<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(Mark One)
(X) Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 (Fee Required) for the fiscal year ended January 29, 1994
( ) Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (No Fee Required) for the transition period
from ---------- to ----------
Commission file number 0-12202
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TRAK AUTO CORPORATION
- - ----------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 52-1281465
- - ------------------------------------ ------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3300 75th Avenue, Landover, Maryland 20785
- - ------------------------------------ ------------------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code (301) 731-1200
---------------------
Securities registered pursuant to Section 12(b) of the Act: NONE
--------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, Par Value $.01 Per Share
- - ----------------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
----- -----
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. ( )
At April 28, 1994, registrant had 6,053,818 shares of Common Stock
outstanding and the aggregate market value of such shares held by
non-affiliates of the registrant was approximately $27,689,000.
DOCUMENTS INCORPORATED BY REFERENCE.
1994 Proxy Statement for annual stockholders'
meeting to be held June 24, 1994............. Part III Items 10-13.
The exhibit index begins at page 56 of this Form 10-K.
Page 1
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Part I
Item 1. Business
The term "Company", as used herein, refers, unless indicated otherwise, to Trak
Auto Corporation ("Trak Auto") and its wholly-owned subsidiaries, including
Trak Corporation ("Trak"), Super Trak Corporation ("Super Trak") and Trak DHC
Corporation ("Trak DHC"). Dart Group Corporation ("Dart") owns 65.5% of the
Company's outstanding common stock.
Operations
The Company operates retail discount specialty stores in the Washington, D.C.,
Richmond, Virginia, Chicago, Illinois and Los Angeles, California metropolitan
areas.
The Company is engaged in the retail sale of a wide range of automobile parts
and accessories for the do-it-yourself market. The Company's products include
"hard parts" (such as alternators, starters, shock absorbers, fan belts, spark
plugs, mufflers, thermostats, and wheel bearings), as well as motor oil, oil
filters, headlights, batteries, waxes, polishes, car stereos, anti-freeze and
windshield wipers. A typical store normally carries 10,000 different item
numbers or SKU's. The Company does not sell tires and does not provide
automotive service or installation.
During the year ended January 30, 1993, the Company organized Super Trak
Corporation. Super Trak was organized as a Delaware corporation to operate
retail auto part stores and is a wholly-owned subsidiary of the Company. Super
Trak stores are similar to the Trak Auto stores described above, however, the
stores provide additional services and merchandise. Super Trak stores carry
approximately 5,000 more SKU's, concentrated primarily in application parts
categories. Additionally, the stores feature special order services permitting
customers access to virtually any automotive part, including engines. The
stores also offer extensive technical assistance through computerized parts
look-up, instruction for repairs, free use of specialized tools, and factory
trained parts people. The Company is planning a conversion to the Super Trak
concept through the opening of new stores and the conversion, relocation and
expansion of its existing stores.
The Company's merchandise is generally purchased directly from a large number
of manufacturers and suppliers. The Company's distribution system is
computerized utilizing an automated replenishment and perpetual inventory
system to generate shipments of product from distribution centers in Landover,
Md., Bridgeview, Ill. and Ontario, California. The required items are
generally assembled and packaged for delivery in the order in which they will
be unpacked and displayed on the shelves at the retail stores, promoting store
efficiency. Inventories are monitored both at stores and in the distribution
centers to determine purchase requirements. The Company has a computerized
point of sale ("POS") register system in every store. The Company uses
scanners to identify most merchandise at the register and uses a price look-up
function to price the sale. Most merchandise is pre-labeled with bar codes by
the manufacturers.
2
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Operations (continued)
The Company's merchandising philosophy is to develop strong consumer
recognition and acceptance of its name by use of mass-media advertising to
promote a broad selection of products at low prices. The Company emphasizes
quality customer service through knowledgeable personnel and advanced
technology such as electronic parts look-up, POS and computerized
do-it-yourself aids.
Trak Auto stores are approximately 5,000 to 6,000 square feet and Super Trak
stores range from 6,000 to 11,000 square feet. The Company's stores use modern
fixtures and equipment and the interiors have been standardized, so that the
interiors of new stores can be assembled quickly. The stores are open seven
days a week.
The following table indicates the Company's store locations and the number of
stores opened, closed and remodeled for the last five years.
<TABLE>
<CAPTION>
Number of Stores
at end of fiscal year
--------------------------------
<S> <C> <C> <C> <C> <C>
Metropolitan Area 1990 1991 1992 1993 1994
----------------- ---- ---- ---- ---- ----
Washington, D.C. ............ 74 77 81 84 86
Baltimore, Maryland ......... 14 14 6 0 0
Richmond, Virginia .......... 14 14 15 15 15
Chicago, Illinois ........... 93 100 99 99 97
Los Angeles, California ..... 113 119 121 119 116
San Diego, California........ - 7 11 0 0
---- ---- ---- ---- ----
Total .............. 308 331 333 317 314
==== ==== ==== ==== ====
Super Trak Stores
- - -----------------
Opened during the year....... - - - 1 10
Closed during the year....... - - - - 1
Classic Trak Stores
- - -------------------
Opened during the year....... 36 26 19 6 1
Closed during the year....... 2 3 17 23 13
Converted to Super Trak
during the year............ - - - 11 52
Remodeled during the year.... - 4 - - -
Super Trak Stores - - - 12 73
Classic Trak Stores 308 331 333 305 241
</TABLE>
The Company had 15 stores substantially damaged or completely destroyed in the
Los Angeles civil disturbances at the end of the first fiscal quarter of 1993.
Eleven of these stores have subsequently reopened and four stores remain
closed. The Los Angeles earthquake in January of 1994 damaged two Trak Auto
stores and one Super Trak resulting in their closing. The Super Trak reopened
shortly after year-end while the two Trak Auto stores remain closed.
The Company has closed certain stores in various markets. At January 29, 1994,
the Company had an accrual for closed stores of approximately $1,000,000 which
represents estimated unrecoverable lease costs, the remaining book value of
leasehold improvements and certain other costs. The net charge (income) was
$(943,000), $500,000, and $3,162,000 during fiscal 1994, 1993, and 1992,
respectively. Income during the year ended January 29, 1994 was the result of
early lease terminations, net of cash buyouts. The Company continually reviews
store operations and expects to close additional
3
<PAGE> 4
Operations (continued)
underperforming stores in the future.
A restructuring charge of $7,400,000 was recorded in 1993 for the anticipated
costs associated with closing, relocating, expanding and converting existing
stores to the new Super Trak concept. During the year ended January 29, 1994,
approximately $600,000 was charged against this reserve.
No store contributed more than 1.0% to the Company's consolidated sales during
the year ended January 29, 1994.
Relationship with Dart
Dart provides the Company with certain general and administrative services.
Some of these services include executive management, accounting, personnel
administration, legal and real estate. In addition, the Company provides
similar services to Dart and its other subsidiaries. Some of these services
are advertising administration, data processing and loss prevention. During
the year ended January 29, 1994, such services resulted in a charge to the
Company of $929,000 and a charge from the Company of $490,000. See Note 4 to
the Consolidated Financial Statements and Item 2. Properties.
Competition
The business in which the Company is engaged is highly competitive. The
Company competes with local, regional and national retail sellers of automobile
parts and accessories. To some extent, the Company competes with garages,
service stations, automobile dealers, supermarkets, and department, hardware
and other stores. Some of the Company's competitors furnish service and
installation, which are not offered by the Company. Many of its competitors
have greater resources than the Company and the Company encounters strong price
competition.
Employees
On January 29, 1994, the Company employed 2,480 full time and 1,690 part time
persons engaged in retail, warehouse and administrative operations. The
Company considers its relations with employees to be good.
4
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Officers
The following table sets forth the names, ages and positions of the officers of
the registrant. Officers are appointed to serve until the meeting of the Board
of Directors following the next annual meeting of stockholders or until their
successors are appointed.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Herbert H. Haft 73 Chairman of the Board of
Directors and Chief
Executive Officer
R. Keith Green 43 President
Ron Marshall 40 Treasurer and Principal
Financial Officer
David B. MacGlashan 51 Principal Accounting
Officer
Robert E. Brann 42 Executive Vice President
Thomas V. Reilly 46 Executive Vice President
Dennis N. Weiss 48 Vice President, Real
Estate
</TABLE>
Herbert H. Haft, the founder of Dart, has been Chief Executive Officer and
Chairman of the Board of Dart since 1960. He has been Chairman of the Board of
Directors and Chief Executive Officer of the Company since its organization,
and was Chairman or Co-Chairman of the Board of Directors of Crown Books
Corporation ("Crown Books"), an affiliate of Dart from its organization in 1983
until December 1991 when he became Chairman of the Executive Committee. Mr.
Haft became Chairman of the Board of Directors of Crown Books, again, in June
1993. Mr. Haft is a director of Dart and Crown Books.
R. Keith Green was appointed President of the Company in July 1990 and was
named a director of the Company in September 1991. Prior to joining the
Company Mr. Green was President and Chief Executive Officer of Whitlock
Corporation. Prior to that he was an officer of Auto Zone.
Ron Marshall was appointed Treasurer and Principal Financial Officer of the
Company in November 1991. At the same time he was appointed Senior Vice
President, Treasurer and Chief Financial Officer of Dart and Treasurer and
Principal Financial and Accounting Officer of Crown Books. Prior to joining the
Company Mr. Marshall was Chief Financial Officer at Barnes and Noble Bookstores
Inc., a national retailer of college bookstores from 1988 to 1991. Prior to
that, he was Vice President of Finance at The Office Place Inc., a subsidiary
of NBI, Inc.
David B. MacGlashan was appointed Principal Accounting Officer of the Company
in October 1991. Before he joined the Company Mr. MacGlashan was Vice
President of Finance and Chief Financial Officer of WSR, Inc., formerly the
Whitlock Corporation, from 1987 to 1991. Prior to that, he was Chief Financial
Officer of I. B. Diffusion Ltd.
Robert E. Brann was appointed Executive Vice President in July 1990. Prior to
that appointment Mr. Brann served as Vice President of Merchandising from the
time he joined the Company in July 1989. Prior to joining the Company Mr.
Brann was Vice President of Merchandising and later Vice President of Store
Operations and Administration for Franks Nursery and Crafts.
5
<PAGE> 6
Thomas V. Reilly was appointed Executive Vice President in July 1987.
Previously, Mr. Reilly served as Assistant Vice President and General Manager
of the Chicago Region of Trak Auto since February 1984 and prior to that time,
served as a Regional Manager of Trak Auto.
Dennis N. Weiss is Vice President of Real Estate of the Company. He has been
Executive Vice President, Real Estate for Dart since December 1987 and in that
position has responsibility for Crown Books and Total Beverage Corporation (a
Dart affiliate). Mr. Weiss joined Dart in August 1981 as Director of Real
Estate.
6
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Item 2. Properties
The Company subleases from Dart 210,000 square feet of a warehouse and office
facility, located in Landover, Maryland, which it shares with Crown Books. The
sublease is for 30 years and six months, provides for rental payments
increasing approximately 15% every five years over the term of the sublease and
commenced October 1985. The current annual rental is $1,284,000. The sublease
also requires payment for maintenance, utilities, insurance and taxes allocable
to the space subleased. Dart leases the entire 271,000 square foot warehouse
and office facility from a private partnership in which Haft family members own
all of the partnership interests. The Company's sublease is on the same terms
as Dart's lease from the Haft family partnership.
Dart has a lease agreement with a private partnership in which Haft family
members own all of the partnership interests, for land adjacent to the
Company's warehouse in Landover, Maryland. The lease is for the same period as
the warehouse and office facility lease described above and the current annual
rental is $33,000 with increases of three percent per year. Such rent will be
renegotiated upon commencement of construction of any improvements. The
Company has agreed to bear the annual carrying cost for such land until such
time as it becomes desirable to use the land in order to expand the Company's
warehousing facilities.
The Company has an agreement with Dart to sublease 6,500 square feet in a
warehouse facility, adjacent to the above warehouse and office facility. Dart
leases the property from a partnership in which Haft family members own all of
the partnership interests. The lease commenced April 1992 with a term of one
year (with nine one year option periods). The annual rental is $21,000 and
will increase to $24,000 for each of the last five option periods. The
sublease agreement also requires the Company to pay approximately $6,000
annually for its full share of any common area charges, real estate taxes and
insurance premiums.
The Company leases a 176,000 square foot warehouse located in Bridgeview,
Illinois from a private partnership in which Haft family members own all of the
partnership interests. The lease is for thirty years and six months, provides
for rental payments increasing approximately 15% every five years over the term
of the lease and commenced April 1984. The current annual rental is $588,000.
The lease also requires the Company to pay for maintenance, utilities,
insurance and taxes on the warehouse. Under the terms of the lease agreement,
Dart is jointly and severally liable for the lease obligations.
The Company has a lease agreement with a private partnership in which Haft
family members own all of the partnership interest for a 317,000 square foot
distribution center in Ontario, California. The lease is for 20 years and
provides for increasing rental payments, based upon the Consumer Price Index
for the Los Angeles area, over the term of the lease. The lease commenced
December 1989. Annual rental for the first five years is $1,129,634. The
lease requires the lessee to pay for maintenance, utilities, insurance and
taxes.
7
<PAGE> 8
Item 2. Properties (continued)
The Company leases all of its 314 retail stores. As of January 29, 1994, the
total remaining minimum annual payments for the Company's retail stores were
$83,701,000 to the lease expiration dates. The lease and license expiration
dates (without regard to renewal options) range from 1994 to 2013.
Twenty-three of these leases are with entities in which the Haft family has
substantially all the beneficial interest, two are with partnerships in which
Dart owns the majority interest and the remaining partnership interests are
held by members of the Haft family, and two are subleased from Crown Books.
See Notes 4 and 6 to the Consolidated Financial Statements for information
concerning charges and methods of allocation to the Company and the lease and
license arrangements in which Dart or the Haft family has an interest.
8
<PAGE> 9
Item 3. Legal Proceedings
See Note 8 to the Consolidated Financial Statements.
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable.
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The following table shows the high and low sale prices for the common stock in
the over-the-counter market for the fiscal quarters indicated, as reported by
National Association of Securities Dealers Automated Quotations System
("NASDAQ"). No dividends were paid or accrued in the fiscal quarters
indicated.
<TABLE>
<CAPTION>
Quarter Ended High Low
------------- ---- ---
<S> <C> <C>
May 2, 1992 18 1/2 13
August 1, 1992 14 3/4 11 1/8
October 31, 1992 15 9 1/2
January 30, 1993 22 5/8 13 3/4
May 1, 1993 20 13 3/4
July 31, 1993 15 10 3/4
October 30, 1993 16 1/2 12 1/2
January 29, 1994 14 1/4 10 3/4
</TABLE>
Approximate number of record holders as of March 31, 1994 was 265.
The Company does not currently intend to pay cash dividends.
9
<PAGE> 10
Item 6. Selected Financial Data
INCOME STATEMENT DATA: (in thousands, except per share and Sales % data)
<TABLE>
<CAPTION>
Fiscal Year
-------------------------------------------------
1994 1993 1992 1991 1990
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Sales $334,798 $315,793 $319,635 $293,075 $275,468
Interest and other income 1,562 1,759 1,145 890 570
Cost of sales, store
occupancy and
warehousing 255,669 233,472 242,787 229,575 212,258
Selling, administrative
and depreciation 77,594 72,031 71,406 64,862 56,900
Interest expense 3,561 3,521 3,549 3,645 2,706
Restructuring charge - 7,400 - - -
Unusual item - 3,894 - - -
Income (loss) before
income taxes (464) 4,971 3,038 (4,117) 4,174
Income (loss) before
cumulative effect of
change in accounting
principle 81 3,355 2,084 (4,177) 2,552
Cumulative effect of change
in accounting principle - 1,658 - - -
Net income (loss) 81 5,013 2,084 (4,177) 2,552
Per share data:
Income (loss) before
cumulative effect of
change in accounting
principle $ .01 $ .57 $ .36 $ (.72) $ .44
Cumulative effect of change
in accounting principle - .28 - - -
Net income (loss) $ .01 $ .85 $ .36 $ (.72) $ .44
Weighted average common
share and common share
equivalents outstanding 6,107 5,928 5,795 5,780 5,785
Percentage change in sales
Total stores 6.0% (1.2)% 9.1% 6.4% 13.3%
Comparative stores 1.3% 2.6% 6.1% .3% 5.6%
</TABLE>
BALANCE SHEET DATA: (in thousands)
<TABLE>
<CAPTION>
at end of Fiscal Year
-------------------------------------------------
1994 1993 1992 1991 1990
------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Current assets $129,805 $119,831 $101,404 $103,057 $100,154
Current liabilities 75,737 59,662 53,370 58,904 49,043
Working capital 54,068 60,169 48,034 44,153 51,111
Total assets 179,149 165,104 144,573 146,209 139,782
Long-term obligations 33,737 36,159 29,800 27,999 27,256
Stockholders' equity 69,675 69,283 61,403 59,306 63,483
</TABLE>
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Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Cash, including short-term instruments, is the Company's primary source of
liquidity. Cash, including short-term instruments, decreased by $16,229,000 to
$16,318,000 at January 29, 1994 from $32,547,000 at January 30, 1993. The
decrease was primarily due to the purchase of marketable debt securities,
increased merchandise inventory and capital expenditures, and was partially,
offset by cash received from insurance claims and operations.
Operating activities provided $4,734,000 in funds to the Company for
the year ended January 29, 1994 compared to $11,835,000 for the year ended
January 30, 1993. The decrease was primarily due to operating results and to
increased inventory levels for the Super Trak stores, and was partially offset
by cash received from insurance claims.
Investing activities used $21,078,000 of the company's funds during the year
ended January 29, 1994, compared to $4,933,000 for the year ended January 30,
1994. The increase was due to the purchase of United States Treasury Notes and
other marketable debt securities, as well as increased capital expenditures for
the Super Trak conversions, which were offset in part by dispositions of United
States Treasury Notes.
Financing activities provided $115,000 to the Company for the year ended
January 29, 1994, compared to $2,480,000 for the same period last year. The
decrease is due to a reduction in the proceeds from stock options exercised.
The Company has a $6,000,000 revolving line of credit available that it shares
with Dart and Crown Books (see Note 9 to the Consolidated Financial
Statements). The Company has not borrowed any funds against this line of
credit.
The Company intends to open new stores as Super Trak stores and to convert or
expand existing stores to Super Trak stores. The Company anticipates
approximately 45 Super Trak stores to be opened or converted from classic
stores in fiscal 1995 and anticipates closing 33 classic stores. At January
29, 1994, the Company had 73 Super Trak stores and 11 signed leases for new
Super Trak stores and 13 signed amendments to existing leases for expansion to
Super Trak stores.
The Company anticipates that the funds necessary for capital expenditures for
new store openings and remodelings, inventory purchases for new stores, and to
meet the Company's long-term lease obligations and current liabilities
(including current and long-term closed store and restructuring reserves) will
come from operations and existing current assets.
The liquid assets maintained by the Company are intended to fund the expansion
of the Company's retail business through opening stores in new markets,
converting classic stores to Super Trak stores and opening additional stores in
existing markets, and to fund other corporate activities.
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<PAGE> 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
Liquidity and Capital Resources (Continued)
At January 29, 1994
Working capital decreased by $6,101,000 to $54,068,000 at January 29, 1994 from
$60,169,000 at January 30, 1993. The decrease is primarily due to increased
capital expenditures as a result of the conversion or opening of Super Trak
stores and was partially offset by operating results.
At January 30, 1993
Working capital increased by $12,135,000 to $60,169,000 at January 30, 1993
from $48,034,000 at February 1, 1992. Operating results and cash received from
partial settlement of insurance claims provided the largest portion of the
increase in working capital. Increased inventory for new Super Trak stores was
more than offset by increased accounts payable, trade as a result of the timing
of inventory purchases.
Results of Operations
Year Ended January 29, 1994 as Compared to the Year Ended
January 30, 1993
Sales of $334,798,000 in fiscal 1994 increased by $19,005,000 or 6.0% from the
prior fiscal year primarily due to increased sales for stores converted from
classic to Super Trak stores. Sales for stores open more than one year
increased 1.3% for the year ended January 29, 1994. Super Trak sales increased
to $78,054,000 from $6,775,000 one year ago and comparable Super Trak sales
decreased 4.0%. Classic Trak Auto store sales decreased to $256,744,000 from
$309,018,000 as a result of converting over 50 classic stores to Super Traks.
Comparable sales for classic Trak Auto stores increased 1.4%. Sales for Super
Trak stores represented 23.3% and 2.1% of total sales for the year ended
January 29, 1994 and January 30, 1993, respectively.
During the year ended January 29, 1994 the Company opened ten Super Trak
stores, converted 52 classic stores to Super Traks and opened one classic Trak
store while closing one Super Trak (temporarily due to the January 1994 Los
Angeles earthquake), and 13 classic Trak stores. Super Trak stores have
generated increased sales at converted locations as well as increased gross
margin as a result of the change in product mix (increased hard parts). The
Company believes that by leasing larger stores it can obtain more favorable
lease rates and that as the stores mature, operating expenses as a percentage
of sales will decrease. The increased sales and margins together with the
knowledge acquired during the current year to control operating expenses are
expected to have a positive impact on future operating results.
Interest and other income decreased by $197,000 during the year ended January
29, 1994 compared to the year ended January 30, 1993. The decrease was
primarily due to decreased sublease income as a result of the expiration of the
primary lease and was partially offset by an increase in interest income as a
result of increased average balance on funds available for short-term
investment.
Cost of sales, store occupancy and warehousing expenses as a percentage of
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Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
Year Ended January 29, 1994 as Compared to the Year Ended
January 30, 1993 (Continued)
sales increased to 76.4% for the year ended January 29, 1994, compared to 73.9%
for the year ended January 30, 1993. This increase was primarily the result of
decreased margins as a result of the Company's marketing strategy of reducing
prices to meet increased competition and increased advertising costs resulting
from utilizing alternative advertising media.
Selling and administrative expenses, as a percentage of sales, were 21.2% of
sales for the year ended January 29, 1994 compared to 20.9% for the year ended
January 30, 1993. The increase was primarily due to increased payroll costs
associated with opening and operating Super Trak stores. The increase was
partially offset by favorable settlement of future lease obligations of
$943,000 for stores closed in prior years and by decreased insurance costs as a
result of the Company's safety programs, which have reduced workers
compensation claims.
Depreciation and amortization increased $727,000 when compared to fiscal 1993.
The increase was due primarily to the increase in fixed assets resulting from
conversions to Super Trak.
Interest expense increased $40,000 for the year ended January 29, 1994 compared
to the year ended January 30, 1993 due to amounts owed under capital lease
obligations. During the year ended January 29, 1994, the Company recorded a
tax benefit of $545,000 as a result of the Company's current book net operating
loss and the effect of certain permanent book/tax differences.
The Company does not offer any of the benefits covered under Statement of
Financial Accounting Standards ("SFAS") No. 106, Employer's Accounting for
Postretirement Benefits Other than Pensions, and as such the standard will have
no impact to the Company.
The Company is required to adopt SFAS No. 112, Employers' Accounting for
Postemployment Benefits, no later than fiscal year ending January 28, 1995.
The Company does not expect that implementing the standard will have a
significant impact on the financial statements.
The Company is required to adopt SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities, no later than its fiscal year ending
January 28, 1995. The Company does not expect that implementing the standard
will have a significant effect on the financial statements.
13
<PAGE> 14
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
Year Ended January 30, 1993 as Compared to the Year Ended
February 1, 1992
Sales of $315,793,000 in fiscal 1993 decreased by $3,842,000 or 1.2% from the
prior fiscal year primarily due to the closure of 11 underperforming stores in
San Diego during the second quarter as well as the continuing impact of the
stores destroyed or damaged during the civil disturbances in Los Angeles during
the first quarter. The Company's decision to close the San Diego stores was
largely due to those stores' inability to generate the sales volume necessary
to meet expenses. In Los Angeles, the six stores that remain closed and the
nine stores that subsequently reopened contributed to the decrease in sales.
These decreases were partially offset by three new Super Trak stores and
increased sales at nine stores converted to Super Trak stores and a 2.6%
increase in sales for stores open more than one year.
Interest and other income increased by $614,000 during the year ended January
30, 1993 compared to the twelve months ended February 1, 1992. The increase was
due to increased interest income as a result of increased funds available for
short-term investments, partially offset by lower interest rates.
Cost of sales, store occupancy and warehousing expenses as a percentage of
sales decreased to 73.9% for the year ended January 30, 1993, compared to 76.0%
for the year ended February 1, 1992. This decrease was primarily the result of
strong margins throughout 1993 compared to 1992 when first quarter margins were
low due to competitive market pressures, and was partially offset by a small
increase in store occupancy costs. Margins for stores open less than one year
did not vary significantly from stores open more than one year.
Selling and administrative expenses were 20.9% of sales for the year ended
January 30, 1993 compared to 20.3% for the year ended February 1, 1992. The
increase was primarily due to increased payroll costs, largely a result of
costs associated with the opening of Super Trak stores, and increased insurance
costs associated with general liability, auto liability and workers
compensation and increased health insurance costs.
Depreciation and amortization decreased $459,000 when compared to fiscal 1992.
The decrease was due primarily to the write-off of fixed assets as a result of
utilization of net operating loss carryforwards, of negative goodwill
amortization and to last year's retroactive adjustment to the useful lives of
certain leasehold improvements.
Interest expense decreased $28,000 for the year ended January 30, 1993 compared
to the year ended February 1, 1992 due to the reduction of amounts owed under
capital lease obligations.
During the year ended January 30, 1993, the Company recorded a one-time
restructuring charge of $7,400,000, before income taxes. The charge includes
the costs associated with closing, relocating, expanding and converting
existing stores to the new Super Trak concept. These costs are primarily
unrecoverable lease obligations.
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<PAGE> 15
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
Year Ended January 30, 1993 as Compared to the Year Ended
February 1, 1992 (Continued)
As a result of the stores destroyed or damaged in the Los Angeles disturbances
discussed above, the Company had received payments from insurance carriers of
approximately $6,400,000 and recorded a receivable for an additional $3,600,000
which represent settlement of the Company's insurance claims. The payments and
receivable, less related expenses and the cost of the related inventory and
fixed assets lost, have been recorded as a gain, classified as an unusual item
during the year ended January 30, 1993.
The effective income tax rate was 32.5% for the year ended January 30, 1993
compared to 31.4% in the prior year. The Company's effective income tax rate
was less than the statutory rates as a result of differences in depreciation
between the book and tax basis of the assets acquired from Trak Auto West, Inc.
("Trak West").
The Company adopted SFAS No. 109, Accounting for Income Taxes, effective
February 2, 1992. At that time the Company had existing unrecognized tax
benefits of net operating loss carryforwards of approximately $6,500,000
representing both preacquisition losses of Trak West and its own operating
losses in 1991. In conjunction with the adoption of the standard, the Company
recorded $1,658,000 as the cumulative effect of recognizing that portion of the
previously unrecognized tax benefits that it concluded would, more likely than
not, be recognized and established a valuation reserve of $728,000.
Effects of Inflation
Inflation in the past several years has not had a significant impact on the
Company's business. The Company believes it will be able to recover future
cost increases due to inflation by increasing selling prices.
15
<PAGE> 16
Item 8. Financial Statements and Supplementary Data
Financial Statements
<TABLE>
<CAPTION>
Page No.
<S> <C>
Report of Independent Public Accountants 17
Consolidated Balance Sheets
As of January 29, 1994 and January 30, 1993 18 - 19
Consolidated Statements of Income
Years ended January 29, 1994 and January 30,
1993 and February 1, 1992 20
Consolidated Statements of Stockholders' Equity
Years ended January 29, 1994 and January 30,
1993 and February 1, 1992 21
Consolidated Statements of Cash Flows
Years ended January 29, 1994 and January 30,
1993 and February 1, 1992 22 - 23
Notes to Consolidated Financial Statements 24 - 39
</TABLE>
16
<PAGE> 17
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
TO TRAK AUTO CORPORATION:
We have audited the accompanying consolidated balance sheets of Trak Auto
Corporation (a Delaware corporation and a majority-owned subsidiary of Dart
Group Corporation) and subsidiaries as of January 29, 1994 and January 30,
1993, and the related consolidated statements of income, stockholders' equity
and cash flows for each of the three fiscal years in the period ended January
29, 1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these 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 an 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 financial statements referred to above present fairly, in
all material respects, the financial position of Trak Auto Corporation and
subsidiaries as of January 29, 1994 and January 30, 1993, and the results of
their operations and their cash flows for each of the three fiscal years in the
period ended January 29, 1994, in conformity with generally accepted accounting
principles.
As discussed in Note 1 to the consolidated financial statements, effective
February 2, 1992, the Company changed its method of accounting for income
taxes.
ARTHUR ANDERSEN & CO.
Washington, D.C.,
April 27, 1994.
17
<PAGE> 18
TRAK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
January 29, January 30,
------------ ------------
1994 1993
------------ ------------
<S> <C> <C>
Current Assets:
Cash $ 4,931,000 $ 4,438,000
Short-term instruments 11,387,000 28,109,000
Marketable debt securities 8,689,000 -
Accounts receivable, trade 5,570,000 4,279,000
Accounts receivable, other 764,000 3,577,000
Merchandise inventories 93,462,000 77,144,000
Prepaid income taxes - 472,000
Deferred income taxes 3,992,000 847,000
Due from affiliate 20,000 -
Other current assets 990,000 965,000
------------ ------------
Total Current Assets 129,805,000 119,831,000
------------ ------------
Property and Equipment, at cost:
Furniture, fixtures and equipment 43,435,000 34,054,000
Leasehold improvements 9,269,000 6,529,000
Property under capital leases 23,667,000 24,756,000
------------ ------------
76,371,000 65,339,000
Accumulated Depreciation
and Amortization 32,608,000 26,496,000
------------ ------------
43,763,000 38,843,000
------------ ------------
Other Assets 239,000 344,000
------------ ------------
Deferred Income Taxes 5,342,000 6,086,000
------------ ------------
Total Assets $179,149,000 $165,104,000
============ ============
</TABLE>
See notes to consolidated financial statements.
18
<PAGE> 19
TRAK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
January 29, January 30,
------------ ------------
1994 1993
------------ ------------
<S> <C> <C>
Current Liabilities:
Accounts payable, trade $ 49,926,000 $ 37,191,000
Income taxes payable 1,155,000 -
Accrued expenses-
Salary and benefits 8,008,000 6,711,000
Taxes other than income 5,572,000 5,821,000
Other 10,865,000 9,708,000
Current portion of obligations under
capital leases 211,000 196,000
Due to affiliate - 35,000
------------ ------------
Total Current Liabilities 75,737,000 59,662,000
------------ ------------
Obligations under Capital Leases 26,331,000 26,058,000
------------ ------------
Reserve for Closed Stores and
Restructuring 7,047,000 9,610,000
------------ ------------
Other 359,000 491,000
------------ ------------
Total Liabilities 109,474,000 95,821,000
------------ ------------
Stockholders' Equity
Common stock, par value $.01 per
share; 15,000,000 shares
authorized; 6,270,497 and
6,257,198 shares issued at
each year end, respectively 63,000 63,000
Note receivable - (124,000)
Paid-in capital 44,477,000 44,290,000
Retained earnings 26,951,000 26,870,000
Treasury stock, 217,812 shares
of common stock at cost (1,816,000) (1,816,000)
------------ ------------
Total Stockholders' Equity 69,675,000 69,283,000
------------ ------------
Total Liabilities and Stockholders'
Equity $179,149,000 $165,104,000
============ ============
</TABLE>
See notes to consolidated financial statements.
19
<PAGE> 20
TRAK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Years Ended
----------------------------------------
January 29, January 30, February 1,
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Sales $334,798,000 $315,793,000 $319,635,000
Interest and other income 1,562,000 1,759,000 1,145,000
------------ ------------ ------------
336,360,000 317,552,000 320,780,000
------------ ------------ ------------
Cost of sales, store occupancy
and warehousing 255,669,000 233,472,000 242,787,000
Selling and administrative 70,838,000 66,053,000 64,918,000
Depreciation and amortization 6,756,000 6,029,000 6,488,000
Interest expense 3,561,000 3,521,000 3,549,000
Restructuring charge - 7,400,000 -
Unusual item - (3,894,000) -
------------ ------------ ------------
336,824,000 312,581,000 317,742,000
------------ ------------ ------------
Income (Loss) before income
taxes (464,000) 4,971,000 3,038,000
Income taxes (benefit) (545,000) 1,616,000 954,000
------------ ------------ ------------
Net income before
cumulative effect of
change in accounting
principle 81,000 3,355,000 2,084,000
Cumulative effect of
change in accounting
principle - 1,658,000 -
------------ ------------ ------------
Net income $ 81,000 $ 5,013,000 $ 2,084,000
============ ============ ============
Weighted average common share
and common share equivalents
outstanding 6,107,000 5,928,000 5,795,000
============ ============ ============
Per share data:
Net income before
cumulative effect of
change in accounting
principle $ .01 $ .57 .36
Cumulative effect of
change in accounting
principle - .28 -
------------ ------------ ------------
Net income $ .01 $ .85 $ .36
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
20
<PAGE> 21
TRAK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Years Ended
----------------------------------------
January 29, January 30, February 1,
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Common Stock:
Balance, beginning of
period $ 63,000 $ 60,000 $ 60,000
Stock options exercised - 3,000 -
------------ ------------ ------------
Balance, end of period 63,000 63,000 60,000
============ ============ ============
Note Receivable:
Balance, beginning of period $ (124,000) $ - $ -
Stock options exercised - (124,000) -
Payment of note receivable 124,000 - -
------------ ------------ ------------
Balance, end of period $ - $ (124,000) $ -
============ ============ ============
Paid-in Capital:
Balance, beginning of period $ 44,290,000 $ 41,302,000 $ 41,289,000
Stock options exercised 187,000 2,988,000 13,000
------------ ------------ ------------
Balance, end of period $ 44,477,000 $ 44,290,000 $ 41,302,000
============ ============ ============
Retained Earnings:
Balance, beginning of period $ 26,870,000 $ 21,857,000 $ 19,773,000
Net income 81,000 5,013,000 2,084,000
------------ ------------ ------------
Balance, end of period $ 26,951,000 $ 26,870,000 $ 21,857,000
============ ============ ============
Treasury Stock:
Balance, beginning and
end of period $ (1,816,000) $ (1,816,000) $ (1,816,000)
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
21
<PAGE> 22
TRAK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended
-----------------------------------------
January 29, January 30, February 1,
1994 1993 1992
------------- ------------ ------------
<S> <C> <C> <C>
Cash Flows from Operating
Activities:
Net Income $ 81,000 $ 5,013,000 $ 2,084,000
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 6,756,000 6,029,000 6,488,000
Utilization of Trak
Corporation net operating
loss carryforwards - (1,658,000) 531,000
Provision for closed
stores, including
restructuring charge (943,000) 8,185,000 2,760,000
Change in assets and
liabilities:
Accounts receivable, trade (1,291,000) 1,865,000 51,000
Accounts receivable, other 2,813,000 (3,577,000) -
Merchandise inventories (16,318,000) (5,942,000) 8,957,000
Prepaid income taxes 472,000 (472,000) 4,257,000
Due from affiliate (20,000) 67,000 (67,000)
Other current assets (25,000) (139,000) (118,000)
Deferred income taxes (2,401,000) (2,674,000) (2,601,000)
Other assets 105,000 155,000 2,000
Accounts payable, trade 12,735,000 7,913,000 (11,185,000)
Accrued expenses 2,689,000 (49,000) 5,151,000
Due to affiliate (35,000) 35,000 (78,000)
Income taxes payable 1,155,000 (677,000) 677,000
Other liabilities - - 660,000
Reserve for closed
stores (1,039,000) (2,239,000) (1,095,000)
------------- ------------ ------------
Net cash provided by
operating activities $ 4,734,000 $ 11,835,000 $ 16,474,000
------------- ------------ ------------
Cash Flows from Investing
Activities:
Capital expenditures $ (12,389,000) $ (4,933,000) $ (4,476,000)
Purchase of U.S. Treasury
Notes (25,777,000) - -
Dispositions of United States
Treasury Notes 23,414,000 - -
Maturities of marketable
debt securities 1,400,000 - -
Purchase of marketable
debt securities (7,726,000) - -
------------- ------------ ------------
Net cash used in
investing activities $ (21,078,000) $ (4,933,000) $ (4,476,000)
------------- ------------ ------------
</TABLE>
See notes to consolidated financial statements.
22
<PAGE> 23
TRAK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
Years Ended
----------------------------------------
January 29, January 30, February 1,
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows from Financing
Activities:
Principal payments under
capital lease obligations (196,000) (387,000) (584,000)
Proceeds from redemption
of note receivable 124,000 - -
Proceeds from exercise of
stock options 187,000 2,867,000 13,000
------------ ------------ ------------
Net cash provided
by (used in)
financing activities $ 115,000 $ 2,480,000 $ (571,000)
------------ ------------ ------------
Net Increase in Cash
and Cash Equivalents $(16,229,000) $ 9,382,000 $ 11,427,000
Cash and Cash Equivalents at
Beginning of Year 32,547,000 23,165,000 11,738,000
------------ ------------ ------------
Cash and Cash Equivalents at
End of Year $ 16,318,000 $ 32,547,000 $ 23,165,000
============ ============ ============
</TABLE>
Supplemental Disclosures of Cash Flow Information:
<TABLE>
<S> <C> <C> <C>
Cash paid during the year for:
Interest $ 3,561,000 $ 3,521,000 $ 3,549,000
Income taxes 340,000 4,657,000 (2,787,000)
</TABLE>
See notes to consolidated financial statements.
23
<PAGE> 24
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements reflect the accounts of Trak
Auto Corporation ("Trak Auto") and its wholly-owned subsidiaries. Trak Auto and
its wholly-owned subsidiaries are referred to collectively as the "Company".
All significant intercompany accounts and transactions have been eliminated.
The Company is engaged in the business of operating specialty retail stores.
Fiscal Year
In December 1991, the Company adopted a 52/53 week fiscal year where the year
will end on the nearest Saturday to January 31. The years ended January 29,
1994 and January 30, 1993 contain two days less than fiscal 1992.
Short-term Instruments and Marketable Debt Securities
The Company's short-term instruments included United States Treasury Bills and
Overnight Repurchase Agreements (collateralized by United States Treasury
Obligations) and marketable debt securities included United States Treasury
Notes, corporate notes and municipal securities. These short-term instruments
and marketable debt securities are recorded at lower of cost or market. At
January 29, 1994, the difference between cost and market value was not
significant.
Fair Value of Financial Instruments
The fair values of current assets and current liabilities are approximately
equal to the reported carrying amounts. No value has been placed on the
Company's line of credit facility as any borrowings would bear interest at
market rates.
Statement of Cash Flows
For purposes of the statement of cash flows, the Company considers all
short-term instruments, consisting of United States Treasury Bills, purchased
with an original maturity of less than one year to be cash equivalents. The
Company's United States Treasury Bills primarily consist of instruments with a
maturity of less than four months. These highly liquid instruments are
considered to be an integral part of the Company's operating cash management
program.
Merchandise Inventories
The Company's inventories are priced at the lower of last-in, first-out
("LIFO") cost or market. At January 29, 1994 and January 30, 1993, inventories
determined on a first-in, first-out basis would have been greater by $5,520,000
and $5,422,000, respectively.
24
<PAGE> 25
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
Property and Equipment
The Company depreciates furniture, fixtures and most equipment generally over a
ten year period using the straight-line method. Computer equipment is
depreciated over a five year period using the straight-line method. Computer
software is charged to expense in the year of acquisition. All stores and some
equipment are leased. Improvements to leased premises are amortized over a ten
year period or the term of the lease, whichever is shorter. Assets financed
through asset-based financing arrangements are depreciated over the lives of
the leases.
Income Taxes
The Company implemented Statement of Financial Accounting Standards ("SFAS")
No. 109, Accounting for Income Taxes, effective February 2, 1992. Adoption of
the new standard resulted in the recording of previously unrecorded tax
benefits, which have been classified as the cumulative effect of a change in
accounting principle. Prior to that the Company accounted for income taxes in
accordance with Accounting Principles Board No. 11.
Adoption of New Accounting Pronouncements
The Company is required to adopt SFAS No. 112, Employers' Accounting for
Postemployment Benefits, no later than its fiscal year ending January 28, 1995.
The Company does not expect that implementing the standard will have a
significant effect on the financial statements.
The Company is required to adopt SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities, no later than its fiscal year ending
January 28, 1995. The Company does not expect that implementing the standard
will have a significant effect on the financial statements.
Preopening Expenses
All costs of a noncapital nature incurred in opening a new store are charged to
expense as incurred.
Net Income Per Common Share and Common Share Equivalents
Net income per common share has been computed using the weighted average number
of shares of common stock and common stock equivalents (certain stock options)
outstanding during the periods. The difference between primary net income per
common share and fully diluted net income per common share is not significant
for the periods presented.
25
<PAGE> 26
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
NOTE 2 - INCOME TAXES
The provision for income taxes includes currently payable and deferred income
taxes as follows:
<TABLE>
<CAPTION>
Fiscal Years
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Current income tax
provision (benefit)
Federal $ 687,000 $ 3,537,000 $ 1,734,000
State 108,000 751,000 88,000
------------ ------------ ------------
795,000 4,288,000 1,822,000
Deferred income
tax provision (1,340,000) (2,672,000) (868,000)
------------ ------------ ------------
$ (545,000) $ 1,616,000 $ 954,000
============ ============ ============
</TABLE>
The effective tax rate is reconciled to the Federal statutory rate as follows:
<TABLE>
<CAPTION>
Fiscal Years
----------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Federal statutory rate 34% 34% 34%
Income taxes at Federal
statutory rate $ (158,000) $ 1,690,000 $ 1,033,000
Increase (decrease) in
taxes resulting from:
State income taxes,
net of Federal
income tax benefit (118,000) 214,000 65,000
Effect of Municipal
Bond tax exempt
interest income $ (50,000) - -
Effect of utilization
of former Trak West
net operating loss (219,000) (209,000) (192,000)
Other - (79,000) 48,000
------------ ------------ ------------
Income tax provision $ (545,000) $ 1,616,000 $ 954,000
============ ============ ============
Effective tax rate n/a 32.5% 31.4%
============ ============ ============
</TABLE>
26
<PAGE> 27
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
Deferred income taxes result from temporary differences between
the financial reporting basis and the tax basis of the Company's assets and
liabilities. The components of the net deferred tax assets and liabilities are
as follows:
<TABLE>
<CAPTION>
at January 29, at January 30,
1994 1993
-------------- --------------
<S> <C> <C>
Deferred tax assets:
Capitalized leases treated as operating
leases for tax purposes $ 2,128,000 $ 1,726,000
Depreciation 1,259,000 637,000
Uniform capitalization of inventory costs 1,931,000 1,172,000
Reserve for expenses related to
unusual item 421,000 346,000
Reserve for closed stores, including
restructuring charge 3,281,000 3,522,000
Accrued rent 289,000 214,000
Accrued legal expenses 86,000 -
Preacquisition basis adjustment as a
result of purchase accounting for
Trak West 659,000 638,000
Other 8,000 -
-------------- --------------
10,062,000 8,255,000
Valuation allowance (728,000) (728,000)
-------------- --------------
Deferred tax assets 9,334,000 7,527,000
Deferred tax liability:
Gain from insurance proceeds -
unusual item - 491,000
Other - 103,000
-------------- --------------
Deferred tax liabilities - 594,000
Net deferred tax assets $ 9,334,000 $ 6,933,000
============== ==============
</TABLE>
In conjunction with the adoption of SFAS No. 109, Accounting for Income Taxes,
effective February 2, 1992, the Company recorded $1,658,000 as the cumulative
effect of a change in accounting principle. At the date of the adoption of the
standard, the Company established a valuation reserve of $728,000 against the
deferred tax asset. The Company will evaluate the continuing need for the
valuation reserve on a periodic basis.
In the opinion of management, the net deferred tax asset will be realized
through projected future earnings. The Company has achieved taxable income in
two of the last three years.
In fiscal year 1992, deferred income taxes resulted from timing differences in
the recognition of revenues and expenses for tax return and financial reporting
purposes. The primary differences arose from the closed store reserve,
depreciation and the uniform capitalization of inventory costs.
27
<PAGE> 28
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
NOTE 3 - RESTRUCTURING CHARGE
During the year ended January 30, 1993, the Company recorded a restructuring
charge of $7,400,000, before income taxes. The restructuring charge is divided
into two categories consisting of the estimated cost of: relocating or
expanding and remodeling an estimated 126 stores to Super Trak stores and
discontinuing operations in an estimated 38 stores. The restructuring charge
for the two components consists of unrecoverable lease obligations (rent, real
estate taxes and common area charges) after the projected closing date of the
store or upon remodel or expansion, the write-off of leasehold improvements and
costs associated with changing store fixtures for new product lines and cost
associated with inventory conversion, as follows:
<TABLE>
<CAPTION>
Lease Fixtures &
Category Stores Obligations Leaseholds Inventories
- - -------- ------ ----------- ---------- -----------
<S> <C> <C> <C> <C>
Relocation or
Expansion to
Super Trak 126 $3,560,000 $ - $1,000,000
Discontinued 38 2,780,000 60,000 -
--- ---------- ----------- ----------
164 $6,340,000 $ 60,000 $1,000,000
</TABLE>
The above lease obligations are for basic lease terms of from one to 74 months.
In the case of relocations/expansions, the reserve has been estimated at 50% of
the total lease obligations because the Company believes that certain
alternatives to abandonment may be available. These alternatives include
leasing different or additional space from the same landlord, subletting the
existing space, lease termination and lease buy-out. Therefore, no provision
for leasehold improvement write-off has been made, and only one-half of the
full lease obligation has been provided.
The amount of unrecoverable lease costs relating to properties under related
party leases is approximately $823,000.
28
<PAGE> 29
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
During the year ended January 29, 1994, the Company charged approximately
$600,000 against the restructuring reserve, primarily for the write-off of the
net book value of fixed assets in stores that were converted to Super Traks.
The following table indicates the fiscal years in which the restructuring
charge at January 30, 1993 is expected to be paid or utilized.
<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ----------
<S> <C>
94 $ 600,000
95 600,000
96 3,000,000
97 2,390,000
98 505,000
99-01 305,000
----------
$7,400,000
</TABLE>
NOTE 4 - TRANSACTIONS WITH AFFILIATES
Management and Support Services
Dart Group Corporation ("Dart"), which currently owns 65.5% of the Company's
outstanding common stock, provides the Company with certain general and
administrative services. Some of these services include executive management,
accounting, personnel administration, legal and real estate. In addition, the
Company provided similar services to Dart and its other subsidiaries including
advertising administration, data processing and loss prevention. In
management's opinion, the intercompany charges for these services were equal to
the incremental costs incurred by Dart or the Company to provide these
functions. The incremental costs were the variable costs in excess of what
Dart or the Company needed to service their own operations. It is not
practicable for the Company to estimate the cost it would have incurred for
these services if it had operated as an unaffiliated entity.
In addition to the intercompany charges for general and administrative
services, Dart charged the Company, on a quarterly basis, for actual expenses
which related directly to the Company's operations. Substantially all such
charges were supported by invoices from unrelated parties designating the
Company as recipient of the related goods or services.
In the Company's opinion, the methods used for allocating costs described above
constitute a reasonable basis on which to allocate such costs.
29
<PAGE> 30
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
Amounts receivable from or payable to affiliate relate to transactions made on
behalf of the Company by Dart or on behalf of Dart by the Company in fiscal
1994, 1993 and 1992.
The following table summarizes the intercompany transactions:
<TABLE>
<CAPTION>
Fiscal Years
----------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Due to (from) Affiliate,
Beginning of year $ 35,000 $ (67,000) $ 78,000
------------ ------------ ------------
Direct expense charges-
Rentals (Note 6) 1,407,000 1,434,000 1,468,000
Other expenses 1,586,000 1,235,000 1,165,000
------------ ------------ ------------
2,993,000 2,669,000 2,633,000
------------ ------------ ------------
Allocated charges-
Salaries from Dart 929,000 923,000 816,000
Salaries to Dart (490,000) (562,000) (535,000)
------------ ------------ ------------
Payments (3,487,000) (2,928,000) (3,059,000)
------------ ------------ ------------
Due to (from) Affiliate,
End of year $ (20,000) $ 35,000 $ (67,000)
============ ============ ============
</TABLE>
All transactions with affiliate included above are made under current payment
terms which, in management's opinion, are comparable to those with unrelated
parties and are free of interest. The average balance of amounts due to
affiliate were $175,000, $127,000, and $81,000 for the years ended January 29,
1994 and January 30, 1993 and February 1, 1992, respectively.
NOTE 5 - UNUSUAL ITEM
The Company had 15 stores substantially damaged or completely destroyed in the
Los Angeles civil disturbances in May of 1992. Eleven of these stores have
subsequently reopened and four stores remain closed. At January 30, 1993, the
Company had received payments from insurance carriers of approximately
$6,400,000 and recorded a receivable for an additional $3,600,000 which
represent settlement of the Company's insurance claims. During the first
quarter of 1994 the Company received these funds. The payments and receivable,
less related expenses and the cost of the related inventory and fixed assets
lost, were recorded as a gain, classified as an unusual item during the year
ended January 30, 1993.
30
<PAGE> 31
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
NOTE 6 - LEASE AND LICENSE COMMITMENTS
Lease Commitments
The Company leases stores, warehouses, leasehold improvements, fixtures and
equipment. Renewal options are available on the majority of leases. In some
instances, store leases require the payment of contingent rentals and license
fees based on sales in excess of specified minimums. Certain properties are
subleased with various expiration dates. Certain capital leases have purchase
options at fair market value at the end of the lease.
The following is a schedule by fiscal year of future minimum payments under
capital leases and non-cancelable operating leases and license agreements which
have initial or remaining terms in excess of one year at January 29, 1994. The
imputed interest rate on capital leases is 13.5% in the aggregate.
<TABLE>
<CAPTION>
--in thousands--
---------------------------------------
Capital Leases Operating
(see Related Party Leases) Leases
-------------------------- ---------
Fiscal Fixtures &
Year Buildings Equipment
------ ---------- ----------
<S> <C> <C> <C>
1995 $ 3,090 $ 244 $ 18,359
1996 3,355 183 15,451
1997 3,524 - 12,860
1998 3,720 - 10,667
1999 3,918 - 7,926
2000-2017 71,670 - 20,292
---------- ---------- -------
Total 89,277 427 $85,555
=======
Less-Imputed interest 63,115 47
---------- ----------
Present value of net
minimum lease payments 26,162 380
Less-Current maturities - 211
---------- ----------
Long-term capital lease
obligations $ 26,162 $ 169
========== ==========
</TABLE>
Rent expense and license fees for operating leases and license agreements are
as follows:
<TABLE>
<CAPTION>
Fiscal Years
----------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Minimum rentals $ 18,101,000 $ 17,822,000 $ 18,511,000
Contingent rentals 361,000 338,000 379,000
------------ ------------ ------------
Total $ 18,462,000 $ 18,160,000 $ 18,890,000
============ ============ ============
</TABLE>
31
<PAGE> 32
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
Store Closing Costs
The costs associated with store closings are charged to administrative expense
when management makes the decision to close a store. Such costs consist
primarily of future lease obligations after the closing date, net of estimated
sublease income, and the remaining book value of leasehold improvements.
Accordingly, the Company has closed certain underperforming stores. Such
stores have leases expiring through 1996 and approximately $(943,000),
$500,000, and $3,162,000 was recorded as a net charge (income) during the
fiscal years 1994, 1993 and 1992. Income during the year ended January 29,
1994 was the result of early lease terminations, net of cash buyouts. The
Company continues to review store operations and may close additional stores in
the future.
Related Party Leases and License Agreements
Members of the Haft family own all the issued and outstanding voting stock of
Dart. Of the Company's 314 stores and three warehouses as of January 29, 1994,
23 stores and the three warehouses are held under leases from entities in which
Haft family members own substantially all beneficial interest. Two stores are
leased from partnerships in which Dart owns the majority interest and the
remaining interest is owned by partnerships in which the Haft family members
own all the partnership interest. In addition, two stores are subleased from
Crown Books Corporation ("Crown Books"), an affiliate of Dart. These 27 store
lease and sublease agreements provide for various termination dates which,
assuming renewal options are exercised, range from 1994 to 2023, and require
the payment of future minimum license fees and rentals aggregating $38,750,000
at January 29, 1994. These agreements also require payment of a percentage of
sales in excess of a stated minimum, and are included in the lease and license
commitments table above as operating leases. Annual fees and rentals for
licenses, leases and subleases involving the Haft family were $5,182,000,
$5,010,000, and $4,850,000 for fiscal 1994, 1993 and 1992, respectively.
Subsequent to January 29, 1994, the Company signed a lease modification
agreement with a partnership in which Haft family members own all the
partnership interests. This modification replaces existing space with a larger
space for a larger store.
Prior to January 29, 1994, the outside members of the board of directors of the
Company approved each related party lease. After January 29, 1994, the Real
Estate Committee (composed of one independent director) of the Board of
Directors approves these transactions. The board of directors is provided with
a fairness opinion attesting that the proposed lease is representative of
market rent for the subject property. The Haft family members do not vote on
these leases.
The Company leases a 176,000 square foot warehouse located in Bridgeview,
Illinois from a private partnership in which Haft family members own all of the
partnership interests. The lease, which is for 30 years and six months (which
commenced April 27, 1984), provides for rental payments increasing
approximately 15% every five years over the term of the lease. The current
annual rental is $588,000. The lease also requires the payment of maintenance,
utilities,
32
<PAGE> 33
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 30, 1992
insurance and taxes on the warehouse. Under the terms of the lease agreement,
Dart is jointly and severally liable for the lease obligations. This lease
agreement has been classified as a capital lease and is included under the
capital lease caption of the lease commitment table above.
The Company subleased from Dart 210,000 square feet of a warehouse and office
facility located in Landover, Maryland which it shares with Dart and Crown
Books. The sublease is for 30 years and six months, provides for rental
payments increasing approximately 15% every five years over the term of the
sublease and commenced October 1985. The current annual rental is $1,284,000.
The sublease agreement also requires the payment for maintenance, utilities,
insurance and taxes allocable to the space subleased. Dart leases the entire
271,000 square foot warehouse and office facility from a private partnership in
which Haft family members own all of the partnership interests. The Company's
sublease is on the same terms as Dart's lease from the Haft partnership and is
classified as a capital lease and is included under the capital lease caption
of the lease commitment table above.
Dart has a lease agreement with a private partnership in which Haft family
members own all of the partnership interests, for land adjacent to the
Company's warehouse in Landover, Maryland. The lease is for the same period as
the headquarters building and distribution center lease described above and the
current annual rental is $33,000 with increases of three percent per year.
Such rent will be renegotiated upon commencement of construction of any
improvements. The Company has agreed to bear the annual carrying cost for such
land until such time as it becomes desirable to use the land in order to expand
the Company's warehousing facilities.
On April 20, 1992, the Company entered into an agreement with Dart, to sublease
6,500 square feet in a warehouse facility, adjacent to the above warehouse and
office facility. Dart leases the property from a partnership in which Haft
family members own all of the partnership interest. The term of the sublease
is one year (with nine one year option periods). The annual rental is $21,000
and will increase to $24,000 for each of the last five option periods. The
sublease agreement also requires the Company to pay approximately $6,000
annually for its full share of any common area charges, real estate taxes and
insurance premiums.
The Company has a lease agreement with a private partnership in which Haft
family members own all of the partnership interests, for a 317,000 square foot
distribution center in Ontario, California. The lease is for 20 years,
commenced in December 1989, and provides for increasing rental payments, based
upon the Consumer Price Index for the Los Angeles area, over the term of the
lease. Rental for the first five years is $1,130,000 per year. The lease
requires the payment for maintenance, utilities, insurance and taxes. This
lease agreement has been classified as a capital lease and is included under
the capital lease caption in the lease commitment table above.
33
<PAGE> 34
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
NOTE 7 - CERTAIN EVENTS
Employment of Ronald S. Haft
On August 1, 1993, the Board of Directors of Dart approved an employment
agreement with Ronald S. Haft (the "Agreement"), pursuant to which he was
employed by Dart as its President and Chief Operating Officer for a term
initially ending on January 31, 1997. The term is to be extended for one year
on each February 1 that Ronald S. Haft is employed under the Agreement. The
Agreement also provides that Ronald S. Haft will be nominated to the Board of
Directors of Dart at each opportunity during the term of the Agreement; he was
elected as a director of Dart on July 28, 1993. Ronald S. Haft also was elected
as a Director of the Company on July 28, 1993. Under the terms of the
Agreement, Ronald S. Haft may engage, directly or indirectly, in any other
business activities so long as they do not interfere with his duties to Dart.
Sale of Options to Ronald S. Haft
Under the Agreement, Ronald S. Haft acquired for $5.00 per share options (the
"Options") to purchase 197,048 shares of Dart's Class B Common Stock, par value
$1.00 ("Dart Class B Stock"). All issued and outstanding Dart Class B Stock,
which is the only class of common stock of Dart with voting rights, is held by
members of the Haft family. The total acquisition price for the Options, which
has been paid, was $985,240.
The exercise price for the Options is $89.65 per share, which as required by
the Agreement is 110% of the reported closing price for shares of Dart's Class
A Common Stock, par value $1.00, on the last trading date prior to the
authorization of the Agreement. The Options were immediately exercisable as of
the date of the Agreement and expire August 1, 2008. The Options may be
exercised by notice to Dart, with payment in cash following within 30 days of
the notice. Further, if Ronald S. Haft's employment is terminated other than
for conviction of an offense involving moral turpitude or for conviction of a
felony, he will have the right to exercise all of the Options prior to or at
such time; in the event of his death, his personal representative shall have
the right to exercise the Options within 60 days thereof.
Under the Agreement, Dart also agreed to loan to Ronald S. Haft the full amount
of the exercise price of any Options which he may exercise. Any such loan is
to bear interest at the Prime Rate charged as of the date of the loan by
NationsBank or its successor. Principal and interest on any such loan is to be
due separately upon the earlier of (i) the sale of shares of Dart Class B Stock
purchased with the loan proceeds, (ii) the fifth anniversary of the loan, or
(iii) 90 days from the termination of Ronald S. Haft's employment under the
Agreement.
34
<PAGE> 35
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
Sale of Class B Common Shares to Ronald S. Haft
On July 28, 1993, Herbert H. Haft sold his 172,730 shares of Dart Class B Stock
to Ronald S. Haft for the purchase price of $80.00 per share, and Ronald S.
Haft granted to Herbert H. Haft an irrevocable proxy to vote those shares until
his death or incapacity. The total acquisition price for these shares was
$13,818,400, of which $2,763,680 was paid at closing; the remaining $11,054,720
was paid for with a promissory note bearing interest at 6.61%, the applicable
federal rate, as announced in the Federal Register on July 28, 1993, with the
principal amount and any accrued but unpaid interest due and payable on August
1, 2013. Accordingly, as of January 29, 1994, there were 302,952 issued and
outstanding shares of Dart Class B Stock, of which Ronald S. Haft owned 25,246
shares (or 8.33%), and another 172,730 shares (or 57.02%) without the power to
vote, for a total of 197,976 shares (or 65.35%). If all of the shares of Dart
Class B Stock covered by the Options were issued, there would be 500,000 issued
and outstanding shares of Dart Class B Stock, of which Ronald S. Haft would
then own 395,024 shares (or 79.00%), with voting power over 222,294 shares (or
44.46%), and Herbert H. Haft would have voting power over 172,730 shares (or
34.54%).
Dart Ownership of Company Stock
As of January 29, 1994, Dart owned 3,962,243 shares of Common Stock, par value
$0.01, of the Company ("Common Stock"), or 65.5% of the 6,052,685 issued and
outstanding shares of Common Stock.
NOTE 8 - LITIGATION
Robert M. Haft Employment Litigation
In August 1993, Robert M. Haft filed a lawsuit in the United States District
Court for the District of Delaware naming as defendants Dart and two of its
subsidiaries, the Company and Crown Books. The complaint, as amended, alleges
breach of contract regarding various employment, stock option, stock incentive
and loan agreements and seeks declaratory judgment regarding a stock incentive
agreement and a possible right by Robert M. Haft to acquire an interest in
Total Beverage Corporation, a wholly-owned subsidiary of Dart. The complaint,
as amended, seeks unspecified damages, costs and attorneys fees.
Under the terms of the employment agreements, if upheld by the Court, Dart and
Crown Books could be required to pay stated compensation plus incentives based
on operating or other financial factors. Minimum payments by Dart and Crown
Books could be as much as $31.8 million over a nine year period ($16.0 million
on an after tax basis, discounted at a 10% rate).
35
<PAGE> 36
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
Management believes that Dart and its subsidiaries (including the Company) have
strong defenses to these allegations and intends to contest such claims
vigorously. Discovery in the litigation is complete and cross motions for
summary judgment have been filed regarding virtually all significant claims.
Although the ultimate outcome of this action cannot be ascertained at this
time, it is the opinion of management that the resolution will not have a
material adverse effect on the Company's or Dart's and its subsidiaries'
financial condition or results of operations.
Derivative Litigation
In September 1993, Alan R. Kahn and Tudor Trust, shareholders of Dart,
filed a lawsuit in the Delaware Court of Chancery for New Castle County naming
as defendants Herbert H. Haft, Ronald S. Haft, Douglas M. Bregman, Bonita A.
Wilson, Combined Properties, Inc., Combined Properties Limited Partnerships,
and Capital Resources Limited Partnership. The suit is brought derivatively
and names as nominal defendants Dart and five of its subsidiaries, the
Company, Crown Books, Shoppers Food Warehouse, Total Beverage Corporation, and
Cabot-Morgan Real Estate Company. The complaint alleges waste, breach of
fiduciary duty, and entrenchment in connection with various lease agreements
between the Combined Properties defendants and Dart and its subsidiaries, the
compensation paid Ronald S. Haft and Herbert H. Haft, Dart's Agreement with
Ronald S. Haft, and the sale of Dart Class B Stock by Herbert H. Haft to Ronald
S. Haft. Plaintiffs seek an accounting of unspecified damages incurred by
Dart, voiding of the options sold to Ronald S. Haft, and costs and attorneys'
fees.
In November 1993, Robert M. Haft also filed another lawsuit in the
Delaware Court of Chancery for New Castle County. The lawsuit names as
defendants Herbert H. Haft, Ronald S. Haft, Douglas M. Bregman, and Bonita A.
Wilson, and also names Dart as a nominal defendant. The complaint derivatively
alleges interested director transactions, breach of fiduciary duty and waste in
connection with Dart's Agreement with Ronald S. Haft. Robert M. Haft also
brings individual claims for breach of contract and dilution of voting rights
in connection with the sale of Dart Class B Stock by Herbert H. Haft and Dart's
Agreement with Ronald S. Haft. The complaint seeks rescission of the sale of
Dart Class B Stock and the options Agreement, unspecified damages from the
individual directors, and costs and attorneys' fees.
In both of these lawsuits, a Special Litigation Committee consisting of
two Dart outside, independent directors has been appointed by the Board of
Directors to assess, on behalf of Dart, whether to pursue, settle or abandon
the claims. Given that the law suits are brought in the name of Dart, recovery
in them would inure to the benefit of Dart if the claims in them are
successfully litigated or settled. It is therefore the opinion of management
that the resolution of these actions will not have a material adverse effect on
the consolidated financial condition or annual results of operations of the
Company.
The Company has recorded expenses of approximately $420,000 during the year
ended January 29, 1994 for legal expenses incurred during the year, as well as
estimated future amounts considered necessary to resolve all litigation
discussed above.
36
<PAGE> 37
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
Other
In the normal course of business, the Company is involved in various claims and
litigation. It is the opinion of management and counsel that the disposition
of these matters will not materially affect the Company's financial position.
NOTE 9 - CREDIT AGREEMENT
The Company is party to a revolving credit agreement, together with Dart and
Crown Books, for a $6,000,000 revolving line of credit. The $6,000,000 is an
aggregate amount and not specifically allocated to any of the parties. The
line is intended to be used for the issuance of standby and trade letters of
credit. At January 29, 1994, there had been no borrowings under the credit
agreement. This line of credit expires May 1, 1995.
NOTE 10 - EMPLOYEES' PROFIT-SHARING PLAN
The Company maintains a non-contributory profit-sharing plan for all full-time
employees with one year of continuous employment. The Company's annual
contribution to the plan is based on a discretionary percentage of the
Company's consolidated net income, as defined in the plan, and as determined by
the Board of Directors. Contributions are allocated to individual employees
based on each employee's salary in relation to the total salaries of all
eligible employees. The Company's contributions were $400,000, and $150,000 in
1993 and 1992. No contribution was made for fiscal 1994.
NOTE 11 - STOCK OPTION PLAN
Trak Auto Corporation 1993 Stock Option Plan
The Trak Auto Corporation 1993 Stock Option Plan (the "1993 Option Plan") was
approved by the shareholders at the June 1993 annual meeting. The 1993 Option
Plan is for officers, directors and key employees. The total number of shares
that may be issued under the 1993 Option Plan is 1,250,000 and the 1993 Option
Plan will terminate June 30, 2003. Based on options outstanding at January 29,
1994 the maximum shares issuable under options exercisable over the next five
years are: 40,230 in 1995, 77,460 in 1996 and 114,690 in each of 1997, 1998 and
1999.
37
<PAGE> 38
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
Information concerning the 1993 Option Plan:
<TABLE>
<CAPTION>
Number of Option Price
Options per Share
----------- ------------
<S> <C> <C>
Outstanding at January 30, 1993 - $ -
Granted 120,810 12.50
Exercised - -
Expired (6,120) 12.50
------- ------
Outstanding at January 29, 1994 114,690 $12.50
======= ======
</TABLE>
Options to purchase 3,000 shares were exercisable at January 29, 1994 and
1,135,310 options remained available for grant.
Trak Auto Corporation Stock Option Plan
The Trak Auto Corporation Stock Option Plan (the "Option Plan") provided for
option grants to officers, directors and key employees of the Company and its
parent and subsidiaries. Based on the options outstanding, as of January 29,
1994, the maximum shares issuable under options exercisable over the next four
years are: 156,868 in 1995, 169,258 in 1996, 131,738 in 1997, and 85,567 in
1998. The Option Plan expired January 31, 1993 and no new options could be
granted after that date.
Information concerning the Option Plan:
<TABLE>
<CAPTION>
Number of Option Price
Options per Share
--------- ---------------
<S> <C> <C>
Outstanding February 1, 1992 432,684 $ 6.00 - 12.37
Granted 105,650 12.50 - 13.75
Exercised (258,121) 6.00 - 12.37
Expired (14,488) 6.00 - 12.50
-------- ---------------
Outstanding January 30, 1993 265,725 6.00 - 13.75
Exercised (13,299) 6.00 - 12.50
Expired (67,535) 6.00 - 13.75
-------- ---------------
Outstanding January 29, 1994 184,891 $ 6.00 - 13.75
======== ===============
</TABLE>
Options to purchase 113,457 shares were exercisable at January 29, 1994.
The Board of Directors of the Company has authorized certain officers and
directors of the Company to apply for loans from the Company to exercise their
vested stock options. Under the plan approved by the board, the loans must
bear interest at the prime rate, adjusted annually, must be secured by all of
the stock acquired by exercise of the options, must be repaid out of the first
proceeds of sale of the stock or at the end of three years, whichever is
earlier, and the borrower must demonstrate to the Company's chief financial
officer both that it would be difficult to dispose of the number of shares on
the open market and that he or she presents a reasonable credit risk to the
Company.
38
<PAGE> 39
TRAK AUTO CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FISCAL YEARS ENDED JANUARY 29, 1994, JANUARY 30, 1993
AND FEBRUARY 1, 1992
NOTE 12 - INTERIM FINANCIAL DATA - (UNAUDITED)
Selected interim financial data for the years ended January 29, 1994 and
January 30, 1993 are as follows:
<TABLE>
<CAPTION>
---- In Thousands Except Per Share Data -----
QUARTER ENDED: JANUARY OCTOBER JULY MAY
29, 1994 30, 1993 31, 1993 1, 1993
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales $ 86,209 $ 86,352 $ 84,354 $ 77,883
Gross Profit (1) 19,782 19,509 19,708 20,130
Net Income (Loss) (613) 267 335 92
Net Income (Loss)
Per Share (3) $ (.10) $ .04 $ .05 $ .01
QUARTER ENDED: JANUARY OCTOBER AUGUST MAY
30, 1993 31, 1992 1, 1992 2, 1992
--------- --------- --------- ---------
Sales $ 75,292 $ 80,643 $ 82,022 $ 77,836
Gross Profit (1) 19,310 21,087 21,032 20,892
Income (loss) before
Cumulative Effect of
Change in Accounting
Principle (2) (3,101) 1,968 2,915 1,573
Cumulative Effect of
Change in Accounting
Principle - - - 1,658
Net Income (Loss) (3,101) 1,968 2,915 3,231
Earnings Per Share: (3)
Income before
Cumulative Effect of
Change in Accounting
Principle $ (.51) $ .33 $ .50 $ .26
Cumulative Effect of
Change in Accounting
Principle - - - .28
Net Income (Loss)
Per Share (3) $ (.51) $ .33 $ .50 $ .54
</TABLE>
(1) After deduction for cost of sales, store occupancy and warehousing.
(2) After deduction for 4th Quarter Restructuring Charge.
(3) The sum of these amounts does not equal the annual amount because
of changes in the average number of shares outstanding during the
year.
Financial data for the year ended January 30, 1993 has been restated to reflect
the adoption of SFAS No. 109, Accounting for Income Taxes, effective February
2, 1992.
39
<PAGE> 40
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures
Inapplicable.
PART III
The following Items 10 through 13 are incorporated herein by reference to the
Company's definitive Proxy Statement to be filed with the Commission pursuant
to Regulation 14A.
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Item 13. Certain Relationships and Related Transactions
40
<PAGE> 41
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports
on Form 8-K
(A)
1. Financial Statements
See Item 8.
2. Schedules (Consolidated) -
Report of Independent Public Accountants on Schedules
I - Schedule of Marketable Securities - Other Investments
II - Accounts Receivable from Related Parties
V - Property, Plant and Equipment
VI - Accumulated Depreciation and Amortization of Property,
Plant and Equipment
VIII - Valuation and Qualifying Accounts
X - Supplementary Income Statement Information
All other schedules are omitted because the required
information is inapplicable or it is presented in the
consolidated financial statements or related notes.
Exhibits
C 3(a) Certificate of Incorporation of Trak Auto Corporation
as amended by Certificate of Amendment dated October 30, 1987.
3(b) By-laws, amended and restated September 14, 1993.
A 10(b) Indemnity Agreement dated March 10, 1983, between Dart
Drug Corporation and Trak Auto Corporation.
A 10(e) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Third Lease Amendment
dated April 13, 1977 between Robert J. J. Seone, Evelyn L. M.
Seone and Dart Drug Corporation, Merrifield as merged into Dart
Drug Corporation, Virginia; Second Lease Amendment dated April
l2, 1972; First Lease Amendment dated May 24, 1971; Lease
Agreement dated April l, 1969 (601).
A 10(f) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Amendment of Lease
Agreement dated June 29, 1973 between Kenren Associates and Dart
Drug Corporation, Pennsylvania Avenue; Lease Agreement dated
April 20, 1972. (602)
A 10(g) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Memorandum of Lease
Amendment dated July 31, 1970; Lease Modification Agreement
dated January 10, 1969; Lease Agreement dated October 9, 1968.
(603)
41
<PAGE> 42
A 10(h) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Lease Agreement dated
December 1, 1971 between Columbia Pike Association and Dart
Drug Corporation, Lake Barcroft. (604)
A 10(j) Lease Agreement dated January 1, 1980 between Oxon Hill
Plaza, Inc., Agent and Nominee for Combined Properties
Corporation, and Trak Auto Corporation. (606)
A 10(n) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Second Amendment of Lease
dated January 17, 1974 between Shopco Crofton Associates and
Dart Drug Corporation, Crofton; First Amendment of Lease dated
January 9, 1974; Lease dated August 31, 1973. (611)
A 10(q) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Addendum to Lease
Agreement dated June 1, 1976 between Kaufman Company S.
Greenhoot Fischer, Carol B. Fisher and Dart Vienna, Inc.; Lease
Agreement dated April 14, 1960. (616)
A 10(r) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Lease dated December 20,
1969 between C.D. Hylton and Dart Drug Corporation, Hampton
Mall. (617)
A 10(s) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Lease Agreement dated
February 14, 1970 between Kenland Corp. and Dart Drug
Corporation, Marlboro; Agreement dated December 31, 1975. (618)
A 10(u) License Agreement dated March 4, 1983 between Dart
Drug Corporation; Amendment C dated February 23, 1979 between
Allentown Plaza Associates and Dart Drug Corporation, Maryland;
Settlement Agreement and Mutual Release and Amendment B dated
October 31, 1975; Amendment A dated August 24, 1970; Lease
dated August 24, 1970. (624)
A 10(v) Lease Agreement dated May 26, 1981 between Maryland City
Plaza, Inc., Agent and Nominee for Combined Properties
Corporation, and Trak Auto Corporation. (623)
A 10(w) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Sublease Agreement dated
July 25, 1969 between Food Fair Stores, Inc. and Dart Drug
Corporation, Westfalls; Lease (undated) between Westfalls
Shopping Center Limited Partnership and Food Lane Stores, Inc.;
Assignment and Assumption Agreement dated March 20, 1980 between
Food Fair, Inc. and Dart Drug Corp.
A 10(x) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Amendment C dated October
25, 1976 between Avon Road Corp. and Dart Drug Corporation, Mount
Vernon; Amendment B dated July 27, 1972; Amendment A dated July
16, 1971; Lease dated August 24, 1970. (626)
42
<PAGE> 43
A 10(y) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Lease Agreement dated
December 10, 1971 between D.C. Hylton and Dart Drug Corporation,
Dale City. (628)
A 10(z) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Indenture of Lease dated
May 21, 1969 between McLean, Chain Bridge Road, Inc. and Dart
Drug Corporation, McLean. (627)
A 10(aa) Lease Agreement dated May 26, 1981 between Bradlick,
Inc., Agent and Nominee for Combined Properties Corporation, and
Trak Auto Corporation. (629)
A 10(cc) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Lease Agreement dated
March 31, 1970 between the Claridge Towers Company and Dart Drug
Corporation, Cherry Hill; Agreement dated January 22, 1970. (631)
A 10(gg) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Lease Agreement May 11,
1970 between Julia Lee Rubin and Dart Drug Corporation, Waldorf;
Agreement dated August 21, 1970. (636)
A 10(hh) License Agreement dated March 4, 1983 between Dart Drug
Corporation and Trak Auto Corporation; Lease Agreement dated
August 16, 1974 between EES Herndon Associates and Dart Drug
Drug Corporation, Sterling Park. (637)
A 10(jj) Second Amendment to Master License Agreement dated
March 8, 1983 between Total Plus Corporation and Trak Auto
Corporation; Master License Agreement dated September 15, 1981.
A 10(ffff) Agreement, dated March 31, 1983, between Dart Drug
Corporation and Trak Auto East Corporation
B 10(gggg) Lease Agreement dated April 27, 1984, between Trak
Chicago Limited Partnership I and Trak Auto Corporation.
B 10(hhhh) Sublease Agreement dated December 26, 1984, between
Dart Group Corporation and Trak Auto Corporation (75th Avenue).
C 10(pppp) Indemnity Agreement, dated June 9, 1986, by and
between Dart Group Corporation and Trak Auto Corporation.
D 10(qqqq) Agreement of Merger dated May 28, 1987 between Trak
Auto East Corporation and Trak Auto West, Inc.
D 10(ssss) 1988 Trak Auto Corporation Deferred Compensation Plan
for Directors, effective January 1, 1988.
E 10(tttt) Lease Agreement dated January 27, 1989 between Trak
Auto Corporation and Combined Properties/Ontario Limited
Partnership.
E 10(uuuu) Lease Agreement dated February 3, 1988 between Trak
Corporation and Haft/Equities - General.
43
<PAGE> 44
E 10(vvvv) Lease Agreement dated June 17, 1987 between Trak Auto
West, Inc. and Haft/Equities/Rose Hill Limited Partnership.
F 10(wwww) Assignment and Assumption agreement dated December 30,
1989 between Greenway Center Associates Limited Partnership and
CM/CP Greenway Center Joint Venture, and lease agreement dated
March 13, 1980, between Greenway Center Associates Limited
Partnership and Trak Auto Corporation. (612)
F 10(xxxx) Assignment and Assumption agreement dated December 30,
1989 between Briggs Chaney Associates Limited Partnership and
CM/CP Briggs Chaney Plaza Joint Venture, and lease agreement
dated June 26, 1981, between Western Development Corporation and
Trak Auto Corporation. (641)
F 10(yyyy) Amended Stock Option Plan
G 10(zzzz) Lease Agreement dated May 18, 1990 between Combined
Properties Limited Partnership and Trak Corporation and Lease
Termination Agreement date March 31, 1990 between Combined
Properties Limited Partnership, Retail Lease Acquisition
Limited Partnership and Trak Corporation re: Fair City Mall
(605).
G 10(aaaaa) Lease Agreement dated May 18, 1990 between Retail
Lease Acquisition Limited Partnership and Trak Corporation and
License Termination Agreement date March 31, 1990 between
Retail Lease Acquisition Limited Partnership and Trak
Corporation re: Chantilly Plaza (609).
G 10(bbbbb) Lease Agreement dated May 18, 1990 between Retail
Lease Acquisition Limited Partnership and Trak Corporation and
License Termination Agreement date March 31, 1990 between
Retail Lease Acquisition Limited Partnership and Trak
Corporation re: College Plaza (610).
G 10(ccccc) Lease Agreement dated May 18, 1990 between Retail
Lease Acquisition Limited Partnership and Trak Corporation and
License Termination Agreement date March 31, 1990 between
Retail Lease Acquisition Limited Partnership and Trak
Corporation re: Enterprise (614).
G 10(ddddd) Lease Agreement dated May 18, 1990 between Retail
Lease Acquisition Limited Partnership and Trak Corporation and
License Termination Agreement date March 31, 1990 between
Retail Lease Acquisition Limited Partnership and Trak
Corporation re: Rolling Valley (630).
G 10(eeeee) Lease Agreement dated May 18, 1990 between Combined
Properties Limited Partnership and Trak Corporation and Lease
Termination Agreement date March 31, 1990 between Combined
Properties Limited Partnership, Retail Lease Acquisition
Limited Partnership and Trak Corporation re: White Flint (632).
G 10(fffff) Lease Agreement dated November 6, 1990 between CP
Acquisition Limited Partnership and Trak Corporation and
Settlement Agreement dated November 6, 1990 between CP
44
<PAGE> 45
Acquisition Limited Partnership and Trak Corporation
re: Aspen Manor (615).
F 10(ggggg) Lease Agreement dated November 6, 1990 between CP
Acquisition Limited Partnership and Trak Corporation and
Settlement Agreement dated November 6, 1990 between CP
Acquisition Limited Partnership and Trak Corporation
re: Lee and Harrison (633).
G 10(hhhhh) Lease Agreement dated November 6, 1990 between CP
Acquisition Limited Partnership and Trak Corporation and
Settlement Agreement dated November 6, 1990 between CP
Acquisition Limited Partnership and Trak Corporation
re: Penn Daw (642).
G 10(iiiii) Lease Agreement dated November 6, 1990 between
Combined Properties Limited Partnership and Trak Corporation
and Settlement Agreement dated November 6, 1990 between
Combined Properties Limited Partnership and Trak Corporation
re: Fairfax Circle (656).
G 10(jjjjj) Lease Agreement dated March 23, 1990 between
Combined Properties/Silver Hill Limited Partnership and Trak
Corporation and Termination Agreement dated April 13, 1990
between Combined Properties/Silver Hill Limited Partnership
and Trak Corporation re: Silver Hill (619).
G 10(kkkkk) Lease Agreement dated November 6, 1990 between Haft/
Equities-Bladen Limited Partnership and Trak Corporation and
Lease Termination Agreement dated November 6, 1990 between
Haft/Equities-Bladen Limited Partnership and Trak Corporation
re: Bladen Plaza (662).
H 10(lllll) Lease agreement dated December 23, 1991 between
Combined Properties Limited Partnership and Trak Corporation
re: Manaport Plaza Shopping Center (607).
H 10(mmmmm) Amendment of lease dated December 24, 1991 between
Haft/Equities-Bladen Limited Partnership and Trak Corporation
re: Bladen Plaza (662).
H 10(nnnnn) Sublease Agreement dated February 19, 1992 between
Crown Books Corporation and Trak Corporation re: Vienna (616).
H 10(ooooo) Sublease agreement dated February 12, 1991 between
Crown Books Corporation and Trak Corporation re: McLean Shopping
Center (627).
H 10(ppppp) Sublease Agreement dated April 20, 1992 between Dart
Group Corporation and Trak Corporation re: Pennsy Drive Whse 3
I 10(qqqqq) Amendment of lease dated December 11, 1992 between
Combined Properties Limited Partnership and Super Trak
Corporation re: Oxon Hill (606).
I 10(rrrrr) Amendment of lease dated December 1, 1992 between
Haft/Equities-Bladen Limited Partnership and Super Trak
Corporation re: Bladen Plaza (662).
45
<PAGE> 46
I 10(sssss) Amendment of lease dated January 8, 1993 between
Retail Lease Acquisition Limited Partnership and Trak
Corporation re: Chantilly Plaza (609).
I 10(ttttt) Note Receivable from Robert M. Haft dated December
31, 1992.
I 10(uuuuu) Amendment of lease dated December 1, 1992 between
Combined Properties/Montebello Limited Partnership and Super
Trak re: Montebello (520)
J 10(vvvvv) Trak Auto Corporation 1993 Stock Option Plan.
10(5w) Amendment of lease dated February 4, 1993 between Retail
Lease Acquisition Limited Partnership and Super Trak re: College
Plaza (610).
10(5x) Amendment of lease dated September 13, 1993 between
Combined Properties Limited Partnership and Super Trak Corporation
re: Fair City Mall (605).
10(5y) Amendment of lease dated September 13, 1993 between
Combined Properties Limited Partnership and Super Trak Corporation
re: Maryland City (623).
10(5z) Second Amendment of lease dated March 31, 1994 between
Combined Properties Limited Partnership and Super Trak Corporation
re: Oxon Hill (606).
10(A) Lease Amendment dated November 22, 1993 between Combined
Properties Limited Partnershp and Super Trak Corporation re:
Landmark (658).
10(B) Third Amendment of lease dated March 31, 1994 between Combined
Properties/Montebello Limited Partnership and Trak Auto West, Inc. re:
Montebello (197).
10(C) Lease Agreement dated September 29, 1993 between Combined
Properties/Reseda Associates Limited Partnership and Super Trak
Corporation re: Reseda (193).
11(a) Statement on Computation of Per Share Net Income.
22 Subsidiaries of the Company
24 Consent of Independent Public Accountants
46
<PAGE> 47
A Incorporated by reference to the Company's Registration Statement
on Form S-1, 2-82430.
B Incorporated by reference to the corresponding Exhibit in the
Company's fiscal year 1985 Form 10-K.
C Incorporated by reference to the corresponding Exhibit in the
Company's fiscal year 1987 Form 10-K.
D Incorporated by reference to the corresponding Exhibit in the
Company's fiscal year 1988 Form 10-K.
E Incorporated by reference to the corresponding Exhibit in the
Company's fiscal year 1989 Form 10-K.
F Incorporated by reference to the corresponding Exhibit in the
Company's fiscal year 1990 Form 10-K.
G Incorporated by reference to the corresponding Exhibit in the
Company's fiscal year 1991 Form 10-K.
H Incorporated by reference to the corresponding Exhibit in the
Company's fiscal year 1992 Form 10-K.
I Incorporated by reference to the corresponding Exhibit in the
Company's fiscal year 1993 Form 10-K.
J Incorporated by reference to the Company's 1993 Proxy Statement.
(Note: Dart Drug Corporation changed its name to Dart Group
Corporation on July 3, 1984).
(B) Reports on Form 8-K
During the fourth quarter of fiscal year end January 29, 1994, the
Company filed one report on Form 8-K.
1. Form 8-k dated December 20, 1993 (Item 5 - Other events).
The report did not contain financial statements.
47
<PAGE> 48
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
TO TRAK AUTO CORPORATION:
We have audited in accordance with generally accepted auditing standards, the
consolidated financial statements of Trak Auto Corporation and subsidiaries
included in this Form 10-K and have issued our report thereon dated April 27,
1994. Our audits were made for the purpose of forming an opinion on the basic
consolidated financial statements taken as a whole. The schedules listed in
the accompanying index (Item 14A2) are the responsibility of the Company's
management and are presented for purposes of complying with the Securities and
Exchange Commission's rules and are not part of the basic consolidated
financial statements. These schedules have been subjected to the auditing
procedures applied in the audits of the basic consolidated financial statements
and, in our opinion, fairly state in all material respects the financial data
required to be set forth therein in relation to the basic consolidated
financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Washington, D.C.,
April 27, 1994.
Exhibit 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our reports dated April 27, 1994 included in this Form 10-K, into Trak Auto
Corporation's previously filed Form S-8 File Number 33-3160.
ARTHUR ANDERSEN & CO.
Washington D.C.,
April 27, 1994.
48
<PAGE> 49
SCHEDULE I
TRAK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF MARKETABLE SECURITIES - OTHER INVESTMENTS
<TABLE>
<CAPTION>
BALANCE
PRINCIPAL MARKET SHEET
ISSUER AMOUNT COST VALUE VALUATION
------ --------- ---- ------ ---------
AS OF JANUARY 29, 1994
----------------------
<S> <C> <C> <C> <C>
Money Markets $ 9,404,000 $ 9,404,000 $ 9,404,000 $ 9,404,000
United States
Treasury Bills 2,000,000 1,983,000 1,998,000 1,983,000
----------- ----------- ----------- -----------
Total Short-term
Instruments $11,404,000 $11,387,000 $11,402,000 $11,387,000
=========== =========== =========== ===========
United States
Treasury Notes $ 2,470,000 $ 2,638,000 $ 2,640,000 $ 2,638,000
Municipals 4,195,000 4,674,000 4,645,000 4,674,000
Corporate Bonds 1,350,000 1,377,000 1,380,000 1,377,000
----------- ----------- ----------- -----------
Total Marketable
Debt Securities $ 8,015,000 $ 8,689,000 $ 8,665,000 $ 8,689,000
=========== =========== =========== ===========
</TABLE>
AS OF JANUARY 30, 1993
----------------------
<TABLE>
<S> <C> <C> <C> <C>
United States
Treasury Bills $28,350,000 $28,109,000 $28,114,000 $28,109,000
=========== =========== =========== ===========
</TABLE>
49
<PAGE> 50
SCHEDULE II
TRAK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF ACCOUNTS RECEIVABLE FROM RELATED PARTIES
<TABLE>
<CAPTION>
BALANCE BALANCE END
BEGINNING AMOUNTS OF PERIOD,
NAME OF DEBTOR OF PERIOD ADDITIONS COLLECTED CURRENT
---------- ---------- ----------- ------------
AS OF JANUARY 29, 1994
----------------------
<S> <C> <C> <C> <C>
Robert M. Haft $ 124,000 $ - $ 124,000 $ -
========== ========== ========== ==========
</TABLE>
AS OF JANUARY 30, 1993
----------------------
<TABLE>
<S> <C> <C> <C> <C>
R. Keith Green $ 100,000 $ - $ 100,000 $ -
David B. MacGlashen - 125,000 125,000 -
Robert M. Haft - 124,000 - 124,000
---------- ---------- ---------- ----------
$ 100,000 $ 249,000 $ 225,000 $ 124,000
========== ========== ========== ==========
</TABLE>
AS OF FEBRUARY 1, 1992
----------------------
<TABLE>
<S> <C> <C> <C> <C>
R. Keith Green $ 100,000 $ - $ - $ 100,000
========== ========== ========== ==========
</TABLE>
50
<PAGE> 51
SCHEDULE V
TRAK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
BEGINNING ENDING
CLASSIFICATION BALANCE ADDITIONS RETIREMENTS BALANCE
-------------- --------- --------- ----------- -------
YEAR ENDED JANUARY 29, 1994
---------------------------
<S> <C> <C> <C> <C>
Furniture,
fixtures and
equipment $ 34,054,000 14,939,000 5,558,000 $ 43,435,000
Leasehold
improvements 6,529,000 4,270,000 1,530,000 9,269,000
Leased property 24,756,000 - 1,089,000 23,667,000
------------ ---------- ---------- ------------
$ 65,339,000 19,209,000 8,177,000 $ 76,371,000
============ ========== ========== ============
</TABLE>
YEAR ENDED JANUARY 30, 1993
---------------------------
<TABLE>
<S> <C> <C> <C> <C>
Furniture,
fixtures and
equipment $ 31,541,000 5,208,000 2,695,000 $ 34,054,000
Leasehold
improvements 5,792,000 1,868,000 1,131,000 6,529,000
Leased property 26,656,000 - 1,900,000 24,756,000
------------ ---------- ---------- ------------
$ 63,989,000 7,076,000 5,726,000 $ 65,339,000
============ ========== ========== ============
</TABLE>
YEAR ENDED FEBRUARY 1, 1992
---------------------------
<TABLE>
<S> <C> <C> <C> <C>
Furniture,
fixtures and
equipment $ 25,853,000 6,435,000 747,000 $ 31,541,000
Leasehold
improvements 5,740,000 949,000 897,000 5,792,000
Leased property 28,263,000 - 1,607,000 26,656,000
------------ ---------- ---------- ------------
$ 59,856,000 7,384,000 3,251,000 $ 63,989,000
============ ========== ========== ============
</TABLE>
51
<PAGE> 52
SCHEDULE VI
TRAK AUTO CORPORATION AND SUBSIDIARIES
CONSOLIDATED SCHEDULE OF ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
BEGINNING ENDING
CLASSIFICATION BALANCE ADDITIONS RETIREMENTS BALANCE
-------------- --------- --------- ----------- -------
YEAR ENDED JANUARY 29, 1994
---------------------------
<S> <C> <C> <C> <C>
Furniture,
fixtures and
equipment $ 14,683,000 7,135,000 642,000 $ 21,176,000
Leasehold
improvements 3,942,000 857,000 134,000 4,665,000
Leased Property 7,871,000 1,083,000 2,187,000 6,767,000
------------ --------- --------- ------------
$ 26,496,000 9,075,000 2,963,000 $ 32,608,000
============ ========= ========= ============
</TABLE>
YEAR ENDED JANUARY 30, 1993
---------------------------
<TABLE>
<S> <C> <C> <C> <C>
Furniture,
fixtures and
equipment $ 11,883,000 4,379,000 1,579,000 $ 14,683,000
Leasehold
improvements 3,519,000 619,000 196,000 3,942,000
Leased Property 8,518,000 1,220,000 1,867,000 7,871,000
------------ --------- --------- ------------
$ 23,920,000 6,218,000 3,642,000 $ 26,496,000
============ ========= ========= ============
</TABLE>
YEAR ENDED FEBRUARY 1, 1992
---------------------------
<TABLE>
<S> <C> <C> <C> <C>
Furniture,
fixtures and
equipment $ 7,615,000 4,268,000 - $ 11,883,000
Leasehold
improvements 2,385,000 1,175,000 41,000 3,519,000
Leased property 7,205,000 1,682,000 369,000 8,518,000
------------ --------- --------- ------------
$ 17,205,000 7,125,000 410,000 $ 23,920,000
============ ========= ========= ============
</TABLE>
52
<PAGE> 53
SCHEDULE VIII
TRAK AUTO CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
BALANCE AMOUNTS BALANCE
BEGINNING PAID OR AT END OF
DESCRIPTION OF PERIOD ADDITIONS REVERSED PERIOD
----------- --------- --------- -------- ---------
AS OF JANUARY 29, 1994
----------------------
<S> <C> <C> <C> <C>
Reserve for
closed stores
including
restructuring
charge $10,360,000 $ - $ 2,563,000 $ 7,797,000
Obsolete inventory 854,000 - 544,000 310,000
LIFO Reserve 5,422,000 98,000 - 5,520,000
</TABLE>
AS OF JANUARY 30, 1993
----------------------
<TABLE>
<S> <C> <C> <C> <C>
Reserve for
closed stores
including
restructuring
charge $ 4,367,000 $ 8,232,000 $ 2,239,000 $10,360,000
Obsolete inventory 1,134,000 550,000 830,000 854,000
LIFO Reserve 5,388,000 34,000 - 5,422,000
</TABLE>
AS OF FEBRUARY 1, 1992
----------------------
<TABLE>
<S> <C> <C> <C> <C>
Reserve for
closed stores $ 2,702,000 $ 2,760,000 $ 1,095,000 $ 4,367,000
Obsolete inventory 1,211,000 693,000 770,000 1,134,000
LIFO Reserve 5,002,000 386,000 - 5,388,000
</TABLE>
53
<PAGE> 54
SCHEDULE X
TRAK AUTO CORPORATION AND SUBSIDIARIES
SCHEDULE OF SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
Charged to Costs and Expenses
----------------------------------------
Fiscal Years
----------------------------------------
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Advertising Costs $ 20,535,000 $ 18,077,000 $ 17,460,000
Licenses and taxes $ 4,237,000 $ 4,090,000 $ 3,882,000
</TABLE>
All other items do not exceed one percent of total sales.
54
<PAGE> 55
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.
<TABLE>
<CAPTION>
TRAK AUTO CORPORATION
<S> <C>
Date: April 29, 1994 By: R. Keith Green
-------------------- ---------------------------------
R. Keith Green
Director and President
</TABLE>
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.
<TABLE>
<S> <C>
Date: April 29, 1994 R. Keith Green
-------------------- --------------------------------
R. Keith Green
Director and President
Date: April 29, 1994 Herbert H. Haft
-------------------- --------------------------------
Herbert H. Haft
Chairman of the Board of
Directors
Date: April 29, 1994 Ronald S. Haft
-------------------- --------------------------------
Ronald S. Haft
Director
Date: April 29, 1994 Bonita Wilson
-------------------- --------------------------------
Bonita Wilson
Director
Date: April 29, 1994 Douglas Bregman
-------------------- --------------------------------
Douglas Bregman
Director
Date: April 29, 1994 Larry G. Schafran
-------------------- ---------------------------------
Larry G. Schafran
Director
Date: April 29, 1994 H. Ridgely Bullock
-------------------- --------------------------------
H. Ridgely Bullock
Director
Date: April 29, 1994 Ron Marshall
-------------------- --------------------------------
Ron Marshall
Principal Financial Officer
Date: April 29, 1994 David B. MacGlashan
-------------------- --------------------------------
David B. MacGlashan
Principal Accounting Officer
</TABLE>
55
<PAGE> 56
TRAK AUTO CORPORATION AND SUBSIDIARY
Exhibit Index
<TABLE>
<CAPTION>
Exhibit Page
Number Exhibit Index Number
------- ------------- ------
<S> <C> <C>
3(b) By-laws, amended and restated September 14,
1993.
10(5w) Amendment of lease dated February 4, 1993
between Retail Lease Acquisition Limited
Partnership and Super Trak re: College
Plaza (610).
10(5x) Amendment of lease dated September 13,
1993 between Combined Properties Limited
Partnership and Super Trak Corporation
re: Fair City Mall (605).
10(5y) Amendment of lease dated September 13, 1993
between Combined Properties Limited
Partnership and Super Trak Corporation
re: Maryland City (623).
10(5z) Second Amendment of lease dated March 31,
1994 between Combined Properties Limited
Partnership and Super Trak Corporation
re: Oxon Hill (606).
10(A) Lease amendment dated November 22, 1993
between Combined Properties Limited
Partnershp and Super Trak Corporation re:
Landmark (658).
10(B) Third Amendment of lease dated March 31,
1994 between Combined Properties/Montebello
Limited Partnership and Trak Auto West, Inc.
re: Montebello (197).
10(C) Lease Agreement dated September 29, 1993
between Combined Properties/Reseda Associates
Limited Partnership and Super Trak Corporation
re: Reseda (193).
11(a) Statement on Computation of Per Share
Net Income. 57
21 Subsidiaries of the Company 58
23 Consent of Independent Public Accountants 48
</TABLE>
56
<PAGE> 57
Exhibit 11(a)
STATEMENT ON COMPUTATION OF PER SHARE NET INCOME
<TABLE>
<CAPTION>
Years Ended
-----------------------------------------
January 29, January 30, February 1,
1994 1993 1992
------------ ----------- -----------
<S> <C> <C> <C>
Weighted average common
shares outstanding
during the year 6,046,000 5,854,000 5,780,000
Effect of dilutive stock
options, net of shares
assumed repurchased
at average market price 61,000 74,000 15,000
------------ ------------ ------------
Weighted average common
share and common share
equivalents 6,107,000 5,928,000 5,795,000
============ ============ ============
Net income before
cumulative effect of
change in accounting
principle $ 81,000 $ 3,355,000 $ 2,084,000
Cumulative effect of
change in accounting
principle - 1,658,000 -
------------ ------------ ------------
Net Income $ 81,000 $ 5,013,000 $ 2,084,000
============ ============ ============
Earnings per share:
Net income before
cumulative effect of
change in accounting
principle $ .01 $ .57 $ .36
Cumulative effect of
change in accounting
principle - .28 -
------------ ------------ ------------
Net income $ .01 $ .85 $ .36
============ ============ ============
</TABLE>
57
<PAGE> 58
Exhibit 21
SUBSIDIARIES OF THE COMPANY
<TABLE>
<CAPTION>
State of Incorporation
----------------------
<S> <C> <C>
Trak Corporation (A) (100%) Delaware
Trak DHC Corporation (100%) Delaware
Super Trak Corporation (100%) Delaware
Trak Acquisition Corp. (100%) Delaware
</TABLE>
A Does business in certain states under the name "Trak Auto
Corporation I".
58
<PAGE> 59
EDGAR APPENDIX
Exhibit 10(5x) Printed version of this document contains a map of Picket
Shopping Center, Fairfax, Virginia
Exhibit 10(5y) printed version of this document contains a map of Maryland
City Plaza, Laurel, Maryland
Exhibit 10(5z) printed version of this document contains a map of Oxon
Hill Plaza Shopping Center, Oxon Hill, Maryland
Exhibit 10(A) printed version of this document contains a map of The Plaza at
Landmark Shopping Center, Alexandria, Virginia
Exhibit 10(B) printed version of this document contains a map of The
Montebello Mart Shopping Center, Montebello, California.
Exhibit 10(c) printed version of this document contains a map of Loehmann's
Plaza Shopping Center, Reseda, California. Printed version of this document
contains company logo, drawings of store front and sign criteria.
59
<PAGE> 1
BYLAWS
OF
TRAK AUTO CORPORATION *
ARTICLE I
OFFICES
The Corporation may have such office(s) at such place(s), both within
and without the State of Delaware, as the Board of Directors from time to time
determines or as the business of the Corporation from time to time requires.
ARTICLE II
MEETINGS OF THE STOCKHOLDERS
SECTION 1. ANNUAL MEETINGS. Annual meetings of the stockholders
shall be held on such date in the month of June of each year and at such place
(within or without the State of Delaware) as is designated from time to time by
the Board of Directors and stated in the notice of the meeting. At each annual
meeting the stockholders shall elect a Board of Directors and shall transact
such other business as may properly be brought before the meeting.
SECTION 2. SPECIAL MEETINGS. Unless otherwise prescribed by law,
the Certificate of Incorporation or these Bylaws, special meetings of the
stockholders for any purpose or purposes may be called by the Chairman of the
Board, if any, or by the President, or by the Secretary upon the written
request of a majority of the total number of directors of the Corporation or of
holders owning not less than one-quarter (1/4) of the shares of capital stock
of
- - -----------------------------------
* As adopted by the Board of Directors on March 10, 1983 and amended
through September 14, 1993.
<PAGE> 2
the Corporation issued and outstanding and entitled to vote at any such
meeting. Requests for special meetings shall state the purpose or purposes of
the proposed meeting.
SECTION 3. NOTICES OF ANNUAL AND SPECIAL MEETINGS.
(a) Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, written notice of any annual or special meeting
of the stockholders shall state the place, date and time thereof and, in the
case of a special meeting, the purpose or purposes for which the meeting is
called, and shall be given to each stockholder of record entitled to vote at
such meeting not less than ten (10) nor more than sixty (60) days prior to the
meeting.
(b) Notice of any meeting of stockholders (whether annual or
special) to act upon an amendment of the Certificate of Incorporation, a
reduction of stated capital or a plan of merger, consolidation or sale of all
or substantially all of the Corporation's assets shall be given to each
stockholder of record entitled to vote at such meeting not less than ten (10)
nor more than sixty (60) days before the date of such meeting. Any such notice
shall be accompanied by a copy of the proposed amendment or plan of reduction,
merger, consolidation or sale.
SECTION 4. LIST OF STOCKHOLDERS. At least ten (10) days (but not more
than fifty (50) days) before any meeting of the stockholders, the officer or
transfer agent in charge of the stock transfer books of the Corporation shall
prepare and make a complete alphabetical list of the stockholders entitled to
vote
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at such meeting, which list shows the address of each stockholder and the
number of shares registered in the name of each stockholder. The list so
prepared shall be maintained at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if
not so specified, at the place where the meeting is to be held and shall be
open to inspection by any stockholder, for any purpose germane to the meeting,
during ordinary business hours during a period of no less than ten (10) days
prior to the meeting. The list also shall be produced and kept open at the
meeting (during the entire duration thereof) and, except as otherwise provided
by law, may be inspected by any stockholder or proxy of a stockholder who is
present in person at such meeting.
SECTION 5. PRESIDING OFFICERS; ORDER OF BUSINESS.
(a) Meetings of the stockholders shall be presided over by
the Chairman of the Board, if any, or, if the Chairman is not present (or, if
there is none), by the President, or, if the President is not present, by such
person who is chosen by the Board of Directors, or, if none is so chosen, by a
chairperson to be chosen at the meeting by stockholders present in person or by
proxy who own a majority of the shares of capital stock of the Corporation
entitled to vote and represented at such meeting. The secretary of meetings
shall be the Secretary of the Corporation, or, if the Secretary is not present,
an Assistant Secretary, or, if an Assistant Secretary is not present, such
person as may be chosen by the Board of Directors, or, if none,
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is so chosen, by such person who is chosen by the chairperson at the meeting.
(b) The following order of business, unless otherwise ordered
at the meeting by the chairperson thereof, shall be observed as far as
practicable and consistent with the purposes of the meeting:
(1) Call of the meeting to order.
(2) Presentation of proof of mailing of notice of
the meeting and, if the meeting is a special
meeting, the call thereof.
(3) Presentation of proxies.
(4) Determination and announcement that a quorum
is present.
(5) Reading and approval (or waiver thereof) of
the minutes of the previous meeting.
(6) Reports, if any, of officers.
(7) Election of directors, if the meeting is an
annual meeting or a meeting called for such
purpose.
(8) Consideration of the specific purpose or
purposes for which the meeting has been
called (other than the election of
directors).
(9) Transaction of such other business as may
properly come before the meeting.
(10) Adjournment.
SECTION 6. QUORUM; ADJOURNMENTS.
(a) The holders of a majority of the shares of capital stock
of the Corporation issued and outstanding and entitled to vote at any given
meeting present in person or by proxy shall be necessary to and shall
constitute a quorum for the transaction of
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business at all meetings of the stockholders, except as otherwise provided by
law or by the Certificate of Incorporation.
(b) If a quorum is not present in person or by proxy at any
meeting of stockholders, the stockholders entitled to vote thereat, present in
person or by proxy, shall have the power to adjourn the meeting from time to
time, without notice of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken, until a quorum is
present in person or by proxy.
(c) Even if a quorum is present in person or by proxy at any
meeting of the stockholders, the stockholders entitled to vote thereat present
in person or by proxy shall have the power to adjourn the meeting from time to
time for good cause, without notice of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken,
until a date which is not more than thirty (30) days after the date of the
original meeting.
(d) Any business which might have been transacted at a
meeting as originally called may be transacted at any meeting held after
adjournment as provided in this Section 6 at which reconvened meeting a quorum
is present in person or by proxy. Anything in paragraph (b) of this Section 6
to the contrary notwithstanding, if an adjournment is for more than thirty (30)
days, or if after an adjournment a new record date is fixed for the adjourned
meeting, notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote thereat.
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SECTION 7. VOTING.
(a) At any meeting of stockholders every stockholder having
the right to vote shall be entitled to vote in person or by proxy. Except as
otherwise provided by law or by the Certificate of Incorporation, each
stockholder of record shall be entitled to one vote (on each matter submitted
to a vote) for each share of capital stock registered in his, her or its name
on the books of the Corporation.
(b) All elections of directors, and except as otherwise
provided by law or by the Certificate of Incorporation, all other matters,
shall be determined by a vote of a majority of the shares present in person or
represented by proxy and voting on such other matters.
SECTION 8. ACTION BY CONSENT. Any action required or permitted to be
taken at any meeting of the stockholders may be taken without a meeting,
without prior notice and without a vote, if a consent setting forth the action
so taken, shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. All written consents shall be filed with the minutes of
the meetings of the stockholders.
ARTICLE III
DIRECTORS
SECTION 1. GENERAL POWERS; NUMBER; TENURE. The business and affairs
of the Corporation shall be managed under the
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direction of its Board of Directors, which may exercise all powers of the
Corporation and perform or authorize the performance of all lawful acts and
things which are not by law, the Certificate of Incorporation or these Bylaws
directed or required to be exercised or performed by the stockholders. The
number of directors of the Corporation shall be at least one but not more than
fifteen, the number to be set from time to time by the Board of Directors. The
directors shall be elected at the annual meeting of the stockholders (except as
otherwise provided in Section 2 of this Article III), and each director elected
shall hold office until the next succeeding annual meeting of the stockholders
or until his or her successor has been elected and has qualified or until his
or her earlier resignation or removal. Directors need not be stockholders nor
residents of the State of Delaware.
SECTION 2. VACANCIES. Vacancies and newly created directorships may
be filled by a majority of the directors then in office, although less than a
quorum, or by a sole remaining director. When one or more directors shall
resign from the Board, effective at a future date, a majority of the directors
then in office, although less than a quorum, or a sole remaining director,
including those who have so resigned, shall have power to fill such vacancy or
vacancies, the vote thereon to take effect when such resignation or
resignations shall become effective, and each director so chosen shall hold
office until
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the next annual meeting of the stockholders or until his successor has been
elected and has qualified.
SECTION 3. REMOVAL; RESIGNATION.
(a) Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, at any meeting of the stockholders called
expressly for such purpose any director may be removed, with or without cause,
by a vote of stockholders holding a majority of the shares issued and
outstanding and entitled to vote at an election of directors.
(b) Any director may resign at any time by giving written
notice to the Board of Directors, the Chairman of the Board, the President, or
the Secretary of the Corporation. Unless otherwise specified in such written
notice, a resignation shall take effect upon delivery thereof to the Board of
Directors or the designated officer. A resignation need not be accepted in
order for it to be effective.
SECTION 4. PLACE OF MEETINGS. The Board of Directors may hold both
regular and special meetings either within or without the State of Delaware, at
such place as the Board from time to time determines.
SECTION 5. ANNUAL MEETINGS. The annual meeting of each newly elected
Board of Directors shall be held as soon as is practicable (but in no event
more than ten (10) days) following the annual meeting of stockholders, and no
notice to the newly elected directors of such meeting shall be necessary for
such meeting to be lawful, provided that a quorum is present thereat.
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SECTION 6. REGULAR MEETINGS. Additional regular meetings of the Board
of Directors may be held without notice, at such time and place as from time to
time may be determined by the Board of Directors.
SECTION 7. SPECIAL MEETINGS. Special meetings of the Board of
Directors may be called by the Chairman of the Board or by the President or by
a majority of the directors upon two (2) days' notice to each director if such
notice is delivered personally or sent by telegram or telecopy, or upon five
(5) days' notice if sent by mail.
SECTION 8. QUORUM; ADJOURNMENTS. A majority of the number of
directors then in office shall constitute a quorum for the transaction of
business at each and every meeting of the Board of Directors, and the act of a
majority of the directors present at any meeting at which a quorum is present
shall be the act of the Board of Directors, except as may otherwise
specifically be provided by law, the Certificate of Incorporation or these
Bylaws. If a quorum is not present at any meeting of the Board of Directors,
the directors present may adjourn the meeting, from time to time, without
notice other than announcement at the meeting.
SECTION 9. COMPENSATION. Directors shall be entitled to such
compensation for their services as directors as from time to time may be fixed
by the Board of Directors and in any event shall be entitled to reimbursement
of all reasonable expenses incurred by them in attending Board meetings. Any
director may
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waive compensation for any meeting. No director who receives compensation as a
director shall be barred from serving the Corporation in any other capacity or
from receiving compensation and reimbursement of reasonable expenses for any or
all such other services.
SECTION 10. ACTION BY CONSENT. Any action required or permitted to
be taken at any meeting of the Board of Directors may be taken without a
meeting and without prior notice if a written consent setting forth the action
so taken is signed either before or after such action by all directors. All
written consents shall be filed with the minutes of the Board's proceedings.
SECTION 11. MEETINGS BY TELEPHONE OR SIMILAR COMMUNICATIONS. The
Board of Directors may participate in meetings by means of conference telephone
or similar communications equipment, whereby all directors participating in the
meeting can hear each other at the same time, and participation in any such
meeting shall constitute presence in person by such director at such meeting.
A written record shall be made of all actions taken at any meeting conducted by
means of a conference telephone or similar communications equipment.
ARTICLE IV
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE.
(a) By resolution duly adopted by a majority of the
directors, the Board of Directors may designate two or more
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directors to constitute an Executive Committee. One of such directors shall be
designated as Chairman of the Executive Committee. Each member of the
Executive Committee shall continue as a member thereof until the expiration of
his term as a director, or until his earlier resignation from the Executive
Committee, or unless sooner removed as a member of the Executive Committee or
as a director by any means authorized by these Bylaws.
(b) The Executive Committee shall have and may exercise all
of the rights, powers and authority of the Board of Directors, except as
expressly limited by the General Corporation Law of the State of Delaware, as
amended from time to time.
(c) The Executive Committee shall fix its own rules of
procedure and shall meet at such times and at such place or places as may be
provided by its rules or as it may determine. The Chairman of the Executive
Committee, or, in the absence of a Chairman a member of the Executive Committee
chosen by a majority of the members present, shall preside at meetings of the
Executive Committee, and another member thereof chosen by the Executive
Committee shall act as Secretary. A majority of the Executive Committee shall
constitute a quorum for the transaction of business, and the affirmative vote
of a majority of the members thereof shall be required for any action of the
Executive Committee. The Executive Committee shall keep minutes of its
meetings and deliver such minutes to the Board of Directors.
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SECTION 2. OTHER COMMITTEES. The Board of Directors, by resolution
duly adopted by a majority of the directors at a meeting at which a quorum is
present, may appoint such other committee or committees as it shall deem
advisable and with such authority as the Board of Directors shall from time to
time determine and may designate a chairman of each committee so appointed.
SECTION 3. OTHER PROVISIONS REGARDING COMMITTEES.
(a) The Board of Directors shall have the power at any time
to fill vacancies in, change the membership of, or discharge any committee.
(b) Members of any committee shall be entitled to
compensation for their services as such, as from time to time may be fixed by
the Board of Directors and in any event shall be entitled to reimbursement of
all reasonable expenses incurred in attending committee meetings. Any member
of a committee may waive compensation for any meeting. No committee member who
receives compensation as a member of one or more committees shall be barred
from serving the Corporation in any other capacity or from receiving
compensation and reimbursement of reasonable expenses for any or all such other
services.
(c) Unless prohibited by law, the provisions of Section 10
("Action by Consent") and Section 11 ("Meetings by Telephone or Similar
Communications") of Article III shall apply to all committees from time to time
created by the Board of Directors.
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ARTICLE V
OFFICERS
SECTION 1. POSITIONS. The officers of the Corporation shall be chosen
by the Board of Directors and shall consist of a Chairman of the Board, a
President, one or more Vice Presidents (if and to the extent required by law or
if not required, if the Board of Directors from time to time appoints a Vice
President or Vice Presidents), a Secretary and a Treasurer. The Board of
Directors also may choose one or more Assistant Secretaries and/or Assistant
Treasurers and such other officers and/or agents as the Board from time to time
deems necessary or appropriate. The Board of Directors may delegate to the
Chairman of the Board the authority to appoint any officer or agent of the
Corporation and to fill a vacancy other than the Chairman of the Board,
President, Secretary or Treasurer. The election or appointment of any officer
of the Corporation in itself shall not create contract rights for any such
officer. All officers of the Corporation shall exercise such powers and
perform such duties as from time to time shall be determined by the Board of
Directors. Any two or more offices may be held by the same person except the
offices of President and Secretary and of President and Vice President. No
person shall be precluded from being an officer of the Corporation by virtue of
holding office in any other corporation, partnership or other business entity.
SECTION 2. TERM OF OFFICE; REMOVAL. Each officer of the Corporation
shall hold office at the pleasure of the Board and
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any officer may be removed, with or without cause, at any time by the
affirmative vote of a majority of the directors then in office, provided that
any officer appointed by the Chairman of the Board pursuant to authority
delegated to the Chairman of the Board by the Board of Directors may be
removed, with or without cause, at any time whenever the Chairman of the Board
in his or her absolute discretion shall consider that the best interests of the
Corporation shall be served by such removal. Removal of an officer by the
Board or by the Chairman of the Board, as the case may be, shall not prejudice
the contract rights, if any, of the person so removed. Vacancies (however
caused) in any office may be filled for the unexpired portion of the term by
the Board of Directors (or by the Chairman of the Board in the case of a
vacancy occurring in an office to which the Chairman of the Board has been
delegated the authority to make appointments).
SECTION 3. COMPENSATION. The salaries of all officers of the
Corporation shall be fixed from time to time by the Chairman of the Board,
except for that of the Chairman of the Board which shall be fixed from time to
time by the Board of Directors, and no officer shall be prevented from
receiving a salary by reason of the fact that he or she also receives from the
Corporation compensation in any other capacity.
SECTION 4. CHAIRMAN OF THE BOARD. The Chairman of the Board shall be
the chief executive officer of the Corporation and subject to the direction of
the Board of Directors, shall have general charge of the business, affairs and
property of the
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Corporation and general supervision over its other officers and agents. In
general, the Chairman of the Board shall perform all duties incident to the
office of chief executive officer of a stock corporation and shall see that all
orders and resolutions of the Board of Directors are carried into effect.
Unless otherwise prescribed by the Board of Directors, the Chairman of the
Board shall have full power and authority on behalf of the Corporation to
attend, act and vote at any meeting of security holders of other corporations
in which the Corporation may hold securities. At any such meeting the Chairman
of the Board shall possess and may exercise any and all rights and powers
incident to the ownership of such securities which the Corporation possesses
and has the power to exercise. The Board of Directors from time to time may
confer like powers upon any other person or persons. The Chairman of the
Board, if present, shall preside at all meetings of the stockholders and all
meetings of the Board of Directors.
SECTION 5. PRESIDENT. The President shall be the chief operating
officer of the Corporation and, subject to the direction of the Board of
Directors, shall perform such executive, supervisory and management functions
and duties as from time to time may be assigned to him or her by the Board.
Unless the Chairman of the Board is present (in person or by proxy) at such
meeting, the President shall have the same power and authority as the Chairman
of the Board to attend, act and
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vote at any meeting of security holders of other corporations in which the
Corporation may hold securities.
SECTION 6. VICE PRESIDENTS. In the absence or disability of the
President, the Vice President, if any (or in the event there is more than one,
the Vice Presidents in the order designated, or in the absence of any
designation, in the order of their election), shall perform the duties and
exercise the powers of the President. The Vice President(s) also generally
shall assist the Chairman of the Board and the President and shall perform such
other duties and have such other powers as from time to time may be prescribed
by the Board of Directors, the Chairman of the Board or the President;
provided, however, that unless specifically authorized by the Board of
Directors no Vice President shall have any authority to attend, act or vote on
behalf of the Corporation at any meeting of security holders of other
corporations in which the Corporation may hold securities.
SECTION 7. SECRETARY. The Secretary shall attend all
meetings of the Board of Directors and of the stockholders and shall record all
votes and the proceedings of all meetings in a book to be kept for such
purposes. The Secretary also shall perform like duties for the Executive
Committee or other committees, if required by any such committee. The
Secretary shall give (or cause to be given) notice of all meetings of the
stockholders and all special meetings of the Board of Directors and shall
perform such other duties as from time to time may be prescribed by the Board
of Directors, the Chairman of the Board
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or the President. The Secretary shall have custody of the seal of the
Corporation, and shall have authority (as shall any Assistant Secretary) to
affix the same to any instrument requiring it, and to attest the seal by his or
her signature. The Board of Directors may give general authority to officers
other than the Secretary or any Assistant Secretary to affix the seal of the
Corporation and to attest the affixing thereof by his or her signature.
SECTION 8. ASSISTANT SECRETARY. The Assistant Secretary, if any (or
in the event there is more than one, the Assistant Secretaries in the order
designated, or in the absence of any designation, in the order of their
election), in the absence or disability of the Secretary, shall perform the
duties and exercise the powers of the Secretary. An Assistant Secretary shall
perform such other duties and have such other powers as from time to time may
be prescribed by the Board of Directors.
SECTION 9. TREASURER. The Treasurer shall have the custody of the
corporate funds, securities, other similar valuable effects, and evidences of
indebtedness, shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all
moneys and other valuable effects in the name and to the credit of the
Corporation in such depositories as from time to time may be designated by the
Board of Directors. The Treasurer shall disburse the funds of the Corporation
in such manner as may be ordered by the Board of Directors from time to time
and shall
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render to the Chairman of the Board, the President and the Board of Directors,
at regular meetings of the Board or whenever any of them may so require, an
account of all transactions and of the financial condition of the Corporation.
SECTION 10. ASSISTANT TREASURER. The Assistant Treasurer, if any (or
in the event there is more than one, the Assistant Treasurers in the order
designated, or in the absence of any designation, in the order of their
election), in the absence or disability of the Treasurer, shall perform the
duties and exercise the powers of the Treasurer. An Assistant Treasurer shall
perform such other duties and have such other powers as from time to time may
be prescribed by the Board of Directors.
ARTICLE VI
NOTICES
SECTION 1. FORM; DELIVERY. Any notice required or permitted to be
given to any director, officer, stockholder or committee member shall be given
in writing, either personally or by mail with postage prepaid, in either case
addressed to the recipient at his or her address as it appears in the records
of the Corporation. Personally delivered notices shall be deemed to be given
at the time they are delivered at the address of the named recipient as it
appears in the records of the Corporation, and mailed notices shall be deemed
to be given at the time they are deposited in the United States mail. Notice
to a director also may be given by telegram or telecopy sent to his or her
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address as it appears on the records of the Corporation and shall be deemed
given at the time delivered at such address.
SECTION 2. WAIVER; EFFECT OF ATTENDANCE. Whenever any notice is
required to be given by law, the Certificate of Incorporation or these Bylaws,
a written waiver thereof, signed by the person or persons entitled to such
notice, whether before or after the time stated therein, shall be the
equivalent of the giving of such notice. In addition, any stockholder who
attends a meeting of stockholders in person, or who is represented at such
meeting by a proxy, or any director or committee member who attends a meeting
of the Board of Directors or a committee thereof shall be deemed to have had
timely and proper notice of the meeting, unless such stockholder (or his or her
proxy) or director or committee member attends for the express purpose of
objecting to the transaction of any business on the grounds that the meeting is
not lawfully called or convened.
ARTICLE VII
INDEMNIFICATION AND INSURANCE
SECTION 1. INDEMNIFICATION.
(a) The Corporation shall indemnify any person who was or is
a party or is threatened to be made a party to any threatened pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the Corporation)
by reason of the fact that he or she is or was or has agreed to become a
director, officer, employee or agent of the Corporation, or is or
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was serving or has agreed to serve at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or by reason of any action alleged to have
been taken or omitted in such capacity, against costs, charges, expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her or on his or her behalf in
connection with such action, suit or proceeding and any appeal therefrom, if he
or she acted in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he or she reasonably believed to be
in, or not opposed to, the best interests of the Corporation, and, with respect
to any criminal action or proceeding, had reasonable cause to believe that his
conduct was unlawful.
(b) The Corporation shall indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he or she is or was or has
agreed to
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become a director, officer, employee or agent of the Corporation, or is or was
serving or has agreed to serve at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, or by reason of any action alleged to have been
taken or omitted in such capacity, against costs, charges, expenses (including
attorneys' fees) actually and reasonably incurred by him or her or on his or
her behalf in connection with the defense or settlement of such action or suit
and any appeal therefrom, if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the Corporation and except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable for gross negligence or misconduct in the performance of his or her
duty to the Corporation unless and only to the extent that the Court of
Chancery of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of such
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnification for such costs, charges and
expenses which the Court of Chancery or such other court shall deem proper.
(c) Notwithstanding the other provisions of Section 1 of
Article VII of these Bylaws, to the extent that a director, officer, employee
or agent of the Corporation has been successful
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on the merits or otherwise, including, without limitation, the dismissal of an
action without prejudice, in defense of any action, suit or proceeding referred
to in Section 1(a) and (b) of Article VII of these Bylaws, or in defense of any
claim, issue or matter therein, he or she shall be indemnified against all
costs, charges and expenses (including attorneys' fees) actually and reasonably
incurred by him or her or on his or her behalf in connection therewith.
(d) Any indemnification under Section 1(a) and (b) of
Article VII of these Bylaws (unless ordered by a court) shall be paid by the
Corporation unless a determination is made (1) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceeding; or (2) if such a quorum is not obtainable, or even
if obtainable a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion; or (3) by the stockholders, that
indemnification of the director, officer, employee or agent is not proper in
the circumstances because he or she has not met the applicable standards of
conduct set forth in Section 1(a) and (b) of Article VII of these Bylaws.
(e) Costs, charges, and expenses (including attorneys'
fees) incurred by a person referred to in Section 1(a) and (b) of Article VII
of these Bylaws in defending a civil or criminal action, suit or proceeding
(including investigations by any government agency and all costs, charges and
expenses incurred in preparing for any threatened action, suit or proceeding)
shall be
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paid by the Corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay all amounts so advanced if it shall ultimately be
determined that such director or officer is not entitled to be indemnified by
the Corporation pursuant to this Article VII. No security shall be required
for such undertaking and such undertaking shall be accepted without reference
to the recipient's financial ability to make repayment. Such expenses incurred
by other employees and agents may be so paid upon such terms and conditions, if
any, as the Board deems appropriate. The Board of Directors may, in the manner
set forth above, and subject to the approval of such director, officer,
employee or agent of the Corporation, authorize the Corporation's counsel to
represent such person, in any action, suit or proceeding, whether or not the
Corporation is a party to such action, suit or proceeding.
(f) Any indemnification under Section 1(a), (b) or (c) of
Article VII or advance of costs, charges and expenses under Section 1(e) of
Article VII of these Bylaws shall be made promptly, and in any event within
sixty (60) days, upon the written request of the director, officer, employee or
agent directed to the Secretary of the Corporation. The right to
indemnification or advances as granted by this Article VII shall be enforceable
by the director, officer, employee or agent in any court of competent
jurisdiction if the Corporation denies such request in whole or in part, or if
no disposition thereof is made
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within sixty (60) days. Such person's costs and expenses incurred in
connection with successfully establishing his right to indemnification or
advances, in whole or in part, in any such action shall also be indemnified by
the Corporation. It shall be a defense to any such action (other than an
action brought to enforce a claim for the advance of costs, charges and
expenses under Section 1(e) of Article VII of these Bylaws where the required
undertaking, if any, has been received by the Corporation) that the claimant
has not met the standard of conduct set forth in Section 1(a) or (b) of Article
VII of these Bylaws, but the burden of proving that such standard of conduct
has not been met shall be on the Corporation. Neither the failure of the
Corporation (including its Board of Directors, its independent legal counsel,
or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in
Section 1(a) and (b) of Article VII of these Bylaws, nor the fact that there
has been an actual determination by the Corporation (including its Board of
Directors, its independent legal counsel, or its stockholders) that the
claimant has not met such applicable standards of conduct, shall be a defense
to the action or create a presumption that the claimant has not met the
applicable standard of conduct.
(g) The indemnification and advancement of expenses
provided by, or granted pursuant to, other Sections of this
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<PAGE> 25
Article VII shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of costs, charges and expenses may be
entitled under any law (common or statutory), bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office or while employed by or acting as agent for the Corporation, and shall
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the estate, heirs, executors and
administrators of such person. All rights to indemnification under Article VII
of these Bylaws shall be deemed to be a contract between the Corporation and
each director, officer, employee or agent of the Corporation who serves or
served in such capacity at any time while Article VII of these Bylaws is in
effect. No amendment or repeal of this Article VII of these Bylaws or any
relevant provisions of the Delaware General Corporation Law or any other
applicable laws shall adversely affect or deny to any director, officer,
employee or agent any rights to indemnification which such person may have, or
change or release any obligations of the Corporation, under Article VII of
these Bylaws with respect to any costs, charges, expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement which arise out of an
action, suit or proceeding based in whole or substantial part on any act or
failure to act, actual or alleged, which takes place before or while Section 1
of Article VII of these Bylaws is
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<PAGE> 26
in effect. The provisions of this sub-section (g) shall apply to any such
action, suit or proceeding whenever commenced, including any such action, suit
or proceeding commenced after any amendment or repeal of Article VII of these
Bylaws.
(h) For purposes of this Article VII, references to "the
Corporation" shall include, in addition to the resulting corporation, any
constituent corporation (including any constituent of a constituent) absorbed
in a consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers,
employees or agents so that any person who is or was a director, officer,
employee or agent of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article VII with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued.
(i) For purposes of this Article VII, references to
"other enterprises" shall include employee benefit plans including but not
limited to any employee benefit plan of the Corporation; references to "fines"
shall include any penalties and any excise or similar taxes assessed on a
person with respect to an employee benefit plan; and references to "serving at
the request of the Corporation" shall include any service as a
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<PAGE> 27
director, officer, employee or agent of the Corporation which imposes duties
on, or involves service by, such director, officer, employee or agent with
respect to any employee benefit plan, its participants, or beneficiaries
including acting as a fiduciary thereof; a person who acted in good faith and
in a manner he or she reasonably believed to be in the interest of the
participants and beneficiaries of an employee benefit plan shall be deemed to
have acted in a manner "not opposed to the best interests of the Corporation"
as referred to in this Article VII; and service as a partner, trustee or member
of management or similar committee of a partnership or joint venture, or as a
director, officer, employee or agent of a corporation which is a partner,
trustee or joint venturer, shall be considered service as a director, officer,
employee or agent of the partnership, joint venture, trust or other enterprise.
SECTION 2. INSURANCE FOR INDEMNIFICATION. The Corporation may
purchase and maintain insurance on behalf of any person who is or was or has
agreed to become a director, officer, employee or agent of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against any liability asserted against him or her and
incurred by him or her or on his or her behalf in any such capacity, or arising
out of his status as such, whether or not the Corporation would have the power
to indemnify him or her against such liability under the provisions of Section
145 of the
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<PAGE> 28
Delaware General Corporation Law and these Bylaws, provided that such insurance
is available on acceptable terms as determined by a vote of a majority of the
entire Board of Directors.
ARTICLE VIII
INTERESTED DIRECTORS; QUORUM
SECTION 1. COMMON OR INTERESTED OFFICERS AND DIRECTORS. The officers
and directors shall exercise their powers and duties in good faith and with a
view to the best interests of the Corporation. No contract or other
transaction between the Corporation and one or more of its officers or
directors, or between the Corporation and any corporation, firm, association,
or other entity in which one or more of the officers or directors of the
Corporation are officers or directors, or are pecuniarily or otherwise
interested, shall be either void or voidable because of such common
directorate, officership or interest, because such officers or directors are
present at the meeting of the Board of Directors or any committee thereof which
authorizes, approves or ratifies the contract or transaction, or because his,
her or their votes are counted for such purpose, if (unless otherwise
prohibited by law) any of the conditions specified in the following paragraphs
exist:
(a) the material facts of the common directorate or interest
or contract or transaction are disclosed or known to the Board of Directors or
committee thereof and the Board or committee authorizes or ratifies such
contract or transaction in good faith by the affirmative vote of a majority of
the
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<PAGE> 29
disinterested directors, even through the number of such disinterested
directors may be less than a quorum; or
(b) the material facts of the common directorate or interest
or contract or transaction are disclosed or known to the stockholders entitled
to vote thereon and the contract or transaction is specifically approved in
good faith by vote of the stockholders; or
(c) the contract or transaction is fair and commercially
reasonable to the Corporation at the time it is authorized, approved or
ratified by the Board, a committee thereof, or the stockholders, as the case
may be.
SECTION 2. QUORUM. Common or interested directors may be counted in
determining whether a quorum is present at any meeting of the Board of
Directors or committee thereof which authorizes, approves or ratifies any
contract or transaction, and may vote thereat to authorize any contract or
transaction with like force and effect as if he, she or they were not such
officers or directors of such other corporation or were not so interested.
ARTICLE IX
STOCK CERTIFICATES
SECTION 1. FORM, SIGNATURES. Each stockholder who has fully
paid for any shares of capital stock of the Corporation shall be entitled to
receive a certificate representing such shares and such certificate shall be
signed by the Chairman of the Board or the President or a Vice President and by
the Treasurer or an Assistant Treasurer or the Secretary or an
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<PAGE> 30
Assistant Secretary of the Corporation. Signatures on the certificate may be
facsimile, in the manner prescribed by law. Each certificate shall exhibit on
its face the number and class (and series, if any) of the shares it represents.
Each certificate also shall state upon its face the name of the person to whom
it is issued and that the Corporation is organized under the laws of the State
of Delaware. Each certificate may (but need not) be sealed with the seal of
the Corporation or facsimile thereof. In the event any officer, transfer agent
or registrar who has signed or whose facsimile signature has been placed upon a
certificate ceases to be such officer, transfer agent or registrar before the
certificate is issued, the certificate nevertheless may be issued by the
Corporation with the same effect as if such person were such officer, transfer
agent or registrar at the date of issue of the certificate. All stock
certificates representing shares of capital stock which are subject to
restrictions on transfer or to other restrictions may have imprinted thereon a
notation of such restriction.
SECTION 2. REGISTRATION OF TRANSFER. Upon surrender to the
Corporation or to any transfer agent or registrar of the Corporation of a
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, the Corporation, or its
transfer agent or registrar, shall issue a new certificate to the person
entitled thereto, cancel the old certificate and record the transaction upon
the Corporation's books.
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<PAGE> 31
SECTION 3. REGISTERED STOCKHOLDERS. Except as otherwise provided by
law, the Corporation shall be entitled to recognize the exclusive right of a
person who is registered on its books as the owner of shares of its capital
stock to receive dividends or other distributions (to the extent otherwise
distributable or distributed), to vote (in the case of voting stock) as such
owner, and to hold such registered owner liable for calls and assessments. The
Corporation shall not be bound to recognize any equitable or legal claim to or
interest in such shares on the part of any other person. The Corporation (or
its transfer agent or registrar, if any) shall not be required to send notices
or dividends to a name or address other than the name or address of the
stockholders appearing on the stock ledger maintained by the Corporation (or by
the transfer agent or registrar, if any), unless any such stockholder shall
have notified the Corporation (or by the transfer agent or registrar, if any),
in writing, of another name or address at least ten (10) days prior to the
mailing of such notice or dividend.
SECTION 4. RECORD DATE. In order that the Corporation may determine
the stockholders of record who are entitled (i) to notice of or to vote at any
meeting of stockholders or any adjournment thereof, (ii) to express written
consent to corporate action in lieu of a meeting, (iii) to receive payment of
any dividend or other distribution, or (iv) to allotment of any rights or to
exercise any rights in respect of any change, conversion or exchange of stock
or in order that the Corporation
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<PAGE> 32
may make a determination of the stockholders of record for any other lawful
purpose, the Board of Directors, in advance, may fix a date as the record date
for any such determination. Such date shall not be more than sixty (60) days
nor less than ten (10) days before the date of such meeting, nor more than
sixty (60) days prior to the date of any other action. A determination of
stockholders of record entitled to notice of or to vote at a meeting of the
stockholders shall apply to any adjournment of the meeting taken pursuant to
Section 6 of Article II; provided, however, that the Board of Directors, in its
discretion, may fix a new record date for the adjourned meeting.
SECTION 5. LOST, STOLEN OR DESTROYED CERTIFICATE. The Secretary or
the Treasurer may direct a new certificate to be issued in place of any
certificate theretofore issued by the Corporation which is claimed to have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming the certificate to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Secretary or the Treasurer, in
his or her discretion, may require as a condition precedent to issuance that
the owner of such lost, stolen or destroyed certificate, or his or her legal
representative, advertise the same in such manner as the Secretary or the
Treasurer shall require and/or give the Corporation a bond in such sum, or
other security in such form, as the Secretary or the Treasurer may direct, as
indemnity against any claim that may be made against the Corporation with
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<PAGE> 33
respect to the certificate claimed to have been lost, stolen or destroyed.
ARTICLE X
GENERAL PROVISIONS
SECTION 1. DIVIDENDS. Subject to the General Corporation Law of the
State of Delaware and to any provisions of the Certificate of Incorporation
relating to dividends, dividends upon the outstanding capital stock of the
Corporation or other distributions may be declared by the Board of Directors at
any annual, regular or special meeting and may be paid in cash, in property or
in shares of the Corporation's capital stock.
SECTION 2. RESERVES. The Board of Directors, in its sole discretion,
may fix a sum which may be set aside or reserved over and above the paid-in
capital of the Corporation for working capital or as a reserve for any proper
purpose, and from time to time may increase, diminish or vary such fund or
funds.
SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be
as determined from time to time by the Board of Directors.
SECTION 4. SEAL. The corporate seal shall have inscribed thereon the
name of the Corporation, the year of its incorporation and the words "Corporate
Seal" and "State of Delaware."
SECTION 5. AMENDMENT OF THE BYLAWS. To the extent not prohibited by
law, the Board of Directors shall have the power to adopt, amend and repeal
these Bylaws, and to adopt new bylaws, in
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<PAGE> 34
all cases by an affirmative vote of a majority of the directors, provided that
notice of the proposal to adopt, amend or repeal these Bylaws, or to adopt new
bylaws, is included in the notice of the meeting of the Board of Directors at
which such action takes place.
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<PAGE> 1
AMENDMENT OF LEASE
THIS AMENDMENT OF LEASE ("Amendment"), made as of this 4th day of
February, 1993, by and between Retail Lease Acquisition Limited Partnership
(hereinafter "Lessor") and Super Trak Corporation t/a Super Trak (hereinafter
"Lessee").
WHEREAS, by indenture of Lease dated May 18, 1990 (hereinafter
referred to as "Lease"), Lessor leased to Lessee certain premises therein more
particularly described located in Store No. 1A in the College Plaza Shopping
Center, Rockville, Maryland ("Premises"), upon terms and conditions, covenants
and agreements contained therein; and
WHEREAS, Lessee desires to expand its business operation into a
portion of adjacent premises, known as Store No. 1B, and which portion of Store
No. 1B contains approximately 3,000 square feet; and
WHEREAS, Lessor is willing to lease said portion of Store No. 1B to
Lessee; and
WHEREAS, the parties desire to amend the Lease as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto intending to be
legally bound, hereby agree that the Lease is hereby amended, effective as of
the date hereof, as follows:
FIRST: Lessor and Lessee hereby acknowledge and confirm that Lessee
is already in occupancy (as of the date hereof) of the premises described on
Schedule "A" of the Lease as Store No. 1A (containing approximately 6,747
square feet and hereinafter referred to in this Amendment as the "Original
Premises").
SECOND: For the purpose of this Amendment and the Lease, the parties
have further agreed that from and after the date Landlord delivers possession
of the Expansion Premises (hereinafter defined) to Lessee the Demised Premises
shall be deemed to refer to the Original Premises and the portion of the
adjacent premises, known as Store No. 1B, as shown on Schedule "A-1" attached
hereto (containing approximately 3,000 square feet and hereinafter referred to
in this Amendment as the "Expansion Premises").
THIRD: The parties, having agreed to increase the size of the Demised
Premises from approximately 6,747 square feet to approximately 9,747 square
feet with irregular dimensions as set forth on Schedule "A-1" attached hereto,
hereby agree that for the purposes of the Lease and all provisions thereof,
including but not limited to, those provisions related to computation of
Lessee's minimum fixed rent, Lessee's contribution toward real estate taxes,
Lessee's minimum contribution and pro-rata share of shopping center's common
areas operating cost, Lessee's management and administrative fee and Lessee's
share of the cost of the promotional program (if and when the same has been
established), the square footage contained within the Demised Premises shall be
9,747 square feet as of the Effective Date set forth in Paragraph Seventh
hereinbelow.
FOURTH: It is agreed that the Demised Premises shall be located in
the area cross-hatched in "red" on Schedule "A-1" hereto and the parties hereto
covenant and agree that all provisions of the Lease which refer to the Demised
Premises shall be deemed to
1
<PAGE> 2
refer to the area cross-hatched in "red" on Schedule "A-1" hereto and that
Schedule "A" of the Lease shall be and is hereby deleted in its entirety and
shall be substituted with Schedule "A-1" attached hereto and by this reference
made a part hereof and all references in the Lease to Schedule "A" shall be
deemed to refer to Schedule "A-1" attached hereto and all references in the
Lease to "Demised Premises" or "Premises" shall be deemed to refer to the
Original Premises and the Expansion Premises.
FIFTH: Lessor hereby agrees to cause a demising wall separating the
Expansion Premises from the premises occupied by an adjacent tenant to be
constructed at no expense to Tenant; said demising wall to be constructed from
floor to underside of roof deck, constructed in accordance with local codes,
with unfinished drywall on Lessee's side. Except as otherwise stated
hereinabove in this paragraph, Lessee agrees to accept both the Original
Premises and the Expansion Premises on an "as is" basis and that any and all
repairs, improvements, installations or additions necessary or required for
Lessee to open for business and conduct its business from the Premises
(consisting of the Original Premises and the Expansion Premises in a unified
store operation) shall be at the sole cost and expense of Lessee.
SIXTH: Lessee agrees, that as soon as possible after full execution
of this Amendment, Lessee, on behalf of Lessor at Lessee's expense, shall
proceed to cause building plans and specifications to be made, including but
not limited to, where and to the extent Lessee deems appropriate, reworking
electrical and plumbing outlets, repairing and repainting the interior walls,
modifying the present entrances, modifying the interior lighting, modifying the
show windows and storefront, modifying any existing ceiling to Lessee's
standard specifications, and providing for heating, cooling and ventilation to
Lessee's standard requirements and Lessee hereby further agrees to make
application for all necessary permits within sixty (60) days from the date
hereof. After completion of said building plans and specifications and the
obtaining of the necessary contractors' bids, Lessee, on behalf of Lessor at
Lessee's expense, shall supervise and prosecute to completion, in conformance
with said building plans and specifications, said building, remodeling and
modernization work.
Lessee further agrees, as part of Lessee Improvements, to demolish the
existing demising wall separating the Original Premises from the Expansion
Premises and to perform such necessary work required to reconfigure the
acoustical lay-in ceiling and recessed fluorescent lighting fixtures into one
unified ceiling and lighting scheme. In addition, Lessee shall design and
construct a new unified storefront with one (1) set of double entrance doors
for the Premises. Lessee shall also consolidate the electrical service in the
Original Premises and the Expansion Premises and install floor covering in the
Original Premises and the Expansion Premises. Lessee understands that it shall
also be required to install (a) all interior partitions and curtain walls
within the Premises; (b) all electrical work involved in actually hooking up
fixtures; (c) internal communication system and alarm systems; (d) store
fixtures and furnishings; (e) show window display and platforms and window
backs; (f) all interior finish in show windows; (g) Lessee's signs, both
interior and exterior; and (h) all finish painting and floor coverings.
All of Lessee's Improvements described in this Paragraph Sixth shall
be of good quality materials, installed in a professional workmanlike condition
and shall be comparable to and consistent with the latest Super Trak Auto
retail store prototype.
SEVENTH: Effective as of the sixty-first (61st) day following the
date (i) Lessor delivers possession of the Expansion Premises to Lessee and the
Lessee has obtained all necessary permits (the "Effective Date") the following
provisions shall be in full force and effect:
2
<PAGE> 3
1. Paragraph 3 of Article I of the Lease shall be deleted in its
entirety and replaced by the following:
3. The term of this Lease shall end at midnight on July
31, 2012.
2. Paragraphs 1(a) and 1(b) of Schedule "C" of the Lease shall be
deleted in their entirety and replaced by the following:
(a) It is agreed that commencing on the Effective Date and
continuing through the last day of the thirty sixth (36th) full calendar month
following the Effective Date, Lessee shall pay Lessor an annual minimum fixed
rent of ONE HUNDRED SIXTY-FOUR THOUSAND SIX HUNDRED TWENTY-SIX AND 83/100
DOLLARS ($164,626.83), payable in monthly installments of THIRTEEN THOUSAND
SEVEN HUNDRED EIGHTEEN AND 90/100 DOLLARS ($13,718.90), payable, in advance, on
or before the first day of each full calendar month.
(b) Commencing as of the first (1st) day of the calendar month
following the expiration of thirty-six (36) full calendar months after the
Effective Date and thereafter as of each third (3rd) anniversary of said day
throughout the lease term (said day and each third (3rd) anniversary thereof
being a "date of adjustment"), the minimum fixed rent shall be increased by
nine percent (9%) of the minimum fixed rent payable in the immediately
preceding twelve (12) month period.
3. Lessee's contribution toward real estate taxes on the Demised
Premises set forth in Paragraph 3 of Schedule "C" of the Lease shall be the sum
of THIRTEEN THOUSAND THREE HUNDRED FIFTY-THREE AND 39/100 DOLLARS ($13,353.39)
each lease year, payable in equal monthly installments of ONE THOUSAND ONE
HUNDRED TWELVE AND 78/100 DOLLARS ($1,112.78). Lessee's contribution toward
real estate taxes on the Demised Premises shall be subject to further
adjustment in accordance with Paragraph 3 of Schedule "C" of the Lease.
4. Lessee's minimum contribution toward the shopping center's common
areas operating cost set forth in Paragraph 6(a) of Schedule "C" of the Lease
shall be the sum of THIRTEEN THOUSAND SIX HUNDRED FORTY-FIVE AND 80/100 DOLLARS
($13,645.80) each lease year, payable in equal monthly installments of ONE
THOUSAND ONE HUNDRED THIRTY-SEVEN AND 15/100 DOLLARS ($1,137.15). Lessee's
minimum contribution toward shopping center's common areas operating cost shall
continue to be subject to adjustment as set forth in Paragraph 6(c) of Schedule
"C" of the Lease and Lessee shall continue to be responsible for paying
Lessee's proportionate share of excess costs or increases above Lessee's
minimum contribution in accordance with Paragraph 6(c) of Schedule "C" of the
Lease.
5. Lessee's monthly management and administrative fee set forth in
Paragraph 6(b) of Schedule "C" of the Lease shall be TWO HUNDRED SEVENTY-FOUR
AND 38/100 DOLLARS ($274.38) subject to adjustment in accordance with the
provisions of Paragraph 6(a) of Schedule "C" of the Lease.
EIGHTH: The parties acknowledge and agree that in the event the
Effective Date occurs on a day other than the first calendar day of a month,
Lessee's minimum fixed rent, Lessee's contribution toward real estate taxes,
Lessee's minimum contribution and pro-rata share of shopping center's common
area operating costs and Lessee's management and administrative fee shall be
subject to appropriate proration.
NINTH: Lessor agrees that in consideration of the Lessee's agreeing
to accept the Premises (Original Premises and Expansion Premises) in an "as is"
condition and Lessee's agreeing to perform all Lessee Improvements required
under Paragraph Sixth of this Amendment and provided Lessee (a) has completed
said Lessee Improvements in accordance with the terms of Paragraph Sixth of
this Amendment; (b) has provided Lessor with reasonably appropriate affidavits,
lien waivers and the like showing that liens and encumbrances effected by
Lessee's Improvements have been released; (c) has obtained a certificate of
occupancy or non-residential use permit for the Premises (Original Premises and
Expansion Premises) and furnished a copy of the same to Lessor; (d) has opened
its
3
<PAGE> 4
store for business from the Premises (both the Original Premises and the
Expansion Premises as one unified operation) in accordance with the terms of
this Amendment; and (e) has performed all of its obligations under the
provisions of this Amendment required of it to be performed and is not then in
default of the Lease beyond any applicable cure period, then Lessor shall
provide Super Trak Corporation with a credit in the amount of THIRTY-SIX
THOUSAND AND 00/100 DOLLARS ($36,000.00), said amount to be credited to the
rental account of Super Trak Corporation for the Premises by amortizing the
same, dollar for dollar, only out of those payments of minimum fixed rent
becoming due from Lessee under the terms of the Lease after the date Lessee has
satisfied the conditions set forth in (a) through (e) of this Paragraph Ninth.
TENTH: Except as modified by this Amendment of Lease, the Lease shall
continue in full force and effect in accordance with the terms thereof. Lessor
acknowledges and agrees that the effectiveness and (1)
ELEVENTH: All the rights and obligations of the parties under this
Amendment of Lease shall bind and inure to the benefit of their respective
heirs, personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed on the date first above written.
<TABLE>
<S> <C>
WITNESS: LESSOR:
RETAIL LEASE ACQUISITION LIMITED
PARTNERSHIP
THOMAS B. MCKEE BY: HERBERT H. HAFT
- - ------------------------------ ---------------------------
Herbert H. Haft
General Partner
ATTEST: LESSEE:
SUPER TRAK CORPORATION
BY: R. KEITH GREEN
- - ------------------------------ ---------------------------
(corporate seal) ITS: PRESIDENT
--------------------------
</TABLE>
(1) validity of this Amendment is subject to and contingent upon the approval
of the Board of Directors of Super Trak Corporation to enter into this
Amendment.
4
<PAGE> 1
AMENDMENT OF LEASE
THIS AMENDMENT OF LEASE (hereinafter "Amendment") is made as of this
13th day of September, 1993, by and between Combined Properties Limited
Partnership (hereinafter "Lessor") and Super Trak Corporation,
successor-in-interest to Trak Corporation (hereinafter "Lessee").
WHEREAS, by Lease Agreement dated May 18, 1990 (hereinafter referred
to as "Lease"), Lessor leased to Lessee certain premises in the Fair City Mall
Shopping Center located in Fairfax, Virginia, known as Store No. 26 and having
an address of 9650-26 Main Street, Fairfax, Virginia 22031 (hereinafter "Former
Premises"), the Former Premises more particularly described in the Lease, upon
the terms, conditions, covenants and agreements contained in the Lease; and
WHEREAS, the Lessor and Lessee have agreed to relocate the Lessee to
Store #15A (the "Relocation Premises"), having an address of 9404-A Main
Street, Fairfax, Virginia 22031, in Lessor's Shopping Center known as Pickett
Shopping Center located in Fairfax, Virginia (the "Shopping Center") in
accordance with the terms and conditions of this Amendment; and
WHEREAS, the parties desire to amend the Lease as set forth herein.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto intending to be
legally bound, hereby agree that the Lease is hereby amended, effective as of
the date hereof, as follows:
FIRST: It is agreed that the Relocation Premises shall be located in the area
cross-hatched in "red" on Schedule "A-1" hereto and the parties hereto covenant
and agree as of the Effective Date (hereinafter defined) that all provisions of
the Lease which refer to the Former Premises and all provisions in this
Amendment of Lease referring to "Relocation Premises" shall be deemed to refer
to the area cross-hatched in "red" on Schedule "A-1" hereto and that as of said
date, Schedule "A" of the Lease shall be deleted in its entirety and Schedule
"A-1" attached hereto and by this reference made a part hereof shall be
substituted in lieu thereof and all references in the Lease to Schedule "A"
shall be deemed to refer to Schedule "A-1" hereto.
SECOND: Lessee agrees to accept the Relocation Premises on an "as is" basis
and that any and all repairs, improvements, installations or additions
necessary or required for Lessee to open for business and conduct its business
from the Relocation Premises shall be at the sole cost and expense of Lessee.
THIRD: Lessee agrees, that as soon as possible after full execution of this
Amendment, Lessee, on behalf of Lessor at Lessee's expense, shall proceed to
cause building plans and specifications to be made, including but not limited
to, where and to the extent Lessee deems appropriate, reworking electrical and
plumbing outlets, repairing and repainting the interior walls, modifying the
present entrances, modifying the interior lighting, modifying the show windows
and storefront, modifying any existing ceiling to Lessee's standard
specifications, and providing for heating, cooling and ventilation to Lessee's
standard requirements and Lessee hereby further agrees to make application for
all necessary permits within sixty (60) days from the date hereof. After
completion of said building plans and specifications and the obtaining of the
necessary contractors' bids, Lessee, on behalf of Lessor at Lessee's expense,
shall supervise and prosecute to completion, in conformance with said building
plans and specifications, said building, remodeling and modernization work.
<PAGE> 2
Lessee understands that it shall also be required to install (a) all
interior partitions and curtain walls within the Relocation Premises; (b) all
electrical work involved in actually hooking up fixtures; (c) internal
communication system and alarm systems; (d) store fixtures and furnishings; (e)
show window display and platforms and window backs; (f) all interior finish in
show windows; (g) Lessee's signs, both interior and exterior; and (h) all
finish painting and floor coverings.
All of Lessee's Improvements described in this Paragraph THIRD shall
be of good quality materials, installed in a professional workmanlike condition
and shall be comparable to and consistent with the latest Super Trak retail
store prototype.
FOURTH: Effective as of the earlier to occur of (i) the one hundred
twenty-first (121st) day following the date of this Amendment or (ii) the date
Lessee opens for business in the Relocation Premises (the "Effective Date") the
following provisions shall be in full force and effect:
1. The Former Premises defined and referred to on the top portion of
page 1 of the Lease as Fair City Mall Shopping Center, Fairfax,
Virginia, Store No. 26-28, containing approximately 5,210 square feet,
irregular, shall be deemed to refer, and shall be changed, to:
Picket Shopping Center
Store #15A, approximately 40' x 130', containing
approximately 5,200 square feet
9404-A Main Street
Fairfax, Virginia 22310
2. From and after the Effective Date, for the purposes of the Lease
and all provisions thereof, including but not limited to, those
provisions related to the computation of Lessee's Minimum Fixed Rent,
Lessee's contribution toward Real Estate Taxes, and Lessee's minimum
contribution and pro-rata share of Shopping Center's Common Areas
Operating Cost, the square footage contained within the Relocation
Premises shall be 5,200 square feet.
3. Paragraph 3 of Article I of the Lease shall be deleted in its
entirety and replaced by the following:
The term of this Lease shall, except as hereinafter provided,
end at midnight on the last day of the one hundred twentieth
(120th) full calendar month following the date of this
Amendment unless that date falls within the months of October,
November or December, in which event the term shall end on the
next succeeding January 31st.
4. Paragraphs 1(a) and 1(b) of Schedule "C" of the Lease shall be
deleted in their entirety and replaced by the following:
(a) It is agreed that commencing on the Effective Date and
continuing through the last day of the thirty-sixth (36th)
full calendar month following the Effective Date, Lessee shall
pay Lessor an annual minimum fixed rent of SEVENTY-EIGHT
THOUSAND AND 00/100 DOLLARS ($78,000.00), payable in monthly
installments of SIX THOUSAND FIVE HUNDRED AND 00/100 DOLLARS
($6,500.00), payable, in advance, on or before the first day
of each full calendar month.
(b) Commencing as of the first (1st) day of the calendar
month following the expiration of thirty-six (36) full
calendar months after the Effective Date and thereafter as of
each third (3rd) anniversary of said day throughout
2
<PAGE> 3
the lease term and option term, if any (said day and each third
(3rd) anniversary thereof being a "date of adjustment"), the
minimum fixed rent shall be increased by ten percent (10%) of the
minimum fixed rent payable in the immediately preceding twelve
(12) month period.
5. Lessee's contribution toward real estate taxes on the Relocation
Premises set forth in Paragraph 3 of Schedule "C" of the Lease shall
be the sum of FIVE THOUSAND THREE HUNDRED FOUR AND 00/100 DOLLARS
($5,304.00) each lease year, payable in equal monthly installments of
FOUR HUNDRED FORTY-TWO AND 00/100 DOLLARS ($442.00). Lessee's
contribution toward real estate taxes on the Relocation Premises shall
be subject to further adjustment in accordance with Paragraph 3 of
Schedule "C" of the Lease.
6. Lessee's minimum contribution toward the shopping center's common
areas operating cost set forth in Paragraph 6(a) of Schedule "C" of
the Lease shall be the sum of FIVE THOUSAND SEVEN HUNDRED SEVENTY-TWO
AND 00/100 DOLLARS ($5,772.00) each lease year, payable in equal
monthly installments of FOUR HUNDRED EIGHTY-ONE AND 00/100 DOLLARS
($481.00). Lessee's minimum contribution toward shopping center's
common areas operating cost shall continue to be subject to adjustment
as set forth in Paragraph 6(d) of Schedule "C" of the Lease and Lessee
shall continue to be responsible for paying Lessee's proportionate
share of excess costs or increases above Lessee's minimum contribution
in accordance with Paragraph 6(d) of Schedule "C" of the Lease.
7. Paragraph 6(b) and paragraphs 6(d)(2) and 6(d)(2)(b) of Schedule
"C" of the Lease shall be deleted in their entirety.
8. Lessee's monthly management and administrative fee set forth in
Paragraph 6(c) of Schedule "C" of the Lease shall be ONE HUNDRED
THIRTY AND 00/100 DOLLARS ($130.00).
9. Paragraph 12(D) of Schedule "C" of the Lease shall be deleted in
its entirety and the following shall be substituted in lieu thereof:
(D) Merchants Association
In the event a Merchants Association is formed or a
promotional program established, Lessee agrees to contribute
to said Association or promotional program a sum equal to Ten
Cents ($.10) per square foot per annum, of the Premises.
FIFTH: Article XV of the Lease, which provides for Lessee's right to extend
the term of the Lease for one (1) additional consecutive period of five (5)
years, is hereby ratified and affirmed by the parties and shall continue in
full force and effect.
SIXTH: Lessee vacated the Former Premises as of July 5, 1993 and the parties
hereby agree that Lessee's obligations to pay Minimum Fixed Rent and other
charges under the Lease for the Former Premises shall cease from July 6, 1993.
SEVENTH: The parties acknowledge and agree that in the event the Effective
Date occurs on a day other than the first calendar day of a month, Lessee's
minimum fixed rent, Lessee's contribution toward real estate taxes, Lessee's
minimum contribution and pro-rata share of shopping center's common area
operating costs and Lessee's management and administrative fee shall be subject
to appropriate proration.
EIGHTH: Lessor agrees that in consideration of the Lessee's agreeing to accept
the Relocation Premises in an "as is" condition
3
<PAGE> 4
and Lessee's agreeing to perform all Lessee Improvements required under
Paragraph THIRD of this Amendment and provided Lessee (a) has completed said
Lessee Improvements in accordance with the terms of Paragraph THIRD of this
Amendment; (b) has provided Lessor with reasonably appropriate affidavits, lien
waivers and the like showing that liens and encumbrances effected by Lessee's
Improvements have been released; (c) has obtained a certificate of occupancy or
non-residential use permit for the Relocation Premises and furnished a copy of
the same to Lessor; (d) has opened its store for business from the Relocation
Premises in accordance with the terms of this Amendment; and (e) has performed
all of its obligations under the provisions of this Amendment required of it to
be performed and is not then in default of the Lease beyond any applicable cure
period, then Lessor shall provide Super Trak Corporation with a credit in the
amount of SIXTY-TWO THOUSAND FOUR HUNDRED AND 00/100 DOLLARS ($62,400.00), said
amount to be credited to the rental account of Super Trak Corporation for the
Relocation Premises by amortizing the same, dollar for dollar, only out of
those payments of minimum fixed rent becoming due from Lessee under the terms
of the Lease after the date Lessee has satisfied the conditions set forth in
(a) through (e) of this Paragraph SEVENTH.
NINTH: Lessor and Lessee hereby acknowledge and agree that, as of the
Effective Date, all references to "Premises", "Demised Premises" or "Store #26"
in the Lease (including Exhibits thereto) shall be deemed to refer to and are
hereby changed to Store #15A located in Pickett Shopping Center.
TENTH: Except as modified by this Amendment of Lease, the Lease shall continue
in full force and effect in accordance with the terms thereof. The terms and
provisions of the Lease are and shall remain in full force and effect, with the
exception that all of the terms and provisions of the Lease which are
inconsistent with the terms of this Amendment shall automatically be modified
and amended to conform to the terms hereof. The parties hereto agree that this
Amendment embodies the entire agreement and understanding of the parties hereto
in respect to the subject matter contained herein and supersedes any and all
prior agreements and understandings between the parties with respect to such
matters.
ELEVENTH: All the rights and obligations of the parties under this Amendment
of Lease shall bind and inure to the benefit of their respective heirs,
personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed on the date first above written.
<TABLE>
<S> <C>
WITNESS: LESSOR:
COMBINED PROPERTIES
LIMITED PARTNERSHIP
THOMAS B. MCKEE BY: RONALD S. HAFT
- - ----------------------------- ----------------------------
Ronald S. Haft
General Partner
ATTEST: LESSEE:
SUPER TRAK CORPORATION
DENNIS WEISS BY: R. KEITH GREEN
- - ----------------------------- ----------------------------
(corporate seal) ITS: PRESIDENT
---------------------------
</TABLE>
4
<PAGE> 5
SCHEDULE A-1
Attached to and forming a part of that certain Indenture of Lease and
Memorandum of Lease executed under date of May 18, 1990 by and between Combined
Properties Limited Partnership, a Maryland limited partnership as Lessor, and
Super Trak Corporation as Lessee
DESCRIPTION OF PROPERTY
1. LESSOR'S PROPERTY. The demised premises are a portion of Lessor's
entire property, situated in the City of Fairfax, County of Fairfax, State of
Virginia, and now commonly known as Store #15A, Pickett Shopping Center. Such
property, herein referred to as "Lessor's Property", means substantially the
entire property within the outer property limits shown on the Plot Plan
attached and made a part hereof on Page - of -.
2. BUILDING. Lessor's Property provides a site for a store building
in the location designated "Super Trak" on the said Plot Plan attached. Such
building is now thereon, pursuant to Schedule B hereof by Lessor for Lessee,
containing 5,200 square feet and having dimensions approximately 40' x 130'.
Said building site, building, improvements, and appurtenances, and fixtures and
equipment owned by the Lessor, now or hereafter located thereon are
collectively referred to in this Lease as the "premises" or "demised premises."
3. PARKING. Lessee, its agents, employees, patrons and invitees, in
common with Lessor and all other tenants of portion of Lessor's Property and
their respective agents, employees, patrons, and invitees shall have and are
hereby granted during the entire term of this Lease and any extension thereof,
the free, uninterrupted, and non-exclusive use of the sidewalks, malls,
roadways, parking area, and all other common areas, which use by all users
shall be for the purposes of ingress, egress, service, utilities, and parking.
It is specifically understood and agreed that Lessee shall have no obligation
whatsoever in connection with the ownership, maintenance, or management of the
malls, roadways, parking area, or other common areas involved, and that Lessor
shall manage, operate, and maintain all such common areas, or cause the same to
be done on its behalf, at no additional cost to Lessee except as subject to
Article XIX of the Lease, and Schedule C.
4. PLOT PLAN. SEE SCHEDULE C, PARAGRAPH B.
5. CONVENANTS. All of the covenants of the Lessor contained in this
Lease shall be covenants running with the land pursuant to applicable law. It
is expressly agreed that each covenant to do or refrain from doing some act on
the Lessor's Property or any part thereof (a) is for the benefit of the demised
premises and each person having any leasehold interest therein derived through
the Leases, and (b) shall be binding upon each successive owner, during his
ownership, of any portion of the land affected thereby and each person having
any interest therein derived through any owner of the land affected hereby.
Page 1 of 2
<PAGE> 6
[PICKETT SHOPPING CENTER SCHEDULE "A-1"]
Page 2 of 2
<PAGE> 1
AMENDMENT OF LEASE
THIS AMENDMENT OF LEASE (hereinafter "Amendment") is made as of this
13th day of September, 1993, by and between Combined Properties Limited
Partnership, successor-in-interest to Maryland City Plaza, Inc. (hereinafter
"Landlord") and Super Trak Corporation, successor-in-interest to Trak Auto
Corporation (hereinafter "Tenant").
WHEREAS, by Lease Agreement dated May 26, 1981 (hereinafter referred
to as "Lease"), Landlord leased to Tenant certain premises in the Maryland City
Plaza Shopping Center (hereinafter "Shopping Center"), located in Laurel,
Maryland, known as Store No. 25 and having an address of 3451 Fort Meade Road,
Laurel, Maryland 20707 (hereinafter "Premises"), the Premises more
particularly described in the Lease, upon the terms, conditions, covenants and
agreements contained in the Lease; and
WHEREAS, the Landlord and Tenant have agreed to relocate the Premises
to Store No. 3 in the Maryland City Plaza Shopping Center also known as 3409
Fort Meade Road (the "Relocation Premises") in accordance with the terms and
conditions of the Lease and this Amendment; and
WHEREAS, the parties desire to amend the Lease as set forth herein.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto intending to be
legally bound, hereby agree that the Lease is hereby amended, effective as of
the date hereof, as follows:
FIRST: It is agreed that the Relocation Premises shall be located in
the area cross-hatched in "red" on Exhibit "A-1" hereto and the parties hereto
covenant and agree as of the Effective Date (hereinafter defined) that all
provisions of the Lease which refer to the Premises and all provisions in this
Amendment of Lease referring to the "Relocation Premises" shall be deemed to
refer to the area cross-hatched in "red" on Exhibit "A-1" hereto and that as of
said date, Exhibit "A" of the Lease shall be deleted in its entirety and
Exhibit "A-1" attached hereto and by this reference made a part hereof shall be
substituted in lieu thereof and all references in the Lease to Exhibit "A"
shall be deemed to refer to Exhibit "A-1" hereto.
SECOND: From and after the Effective Date (hereinafter defined), for
the purposes of the Lease and all provisions thereof, including but not limited
to, those provisions related to the computation of Tenant's Minimum Guaranteed
Rent, Tenant's contribution toward Real Estate Taxes, and Tenant's Common Area
Minimum Contribution and pro-rata share of Shopping Center's Common Areas
Operating Cost, the square footage contained within the Premises shall be 8,800
square feet.
THIRD: Effective as of the earlier to occur of (i) the one hundred
twenty-first (121st) day following the date of this Amendment or (ii) the date
Tenant opens for business in the Relocation Premises (the "Effective Date") the
following provisions shall be in full force and effect:
1. The Premises defined and referred to in Section 2 of the Lease as
Maryland City Plaza Shopping Center, Store No. 25, approximately 50' x 150',
approximately 7,500 square feet shall be deemed to refer, and shall be changed,
to:
Premises: MARYLAND CITY PLAZA SHOPPING CENTER
Store No. 3, approximately 8,800 square feet
2. The first and second paragraphs of Section 3 of the Lease shall be
deleted in their entirety and replaced by the following:
The term of this Lease shall, except as hereinafter
provided, end at midnight on the last day of the one
hundred twentieth (120th) full calendar month
following the Effective Date unless that date falls
within the months of October, November or December,
in which event the term shall end on the next
succeeding January 31st.
<PAGE> 2
3. Section 6 of the Lease shall be deleted in its entirety and
replaced by the following:
6. MINIMUM GUARANTEED RENT.
It is agreed that commencing on the Effective Date
and continuing through the last day of the thirty
sixth (36th) full calendar month following the
Effective Date, Tenant shall pay Landlord an annual
Minimum Guaranteed Rent of EIGHTY FIVE THOUSAND EIGHT
HUNDRED AND 00/100 DOLLARS ($85,800.00), payable in
monthly installments of SEVEN THOUSAND ONE HUNDRED
FIFTY AND 00/100 DOLLARS ($7,150.00), payable, in
advance, on or before the first day of each full
calendar month.
Commencing as of the first (1st) day of the calendar
month following the expiration of thirty-six (36)
full calendar months after the Effective Date and
thereafter as of each third (3rd) anniversary of said
day throughout the lease term and option term(s), if
any (said day and each third (3rd) anniversary
thereof being a "date of adjustment"), the Minimum
Guaranteed Rent shall be increased by ten percent
(10%) of the Minimum Guaranteed Rent payable in the
immediately preceding twelve (12) month period.
4. Tenant's minimum contribution toward the shopping center's common
areas operating cost set forth in Section 7 of the Lease shall be the sum of
NINE THOUSAND SIX HUNDRED EIGHTY AND 00/100 DOLLARS ($9,680.00) each lease
year, payable in equal monthly installments of EIGHT HUNDRED SIX AND 67/100
DOLLARS ($806.67). Tenant's minimum contribution toward shopping center's
common areas operating cost shall continue to be subject to adjustment as set
forth in Section 7(c) of the Lease and Tenant shall continue to be responsible
for paying Tenant's proportionate share of excess costs or increases above
Tenant's minimum contribution in accordance with Section 7(c) of the Lease.
5. Tenant's contribution toward real estate taxes on the Premises set
forth in Section 8 of the Lease shall be the sum of FOUR THOUSAND FOUR HUNDRED
EIGHTY EIGHT AND 00/100 DOLLARS ($4,488.00) each lease year, payable in equal
monthly installments of THREE HUNDRED SEVENTY FOUR AND 00/100 DOLLARS
($374.00). Tenant's contribution toward real estate taxes on the Premises
shall be subject to further adjustment in accordance with Section 8 of the
Lease.
6. The following provision shall be added to the Lease as a new
Section 62.
62. OPTION.
The Tenant shall have the option to renew this Lease
for one (1) additional five (5) year period under the
same terms and conditions called for herein except
that during the option term Tenant shall pay to
Landlord annual Minimum Guaranteed Rent in accordance
with Section 6 hereof, as amended.
Said option to be exercised at least six (6) months
prior to the expiration of the original term by
written notice sent certified or registered mail to
Landlord.
FOURTH: The parties acknowledge and agree that in the event the
Effective Date occurs on a day other than the first calendar day of a month,
Tenant's Minimum Guaranteed Rent, Tenant's minimum contribution and pro-rata
share of shopping center's common area operating costs and Tenant's
contribution toward real estate taxes, shall be subject to appropriate
proration.
FIFTH: Upon execution of this Amendment, Landlord shall deliver
possession of the Relocation Premises to Tenant. Tenant agrees to accept the
Relocation Premises on an "as is" basis and that any and all repairs,
improvements, installations or additions necessary or required for Tenant to
open for business and conduct its business from the Relocation Premises shall
be at the sole cost and expense of Tenant.
SIXTH: As of the day prior to the Effective Date, Tenant and any
subtenants, concessionaires or others shall quit, surrender and vacate Store
No. 25 in accordance with the provisions of Section 52 of the Lease. In the
event Tenant fails to vacate Store No. 25 as required by the provisions of this
Paragraph SIXTH, then as of the Effective Date through the date Tenant vacates
Store No. 25 Tenant's obligations to pay Minimum Guaranteed Rent and other
charges under the Lease for Store No. 25 shall
2
<PAGE> 3
resume and Tenant's obligations for rent and other charges for the Relocation
Premises shall continue to be governed by the provisions of Paragraph THIRD
hereinabove.
SEVENTH: Tenant agrees, that as soon as possible after full execution
of this Amendment, Tenant, on behalf of Landlord at Tenant's expense, shall
proceed to perform such construction in the Relocation Premises as may be
necessary to finish the Relocation Premises with an interior decor package
comparable to and consistent with the latest Super Trak retail store prototype,
the same to be constructed of good quality materials and installed in a
professional workmanlike condition.
EIGHTH: Landlord agrees that in consideration of the Tenant's
agreeing to accept the Relocation Premises in an "as is" condition and Tenant's
agreeing to perform all Tenant Improvements pursuant to Paragraph Seventh of
this Amendment and provided Tenant (a) has completed said Tenant Improvements
in accordance with the terms of Paragraph Seventh of this Amendment; (b) has
provided Landlord with reasonably appropriate affidavits, lien waivers and the
like showing that liens and encumbrances effected by Tenant's Improvements have
been released; (c) has obtained a certificate of occupancy or non-residential
use permit for the Relocation Premises and furnished a copy of the same to
Landlord; (d) has opened its store for business from the Relocation Premises in
accordance with the terms of this Amendment; and (e) has performed all of its
obligations under the provisions of this Amendment required of it to be
performed and is not then in default of the Lease beyond any applicable cure
period, then Landlord shall provide Super Trak Corporation with a credit in the
amount of ONE HUNDRED SIXTY ONE THOUSAND EIGHT HUNDRED TWENTY SEVEN AND 00/100
DOLLARS ($161,827.00), said amount to be credited to the rental account of
Super Trak Corporation for the Premises by amortizing the same, dollar for
dollar, only out of those payments of Minimum Guaranteed Rent becoming due from
Tenant under the terms of the Lease after the date Tenant has satisfied the
conditions set forth in (a) through (e) of this Paragraph EIGHTH.
NINTH: Landlord and Tenant hereby acknowledge and agree that all
references to "Premises" or "Store No. 25" in the Lease (including Exhibits
thereto) shall be deemed to refer to and are hereby changed to "Store No. 3".
TENTH: The terms and provisions of the Lease are and shall remain in
full force and effect, with the exception that all of the terms and provisions
of the Lease which are inconsistent with the terms of this Amendment shall
automatically be modified and amended to conform to the terms hereof. The
parties hereto agree that this Amendment embodies the entire agreement and
understanding of the parties hereto in respect to the subject matter contained
herein and supersedes any and all prior agreements and understandings between
the parties with respect to such matters.
ELEVENTH: All the rights and obligations of the parties under this
Amendment of Lease shall bind and inure to the benefit of their respective
heirs, personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed on the date first above written.
<TABLE>
<S> <C>
WITNESS: LANDLORD:
COMBINED PROPERTIES LIMITED
PARTNERSHIP
THOMAS B. MCKEE By: RONALD S. HAFT
- - ------------------------------ -----------------------------
Ronald S. Haft
General Partner
ATTEST: TENANT:
SUPER TRAK CORPORATION
DENNIS WEISS By: R. KEITH GREEN (Seal)
- - ------------------------------ -----------------------------
Its: PRESIDENT
----------------------------
</TABLE>
3
<PAGE> 4
[MARYLAND CITY PLAZA EXHIBIT "A-1"]
4
<PAGE> 1
SECOND AMENDMENT OF LEASE
THIS SECOND AMENDMENT OF LEASE ("Amendment") is made as of this 31st
day of March, 1994, by and between Combined Properties Limited Partnership,
successor-in-interest to Combined Properties Corporation (hereinafter
"Landlord") and Super Trak Corporation, successor-in- interest to Trak Auto
Corporation t/a Super Trak (hereinafter "Tenant").
WHEREAS, by indenture of Lease dated January 1, 1980, as amended by
Amendment of Lease dated December 11, 1992 ("First Amendment") (hereinafter
collectively referred to as "Lease"), Landlord leased to Tenant certain
premises therein more particularly described located in Store No. 15 in the
Oxon Hill Plaza Shopping Center, Oxon Hill, Maryland ("Premises"), upon terms
and conditions, covenants and agreements contained therein; and
WHEREAS, by First Amendment, Tenant expanded its business operation
into the rear portion of adjacent premises known as Store No. 16; and
WHEREAS, Tenant desires to further expand its business operation into
the remaining portion of Store No. 16 which contains approximately 3,000 square
feet; and
WHEREAS, Landlord is willing to lease said remaining portion of Store
No. 16 to Tenant; and
WHEREAS, the parties desire to amend the Lease as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto intending to be
legally bound, hereby agree that the Lease is hereby amended, effective as of
the date hereof, as follows:
FIRST: Landlord and Tenant hereby acknowledge and confirm that Tenant
is already in occupancy (as of the date hereof) of the premises shown on
Exhibit "A-1" of the Lease as Store No. 15 (containing approximately 10,357
square feet and hereinafter referred to in this Amendment as the "Original
Premises").
SECOND: For the purpose of this Amendment and the Lease, the parties
have further agreed that the Demised Premises shall hereinafter be deemed to
refer to the Original Premises and adjacent premises as shown on Exhibit "A-2"
attached hereto (containing approximately 3,000 square feet and hereinafter
referred to in this Amendment as the "Expansion Premises").
THIRD: The parties, having agreed to increase the size of the Demised
Premises from approximately 10,357 square feet to approximately 13,357 square
feet with irregular dimensions as shown on Exhibit "A-2" attached hereto,
hereby agree that for the purposes of the Lease and all provisions thereof,
including but not limited to, those provisions related to computation of
Tenant's minimum guaranteed rent, Tenant's contribution toward real estate
taxes, Tenant's contribution and pro-rata share of shopping center's common
areas operating cost and Tenant's share of the cost of the promotional program
(if and when the same has been established), the square footage contained
within the Demised Premises shall be 13,357 square feet as of the Effective
Date set forth in Paragraph Seventh hereinbelow.
1
<PAGE> 2
FOURTH: It is agreed that the Demised Premises shall be located in
the area cross-hatched on Exhibit "A-2" hereto and the parties hereto covenant
and agree that all provisions of the Lease which refer to the Demised Premises
shall be deemed to refer to the area cross- hatched in "red" on Exhibit "A-2"
hereto and that Exhibit "A-1" of the Lease shall be and is hereby deleted in
its entirety and shall be substituted with Exhibit "A-2" attached hereto and by
this reference made a part hereof and all references in the Lease to Exhibit
"A-1" shall be deemed to refer to Exhibit "A-2" attached hereto and all
references in the Lease to "Demised Premises" or "Premises" shall be deemed to
refer to the Original Premises and the Expansion Premises.
FIFTH: Tenant agrees to accept both the Original Premises and the
Expansion Premises on an "as is" basis and that any and all repairs,
improvements, installations or additions necessary or required for Tenant to
open for business and conduct its business from the Premises (consisting of the
Original Premises and the Expansion Premises in a unified store operation)
shall be at the sole cost and expense of Tenant.
SIXTH: Tenant agrees, that as soon as possible after full execution
of this Amendment, Tenant, on behalf of Landlord at Tenant's expense, shall
proceed to cause building plans and specifications to be made, including but
not limited to, where and to the extent Tenant deems appropriate, reworking
electrical and plumbing outlets, repairing and repainting the interior walls,
modifying the present entrances, modifying the interior lighting, modifying the
show windows and storefront, modifying any existing ceiling to Tenant's
standard specifications, and providing for heating, cooling and ventilation to
Tenant's standard requirements and Tenant hereby further agrees to make
application for all necessary permits within thirty (30) days from the date
hereof. After completion of said building plans and specifications and the
obtaining of the necessary contractors' bids, Tenant, on behalf of Landlord at
Tenant's expense, shall supervise and prosecute to completion, in conformance
with said building plans and specifications, said building, remodeling and
modernization work.
Tenant further agrees, as part of Tenant Improvements, to demolish the
existing demising walls separating the Original Premises from the Expansion
Premises and to perform such necessary work required to reconfigure the
acoustical lay-in ceiling and recessed fluorescent lighting fixtures into one
unified ceiling and lighting scheme. In addition, Tenant shall design and
construct a new unified storefront with one (1) set of double entrance doors
for the Premises. Tenant shall also consolidate the electrical service in the
Original Premises and the Expansion Premises and install floor covering in the
Original Premises and the Expansion Premises. Tenant understands that it shall
also be required to install (a) all interior partitions and curtain walls
within the Premises; (b) all electrical work involved in actually hooking up
fixtures; (c) internal communication system and alarm systems; (d) store
fixtures and furnishings; (e) show window display and platforms and window
backs; (f) all interior finish in show windows; (g) Tenant's signs, both
interior and exterior; and (h) all finish painting and floor coverings.
All of Tenant's Improvements described in this Paragraph Sixth shall
be of good quality materials, installed in a professional workmanlike condition
and shall be comparable to and consistent with the latest Super Trak retail
store prototype.
2
<PAGE> 3
SEVENTH: Effective as of the earlier to occur of (i) the one hundred
fifty-first (151st) day following the date Landlord delivers possession of the
Expansion Premises to Tenant or (ii) the date Tenant opens for business to the
public in the Expansion Premises (the "Effective Date") the following
provisions shall be in full force and effect:
1. The first and second paragraphs of Section 3 of the Lease
shall be deleted in their entirety and replaced by the following:
The term of this Lease shall, except as hereinafter provided,
end at midnight on January 31, 2004.
2. Section 6 of the Lease shall be deleted in its entirety and
replaced by the following:
6. MINIMUM GUARANTEED RENT:
In consideration of the demise and leasing of the
Demised Premises, for the period commencing on the Effective Date
through to December 31, 1999, Tenant covenants and agrees to pay to
the Landlord, Minimum Guaranteed Rent of ONE HUNDRED THIRTY THOUSAND
FOUR HUNDRED NINETY-SEVEN AND 89/100 DOLLARS ($130,497.89), each lease
year with no offsets whatsoever, to be paid in equal monthly payments
of TEN THOUSAND EIGHT HUNDRED SEVENTY-FOUR AND 82/100 DOLLARS
($10,874.82), on the first day of each month, in advance, at such
place as shall be designated by Landlord.
For the period commencing on January 1, 2000 through
to January 31, 2004, as set forth in subparagraph 1 above of this
Paragraph SEVENTH, Tenant covenants and agrees to pay to the Landlord
Minimum Guaranteed Rent of ONE HUNDRED FORTY THREE THOUSAND FIVE
HUNDRED FORTY-SEVEN AND 68/100 DOLLARS ($143,547.68), each lease year
with no offsets whatsoever, to be paid in equal monthly payments of
ELEVEN THOUSAND NINE HUNDRED SIXTY-TWO AND 31/100 DOLLARS
($11,962.31), on the first day of each month, in advance, at such
place as shall be designated by Landlord.
3. The first sentence of Section 7(a) of the Lease shall be
deleted in its entirety and replaced by the following:
Tenant agrees to pay to Landlord for each lease year during
the term hereof, in equal monthly installments at the same time as the
Minimum Guaranteed Rent (and pro-rata for any portion of a month), as
a contribution toward the Shopping Center's Common Areas Operating
Cost (hereinafter defined), the sum of SIXTEEN THOUSAND FOUR HUNDRED
TWENTY NINE AND 11/100 DOLLARS ($16,429.11) each lease year, with no
offsets, to be paid in equal monthly installments in the amount of ONE
THOUSAND THREE HUNDRED SIXTY-NINE AND 09/100 DOLLARS ($1,369.09),
(said sum computed at the rate of ONE AND 23/100 DOLLARS ($1.23) per
square foot of the Demised Premises).
4. The first and second sentences of Section 8 of the Lease shall
be deleted in their entirety and replaced by the following:
In addition to the rental set forth herein, Tenant agrees to
pay to the Landlord each lease year the sum of TEN THOUSAND FIVE
HUNDRED FIFTY-TWO AND 03/100 DOLLARS ($10,552.03) to be paid in equal
monthly installments in the amount of EIGHT HUNDRED SEVENTY-NINE AND
34/100 DOLLARS ($879.34), on the first day of each month, in advance,
along with Tenant's payment of rental. Said sum represents Tenant's
contribution toward real estate taxes on the Demised Premises, as per
Landlord's estimated real estate tax schedule for 1992.
3
<PAGE> 4
5. Section 9 of the Lease shall be and is hereby amended by
increasing the Minimum Basis of Sales amount, as set forth therein, to the sum
of FOUR MILLION THREE HUNDRED FORTY NINE THOUSAND NINE HUNDRED TWENTY-NINE AND
66/100 DOLLARS ($4,349,929.66), subject to adjustment in accordance with
increases in Minimum Guaranteed Rent.
6. Section 60 of the Lease shall be deleted in its entirety and
replaced by the following:
60. OPTIONS.
The Tenant shall be granted options to renew this
Lease for four (4) consecutive five (5) year periods followed by one
(1) consecutive two (2) year period under the same terms and
conditions called for herein except that the Minimum Guaranteed Rent,
as called for in Section 6 hereof, shall be at the following annual
amounts, payable in applicable monthly installments:
Annual Minimum
Option Period Guaranteed Rent
------------- ---------------
February 1, 2004 - January 31, 2009 $164,075.00
February 1, 2009 - January 31, 2014 $188,686.25
February 1, 2014 - January 31, 2019 $216,989.19
February 1, 2019 - January 31, 2024 $249,537.57
February 1, 2024 - January 31, 2026 $286,968.21
Said options to be exercised at least six (6) months prior to
the expiration of the original or option term then in effect, by
written notice sent certified or registered mail to Landlord,
provided, however, that in the event that Tenant fails to give such
notice of extension, Tenant shall not be deemed to have waived the
right to that extension or any extension thereafter until Landlord
gives Tenant written notice of Tenant's failure to exercise such right
of extension and affords Tenant a period of ten (10) days after
receipt of such notice to exericse that right of extension by giving
Landlord written notice thereof and Tenant fails to exercise that
right thereafter. It is expressly understood and agreed by the
parties hereto that in the event the Lease is assigned to any entity
unaffiliated with the tenant, or Dart Group Corp., then Tenant shall
be deemed to have waived its rights to an extension of the lease term
if Tenant fails to timely notify Landlord of its option exercise at
least six (6) months prior to the expiration of the original term or
option term then in effect notwithstanding Landlord's failure to
notify Tenant of Tenant's failure to timely exercise an extension
right; it being understood that Landlord shall only be required to
notify Tenant of Tenant's failure to do so if Tenant remains an
affiliate of Dart Group Corp., or Tenant.
EIGHTH: The parties acknowledge and agree that in the event the
Effective Date occurs on a day other than the first calendar day of a month,
Tenant's minimum guaranteed rent, Tenant's contribution and pro-rata share of
shopping center's common areas operating cost and Tenant's contribution toward
real estate taxes shall be subject to appropriate proration.
NINTH: Landlord agrees that in consideration of the Tenant's agreeing
to accept the Premises (Original Premises and Expansion Premises) in an "as is"
condition and Tenant's agreeing to perform all Tenant Improvements required
under Paragraph Sixth of this Amendment and provided Tenant (a) has completed
said Tenant Improvements in accordance with the terms of Paragraph Sixth of
this Amendment; (b) has provided Landlord with reasonably appropriate
affidavits, lien waivers and the like showing that liens and encumbrances
effected by Tenant's Improvements have been released; (c) has obtained a
certificate of occupancy or non-residential use permit for the Premises
(Original Premises and Expansion Premises) and furnished a copy of the same to
Landlord; (d) has opened its store for business from the Premises (both the
4
<PAGE> 5
Original Premises and the Expansion Premises as one unified operation) in
accordance with the terms of this Amendment; and (e) has performed all of its
obligations under the provisions of this Amendment required of it to be
performed and is not then in default of the Lease beyond any applicable cure
period, then Landlord shall provide Super Trak Corporation with a credit in the
amount of THIRTY-SIX THOUSAND AND 00/100 DOLLARS ($36,000.00), said amount to
be credited to the rental account of Super Trak Corporation for the Premises by
amortizing the same, dollar for dollar, only out of those payments of minimum
guaranteed rent becoming due from Tenant under the terms of the Lease after the
date Tenant has satisfied the conditions set forth in (a) through (e) of this
Paragraph Ninth.
TENTH: Except as modified by this Amendment of Lease, the Lease shall
continue in full force and effect in accordance with the terms thereof.
ELEVENTH: All the rights and obligations of the parties under this
Amendment of Lease shall bind and inure to the benefit of their respective
heirs, personal representatives, successors and assigns.
TWELFTH: Landlord and Tenant hereby acknowledge and agree that the
square footage of the Expansion Premises may be different than as stated herein
and is subject to confirmation by Landlord and Tenant jointly. Tenant's
Minimum Guaranteed Rent, Tenant's contribution and pro- rata share of Shopping
Center's Common Areas Operating Cost and Tenant's contribution toward Real
Estate Taxes shall be adjusted accordingly based upon the actual square footage
of the Premises (Original Premises and Expansion Premises). Notwithstanding
anything contained in the foregoing to the contrary, the parties hereto further
agree that any increase in Tenant's rental and other charges, resulting from an
adjustment in the square footage of the Premises (Original Premises and
Expansion Premises) from the amounts set forth in Paragraph THIRD hereinabove,
shall not exceed six percent (6%).
THIRTEENTH: The parties hereto hereby acknowledge and agree that Dart
Group Corporation ("Dart Group")is the successor-in-interest to Dart Drug
Corporation, guarantor of the Lease Agreement by and between the parties dated
January 1, 1980. Notwithstanding anything to the contrary set forth
hereinabove, Landlord, Tenant, Dart Group and Trak Auto Corporation ("Trak
Auto") hereby agree that the liability of Dart Group under the Lease shall be
limited to the rental and other amounts set forth in the unamended Lease
provided, however, that Trak Auto guarantees the performance of Tenant and the
payment of all rent and charges under the Lease, as amended, in excess of the
liabilities guaranteed by Dart Group.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed on the date first above written.
WITNESS: LANDLORD:
COMBINED PROPERTIES LIMITED
PARTNERSHIP
BY: RONALD S. HAFT
- - ---------------------------------- -----------------------------
Ronald S. Haft
General Partner
[SIGNATURES CONTINUE ON THE NEXT PAGE]
5
<PAGE> 6
ATTEST: TENANT:
SUPER TRAK CORPORATION
------------------------------ BY: /s/ R. KEITH GREEN
------------------------
(corporate seal) ITS: President
-----------------------
ATTEST: GUARANTOR:
DART GROUP CORPORATION
THOMAS B. MCKEE
------------------------------ BY: RONALD S. HAFT
------------------------
Ronald S. Haft
(corporate seal) ITS: President
------------------------
ATTEST: ADDITIONAL GUARANTOR:
TRAK AUTO CORPORATION
------------------------------ BY: /s/ R. KEITH GREEN
------------------------
(corporate seal) ITS: PRESIDENT
-------------------------
6
<PAGE> 7
EXHIBIT A-2
[OXON HILL PLAZA MAP -- SEE EDGAR APPENDIX]
<PAGE> 1
AMENDMENT OF LEASE
THIS AMENDMENT OF LEASE (hereinafter "Amendment") is made as of this
22nd day of November, 1993, by and between Combined Properties Limited
Partnership, successor-in-interest to Combined Properties Virginia Plaza
Limited Partnership (hereinafter "Lessor") and Super Trak Corporation,
successor-in-interest to Trak Auto East Corporation (hereinafter "Lessee").
WHEREAS, by Lease Agreement dated April 24, 1984 (hereinafter referred
to as "Lease"), Lessor leased to Lessee certain premises in the Plaza at
Landmark Shopping Center (hereinafter "Shopping Center"), located in
Alexandria, Virginia, known as Store No. 18B and having an address of 6240-B
Little River Turnpike, Alexandria, Virginia 22312 (hereinafter "Premises"),
the Premises more particularly described in the Lease, upon the terms,
conditions, covenants and agreements contained in the Lease; and
WHEREAS, the Lessor and Lessee have agreed to relocate the Premises to
Store No. 37 in the Plaza at Landmark Shopping Center also known as 6198-F
Little River Turnpike (the "Relocation Premises") in accordance with the terms
and conditions of the Lease and this Amendment; and
WHEREAS, the parties desire to amend the Lease as set forth herein.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto intending to be
legally bound, hereby agree that the Lease is hereby amended, effective as of
the date hereof, as follows:
FIRST: It is agreed that the Relocation Premises shall be located in
the area cross-hatched in "red" on Schedule "A-1" hereto and the parties hereto
covenant and agree as of the Effective Date (hereinafter defined) that all
provisions of the Lease which refer to the Premises and all provisions in this
Amendment of Lease referring to the "Relocation Premises" shall be deemed to
refer to the area cross-hatched in "red" on Schedule "A-1" hereto and that as
of said date, Schedule "A" of the Lease shall be deleted in its entirety and
Schedule "A-1" attached hereto and by this reference made a part hereof shall
be substituted in lieu thereof and all references in the Lease to Schedule "A"
shall be deemed to refer to Schedule "A-1" hereto.
SECOND: From and after the Effective Date (hereinafter defined), for
the purposes of the Lease and all provisions thereof, including but not limited
to, those provisions related to the computation of Lessee's Minimum Guaranteed
Rent, Lessee's contribution toward Real Estate Taxes, and Lessee's Common Area
Minimum Contribution and pro-rata share of Shopping Center's Common Areas
Operating Cost, the square footage contained within the Premises shall be 7,958
square feet.
THIRD: Effective as of the earlier to occur of (i) the one hundred
twenty-first (121st) day following the date Lessor delivers possession of the
Relocation Premises to Lessee or (ii) the date Lessee opens for business in the
Relocation Premises (the "Effective Date") the following provisions shall be in
full force and effect:
1. The Premises described and referred to on the top portion of page
1 of the Lease as containing approximately 5,440 square feet and having
dimensions of 34' frontage and 160' depth, situated in Fairfax County,
Virginia, known as 6240 Little River Turnpike, Alexandria, Virginia 22312
shall be deemed to refer, and shall be changed, to:
Premises: Plaza at Landmark Shopping Center
Store No. 37, containing approximately 7,958
square feet and having dimensions of 46'
frontage and 173' depth, situated in Fairfax
County, Virginia, known as 6198-F Little River
Turnpike, Alexandria, Virginia 22312
2. Paragraph 3 of Article I of the Lease shall be deleted in its
entirety and replaced by the following:
The term of this Lease shall, except as hereinafter
provided, end at midnight on the last day of the one
hundred twentieth (120th) full calendar month
following the Effective Date unless that date falls
within the months of October, November or December,
in which event the term shall end on the next
succeeding January 31st.
<PAGE> 2
3. Paragraph 1(a), 1(b) and 1(c) of Schedule "C" of the Lease shall
be deleted in their entirety and replaced by the following:
(a) It is agreed that commencing on the Effective
Date and continuing through the last day of
the twelfth (12th) full calendar month
following the Effective Date, Lessee shall
pay Lessor an annual minimum fixed rent of
ONE HUNDRED THIRTY SEVEN THOUSAND TWO HUNDRED
SEVENTY FIVE AND 50/100 DOLLARS
($137,275.50), payable in monthly
installments of ELEVEN THOUSAND FOUR HUNDRED
THIRTY NINE AND 63/100 DOLLARS ($11,439.63),
payable, in advance, on or before the first
day of each full calendar month.
(b) Commencing as of the first (1st) day of the
calendar month following the expiration of
twelve (12) full calendar months after the
Effective Date and thereafter as of each
fifth (5th) anniversary of said day
throughout the lease term and option term(s),
if any (said day and each fifth (5th)
anniversary thereof being a "date of
adjustment"), the minimum fixed rent shall be
increased by fifteen percent (15%) of the
minimum fixed rent payable in the immediately
preceding twelve (12) month period.
4. Lessee's minimum contribution toward the shopping center's common
areas operating cost set forth in Paragraph 9 of Schedule "C" of the Lease
shall be the sum of SEVENTEEN THOUSAND FIVE HUNDRED SEVEN AND 60/100 DOLLARS
($17,507.60) each lease year, payable in equal monthly installments of ONE
THOUSAND FOUR HUNDRED FIFTY EIGHT AND 97/100 DOLLARS ($1,458.97). Lessee's
minimum contribution toward shopping center's common areas operating cost shall
continue to be subject to adjustment as set forth in Paragraph 9(d) of Schedule
"C" of the Lease and Lessee shall continue to be responsible for paying
Lessee's proportionate share of excess costs or increases above Lessee's
minimum contribution in accordance with Paragraph 9(d) of Schedule "C" of the
Lease.
5. Lessee's contribution toward real estate taxes on the Premises set
forth in Paragraph 4 of Schedule "C" of the Lease shall be the sum of SIX
THOUSAND SIX HUNDRED FIVE AND 14/100 DOLLARS ($6,605.14) each lease year,
payable in equal monthly installments of FIVE HUNDRED FIFTY AND 43/100 DOLLARS
($550.43). Lessee's contribution toward real estate taxes on the Premises
shall be subject to further adjustment in accordance with Paragraph 4 of
Schedule "C" of the Lease.
6. Lessee's monthly management and administrative fee set forth
in Paragraph 9(c) of Schedule "C" of the Lease shall be the sum of TWO HUNDRED
TWENTY EIGHT AND 79/100 DOLLARS ($228.79), subject to adjustment in accordance
with the provisions of Paragraph 9(a) of Schedule "C" of the Lease.
7. Paragraph 7 of Article II of the Lease is hereby deleted in
its entirety and replaced by the following:
7. Payments of rental hereunder are to be made
to Combined Properties Limited Partnership c/o Combined
Properties Incorporated, P.O. Box 2753, Merrifield, Virginia
22116 or to such other person or corporation and at such other
place as shall be designated in writing by notice given as
provided in Article XX of this Lease on the first day of each
month during the term.
8. The following provision shall be added to the Lease as a new
Article XV.
ARTICLE XV: EXTENSION
The Lessee shall have the option to extend the term
of this Lease for two (2) additional five (5) year
periods under the same terms and conditions called
for herein except that during the option term(s), if
any, Lessee shall pay to Lessor annual minimum fixed
rent in accordance with Article II hereof.
Said option to be exercised at least six (6) months
prior to the expiration date hereof by written notice
sent certified or registered mail to Lessor,
provided, however, that in the event that Lessee
fails to given such notice
2
<PAGE> 3
of extension, Lessee shall not be deemed to have
waived the right to that extension or any extension
thereafter until Lessor gives Lessee written notice
of Lessee's failure to exercise such right of
extension and affords Lessee a period of ten (10)
days after receipt of such notice to exercise that
right of extension by giving Lessor written notice
thereof.
9. The following provision shall be added to the Lease as a new
subparagraph "(D)" of Paragraph 15 of Schedule "C" to the Lease.
(D) Notwithstanding anything to the contrary contained in
this Lease Agreement (including Exhibits), Lessor shall have the
absolute unilateral right to terminate this Lease Agreement effective
at any time on or after December 31, 2007 upon giving at least one (1)
year prior written notice.
FOURTH: The parties acknowledge and agree that in the event the
Effective Date occurs on a day other than the first calendar day of a month,
Lessee's minimum fixed rent, Lessee's minimum contribution and pro-rata share
of shopping center's common areas operating cost, Lessee's contribution toward
real estate taxes, and Lessee's management and administrative fee shall be
subject to appropriate proration.
FIFTH: Lessee agrees to accept the Relocation Premises on an "as is"
basis and that any and all repairs, improvements, installations or additions
necessary or required for Lessee to open for business and conduct its business
from the Relocation Premises shall be at the sole cost and expense of Lessee.
SIXTH: As of the day prior to the Effective Date, Lessee and any
subtenants, concessionaires or others shall quit, surrender and vacate Store
No. 18B in accordance with the provisions of Paragraph 8 of Article VIII of the
Lease. In the event Lessee fails to vacate Store No. 18B as required by the
provisions of this Paragraph SIXTH, then as of the Effective Date through the
date Lessee vacates Store No. 18B Lessee's obligations to pay minimum fixed
rent and other charges under the Lease for Store No. 18B shall resume and
Lessee's obligations for rent and other charges for the Relocation Premises
shall continue to be governed by the provisions of Paragraph THIRD hereinabove.
SEVENTH: Lessee agrees, that upon Lessor's delivery of possession of
the Relocation Premises to Lessee, Lessee, on behalf of Lessor at Lessee's
expense, shall proceed to perform such construction in the Relocation Premises
as may be necessary to finish the Relocation Premises with an interior decor
package comparable to and consistent with the latest Super Trak retail store
prototype, the same to be constructed of good quality materials and installed
in a professional workmanlike condition.
EIGHTH: Lessor agrees that in consideration of the Lessee's agreeing
to accept the Relocation Premises in an "as is" condition and Lessee's agreeing
to perform all Lessee Improvements pursuant to Paragraph Seventh of this
Amendment and provided Lessee (a) has completed said Lessee Improvements in
accordance with the terms of Paragraph Seventh of this Amendment; (b) has
provided Lessor with reasonably appropriate affidavits, lien waivers and the
like showing that liens and encumbrances effected by Lessee's Improvements have
been released; (c) has obtained a certificate of occupancy or non-residential
use permit for the Relocation Premises and furnished a copy of the same to
Lessor; (d) has opened its store for business from the Relocation Premises in
accordance with the terms of this Amendment; and (e) has performed all of its
obligations under the provisions of this Amendment required of it to be
performed and is not then in default of the Lease beyond any applicable cure
period, then Lessor shall provide Super Trak Corporation with a credit in the
amount of NINETY FIVE THOUSAND FOUR HUNDRED NINETY SIX AND 00/100 DOLLARS
($95,496.00), said amount to be credited to the rental account of Super Trak
Corporation for the Premises by amortizing the same, dollar for dollar, only
out of those payments of minimum fixed rent becoming due from Lessee under the
terms of the Lease after the date Lessee has satisfied the conditions set forth
in (a) through (e) of this Paragraph EIGHTH.
NINTH: Lessee understands and agrees that the Relocation Premises is
presently occupied by an existing tenant. Accordingly, immediately following
full execution of this Amendment of Lease by the parties hereto, Lessor agrees
to use best efforts to negotiate or obtain a termination of the existing
tenant's right to occupy the Relocation Premises as soon as possible. After
said existing tenant's rights to occupy the Relocation Premises have been
terminated, Lessor shall make the same available to the Lessee as called for
herein. In the event Lessor is unable to obtain possession of the Relocation
Premises within twenty-four (24) months from the date of execution of this
Amendment of Lease, either party shall, at any time following said twenty-four
(24) month period, have the right to declare this Amendment of Lease null and
void, upon written notice to the other without any liability whatsoever and
thereafter this Amendment of Lease shall have no further force and effect.
3
<PAGE> 4
TENTH: Lessor and Lessee hereby acknowledge and agree that all
references to "Premises" or "Store No. 18B" in the Lease (including Exhibits
thereto) shall be deemed to refer to and are hereby changed to "Store No. 37".
ELEVENTH: The terms and provisions of the Lease are and shall remain
in full force and effect, with the exception that all of the terms and
provisions of the Lease which are inconsistent with the terms of this Amendment
shall automatically be modified and amended to conform to the terms hereof.
The parties hereto agree that this Amendment embodies the entire agreement and
understanding of the parties hereto in respect to the subject matter contained
herein and supersedes any and all prior agreements and understandings between
the parties with respect to such matters.
TWELFTH: All the rights and obligations of the parties under this
Amendment of Lease shall bind and inure to the benefit of their respective
heirs, personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed on the date first above written.
WITNESS: LESSOR:
COMBINED PROPERTIES LIMITED
PARTNERSHIP
THOMAS B. MCKEE By: RONALD S. HAFT
- - -------------------------------- ---------------------------- (Seal)
Ronald S. Haft
General Partner
ATTEST: LESSEE:
SUPER TRAK CORPORATION
By: /S/ R. KEITH GREEN
- - --------------------------------- ------------------------------
Its: President
-----------------------------
4
<PAGE> 5
SCHEDULE A-1
Attached to and forming a part of that certain Indenture of Lease and
Memorandum of Lease executed under date of April 24, 1984 by and between
COMBINED PROPERTIES LIMITED PARTNERSHIP, Lessor, and Super Trak Corporation, as
Lessee,
DESCRIPTION OF PROPERTY
1. LESSOR'S PROPERTY. The demised premises are a portion of Lessor's
entire property, situated in the County of Fairfax, State of Virginia, and now
commonly known as 6198-F Little River Turnpike, Alexandria, Virginia 22312.
Such property, herein referred to as "Lessor's Property", means substantially
the entire property within the outer property limits shown on the Plot Plan
initialed by the parties hereto, dated April 19, 1984, attached hereto and made
a part hereof.
2. BUILDING. Lessor's Property provides a site for a store building
in the location designated "Trak Auto" on the said Plot Plan attached. Such
building is now thereon, or is to be erected pursuant to Schedule ?8 hereof by
Lessor for Lessee, containing 7,958 square feet and having dimensions of
approximately 46' x 173'. Said building site, building, improvements, and
appurtenances, and fixtures and equipment owned by the Lessor, now hereafter
located thereon are collectively referred to in this Lease as the "premises" or
"demised premises."
3. PARKING. Lessee, its agents, employees, patrons and invitees, in
common with Lessor and all other tenants of portions of Lessor's Property and
their respective agents, employees, patrons, and invitees shall have and are
hereby granted, during the entire term of this Lease and any extension thereof,
the free, uninterrupted, and non-exclusive use of the sidewalks, malls,
roadways, parking areas, and all other common areas, which use by all users
shall be for the purposes of ingress, egress, service, utilities, and parking,
and which parking area shall consist of not less than 900 automobile spaces.
It is specifically understood and agreed that Lessee shall have no obligation
whatsoever in connection with the ownership, maintenance, or management of the
malls, roadways, parking area, or other common areas involved, and that Lessor
shall manage, operate, and maintain all such common areas, or cause the same to
be done on its behalf, at no additional cost to Lessee, subject to Article XIX
of the Lease.
4. PLOT PLAN. SEE SCHEDULE C, PARAGRAPH 11.
5. COVENANTS. All of the covenants of the Lessor contained in this
Lease shall be covenants running with the land pursuant to applicable law. It
is expressly agreed that each covenant to do or refrain from doing some act on
the Lessor's Property or any part thereof (a) is for the benefit of the demised
premises and each person having any leasehold interest therein derived through
the Lessee, and (b) shall be binding upon each successive owner, during his
ownership, of any portion of the land affected thereby and each person having
any interest therein derived through any owner of the land affected hereby.
-1-
<PAGE> 6
[PLAZA AT LANDMARK, ALEXANDRIA, VA MAP -- SEE EDGAR APPENDIX]
<PAGE> 1
THIRD AMENDMENT OF LEASE
THIS THIRD AMENDMENT OF LEASE ("Amendment") is made as of this 31st
day of March, 1994, by and between Combined Properties/Montebello Limited
Partnership, a District of Columbia limited partnership, successor-in-interest
to Montebello Mart Associates, a California limited partnership (hereinafter
"Lessor") and Super Trak Corporation, successor-in-interest to Trak Auto West,
Inc. t/a Super Trak (hereinafter "Lessee").
WHEREAS, by indenture of Lease dated December 7, 1982, as amended by
Amendment No. 1 to Lease dated December 7, 1982 and Second Amendment of Lease
dated December 1, 1992 (hereinafter, collectively referred to as "Lease"),
Lessor leased to Lessee certain premises therein more particularly described
located in Store No. 20-21 in the Montebello Mart Shopping Center, Montebello,
California ("Premises"), upon terms and conditions, covenants and agreements
contained therein; and
WHEREAS, the Lessor and Lessee have agreed to relocate the Premises to
Store No. 27 in the Montebello Mart Shopping Center also known as 806 W.
Beverly Boulevard (the "Relocation Premises") in accordance with the terms and
conditions of the Lease and this Amendment; and
WHEREAS, the parties desire to amend the Lease as set forth herein.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto intending to be
legally bound, hereby agree that the Lease is hereby amended, effective as of
the date hereof, as follows:
FIRST: It is agreed that the Relocation Premises shall be located in
the area cross-hatched in "red" on Schedule "A-2" hereto and the parties hereto
covenant and agree as of the Effective Date (hereinafter defined) that all
provisions of the Lease which refer to the Premises and all provisions in this
Amendment of Lease referring to the "Relocation Premises" shall be deemed to
refer to the area cross-hatched in "red" on Schedule "A-2" hereto and that as
of said date, Schedule "A-1" of the Lease shall be deleted in its entirety and
Schedule "A-2" attached hereto and by this reference made a part hereof shall
be substituted in lieu thereof and all references in the Lease to Schedule "A-
1" shall be deemed to refer to Schedule "A-2" hereto. Lessor shall provide
Lessee with at least ten (10) days prior written notice of the date that Lessor
will deliver the Relocation Premises to Lessee not subject to and free of any
leases, subleases, liens, incumbrances or violations of law.
SECOND: From and after the Effective Date (hereinafter defined), for
the purposes of the Lease and all provisions thereof, including but not limited
to, those provisions related to the computation of Lessee's fixed minimum
rental, Lessee's contribution and pro-rata share of shopping center's common
area fees, Lessee's proportionate share of real property taxes, Lessee's
management and administrative fee and Lessee's insurance premium costs, the
square footage contained within the Premises shall be 11,680 square feet.
THIRD: Effective as of the earlier to occur of (i) the one hundred
twenty-first (121st) day following the date Lessor delivers possession of the
Relocation Premises to Lessee or (ii) the date Lessee opens for business in the
Relocation Premises (the "Effective Date") the following provisions shall be in
full force and effect:
1
<PAGE> 2
1. The Premises described and referred to on the top portion of page
1 of the Lease as containing approximately 9,750 square feet and having
dimensions of 65' frontage and 150' depth, situated in Los Angeles County,
California, known as 830 W. Beverly Boulevard shall be deemed to refer, and
shall be changed, to:
Premises: Montebello Mart Shopping Center, Store No. 27,
containing approximately 11,680 square feet and
having irregular dimensions, situated in Los
Angeles County, California, known as 806 W. Beverly
Boulevard, Montebello, California 90640
2. Paragraph 3 of Article I of the Lease shall be deleted in its
entirety and replaced by the following:
3. The term of this Lease shall, except as hereinafter
provided, end at midnight on the last day of the one hundred twentieth
(120th) full calendar month following the Effective Date.
3. Paragraph 1(d) of Schedule C of the Lease shall be deleted in
its entirety and replaced by the following:
(d) It is agreed that for the period commencing on the
Effective Date and continuing through the sixtieth (60th) full
calendar month following the Effective Date, the percentage rental to
be paid by Lessee to Lessor as provided in Article II, Paragraph 1 of
this Lease, shall not be less than ONE HUNDRED FOURTEEN THOUSAND TWO
HUNDRED THIRTY AND 40/100 DOLLARS ($114,230.40) for each full calendar
year during said period and payable in monthly installments of NINE
THOUSAND FIVE HUNDRED NINETEEN AND 20/100 DOLLARS ($9,519.20),
payable, in advance, on or before the 10th day of each full calendar
month. The period from the Effective Date through the expiration of
the sixtieth (60th) full calendar month following the Effective Date
is hereinafter referred to as the "First Period". The proportionately
reduced fixed minimum rental for a part of a calendar month for which
rental may be due shall be paid at the same time and together with the
rental payment for the first full calendar month for which rent may be
due as provided herein.
4. Paragraph 1(e) of Schedule C of the Lease shall be deleted in
its entirety and replaced by the following:
(e) Commencing as of the first (1st) day of the sixty-first
(61st) full calendar month following the Effective Date and ending on
the last day of the term of this Lease, set forth in Article 1,
Paragraph 3 hereof (hereinafter referred to as the "Second Period"),
the percentage rental to be paid by Lessee to Lessor, as provided in
Article II, Paragraph 1 of this Lease shall not be less than the sum
of ONE HUNDRED TWENTY-FIVE THOUSAND ONE HUNDRED NINETY-SIX AND 52/100
DOLLARS ($125,196.52) for each full calendar year during said period
and payable in monthly installments of TEN THOUSAND FOUR HUNDRED
THIRTY-THREE AND 04/100 DOLLARS ($10,433.04) in advance, on or before
the 10th day of each full calendar month.
5. The following paragraph shall be added as Paragraph 1(e)-1 of
Schedule C of the Lease:
(e)-1 For the period commencing with the day following the
expiration of the original term and continuing through to the last day
of the extension period, if any, as provided in Article XV of the
Lease, as amended (hereinafter referred to as the "Option Period"),
the percentage rental to be paid by
2
<PAGE> 3
Lessee to Lessor, shall not be less than the sum of ONE HUNDRED
THIRTY-SEVEN THOUSAND SEVEN HUNDRED SIXTEEN AND 17/100 DOLLARS
($137,716.17) for each full calendar year during said period and
payable in monthly installments of ELEVEN THOUSAND FOUR HUNDRED
SEVENTY-SIX AND 35/100 DOLLARS ($11,476.35) in advance, on or before
the 10th day of each full calendar month.
6. Paragraph 1(f) of Schedule C of the Lease shall be deleted in
its entirety and replaced by the following:
(f) In the event that the percentage rental computed as
provided in Article II of this Lease exceeds the sum of ONE HUNDRED
FOURTEEN THOUSAND TWO HUNDRED THIRTY AND 40/100 DOLLARS ($114,230.40)
for any one full calendar year during the First Period, or ONE HUNDRED
TWENTY-FIVE THOUSAND ONE HUNDRED NINETY-SIX AND 52/100 DOLLARS
($125,196.52) for any full calendar year during the Second Period, or
ONE HUNDRED THIRTY-SEVEN THOUSAND SEVEN HUNDRED SIXTEEN AND 17/100
DOLLARS ($137,716.17) for any full calendar year during the Option
Period, such excess sums shall be paid by Lessee to Lessor on or
before the 20th day of February for the preceding calendar year. For
periods of tenancy under this Lease of less than a full calendar year
or a full calendar month, the sums of ONE HUNDRED FOURTEEN THOUSAND
TWO HUNDRED THIRTY AND 40/100 DOLLARS ($114,230.40) and NINE THOUSAND
FIVE HUNDRED NINETEEN AND 20/100 DOLLARS ($9,519.20) in the First
Period and ONE HUNDRED TWENTY-FIVE THOUSAND ONE HUNDRED NINETY-SIX AND
52/100 DOLLARS ($125,196.52) and TEN THOUSAND FOUR HUNDRED
THIRTY-THREE AND 04/100 DOLLARS ($10,433.04) in the Second Period, and
ONE HUNDRED THIRTY-SEVEN THOUSAND SEVEN HUNDRED SIXTEEN AND 17/100
DOLLARS ($137,716.17) and ELEVEN THOUSAND FOUR HUNDRED SEVENTY-SIX AND
35/100 DOLLARS ($11,476.35) in the Option Period, whichever may apply,
shall be proportionately reduced.
7. Paragraph 1(g) of Schedule C of the Lease shall be deleted in
its entirety and replaced by the following:
(g) Notwithstanding the provisions of 1(a) and 1(h) of
Schedule C to this Lease, if the percentage rental payable for any one
full calendar year exceeds the sum of ONE HUNDRED FOURTEEN THOUSAND
TWO HUNDRED THIRTY AND 40/100 DOLLARS ($114,230.40) during the First
Period, or ONE HUNDRED TWENTY-FIVE THOUSAND ONE HUNDRED NINETY-SIX AND
52/100 DOLLARS ($125,196.52) during the Second Period, or ONE HUNDRED
THIRTY-SEVEN THOUSAND SEVEN HUNDRED SIXTEEN AND 17/100 DOLLARS
($137,716.17) during the Option Period, then, in such event, Lessee
shall be entitled to withhold from such excess (but only to the extent
of such excess): (1) all real property taxes and assessments paid or
payable by Lessee hereunder pursuant to Schedule C, Paragraph 2
hereof, (2) all insurance paid or payable by Lessee pursuant to
Schedule C, Paragraph 4 hereof, and (3) all common area charges paid
or payable by Lessee pursuant to Schedule C, Paragraph 5 hereof, for
the calendar year in which such excess occurs, which right of
withholding shall not be cumulative. For portions of a calendar year,
said sums of ONE HUNDRED FOURTEEN THOUSAND TWO HUNDRED THIRTY AND
40/100 DOLLARS ($114,230.40) and ONE HUNDRED TWENTY-FIVE THOUSAND ONE
HUNDRED NINETY-SIX AND 52/100 DOLLARS ($125,196.52) and ONE HUNDRED
THIRTY-SEVEN THOUSAND SEVEN HUNDRED SIXTEEN AND 17/100 DOLLARS
($137,716.17) shall be proportionately reduced.
8. All references in the Lease to the sums of "NINETY-FIVE
THOUSAND THREE HUNDRED FIFTY-FIVE AND 00/100 DOLLARS ($95,355.00)" and "ONE
HUNDRED FOUR THOUSAND FIVE HUNDRED NINE AND 08\100 DOLLARS ($104,509.08)" are
hereby deleted and shall be replaced with the sums of "ONE HUNDRED FOURTEEN
THOUSAND TWO HUNDRED THIRTY AND 40/100 DOLLARS ($114,230.40)" and "ONE HUNDRED
TWENTY-FIVE THOUSAND
3
<PAGE> 4
ONE HUNDRED NINETY-SIX AND 52/100 DOLLARS ($125,196.52)", respectively.
9. Lessee's contribution toward the shopping center's common area
fees shall be FIVE THOUSAND ONE HUNDRED THIRTY-NINE AND 20/100 DOLLARS
($5,139.20) each lease year, payable in equal monthly installments in the
amount of FOUR HUNDRED TWENTY-EIGHT AND 27/100 DOLLARS ($428.27). Lessee's
contribution toward shopping center's common area fees shall continue to be
subject to adjustment in accordance with the provisions of Paragraph 5 of
Schedule C of the Lease.
10. Lessee's monthly management and administrative fee shall be
THIRTY-EIGHT AND 93/100 DOLLARS ($38.93) subject to adjustment in accordance
with the provisions of Paragraph 5 of Schedule C of the Lease.
11. Lessee's monthly contribution toward insurance shall be TWO
HUNDRED FOUR AND 40/100 DOLLARS ($204.40) subject to adjustment in accordance
with the provisions of Paragraph 4 of Schedule C of the Lease.
FOURTH: The parties acknowledge and agree that in the event the
Effective Date occurs on a day other than the first calendar day of a month,
Lessee's fixed minimum rental, Lessee's contribution and pro-rata share of
shopping center's common area fees, Lessee's proportionate share of real
property taxes, Lessee's management and administrative fee and Lessee's
insurance premium costs shall be subject to appropriate proration.
FIFTH: Lessee agrees to accept the Relocation Premises on an "as is"
basis and that any and all repairs, improvements, installations or additions
necessary or required for Lessee to open for business and conduct its business
from the Relocation Premises shall be at the sole cost and expense of Lessee.
SIXTH: As of the day prior to the Effective Date, Lessee and any
subtenants, concessionaires or others shall quit, surrender and vacate Store
No. 20-21 in accordance with the provisions of Paragraph 8 of Article VIII of
the Lease. In the event Lessee fails to vacate Store No. 20-21 as required by
the provisions of this Paragraph SIXTH, then as of the Effective Date through
the date Lessee vacates Store No. 20-21 Lessee's obligations to pay fixed
minimum rental and other charges under the Lease for Store No. 20-21 shall
resume and Lessee's obligations for rent and other charges for the Relocation
Premises shall continue to be governed by the provisions of Paragraph THIRD
hereinabove.
SEVENTH: Lessee agrees, that upon Lessor's delivery of possession of
the Relocation Premises to Lessee, Lessee, on behalf of Lessor at Lessee's
expense, shall proceed to perform such construction in the Relocation Premises
as may be necessary to finish the Relocation Premises with an interior decor
package comparable to and consistent with the latest Super Trak retail store
prototype, the same to be constructed of good quality materials and installed
in a professional workmanlike condition.
EIGHTH: Lessor agrees that in consideration of the Lessee's agreeing
to accept the Relocation Premises in an "as is" condition and Lessee's agreeing
to perform all Lessee Improvements pursuant to Paragraph Seventh of this
Amendment and provided Lessee (a) has completed said Lessee Improvements in
accordance with the terms of Paragraph Seventh of this Amendment; (b) has
provided Lessor with reasonably appropriate affidavits, lien waivers and the
like showing that liens and encumbrances effected by Lessee's Improvements have
been released; (c) has obtained a certificate of occupancy or non-residential
use permit for the Relocation Premises and furnished a copy of the same to
Lessor; (d) has opened its store for business from the Relocation Premises in
accordance with
4
<PAGE> 5
the terms of this Amendment; and (e) has performed all of its obligations under
the provisions of this Amendment required of it to be performed and is not then
in default of the Lease beyond any applicable cure period, then Lessor shall
provide Super Trak Corporation with a credit in the amount of ONE HUNDRED FORTY
THOUSAND ONE HUNDRED SIXTY AND 00/100 DOLLARS ($140,160.00), said amount to be
credited to the rental account of Super Trak Corporation for the Premises by
amortizing the same, dollar for dollar, only out of those payments of fixed
minimum rental becoming due from Lessee under the terms of the Lease after the
date Lessee has satisfied the conditions set forth in (a) through (e) of this
Paragraph EIGHTH.
NINTH: Lessor and Lessee hereby acknowledge and agree that all
references to "Premises" or "Store No. 20-21" in the Lease (including Exhibits
thereto) shall be deemed to refer to and are hereby changed to "Store No. 27".
TENTH: The terms and provisions of the Lease are and shall remain in
full force and effect, with the exception that all of the terms and provisions
of the Lease which are inconsistent with the terms of this Amendment shall
automatically be modified and amended to conform to the terms hereof. The
parties hereto agree that this Amendment embodies the entire agreement and
understanding of the parties hereto in respect to the subject matter contained
herein and supersedes any and all prior agreements and understandings between
the parties with respect to such matters.
ELEVENTH: All the rights and obligations of the parties under this
Amendment of Lease shall bind and inure to the benefit of their respective
heirs, personal representatives, successors and assigns.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed on the date first above written.
WITNESS: LESSOR:
COMBINED PROPERTIES\MONTEBELLO
LIMITED PARTNERSHIP
THOMAS B. MCKEE By: RONALD S. HAFT
- - --------------------------------- -------------------------------(Seal)
Ronald S. Haft
General Partner
ATTEST: LESSEE:
SUPER TRAK CORPORATION
By: /S/ R.KEITH GREEN
- - --------------------------------- ------------------------------ (Seal)
Its: PRESIDENT
-----------------------------
5
<PAGE> 6
SCHEDULE A-2
Attached to and forming a part of that certain Indenture of Lease and
Memorandum of Lease executed under date of December 7, 1982 by and between
COMBINED PROPERTIES/MONTEBELLO LIMITED PARTNERSHIP, successor-in-interest to
MONTEBELLO MART ASSOCIATES, a California limited partnership, as Lessor, and
SUPER TRAK CORPORATION, successor-in-interest to TRAK AUTO WEST, INC., as
Lessee,
DESCRIPTION OF PROPERTY
1. LESSOR'S PROPERTY. The demised premises are a portion of Lessor's
entire property, situated in the City of Montebello, County of Los Angeles,
State of California, and now commonly known as 806 W. Beverly Boulevard. Such
property, herein referred to as "Lessor's Property", means the entire property
within the outer property limits shown on the Plot Plan attached herein, and
made a part hereof. The legal description of Lessor's Property is set forth in
Section 6 of this Schedule A.
2. BUILDING. Lessor's Property provides a site for a store building
in the location designated "Super Trak" on the said Plot Plan attached. Such
building is now thereon, or is to be erected pursuant to Schedule B hereof by
Lessor for Lessee, containing approximately 11,680 s.f. Said building site,
building, improvements, and appurtenances, and fixtures and equipment owned by
the Lessor, now or hereafter located thereon are collectively referred to in
this Lease as the "premises" or "demised premises."
3. PARKING. Lessee, its agents, employees, patrons and invitees, in
common with Lessor and all other lessees of portions of Lessor's Property and
their respective agents, employees, patrons, and invitees shall have and are
hereby granted, during the entire term of this Lease and any extension thereof,
the free, uninterrupted, and non-exclusive use of the sidewalks, malls,
roadways, parking areas, and all other common areas, which use by all users
shall be for the purposes of ingress, egress, service, utilities, and parking,
and which parking area shall consist of not less than 200 car-parking spaces,
located as shown on the said Plot Plan attached. It is specifically understood
and agreed that Lessee shall have no obligation or liability whatsoever in
connection with the ownership, maintenance, or management of the sidewalks,
malls, roadways, parking areas, or other common areas involved, and that Lessor
shall manage, operate and maintain all such common areas, or cause the same to
be done on its behalf, at no additional cost to Lessee.
4. PLOT PLAN. It is understood and agreed that no changes from that
shown on the Plot Plan attached shall be made to the building area and/or the
parking and other common areas of Lessor's Property and no buildings or
building-type structures may be built except within the building areas or areas
for building designated thereon, except by written amendment to this Lease,
duly executed by the parties hereto. Lessor must take reasonable precautions
to prohibit commuters and office help from parking on the common areas of
Lessor's Property and Lessee may, if it deems such action necessary, have any
such offending vehicles towed from the common areas of Lessor's Property. See
Schedule C, Paragraph 6.
5. COVENANTS. All of the covenants of the Lessor contained in this
Lease shall be covenants running with the land pursuant to applicable law. It
is expressly agreed that each covenant to do or refrain from doing some act on
the Lessor's Property or any part thereof (a) is for the benefit of the demised
premises; shall be binding upon and for the benefit of each person having any
leasehold interest therein derived through the Lessee, and (b) shall be for the
benefit of and binding upon each successive owner, during his ownership, of any
portion of the land affected thereby and each person having any interest
therein derived through any owner of the land affected hereby.
6. LEGAL DESCRIPTION OF LESSOR'S PROPERTY: The legal description of
Montebello Mart, situated in the State of California, County of Los Angeles, is
as follows:
Lots 195, 196 and 198 of Montebello, in the City of Montebello, County of Los
Angeles, State of California, as per map recorded in Book 78, Page 19 et seq.
of Miscellaneous Records in the Office of the County Recorder of said county.
EXCEPT the Northerly 90 feet of the Easterly feet of said Lot 198.
<PAGE> 7
[MONTEBELLO MART, MONTEBELLO, CALIFORNIA MAP -- SEE EDGAR APPENDIX]
<PAGE> 1
LEASE
THIS INDENTURE OF LEASE, made and entered into this 29th day of
September 1993 by and between Combined Properties/Reseda Associates Limited
Partnership, a Washington, DC limited partnership.
Hereinafter called "Lessor", owner of the hereinafter demised premises, and
SUPER TRAK CORPORATION, a Delaware corporation hereinafter called "Lessee".
WITNESSETH:
That for and in consideration of the rental hereinafter reserved and
of the mutual covenants, agreements and conditions hereinafter contained Lessor
does hereby lease, let, and demise unto Lessee, and Lessee does hereby take
accept, and rent from Lessor, those certain premises containing approximately
9,840 square feet referred to as the "demised premises" or the "premises")
situated in the City of Reseda County of Los Angeles State of California now
known as a portion of Loehmann's Plaza Shopping Center and more particularly
described in Schedule A attached hereto and made a part hereof and shown on a
plot plan attached to and made a part of said Schedule A, together with all
easements, rights, and appurtenances in connection therewith or thereunto
belonging. The Lessor's property is sometimes referred to herein as the
"shopping center".
This Lease is made for the term and upon the covenants and agreements
hereinafter expressed to wit:
ARTICLE I: TERM October 15, 1993 (hereinafter referred to as the "Commencement
Date")
3. The term of this Lease shall, except as hereinafter provided,
end at midnight on the last day of the 120th full calendar month after the
commencement of the term.
ARTICLE II: RENTAL
1. Lessee shall pay to Lessor as minimum fixed rent for the
demised premises the sums provided for in Schedule C, paragraph 1 hereof. The
rent for periods of tenancy of less than a month are to be calculated at a
daily rate.
2. In addition to the minimum fixed rent set forth in paragraph 1
hereof, Lessee agrees that with respect to each calendar year during the term
hereof, Lessee shall pay to Lessor, as percentage rent, a sum equal to the
amount by which 3% of all gross sales (as hereafter defined) made during such
calendar year exceeds the minimum fixed rent for such calendar year.
3. The term "gross sale", as used herein, is hereby defined as
the amount of gross sales made upon credit or for cash upon the demised
premises, plus the gross compensation or consideration received or receivable
for services rendered to customers in the conduct of business upon the demised
premises, but less the following (i) discounts on sales to employees; (ii) any
sales tax, gross receipts tax or similar tax by whatever name called, payable
by reason of such sales to the state or federal government in accordance with
state or federal sales tax law, or any amendment thereof or payable under any
other tax law taxing according to sales, gross volume, gross receipts, now in
effect or which may hereafter be adopted by duly constituted governmental
authority; (iii) transfers of merchandise inter-store and for convenience only
made by Lessee or its affiliated companies; (iv) credits or refunds made to
customers for merchandise purchased at the premises and later returned or
exchanged; (v) sales of postage stamps, (vi) any sale of store fixtures or
store equipment; (vii) merchandise or other things of value issued in
redemption of trading stamps or gift certificates issued by Lessees free of
charge to its customers in connection with any sales promotion program; (viii)
returns of merchandise to suppliers or manufacturers.
4. The percentage rent, if any, shall be paid by Lessee on or
before the twentieth (20th) day of February for the preceding calendar year.
Nothing in this Lease shall be construed to entitle Lessor to percentage rent
in the event Lessee closes its store, or assigns or subleases to an entity
whose sales are insufficient to generate percentage rent in any calendar year.
5. Lessee covenants and agrees to keep true and accurate records
of account showing all receipts derived by it from gross sales on the demised
premises. Lessee shall submit to Lessor on or before the twentieth (20th) day
of February, a complete statement by Lessee showing in all reasonable detail
the amount of the gross sales. No inadvertent mistake by Lessee in the
preparation of such statements shall be deemed to be a breach of any covenant
of this Lease. Lessor is hereby given permission to inspect personally, or by
its authorized agent or representative, the books of account of Lessee relating
to records of sales made upon the demised premises on any occasion during each
calendar year (but not those of general accounting), at any reasonable time
during the usual business hours of Lessee for the purpose of determining the
amounts of rental due and payable hereunder. Lessee shall be required to
preserve its records on which any statement is based for a period of two years
after such statement is rendered and no more, and if Lessor fails to object in
writing to any statement for a period of twenty-four (24) months after the
rendering thereof, such statement shall conclusively be presumed to be correct.
If receipts from gross sales shall
<PAGE> 2
be found to be understated by two percent (2%) or more, Lessee shall bear the
cost of such inspection, otherwise Lessor shall bear the cost of inspection.
Lessee shall promptly pay to Lessor any deficiency or Lessor shall promptly
refund to Lessee any overpayment, as the case may be, which is established by
such inspection.
6. Whenever the Demised Premises shall be rendered untenantable
in whole or in part by reason of condemnation or by reason of any casualty or
by reason of eminent domain proceedings, or by any taking or repair occasioned
thereby, then and in each and all such cases, Lessee shall be allowed an
abatement of rent and other charges payable hereunder in whole or in part based
upon the duration and the extent of such interrupted enjoyment.
7. Payments of rental hereunder are to be made to Lessor c/o P.O.
Box 1012, Merrifield, Virginia 22116 or to such other person or corporation
and at such other place as shall be designated in writing by notice given as
provided in Article XX of this Lease on the first day of each month during
term.
ARTICLE III: POSSESSION
2. The Lessor agrees that possession of the demised premises
shall not be deemed premises shall not be deemed to have been given to Lessee
unless the demised premises are free and clear of all tenants and occupants
(other than the Lessee) and the rights of either, and also free of liens,
encumbrances, and violations of laws, ordinances, and regulations relating to
the use, occupancy and construction of the building on the demised premises
which would interfere with Lessee's occupancy and use thereof.
3. The Lessor agrees that the Lessee, upon paying the rental and
performing the covenants of this Lease, may quietly have, hold and enjoy the
demised premises during the term hereof or any extension thereof.
4. The Lessor covenants that as of the date hereof it has good
and marketable title to the demised premises in fee simple or a leasehold
interest therein for a term exceeding the term of the Lease herein, and as it
may be extended. Lessor further covenants that the demised premises is not
subject to any leases, subleases, tenancies, agreements, encumbrances, liens,
defects in title, laws, ordinances, zoning regulations or restrictive
covenants, which will prevent the Lessee from conducting its usual business or
any department thereof in the demised premises or which will prevent the Lessee
from using the ground floor of the demised premises as one undivided sales
area.
7. Lessee covenants that it will execute an agreement
subordinating this Lease to any mortgage or deed of trust subsequently placed
upon the demised premises, provided that Lessor executes and procures execution
by each and every such mortgagee or holder of a deed of trust of the said
subordination agreement executed by Lessee which will incorporate, among other
things, provisions to the following effect:
(a) That the mortgagee or holder involved will at all times
and under all conditions including but not limited to any foreclosure
or other repossession proceedings, recognize permit and continue the
tenancy of Lessee or its permitted successors and assigns, on the
demised premises under the provisions of and for the then remaining
term of this Lease.
(b) That the mortgagee or holder involved will require that
any purchaser or purchasers acquiring the property covered by this
Lease shall take said property subject to this Lease so that the
rights of Lessee or those holding under Lessee shall not be interfered
with or affected in any manner or means.
ARTICLE IV: HOLDING OVER
1. If Lessee shall hold over, Lessee shall become a tenant from
month to month upon the same terms as herein provided (except the minimum fixed
rent and other charges shall be 150% of the amounts payable prior to such
holdover) until the tenancy shall be terminated at the end of a month by the
giving of at least thirty (30) days written notice by either party hereto to
the other, stating the intention of the party giving such notice so to
terminate the tenancy.
ARTICLE V: USE OF PREMISES
1. The demised premises may be used by the Leasee for the purpose
of conducting an automobile parts and accessories store selling such items as
are sold in other auto parts and accessory stores and Lessee's other Super Trak
Auto stores in the Los Angeles County metropolitan area.
2. Lessee agrees that it will conduct its said business on the
demised premises in a lawful manner and in compliance with all governmental
laws, rules, regulations, and orders, and that Lessee will at its own cost and
expense comply with all such governmental laws, rules, regulations, and orders
as may be applicable to the business of Lessee conducted in the demised
premises; and that any changes, alterations, improvements, or additions,
structural or otherwise, to or of the demised premises or any part thereof,
which may be made necessary or required by reason of any law, rule, regulation
or order, promulgated by
<PAGE> 3
competent governmental authority, shall be made by and at the sole cost and
expense of Lessee.
3. If at any time after execution hereof until expiration or
sooner termination of this Lease, Lessee is prohibited by any federal, state or
municipal law, rule or regulation from remodeling, opening, or operating the
premises as provided herein, Lessee shall have the right to terminate this
Lease upon 30 days written notice to Lessor, whereupon this Lease shall
terminate thirty days after the date of such notice when Lessee surrenders
possession of the premises to Lessor.
4. Nothing herein contained shall require Lessee to continuously
operate an automobile parts store or any other particular type of business.
5. Lessee shall have the right to install, at its cost and
expense, any signs on the interior of the demised premises. SEE SCHEDULE C,
PARAGRAPH 13.
6. Lessor acknowledges that Lessee may lease some or all of the
equipment, signs, and furnishings to be installed by Lessee upon the demised
premises. In consideration of the execution of this Lease, Lessor agrees that
notwithstanding anything in this Lease to the contrary, Lessor will execute
Lessor's Subordination Agreement which is attached hereto as Schedule E and
such other documents deemed reasonably necessary by the Lessor(s) of such items
to affectuate the subordination of Lessor's interest therein.
7. Lessees shall have the right at any time on or before the
termination of this Lease to remove from the demised premises all merchandise,
signs, fixtures, furniture, furnishings, partitions, and equipment installed
and owned by Lessee; provided, however, that Lessee repair any damage to the
demised premises caused by any such removal, and further provided Lessee is not
in default under this Lease.
ARTICLE VI: UTILITIES AND TRASH STORAGE
1. Lessee covenants to pay during the term hereof all metered
electric, water and gas charges in connection with its occupancy and use of the
demised premises. Lessee shall install, at its cost and expense, the necessary
meters to measure Lessee's consumption of said services.
2. Lessor shall provide an area adjacent to the premises where
Lessee can store trash and necessary trash receptacles.
ARTICLE VII: COVENANTS AGAINST LIENS, TAXES
1. Throughout the term hereof all personal property taxes on the
fixtures and equipment in the demised premises shall be assessed to and paid
(before delinquency) by the respective legal owner's thereof. All taxes and
assessments of every kind and character whatsoever against the demised premises
or the property of which the demised premises are a part shall be paid by
Lessor prior to delinquency, provided, however, that the taxes or assessments
to be paid as aforesaid by Lessor shall not include any tax payable by the
Lessee as a condition of doing business or any franchise tax or license fee
levied by the state in which the demised premises are located against or upon
Lessee, or any tax on any fixtures owned by the Lessee, or on any personal
property of Lessee even though the same might from time to time be levied or
charged or become a lien against the demised premises. SEE SCHEDULE C,
PARAGRAPH 3.
2. Lessee covenants that it will not, during the term hereof,
suffer or permit any lien to be attached to or upon the demised premises, or
any portion thereof, by reason of any act or omission on the part of Lessee,
and hereby agrees to save and hold harmless Lessor from of against any such
lien or claim of lien. In the event any such lien does attach or any claim of
lien is made against the demised premises which may be occasioned by any act or
omission upon the part of Lessee, and shall not be released with fifteen (15)
days after notice from Lessor to Lessee so to do, Lessor in its sole discretion
may pay and discharge the same and relieve the demised premises form any such
lien, and Lessee agrees to repay and reimburse Lessor, upon demand, for or on
account of any amount which may be paid by Lessor in discharging such lien or
claim together with interest at the rate of twelve percent (12%) per annum from
the date of the expenditure by Lessor to the date of repayment by Lessee;
provided, however, that if Lessee desires to contest the validity or
correctness of any such lien it may do so provided that it shall first furnish
Lessor with a good and sufficient bond indemnifying Lessor against any loss,
liability or damages, on account thereof.
ARTICLE VIII: REPAIRS
1. Lessee shall keep the interior of the demised premises
including the fixtures and equipment in good condition and repair, excepting
for obsolescence, ordinary physical depreciation, ordinary wear, tear, and such
repairs as under this Lease Lessor is required to make. If the demised
promises be part of an entire center or building containing general systems of
electricity and plumbing, Lessee shall have no responsibility for the same
beyond the demised premises unless serving the premises exclusively and shall
be responsible for any portions thereof running through, in, or across the
demised premises. Lessor agrees to keep said general systems in repair so that
the portions thereof which are a part
<PAGE> 4
of and serve the demised premises will function properly if such portions are
kept in good condition and repair by Lessee.
2. Lessee covenants that it will at its own cost and expense make
all necessary repair and replacements to the heating and air conditioning,
plumbing, electrical and mechanical systems, to the roof (including the
skylights and trap doors), gutters, down-spouts, exterior walls, including the
store front and structural walls of the demised premises the structural
portions of the building of which the demised premises are a part, the
sidewalks and alleys adjacent thereto, during the entire term of this Lease and
Lessee covenants that it will promptly make and complete any such repairs and
that it will repair any and all damage to the demised premises which may result
from its failure to make the same within a reasonable time after being notified
by Lessor that repairs are needed lessor shall not be responsible for any
repairs or replacements to the demised premises except as specifically provided
herein however, Lessor represents to Lessee that the roof is water tight and in
good condition, and the structure of the demised premises is sound.
4. Lessor at all reasonable times shall have the right to post
and keep posted on the demised premises statutory notices of non-responsibility
which Lessor may deem to be necessary for the protection of Lessor and said
property from mechanics' liens or liens of a similar nature.
5. Lessee shall have the right at any time to make such
non-structural additions, repairs, alterations, changes, or improvements, in or
to the demised premises as Lessee may deem necessary, proper or expedient in
the operation of the demised premises (including, but without in any wise
limiting the generality of the foregoing language, modifying or changing the
utility lines, air conditioning ducts, interior square footage of the premises,
modifying interior walls, provided airways, that no work done by Lessee shall
adversely affect the structural strength of said building or the value of the
shopping center, and provided further, the Lessee shall pay promptly for all
such work done by it or upon its order. Nothing herein contained shall be
construed to require Lessee to make or pay for any repair, alteration,
improvement, or addition, or to do any other act or thing which Lessor is
required to make or do under any provision of this Lease, or which is required
or becomes necessary at any time because of any failure of Lessor to perform
any of its obligations hereunder.
6. Lessor hereby reserves the right for itself or its duly
authorized agents and representatives at all reasonable times during business
hours of Lessee to enter upon the demised premises for the purpose of
inspecting the same or to show the same to any prospective purchaser, and for
the purpose of making any necessary repairs to or upon the building of which
the demised premises are a part, but such right shall be exercised reasonably
and so as to cause the least possible inconvenience to Lessee, and so as not to
unreasonably interfere with its business.
7. With respect to any repairs to the demised premises and to the
building of which the same are a part which the Lessor is required to make,
Lessor covenants that the same shall be made with reasonable dispatch and in
such a manner and at such time as to cause the least possible inconvenience to
Lessee in the conduct of its business, and that Lessor shall be permitted to
enter upon the demised premises for the purpose of making such repairs. In the
event of an emergency requiring immediate action e.g., danger to health, life
or property, fire, water seepage, sewer back-up, cessation or interruption of
any facility serving the demised premises, and the like (herein called
"Emergency"), Lessee may repair the cause of the emergency whether the means of
repairing the same are located within the demised premises or other portions of
Lessor's property, prior to giving any written notice to Lessor, provided,
however, that Lessee shall notify Lessor within three (3) business days after
expiration of the Emergency.
8. Lessee shall at the end of the term hereof, or of any
extension thereof, surrender the demised premises together with any personal
property therein belonging to Lessor, and alterations made thereto, in good
order, repair, and condition, except for damage caused by obsolescence,
ordinary physical depreciation, or ordinary wear and tear, and except for the
matters and things which Lessor is required to do or repair under this Lease.
9. This Article VIII is subject and subordinate to Article IX of
this Lease.
ARTICLE IX: DAMAGE BY FIRE, ETC.
1. If the demised premises, or the building of which they are a
part, shall be destroyed or damaged from any cause other than ordinary wear and
tear, ordinary physical depreciation or obsolescence covered by standard "all
risk: insurance, Lessor shall forthwith repair, restore and rebuild the same
with all reasonable dispatch and diligence including restoration and repair of
all fixtures and equipment in the demised premises owned by Lessor and so
damaged or destroyed and, after repair, restoration and rebuilding, Lessor
shall give possession to the Lessee of the same space in said building as is
herein demised without diminution or change of location.
2. If the entire demised premises shall be rendered untenantable
by reason of any such damage, the minimum fixed rent and any other charges
payable by Lessee under this Lease shall abate for the period from the date of
such
<PAGE> 5
damage until the earlier to occur thirty (30) days following substantial
completion of Lessor's restoration work placing the demised premises in at
least as good condition as existed at commencement of the term hereof or (ii)
the day that Lessee opens the demised premises for business with the public.
If only a part of the demised premises shall be rendered untenantable, the rent
and other charged payable by Lessee shall abate for such period in the
proportion that the floor area of the demised premises so rendered untenantable
bears to the original floor area of the demised premises.
3. Anything in this Article IX to the contrary notwithstanding,
if, by reason of any of the causes referred to in paragraph 1 hereof, the
demised premises or the building of which the same are a part shall be
destroyed or damaged at any time prior to the last twelve (12) months of the
term hereof and is not substantially restored within a period of one hundred
twenty (120) working days from and after the date of the casualty or if such
damage or destruction occurs during the last twelve (12) months of the term
hereof and the demised premises or the building of which the same are a part is
not substantially restored within a period of sixty (60) working days from and
after the date of the casualty, this Lease may be terminated upon written
notice by Lessee to Lessor. Upon such termination Lessee shall be relieved
from all liabilities hereunder except the liability to pay rent up to the date
of such damage or destruction and any accrued charges, costs, and expenses
required to be paid by Lessee hereunder.
5. If any restoration required under this Article IX is not
completed in accordance with the terms hereof, with Lessor having the
obligation to exercise all due diligence to expedite restoration, Lessee shall
have the option to terminate this Lease, by written notice, at any time
following Lessor's default in its restoration obligation, unless, at such time,
restoration has been substantially completed by Lessor.
ARTICLE X: INSURANCE
1. Lessee agrees that it will at all times during the term of
this Lease maintain in force an insurance policy or policies which will insure
Lessor against liability for bodily injury to persons or damage to property
occurring on the demised premises, the limits of liability under such insurance
to be not less than Five Hundred Thousand Dollars ($500,000) for any one person
injured, One Million Dollars ($1,000,000) for any one accident, and One Hundred
Thousand Dollars ($100,000) for property damage.
2. Lessor agrees that it will throughout the term of this Lease
maintain in force fire insurance with extended coverage endorsement attached,
to the extent of at least ninety percent (90%) of the full insurable
replacement value thereof on the building of which the demised premises are a
part, including all improvements made pursuant to this Lease and on all
fixtures and equipment therein on which Lessor is legal owner in good and
solvent insurance companies.
3. Lessor and Lessee each hereby release the other, its officers,
and employees, and waive any claim against the other, its officers, and
employees, for damages to or destruction of each other's property, real or
personal, including adjacent property and consequential loss or damage, caused
by fire or any risk enumerated in a standard form of fire insurance policy and
extended coverage endorsement, whether due to the negligence of either Lessor
or Lessee, or otherwise.
4. If Schedule A of this Lease provides Lessee and others with
common use of designated parking areas, sidewalks, malls, and other common
areas, Lessor agrees that it will at its cost and expense throughout the term
of this Lease maintain in force insurance, which shall be primary and
non-contributing with any insurance maintained by Lessee, to insure Lessee
against liability for bodily injury to persons or damage to property occurring
in or about said common areas. The limits of liability under such insurance
shall be not less than Five Hundred Thousand Dollars ($500,000) for any person
injured, One Million Dollars ($1,000,000) for any one accident, and One Hundred
Thousand Dollars ($100,000) for property damage. SEE SCHEDULE C, PARAGRAPH
5. Lessee may self-insure for the amount of any insurance
required to be carried under Article X, (i) under any plan of self-insurance
which it may from time to time have in force and effect provided it furnishes
upon request evidence satisfactory to Lessor and to Lessor's lender of the
existence of an insurance reserve adequate for the risks covered by such plan
of self-insurance, or (ii) under a blanket policy, or policies, covering other
liabilities of Lessee and its subsidiaries, controlling or affiliated
corporation, or (iii) partly under such a plan of self-insurance and partly
under such blanket policies. Any portion of any risk for which Lessee is
self-insured shall be deemed to be an insured risk under this Lease.
6. Lessor and Lessee shall each cause to be issued to the other,
at any time upon request, appropriate certificates of insurance evidencing
compliance with the foregoing covenants. Such certificates shall provide that
if the insurance is cancelled or materially changed during the policy period,
the insurance carrier will make every effort to notify the party to whom such
certificate is addressed ten (10) days prior to the effective date of
cancellation or material change.
<PAGE> 6
ARTICLE XI: ASSIGNMENT AND SUBLETTING - SEE SCHEDULE C, PARAGRAPH 11.
2. This lease binds, applies to and inures to the benefit of, as
the case may require, the heirs, executors, administrators, successors, and
assigns of the Lessor and the successors and assigns of the Lessee.
ARTICLE XII: EMINENT DOMAIN
1. If any part of the premises shall be taken under the power of
eminent domain, or if thirty percent (30%) or more of the common areas in the
shopping center or thirty percent (30%) or more of the area in the shopping
center occupied by other stores is so taken, then and in any of such events,
Lessee may, by giving written notice to Lessor within sixty (60) days after
such taking, terminate this Lease as of the date of such notice. In the event
that Lessee does not have the right to terminate this Lease as the result of a
taking under the standards hereinabove set forth, or if Lessee has such right
but elects not to exercise such right within said sixty (60) day period, then
Lessor shall make such repairs and alterations as may be necessary to restore
the presses and/or any other portion of the shopping center as nearly as
practicable to complete units of like quality and character as existed just
prior to such taking.
2. The condemnation award shall belong solely to the Lessor,
except for any portion of the award attributable to Lessee's fixtures or
equipment. In addition Lessee shall have the right to claim any compensation
as may be separately awarded or receivable by Lessee in Lessee's own right on
account of any cost or loss Lessee may suffer for the removal of its
merchandise, furniture, fixtures or equipment, the loss of the unamortized
value of the improvements made pursuant to Schedule B of this Lease or any
other element of special damage separately recoverable by the Lessee.
ARTICLE XIII: ATTORNEY FEES
1. In the event either party hereto brings or commences legal
proceedings to enforce any of the terms of this Lease, the successful party in
such action shall then be entitled to receive and shall receive from the other
of said parties, in every such action commenced, a reasonable sum as attorney's
fees and costs, to be fixed by the court in the same action.
ARTICLE XIV: PERMITS AND LICENSES
1. Lessee shall apply for and secure any building permit or
permission of any duly constituted authority for the purpose of doing any of
the things which Lessee is required or permitted to do under the provisions of
this Lease.
2. Without limiting the foregoing, Lessor agrees that, in all
such cases, and whenever and as often as requested so to do by Lessee, Lessor
will in its own name apply for and secure any such permit or license.
3. Lessee agrees to indemnify and save harmless Lessor from loss
or damage by reason of any authority granted in this Article XIV or by reason
of any such application or consent.
ARTICLE XV: EXTENSION
1. Lessee shall have the right to extend the term of this Lease
upon the same terms, covenants, and conditions as herein contained, and at the
rental as herein reserved for two (2) additional consecutive periods of five
(5) years from and after the expiration date hereof, by giving Lessor notice in
writing at least (6) months prior to such expiration date and prior to each
such extended expiration date, notifying Lessor of Lessee's intention to so
extend said term, provided, however, that in the event that Lessee fails to
give such notice of extension, Lessee shall not be deemed to have waived the
right to that extension or any extension thereafter until Lessor gives Lessee
written notice of Lessee's failure to exercise such right of extension and
affords Lessee a period of ten (10) days after receipt of such notice to
exercise that right of extension by giving Lessor written notice thereof.
ARTICLE XVI: BANKRUPTCY
1. If Lessee be adjudicated a bankrupt, or seeks any relief under
bankruptcy laws, voluntary or not, or makes a general assignment for the
benefit of creditors, or if any receiver of Lessee, or any sheriff, marshal,
constable, or keeper takes possession of the demised premises by virtue of any
appointment of such receiver by a court of competent jurisdiction or by virtue
of any attachment or execution against Lessee, and if the premises are not
released from the possession of such receiver, sheriff, marshal, constable, or
keeper, and restored to the possession of Lessee within thirty (30) days after
the taking of such possession, such adjudication assignment, appointment, or
action shall constitute a default by the Lessee as provided in Article XVII of
this Lease, and shall give Lessor only the same right and remedy as provided in
Article XVII.
ARTICLE XVII: LESSEE'S DEFAULT IN RENT
1. If Lessee shall fail to pay the rent when the same is due, and
the same remains unpaid for fifteen days after Lessor has given Lessee written
notice that the same has not been paid, then Lessor may, at its option, in
addition to
<PAGE> 7
any other right provided for by law, terminate and cancel this Lease, and
re-enter and take possession of the demised premises, remove Lessee's property
therefrom and place the same in storage in a public warehouse at the expense
and risk of Lessee. SEE SCHEDULE C, PARAGRAPH 5.
ARTICLE XVIII: OTHER DEFAULTS BY LESSEE
1. If the Lessee shall be in default in the performance of any of
the terms or provisions of this Lease, other than in the payment of rent, and
if the Lessor shall give to the Lessee notice in writing of such default,
specifying the nature thereof, and if Lessee shall fail to cure such default
within thirty (30) days after the date of receipt of such notice, or in case
the default is of such a character as to require more than thirty (30) days to
cure then if Lessee shall fail to use reasonable diligence in curing such
default, then and in any such event the Lessor may cure such default for the
account of and at the cost and expense of the Lessee, and the sum so expended
by the Lessor shall be deemed to be additional rent and shall be paid by the
Lessee on the day when rent shall next become due and payable. SEE SCHEDULE C,
PARAGRAPH 5.
ARTICLE XIX: COMMON AREA MAINTENANCE - SEE SCHEDULE C, PARAGRAPH 6
ARTICLE XX: NOTICES
1. Any notices, demands, and the like, which are required to be
given hereunder or which either party hereto may desire to give to the other
shall be given in writing by mailing the same by certified United States mail,
return receipt requested, postage prepaid, addressed to the Lessor: c/o
Combined Properties Incorporated, 1899 L Street, N.W., 9th floor, Washington,
D.C. 20036 or to Lessee at 3300 75th Avenue, Landover, Maryland 20785,
attention of the Legal Department, or to such other addresses as the respective
parties may from time to time designate by notice given as provided in this
Lease. Notices shall be deemed served on the date on which personally
delivered or, if sent by mail, on the third (3rd) day after being posted.
2. If the Lessor be more than one person, notice by Lessee or
payment by Lessee to any one of them is notice or payment to all. If the
Lessor be more than one person, Lessee may act on notice from any Lessor, and
in the case of conflicting notices may recognize any one of them as valid and
disregard the others, but shall take reasonable steps to determine which notice
shall be followed by inquiry to Lessor in writing.
ARTICLE XXI: SHORT FORM LEASE
2. This Lease is the only agreement between the parties hereto.
All negotiations and oral agreements acceptable to both parties are included
herein.
ARTICLE XXII: MISCELLANEOUS PROVISIONS
1. Whenever in this Lease any words of obligation or duty
regarding either of the parties are used, such words shall have the same force
and effect as though in the express form of covenants. Whenever appropriate
from the context, the use of any gender shall include any other or all genders,
and the singular number shall include the plural, and the plural shall include
the singular.
2. The captions heading the various articles of this Lease are
for convenience and identification only, and shall not be deemed to limit or
define the contents of their respective paragraphs.
3. Lessee may make payment or give any notice to the Lessor,
despite any succession or assignment, and be protected in so doing, until it
has written notice from Lessor or in the case of Lessor's death, if he be a
natural person, from his executor or administrator, together with a certified
copy of Letters Testamentary or Letters of Administration.
4. If there be any conflicting claims concerning any money
payable by Lessee under this Lease, or reasonable doubt as to whom or whether
any money is payable, Lessee may discharge its obligation to pay by payment to
Lessor to abide the litigation of any such matters, however, nothing contained
herein in the case of adverse claims shall obligate Lessee to recognize such
adverse claimant and Lessee may pay the money to Lessor. All sums payable
hereunder by either party to the other are payable in lawful money of the
United State of America.
5. The parties agree that there are no brokerage fees and
commissions due for bringing about the execution and delivery of this Lease,
and each agrees to indemnify each other and save each other harmless of and
from any and all claims for such fees and commissions.
6. If either party hereto shall be delayed or prevented from the
performance of any act required hereunder by reason of acts of God, strikes,
lockouts, labor troubles, inability to procure materials, respective
governmental laws or regulations or other causes without fault and beyond the
control of the party obligated (financial inability excepted) performance of
such acts shall be excused for the period of the delay and the period for the
performance of any such acts shall be extended for a period equivalent to the
period of such delay provided the party is acting reasonably with due
diligence.
<PAGE> 8
7. The following schedules are attached hereto and by this
reference made a part of hereof.
Schedule A Description of Property
Schedule B Building
Schedule C Rental Payment and Other Amendments
Schedule E Lessor's Subordination Agreement
Schedule F Lessee's Sign Plan
Schedule G Prohibited Use of Premises
8. It is understood and agreed that until this Lease is fully
executed and delivered by both Lessee and by Lessor, there is not and shall not
be an agreement of any kind between the parties hereto upon which any
commitment, undertaking or obligation can be founded.
9. If this Lease is being executed by an agent of the Lessor,
each individual executing this Lease on behalf of such agent represents and
warrants that the agent is duly authorized to execute and deliver this Lease on
behalf of the Lessor, and acknowledges that Lessee is entering into this Lease
in reliance of such representation
SEE SCHEDULE C for additional provisions.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and
year first above written.
COMBINED PROPERTIES/RESEDA ASSOCIATES
LIMITED PARTNERSHIP
Ronald S. Haft
---------------------------------
Ronald S. Haft
General Partner
LESSOR
SUPER TRAK CORPORATION
By: R. Keith Green
------------------------------
President
LESSEE
<PAGE> 9
SCHEDULE A
Attached to and forming a part of that certain Indenture of Lease and
Memorandum of Lease executed under date of September 29, 1993 by and between
Combined Properties/Reseda Associates Limited Partnership, a Washington, D.C.
limited partnership as Lessor, and TRAK CORPORATION, a Delaware corporation, as
Lessee.
DESCRIPTION OF PROPERTY
1. LESSOR'S PROPERTY. The demised premises are a portion
of Lessor's entire property, situated in the City of Reseda County of Los
Angeles State of California and now commonly known as Loehmann's Plaza Shopping
Center. Such property, herein referred to as "Lessor's Property", means
substantially the entire property within the outer property limits shown on the
Plot Plan attached hereto and made a part hereof on Page 2 of 2.
2. BUILDING. Lessor's Property provides a site for a store
building in the location designated "Trak Auto" on the said Plot Plan attached.
Such building is now thereon, pursuant to Schedule B hereof by Lessor for
Lessee containing approximately 9,840 square feet. Said building site,
building, improvements, and appurtenances, and fixtures and equipment owned by
the Lessor, now or hereafter located thereon are collectively referred to in
this Lease as the "premises" or "demised premises"
3. PARKING. Lessee, its agents, employees, patrons and
invitees, in common with Lessor and all other tenants of portions of Lessor's
Property and their respective agents, employees, patrons, and invitees shall
have and are hereby granted, during the entire term of this Lease and any
extension thereof, the free, uninterrupted, and non-exclusive use of sidewalks,
malls, roadways, parking area, and all other common areas, which use by all
users shall be for the purposes of ingress, egress, service, utilities, and
parking. It is specifically understood and agreed that Lessee shall have no
obligation whatsoever in connection with the ownership, maintenance, or
management of the malls, roadways, parking area, or other common areas
involved, and that Lessor shall manage, operate, and maintain all such common
areas or cause the same to be done on its behalf, at no additional cost to
Lessee except as subject to Article XIX of the Lease, and Schedule C.
5. COVENANTS. All of the covenants of the Lessor contained
in this Lease shall be covenants running with the land pursuant to applicable
law. It is expressly agreed that each covenant to do or refrain from doing
some act on the Lessor's Property or any part thereof (a) is for the benefit of
the demised premises and each person having any leasehold interest therein
derived through the Lessee, and (b) shall be binding upon each successive
owner, during his ownership, of any portion of the land affected thereby and
each person having any interest therein derived through any owner of the land
affected hereby.
<PAGE> 10
EXHIBIT "A"
PROJECT: LOEHMANN'S PLAZA
LANDLORD: Combined Properties/Reseda Associates L/P
TENANT: TRAK CORPORATION
STORE: #8 = approx. 9,840 s.f.
LEASE DATED: 9/29/93
<PAGE> 11
DESCRIPTION OF LESSOR'S WORK
Lessor did furnish shell of building complete with the following
installations for Loehmann's Plaza Shopping Center and Lessee shall be
responsible for servicing, maintaining and replacing of same throughout the
term of this Lease and any renewals thereof:
(a) Existing air conditioning and heating unit.
(b) Existing lighting fixtures.
(c) Existing bathroom.
(d) Existing acoustical tile ceiling.
(e) Sewer tap(s) of normal size and capacity to service the size
of Lessee's store. In the event additional sewer tap(s) are
required due to Lessee's "use" of the Premises then Lessee
shall bear all cost and expense with regard to acquiring and
installing of same.
It is agreed that Lessee accepts the demised premises in an "as is"
basis and that any and all repairs, improvements, installations or additions
necessary or required for Lessee to open for business and conduct its business
from the demised premises, including but not limited to those items identified
hereinbelow as part of Lessee's Work, shall be at the sole cost and expense of
Lessee.
Lessee's Work: The term "Lessee's Work" shall mean construction
and/or completion by Lessee of an interior decor package comparable and
consistent with the latest Super Trak Auto retail store prototype, the same to
be constructed of good quality materials and installed in a professional
workmanlike condition.
SCHEDULE B
PROJECT: LOEHMANN'S PLAZA
LESSOR: Combined Properties/Reseda Associates Limited Partnership
LESSEE: TRAK CORPORATION
STORE: #8 = approx. 9,840 s.f.
LEASE DATED: 9/29/93
<PAGE> 12
SCHEDULE C
Attached to and forming a part of that certain Indenture of Lease executed
under date of September 29, 1993 by and between Combined Properties/Reseda
Associates Limited Partnership, a Washington, D.C. limited partnership as
Lessor, and TRAK CORPORATION, a Delaware corporation, as Lessee.
1. ADDITION TO ARTICLE II, RENTAL, PARAGRAPH 1:
(a) It is agreed that for the period October 15, 1993 through
October 31, 1994, Lessee shall pay Lessor an annual minimum fixed rent of One
Hundred Thirty Two Thousand Eight Hundred Forty Dollars ($132,840.00) payable
in monthly installments of Eleven Thousand Seventy Dollars ($11,070.00)
payable, in advance, on or before the first day of each full calendar month.
(b) Commencing as of November 1, 1994 and thereafter each and
every third calendar year throughout the Lease term and option term, if any, as
of November 1st of each and every third calendar year, (said November 1, 1994,
and each of the third anniversaries thereof each being a "date of adjustment"),
the minimum fixed rent shall be increased by ten percent (10%) of the minimum
fixed rent payable in the immediately preceding twelve (12) month period.
Notwithstanding the foregoing, in consideration of Lessee accepting
the Demised Premises "as is", and provided Lessee has performed all of its
obligations under the Lease to be performed and is not in default of the Lease.
Lessor agrees to contribute to Lessee the sum of One Hundred Ninety Thousand
Eighty and 00/100 Dollars ($190,080.00) which sum shall be credited to the
Rental Account of Lessee commencing on the Commencement Date until credited in
full by amortizing the same dollar for dollar, out of those initial payments of
minimum fixed rent and other charges due from Lessee under this Lease and said
credit shall be maintained on the Rental account of Lessee for so long as
Lessee has complied with the provisions of this Lease and is not in default
thereof, but in no event to exceed in the aggregate the sum of One Hundred
Ninety Thousand Eighty and 00/100 Dollars ($190,080.00).
(c) Notwithstanding the foregoing, minimum fixed rent and other
payments called for hereunder shall not commence to accrue until that date
("the Rent Commencement Date") which is January 15, 1994.
3. ADDITION TO ARTICLE VII, COVENANTS AGAINST LIENS, PARAGRAPH 1 (REAL
PROPERTY TAX):
In addition to the rental set forth herein, Lessee agrees to pay to
Lessor each lease year the sum of Twelve Thousand Eight Hundred Ninety and
40/100 Dollars ($12,890.40) to be paid in equal monthly installments in the
amount of One Thousand Seventy Four and 20/100 Dollars ($1.074.20), on the
first day of each month, in advance, along with Lessee's payment of rental.
Said sum represents Lessee's contribution toward real estate taxes on the
demised premises, as per Lessor's real estate tax schedule for CY 1993. In the
event the real estate taxes on the land and buildings within the area described
in the plot plan attached to Schedule A or such other land and buildings now or
hereafter forming a part of the Shopping Center shall be increased in any tax
year during term of this Lease, by reason of an increase in the tax rate or an
increase in the assessed valuation, over the amount of taxes due and payable
for CY 1993 then Lessee shall pay to Lessor as additional rent, within thirty
(30) days after receiving notice form Lessor that such taxes are payable, its
proportionate share of said increases and, thereafter, Lessee shall pay said
increases on a monthly basis along with other payments called for herein.
Lessee's share of the aforesaid increases shall be calculated by multiplying
said increase by a fraction, the numerator of which is the square foot area of
the demised premises and the denominator of which is the total number of square
feet of net leasable first floor area of all buildings in the Shopping Center.
The square footage of any new building(s) hereafter constructed and forming a
part of the Shopping Center shall only be included in the proceeding
calculations once the same has been leased for the first time.
4. ADDITION TO ARTICLE X, INSURANCE, PARAGRAPH 2:
Lessee shall, for the term of this Lease, pay its pro rata share of
Lessor's fire and extended coverage insurance premium and public liability
insurance which shall be included as common area maintenance costs under
Article XIX.
5. ADDITION TO ARTICLES XVII AND XVIII, LESSEE'S DEFAULT IN RENT; OTHER
DEFAULTS BY LESSEE
In addition to any other remedies available to Lessor hereunder, if
any rental payable by Lessee to Lessor shall be and remain unpaid for more than
fifteen (15) days after Lessor has given Lessee written notice that the same
has not been paid, or if Lessee shall violate or be in default of any of the
other covenants, agreements, stipulations or conditions herein and such
violation or default shall continue for a period of thirty (30) days after
written notice of such violation or default, then it shall be optional for
Lessor to declare this Lease forfeited and said term ended, and to re-enter the
demised premises, with or without process of law, using such force as may be
necessary to remove all persons or chattels therefrom, and Lessor shall not be
liable for damages by
<PAGE> 13
reason of such re-entry or forfeiture; but notwithstanding such re-entry,
Lessee shall remain liable for any rent or damages which may be due or
sustained prior thereto, and Lessee shall pay the amount of rent reserved
under this Lease at the times herein stipulated for payment of rent for the
balance of the term, which rent shall become all due and payable on demand,
less any amount received by Lessor during such period from others to whom the
premises may be rented on such terms and conditions and at such rentals as
Lessor in its sole discretion shall deem proper. It is further understood that
Lessee will pay all costs and expenses of collection and reasonable attorney's
fees on any part of said rental that may be collected by an attorney, and
further, in the event that Lessee fails to promptly and fully perform and
comply with each and every condition and covenant hereunder, and the matter is
turned over to Lessor's attorney, Lessee shall pay Lessor a reasonable
attorney's fee plus costs, where necessary whether suit is instituted or not.
6. ADDITION TO ARTICLE XIX, COMMON AREA MAINTENANCE, PARAGRAPH 3:
(a) Lessee agrees to pay to Lessor for each lease year during the
term hereof, in equal monthly installments at the same time as the minimum
fixed rent (and pro-rata for any portion of a month), as a minimum contribution
toward the shopping Center's Common Areas Operating Cost, (hereinafter
defined), the sum of Fourteen Thousand Two Hundred Sixty Eight and 00/100
Dollars ($14,268.00) each lease year, with no offsets, to be paid in equal
monthly installments in the amount of One Thousand One Hundred Eighty Nine and
00/100 Dollars ($1,189.00), (hereinafter "minimum contribution") (said sum
computed at the rate of One and 45/100 ($1.45/per square foot of the demised
premises). For the purpose of this subsection (a), the Shopping Center's
Common Areas Operating Cost means the total cost and expense incurred in
maintaining, operating, repairing and replacing the parking and other exterior
common areas, the roof and the exterior walls of the buildings in the Shopping
Center and those areas of the Shopping Center which house mechanical,
electrical or other equipment or are otherwise determined by Lessor from time
to time to be used in operating or maintaining the Shopping Center,
specifically including but not limited to, if provided and without limitation,
the cost of maintaining, operating, repairing, replacing and repaving the
common areas, gardening and landscaping, the cost of fire and extended coverage
insurance and public liability and property damage insurance, water and sewer
charges, repairs, lighting, security, sanitary control, removal of ice, snow,
trash rubbish, garbage and other refuse, cleaning, directional signs, pavement
markings, parking lot striping, depreciation on machinery, equipment and
furnishings used in such operation and maintenance, the cost of personnel to
implement such services, to direct parking, and to police the said portion of
the common areas and facilities, utilities, legal fees, accounting fees, and
other professional fees. In addition, as a management and administrative fee,
Lessee shall pay in equal monthly installments as aforesaid two percent (2%) of
the Minimum Guaranteed Rent due for each lease year during the term.
(b) Lessee's management and administrative fee pursuant to
subsection (a) above is presently in the monthly amount of Two Hundred Thirteen
and 20/100 Dollars ($213.20).
(c) Upon the commencement of each lease year during the term
hereof, Lessee's minimum contribution(s) shall be increased based upon either
(i) an amount equal to Lessee's proportionate share of the excess costs, as
hereinafter defined, or (ii) the increase in the Consumer Price Index, as
hereinafter defined, whichever increase shall be the greatest. (Lease year
used herein means calendar year.)
Excess costs and Lessee's proportionate share of such excess costs
shall have the meaning and be calculated as follows:
If in any lease year or portion thereof, the aforesaid total costs and
expense comprising the Shopping Center's Common Areas Operating Cost exceeds;
(1) With respect to the said Shopping Center's Common Areas
Operating Cost, One and 45/100 Dollars ($1.45) per square foot times the total
number of square feet of tenancies in the Shopping Center that are obligated to
pay the Shopping Center's Common Areas Operating Costs (such excess being
referred to as "excess costs").
Then, and so often as such event shall occur, Lessee's proportionate
share of such excess costs shall be calculated as follows:
(a) with respect to the said Shopping Center's Common Areas
Operating Costs, said excess costs shall be multiplied by a fraction, the
numerator of which is the square foot area of the demised premises and
denominator of which is the total number of square feet of tenancies in the
Shopping Center that are obligated to pay the Shopping Center's Common Areas
Operating Cost;
The Consumer Price Index shall mean the "Consumer Price Index For
Urban Wage Earners And Clerical Workers (1982-84=100) for All Items, U.S. City
Average", issued by the Bureau of Labor Statistics of the United States
Department of Labor. In event the Consumer Price Index is not available, or is
discontinued, then any successor or substitute index shall be used for the
computations herein set forth. In computing the increase in the Consumer Price
Index, the amount of increase shall be based upon the percentage increase in
the Consumer Price Index from the date of the Lease through to the date of
<PAGE> 14
adjustment.
Within fifteen (15) days from the date of billing by Lessor, Lessee
shall pay Lessee's proportionate share of such excess costs or the increase
above Lessee's minimum contribution(s) as calculated by the increase in the
Consumer Price Index and thereafter Lessee shall pay it's proportionate share
of such excess costs or the increase as calculated by the increase in the
Consumer Price Index in equal monthly installments along with the payment of
its minimum contribution(s), the combined amount being Lessee's new minimum
contribution(s) until further adjusted as herein provided.
7. ESTOPPEL CERTIFICATES:
Each party shall, from time to time upon not less than fifteen (15)
days prior written notice from the other which shall be accompanies by an
estoppel certificate signed by the requesting party, executed acknowledge and
deliver to the other a statement in writing (a) certifying that this Lease is
unmodified and in full force and effect (or, if modified, stating the nature of
such modification and certifying that this Lease as so modified is in full
force and effect), and the date to which the rental and other charges are paid
in advance, if any, and (b) acknowledging that there are not, to such party's
knowledge, any uncured defaults on the part of the other hereunder, or
specifying such defaults if any are claimed, and (c) setting forth the date of
commencement of rents and expiration of the term hereof. Any such statement
may be relied upon by any prospective purchaser, encumbrance, assignee, or
subtenant of all or any portion of the real property of which the premises are
a part.
8. MODIFICATION TO SHOPPING CENTER:
Lessor reserves the right at any time and from time to time (a) to
make or permit changes or revisions in the shopping center including additions
to , subtractions from, rearrangements of, alterations of, modifications of or
supplements to the building areas, walkways, parking areas, driveways or other
common areas, provided that the size or configuration of the demised premises
shall not be reduced or changed and that any such changes or revisions shall
not materially affect ingress or egress to the demised promises or the
visibility of the demised premises, (b) to construct other buildings or
improvements in the shopping center and to make alterations thereof or
additions thereof on any such building or buildings and to build adjoining
same. It is agreed that Lessor's implementation of its rights under this
paragraph shall not materially interfere with the operation of Lessee's
business in the demised premises. Lessor must take reasonable precautions to
prohibit commuters and office help from parking on the common areas of Lessor's
Property other than in designated areas. Lessor shall not permit the parking
areas or other common areas to be used for carnivals or other similar
activities.
9. INDEMNIFICATION:
(a) Lessee agrees to and does hereby indemnify and defend Lessor
and save it harmless and defend if from and against any and all claims,
actions, damages, liability and expense, including attorney's and other
professional fees, in connection with loss of life, personal injury and/or
damage to property arising within the premises and the sidewalks and loading
areas adjacent to the Demised Premises.
(b) Lessor agrees to and does hereby indemnify and defend Lessee
and save it harmless from and against any and all claims, acts, damages,
liability and expense, including attorneys and other professional fees, in
connection with loss of life, personal injury and/or damage to property
occurring within the common areas of the shopping center and outside of the
premises except the sidewalks and loading areas adjacent to the Demised
Premises.
10. LIABILITY:
Lessor, or its agents, shall not be liable for any injury or damage to
persons or property resulting from fire, explosion, falling plaster, steam,
gas, electricity, water, rain, or snow or leaks from any part of the demised
premises or other parts of the building of which the premises are a part,
including the roof, or from the pipes, conduits, appliances or plumbing works,
or from the roof, street or subsurface or from any other place or by dampness
or by any other cause of whatsoever nature, unless caused by or due to the
negligence or willful acts of Lessor, its agents, servants, or employees. All
personal property and equipment located in the demised premises shall be at the
risk of Lessee.
11. ADDITION TO ARTICLE XI, ASSIGNMENT AND SUBLETTING, PARAGRAPH 1:
(a) Lessee shall have the right without Lessor's consent to enter
into an assignment of this Lease, or a sublease of the premises, to any
corporation which is owned by or closely affiliated with the Dart Group
Corporation, or to any subsidiary corporation of Lessee, or Lessee's parent
corporation, or to any corporation succeeding to substantially all the assets
of Lessee as a result of a consolidation or merger, or to a corporation to
which all or substantially all the assets of Lessee have been sold. If Lessee
desires to assign or sublet all or any part of this Lease or the premises to
anyone else, Lessee shall first notify Lessor in writing of its intentions
(Lessee's notice). Thereafter, Lessor shall have the option, exercisable in
writing within thirty (30) days of receipt
<PAGE> 15
of Lessee's notice, to terminate this Lease. If Lessor does not timely
exercise its option to terminate, Lessee may freely assign this Lease or sublet
all or any part of the premises provided, however, Lessee shall continue to
remain liable and obligated under all the term, conditions and provisions
hereof, In the event of an assignment or a sublease made in accordance with
this paragraph, the assignee or sublessee may use the premises for any lawful
retail use except for any use which is: (a) a restaurant; (b) obnoxious or
burdensome due to the emission or conduction of noise, smoke, dust or odors; or
(c) requires a special use permit, special exception or variance any of which
would have an adverse impact or impose any requirements upon the Shopping
Center, or which would require a reclassification of the Shopping Center or any
part thereof under applicable local zoning or building codes; or (d) increases
the demand or requirements for parking for the Shopping Center over that
required for the use set forth in Article V; or (e) is categorized as primarily
service and non-retail such as a medical, dental or tax preparation service; or
(f) is categorized as an amusement or entertainment in nature or a place of
public assembly; or (g) conflicts with any primary use of any other then
existing tenant in the Shopping Center; or (h) violates the provisions of
Schedule 3 hereto. In the event of any such assignment or sublet, Lessor
reserves the right to require a change in the percentage rent payable
hereunder, according to industry standards.
(b) Notwithstanding anything to the contrary contained in this
Article, Lessee shall have the right to sublet up to fifty percent (50%) of the
premises provided that said sublessee uses the sublet portion of the premises
for the sale of merchandise presently or previously sold by Lessee.
12. ADDITIONAL PROVISIONS:
A) PAYMENT TO LESSOR AND LATE CHARGE FEES.
Lessee will promptly pay all rental and other payments called for
herein when and as the same shall become due and payable. If Lessor shall pay
any monies, or incur any expenses in connection with any violation of the
covenants herein set forth, the amounts so paid or incurred shall at Lessor's
option, and on notice to Lessee, be considered additional rental payable by
Lessee with the first installment of minimum fixed rent thereafter to become
due and payable, and may be collected and enforced by Lessor as rent. All sums
of money or charges payable by Lessee to Lessor under this Lease shall be paid
when due, without any deductions or offsets whatsoever, and the failure to pay
such charge carries the same consequences as Lessee's failure to pay rent. Any
payments of rental or other charges by Lessee or acceptance by Lessor of a
lesser amount than shall be due from Lessee to Lessor shall be treated as a
payment on account. The acceptance by Lessor of a check for a lesser amount
with an endorsement or statement thereon, or upon any letter accompanying such
check, that such lesser amount is payment in full, shall be given no effect,
and Lessor may accept such check without prejudice to any other rights or
remedies which Lessor may have against Lessee.
In the event said payments are not received by the Lessor by the 10th
day of the month in which said payments are due, then Lessee agrees to pay to
Lessor, upon demand, a late charge fee of One Hundred Dollars ($100.00) for
each such late payment to cover extra expenses incurred by Lessor in handling
delinquent payments. In addition to the late charge fee referred to above, any
and all payments in arrears shall bear interest, payable as rent to Lessor at
the rate of fifteen percent (15%) per annum or, or at Lessor's option, at the
rate of two percent (2%) above the prevailing prime interest rate as posted by
Riggs National Bank of Washington, D.C. The provisions of this section are
cumulative and shall in no way restrict the other remedies available to Lessor.
In the event of Lessee's default as provided for under this Lease.
(B) LIMITATION OF LESSOR'S LIABILITY.
Lessor shall not be liable to Lessee for Lessee's loss of business, or
other consequential loss or damage, whether resulting from failure of
utilities, services, or otherwise. It is understood and agreed that the
liability of Lessor hereunder shall be limited solely to the assets and
property of the Shopping Center; that no general partner of Lessor shall be
personally liable with respect to any claim arising out of or related to this
Lease; and that a deficit capital account of a partner of Lessor shall not be
deemed an asset or property of the Shopping Center.
(C) APPLICABLE LAW - WAIVER OF TRAIL BY JURY.
The covenants, conditions and provisions of this Lease shall be
construed under the laws of the State of California.
The parties hereto shall, and they hereby do, waive trial by jury in
any action, proceeding or counterclaim brought by either of the parties hereto
against the other on any matters whatsoever arising out of or in any way
connected with this Lease, the relationship of Lessor and Lessee, Lessee's use
or occupancy of the premises, and/or any claim for injury or damage.
(D) MERCHANTS ASSOCIATION
In the event a Merchants Association is formed or a promotional
program established, Lessee agrees to contribute to said Association or
promotional
<PAGE> 16
program, Ten Cents ($.10) per square foot per annum, of the demised
Premises.
13. ADDITION TO ARTICLE V, USE, PARAGRAPH 5:
(a) Lessee shall not install any exterior sign without obtaining
Lessor's written consent, which consent shall not be unreasonably withheld or
delayed. Lessor hereby approves Lessee's trade name and Lessor hereby approves
of the installation of said sign above the storefront of the demised premises.
(c) Lessor warrants and represents that it has no knowledge of any
sign ordinance, law, rule or regulation which would preclude Lessee from
installing any signs contemplated herein.
15. RELOCATION RIGHT.
Throughout the term of this lease and any renewal, Lessor shall have
the right to require Lessee to relocate Lessee's store to another location
("Relocation Premises") in the Shopping Center. The Relocation Premises shall
contain approximately 10,000 square feet. The minimum fixed rent and other
charges and payments set forth under this Lease shall remain unchanged
regardless of any increase or decrease in the size of Lessee's store. Lessor
shall give Lessee thirty (30) days prior written notice to relocate Lessee's
store and upon the expiration of said thirty (30) days Lessee shall have no
further right to occupy the Demised Premises. Lessee's failure to vacate the
Demised Premises upon the expiration of said thirty (30) day period shall
constitute a default. In consideration of Lessee agreeing to accept the
Relocation Premises, Lessor agrees to reimburse Lessee for all costs related to
relocation of the Demised Premises, including but not limited to, moving
expenses and the unamortized cost of Lessee's actual non- movable leasehold
improvements in the Demised Premises. After any such relocation, this Lease
shall remain in full force and effect in accordance with its terms except that
the Demised Premises herein set forth shall be redefined as the store to which
Lessee has been relocated.
17. EXISTING TENANT IN POSSESSION.
Lessee understands that the Demised Premises is presently occupied by
an existing tenant under the terms of a Temporary Occupancy Agreement dated
June 10, 1993. Accordingly, immediately following full execution of this Lease
by the parties, Lessor shall use its best efforts to regain possession of the
Demised Premises. In the event Lessor is delayed in delivering possession of
the Demised Premises on October 15, 1993, the Commencement Date, the Rent
Commencement Date, and all other dates in the Lease shall be adjusted on a day
to day basis for the period of any such delay. Furthermore, notwithstanding
anything to the contrary, in the event Lessor is unable to deliver possession
of the Demised Premises as provided herein by September 15, 1994, either party
shall at any time following said September 15, 1994, have the right to
terminate this Lease upon written notice to the other as herein provided. In
the event Lessor is able to secure and deliver possession of the Demised
Premises prior to October 15, 1993, Lessor shall give Lessee five (5) days
prior written notice of the date the Demised Premises shall be available to
Lessee and Lessee shall be obligated to accept delivery as of that date and the
Commencement Date, the Rent Commencement Date and all other dates in the Lease
shall be adjusted to the date of such early delivery.
<PAGE> 17
SCHEDULE D
LESSOR'S SUBORDINATION AGREEMENT
This Agreement between --------------------------------------
hereafter called "Lessor, and ------------------------ hereinafter called
"Secured Party":
1. By Lease dated ------------------, Lessor has leased to
- - ------------------------, as Lessee, premises located at ---------------------
(hereinafter referred to as the "premises")
2. By this instrument, subject to the terms and provisions
hereinafter set forth, Lessor hereby subordinates its landlord's liens and
security interest contractual and statutory, to the security interest arising
in favor of the undersigned Secured Party as to the personal property listed
and described on attached Exhibit "A" (said personal property being herein
referred to as the "Encumbered Removable Trade Fixtures").
3. In the event that Lessor shall terminate said Lease or
terminate Lessee's right to possession under said Lease prior to the expiration
of the term for which the premises thereunder were leased or any extension
thereof, or in the event the Lessee abandons said premises prior to the
expiration of term for which said premises were leased or any extension thereof
Lessor may, in any such event at any time after such event give written notice
to the undersigned Secured Party to perform Secured Party's removal duties
(hereinafter stated in Article 4) and repair duties (hereinafter stated in
Article 5).
4. The undersigned Secured Party agrees that upon receipt of such
notice under Article 3 it shall remove all of said Encumbered Removable Trade
Fixtures from the premises, whether or not Lessee is in default under any note
or security agreement held by Secured Party, the aforesaid removal (and the
performance of any repair duties of Secured Party as hereinafter stated in
Article 5) to be completed within a period of fifteen (15) days from its
receipt of any such notice. In the event, however, that within the aforesaid
period of time, either not all of said Encumbered Removable Trade Fixtures
shall have been removed from the premises or Secured Party has not completed
the aforesaid repair duties of Secured Party set forth in Article 5 of this
instrument then the following shall apply: (i) this subordination by Lessor
shall automatically cease and thereupon the statutory and contractual liens and
security interests of Lessor and the mortgagee shall automatically be prior an
superior to any and all security interests ( and other rights, if any) in said
Encumbered Removable Trade Fixtures in favor of the undersigned Secured Party,
(ii) the undersigned Secured Party shall not thereafter remove any of said
Encumbered Removable Trade Fixtures without the prior written permission of
Lessor, (iii) Lessor shall be permitted (but not obligated) to foreclose on
such Encumbered Removable Trade Fixtures (without court proceedings) at any
time after expiration of the aforesaid period of notice from Lessor to Secured
Party upon ten (10) days' notice to both Lessee (given in the manner and to the
place stated in said Lease) and Secured Party (given in manner and to the place
stated above in this Article 4) advising of the time and place of said sale.
5. In the event of removal from said premises of any of said
Encumbered Removable Trade Fixtures by Secured Party, Lessee and Secured Party,
jointly and severally, agree to promptly repair all damage to the premises
caused by such removal, and to leave said premises in a safe and sanitary
condition.
EXECUTED this the ------------- day of --------------------, 19--- in
multiple counterparts each of which shall have the force and effect of an
original.
- - ------------------------------ ------------------------------
By---------------------------- By----------------------------
Authorized Agent Authorized Agent
Title:------------------------ Title:------------------------
LESSEE LESSOR
- - ------------------------------
By----------------------------
Authorized Agent
Title:------------------------
Address:----------------------
----------------------
SECURED PARTY
<PAGE> 18
SCHEDULE "F"
Notwithstanding anything contained herein to the contrary and subject to
conformance with local codes, Lessor hereby approves Lessee's us of its typical
"Super Trak" signage, including stylized lettering and logo as shown on this
Schedule "F" page 1, for installation on Lessee's storefront, subject to the
conformance with governmental regulations, and provided the same otherwise
conforms to, and is installed in accordance with, Lessor's sign criteria set
forth on Schedule "F" pages 2 through 4.
<PAGE> 19
PROHIBITED USE OF PREMISES
Lessee hereby covenants that throughout the term of its Lease, any
renewals or extensions thereof, the Demised Premises, in whole or in part, will
not be used or operated directly or indirectly for the business of:
(a) A retail super market.
(b) A restaurant which features Italian food.
(c) The display and sale, at discount, of women's clothing or
furnishings.
(d) The sale, at discount, of junior ready-to-wear clothes.
(e) The operation of a drugstore and/or prescription pharmacy.
(f) The sale of liquor for off-premises consumption.
(g) The sale of alcoholic beverages, liquor, beer and/or wine for
on-site consumption other that a restaurant.
(h) Music store engaged primarily in the sale of records.
(i) Camera shop or drive-up photo supply store.
(j) Theatre or bowling alley.
(k) Second-hand or thrift store.
(l) A store for the sale of non-prepackaged doughnuts.
(m) A "Sub" shop.
(n) The sale of high-fashion/high-price ladies footwear.
(o) The operation of a dry cleaners and shirt laundry.
(p) A store whose primary use is the sale of large size women's
ready-to-wear apparel.
In the event such covenants shall be breached, Lessee agrees to take
those steps necessary to correct any such violation of such covenants and
Lessor shall be entitled to injunctive relief or other appropriate remedy at
law or in equity, by statute or otherwise, as Lessor may elect.
SCHEDULE "G"
Consisting of one page, attached to and made a part of the Lease
Agreement by and between COMBINED PROPERTIES/RESEDA ASSOCIATES LIMITED
PARTNERSHIP, LESSOR and TRAK CORPORATION, LESSEE, dated 9/29/93.
(200) Loehmann's Plaza
