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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
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CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 21, 1997
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DART GROUP CORPORATION
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(Exact name of registrant as specified in its charter)
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Delaware 0-1946 53-0242973
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
3300 75th Avenue, Landover, Maryland 20785
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code (301) 731-1200
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(Former name or former address, if changed since last report).
The total number of sequentially numbered pages is 9.
The exhibit index appears on page 7.
Page 1 of 9
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Item 1. Changes in Control of Registrant
The discussion under Item 5 of this Current Report on Form 8-K is
incorporated herein by reference.
Item 5. Other Events
On April 21, 1997, Dart Group Corporation ("Dart") reached a
conditional settlement agreement in principle with Herbert H. Haft, Dart's
founder and its present Chairman and Chief Executive Officer. If the
settlement contemplated by the agreement in principle is implemented, Herbert
Haft, 76, would retire from his positions as Chairman of Dart and its three
major operating subsidiaries: Shoppers Food Warehouse Corp., Trak Auto
Corporation and Crown Books Corporation. Mr. Haft also would relinquish his
claim to voting control of Dart if the settlement is implemented. A press
release announcing the conditional settlement agreement is incorporated by
reference and attached hereto as Exhibit 99.1.
Among other things, the agreement in principle is conditioned on
Dart's entering into a supplemental settlement with Ronald Haft and a
comprehensive settlement with Gloria, Robert and Linda Haft. Negotiations with
respect to these related settlements are currently underway. Current
settlement discussions contemplate that Dart would pay approximately $50
million in connection with these other proposed settlements and that Robert,
Gloria and Linda Haft would relinquish their equity interests in Dart and its
subsidiaries and certain real estate interests. There can be no assurance
that such settlements will be reached or as to the terms or timing of any
settlement, if one occurs.
The April 21, 1997 letter agreement between Dart and Herbert Haft sets
forth the settlement terms to which Dart is prepared to agree in principle,
subject to the negotiation and execution of a definitive settlement agreement
satisfactory to Dart in its sole discretion. Dart's willingness to enter into
an agreement on these terms is also subject to its receipt of advice from
Wasserstein Perella & Co. satisfactory to Dart that the proposed transaction is
fair to Dart and that adequate financing will be available at closing.
Principal terms set forth in the letter agreement include the
following:
Payments to Herbert Haft. Total payments to Herbert Haft of
approximately $42,000,000, as follows:
- $11,619,274 of escrowed funds tendered to Herbert Haft in
October 1995 in repayment of Ronald Haft's 1993 note to Herbert
Haft. Herbert Haft also would receive
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$700,000 of accrued interest in escrow account, which would
require a separate agreement between Herbert Haft and Ronald
Haft.
- $11,120,000 additional cash from Dart at closing.
- $9,250,000 from Dart on January 31, 1998, or upon earlier sale
for cash (whether through an asset sale, stock sale, merger or
other similar transaction) of Shoppers Food Warehouse Corp.
("Shoppers"), in whole or in substantial part, or of Trak Auto
Corporation ("Trak") or Crown Books Corporation ("Crown") in
whole. Simple interest would be payable monthly on unpaid
amount at 5% beginning the later of August 1, 1997 or the
closing date.
- $9,300,000 from Dart, payable in three installments of
$3,100,000 each on the first, second and third anniversaries of
closing (with simple interest on unpaid amount at 5% from the
later of August 1, 1997 or the closing date payable with
principal installments), subject to acceleration of any unpaid
installment(s) upon the sale for cash (whether through an asset
sale, stock sale, merger or other similar transaction) of
Shoppers, in whole or in substantial part, or of Trak or Crown
in whole. Alternatively, Dart could elect to pay in cash at
closing an amount equal to the present value (calculated at a
10% discount rate) of these $9,300,000 deferred payments.
- Dart's full recourse post-closing payment obligations set forth
above would be secured by a first priority pledge of Trak shares
owned by Dart.
Transfers and Benefits to Dart.
- At closing, Herbert Haft would transfer to Dart 122,747 Class A
shares, free of liens, including shares now pledged for a loan
by First Union, and would also transfer to Dart his claim to all
Class A shares that are subject to conflicting ownership claims
among members of the Haft family.
- At closing, Herbert Haft would relinquish all options to
purchase stock of Dart, Trak and Crown and any claims to
co-investment or other rights with respect to Total Beverage,
Shoppers, Dart/SFW Corp. or SFW Holding Corp.
- Herbert Haft's employment agreement would terminate effective as
of closing, with no further obligation by Dart thereunder, and
Herbert Haft would resign all
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director and officer positions with Dart and its affiliates.
Prior to closing Dart would continue Herbert Haft's base salary
and benefits provided for in his employment agreement, but would
not be obligated to pay any bonus. Herbert Haft would be
subject to the same non-interference covenants that Ronald Haft
agreed to in his October 1995 settlement with Dart.
- Herbert Haft would cooperate fully and promptly (including voting
in favor of) and not interfere with the amended plans of
reorganization for the 75th Avenue/wooded lot and Bridgeview
warehouses approved by Ronald Haft and Dart, which may become
effective prior to the closing of the settlement. At closing,
Herbert Haft would transfer to Dart all of his right, title and
interest in any Dart warehouse/office building properties (i.e.,
Pennsy I, II, III and III addition and Ontario, Cal.; 75th
Avenue/wooded lot and Bridgeview, Ill., if plans of
reorganization have not theretofore become effective) and would
cooperate fully and promptly with the implementation of Dart's
October 1995 settlement with Ronald Haft with respect to these
properties. Dart would at closing receive a power of attorney
from Herbert Haft for this limited purpose, which power of
attorney would be in form and substance mutually satisfactory to
both Dart and Herbert Haft.
- At closing, Herbert Haft's claim to a proxy to vote Dart Class B
shares would be extinguished.
- At the closing, Herbert Haft would deliver a general release to
Dart, Shoppers, Trak, Crown, Total Beverage, and all of their
respective affiliates, directors and officers.
Conditions.
- Dart's and Herbert Haft's obligation to close the settlement
would be subject to the simultaneous closing of a comprehensive
settlement between Dart and Gloria, Robert and Linda Haft (the
"GRL Settlement") and a supplemental settlement between Dart and
Ronald Haft (the "Supplemental RSH Settlement"), on terms
satisfactory to the Board of Directors of Dart.
- Herbert Haft has agreed in the letter agreement not to object
to or interfere in any way with, and has agreed to provide any
consents that may be reasonably requested by Dart in connection
with, any financing, stock sale, asset sale or other similar
transactions by Dart and/or any of its subsidiaries after
approval by a majority of the members of the Board of Directors
of Dart, Shoppers,
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Trak or Crown, provided that such transaction does not close
before May 15, 1997.
- Dart would make a secured $10 million loan (guaranteed by Ronald
Haft) to the "Retained Partnership," which would own and pledge
100% of the equity interests in the Sully Plaza, Maryland City
and Rolling Valley shopping centers owned indirectly by Herbert
Haft and Ronald Haft (the "$10 Million Loan"). The Hafts' 50%
interest in Shoppers' headquarters building in Lanham, Maryland
would also be pledged as collateral. Dart's obligation to make
the $10 Million Loan would be subject to the negotiation by Dart
and Ronald Haft of definitive loan terms and documentation
satisfactory to Dart in its sole discretion and the completion
by Dart of due diligence.
The letter agreement provides that the closing of the settlement would
occur upon Final Court Approval, subject to delay of up to 90 days after Final
Court Approval to enable Dart to arrange financing for the settlement and for
the GRL Settlement, the Supplemental RSH Settlement and the $10 Million Loan.
"Final Court Approval" would include, without limitation, (1) final and
non-appealable action by the Delaware Court of Chancery or the Delaware Supreme
Court approving all of the terms of the settlement, terminating certain
putative derivative actions pending in the Delaware Chancery Court with respect
to Dart and Crown and approving the October 1995 settlement between Dart and
Ronald Haft and the Supplemental RSH Settlement, and (2) final and
non-appealable action by the U.S. Bankruptcy Court approving the effectiveness
of Chapter 11 plans of reorganization for certain real estate entitites owned
by Herbert Haft and members of his family.
The letter agreement provides that either party will be entitled to
terminate the settlement agreement prior to closing if Final Court Approval
has not been obtained by November 30, 1997.
The letter agreement states that it will terminate upon the earlier of
the execution and delivery by Dart and Herbert Haft of a definitive settlement
agreement or May 9, 1997. If the letter agreement terminates without the
execution and delivery of a definitive settlement agreement, it provides that
neither party will have any liability to the other for breach thereof; provided,
however, that if the failure of either party to proceed in good faith to enter
into a settlement agreement consistent with the letter causes injury to the
other party, such party may seek actual damages not to exceed $3,000,000 in the
aggregate.
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Item 7. Financial Statements and Exhibits
Exhibit 99.1 Press Release, dated April 22, 1997, of Dart
Group Corporation
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DART GROUP CORPORATION
By: MARK A. FLINT
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Mark A. Flint
Senior Vice President and
Chief Financial Officer
Date: April 25, 1997
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DART GROUP CORPORATION
Form 8-K
Exhibit Index
Exhibit 99.1 Press Release, dated April 22, 1997, of Dart
Group Corporation
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EXHIBIT 99.1
DART GROUP CORPORATION ANNOUNCES
CONDITIONAL SETTLEMENT AGREEMENT IN PRINCIPLE
WITH HERBERT H. HAFT
LANDOVER, MD., April 22, 1997 -- Dart Group Corporation (Nasdaq:
DARTA) announced today that it has reached a conditional settlement agreement
in principle with Herbert H. Haft, the Company's founder and its present
Chairman and Chief Executive Officer. If the settlement contemplated by the
agreement in principle is implemented, Herbert Haft, 76, will retire from his
positions as Chairman of Dart and its three major operating subsidiaries:
Shoppers Food Warehouse Corp., Trak Auto Corporation and Crown Books
Corporation. Mr. Haft also will relinquish his claim to voting control of
Dart.
Under the settlement contemplated by the agreement in principle,
Herbert Haft would sell to the Company all of his shares of stock and stock
options in Dart, Trak Auto and Crown Books. The settlement also would
terminate Herbert Haft's employment agreement with Dart and would resolve all
outstanding litigation and disputes between Dart and Herbert Haft. Mr. Haft
would also assign certain real estate interests to the Company.
Herbert Haft will receive $29.7 million from Dart if the
settlement is implemented. Herbert Haft would also receive an additional $11.6
million from escrowed funds previously paid by Dart to Ronald Haft as part of
its October 1995 settlement with Ronald Haft (and $700,000 interest on those
funds). The agreement in principle also contemplates that Dart would make a
$10 million loan to a partnership owned by Herbert and Ronald Haft, which loan
would be secured by such partnership's interests in three shopping centers
located in suburban Washington, D.C. and would be personally guaranteed by
Ronald Haft.
Implementation of the agreement in principle is subject to the
negotiation of a definitive settlement agreement satisfactory to Dart and
Dart's receipt of satisfactory advice from its investment bankers. The
agreement in principle states that it will terminate if a definitive settlement
agreement is not entered into by May 9, 1997. The agreement in principle is
also conditioned on Dart's entering into a supplemental settlement with Ronald
Haft and a comprehensive settlement with Gloria, Robert and Linda Haft.
Negotiations with respect to these related settlements are currently underway.
Closing of the transactions contemplated by the agreement in
principle also is subject to (1) final and non-appealable action by the
Delaware Court of Chancery or the Delaware Supreme Court approving all of the
terms of the
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settlement, terminating certain putative derivative actions pending with
respect to Dart in the Delaware Court of Chancery, and approving the October
1995 settlement between Dart and Ronald Haft and the supplemental settlement
between Dart and Ronald Haft, and (2) final and non-appealable action by the
U.S. Bankruptcy Court approving the effectiveness of Chapter 11 plans of
reorganization for certain real estate entities owned by Mr. Haft and members
of his family.
There can be no assurance that a definitive settlement agreement
between Dart and Herbert Haft will be entered into and that the transactions
contemplated by the conditional agreement in principle will be implemented.
In its negotiation with members of the Haft family, Dart is
represented by the Executive Committee of its Board of Directors, comprised of
Larry G. Schafran, Chairman, Douglas M. Bregman, Esq. and Bonita A. Wilson.
For further information, contact Larry G. Schafran
(301-731-1502).
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