses including the failure of Service to
mitigate damages by refusing to consent to the sublease of the premises by PEC
to a financially responsible and reputable company. Following a trial in
December, 1993, a judgment was issued in favor of Service in February, 1995, for
rent due to such date and PEC remains liable under the lease through July 31,
1997. Under such judgment PEC was ordered to pay the sum of $405,460 to
plaintiff, which amount was duly paid by PEC to Service in March, 1995.
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<PAGE>
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Price Range of Common Stock
URT's Class A and Class B Common Stock are quoted by market makers on
the over-the-counter market. The following table sets forth the high and low,
bid and asked quotations for the Class A Common Stock for the calendar periods
indicated, based on information supplied by the National Quotation Bureau,
Incorporated:
Bid Prices Asked Prices
---------- ------------
High Low High Low
1993
- ----
Quarter ended March 31, 3/16 1/8 9/16 5/16
Quarter ended June 30, 3/16 1/8 3/8 5/16
Quarter ended Sept. 30, 3/16 1/16 3/8 3/16
Quarter ended Dec. 31, .15 1/16 5/16 3/16
1994
- ----
Quarter ended March 31, .18 1/16 .36 .23
Quarter ended June 30, .16 1/8 .36 .22
Quarter ended Sept. 30, .16 .09 .50 .19
Quarter ended Dec. 31, .16 .09 .50 .19
1995
- ----
Quarter ended March 31, .14 .10 1/2 .19
Quarter through May 30, .14 .10 1/2 .19
The following table sets forth the high and low, bid and asked
quotations for the Class B Common Stock for the calendar periods indicated,
based on information supplied by the National Quotation Bureau, Incorporated:
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<PAGE>
Bid Prices Asked Prices
----------- ------------
High Low High Low
1993
- ----
Quarter ended March 31, 1/4 1/4 5/8 1/2
Quarter ended June 30, 1/4 1/4 5/8 1/2
Quarter ended Sept. 30, 1/4 1/8 5/8 1/2
Quarter ended Dec. 31, 1/4 1/8 5/8 1/2
1994
- ----
Quarter ended March 31, 1/4 1/8 5/8 1/2
Quarter ended June 30, 1/4 1/8 5/8 1/2
Quarter ended Sept. 30, 1/4 1/8 5/8 5/16
Quarter ended Dec. 31, 1/8 1/8 5/8 5/16
1995
- ----
Quarter ended March 31, .13 1/8 5/8 5/16
Quarter through May 30, .13 1/8 5/8 5/16
The above over-the-counter quotations represent prices between dealers,
do not include retail markups, markdowns or commissions and do not necessarily
represent actual transactions.
Dividends
There has been no payment of dividends during the past five years and
payment of dividends in the future will depend on URT's earnings and needs.
Approximate Number of Equity Security Holders
The following table indicates the approximate number of holders of
record of each class of URT's equity securities as of May 30, 1995, based on
information supplied by URT's transfer agent:
Number of Record
Title of Class Holders
-------------- ----------------
Class A Common Stock, $.01 par value 5,035
Class B Common Stock, $.01 par value 1,235
-8-
<PAGE>
Item 6. SELECTED FINANCIAL DATA
The following table sets forth selected financial data and other
operating information of the Company. The selected financial data should
be read in conjunction with the financial statements and related notes
and "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
<TABLE>
<CAPTION>
April 1, April 2, April 3, March 28, March 30,
1995 1994 1993(1) 1992 1991
---- ---- ------- ---- ----
<S> <C> <C> <C> <C> <C>
Operating Statement Data:
Net sales $ 31,960,986 36,303,498 37,861,440 35,566,752 35,522,631
Net income (loss) (1,759,085) (153,053) 290,085 (269,333) 871,525
Income (loss) per common share (0.14) (0.01) 0.02 (0.02) 0.07
Weighted average number of common shares
outstanding 12,674,448 12,695,136 12,594,531 12,753,748 12,568,161
Balance sheet data:
Working capital 5,168,136 6,651,083 6,520,743 5,540,347 5,777,300
Total assets 14,647,795 16,805,328 17,504,370 15,999,575 16,361,380
Current portion of long-term obligations 110,028 131,173 174,579 188,524 65,139
Long-term obligations 929,654 705,109 836,282 1,010,861 858,117
Shareholders' equity 6,702,841 8,507,621 8,646,416 8,322,299 8,702,740
Store data:
Weighted average square feet of selling space 130,157 137,145 139,850 145,279 136,473
Weighted average sales per square foot of
selling space 246 265 271 245 260
Number of stores open at end of period 19 20 21 22 21
</TABLE>
There were no cash dividends declared for common stock in any of the periods
presented.
(1) Includes 53 weeks of operations.
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<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FISCAL YEAR ENDED APRIL 1, 1995 (1995) COMPARED TO FISCAL YEAR ENDED APRIL 2,
1994 (1994)
Net sales for 1995 decreased 12.0% compared to 1994. Such decrease is attributed
to an 8.2% decrease in comparable store sales, and a 3.8% decrease in sales in
those stores that opened or closed during 1995 versus 1994.
During the last few years, non-traditional music retailers such as appliance and
computer retailers and super bookstores have begun to sell prerecorded music and
video products. They have adopted policies of selling music product at near or
below wholesale cost as a means of attracting customers to sell other products.
During the current fiscal year, the effect of this competition was encountered
in some of our markets and will be expanded to some others in the future. The
Company has reduced prices which has resulted in lower sales and lower gross
profit. The Company believes that it will remain competitive due to its
locations, selection of product and superior customer service.
The cost of sales for 1995 was lower than that for 1994 due to a decrease in net
sales. Cost of sales as a percentage of net sales has increased from 62.7% in
1994 to 63.7% in 1995 due to a reduction in retail pricing in an effort to meet
the increased competition.
Selling, general, and administrative (SG&A) expenses in 1995 decreased 6.8%
compared to 1994. Such decrease is attributable to a decrease in comparable
store expenses (1.0%), a decrease in store operating expenses of stores that
opened or closed during 1995 versus 1994 (2.6%), a decrease in corporate
overhead (2.8%), and a decrease in the cost of store openings (0.4%). SG&A
expenses, as a percentage of net sales increased from 37.4% in 1994 to 39.7% in
1995 due to the fixed nature of certain expenses and the decrease in net sales
in addition to the aforementioned items.
Store closing costs increased in 1995 over 1994 due to the fact that the cost of
closing 1 store is included in 1994, and the cost of closing 4 stores is
included in 1995.
In 1994, the Company adopted the provisions of Financial Standards No. 109 (SFAS
109) "Accounting for Income Taxes," which established new financial accounting
and reporting standards for income taxes. Such adoption resulted in a cumulative
adjustment of approximately $74,000 of income which has been reflected in the
statement of operations for 1994.
The Company incurred a net loss of approximately $1,759,000 in 1995 versus a net
loss of approximately $153,000 in 1994 due to costs of closing 4 stores, the
loss on litigation, and the reduction in net sales and gross profit as described
above.
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<PAGE>
FISCAL YEAR ENDED APRIL 2, 1994 (1994) COMPARED TO FISCAL YEAR ENDED APRIL 3,
1993 (1993)
Net sales for 1994 decreased 4.1% compared to 1993. Such decrease is attributed
to the fact that 1993 included 53 weeks of operations (1.7%), a decrease in
comparable store sales (1.6%), store closings due to inclement weather (0.3%)
and a decrease in sales in those stores that opened or closed during 1994 versus
1993 (0.5%).
The cost of sales for 1994 was lower than that for 1993 due to decreased net
sales. Cost of sales as a percentage of net sales for both 1994 and 1993 was
62.7%.
Selling, general, and administrative (SG&A) expenses in 1994 increased 1.3%
compared to 1993. Such increase is attributable to an increase in comparable
store expense (1.7%), an increase in corporate overhead (1.2%), an increase in
the cost of store openings (0.7%), offset by a decrease in store expenses that
opened or closed during 1994 versus 1993 (1.4%), and a decrease due to the fact
that 1993 included 53 weeks of operations (0.9%). SG&A expenses, as a percentage
of net sales increased from 35.4% in 1993 to 37.4% in 1994 due to the fixed
nature of certain expenses and the decrease in net sales in addition to the
aforementioned items.
In 1994, the Company adopted the provisions of Financial Standards No. 109 (SFAS
109) "Accounting for Income Taxes," which established new financial accounting
and reporting standards for income taxes. Such adoption resulted in a cumulative
adjustment of approximately $74,000 of income which has been reflected in the
statement of operations for 1994.
The Company incurred a net loss of approximately $153,000 in 1994 versus net
income of approximately $291,000 in 1993 due to the decrease in net sales and an
increase in certain SG&A expenses as discussed above. Approximately $55,000 of
net income in 1993 is due to the fact that 1993 included 53 weeks of operations.
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<PAGE>
FISCAL YEAR ENDED APRIL 3, 1993 (1993) COMPARED TO FISCAL YEAR ENDED MARCH 28,
1992 (1992)
Net sales for 1993 increased 6.4% compared to 1992. Such increase is
attributable to the fact that 1993 included 53 weeks of operations (1.8%), an
increase in comparable store sales (3.8%), and an increase in sales in those
stores that opened or closed during 1993 versus 1992 (0.8%).
Cost of sales for 1993 increased compared to 1992 due primarily to increased
sales volume as described above. Cost of sales as a percentage of net sales for
1993 (62.7%) was lower than that for 1992 (63.7%) due to the amortization of
$131,000 relating to the cost of video cassettes, which were test marketed and
discounted in 1992.
Selling, general, and administrative (SG&A) expenses for 1993 decreased 0.1%
compared to 1992. Such decrease is attributable to a decrease in expenses of
comparable stores (2.2%), an increase in expenses of stores opened or closed in
1993 versus 1992 (0.9%), an increase attributable to the fact that 1993 included
53 weeks of operations (0.9%), an increase in corporate overhead (0.1%), and an
increase in expenses incurred in connection with the opening of stores (0.2%).
SG&A expenses, as a percentage of net sales decreased from 38.0% in 1992 to
35.4% in 1993 due to the fixed nature of certain expenses and the increase in
net sales.
Store closing costs increased in 1993 over 1992 because the costs incurred with
the closing of the store due to Hurricane Andrew in 1993 was higher than the
negligible cost of closing the store in 1992.
The Company achieved net income of approximately $290,000 in 1993 versus a net
loss of approximately $269,000 in 1992 due to the increase in net sales which
was partially offset by the increases in certain SG&A expenses as discussed
above. Approximately $55,000 of net income in 1993 is due to the fact that 1993
included 53 weeks of operations.
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<PAGE>
Liquidity and Capital Resources
The Company had working capital of $5,168,136 at April 1, 1995 compared to
working capital of $6,651,083 at April 2, 1994 and a current ratio (the ratio of
total current assets to total current liabilities) of 1.86 to 1 at April 1, 1995
compared to a current ratio of 2.05 to 1 at April 2, 1994.
The Company has historically maintained a strong cash position and management
believes that this will continue in the future.
At April 1, 1995, the Company had long-term obligations of $929,654. Management
anticipates that its ability to repay its long-term obligations will be
satisfied primarily through funds generated from its operations.
Management believes that the Company has excellent relationships with its banks
and suppliers and does not anticipate any significant difficulties in financing
operations at current levels.
Management anticipates that cash generated from operations and cash equivalents
on hand will provide sufficient liquidity to maintain adequate working capital
for operations and the opening of any new stores during the next few years.
Inflation trends have not had an impact upon revenues because increases in costs
have been passed along to customers.
The Company's business is seasonal in nature, with the highest sales and
earnings occurring in the third fiscal quarter, which includes the Christmas
selling season.
In July 1995, the Company will be selling its leasehold in a store to the
landlord for $325,000.
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<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
[LETTERHEAD OF KPMG PEAT MARWICK LLP]
Independent Auditors' Report
Directors and Shareholders
URT Industries, Inc. and Subsidiaries
Miramar, Florida:
We have audited the accompanying consolidated balance sheets of URT Industries,
Inc. and subsidiaries as of April 1, 1995 and April 2, 1994, and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years in the three-year period ended April 1, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of URT Industries, Inc.
and subsidiaries as of April 1, 1995 and April 2, 1994, and the results of their
operations and their cash flows for each of the years in the three-year period
ended April 1, 1995, in conformity with generally accepted accounting
principles.
/s/ KPMG PEAT MARWICK LLP
June 9, 1995
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<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
April 1, 1995 and April 2, 1994
<TABLE>
<CAPTION>
Assets 1995 1994
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,014,147 6,723,034
Marketable investment securities 2,649,534 --
Inventories 5,578,737 5,842,316
Current portion due from officers/shareholders (note 2) 28,470 26,285
Land held for sale (note 10) 300,000 --
Prepaid expenses and other current assets 368,205 376,961
Refundable income taxes 257,229 24,400
------------ ------------
Total current assets 11,196,322 12,992,996
Property and equipment, net (notes 3 and 4) 3,102,928 3,046,338
Due from officers/shareholders (note 2) 139,550 168,020
Deferred income taxes (note 9) -- 342,014
Other assets 208,995 255,960
------------ ------------
$ 14,647,795 16,805,328
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Note payable (note 11) -- 75,000
Current portion of long-term obligations (note 4) 110,028 131,173
Accounts payable 4,130,530 4,614,580
Accrued liabilities (note 5) 1,787,628 1,521,160
------------ ------------
Total current liabilities 6,028,186 6,341,913
Long-term obligations (note 4) 929,654 705,109
Deferred rent (note 6) 500,470 505,008
Minority interest in a subsidiary 486,644 745,677
------------ ------------
7,944,954 8,297,707
------------ ------------
Shareholders' equity (note 7):
Common stock, $.01 par value; 30,000,000 shares
authorized; 15,317,454 and 15,231,204 shares
issued in 1995 and 1994, respectively; and
12,536,201 and 12,773,737 shares outstanding in
1995 and 1994, respectively 153,175 152,312
Additional paid-in capital 5,542,152 5,538,987
Retained earnings 1,987,944 3,747,029
------------ ------------
7,683,271 9,438,328
Treasury stock, 2,781,253 and 2,457,467 common shares
in 1995 and 1994, respectively, at cost (980,430) (930,707)
------------ ------------
Total shareholders' equity 6,702,841 8,507,621
Commitments and contingencies (note 6)
------------ ------------
$ 14,647,795 16,805,328
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For each of the years in the three-year period ended April 1, 1995
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Net sales $ 31,960,986 36,303,498 37,861,440
------------ ------------ ------------
Costs and expenses:
Cost of sales 20,347,493 22,762,742 23,750,684
Selling, general and administrative expenses 12,651,133 13,576,007 13,398,936
Store closing costs 548,701 278,377 229,882
Loss on litigation (note 6) 431,692 -- --
------------ ------------ ------------
33,979,019 36,617,126 37,379,502
------------ ------------ ------------
Income (loss) from operations (2,018,033) (313,628) 481,938
------------ ------------ ------------
Other (expense) income:
Interest expense (84,478) (88,971) (107,487)
Interest income 204,810 148,796 168,720
------------ ------------ ------------
120,332 59,825 61,233
------------ ------------ ------------
Income (loss) before provision (benefit)
for income taxes and minority
interest in net income (loss) of
consolidated subsidiary (1,897,701) (253,803) 543,171
Provision (benefit) for income taxes (note 9) 120,417 (86,000) 211,000
------------ ------------ ------------
Income (loss) before minority interest in net
income (loss) of consolidated subsidiary (2,018,118) (167,803) 332,171
Minority interest in net income (loss) of consolidated
subsidiary (259,033) (14,750) 42,086
------------ ------------ ------------
Net income (loss) $ (1,759,085) (153,053) 290,085
============ ============ ============
Net income (loss) per common share $ (.14) (.01) .02
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
-16-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
For each of the years in the
three-year period ended April 1, 1995
<TABLE>
<CAPTION>
Common stock issued Treasury stock
----------------------------- ------------------------------
Shares Shares Capital
-------------------- -------------------- in excess Retained
Class "A" Class "B" Amount Class "A" Class "B" Amount of par earnings Total
--------- --------- ------ --------- --------- ------ ------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, March 28, 1992 13,333,338 1,552,866 $148,862 2,167,021 182,839 $(898,221) 5,461,661 3,609,997 8,322,299
Treasury stock
purchased, at cost -- -- -- 33,349 4,458 (9,452) -- -- (9,452)
Issuance of common
stock (note 7) 172,500 -- 1,725 -- -- -- 32,775 -- 34,500
Benefit from
subsidiary's
treasury stock
transactions -- -- -- -- -- -- 8,984 -- 8,984
Net income -- -- -- -- -- -- -- 290,085 290,085
---------- --------- -------- --------- ------- --------- --------- --------- ---------
Balance, April 3, 1993 13,505,838 1,552,866 150,587 2,200,370 187,297 (907,673) 5,503,420 3,900,082 8,646,416
Treasury stock
purchased, at cost -- -- -- 69,800 -- (23,034) -- -- (23,034)
Issuance of common
stock (note 7) 172,500 -- 1,725 -- -- -- 32,775 -- 34,500
Benefit from
subsidiary's
treasury stock
transactions -- -- -- -- -- -- 2,792 -- 2,792
Net loss -- -- -- -- -- -- -- (153,053) (153,053)
---------- --------- -------- --------- ------- --------- --------- --------- ---------
Balance, April 2, 1994 13,678,338 1,552,866 152,312 2,270,170 187,297 (930,707) 5,538,987 3,747,029 8,507,621
Treasury stock
purchased, at cost -- -- -- 271,500 52,286 (49,723) -- -- (49,723)
Issuance of common
stock (note 7) 86,250 -- 863 -- -- -- 16,387 -- 17,250
Benefit from
subsidiary's
treasury stock
transactions -- -- -- -- -- -- (13,222) -- (13,222)
Net loss -- -- -- -- -- -- -- (1,759,085) (1,759,085)
---------- --------- -------- --------- ------- --------- --------- --------- ---------
Balance, April 1, 1995 13,764,588 1,552,866 $153,175 2,541,670 239,583 $(980,430) 5,542,152 1,987,944 6,702,841
========== ========= ======== ========= ======= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
-17-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For each of the years in the three-year period ended April 1, 1995
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $(1,759,085) (153,053) 290,085
----------- ----------- -----------
Adjustments to reconcile net income (loss) to
net cash (used in) provided by operating
activities:
Depreciation and amortization 565,946 531,154 526,240
Loss on abandonment of leasehold improvements -- 141,828 --
Deferred income taxes 342,014 (49,100) (39,000)
Minority interest in net income (loss)
of consolidated subsidiary (259,033) (14,750) 42,086
Change in assets and liabilities
affecting cash flows from operating
activities:
(Increase) decrease in:
Inventories 263,579 188,165 (228,081)
Prepaid expenses and other current
assets 8,756 57,657 171,275
Refundable income taxes (232,829) (24,400) 81,000
Other assets 46,965 (66,711) (3,974)
Increase (decrease) in:
Accounts payable (484,050) (402,841) 828,080
Accrued liabilities 266,468 22,500 311,135
Long-term obligations 334,573 -- --
Income taxes payable -- (73,659) 73,659
Deferred rent (4,538) 51,134 135,557
----------- ----------- -----------
Total adjustments 847,851 360,977 1,897,977
----------- ----------- -----------
Net cash (used in) provided by
operating activities (911,234) 207,924 2,188,062
----------- ----------- -----------
Cash flows from investing activities:
Purchase of marketable investment securities (2,649,534) -- --
Purchases of property and equipment (922,536) (176,480) (72,388)
Due from officers/shareholders 26,285 24,273 22,413
Involuntary conversion of property and equipment due
to Hurricane Andrew -- -- 239,380
----------- ----------- -----------
Net cash (used in) provided by
investing activities (3,545,785) (152,207) 189,405
----------- ----------- -----------
</TABLE>
(Continued)
-18-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Increase in note payable $ -- 75,000 --
Repayment of note payable (75,000) -- --
Repayment of long-term debt (131,173) (174,579) (188,524)
Proceeds from issuance of stock 17,250 34,500 34,500
Acquisition of treasury stock (49,723) (23,034) (9,452)
Acquisition of subsidiary stock (13,222) (40,260) (12,332)
----------- ----------- -----------
Net cash used in financing
activities (251,868) (128,373) (175,808)
----------- ----------- -----------
Net (decrease) increase in cash and
cash equivalents (4,708,887) (72,656) 2,201,659
Cash and cash equivalents, beginning of year 6,723,034 6,795,690 4,594,031
----------- ----------- -----------
Cash and cash equivalents, end of year $ 2,014,147 6,723,034 6,795,690
=========== =========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 84,478 88,971 107,487
=========== =========== ===========
Income taxes, net of refunds $ 11,232 63,651 95,761
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
-19-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
April 1, 1995, April 2, 1994 and April 3, 1993
(1) Business and Summary of Significant Accounting Policies
(a) Business
URT Industries, Inc. and subsidiaries (the "Company") is engaged
in the business of retailing prerecorded music, video and
accessory items, principally in the southeastern United States.
(b) Fiscal Year
The Company's fiscal year consists of the 52 or 53 weeks ending
on the Saturday closest to the end of March. The fiscal years
ended April 1, 1995, April 2, 1994 and April 3, 1993 consisted
of 52 weeks, 52 weeks and 53 weeks, respectively.
(c) Principles of Consolidation
The consolidated financial statements include the accounts of
URT Industries, Inc. and its wholly owned nonoperating
subsidiary, whose business was discontinued in 1984, and its
87%-owned subsidiary, Peaches Entertainment Corporation. All
significant intercompany balances and transactions have been
eliminated. Reference to the Company encompasses any or all of
the aforementioned entities.
(d) Cash Equivalents
The Company considers highly liquid investments purchased with
original maturities of three months or less to be cash
equivalents. Cash equivalents totaled $486,192 and $4,816,000 at
April 1, 1995 and April 2, 1994, respectively.
The Company has an agreement to purchase securities overnight
under agreements to resell ("repos"). At April 1, 1995 and April
2, 1994, the outstanding repos, included above, approximated
$385,000 and $1,559,000, respectively, which approximated
market. The repos are collaterized by U.S. Government and agency
securities.
(e) Marketable Investment Securities
The Company adopted Statement of Financial Accounting Standards
No. 115 ("SFAS 115"), Accounting for Certain Investments in Debt
and Equity Securities, effective April 3, 1994. There was no
cumulative effect as a result of adopting SFAS 115 in 1995. The
Company invests in short-term cash investments which are
classified as available-for-sale at April 1, 1995 and are
comprised of treasury bills with maturities not exceeding one
year. The carrying amount approximates fair value because of the
short maturity of these instruments.
(Continued)
-20-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(f) Inventories
Inventories, comprised of compact discs, cassettes, videos and
accessories, are stated at the lower of cost (principally
average) including freight in, or market.
(g) Property and Equipment
Property and equipment are stated at cost. The assets are
depreciated over their estimated useful lives ranging from 5 to
31-1/2 years using both straight-line and accelerated methods.
The Company's policy is to retire assets from its accounts as
they become fully depreciated.
(h) Income Taxes
The Company files a consolidated income tax return with its
subsidiaries. Provision is made for deferred income taxes which
result from certain items of income and expense being reported
for tax purposes in periods different than those reported for
financial reporting purposes. These items relate principally to
the methods of accounting for store leases with future scheduled
rent payment increases, inventory and the utilization of
different methods of depreciation for financial statement and
income tax purposes.
Effective April 4, 1993, the Company adopted the provisions of
Financial Accounting Standards Board's SFAS No. 109, Accounting
for Income Taxes and has reported the cumulative effect of that
change in the method of accounting for income taxes in the
consolidated statements of operations. Under the asset and
liability method of SFAS No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. Under SFAS No. 109, the
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date.
(i) Income (Loss) Per Common Share
Income (loss) per common share was computed by dividing net
income (loss) by the weighted average number of common shares
outstanding during each of the periods which was 12,674,448,
12,695,136 and 12,594,531 for the years ended April 1, 1995,
April 2, 1994 and April 3, 1993, respectively.
(j) Store Closing Costs
Store closing costs are recorded in the period the Company
decides to close the store. Such costs include the book value of
abandoned leasehold improvements, provision for the present
value of future lease obligations, less estimated sub-rental
income as well as other costs incident to the store closing.
(Continued)
-21-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(k) Reclassifications
Certain amounts in the 1994 and 1993 consolidated financial
statements have been reclassified to conform with the 1995
presentation.
(2) Due From Officers/Shareholders
Due from officers/shareholders consist of the following at April 1,
1995 and April 2, 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Unsecured loans made to two officers/shareholders;
proceeds of the loans were used to purchase shares
of the Company's Class A and Class B common
stock in the open market from an unrelated party $ 168,020 194,305
Less current portion (28,470) (26,285)
--------- -------
$ 139,550 168,020
========= =======
</TABLE>
The promissory note agreements with the two officers/shareholders are
payable with interest at 8% in 96 equal, consecutive monthly
installments through March 31, 2000.
Under amended and restated employment agreements with these
officers/shareholders [see note 6(c)], the required loan payments will
be credited as compensation for the two officers/shareholders.
Interest income on these loans amounted to $14,590, $16,610 and $18,460
in each of the years in the three-year period ended April 1,1995,
respectively, and is included in interest income in the accompanying
consolidated statements of operations.
(3) Property and Equipment
Property and equipment consist of the following at April 1, 1995 and
April 2, 1994:
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Land $ 395,570 395,570
Building 538,093 538,093
Leasehold improvements 3,383,814 3,091,492
Furniture and equipment 1,620,590 1,554,964
Building under capitalized lease (note 4) 206,964 206,964
----------- -----------
6,145,031 5,787,083
Less accumulated depreciation and amortization (3,042,103) (2,740,745)
----------- -----------
$ 3,102,928 3,046,338
=========== =========
</TABLE>
(Continued)
-22-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(4) Long-term Obligations
Long-term obligations consists of the following at April 1, 1995 and
April 2, 1994:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Capital lease obligation, due in monthly installments
of $3,382, including interest at 17.5%; final
payment due March 2005 $ 191,096 197,605
Mortgage payable, due in equal installments of
$2,981 per month, including interest at prime plus
.5%; collateralized by the mortgaged property with
depreciated cost of $836,297; final balloon
payment of $427,500 due September 1997 514,013 549,788
Lease obligation on closed store, net of sublease
rentals, including interest at 10%, payable in
monthly installments until November 2004 334,573 --
Note payable, with interest at 10%; repaid December
1994 -- 88,889
----------- -----------
1,039,682 836,282
Less current portion (110,028) (131,173)
----------- -----------
$ 929,654 705,109
=========== ===========
</TABLE>
The capital lease pertains to the building portion of property owned by
one director and one former director. The rent expense on the land
portion of this lease was $99,000 for each of the years in the
three-year period ended April 1, 1995.
The following represents future minimum lease payments under the capital
lease obligation:
Fiscal year Amount
----------- ------
1996 $ 40,600
1997 40,600
1998 40,600
1999 40,600
2000 40,600
Thereafter 202,760
--------
Total minimum lease payments 405,760
Less amount representing interest 214,664
--------
Present value of minimum lease payments $191,096
========
(Continued)
-23-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Maturities of long-term obligations, excluding the capital lease
obligation, to maturity, are as follows:
Fiscal year Amount
----------- ------
1996 $102,284
1997 519,818
1998 37,639
1999 32,968
2000 35,021
Thereafter 120,856
--------
$848,586
========
In addition, the Company has a standby letter of credit of $64,800
available to a landlord that was not drawn upon as of April 1, 1995.
The letter of credit is fully collateralized by a certificate of
deposit, which is included in other assets.
(5) Accrued Liabilities
Accrued liabilities consist of the following at April 1, 1995 and April
2, 1994:
1995 1994
---- ----
Gift certificate and credit slip liability $ 484,501 426,547
Other 1,303,127 1,094,613
---------- ---------
$1,787,628 1,521,160
========== =========
(6) Commitments and Contingencies
(a) Leases
The Company is a lessee under various operating leases, several
of which provide for percentage rent. An insignificant amount of
percentage rent was incurred in each of the years in the
three-year period ended April 1, 1995. Most of the leases
contain renewal options.
The aggregate minimum rental commitments under all noncancelable
operating leases are as follows:
Fiscal year Amount
----------- ------
1996 $ 1,812,210
1997 1,695,177
1998 1,561,568
1999 1,340,440
2000 1,181,966
Thereafter 5,799,015
-----------
$13,390,376
===========
(Continued)
-24-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Rental expense under noncancelable operating leases, included in
selling, general and administrative expenses in the accompanying
consolidated statements of operations, amounted to $2,410,000,
$2,561,000 and $2,639,000, respectively, for each of the years
in the three-year period ended April 1, 1995.
Rental expense on two stores owned by two directors and/or their
relatives was $234,000 for each of the years in the three-year
period ended April 1, 1995.
(b) Legal Matters
The Company has been party to a lawsuit involving the Company's
closing of a store which it had leased in Charlotte, North
Carolina and its refusal to pay rent with respect to such store
from and after February, 1991. In February 1995, the Court
entered a judgment ordering the Company to pay the sum of
$405,460 to plaintiff. The Company recorded a charge to
operations for the year ended April 1, 1995 related to the loss
on such litigation and paid such amount in March 1995.
(c) Employment Agreements
As amended October 1, 1994, the Company entered into amended and
restated employment agreements with two officers, which expire
March 31, 2000 and September 30, 1996, respectively. The
aggregate annual average base compensation under such agreements
is approximately $720,000 and $242,000, respectively. In
addition, the two officers shall be credited, as compensation,
with the monthly amounts payable by them to the Company under
promissory notes (note 2). The Company also agreed to engage one
of the officers as a consultant during the period from the date
immediately following the period of employment until September
3, 2005, with an aggregate average annual base compensation of
approximately $81,000.
The respective employment agreements provide the officers with
the use of an automobile, full medical coverage, reimbursement
for life insurance policies, paid vacations and substantial
severance pay to one of the officers if the Company refuses to
renew the employment agreement upon expiration, or in the event
of termination upon mutual consent or termination in certain
other events.
(7) Shareholders' Equity
Authorized shares of common stock as of April 1, 1995 and April 2, 1994
were 20,000,000 Class "A" and 10,000,000 Class "B" shares, both classes
having a par value of $.01. The two classes of the Company's common
stock are identical except that each class votes separately so that all
matters requiring the vote of stockholders require the approval of both
classes of common stock voting as separate classes.
The Company had agreed to sell to two officers shares of Class "A"
common stock in 96 equal consecutive monthly installments, starting
April 1, 1992, each installment involving the purchase of an aggregate
of 14,375 shares for $2,875 ($.20 per share). The amounts required to
purchase such shares were required to be credited as compensation to
the two officers. Effective October 1, 1994, the agreements were
terminated.
(Continued)
-25-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(8) Pension Plan
Effective September 15, 1994, the Company decided to curtail its
noncontributory defined benefit plan which it had maintained with its
Parent. As a result of this curtailment all future benefit accruals
were eliminated and accrued benefits became fully vested.
The following table sets forth the plan's funded status at April 1,
1995 and April 2, 1994:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligation including
vested benefits of $833,486 in 1995
and $679,896 in 1994 $(833,486) (699,785)
========= =========
Projected benefit obligation for service
rendered to date (833,486) (946,487)
Plan assets at fair value 852,982 931,885
--------- ---------
Plan assets in less than projected benefit
obligation 19,496 (14,602)
Unrecognized amounts:
Net gain 19,033 (68,573)
Prior service costs -- 24,282
Obligation at transition -- 52,768
--------- ---------
Accrued pension costs $ 38,529 (6,125)
========= =========
</TABLE>
Net pension cost for each of the years in the three-year period ended
April 1, 1995 included the following components:
<TABLE>
<CAPTION>
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Service cost - benefits earned during the
period $ 13,330 128,990 125,369
Interest cost on projected benefit obligation 83,137 62,124 48,453
Actual return on plan assets (43,011) (50,905) (17,980)
Net amortization and deferral (9,854) 1,022 (32,884)
-------- -------- --------
Net periodic pension cost $ 43,602 141,231 122,958
======== ======== ========
</TABLE>
(Continued)
-26-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The weighted average discount rate and rate of increase in future
compensation levels used in determining the actuarial present value of
the projected benefit obligation were 5.75% and 8.0% and 0% and 4.5%,
as of April 1, 1995 and April 2, 1994, respectively. The expected
long-term rate of return on assets was 7.0%.
(9) Income Taxes
The provision (benefit) for income taxes consists of:
1995 1994 1993
--------- --------- ---------
Current:
Federal $(221,597) (26,000) 227,000
State -- 1,000 23,000
--------- --------- ---------
(221,597) (25,000) 250,000
Deferred:
Federal 295,910 (61,000) (46,000)
State 46,104 -- 7,000
--------- --------- ---------
342,014 (61,000) (39,000)
--------- --------- ---------
$ 120,417 (86,000) 211,000
========= ========= =========
Reasons for differences between income tax expense (benefit) and the
amount computed by applying the statutory federal income tax rate of 34%
to income before income taxes and minority interest were:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Income tax (benefit) at applicable statutory
tax rate of income before income taxes $(645,000) (86,000) 186,000
Add:
State income tax expense (benefit), net
of Federal benefit (64,000) -- 20,000
Change in valuation allowance 811,258 -- --
Other 18,159 -- 5,000
--------- --------- ---------
Income tax provision (benefit) for the year $ 120,417 (86,000) 211,000
========= ========= =========
</TABLE>
Deferred income tax benefit resulting from timing differences in the
recognition of revenue and expense for tax and financial purposes for
the year ended April 3, 1993 were as follows:
1993
----
Excess book over tax depreciation on property and
equipment $ 4,000
Capitalization of inventory costs (2,000)
Excess book over tax rent expense 55,000
State tax benefit (14,000)
Other (4,000)
---------
$ 39,000
========
(Continued)
-27-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets at April 1, 1995 and April 2, 1994
are presented below.
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Deferred tax assets:
Inventories, principally due to additional costs
capitalized for tax purposes $ 50,051 47,500
Property and equipment, net, principally due to
differences in depreciation 200,840 152,087
Accrued rent, principally due to accrual for financial
reporting purposes 210,136 186,852
Provision for store closings 208,114 --
NOL carryforward 126,026 --
Other 84,847 24,331
--------- ---------
Total gross deferred tax assets 880,014 410,770
Less valuation allowance (880,014) (68,756)
--------- ---------
Net deferred tax assets $ -- 342,014
========= =========
</TABLE>
At April 1, 1995, the Company has a net operating loss carryforward for
federal income tax purposes of $126,026 which is available to offset
future federal taxable income, if any, through 2010.
A valuation allowance is provided to reduce deferred tax assets to a
level which, more likely than not, will be realized. The net deferred
assets reflect management's estimate of the amount which will be
realized from future profitability which can be predicted with
reasonable certainty.
(10) Sale of Land
In May 1995, the Company sold an unimproved parcel of land in
Lafayette, Louisiana. As of April 1, 1995, the net book value of the
land approximated the sales price.
(11) Store Closings
During 1993, the Company closed the Cutler Ridge, Florida store which
was destroyed by Hurricane Andrew and entered into an agreement with
the landlord to terminate the lease. The costs associated with the
closing are included in store closing costs for the year ended April 3,
1993.
(Continued)
-28-
<PAGE>
URT INDUSTRIES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
During 1994, the Company closed the Aventura, Florida store and entered
into an agreement to terminate the lease. The costs associated with the
closing are included in store closing costs for the year ended April 2,
1994. As part of the agreement to terminate the lease, the Company
executed a note to the former landlord in the amount of $75,000 payable
in twelve monthly installments through March 1995.
The Company recorded a charge relating to four store closings of
approximately $595,500 for the year ended April 1, 1995. The charge
includes the write-off of leasehold improvements, loss incurred due to
the present value of future lease obligations, less estimated
sub-rental income and other costs incident to the store closings,
offset by approximately $47,000 of deferred rent.
-29-
<PAGE>
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
As of the date of this filing, the directors and executive officers of
URT are:
Name Position Age
---- -------- ---
Allan Wolk Chairman of the Board,
Chief Executive Officer
and Director 57
David Jackowitz President, Treasurer
and Director 54
Ann Krouse Director 48
Brian Wolk Vice-President and Director 29
Jason Wolk Vice-President and Director 27
Allan Wolk has been the Chief Executive Officer and a director of URT
and PEC since their formation. He has been engaged in the prerecorded music
business for more than 35 years, principally in the rack merchandising and
retail segments thereof.
David Jackowitz has been employed by the URT Companies since 1970. He
became the President of URT in 1978 and has been a director since 1974. He has
also been the Executive Vice-President and a director of PEC since its
formation. Prior to his employment by URT, he was principally engaged as a
certified public accountant.
Ann Krouse has been a director since 1977. She has been a director of
PEC since February, 1983. She has been Executive Vice-President of Educational
Communications, Inc., an unaffiliated company which is a biographical publisher
in Illinois, for more than five years.
-30-
<PAGE>
Brian Wolk, an attorney, has been employed by the URT Companies in
various capacities and at various times since 1982 and has been employed by
them, full time, since 1992. He has been a director of URT and PEC since 1994
and a vice-president of both companies since June of 1995.
Jason Wolk, a certified public accountant, has been employed by the URT
Companies in various capacities and at various times since 1983 and has been
employed by them, full time, since 1994. Prior to his full time employment by
the URT Companies, he had been employed as an accountant by KPMG Peat Marwick.
He has been a director of URT and PEC since 1994 and a vice-president and the
secretary of both companies since June of 1995.
Ann Krouse is Allan Wolk's sister. Brian Wolk and Jason Wolk are his
sons.
The term of office of each director continues until the next annual
meeting of the stockholders and until his or her successor is elected. Mr. Wolk
and Mr. Jackowitz have employment agreements with URT and PEC, respectively (See
"Executive Compensation--Employment Contracts").
Item 11. EXECUTIVE COMPENSATION
The following table sets forth compensation paid or accrued by the URT
Companies for services rendered in all capacities to them during the 1995 fiscal
year and the two prior fiscal years to (i) URT's chief executive officer ("CEO")
and (ii) each of the other most highly compensated executive officers of the URT
Companies whose cash compensation exceeded $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------------- ------------------------------
Awards Payouts
--------------------- -------
Long
Options/ Term
Other Stock. Incen. All
Annual Restricted App. Plan Other
Name and Fiscal Salary Bonus Compensa- stock Rights Pay-outs Compensa-
position Year ($) ($) tion($) award(s)($) (#) ($) tion($)
- -------- ---- ------- ----- ---------- ----------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Allan 1995 810,380 -0- 109,704(1) -0- -0- -0- -0-
Wolk, 1994 918,923 -0- 125,771(1) -0- -0- -0- -0-
Chairman 1993 852,625 -0- 89,983(1) -0- -0- -0- -0-
& CEO
David 1995 289,897 -0- (2) -0- -0- -0- -0-
Jackowitz, 1994 326,889 -0- 33,646(1) -0- -0- -0- -0-
Pres. & 1993 316,384 -0- (2) -0- -0- -0- -0-
Treas.
</TABLE>
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<PAGE>
- ----------
(1) Includes, for the years to which this footnote applies, life insurance
premiums ($59,584 for Mr. Wolk in fiscal 1995) and amounts credited to Mr.
Wolk and Mr. Jackowitz under their respective employment agreements
against monthly payments owed to URT under their respective promissory
notes and stock purchase agreements, all as described below.
(2) Pursuant to applicable rules, information is not included with respect to
other annual compensation which does not exceed the lesser of $50,000 or
10% of the salary and bonus reported for the named executive officer.
Employment Contracts
On April 3, 1994, when the 1995 fiscal year began, Mr. Wolk was
employed by URT under an employment agreement dated as of March 31, 1992.
Effective October 1, 1994, URT and Mr. Wolk entered into a new employment
agreement which is presently in effect. Under his 1994 Agreement, as in his 1992
Agreement, the period of employment continues until March 31, 2000. The 1994
Agreement reduced the annual rate of his base salary to $725,380 for the period
from October 1, 1994 though March 31, 1995, to $575,380 for the next eighteen
month period ending September 30, 1996 and to $784,048 for the balance of the
term of employment (as compared to an annual base salary at the rate of $834,048
under his 1992 Agreement). The 1994 Agreement eliminated provisions contained in
the 1992 Agreement under which Mr. Wolk was entitled to cost of living increases
based on increases in the consumer price index and changes in U. S. individual
income tax rates. It reduced certain monthly credits to which he was entitled
under the 1992 Agreement effective October 1, 1994 from $5,435 per month to
$2,935 per month but retained the provision that if he died or became disabled
during the term of such agreement, the credits which he would have received
through March 31, 2000 (but in the reduced amount under the 1994 Agreement) if
he had survived and not become disabled would be accellerated to the date of
death or disability. The 1994 Agreement also provided that URT would pay or
reimburse him for the premiums on term or other life insurance coverage to be
selected by URT and payable to his designee in the amount of $2,600,000 for the
duration of his life (rather than being reduced to $1,500,000 after age 70 as
provided in the 1992 Agreement). Mr. Wolk was also permitted under the 1994
Agreement (as he had been under the 1992 Agreement) to repay certain loans which
are hereinafter
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<PAGE>
described in "Certain Relationships and Related Transactions"), over the term of
his employment.
The 1994 Agreement also continued to provide (as had the 1992
Agreement) that during his employment period URT would furnish Mr. Wolk with an
automobile, reimburse him for business expenses, including socially related
business expenses incurred by him, and provide him with hospital and medical
benefits; that upon termination of his employment, he would not compete with the
URT Companies for a period of three years and for the additional period during
which he accepted severance payments; that upon the termination of his period of
employment and URT's refusal to continue to employ him on terms no less
favorable than those contained in his employment agreement or in the event of
the earlier termination of his employment for any reason other than death, URT
was required to pay him as severance payments, an amount equal to his annual
base salary which was in effect at the time of termination and thereafter, upon
each anniversary of the termination date until his death, 50% of such annual
base salary (except for the elimination of provisions which had been in the 1992
Agreement under which he could have been entitled to additional amounts if
adjustments were made due to increases in the consumer price index, changes in
the income tax laws or certain other contingencies), as reduced by any payments
he received under any pension or profit sharing plan of the URT Companies and if
applicable, any disability insurance policy; that so long as he was entitled to
receive severance payments, URT was required to continue to furnish him with an
automobile, pay the premiums on the above described life insurance coverage and
provide medical insurance coverage for him and his family which would continue
during his lifetime and that of his wife, if she survived him; that as a
condition of receiving such severance payments and benefits, he was required to
be available to the URT Companies as a consultant; that if any persons,
excluding officers and directors of URT, should acquire effective control of URT
while he was in its employ, he would be entitled to receive, in addition to all
other payments required to be made to him under his employment agreement, an
amount equal to the maximum amount permitted to be paid by URT without such
payment being considered a "parachute payment" under the Internal Revenue Code;
that such provision was designed to deter corporate raiders and would require
that a substantial payment be made to him in the event that any such persons
acquired effective control of URT. The amount to which Mr. Wolk would be
entitled under the circumstances described above would depend on his
compensation during the five tax years immediately preceding any such change in
control. If, for illustrative purposes, such change in control had occurred
during the 1995 tax year,
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<PAGE>
the payment to Mr. Wolk would have been approximately $2,900,000.
The 1994 Agreement also permits Mr. Wolk to obtain a loan from URT on a
single occasion not to exceed $400,000 for a period of up to five years at an
interest rate of 3% per annum, which is required to be collateralized by
adequate security and made upon such other terms and conditions as URT's
directors with the advice of counsel deem necessary to protect URT. Under his
1992 Agreement, he was able to obtain a secured bridge loan repayable over three
years at prevailing interest rates of up to $400,000 on a single occasion if he
should need it in connection with a change of personal residence.
When the 1995 fiscal year began, Mr. Jackowitz was employed by PEC
under an employment agreement dated as of March 31, 1992. Effective October 1,
1994, PEC and Mr. Jackowitz entered into a new employment agreement which is
presently in effect. Under his 1994 Agreement, Mr. Jackowitz' employment period
will expire on September 30, 1996 instead of September 30, 2000, the expiration
date of his 1992 Agreement (although PEC has the right under the 1994 Agreement
to terminate his employment at any time after September 30, 1995). Thereafter,
he is required to act as a consultant to the URT Companies until September 3,
2005 concerning company matters but is not required to spend more than ten hours
per month in doing so. Mr. Jackowitz' 1994 Agreement reduced the annual rate of
his base salary to $258,833 for the period from October 1, 1994 through March
31, 1995, and to $225,000 for the period from April 1, 1995 to September 30,
1996 (while his employment continues) as compared to a base salary at the annual
rate of $309,490 together with cost of living increases based on increases in
the consumer price index and proportional adjustments in compensation based on
increases in U. S. individual income tax rates, which were provided for in the
1992 Agreement. The 1994 Agreement also provided that Mr. Jackowitz is entitled
to a credit as additional compensation in the amount of $471 per month (as
opposed to $846 per month under the 1992 Agreement) except (as had also been
provided under the 1992 Agreement) that if he died or became disabled during the
term of his employment agreement, all such credits (in such reduced amount)
which he would have received if he had survived and not become disabled would be
accellerated to the date of death or disability. Such credits are required to be
paid both during his employment and consulting periods until the promissory
notes against which they are to be applied have been paid in full. Such credits
represent monthly amounts which are payable by him under certain promissory
notes. The
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<PAGE>
credits under the 1992 Agreement had also been applied against his obligations
under a stock purchase agreement described below.
Mr. Jackowitz' 1994 Agreement retained provisions which were in his
1992 Agreement requiring PEC, during his period of employment, to furnish him
with an automobile, reimburse him for business expenses including socially
related business expenses incurred by him, and provide him with hospital and
medical benefits while he is employed by PEC.
Mr. Jackowitz' 1994 Agreement also provides that during the first
twelve months of the consulting period, Mr. Jackowitz will be compensated at the
rate of $213,000 per annum and during each year of the balance of the consulting
period at the rate of $65,000 per annum, provided, however, that if the
consulting period should commence before October 1, 1996, other than as a result
of death, voluntary resignation or conviction of a crime involving any act of
dishonesty which was intended to harm the URT Companies, his compensation during
the consulting period would be at the rate of $225,000 per annum during the
first year, $125,000 during the second year, and $65,000 per annum during the
balance of the consulting period. If Mr. Jackowitz is unable to perform his
consulting services as a result of sickness, accident or other cause outside of
his control, PEC is still obligated under his 1994 Agreement to continue to pay
him the compensation required to be paid during the consulting period.
The 1994 Agreement further provides that during the consulting period,
PEC will use its best efforts to cause Mr. Jackowitz and his wife to be included
in PEC's health insurance plan, as in effect at the time of the end of his
employment period and, in such event, PEC will be required to pay for the cost
thereof but not to exceed $485 per month; but that if they are unable to be
included, PEC will be responsible for the cost incurred by Mr. Jackowitz for
such purpose up to $485 per month; and that PEC will also pay him $500 per month
to pay for the costs of any automobile which is used by him during the
consulting period.
In his 1992 Agreement, PEC was required to pay or reimburse Mr.
Jackowitz for the premiums on term or other life insurance coverage to be
selected by PEC and payable to his designee in the amount of $1,000,000 if he
died before age 70 and $750,000 if he died after age 70. The 1994 Agreement
provides that from and after January 1, 1995, PEC is no longer required to do so
but that on the first days of January during 1995 through 2000, it will pay to
him as additional
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<PAGE>
compensation, the amount of $10,000 per annum to enable him to obtain a policy
of life insurance on his life from any insurance company which he selects.
The 1994 Agreement also provides that during the consulting period or
any period during which he is disabled, as above described, Mr. Jackowitz will
not own or operate or work for any company which owns or operates any retail
stores which sell pre-recorded audio products or divulge any information
relating to PEC's finances, leases, properties, personnel or manner in which it
conducts business.
Compensation Committee Interlocks and Insider Participation
URT does not have a compensation committee or other board committee
performing equivalent functions. During the last completed fiscal year, all
deliberations concerning executive officer compensation or any other
arrangements between URT and any executive officers were conducted by URT's full
board of directors, provided, however, that no director voted on compensation
payable to him as an executive officer or any other arrangement between him and
URT.
Pension Plan
The URT Companies had adopted a defined benefit pension plan and trust
(the "Pension Plan") effective April 1, 1985. Such Plan was amended during the
1995 fiscal year to provide that no present or future employee of the URT
Companies who was not a participant in the Pension Plan on September 9, 1994 was
eligible to become a participant in the Pension Plan, and that effective as of
September 14, 1994, no further accrual of benefits would be made under the Plan
except to the extent, if any, that such accruals were required by law. In March
of 1995, the URT Companies decided to terminate the Pension Plan effective May
12, 1995 and will file documents with the Internal Revenue Service for such
purpose. Upon receiving an appropriate determination letter from the Internal
Revenue Service or the expiration of the period in which the Pension Benefit
Guaranty Corporation can issue a notice of non-compliance, whichever is sooner,
the assets of the Pension Plan will be distributed to Pension Plan participants.
Interests in the Pension Plan have been computed on the basis of compensation
and service.
As a result of the termination of the Pension Plan, the following
officers will be entitled, at age 65, to receive a
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<PAGE>
single life annuity, payable monthly, in the following annual amounts:
Name of Individual Annual Amounts
------------------ --------------
Allan Wolk $53,328
David Jackowitz $48,921
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains information concerning the number of
shares of each class of URT's common stock which was owned by each person who,
on May 30, 1995, owned, beneficially, more than 5% thereof, and the number of
shares of each class of such stock owned beneficially, directly or indirectly,
by each executive officer and director and by all directors and executive
officers as a group on such date:
Amount & Nature
of Beneficial Percent
Title of Class Name Ownership of Class
- -------------- ---- --------- --------
Class A Common Executive Officers
Stock, par value and Directors
$.01 per share ------------------
Allan Wolk 3,194,186(1)(5) 28.5%
David Jackowitz 245,850 2.2%
Lawrence Strauss
and Allan Wolk,
as Trustees 33,072(2)(5) *
Ann Krouse 12,096(4) *
Brian Wolk 12,980(6) *
Jason Wolk 17,480(6) *
All officers and
directors as a
group (5 persons) 3,515,664 31.4%
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<PAGE>
Amount & Nature
of Beneficial Percent
Title of Class Name Ownership of Class
- -------------- ---- --------- --------
Other
Scorpio Music, Inc.
P. O. Box A
Trenton, N.J. 08691 1,195,800(7) 10.7%
Class B Common Executive Officers and Directors
Stock, par value --------------------------------
$.01 per share Allan Wolk 786,654(3)(5) 57.6%
David Jackowitz 7,922 *
Ann Krouse 3,024(4) *
All officers and
directors as a
group (3 persons) 797,600 58.4%
- ----------
(1) Includes 3,150,786 shares owned by Allan Wolk, 25,920 shares owned by his
wife and 17,480 shares held by him for his daughter.
(2) Such shares are held by Lawrence Strauss and Allan Wolk as trustees for the
benefit of children of Sheffield Wolk, Allan Wolk's brother.
(3) Includes 780,174 shares owned by Allan Wolk and 6,480 shares owned by his
wife.
(4) Includes 3,456 shares of Class A Stock and 864 shares of Class B Stock
owned by Paul Krouse, husband of Ann Krouse.
(5) Allan Wolk has renounced all voting and investment power with respect to
those shares of URT which are held by him for his children and those which
are held by a trust for the benefit of children of Mr. Wolk's brother. All
such powers as trustee are exercised exclusively by the co-trustee. Each
director believes that his or her spouse will vote the shares owned by him
or her in favor of proposals which he or she favors. However, each of such
directors disclaims beneficial ownership of any shares owned by his or her
spouse or held for the benefit of his children or others.
(6) Such shares are held in the name of Allan Wolk, as custodian, but are not
included under the shares listed as beneficially owned by Allan Wolk.
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<PAGE>
(7) Based on information supplied by URT's transfer agent. Does not include
160,000 shares reported in a Schedule 13D, dated June 14, 1989, as owned by
John T. Gervasoni, Scorpio's president and 100% shareholder, as to which no
confirmation of ownership has been made by URT's transfer agent.
(*) Less than one percent.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As a result of their purchase in 1983 from an unaffiliated third party
seller, Allan Wolk and his brother, Sheffield Wolk, a former director of URT,
are the owners of the land and building on which the PEC store in Fort
Lauderdale, Florida, is located. Such property was and continues to be subject
to a lease with PEC as tenant, which had been negotiated by the prior owner.
During the 1995 fiscal year, PEC made and paid for certain renovations to the
premises. Based on the provisions of the lease, the owners agreed to be
responsible for $26,225 of such cost which, with interest, is being deducted by
PEC over a period of 36 months.
In September, 1984, PEC entered into a long term lease with the mother
of Allan Wolk, Sheffield Wolk and Ann Krouse, of premises owned by her in North
Miami Beach, Florida (the "North Miami Beach lease"). It was approved by
disinterested directors. As a result of her death, the premises are now owned by
Allan Wolk (one-third interest), Ann Krouse (one-third interest), and two
children of Sheffield Wolk, each of whom has a one-sixth interest. The lease
term commenced on September 1, 1984 and is for a period of twenty years with two
additional five year terms. The lease is a triple net lease. The rental consists
of a net minimum rent plus 5% of net sales in excess of $1,400,000 up to
$1,800,000 and 2-1/2% of net sales in excess of $1,800,000. The net minimum rent
during the first five years of the term was $95,000 per annum. There are annual
increases in such minimum rent, before the adjustments described below, of
$10,000 during each of the next three five year periods and annual increases of
$7,500 during each of the last two five year periods.
In October, 1990, the North Miami Beach lease was amended for the
purpose of including within the demised premises an adjoining parking area which
is also owned by the owners of the store site. Such adjoining parking area was
required by PEC for the purpose of complying with applicable zoning
requirements. As a result of the inclusion of such adjoining parking area in the
demised premises covered by the existing lease, PEC agreed to pay additional
annual net minimum rent
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<PAGE>
ranging from $9,000 in the first four years (commencing as of September 1, 1990)
to $14,000 in the final five years covered by the amendment to such lease. The
amendment was also approved by disinterested directors.
In December, 1984, PEC entered into a long-term lease with Allan Wolk
and Sheffield Wolk for premises owned by them in Orlando, Florida. The lease
term commenced in December, 1984, and is for a period of twenty years with two
additional five year terms. The lease is a triple net lease. The lease provides
for a net minimum rental rate of $125,000 per annum from the rental commencement
date through March 31, 1985; a rate of $140,000 per annum during the following
five year period; a rate of $145,000 per annum during the next five year period;
a rate of $160,000 during the next five year period; and increases of $5,000
during every five year period thereafter. Notwithstanding the foregoing,
commencing with the sixth rental year, if net sales at the store during any
rental year are less than $1,800,000, the annual net minimum rental rate for
such year will be the same as that which had been in effect during the preceding
five year period. The lease was approved by disinterested directors.
Management believes that the terms of such North Miami Beach and
Orlando leases are as reasonable as those which could have been obtained from
unaffiliated third parties.
In August, 1987, URT made loans to Allan Wolk and David Jackowitz of
$392,872 and $63,748, respectively, and in March, 1988 made additional loans of
$123,000 and $21,000, respectively. The principal amounts of the August, 1987
loans were payable in five years, with interest payable at the rate of 7.9% per
annum and the principal amounts of the March, 1988 loans were payable in six
years, with interest payable at the rate of 7.86% per annum. As consideration,
in part, for the agreements of Mr. Wolk and Mr. Jackowitz to reduce the amounts
of compensation which would have been payable to them under employment
agreements dated as of February 1, 1991, which were then in effect, the
promissory notes evidencing the above-described indebtedness were replaced by
new promissory notes which permitted such indebtedness to be repaid over a
period of eight years, from April 1, 1992 through March 31, 2000, with interest
at the rate of 8.0% per annum, in 96 consecutive monthly installments of $2,935
and $471, respectively. The loans are unsecured. Under the above-described
provisions of Mr. Wolk's 1994 Agreement (which took effect on October 1, 1994),
he is entitled to be credited, as additional compensation through March 31,
2000, when his agreement expires, at the rate of $2,935 per month. Under the
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above described provisions of Mr. Jackowitz' 1994 Agreement, he is entitled to
be credited, as additional compensation, at the rate of $471 per month during
the period of employment and the consulting period provided for therein until
the amount owed has been paid. As a result of such credits, each of such loans
should be paid in full by March 31, 2000. See "Executive Compensation". During
the period from April 2, 1994 through March 31, 1994, Mr. Wolk was credited
under his 1992 Agreement with a total of $22,650 and Mr. Jackowitz was credited
with a total of $3,637 with respect to the above-described loans. As of June 15,
1995, the outstanding principal amount of Mr. Wolk's loans was $140,813 and the
outstanding principal amount of Mr. Jackowitz' loans was $22,617. The highest
amount outstanding on Mr. Wolk's loans during the 1995 fiscal year was $167,416
and the highest amount outstanding on Mr. Jackowitz' loans during such year was
$26,889. Mr. Wolk and Mr. Jackowitz used the funds lent to them to purchase
shares of URT's Class A and Class B Common Stock from independent third parties.
The disinterested directors authorized URT to finance such purchases as
above-described, because they believed that such action would give Mr. Wolk and
Mr. Jackowitz continued incentive to remain with URT and to work to increase the
value of its shares.
Pursuant to stock purchase agreements dated as of February 1, 1989
which were entered into by between URT and Mr. Wolk and URT and Mr. Jackowitz,
Mr. Wolk and Mr. Jackowitz each agreed to purchase from URT 2,000,000 and
300,000 shares, respectively, of URT's authorized but unissued Class A common
stock in five consecutive equal annual installments of 400,000 and 60,000
shares, respectively, commencing January 31, 1990. Prior to 1992, Mr. Wolk and
Mr. Jackowitz had acquired 800,000 and 120,000 shares, respectively, pursuant to
such stock purchase agreements. As further consideration for their agreement to
reduce the amounts of compensation which would have been payable to them under
earlier employment agreements, the February 1, 1989 stock purchase agreements
were amended as of March 31, 1992, under which their obligation to purchase the
remaining 1,200,000 and 180,000 shares, respectively, was extended over a period
of eight years from April 1, 1992 through March 31, 2000. The purchase price for
such shares was $0.20 per share, payable by Mr. Wolk and Mr. Jackowitz in 96
consecutive monthly installments of $2,500 and $375, respectively. Each of them
was entitled to receive the shares paid for. Through September 30, 1994, Mr.
Wolk had purchased an aggregate of 1,175,000 shares for which he was credited
with an aggregate amount of $235,000 and Mr. Jackowitz had received an aggregate
of 176,250 shares for which he was credited with an aggregate amount of $35,250.
Pursuant to second amendments to their respective stock purchase agreements,
effective October 1, 1994, Mr. Wolk, Mr. Jackowitz
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<PAGE>
and URT agreed that URT would have no further obligation to sell to either of
them any shares which had not been purchased through September 30, 1994, that
each of them would have no obligation to pay to URT any of the consideration
which would have been required to have been paid under their stock purchase
agreements, as originally amended, that neither of them had any further right to
purchase any of such unpurchased shares and that URT had no right to receive the
balance of the consideration which would have been payable by them under the
stock purchase agreements, as originally amended. As a result of the foregoing,
no shares, other than those above described which had been purchased through
September 30, 1994 will be purchased by Mr. Wolk or Mr. Jackowitz under the
above described agreements. Under their respective stock purchase agreements,
Mr. Wolk and Mr. Jackowitz agreed that no share which was purchased may be sold
until the expiration of three years from the date of its issuance. The stock
purchase agreements, and the amendments under which the shares were authorized
to be issued to Mr. Wolk and Mr. Jackowitz, were approved by the disinterested
directors, who found the agreements to be fair and reasonable based on the bid
and asked prices quoted for Class A shares on the over-the-counter market, the
obligation of Mr. Wolk and Mr. Jackowitz to purchase the shares for the prices
specified in such agreements regardless of what happened to the market price of
the shares and the fact that each share acquired could not be sold until three
years after the date of its issuance. The decision of URT and Mr. Wolk and Mr.
Jackowitz to terminate the share purchase arrangement effective October 1, 1994
was approved by directors other than themselves.
In April, 1989, URT's board of directors authorized URT to enter into
agreements with its officers and directors under which they would be entitled to
be indemnified by URT and have their expenses advanced to them in the event of
any claim against them in their capacities as officers and directors. On or
about May 22, 1989, such agreements were entered into with all who were then
officers and directors of URT.
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PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this
report.
Page
----
1. Consolidated Financial Statements 14
Independent Auditors' Report
URT Industries, Inc. and
Subsidiaries Consolidated
Financial Statements:
Consolidated Balance Sheets as
of April 1, 1995 and April 2, 1994. 15
Consolidated Statements of
Operations for each of the years
in the three year period ended
April 1, 1995. 16
Consolidated Statements of
Shareholders' Equity for each of
the years in the three year period
ended April 1, 1995. 17
Consolidated Statements of Cash
Flows for each of the years in
the three year period ended
April 1, 1995. 18
Notes to Consolidated Financial
Statements. 20
2. Financial Statement Schedules
Schedules have been omitted which are not
applicable or where the required information
is shown in the financial statements or the
notes thereto.
3. Exhibits.
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Exhibit No.
- -----------
3.1 Articles of Incorporation of URT Industries, Inc. ("URT") and all
amendments thereto through January 11, 1973, incorporated by reference
to Exhibit No. 3.1 to URT's Registration Statement No. 2-36263.
3.1-1 Amendment to URT's Articles of Incorporation dated January 2, 1975,
incorporated by reference to Exhibit No. 3.1-1 to URT's Registration
Statement No. 2-59153.
3.1-2 Amendment to URT's Articles of Incorporation dated November 10, 1976,
incorporated by reference to Exhibit No. 3.1-2 to URT's Registration
Statement No. 2-59153.
3.1-3 Amendment to URT's Articles of Incorporation dated September 21, 1979,
incorporated by reference to Exhibit No. 3.1-3 to URT's Registration
Statement No. 2-63747.
10 (ll) Lease dated July 1, 1984 between Shirley Wolk and Peaches
Entertainment Corporation ("PEC") applicable to North Miami Beach,
Florida premises, incorporated by reference to Exhibit No. 13.46 to
URT's Registration Statement No. 2-63747.
10 (mm) Lease dated December 13, 1984 between Allan Wolk and Sheffield Wolk
and PEC applicable to Orlando, Florida premises, incorporated by
reference to Exhibit No. 13.47 to URT's Registration Statement No.
2-63747.
10 (ss) Amendment to Lease dated February 25, 1986 between Allan Wolk and
Sheffield Wolk and PEC applicable to Orlando, Florida premises
incorporated by reference to Exhibit 10(ss) to URT's Form 10-K Annual
Report filed on June 27, 1986.
10 (kkk) Indemnification Agreement dated May 22, 1989 between Allan Wolk and
URT, incorporated by reference to Exhibit 10(kkk) to URT's Form 10-K
Annual Report dated June 27, 1989.
10 (lll) Indemnification Agreement dated May 22, 1989 between David Jackowitz
and URT, incorporated by reference to Exhibit 10(lll) to URT's Form
10-K Annual Report dated June 27, 1989.
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10 (nnn) Indemnification Agreement dated May 22, 1989 between Ann Krouse and
URT, incorporated by reference to Exhibit 10(nnn) to URT's Form 10-K
Annual Report dated June 27, 1989.
10 (ppp) By-Laws of URT, as amended and restated, incorporated by reference to
Exhibit 10 (ppp) to URT's Form 10-K Annual Report dated June 28, 1990.
10 (xxx) Promissory Note dated March 31, 1992 made by Allan Wolk to URT, as
payee, incorporated by reference to Exhibit 10(xxx) to URT's Form 10-K
Annual Report dated June 25, 1992.
10(bbbb) Promissory Note dated March 31, 1992 made by David Jackowitz to URT,
as payee, incorporated by reference to Exhibit 10(bbbb) to URT's Form
10-K Annual Report dated June 25, 1992.
10(dddd) Management and Intercorporate Agreement dated March 29, 1993 between
URT and PEC, incorporated by reference to Exhibit 10(dddd) to URT's
Form 10-K Annual Report dated June 25, 1993.
10(eeee) Amended and Restated Employment Agreement, dated October 1, 1994,
between Allan Wolk and URT.
10(ffff) Amended and Restated Employment Agreement, dated December 14, 1994,
between David Jackowitz and PEC.
10(gggg) Second Amendment to Stock Purchase Agreement, dated as of October 1,
1994, between Allan Wolk and URT.
10(hhhh) Second Amendment to Stock Purchase Agreement, dated as of December 14,
1994, between David Jackowitz and URT.
10(iiii) Amendment dated as of October 1, 1994 to Management and Intercorporate
Agreement dated March 29, 1993 between URT and PEC.
22 Subsidiaries of URT.
(b) Reports on Form 8-K.
None.
-45-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
URT INDUSTRIES, INC.
By: s/Allan Wolk
-------------------------------------------
Allan Wolk,
Chairman of the Board
Dated: June 29, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Title Date
----- ----
By: s/Allan Wolk June 29, 1995
---------------------------
Allan Wolk,
Chairman of the Board
(Principal Executive
Officer) and Director
By: s/David Jackowitz June 29, 1995
---------------------------
David Jackowitz,
President (Principal
Financial and Accounting
Officer) and Director
By: s/Brian Wolk June 29, 1995
---------------------------
Brian Wolk,
Director
By: s/Jason Wolk June 29, 1995
---------------------------
Jason Wolk,
Director
-46-
Exhibit 10(eeee)
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
AGREEMENT made as of the 1st day of October, 1994 between URT
INDUSTRIES, INC., a corporation duly organized and existing under the laws of
the State of Florida (the "Company") whose principal offices are located at 3451
Executive Way, Miramar, Florida 33025, and ALLAN WOLK, whose business address is
3451 Executive Way, Miramar, Florida 33025 (the "Employee").
The Employee is presently employed by the Company as its Chairman under
an employment agreement dated as of March 31, 1992 (the "1992
Agreement");
The parties have agreed to reduce the base salary payable to the
Employee and make various additional changes to the 1992 Agreement and
wish to set forth such changes herein.
IT IS, THEREFORE AGREED,
1. Subject to all of the terms and conditions of this Agreement (which,
from and after the date hereof, shall replace the 1992 Agreement in its
entirety), the Company agrees to continue to employ the Employee and the
Employee agrees to continue to be employed by the Company from the date hereof
until March 31, 2000 (the "Period of Employment"). Each year from April 1st
through March 31st during the Period of Employment shall be hereinafter called
an "Employment Year". While so employed, the Employee shall serve as the
Chairman of the Company's Board of Directors and as its Chief Executive
<PAGE>
Officer. The word "Company", as used in paragraphs 2, 6, 7, 8, 9(e), 11, 12, 14
and 16 of this Agreement shall include any company which is an affiliate of URT
Industries, Inc. at the time of or after the termination of the Employee's
employment, as the term "affiliate" is defined under the Securities Exchange Act
of 1934, as amended.
2. The Employee agrees that during the Period of Employment:
(a) he shall devote his entire working time and energy to the
business and affairs of the Company; and
(b) he will not directly or indirectly be associated (as an owner,
partner, shareholder, employee, officer, agent, consultant, adviser, or in any
other capacity) with any person, firm, corporation, enterprise or entity other
than the Company. Notwithstanding the foregoing, nothing contained herein shall
be construed to prevent the Employee from: (i) acting as a director of another
company provided that there is no conflict of interest between such activities
and the duties of the Employee under this Agreement, or (ii) investing his
assets in such form or manner as he may determine provided, however, that such
investments shall not be made in any company which competes or transacts any
material amount of business with the Company or involve any services to be
performed by the Employee. The foregoing shall not in any event be construed to
-2-
<PAGE>
prevent the Company from leasing any real property in which the Employee has an
interest provided that all requirements of fiduciary duty are satisfied.
3. From and after the date of this Agreement, the Company shall pay to
the Employee, monthly, on the first day of each month, for services rendered
hereunder, a base salary ("base salary"), at the following annual rates:
(i) for that portion of the current Employment Year, beginning on
October 1, 1994 and ending on March 31, 1995, at the annual rate of Seven
Hundred Twenty Five Thousand Three Hundred and Eighty Dollars ($725,380.00);
(ii) for the next Employment Year beginning on April 1, 1995 and
ending on March 31, 1996, at the annual rate of Five Hundred Seventy Five
Thousand Three Hundred Eighty Dollars ($575,380.00);
(iii) for the portion of the next Employment Year beginning on
April 1, 1996 and ending on September 30, 1996, at the annual rate of Five
Hundred Seventy Five Thousand Three Hundred Eighty Dollars ($575,380.00);
(iv) for the following twelve (12) calendar months beginning on
October 1, 1996 and ending on September 30, 1997, at the annual rate of Seven
Hundred Eighty Four Thousand Forty Eight Dollars ($784,048.00);
(v) for the following twelve (12)
-3-
<PAGE>
calendar months beginning on October 1, 1997 and ending on September 30, 1998,
at the annual rate of Seven Hundred Eighty Four Thousand Forty Eight Dollars
($784,048.00);
(vi) for the following twelve (12) calendar months beginning on
October 1, 1998 and ending on September 30, 1999, at the annual rate of Seven
Hundred Eighty Four Thousand Forty Eight Dollars ($784,048.00); and
(vii) for the following six (6) calendar months beginning on
October 1, 1999 and ending on March 31, 2000, at the annual rate of Seven
Hundred Eighty Four Thousand Forty Eight Dollars ($784,048.00);
4. In addition to the payments of base salary, the Company will credit
the Employee, as additional compensation, with the amount of Two Thousand Nine
Hundred Thirty Five Dollars ($2,935.00) per month on the first day of each month
during the Period of Employment. If the Employee owes the Company any such
amount at such time, the amount credited shall be applied by the Company against
the amount owed. If such amount is not owed to the Company at such time, such
amount will be paid to the Employee on each of such dates.
5. In the event of the death or total disability of the Employee before
the expiration of the Period of Employment,
-4-
<PAGE>
the Company will credit the Employee, as additional compensation, with the
aggregate of all remaining amounts which it would have credited to him under
paragraph 4 during the balance of the Period of Employment. If the Employee owes
any money to the Company at such time, the amounts so credited shall be applied
by the Company against the amounts owed. If there is any excess, it shall be
paid to the Employee's estate.
6. The Employee agrees that he shall be required to perform the
services required hereunder at any office of the Company which is located during
the Period of Employment in Dade or Broward Counties, Florida. In no event will
the Company require him to permanently relocate to a different area during the
Period of Employment without his approval.
7. The Employee shall be entitled to such paid vacations as the
Employee may deem to be appropriate during the Period of Employment, provided,
however, that such vacations do not prevent him from performing his duties
hereunder and do not violate any requirements with respect thereto which may be
established by the Board of Directors from time to time.
8. The Employee acknowledges that he is the senior executive of the
Company, that his duties have involved him in very significant and highly
confidential matters on behalf of
-5-
<PAGE>
the Company and that he possesses intimate knowledge concerning the Company's
business, finances and operations. Both he and the Company agree that if, after
the expiration or termination of his employment, he should engage, directly or
indirectly, in any enterprise which is competitive with the Company's
activities, such competition could severely injure the Company. Accordingly, the
parties have, after thorough discussion, agreed on provisions which they believe
are fair in that they protect the Company from such competition while, at the
same time, adequately compensate the Employee. Such provisions are as follows:
(a) During the period commencing with such expiration or
termination and continuing for three (3) years thereafter and for the additional
period described in subparagraph 9(a) or 9(b) during which the Employee accepts
the payments described therein, the Employee agrees that he will not own or
operate or work for or in connection with any company which owns or operates any
retail store which sells recorded audio or video products, including tapes and
compact disks, or blank audio or video tapes, or any other material product line
which the Company sells during the Period of Employment in any state or
territory of the United States. The restrictions contained in this subparagraph
shall apply to the Employee acting by himself or through any other person, firm
or entity of any kind, on his own behalf as well as on behalf of
-6-
<PAGE>
any other person, firm or company, either directly or indirectly.
(b) In addition to the foregoing, the Employee agrees that for a
period of three (3) years after the date of such expiration or termination and
for the additional period described in subparagraph 9(a) during which the
Employee accepts the payments described therein, he will not divulge to any
other person, firm or company, any information relating to the Company's
finances, leases, properties, personnel or manner in which the Company conducts
its business.
9. (a) In the event of the expiration of this Agreement or earlier
termination of this Agreement for any reason other than death including, without
limitation, total disability and mutual consent of the parties, the Company
agrees to pay to the Employee, as severance payments: (i) upon such expiration
or termination (the "termination date"), an amount equal to the Employee's
annual base salary which was in effect at the time of the termination date; and
(ii) upon each anniversary of the termination date, until the death of the
Employee, fifty (50%) percent of the amount described in subparagraph (i),
payable quarterly. All severance payments required to be made under this
subparagraph in the event of the Employee's total disability shall be subject to
the provisions of subparagraph 9(c).
-7-
<PAGE>
(b) During the period described in subparagraph 9(a) and so long
as Employee is entitled to receive payments thereunder, the Company shall
continue to provide: (i) medical insurance coverage for the Employee and his
family at least equal to that which was provided at the time of the expiration
or termination of this Agreement; (ii) an automobile to the Employee
substantially equivalent to that which was provided at the time of such
expiration or termination; and (iii) the payments described in paragraph 15.
(c) In the event of the Employee's total disability, all payments
received by the Employee under the disability income insurance policy presently
provided by the Company shall be credited against the first amounts payable to
the Employee under subparagraph 9(a). Such payments shall be made quarterly on
the first day of each month during the first twelve (12) months of total
disability and monthly thereafter. Appropriate adjustments shall be made for
portions of any year and, at the end of each year, there shall be an adjustment
with respect to any above-described credits which were not used to offset
payments made under this paragraph. The Company agrees to pay all premiums on
said policy during the Period of Employment. The term "total disability" shall
have the same meaning in this Agreement as in said insurance policy. In the
event of the termination of this Agreement as a result of total disability, the
provisions of paragraph 8 shall apply with full
-8-
<PAGE>
force and effect.
(d) All payments received by the Employee under this paragraph 9
shall constitute the consideration for the rights granted to the Company under
paragraph 8 hereof as well as severance pay.
(e) As a condition of receiving the severance payments described
herein and as a condition of receiving the benefits described in subparagraph
(b), from and after the date of the expiration or termination of this Agreement
as above provided, the Employee shall be available to the Company, as a
consultant, to furnish advice to the Company relating to its operations and
business including, without limitation of the generality of the foregoing,
matters involving the opening of new stores, the sale of new products, employee
relations and the acquisition of other companies. Such consultation shall be
required to take place at the home of the Employee, wherever located, unless at
the Employee's option, he should desire such consultation to take place at the
offices of the Company. In no event shall the Employee be required to spend an
aggregate of more than ten (10) hours per month (which shall not be cumulative)
in carrying out his responsibilities under this subparagraph.
(f) Upon the death of the Employee and if his wife survives him,
the Company shall continue to provide medical insurance coverage to her, for the
duration of her
-9-
<PAGE>
life, which is at least equal to that which was provided at the time of the
death of the Employee.
(g) For as long as any payments or benefits may be due to Employee
under this paragraph 9, the Company shall not sell all or substantially all of
its assets, merge with another company or engage in a reorganization of any kind
or nature, in one or a series of transactions, except upon the written agreement
by any such other entity, as applicable, which written agreement shall be
delivered to Employee, to assume all of the Company's obligations under this
Agreement.
10. If, during the Period of Employment, any person, firm or company
(excluding officers and directors of the Company) acting individually or in
concert so that they are required to file a Form 13-D with the Securities and
Exchange Commission, should acquire effective control of the Company and,
therefore, the ability to cause a board of directors chosen by such person, firm
or company to be elected, in addition to all other payments required to be made
to the Employee under this Agreement, the Employee shall be entitled to receive
an amount equal to the maximum amount which may be paid by the Corporation
without such payment being considered a "parachute payment" under Section
280G(b)(2)(A) of the Internal Revenue Code of 1986 ("Code") as the same may be
amended during the Period of Employment.
-10-
<PAGE>
11. The Employee acknowledges that because of the Company's multi-state
business, its desire to continue to expand such business geographically, the
significance of the Employee to the Company's business and the severance
benefits provided for, the time and geographical restrictions contained in
paragraph 8 are fair and reasonable.
12. The Employee agrees and acknowledges that if he fails to comply
with the provisions of subparagraphs 8(a) and (b), such failure would result in
irreparable and continuing damage to the Company for which there would be no
adequate remedy at law and that the Company, in such event, shall be entitled to
injunctive relief and to such other and further remedies as it may deem
necessary in order to cause him to comply with his obligations under such
paragraphs. If the Company seeks such relief as the result of the Employee's
alleged failure to comply with such paragraphs and the Company is successful, in
whole or in part, in obtaining the relief sought, the Employee agrees to be
responsible for the payment of all legal fees and expenses incurred by the
Company in connection with its efforts to remedy such failure to comply. If the
Company is not successful, either in whole or in part, the Company agrees to be
responsible for the payment of all legal fees and expenses incurred by the
Employee in defense of the Company's efforts to remedy the alleged failure to
comply. No waiver or purported waiver by the Employee of any severance
-11-
<PAGE>
benefits shall be construed to release or limit the obligations undertaken by
the Employee under subparagraphs 8(a) or (b).
13. The Company acknowledges that the Employee will require an
automobile in connection with the normal performance of his duties under this
Agreement and agrees to provide him with an automobile of his selection and to
pay the costs and expenses of the operation of such automobile.
14. During the Period of Employment, the Company agrees to supply to
the Employee such hospital and medical insurance benefits and similar benefits
as the Company provides to other executive employees.
15. During the Period of Employment and the period described in
subparagraph 9(b), the Company will cause a policy of insurance on the life of
the Employee to be maintained which will provide insurance proceeds to be paid
to persons who are designated either by the Employee or by persons who, with the
Employee's consent, have purchased such policy or caused it to be issued. The
policy shall provide for proceeds of Two Million Six Hundred Thousand Dollars
($2,600,000) to be payable upon the death of the Employee. The Company will
either pay or reimburse the Employee for the insurance premiums payable with
respect to such insurance. Subject to the Employee's approval, which will not be
withheld unreasonably, the Company shall have
-12-
<PAGE>
the right to determine the type of insurance policy which shall be purchased and
the company from whom such policy is obtained. At present there are a term life
insurance policy and a whole life insurance policy on the life of the Employee
which provide for such aggregate amount of insurance proceeds in the event of
the death of the Employee. The Company shall continue to be responsible for
payment of the premiums on said policies until and unless they are replaced with
other policies as above provided. The above provisions shall apply regardless of
whether such policies are owned by the Employee, his wife, a member of his
family or a trust established for the benefit of members of the Employee's
family.
16. If, on a single occasion during the Period of Employment the
Employee should desire to obtain a loan from the Company in an amount not to
exceed Four Hundred Thousand Dollars ($400,000.00) for a period not to exceed
five (5) years, the Company agrees to furnish such loan to the Employee, upon
the following conditions:
(a) the Employee shall pay interest to the Company monthly on such
loan at the rate of 3% per annum (such rate being, in part, the consideration
for the agreement of the Employee to reduce his base salary and change the 1992
Agreement in certain other respects, as provided in this Agreement);
(b) the Employee shall be required to provide adequate security to
the Company for repayment of the loan; and
-13-
<PAGE>
(c) such loan shall be upon such other terms and conditions as the
directors of the Company, with the advice of counsel, deem to be required to
protect the Company.
17. The Employee is authorized to incur reasonable expenses for
promoting the business of the Company, including expenses for entertainment,
travel and similar items. The Company will reimburse the Employee for all such
expenses upon the presentation by the Employee, from time to time, of itemized
accounts of such expenditures.
18. This Agreement shall not be altered, amended or supplemented except
by an instrument or instruments in writing signed by both the Company and the
Employee and no rights contained herein may be waived or abridged except by the
execution of such written instrument by both parties.
19. The provisions of this Agreement shall inure to the benefit of and
be binding upon the Company and its respective successors and assigns and upon
the heirs, legal representatives and assigns of the Employee.
20. Any notices or communications between the parties given hereunder
shall be in writing and sent by certified or registered mail, postage prepaid,
as follows: If to the Employee, addressed to him at his address above
-14-
<PAGE>
written. If to the Company, addressed to its address above written, attention
Mr. David Jackowitz; or to such other address or addresses as either party may,
from time to time, designate in writing to the other.
21. If for any reason any provision of this Agreement shall be found to
be void or invalid, such provision shall be construed in a manner so as to give
it maximum effect and such finding shall not effect the validity of the rest of
the Agreement, which shall remain in force as if executed with the void or
invalid provision eliminated.
22. This Agreement supersedes any and all prior agreements between the
Company and Employee with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year first above written.
WITNESSED ON BEHALF
OF THE COMPANY BY: URT INDUSTRIES, INC.
/s/ Terecita Perez By: /s/ David Jackowitz (L.S.)
- ------------------------- ----------------------------
President
/s/ Beatriz Rodriguez
- -------------------------
-15-
<PAGE>
WITNESSED ON BEHALF
OF THE EMPLOYEE BY:
/s/ Gail Sokolow /s/ Allan Wolk
- ------------------------- ----------------------------
Allan Wolk
/s/ Rebecca Sandoval
- -------------------------
-16-
Exhibit 10(ffff)
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
-----------------------------------------
AGREEMENT made this 14 day of December, 1994 between PEACHES
ENTERTAINMENT CORPORATION, a corporation duly organized and existing under the
laws of the State of Florida (the "Company") whose principal offices are located
at 3451 Executive Way, Miramar, Florida 33025, and DAVID JACKOWITZ, whose
address is 7045 Golf Pointe Circle, Tamarac, Florida 33321 (the "Employee").
The Employee is presently employed by the Company as its Executive
Vice-President and Treasurer under an agreement dated March 31, 1992
(the "1992 Agreement");
The parties wish to modify the provisions of the 1992 Agreement,
effective as of October 1, 1994 (the "Effective Date"), and restate
herein all of the terms and conditions which shall apply to the
employment of the Employee from and after the Effective Date.
IT IS, THEREFORE, AGREED,
1. Subject to all of the terms and conditions of this Agreement, the
Company agrees to continue to employ the Employee and the Employee agrees to
continue to be employed by the Company from the Effective Date until September
30, 1996 unless sooner terminated as provided herein (the "Period of
Employment"). While so employed, the Employee shall serve as the Executive
Vice-President and Treasurer of the Company and as
<PAGE>
President and Treasurer of URT Industries, Inc. ("URT"), an affiliated company,
at the pleasure of the respective boards of directors of the Company and such
affiliate, and perform such duties as the board of directors of the Company may
determine. The word "Company", as used in paragraphs 2, 3, 6, 7, 8, 12, 13, 15,
16, 17, 21 and 22 of this Agreement shall include any company which is an
affiliate of the Company at the time of or after the termination of the Period
of Employment, as the term "affiliate" is defined under the Securities Exchange
Act of 1934, as amended.
2. Subject to all of the terms and conditions of this Agreement, the
Company also agrees to engage the Employee as a consultant during the period
from the date immediatley following the termination of the Period of Employment
until September 3, 2005, the date when the Employee reaches age 65, such period
hereinafter called the "Consulting Period". During the Consulting Period, the
Employee agrees to consult with the executive officers of the Company relating
to its operations and business including, without limitation of the generality
of the foregoing, matters involving the opening of new stores, the sale of new
products, employee relations and the acquisition of other companies. Such
services are hereinafter called "Consulting Services". The Consulting Services
shall be required to be performed at the home of the Employee, wherever located,
unless at the Employer's option, he should desire to perform them at
-2-
<PAGE>
the offices of the Company. In no event shall the Employee be required to spend
an aggregate of more than ten (10) hours per month (which shall not be
cumulative) in performing the Consulting Services.
3. During the Period of Employment, the Employee shall:
(a) devote his entire working time and energy to the business and
affairs of the Company; and
(b) not, directly or indirectly, be associated (as an owner,
partner, shareholder, employee, officer, agent, consultant, adviser, or in any
other capacity) with any person, firm, corporation, enterprise or entity other
than the Company. Notwithstanding the foregoing, nothing contained herein shall
be construed to prevent the Employee, during such Period, from: (i) acting as a
director of another company provided that there is no conflict of interest
between such activities and the duties of the Employee under this Agreement, or
(ii) investing his assets in such form or manner as he may determine provided,
however, that such investments shall not be made in any company which competes
or transacts any material amount of business with the Company or involve any
services to be performed by the Employee. The foregoing shall not in any event
be construed to prevent the Company from leasing any real property in which the
Employee has an interest if such lease is approved by directors who do not have
an interest in such real property.
-3-
<PAGE>
4. For the services performed by the Employee during the Period of
Employment, the Company shall pay to the Employee, monthly, on the first day of
each month, the following amounts of base salary ("base salary"):
(a) for the period commencing on the Effective Date and ending on
March 31, 1995, at the rate of Two Hundred Fifty Eight Thousand Eight Hundred
Thirty Three Dollars ($258,833) per annum; and
(b) for the period commencing on April 1, 1995 and ending on
September 30, 1996, at the rate of Two Hundred Twenty-Five Thousand Five Hundred
Dollars ($225,500) per annum.
5. (a) As of September 30, 1994, the Employee owed URT the amount of
Twenty Five Thousand One Hundred Seven Dollars ($25,107) under a promissory note
dated March 31, 1992. In addition to the above described payments of base
salary, so long as any indebtedness remains unpaid on such note, there shall be
credited against the amounts owed under such note, as additional compensation to
the Employee, both during the Period of Employment and the Consulting Period,
the amount of Four Hundred Seventy One Dollars ($471) per month on the first day
of each month. No such amount shall be credited or paid after such note
indebtedness has been paid in full.
(b) In the event of the death or total disability of the Employee
during either the Period of Employment or the
-4-
<PAGE>
Consulting Period and if any amounts are then owed on such note, the Company
will credit the Employee with such additional compensation, as shall equal the
aggregate amount which is then owed under such note.
6. The Employee agrees that he shall be required to perform the
services required to be performed during the Period of Employment at any office
of the Company which is then located in Dade or Broward Counties, Florida. In no
event will the Company require him to permanently relocate to a different area
during the Period of Employemnt without his approval.
7. During the Period of Employment, the Employee shall be entitled to a
paid vacation at the rate of four (4) weeks during each period of twelve (12)
months commencing on the Effective Date through the balance of the Period of
Employment. All such vacations shall be taken at such times as both the Employee
and the Company may deem to be appropriate taking into account the Company's
needs from time to time.
8. The Employee acknowledges that he is one of the senior executives of
the Company, that his duties have involved him in very significant and highly
confidential matters on behalf of the Company and that he possesses intimate
knowledge concerning the Company's business, finances and operations.
-5-
<PAGE>
Both he and the Company agree that if, after the expiration or termination of
the Period of Employment, he should engage, directly or indirectly, in any
enterprise which is competitive with the Company's activities, such competition
could severely injure the Company. Accordingly, the parties have, after thorough
discussion, agreed on provisions which they believe are fair in that they
protect the Company from such competition while, at the same time, adequately
compensate the Employee. Such provisions are as follows:
(a) During the Consulting Period or Disability Period (as defined
in subparagraph 11(a)) during which he is entitled to disability benefits
hereunder, the Employee agrees that he will not own or operate or work for or in
connection with any company which owns or operates any retail store which sells
pre-recorded audio products, including musical tapes and musical compact disks.
The restrictions contained in this subparagraph shall apply to the Employee
acting by himself or through any other person, firm or entity of any kind, on
his own behalf as well as on behalf of any other person, firm or company, either
directly or indirectly.
(b) In addition to the foregoing, the Employee agrees that during
the Consulting and Disability Periods, he will not divulge to any other person,
firm or company, any information relating to the Company's finances, leases,
properties, personnel or manner in which the Company conducts its business.
-6-
<PAGE>
9. During the Consulting Period, the Company agrees to pay to the
Employee, monthly on the first day of each month, as compensation for his
services as a consultant:
(a) If the Consulting Period commences on October 1, 1996:
(i) during each of the first twelve (12) calendar months of
the Consulting Period, at the rate of Two Hundred Thirteen Thousand Dollars
($213,000) per annum; and
(ii) during each month thereafter until the Employee shall
reach the age of sixty-five (65) years, at the rate of Sixty Five Thousand
Dollars ($65,000) per annum.
(b) If the Consulting Period commences before October 1, 1996, for
any reason other than death, voluntary resignation, or the Employee's conviction
of a crime involving any act of dishonesty which is intended to harm the
Company:
(i) during each of the first twelve (12) calendar months of
the Consulting Period at the rate of Two Hundred Twenty Five Thousand Dollars
($225,000) per annum;
(ii) during each of the next twelve (12) calendar months of
the Consulting Period at the rate of One Hundred Twenty Five Thousand Dollars
($125,000) per annum; and
(iii) during each month thereafter until the Employee shall
reach the age of sixty five (65) years, at the rate of Sixty Five Thousand
Dollars ($65,000) per annum.
(c) The inability of the Employee to perform
-7-
<PAGE>
the Consulting Services during the Consulting Period, in whole or in part, as a
result of sickness, accident or other cause outside of the Employee's control,
shall not affect the obligation of the Company to pay the Employee the
compensation which it is required to pay to him under subparagraphs 9(a) or
9(b).
10. (a) During the Consulting Period, the Company shall also do the
following:
(i) use its best efforts to continue to cause the Employee
and his wife to be included under the Company's health insurance plan, as in
effect at the time of the end of the Period of Employment, and, if they are
included, the Company shall be responsible solely for the costs thereof which
are allocable to the Employee and his wife which do not exceed Four Hundred
Eighty Five Dollars ($485) per month, with the Employee being responsible for
all amounts exceeding Four Hundred Eighty Five Dollars ($485) per month. If the
Company advises the Employee that despite using its best efforts to do so, it is
not able to continue to cause the Employee and his wife to be included in the
Company's health insurance plan, and if the Employee believes that it is
possible to enable them to be included by following a specific procedure, the
Employee shall advise the Company of such procedure which the Company shall
communicate to the provider of such health insurance
-8-
<PAGE>
coverage. If the latter agrees that such procedure may be utilized, the Company
shall follow such procedure to attempt to enable the Employee and his wife to be
included in the Company's health insurance plan provided, however, that under no
circumstances, shall the Company be responsible for any costs thereof in excess
of Four Hundred Eighty Five Dollars ($485) per month. However, if the Company is
not able to cause the Employee and his wife to be included in such plan, the
Employee shall be responsible for obtaining health insurance coverage for
himself and his wife in which event the Company will reimburse him, from time to
time but no more frequently than monthly, with such portion of the cost thereof
which does not exceed Four Hundred Eighty Five Dollars ($485) per month; and
(ii) pay to the Employee Five Hundred Dollars ($500) per
month on the first day of each month to assist him to pay for the costs of any
automobile which is used by him during the Consulting Period; and
(iii) continue to make those payments described in
subparagraph 20(b) which are required to be made during the period described
therein.
(b) All payments under subparagraph 10(a) shall be deemed to be
additional compensation to the Employee.
11. (a) In the event of the Employee's total
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<PAGE>
disability during the Period or Employment, the Period of Employment shall
terminate in which event the Employee shall be required to perform on behalf of
the Company the same services as the Consulting Services until he attains the
age of sixty five (65) but only to the extent that he is physically and mentally
able to do so. The term "total disability" shall have the same meaning in this
Agreement as in the disability income insurance policy which is presently
maintained by the Company (the "Disability Policy"). In the event of such total
disability, he shall be entitled to receive all amounts which would have been
payable under subparagraphs 9(a) or 9(b) as if the Consulting Period had
commenced on the date of his total disability. All payments to the Employee
under this paragraph shall constitute taxable compensation to the Employee. The
period during which he shall be entitled to receive such amounts is referred to
herein as the "Disability Period". All payments received by the Employee during
the Disability Period under the Disability Policy as in effect at the time of
total disability, shall be credited against the first amounts payable to the
Employee under this paragraph. All payments required to be made by the Company
to the Employed under this paragraph, shall be made quarterly on the first day
of each month during the first twelve (12) months of disability and monthly
thereafter. Appropriate adjustments shall be made for portions of any year and,
at the end of each year, there shall be an adjustment with respect to any
permitted credits described
-10-
<PAGE>
above which were not used to offset payments made under this paragraph. The
Company agrees to pay all premiums on the Disability Policy during the Period of
Employment.
(b) In addition to the foregoing, during the Disability Period the
Company will also make the same payments to or for the Employee and provide the
same benefits to the Employee as it would have been required to pay and provide
during the Consulting Period if the Employee had not been disabled and the
Period of Employment had terminated on the date of total disability. All amounts
paid under this subparagraph shall be deemed to be additional compensation to
the Employee.
12. All payments received by the Employee under paragraphs 9, 10 and 11
shall also constitute consideration for the rights granted to the Company under
paragraph 8.
13. As a condition of receiving all payments required to be made during
the Consulting Period and as a condition of receiving all amounts payable during
the Disability Period, if any, the Employee shall be required to execute, in
such form as the Company's attorneys shall approve:
(a) a general release in favor of the Company
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<PAGE>
and its affiliates, officers and directors, under which he unconditionally
releases each of them from and against all liabilities and obligations which
they may have to him, without limitation, reserving, however, those rights which
are contained in this Agreement; and
(b) an agreement indemnifying each of them from and against all
costs and expenses, including reasonable legal fees and disbursements, in the
event of the assertion by the Employee of any claim to which such general
release applies.
14. The Employee shall have the right to cause the Consulting Services
to be performed by any entity, corporation or partnership of which he is the
controlling shareholder or partner and to assign to it all of his rights to
receive the compensation for such Services during the Consulting Period
provided, however, that he, alone, shall be required to perform all of the
Consulting Services.
15. For as long as any payments or benefits may be due to Employee
under this Agreement, the Company shall not sell all or substantially all of its
assets, merge with another company or engage in a reorganization of any kind or
nature, in one or a series of transactions, except upon the written agreement by
any such other entity, as applicable, a copy of which shall be delivered to
Employee, to assume all of the
-12-
<PAGE>
Company's obligations under this Agreement.
16. The Employee acknowledges that because of the Company's multi-state
business, its desire to continue to expand such business geographically, the
significance of the Employee to the Company's business and the severance
benefits provided for, the time and geographical restrictions contained in
paragraph 8 are fair and reasonable.
17. The Employee agrees and acknowledges that if he fails to comply
with the provisions of subparagraphs 8(a) and (b), such failure would result in
irreparable and continuing damage to the Company for which there would be no
adequate remedy at law and that the Company, in such event, shall be entitled to
injunctive relief and to such other and further remedies as it may deem
necessary in order to cause him to comply with his obligations under such
paragraphs. If the Company seeks such relief as the result of the Employee's
alleged failure to comply with such paragraphs and the Company is successful, in
whole or in part, in obtaining the relief sought, the Employee agrees to be
responsible for the payment of all legal fees and expenses incurred by the
Company in connection with its efforts to remedy such failure to comply. If the
Company is not successful, either in whole or in part, the Company agrees to be
responsible for the payment of all
-13-
<PAGE>
legal fees and expenses incurred by the Employee in defense of the Company's
efforts to remedy the alleged failure to comply. No waiver or purported waiver
by the Employee of any benefits under this Agreement shall be construed to
release or limit the obligations undertaken by the Employee under subparagraphs
8(a) or (b).
18. The Company acknowledges that the Employee will require an
automobile during the Period of Employment in connection with the normal
performance of his duties under this Agreement and agrees, during such Period,
to provide him with an automobile of his selection and to pay the costs and
expenses of the operation of such automobile.
19. During the Period of Employment, the Company agrees to supply to
the Employee such hospital and medical insurance benefits and similar benefits
as the Company provides to other executive employees.
20. (a) During the period commencing on the Effective Date and
continuing through December 31, 1994, the Company will cause a policy of life
insurance on the life of the Employee to be maintained which will provide
insurance proceeds to be paid to persons who are designated either by the
Employee or by persons described in the last sentence of this
-14-
<PAGE>
paragraph who, with the Employee's consent, have purchased such policy or caused
it to be issued. The policy shall provide for proceeds of One Million Dollars
($1,000,000) to be payable upon the death of the Employee if the Employee shall
die prior to the age of seventy (70) years and in the amount of Seven Hundred
Fifty Thousand Dollars ($750,000) if the Employee shall die after the age of
seventy (70) years. The Company will either pay or reimburse the Employee for
the insurance premiums payable with respect to such insurance. Subject to the
Employee's approval, which will not be withheld unreasonably, the Company shall
have the right to determine the type of insurance policy which shall be
purchased and the company from whom such policy is obtained. As of the Effective
Date there were term life insurance policies on the life of the Employee which
provided for such aggregate amount of insurance proceeds in the event of the
death of the Employee. During the above described period, the Company shall
continue to be responsible for payment of the premiums on said policies until
and unless they are replaced with other policies as above provided. The above
provisions shall apply regardless of whether such policies are owned by the
Employee, his wife, a member of his family or a trust established for the
benefit of members of the Employee's family.
(b) After December 31, 1994, the Company shall no longer be
required to pay any premiums on the existing policies of insurance on the life
of the Employee. On the 1st
-15-
<PAGE>
days of January, 1995, 1996, 1997, 1998, 1999 and 2000, the Company will pay to
the Employee, as additional compensation, the amount of Ten Thousand Dollars
($10,000) per annum to enable the Employee to obtain a policy of life insurance
on his life from any insurer, in such amounts and containing such terms and
conditions as the Employee shall determine.
21. During the Period of Employment, the Employee shall be authorized
to incur reasonable expenses for promoting the business of the Company,
including expenses for entertainment, travel and similar items. The Company will
reimburse the Employee for all such expenses upon the presentation by the
Employee, from time to time, of itemized accounts of such expenditures. At his
request, the Company will also advance to him, from time to time, amounts which
are approved by it and reasonably required by him to perform the Consulting
Services.
22. Notwithstanding anything heretofore contained in this Agreement,
the Company shall be entitled to terminate the Employee's employment hereunder,
without cause, on September 30, 1995 or at any time thereafter provided that it
has first given at least thirty (30) days advance notice to the Employee. In
such event, the Employee, if requested by the Company, shall continue to render
his services and be paid his
-16-
<PAGE>
regular compensation up to the time of termination. Without limitation of
anything heretofore contained, it is understood that in such event, all
provisions of this Agreement which are applicable to the Consulting Period will
then take effect.
23. This Agreement shall not be altered, amended or supplemented except
by an instrument or instruments in writing signed by both the Company and the
Employee and no rights contained herein may be waived or abridged except by the
execution of such written instrument by both parties.
24. The provisions of this Agreement shall inure to the benefit of and
be binding upon the Company and its respective successors and assigns and upon
the heirs, legal representatives and assigns of the Employee.
25. Any notices or communications between the parties given hereunder
shall be in writing and sent by certified or registered mail, postage prepaid,
as follows: If to the Employee, addressed to him at his address above written.
If to the Company, addressed to its address above written, attention Allan Wolk;
or to such other address or addresses as either party may, from time to time,
designate in writing to the other.
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<PAGE>
26. If for any reason any provision of this Agreement shall be found to
be void or invalid, such provision shall be construed in a manner so as to give
it maximum effect and such finding shall not effect the validity of the rest of
the Agreement, which shall remain in force as if executed with the void or
invalid provision eliminated.
27. This Agreement supersedes any and all prior agreements between the
Company and Employee with respect to the subject matter hereof.
28. URT does not guarantee performance of and is not responsible for
any of the obligations undertaken by the Company to the Employee hereunder.
29. This Agreement shall be governed by and construed in accordance
with the laws of the State of Florida. Any action or proceeding which is brought
by either party to enforce this Agreement shall be brought in a court of
appropriate jurisdiction located in Broward County, Florida. If either party
commences any such action or proceeding for such purpose, the party who prevails
after a final judgment has been entered, which is no longer appealable, shall be
responsible for the payment of the costs and expenses which are
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<PAGE>
incurred in such litigation by the non-prevailing party including, without
limitation, appellate costs and reasonable attorneys' fees.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year first above written.
WITNESSED ON BEHALF
OF THE COMPANY BY: PEACHES ENTERTAINMENT CORPORATION
/s/ Brian Wolk By:/s/ Allan Wolk (L.S.)
- --------------------------- --------------------------------
Chairman
/s/ Jason Wolk
- ---------------------------
WITNESSED ON BEHALF
OF THE EMPLOYEE BY:
/s/ Rebecca Sandoval /s/ David Jackowitz
- --------------------------- --------------------------------
David Jackowitz
/s/ Gail Sokolow
- ---------------------------
-19-
Exhibit 10(gggg)
SECOND AMENDMENT TO
STOCK PURCHASE AGREEMENT
------------------------
AGREEMENT made this 14th day of December, 1994 between URT INDUSTRIES,
INC., a corporation duly organized and existing under the laws of the State of
Florida (the "Company"), whose principal offices are located at 3451 Executive
Way, Miramar, Florida 33025, and DAVID JACKOWITZ, whose address is 7045 Golf
Pointe Circle, Tamarac, Florida 33321 ("Jackowitz").
On February 1, 1989, the Company and Jackowitz entered into a stock
purchase agreement (the "Stock Purchase Agreement") under which
Jackowitz agreed to purchase an aggregate of 300,000 shares of the
Company's Class A common stock for an aggregate purchase price of
$60,000 at a rate of 60,000 shares per year on the first day of
February of each year from 1990 through 1994.
In 1990 and 1991, Jackowitz purchased an aggregate of 120,000 shares of
such stock for a total consideration of $24,000, leaving a balance of
180,000 shares unpurchased.
By an amendment to the Stock Purchase Agreement dated March 1, 1992
(the "First Amendment"), the Company and Jackowitz agreed that the
remaining 180,000 shares would be sold to Jackowitz and purchased by
him in 96 equal consecutive monthly installments of 1,875 shares each,
the first of which would occur on April 1, 1992 and that on each such
installment date, Jackowitz would pay the Company $375 for the shares
purchased.
Pursuant to the Stock Purchase Agreement, as amended by the First
Amendment (the "Amended Stock Purchase Agreement"), between April 1,
1992 and September 1, 1994, Jackowitz purchased an aggregate of 56,250
shares of the Company's Class A common stock for which
<PAGE>
he paid the Company an aggregate of $11,250 leaving an aggregate of
123,750 shares of such stock remaining unpurchased (the "Unpurchased
Shares") under the Amended Stock Purchase Agreement.
The Company and Jackowitz have agreed that on and after October 1, 1994
(the "Effective Date"), the Company shall not sell to Jackowitz and
Jackowitz shall not purchase from the Company any further shares of
stock under the Amended Stock Purchase Agreement and wish to set forth
such agreement herein.
IT IS, THEREFORE, AGREED THAT:
1. Effective on and after the Effective Date, the Amended Stock
Purchase Agreement shall be terminated and have no further force or effect and
all of the provisions of this Agreement shall apply.
2. As a result of such termination of the Amended Stock Purchase
Agreement:
(a) from and after the Effective Date, the Company shall have no
obligation to sell to Jackowitz any of the Unpurchased Shares and Jackowitz
shall have no obligation to pay to the Company any of the consideration therefor
which is provided for in the Amended Stock Purchase Agreement; and
(b) Jackowitz shall have no right to purchase any of the
Unpurchased Shares and the Company shall have no right to receive from him the
balance of the consideration which would have been payable under the Amended
Stock Purchase
-2-
<PAGE>
Agreement if he had been obligated to purchase the Unpurchased Shares.
3. Both parties shall execute and deliver such other and further
documents and take such other and further action as either party may request at
any time for the purpose of further evidencing that all of the obligations under
the Amended Stock Purchase Agreement terminated effective on the Effective Date.
4. This Second Amendment shall be binding upon the Company and its
successors and assigns and upon Jackowitz and his heirs, legal representatives
and assigns. It may not be altered, amended or supplemented except by an
instrument in writing signed by both the Company and Jackowitz. It constitutes
the entire agreement of the parties with respect to the subject matter set forth
herein.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year first above written.
WITNESSED ON BEHALF
OF THE COMPANY BY: URT INDUSTRIES, INC.
/s/ Brian Wolk By:/s/ Allan Wolk (L.S.)
- --------------------------- --------------------------------
Chairman
/s/ Jason Wolk
- ---------------------------
-3-
Exhibit 10(hhhh)
SECOND AMENDMENT TO
STOCK PURCHASE AGREEMENT
------------------------
AGREEMENT made as of this 1st day of October, 1994 between URT
INDUSTRIES, INC., a corporation duly organized and existing under the laws of
the State of Florida (the "Company"), whose principal offices are located at
3451 Executive Way, Miramar, Florida 33025, and ALLAN WOLK, whose business
address is 3451 Executive Way, Miramar, Florida 33025 ("Wolk").
On February 1, 1989, the Company and Wolk entered into a stock purchase
agreement (the "Stock Purchase Agreement") under which Wolk agreed to
purchase an aggregate of 2,000,000 shares of the Company's Class A
common stock for an aggregate purchase price of $400,000 at a rate of
400,000 shares per year on the first day of February of each year from
1990 through 1994.
In 1990 and 1991, Wolk purchased an aggregate of 800,000 shares of such
stock for a total consideration of $160,000, leaving a balance of
1,200,000 shares unpurchased.
By an amendment to the Stock Purchase Agreement dated March 1, 1992
(the "First Amendment"), the Company and Wolk agreed that the remaining
1,200,000 shares would be sold to Wolk and purchased by him in 96 equal
consecutive monthly installments of 12,500 shares each, the first of
which would occur on April 1, 1992 and that on each such installment
date, Wolk would pay the Company $2,500 for the shares purchased.
Pursuant to the Stock Purchase Agreement, as amended by the First
Amendment (the "Amended Stock Purchase Agreement"), between April 1,
1992 and September 1, 1994, Wolk purchased an aggregate of 375,000
shares of the Company's Class A common stock for which he paid the
Company an aggregate of $75,000 leaving an
<PAGE>
aggregate of 825,000 shares of such stock remaining unpurchased
(the "Unpurchased Shares") under the Amended Stock Purchase Agreement.
The Company and Wolk have agreed that on and after October 1, 1994 (the
"Effective Date"), the Company shall not sell to Wolk and Wolk shall
not purchase from the Company any further shares of stock under the
Amended Stock Purchase Agreement and wish to set forth
such agreement herein.
IT IS, THEREFORE, AGREED THAT:
1. Effective on and after the Effective Date, the Amended Stock
Purchase Agreement shall be terminated and have no further force or effect and
all of the provisions of this Agreement shall apply.
2. As a result of such termination of the Amended Stock Purchase
Agreement:
(a) from and after the Effective Date, the Company shall have no
obligation to sell to Wolk any of the Unpurchased Shares and Wolk shall have no
obligation to pay to the Company any of the consideration therefor which is
provided for in the Amended Stock Purchase Agreement; and
(b) Wolk shall have no right to purchase any of the Unpurchased Shares
and the Company shall have no right to receive from him the balance of the
consideration which would have been payable under the Amended Stock Purchase
Agreement if he had been obligated to purchase the Unpurchased Shares.
3. Both parties shall execute and deliver such other
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<PAGE>
and further documents and take such other and further action as either party may
request at any time for the purpose of further evidencing that all of the
obligations under the Amended Stock Purchase Agreement terminated on the
Effective Date.
4. This Second Amendment shall be binding upon the Company and its
successors and assigns and upon Wolk and his heirs, legal representatives and
assigns. It may not be altered, amended or supplemented except by an instrument
in writing signed by both the Company and Wolk. It constitutes the entire
agreement of the parties with respect to the subject matter set forth herein.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
the day and year first above written.
WITNESSED ON BEHALF
OF THE COMPANY BY: URT INDUSTRIES, INC.
/s/ Terecita Perez By:/s/ David Jackowitz (L.S.)
- --------------------------- --------------------------------
President
/s/ Beatriz Rodriguez
- ---------------------------
WITNESSED ON BEHALF
OF THE EMPLOYEE BY:
/s/ Gail Sokolow /s/Allan Wolk
- --------------------------- --------------------------------
Allan Wolk
/s/ Rebecca Sandoval
- ---------------------------
-3-
<PAGE>
WITNESSED ON BEHALF
OF THE EMPLOYEE BY:
/s/ Rebecca Sandoval /s/David Jackowitz
- --------------------------- --------------------------------
David Jackowitz
/s/ Gail Sokolow
- ---------------------------
-4-
Exhibit 10(iiii)
AMENDMENT NO. 1 TO
MANAGEMENT AND INTERCORPORATE AGREEMENT
---------------------------------------
THIS AMENDMENT NO. 1 made as of the 1st day of October, 1994 by and
between URT INDUSTRIES, INC. ("URT"), a Florida corporation with principal
offices located at 3451 Executive Way, Miramar, Florida 33035 and PEACHES
ENTERTAINMENT CORPORATION ("PEC"), a Florida corporation with principal offices
located at 3451 Executive Way, Miramar, Florida 33035.
On March 29, 1993, URT and PEC entered into a Management and
Incorporate Agreement, a true copy of which is annexed hereto as
Exhibit A (the "Management Agreement").
The parties desire to modify the Management Agreement, as provided
herein.
IT IS, THEREFORE, AGREED:
1. Subparagraph 2(d) of the Management Agreement is hereby deleted and
the following subparagraph 2(d) is substituted:
<PAGE>
"(d) during the period commencing on October 2, 1994 and ending on
April 1, 1995, for the services and guarantee provided for under
paragraphs 2(a) and 2(b), PEC agrees to pay a fee to URT of Five
Hundred Thousand Dollars ($500,000) in equal weekly installments during
such period; from and after April 2, 1995, for such services and
guarantee, PEC agrees to pay a fee to URT, weekly, at the rate of Seven
Hundred Fifty Thousand Dollars ($750,000) per year;".
2. Except as above provided, all of the terms and conditions of the
Management Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
as of the date set forth above.
URT INDUSTRIES, INC.
By:/s/ Allan Wolk
---------------------------------
PEACHES ENTERTAINMENT CORPORATION
By:/s/ David Jackowitz, Exec. V.P.
---------------------------------
-2-
EXHIBIT 22
URT INDUSTRIES, INC. AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT
Subsidiary State of Incorporation
---------- ----------------------
United Record & Tape Industries, Inc. Florida
Peaches Entertainment Corporation Florida
