SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER
SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended December 31, 1996
Commission File Number 0-20984
HAHN AUTOMOTIVE WAREHOUSE, INC.
(Exact name of Registrant as specified in its charter)
NEW YORK 16-0467030
(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
415 West Main Street Rochester, New York 14608
(Address of principal executive offices) (Zip Code)
(716) 235-1595
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
Number of shares outstanding of the registrant's common stock, par
value $.01 per share, on February 14, 1997; 4,562,513.
HAHN AUTOMOTIVE WAREHOUSE, INC.
Index
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
December 31, 1996 and September 30, 1996
Condensed Consolidated Statements of Income -
for the quarters ended December 31, 1996
and December 31, 1995
Condensed Consolidated Statements of Cash Flows -
for the quarters ended December 31, 1996
and December 31, 1995
Notes to Condensed Consolidated
Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
EXHIBIT INDEX
<TABLE>
<CAPTION>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands except share data)
ASSETS
12/31/96 9/30/96
(Unaudited)
<S> <C> <C>
Current Assets:
Cash 889 $ 199
Accounts Receivable:
Trade, net of allowance
for doubtful accounts 17,553 17,575
Inventory 76,658 70,914
Other Current Assets 2,260 2,608
Total Current Assets 97,360 91,296
Property, Equipment, and
Leasehold Improvements, net 13,472 13,362
Other Assets 4,185 4,300
$ 115,017 $ 108,958
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt
and capital lease obligations 3,483 $ 3,389
Notes payable -officers and 2,536 2,560
affiliates
Accounts payable 19,138 19,452
Compensation related liabilities 2,724 3,274
Other accrued expenses 2,179 5,891
Total Current Liabilities 30,060 32,566
Long-term Debt 51,057 40,443
Capital Lease Obligations 331 450
Total Liabilities 81,448 75,459
Shareholders' Equity:
Common stock (par value $.01 per
share;
authorized 20,000,000 shares;
issued and outstanding 4,562,513) 46 46
Additional Paid-in Capital 24,607 24,607
Retained Earnings 8,916 8,846
Total Shareholders' Equity 33,569 33,499
$ 115,017 $ 108,958
</TABLE>
<TABLE>
<CAPTION>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF INCOME
For the Three Months Ended
December 31, 1996 and 1995
(In Thousands except for share
and per share data)
(Unaudited)
1996 1995
<S> <C> <C>
Net sales $ 51,828 $ 52,677
Cost of products sold 30,940 31,106
Gross profit 20,888 21,571
Selling, general and
administrative expense 19,055 19,688
Depreciation and amortization 761 804
Income from operations 1,072 1,079
Interest expense (1,071) (1,075)
Interest and service charge
income 118 117
Interest before taxes 119 $ 121
Income taxes 47 48
Net Income 72 $ 73
Net Income Per Share $ .02 $ .02
Weighted Average Number of Shares 4,562,513 4,562,406
</TABLE>
<TABLE>
<CAPTION>
HAHN AUTOMOTIVE WAREHOUSE, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
For the Three Months Ended
December 31, 1996 and 1995
(In Thousands except for share
and per share data)
(Unaudited)
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income 72 $ 73
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 761 804
Provision for doubtful accounts
and notes 94 102
Change in assets and liabilities:
Trade receivables (72) 812
Inventory (5,744) (945)
Other assets 394 672
Accounts payable and other accruals (4,575) (9,270)
Net cash provided by operating
activities (9,070) (7,752)
Cash flows from investing activities:
Additions to property, equipment and
leasehold improvements (803) (360)
Net cash used in investing
activities (803) (360)
Cash flows from financing activities:
Net borrowings under Revolving
Credit Agreement 9,250 8,427
Proceeds from long-term debt and
demand notes 1,519 21
Payments from long-term debt and
demand notes (77) (193)
Payment of notes payable -
officers and affiliates (24) (22)
Payment of capital lease obligations (105) (125)
Net cash provided by
financing activities 10,563 8,108
Net increase (decrease) in cash 690 (4)
Cash at beginning of year 199 205
Cash at end of period 889 201
Supplemental disclosures of cash
flow information:
Cash paid during the quarter for:
Interest 1,185 $ 1,294
Income taxes paid $ 39 $ 126
</TABLE>
HAHN AUTOMOTIVE WAREHOUSE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Basis of Presentation
The condensed interim consolidated financial statements included
herein have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission.
The interim financial statements reflect all adjustments which are, in
the opinion of management, necessary to fairly present such
information. Although the Company believes that the disclosures
included on the face of the interim consolidated financial statements
and in the other footnotes herein are adequate to make the information
presented not misleading, certain information and footnote
disclosures, including significant accounting policies, normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations. It is suggested that all condensed
consolidated financial statements contained herein be read in
conjunction with the financial statements and the notes thereto
included in the Company's Annual Report for the fiscal year ended
September 30, 1996, on Form 10-K, filed with the Securities and
Exchange Commission, Washington, D.C. 20549. This information may be
obtained through the web site of the Securities and Exchange
Commission, EDGAR Filing section at http://www.sec.gov.
Operating results for the three month period ended December 31, 1996,
are not necessarily indicative of the results that may be expected for
the entire fiscal year.
2. Acquisitions
On October 14, 1996, the Company acquired the assets of Nu-Way Auto
Parts, Inc. (Nu-Way) for $2.7 million, of which $600,000 was paid in
cash and the balance with deferred payments. The $600,000 in cash was
funded with borrowings under the Company's credit facility. The four
new locations are being integrated into the Company's Direct
Distribution (two-step) Division. Accordingly, the operating results
of Nu-Way have been included in the Company's results of operation
from the date of acquisition forward.
3. Stockholders' Equity
On December 13, 1994 and January 31, 1995, two employees exercised
options for 4,160 shares of the Company's common stock. The Company
realized net proceeds of approximately $44,000, which was used in the
general operations of the business.
On March 15, 1996, the Board of Directors declared a 4% stock dividend
on the Company's common stock, payable May 1, 1996, to shareholders of
record as of April 10, 1996. Accordingly, amounts equal to the fair
market value of the additional shares issued have been charged to
retained earnings and credited to common stock and paid-in capital at
September 30, 1996. Earnings per share and weighted average shares
outstanding as of December 31, 1996 and 1995, were restated to reflect
this 4% stock dividend.
4. Debt (in thousands)
Long-term debt consists of the following:
<TABLE>
<CAPTION>
12/31/96 9/30/96
<S> <C> <C>
Revolving Credit $45,251 $36,000
Senior Secured Notes 6,400 6,400
Other Long-term Debt 2,432 990
Less Current Maturities (3,026) (2,947)
$51,057 $40,443
</TABLE>
Effective June 26, 1996, the Company replaced the Amended and Restated
Credit Facility Agreement ("Prior Credit Agreement") dated September 30,
1994, with the Credit Facility Agreement ("Credit Agreement") with a
group of banks. The Credit Agreement, which expires June 26, 1999,
provides for a revolving line of credit and a swing line of credit with
maximum availabilities of $47.5 million and $2.0 million, respectively.
The $13.0 million outstanding as a term loan under the Prior Credit
Agreement is now included in the revolving line of credit under the
Credit Agreement. Interest is payable at LIBOR plus 1.125% to 2.25% and
prime plus 0% to 1% for the revolving line of credit and swing line of
credit, respectively. The exact rate is dependent upon the Company's
financial performance. LIBOR and prime were 6% and 8.25%, respectively,
at September 30, 1996, and 5.6% and 8.25%, respectively, at December 31,
1996.
The Senior Secured Notes are due June 15, 1999, and require single
annual sinking fund payments of $2.2 million with a final payment of
$2.1 million due June 15, 1999. The Senior Secured Notes may be
prepaid, subject to a prepayment penalty. Interest at 10.25% is payable
semi-annually in June and December.
The Credit Agreement and Senior Secured Notes are collateralized by
substantially all of the Company's assets and contain covenants and
restrictions, including limitations on indebtedness, liens, leases,
mergers and sales of assets, and investments, and on dividends, stock
purchases and other payments in accordance with capital stock and cash
flow coverage requirements. At September 30, 1996, the Company was in
compliance with all covenants under the Credit Agreement and Senior
Secured Notes agreement.
Upon the failure of the Company to comply with any covenant contained in
the Credit Agreement or upon the occurrence of an event of default, the
rate of interest may be increased to a rate at all times equal to two
percent (2%) above the rate of interest which would be in effect absent
such failure of compliance or default. Such increased rate is to remain
in effect, through and including the end of the fiscal quarter in which
such failure of compliance is remedied and the Borrower is in compliance
with the covenant, whereby in the case of an event of default, such
increased rate is to remain in effect through payment in full of all
obligations and cancellation of further commitments to lend under the
Credit Agreement, or written waiver of such event of default by the
Bank, whichever is earlier.
The Company executed promissory notes ("Notes") with the President and
the Chief Executive Officer of the Company on June 26, 1996, in the
aggregate amount of $2.2 million, which replaced demand debt previously
advanced to the Company. The Notes bear interest which is payable
monthly, at the annual rate of 12%. Commencing January 1, 1997, the
Notes require monthly principal repayments with possible mandatory
prepayments if the Company's net income exceeds certain defined amounts.
Final principal and interest payments are due February 1, 2001.
HAHN AUTOMOTIVE WAREHOUSE, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The discussions set forth in this form 10-Q may contain forward-looking
comments. Such comments are based upon the information currently
available to management of the Company and management's perception
thereof as of the date of this report. Actual results of the Company's
operations could materially differ from those indicated in the forward-
looking comments. The difference could be caused by a number of factors
including, but not limited to, those discussed under the heading
"Important Information Regarding Forward-Looking Statements" in the
Company's Annual Report on Form 10-K, dated December 26, 1996, which has
been filed with the United States Securities and Exchange Commission
(the "Commission"). That Annual Report may be obtained by contacting
the Commission's public reference operations or through the worldwide
web site at http://www.sec.gov, EDGAR Filing section. Readers are
strongly encouraged to obtain and consider the factors listed in the
December 26, 1996, Annual Report and any amendments or modifications
thereof when evaluating any forward-looking comments concerning the
Company.
Hahn Automotive Warehouse, Inc. (the "Company") operates its automotive
aftermarket business both through the Company and its wholly-owned
subsidiaries, AUTOWORKS, Inc. and Meisenzahl Auto Parts, Inc. Unless
otherwise indicated, the discussion herein refers to the financial
condition and results of operation of the Company on a consolidated
basis.
Results of Operations
The Company's net sales for the first fiscal quarter of 1997 ended
December 31, 1996, were $51.8 million, down $900,000, or 1.7%, from
$52.7 million for the same fiscal quarter last year. This decrease is
due to the AUTOWORKS retail division which showed a $4.1 million, or
18.6%, decrease in overall sales. This decline is attributable to the
net reduction of 8 stores and a comparable store decrease of 14.3%,
which is primarily due to increased competition in certain markets and a
general softness in the retail automotive aftermarket. The majority of
this decrease was offset by a $1.7 million (or 11.5%) increase in
distribution center sales is due to higher-unit sales and a $1.7 million
increase in direct-distribution sales, of which $1.2 million is
attributed to the Nu-Way acquisition, and the balance to a 16.2%
comparable location increase. The Advantage Auto stores showed a slight
sales decline of $160,000 (due to the closing of four stores);
comparable stores sales were up 1.6%.
Gross profit for the current quarter decreased $684,000 as compared to
the first quarter of fiscal 1996. Gross profit expressed as a
percentage of sales decreased to 40.3% from 40.9% for the previous
fiscal year. This percentage decrease is mainly due to the addition
of the four Nu-Way locations and to a decrease in Advantage Auto store
sales as a percentage of total distribution center sales.
Selling, general and administrative expenses dropped $632,000 from
$19.7 million in the first quarter of fiscal 1996, to $19.1 million
for the comparable quarter of fiscal 1997. As a percentage of net
sales, SG&A decreased to 36.8% from 37.4% for the same period last
year. This percentage decrease occurred primarily in the traditional
Distribution Center and the Advantage Auto division. The Direct
Distribution Division expenses were adversely affected by the Nu-Way
acquisition which created additional non-recurring expenses. The
AUTOWORKS retail division expenses increased slightly as a percentage
of sales, primarily due to the comparable store sales decline.
Depreciation and amortization decreased $43,000 from $804,000 during
the corresponding quarter last year, to $761,000 for the first quarter
of this fiscal year. This decrease is the result of the decrease in
capital expenditures during the previous fiscal year as a result of
the Company's policy of generally leasing fixed asset replacements
(i.e. vehicles and computers) instead of purchasing them.
Income from operations was $1.1 million for first quarter of both
fiscal years. On a segment basis, the Distribution Centers and
Advantage Auto stores had income from operations of $2.0 million, and
AUTOWORKS had a loss from operations of $972,000. As a percentage of
net sales, operating income remained constant at 2.1% in the first
fiscal quarter of both years.
Interest expense also remained constant at $1.1 million for the first
fiscal quarter of both years.
As a result of the factors discussed above, net income declined to
$72,000 or $.02 per share compared to $73,000, also $.02 per share for
the same quarter last year. The average shares outstanding have been
adjusted for the 4.0% stock dividend distributed by the Company on May
1, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary cash requirements have historically been to fund
working capital needs to support growing sales and operations. During
the first fiscal quarter of fiscal 1997, working capital increased $10.6
million due to a $5.7 million increase in inventory (primarily due to
the Nu-Way acquisition) and a $4.6 million reduction in accounts payable
and accrued expenses. The payable reduction is typical of the first
quarter of each fiscal year due to the seasonal decline in sales and
deferred vendor payables becoming due.
For the quarter ended December 31, 1996, net earnings adjusted for non-
cash items, including depreciation, amortization and bad debt reserves,
dropped by 5.4% for the current quarter compared to the same quarter
last year. However, net cash used by operating activities increased by
17.0% due primarily to a lesser reduction in payables for the comparable
quarter last year.
During the quarter ended December 31, 1996, the Company invested
$803,000 in capital expenditures, which included the Nu-Way acquisition
and the replacement or enhancement of other fixed assets. The Company
plans to open three new AUTOWORKS stores during the next fiscal quarter
and two in the third fiscal quarter. The Company expects that funding
for these new operations will be provided through vendor payables which
will be supplemented with relocated inventory from closed AUTOWORKS
stores.
Financing activities for the first fiscal quarter produced $10.6
million. These funds generally reflect net borrowings under the
Company's revolving credit line that were used to fund the Nu-Way
acquisition, and the reduction in payables referenced above. During the
third fiscal quarter, the Company is required to make a $2.2 million
payment on its Senior Secured Notes and regular monthly payments on
other Notes. The Company expects to be able to make these payments
through funds generated from operations and net borrowing under its
revolving credit line.
As of February 11, 1997, under its revolving credit line, the Company
had outstanding borrowings in the principal amount of $45.3 million,
generally bearing interest at 7.5% per annum, and availability of $2.2
million. The Company is currently seeking to increase the maximum
credit availability under its revolving credit line by $2.5 million.
The Company's principal sources of liquidity for its operational
requirements are internally generated funds, borrowings under its
revolving credit facility, leasing arrangements and extended payment
terms from vendors. The Company anticipates that these sources will
provide sufficient working capital to operate its business, make
expected capital expenditures, continue implementation of AUTOWORKS
operational and organizational changes and to meet its other short-term
and longer-term liquidity needs for the next four quarters. The Company
currently does not expect to generate cash flow sufficient to fund the
repayment of borrowings due under its revolving credit facility upon its
maturity in June 1999 and accordingly, expects that it will seek to
refinance such amounts prior to such maturity. No assurance can be
given that such refinancing can be successfully accomplished.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Those exhibits required to be filed by Item 601 of Regulation S-K are
listed in the Exhibit Index immediately preceding the exhibits filed
herewith and such liability is incorporated by reference.
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
HAHN AUTOMOTIVE WAREHOUSE, INC.
(Registrant)
By: s//Mike Futerman
Mike Futerman
Chief Executive Officer
By: s//Eli N. Futerman
Eli N. Futerman
President
By: s//Albert J. Van Erp
Albert J. Van Erp
Vice President - Finance
Dated: February 14, 1997
EXHIBIT INDEX
Exhibit 10.1 Settlement agreement dated January 1997
among the Company and CSK Group, Ltd.
AGREEMENT
AGREEMENT entered into this 28th day of January, 1997, by
and between HAHN AUTOMOTIVE WAREHOUSE, INC., a New York
corporation with an office and principal place of business in
Rochester, Monroe County, New York, hereinafter called "Hahn" and
CSK GROUP, LTD., a Delaware corporation with an office and
principal place of business at 645 East Missouri Avenue, Phoenix,
Arizona, hereinafter called "CSK".
WHEREAS, Hahn and Northern Automotive Holdings Corporation
("Northern"), a corporation which no longer exists, have
heretofore entered into a Purchase Agreement (the "Purchase
Agreement") dated October 27, 1993 wherein Hahn purchased all the
outstanding capital stock of Auto Works Holdings, Inc.,
hereinafter called "Auto Holdings" (which company's principal
asset was the stock of Auto Works, Inc., hereinafter called "Auto
Works"); and
WHEREAS, that Purchase Agreement was closed and the stock of
Auto Holdings acquired by Hahn on November 29, 1993; and
WHEREAS, the parties entered into an Agreement (the
"Adjustment Agreement") dated December 28, 1994, to establish the
final purchase price for the outstanding capital shares of Auto
Holdings; and
WHEREAS, a dispute has arisen between the parties related to
the assignment of certain leases by Auto Works to The Whitlock
Corporation (hereinafter called "Whitlock") during the time when
the shares of Auto Holdings were owned and controlled by
Northern; and
WHEREAS, as a result of the bankruptcy of Whitlock, its
disaffirmance of certain leases and the claims of outstanding
contingent liabilities of Auto Works on leases assigned to
Whitlock in 1992, including leases still operated by Whitlock,
Hahn commenced an action in the United States District Court for
the Western District of New York (the "Court") against CSK,
Northern, David LaBau ("LaBau") and James Bazlen ("Bazlen")
hereinafter referred to as the "Action"; and
WHEREAS, the parties have agreed to resolve their
differences with regard to the matters contained in the Complaint
and Amended Complaint filed by Hahn, and as to any other matters
which may in the future arise in connection with the Purchase
Agreement and the Adjustment Agreement or their subject matter
except for the Reserved Claims set forth below; and
WHEREAS, CSK is the successor to Northern by merger.
For purposes hereof the following definitions shall apply:
a. "Lease Claims" shall be defined to be an actual or
threatened claim or demand against any of the parties
hereto under any of the leases listed on Exhibit "A"
hereto;
b. "Lease Expenses" shall be defined to mean (i) any
amounts hereafter expended (x) in the payment of any
settlement, judgment, rent, common area charge, late
charge, interest, cost, disbursement and expenditures
made in connection with Lease Claims and (y) pursuant
to paragraph 2 hereof and (ii) the sum of $100,000 of
the $161,927.08 heretofore expended or committed by
Hahn as shown on Exhibit "B" hereto.
NOW, THEREFORE, IT IS AGREED:
1. Upon the execution of this Settlement Agreement, Hahn
shall file with the Court a Notice of Dismissal with Prejudice in
the form annexed hereto as Exhibit "C" and such other documents,
if any, which may be necessary to effectuate such dismissal.
2. CSK shall assume responsibility for administration of
the defense and disposition of all Lease Claims, as herein
defined, including but not limited to negotiating settlements,
terminating Leases, negotiating subleases, collecting and
disbursing any sublease rents or expenses, receiving and using
toward Lease Expenses any amounts received as sublease rentals,
arranging for the defense of actions commenced by any person
under the Leases, directing the defense thereof and obtaining
appropriate documentation finally resolving any Lease Claims. CSK
shall use reasonable good faith efforts and diligence to settle,
resolve or dispose of Lease Claims on the most favorable
available terms to CSK and Hahn, including obtaining appropriate
releases of Hahn and CSK from all further liability in respect of
such claims. CSK may engage, or authorize others to engage, such
legal counsel (which shall be firms reasonably acceptable to
Hahn), brokers or others as it deems reasonably necessary to
assist it in the resolution of Lease Claims, and the costs of
such engagements and reasonable out-of-pocket expenses incurred
by CSK shall be included as "Lease Expenses".
3. Lease Expenses (net of amounts received as sublease
rentals and applied toward payment of Lease Expenses)
(hereinafter "Net Lease Expenses") shall be borne by CSK and Hahn
as follows:
a. All Net Lease Expenses up to $150,000
shall be paid by Hahn which shall receive credit
for $100,000 of the amounts shown on Exhibit B;
b. All Net Lease Expenses between $150,000
and $300,000, shall be paid by CSK; and
c. Hahn shall pay 72.5%, and CSK shall pay
27.5%, of all Net Lease Expenses over $300,000.
4. In addition to the provisions for payment in paragraph
6 hereof, the parties shall make necessary payments to each other
at least quarterly in order that the amounts theretofore expended
reflect the allocations in paragraph 3 hereof. In order to
accomplish such payment the following procedures shall apply:
a. On April 15, 1997, CSK and Hahn shall
render to the other a written statement setting
forth in detail (and with supporting
documentation) a computation of Net Lease Expenses
incurred by that party, for the period through
March 31, 1997, and shall render similar
statements quarterly thereafter on the 15th day of
the month following each quarter;
b. Within fifteen days after receipt of the
statement from the other party, either Hahn or CSK
as shall be appropriate will remit to the other
the amount necessary to make the Net Lease
Expenses incurred by each to the date of the
statement conform to the allocation of Net Lease
Expenses set forth in paragraph 3. To the extent
either party shall dispute the statement received
on any grounds, it may not withhold payment but
shall pay any disputed portion into an escrow
account held by its counsel.
5. CSK and Hahn shall keep each other informed of
litigation relating to the Leases and of negotiations for
settlement or other disposition as they progress, and shall cause
the other to be given copies of significant legal documents,
correspondence and other communications sent by either party or
its counsel relating thereto on a current basis. All such
communications shall be deemed to be pursuant to a joint defense
of any claims and be treated as privileged communications to the
extent permitted by law. CSK and Hahn shall provide each other
with a copy of any documentation memorializing a proposed
resolution of any claim, as well as any other information
respecting the transaction which the other may reasonably
request. The other party shall be deemed to have given its
consent to the transaction unless, within five (5) business days
after its receipt of such documentation, it shall notify the
other in writing that it objects to the transaction in which
event the proposed transaction cannot be completed.
6. In the event that any Lease Claim results in (i) a
money judgment whether or not subject to further appeal or review
other than a money judgment which is fully stayed, as long as it
remains so stayed (or would, but for payment, result in such a
money judgment) or (ii) an agreed upon settlement payment, Hahn
shall in the first instance pay such judgment (or amount which
would become a judgment) or settlement. Any such amount paid
shall be deemed Lease Expenses. CSK shall reimburse Hahn with
respect to amounts actually paid by Hahn, to the extent required
under this agreement, consistent with the allocations set forth
in Paragraph 3(a)-(c) above, within ten days of receipt of a
written request for such reimbursement which request shall
include reasonable proof of payment by Hahn in accordance with
the agreement. In the event that CSK or Hahn elects to prosecute
an appeal from any judgment, Hahn shall cooperate with CSK in
obtaining and filing such undertaking as may be necessary to stay
enforcement of the underlying judgment pending such appeal and
delay payment of such judgment if so instructed by CSK and
permitted by applicable law (the cost of which shall be included
as a Lease Expense).
7. Except for (i) the obligations set forth in this
agreement and (ii) any and all obligations of CSK as successor to
Northern and of Hahn, pursuant to Section 9 of the Purchase
Agreement and Section 8 of the Purchase Agreement insofar as it
pertains to Sections 4(a) (other than the second, third and sixth
sentences thereof, 4(b), 4(f) and 4(k) thereof which are not
affected by this Agreement or the Action and shall survive this
Agreement and be preserved to the extent permitted by the
Purchase Agreement (the "Reserved Claims"), Hahn, on the one
hand, and CSK (each of Hahn and CSK for itself and all of its
affiliated persons, firms or companies and the officers, agents
and employees of any of them), Labau and Bazlen, on the other,
hereby mutually release each other from any and all claims,
costs, losses or expenses, known or unknown, whether presently
existing or arising in the future that any of them may have as a
result of, pursuant to or in connection with the Purchase
Agreement and the Adjustment Agreement, the transactions or
occurrences pursuant thereto, or the filing of the Action, it
being the intention of the parties and Bazlen and LaBau that none
of them shall have any claim against any other party in
connection with any matter which is in any way related to the
purchase and sale of the stock of Auto Holdings or the
performance, execution or provisions of either the Purchase
Agreement or the Adjustment Agreement, except the Reserved
Claims. However, the parties acknowledge that Auto Works is
indebted to CSK Auto Inc. for property leased, and/or goods sold,
and/or services provided and the release set forth herein is not
intended to discharge any such claim.
8. A schedule summarizing the status of Hahn's knowledge
of known Lease Claims as of the date of this Agreement is annexed
hereto as Exhibit "D". In addition to the matters set forth
therein, CSK and Hahn are informed and believe that lease numbers
3332, 3344, 3514, 3584, 3741 and 3743 have been disaffirmed by
Whitlock, Auto Works has been released from liability under lease
numbers 3532, 3538 and 3540, lease number 3584 has expired and
the liability of Auto Works under lease number 3344 has been
terminated by settlement. CSK and Hahn acknowledge that while
neither party has undertaken any independent investigation to
verify or confirm the facts set forth herein or in Exhibit D, as
of the date of this Agreement neither Hahn nor CSK has actual
knowledge contrary to such statements. Each party agrees that
nothing in this paragraph 8 is intended to revive any
representation or warranty contained in the Purchase Agreement;
provided that this shall not impair any representation or
warranty in the Purchase Agreement which is expressly designated
a Reserved Claim in paragraph 7 hereof.
9. Each party shall have the right to examine, at its own
expense, all records maintained by the others in connection with
the provisions of this agreement on reasonable notice and each
party agrees to maintain appropriate financial records of its
activities pursuant to this agreement at its principal place of
business.
10. This Agreement is not intended to confer any benefit or
right on any person other than the parties, David Labau and James
Bazlen, and others hereby released, and no person shall be a
third party beneficiary of this agreement.
11. Each party shall cooperate fully with the other party,
execute and deliver such further agreements, instruments and
documents and give such further written assurances, as may be
reasonably requested by the other party to carry into effect the
intents and purposes of this agreement.
12. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original and, even
if executed separately by each party, shall constitute a single
original instrument, effective as if the parties had executed one
and the same instrument.
13. No waiver of any term or condition of this Agreement,
whether by conduct or otherwise, in any one or more instances,
shall be deemed to be a further or continuing waiver of that term
or condition or a waiver of any other term or condition.
14. This Agreement contains the entire agreement between
the parties hereto with respect to the transactions contemplated
hereby. No amendment or modification hereof shall be effective
unless in writing and signed by the party against which it is
sought to be enforced.
15. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. Any attempted assignment by either party without the
consent of the other party hereto shall be null and void and of
no force or effect, except that Hahn may assign its rights under
this Agreement to Auto Works or to any party which assumes the
liabilities of Auto Works with respect to Lease Claims.
16. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of
any other provision.
17. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable in
the case of agreements made and to be performed entirely within
such State, without regard to the conflicts of law rules thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the ___ day of January, 1997.
HAHN AUTOMOTIVE WAREHOUSE, INC.
By: s//David Beckerman
Its: Vice President
CSK GROUP, LTD.
By: s//James Bazlen
Its:
David LaBau and James Bazlen execute this Agreement for the
sole purpose of entering into the release set forth in Section 7
thereof.
S//David LaBau
David LaBau
s//James Bazlen
James Bazlen
STATE OF NEW YORK
COUNTY OF MONROE ) ss:
On January 22, 1997, before me personally came David
Beckerman to me known, who, by me duly sworn, did depose and say
that deponent resides at 17 Cranston Road, Pittsford, NY 14534,
that deponent is the Vice President of Hahn Automotive Warehouse,
Inc., the corporation described in, and which executed the
foregoing Settlement Agreement, and that deponent signed
deponent's name by order of its Board of Directors.
s//Albert J. Van Erp
Notary Public
STATE OF ARIZONA
COUNTY OF MARICOPA ) ss:
On January __, 1997, before me personally came __________
________________________, to me known, who, by me duly sworn, did
depose and say that deponent resides at ________________________
_________________, that deponent is the ________________ of CSK
Group, Ltd., the corporation described in, and which executed the
foregoing Settlement Agreement, and that deponent signed
deponent's name by order of its Board of Directors.
_______________________________
Notary Public
STATE OF ARIZONA
COUNTY OF MARICOPA ) ss:
On January __, 1997, before me personally came David LaBau
to me known, and known to be the individual described in, and who
executed the foregoing Settlement Agreement, and he duly
acknowledged to me that he executed the same.
_______________________________
Notary Public
STATE OF ARIZONA
COUNTY OF MARICOPA ) ss:
On January __, 1997, before me personally came James Bazlen
to me known, and known to be the individual described in, and who
executed the foregoing Settlement Agreement, and he duly
acknowledged to me that he executed the same.
_______________________________
Notary Public
Exhibit A
to Settlement Agreement
The leases which are the subject of this Settlement Agreement are
all real property leases assigned by Auto Works to Whitlock
pursuant to an Asset Purchase Agreement dated September 20, 1991
between Whitlock and Auto Works as they exist on the date hereof.
These real property leases are further described in Schedule
3.1.4 to such Asset Purchase Agreement, a copy of which
(consisting of 9 pages) is attached solely for purposes of
identification and without representation or warranty by any
party as to any of the contents thereof.
Schedule 3.1.4
Leased Real Estate
Auto Works Store No. 3310
3752 N. Elston Avenue
Chicago, IL 60618
Sublease Agreement by and between Perry Drugs Company, an
Illinois corporation, and Perry Drug Stores, Inc., an Illinois
corporation d/b/a Perry Auto Works, Inc. dated October 6, 1983.
Agreement of Sublease and Lease by and between Dominick's
Finer Foods, Inc., a Delaware corporation and Perry Drugs
Company, an Illinois corporation dated May 5, 1983.
Assignment and Assumption of Sublease by and between Perry
Auto Works, Inc., an Illinois corporation and Auto Works, Inc.
dated September 1, 1985.
Lease information:
Commencement: 10/6/83
Expiration: 2/27/2002
Pro Rata Share:
Taxes: 28.25%
Insurance: 28.25%
Operating Exp: 28.25%
Consent Required: Yes
Auto Works Store No. 3313
6706 W. Greenfield Avenue
West Allis, WI 53214
Lease Agreement between West Allis Shopping Center
Associates and Auto Works, Inc., a Michigan corporation dated
October 23, 1989.
Memorandum of Lease by and between West Allis Shopping
Center Associates, a Wisconsin co-partnership and Auto Works,
Inc., a Michigan corporation dated March 26, 1990.
Lease information:
Commencement: 1/18/90
Expiration: 1/31/95
Pro Rata Share:
Taxes: 4.94%
Insurance: 4.94%
Operating Exp: 4.94%
Consent Required: Yes
Auto Works Store No. 3329
2237 N. Lewis Avenue
Waukegan, IL 60085
Lease Agreement by and between LaSalle National Bank of
Chicago as Trustee under Trust Agreement Numbers 10-16889-09 and
10-16890-09 and Perry Auto Works, Inc., an Illinois corporation
dated September 18, 1984.
Assignment and Assumption of Lease by and between Perry Auto
Works, Inc., an Illinois corporation and Auto Works, Inc., a
Michigan corporation dated September 1, 1985.
Estoppel Certificate signed by Auto Works, Inc. dated
December 2, 1986.
Subordination, Attornment and Non-Disturbance Agreement
between Auto Works, Inc. and Standard Federal Savings and Loan
Association dated December 2, 1986.
Lease information:
Commencement: 10/31/84
Expiration: 10/31/99
Pro Rata Share:
Taxes: 32.22%
Insurance: 32.22%
Operating Exp: 32.22%
Auto Works Store No. 3331
1357 S. 108th Street
West Allis, WI 53214
Lease Agreement by and between Auto Works, Inc., a Michigan
corporation and Jensam-Perry Investments, a Michigan co-
partnership dated May 7, 1985.
Subordination, Non-Disturbance and Attornment Agreement by
and between Michigan National Bank and Auto Works, Inc., a
Michigan corporation dated June 28, 1990.
Lease information:
Commencement: 5/7/85
Expiration: 10/31/2005
Pro Rata Share:
Taxes: 33.3%
Insurance: 33.3%
Operating Exp: 33.3%
Auto Works Store No. 3332
2376 W. Washington
West Bend, WI 53095
Sublease Agreement by and between Perry Drugs Company, an
Illinois corporation and Auto Works, Inc., a Michigan corporation
dated October 18, 1984.
Lease information:
Commencement: 10/18/84
Expiration: 10/31/2004
Pro Rata Share:
Taxes: 33.52%
Insurance: 33.52%
Operating Exp: 33.52%
Consent Required: Yes.
The consent of the prime
landlord may be required.
Auto Works Store No. 3343
2968 S. Chase
Milwaukee, WI 53207
Lease Agreement by and between Auto Works, Inc., a Michigan
corporation and Metropolitan Holding Company dated December 10,
1984.
Tenant Acceptance Letter to Northern Life Insurance Company
signed by Auto Works, Inc. dated January 16, 1986.
Lease information:
Commencement: 9/12/85
Expiration: 10/31/2005
Pro Rata Share:
Taxes: 20.70%
Insurance: 20.70%
Operating Exp: 20.70%
Consent Required:
Consent or waiver of
termination provision required
to be delivered to the Purchaser.
Auto Works Store No. 3344
241 S. Bolingbrook
Bolingbrook, IL 60439
Lease Agreement by and between LaSalle National Bank and
Perry Drug Stores, Inc., an Illinois corporation d/b/a Perry Auto
Works dated May 4, 1984.
Assignment and Assumption of Lease by and between Perry Auto
Works, Inc., an Illinois corporation and Auto Works, Inc., a
Michigan corporation dated September 1, 1985.
Estoppel Certificate signed by Auto Works, Inc., a Michigan
corporation dated July 9, 1990.
Lease information:
Commencement: 11/5/85
Expiration: 10/31/2001
Pro Rata Share:
Taxes: 5.38%
Insurance: 5.38%
Operating Exp: 5.38%
Consent Required:
Consent or waiver of
termination provision required
to be delivered to the Purchaser.
Auto Works Store No. 3514
4646 Western Avenue
South Bend, IN 46619
Lease Agreement by and between Colpaert Realty Corporation,
an Indiana corporation and Auto Works, Inc., a Michigan
corporation dated October 30, 1986.
Letter Agreement by and between Colpaert Realty Corporation,
an Indiana corporation and Auto Works, Inc., a Michigan
corporation dated August 6, 1991 (Not yet signed by Colpaert).
Lease information:
Commencement: 4/1/87
Expiration: 4/30/97
Pro Rata Share:
Taxes: 8.9%
Insurance: 8.9%
Operating Exp: 8.9%
Auto Works Store No. 3532
4043 S. Michigan
South Bend, IN 46614
Commercial Lease Agreement by and between Marvin P. Borr and
Fleenor's Inc., an Indiana corporation dated July 19, 1979.
Consent to Assignment of Lease by and between S.B.
Associates, Inc. and Fleenor's Inc. dated July 19, 1979.
Assignment and Assumption of Lease by and between Fleenor's
Inc., an Indiana corporation and FAS Auto Works, Inc., a Michigan
corporation dated July 19, 1979.
Assignment of Lessor's Interest in Leases by and between
S.B. Associates, Inc., an Indiana corporation and Marvin P. Borr
(Assignor) and American National Bank and Trust Company of South
Bend, a national banking corporation (Assignee) dated October 31,
1980.
First Amendment to Lease Agreement by and between Lloyd V.
Weldy, an individual, an individual, successor to Marvin P. Borr
and Auto Works, Inc., a Michigan corporation dated August 6,
1991.
Lease information:
Commencement: 8/1/79
Expiration: 7/31/92
Consent Required: Yes
Auto Works Store No. 3538
1915 N. Cassapolis Street
Elkhart, IN 46514
Lease Agreement by and between Clarion III Partnership, an
Indiana partnership and FAS Auto Works, Inc., a Michigan
corporation dated March 18, 1986.
Lease information:
Commencement: 10/10/86
Expiration: 10/31/2001
Auto Works Store No. 3540
51978 U.S. 31 North
South Bend, IN 46637
Lease Agreement by and between Neville J. Gough and Arnold
G. Gough and Fleenor's Inc. dated May 26, 1976.
Assignment and Assumption of Lease by and between Fleenor's
Inc., an Indiana corporation and FAS Auto Works, Inc., a Michigan
corporation dated September 27, 1983.
Consent to Assignment of Lease by and between Roberta M.
Gough and Mary Ann Gough and Fleenor's Inc. dated September 21,
1983.
First Amendment to Lease Agreement by and between Neville J.
Gough and Arnold G. Gough and Auto Works, Inc., a Michigan
corporation dated June 28, 1991.
Lease information:
Commencement: 8/1/76
Expiration: 7/31/92
Consent Required: Yes
Auto Works Store No. 3541
1640 Route #41
Schererville, IN 46375
Sublease Agreement by and between May's Family Centers, Inc.
and FAS Auto Works, Inc. dated February 24, 1984.
Non-Disturbance and Attornment Agreement by and between
May's Family Centers, Inc. and FAS Auto Works, Inc. and Lake
County Trust Company dated February 24, 1984.
Lease information:
Commencement: 4/16/84
Expiration: 10/31/92
Consent Required: No.
The consent of the prime
landlord may be required.
Auto Works Store No. 3553
2528 Peddlers Village
Goshen, IN 46526
Sublease Agreement by and between Perry Drugs Company, an
Illinois corporation and FAS Auto Works, Inc., a Michigan
corporation dated October 22, 1984.
Sublease Assignment and Assumption Agreement by and between
Perry Drugs Company, an Illinois corporation (Assignor) and Hook-
SuperX, Inc. (Assignee) dated April, 1990.
Lease information:
Commencement: 10/22/84
Expiration: 10/31/04
Pro Rata Share:
Taxes: 33.52%
Insurance: 33.52%
Operating Exp: 33.52%
Consent Required:
Consent or waiver of
termination provision required
to be delivered to the
Purchaser.
Auto Works Store No. 3555
1911 N. Michigan
Plymouth, IN 46563
Lease Agreement by and between Plymouth Plaza, an Indiana
limited partnership and FAS Auto Works, Inc., a Michigan
corporation dated August 22, 1984.
Letter Agreement by and between Plymouth Plaza, an Indiana
limited partnership and Auto Works, Inc., a Michigan corporation
dated August 6, 1991.
Lease information:
Commencement: 12/7/84
Expiration: 10/31/2000
Pro Rata Share:
Taxes: 4.1%
Insurance: 4.1%
Operating Exp: 3.9%
Auto Works Store No. 3579
322 N. Detroit Street
Warsaw, IN 46580
Lease Agreement by and between Warsaw Service Center, Inc.,
an Indiana corporation and FAS Auto Works, Inc., a Michigan
corporation dated October 30, 1984.
Notice of Lease by and between Warsaw Service Center, Inc.
and FAS Auto Works, Inc. dated October 30, 1984.
Lease information:
Commencement: 11/1/85
Expiration: 10/31/95
Consent Required:
Consent or waiver of
termination provision required
to be delivered to the
Purchaser.
Auto Works Store No. 3584
5398 Broadway
Merrillville, IN 46410
Lease Agreement by and between Lake County Trust Company as
Trustee and FAS Auto Works, Inc., a Michigan corporation dated
November 6, 1985.
Lease information:
Commencement: 2/15/86
Expiration: 10/31/96
Pro Rata Share:
Taxes: 20.8% (of tax parcel)
Insurance: 4.16%
Auto Works Store No. 3725
3430 52nd Street
Kenosha, WI 53142
Lease Agreement by and between Kenosha Associates and Auto
Works, Inc., a Michigan corporation dated April 23, 1987.
Subordination, Non-Disturbance and Attornment Agreement by
and between General Electric Capital Corporation and Auto works,
Inc., a Michigan corporation dated October 19, 1989.
Tenant Estoppel Certificate to General Electric Capital
Corporation signed by Auto Works, Inc., a Michigan corporation
dated October 19, 1989.
Lease information:
Commencement: 10/12/87
Expiration: 4/30/98
Pro Rata Share:
Taxes: 4.59%
Insurance: 4.59%
Operating Exp: .59%
Auto Works Store No. 3726
4283 S. 76th Street
Greenfield, WI 53220
Lease Agreement by and between David S. Israel and Auto
Works, Inc., a Michigan corporation dated June 22, 1987.
Tenant Estoppel Letter to American National Bank and Trust
Company of Chicago signed by Auto Works, Inc., a Michigan
corporation dated August 12, 1987.
Lease information:
Commencement: 9/21/87
Expiration: 4/30/98
Pro Rata Share:
Taxes: 9.18%
Insurance: 16.9%
Operating Exp: 16.9%
Auto Works Store No. 3729
320 E. Capitol Drive
Milwaukee, WI 53212
Lease Agreement by and between Frank P. Crivello and Joseph
A. Crivello and Auto Works, Inc., a Michigan corporation dated
August 24, 1989.
Tenant Estoppel Certificate signed by Auto Works, Inc., a
Michigan corporation dated January 12, 1990.
Memorandum of Lease by and between Frank P. Crivello and
Joseph A. Crivello d/b/a Crivello Properties and Auto Works,
Inc., a Michigan corporation dated June 1, 1990.
Lease information:
Commencement: 11/1/89
Expiration: 4/30/98
Pro Rata Share:
Taxes: 7.24%
Insurance: 5.59%
Operating Exp: 5.59%
Consent Required: Yes
Auto Works Store No. 3741
136 E. McKinley
Mishawaka, IN 46545
Lease Agreement by and between Magnum Investments, Inc., an
Indiana corporation and Auto Works, Inc., a Michigan corporation
dated December 12, 1989.
Subordination, Non-Disturbance and Attornment Agreement by
and between Ameritrust National Bank Michiana, a national banking
association and Auto Works, Inc., a Michigan corporation dated
February 20, 1990.
Memorandum of Lease by and between Magnum Investments, Inc.,
an Indiana corporation and Auto Works, Inc., a Michigan
corporation dated March 30, 1990.
Lease information:
Commencement: 2/24/90
Expiration: 2/28/05
Pro Rata Share:
Taxes: 19.25%
Insurance: 19.25%
Operating Exp: 19.25%
Auto Works Store No. 3743
1957 Oak Street
Niles, MI 49120
Lease Agreement by and between Eastgate Associates, a
limited partnership and Auto Works, Inc., a Michigan corporation
dated July 24, 1987.
Tenant Estoppel Certificate to Michigan National Bank signed
by Auto Works, Inc. dated July 31, 1991.
Lease information:
Commencement: 1/20/88
Expiration: 4/30/98
Pro Rata Share:
Taxes: 2.89%
Insurance: 2.89%
Operating Exp: 2.89%
Auto Works Store No. 3773
U.S. Highway 31 and 33 at Darden
South Bend, IN
Lease Agreement by and between Apex Properties, Inc. and
Auto Works, Inc., a Michigan corporation dated July 31, 1991.
Memorandum of Lease by and between Apex Properties, Inc. and
Auto Works, Inc., a Michigan corporation dated July 31, 1991.
Subordination, Non-Disturbance and Attornment Agreement by
and between Ameritrust National Bank Michiana, a national banking
corporation, and Auto Works, Inc., a Michigan corporation dated
July 31, 1991.
Lease information:
Consent required: Yes
This store is not yet open and construction is not complete.
EXHIBIT B
to Settlement Agreement
Hahn has incurred the following Lease Expenses to date:
Store No. 3344 <F1> $100,000.00
Store No. 3741 46,125.35
Store No. 3773 3,801.73
Legal fees (billed and
estimated unbilled) 12,000.00
$161,927.08
[FN]
<F1> Includes amounts incurred but not yet paid.
[/FN]
EXHIBIT C
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
_________________________________________
HAHN AUTOMOTIVE WAREHOUSE, INC.,
Plaintiff,
NOTICE OF
vs. DISMISSAL
CSK HOLDINGS LTD, (formerly known as Civil Action No.
NORTHERN AUTOMOTIVE HOLDINGS 96-CV-6486T
CORPORATION), CSK GROUP, LTD., DAVID
LABAU and JAMES BAZLEN,
Defendants.
__________________________________________
PLEASE TAKE NOTICE that pursuant to Fed.R.Civ.P. 41(a),
Plaintiff, Hahn Automotive Warehouse, Inc., hereby voluntarily
dismisses the action entitled "Hahn Automotive Warehouse, Inc. v. CSK
Holdings Ltd. (formerly known as Northern Automotive Holdings
Corporation), CSK Group, Ltd., David LaBau, and James Bazlen, Civil
Action No. 96-CV-6486T," with prejudice.
DATED: January , 1997
Rochester, New York
WOODS, OVIATT, GILMAN,
STURMAN & CLARKE LLP
By: s//William G. Bauer
William G. Bauer, Esq.
Attorneys for Plaintiff
44 Exchange Street
Rochester, New York 14614
(716) 454-5370
Of Counsel: Beryl Nusbaum
William G. Bauer
EXHIBIT D
Status of Lease Negotiations
Store No. 3310: 3752 N. Elston Avenue, Chicago, Illinois.
Auto Works, Inc. ("Auto Works") received no contact from the Landlord
in connection with this Lease.
Store No. 3313: 6706 N. Greenfield Avenue, West Allis,
Wisconsin. This Lease, as executed by Auto Works, expired on January
31, 1995. After the assignment from Auto Works to Whitlock, the
Landlord and Whitlock extended the term of the lease until January 31,
1998. The Lease contained a renewal option, but the actual renewal
was for a shorter term and a lower rent then provided by the renewal
option. The attorney for the Landlord has sent notice to Auto Works
indicating that Auto Works is liable under the Lease. David Beckerman
has informed the Landlord's counsel that Auto Works' position is that
Auto Works is not liable under the Lease.
Store No. 3329: 2237 N. Lewis Avenue, Waukegan, Illinois.
Auto Works has received no contact from the Landlord in connection
with this Lease.
Store No. 3331: 1357 S. 108th Street, West Allis,
Wisconsin. Auto Works has received no contact from the Landlord in
connection with this Lease.
Store No. 3332: 2376 W. Washington, West Bend, Wisconsin.
The sublessor, Pharmaceutical Services, Inc., filed a complaint
against Auto Works and Rite Aid Corporation in the Surrogate Court of
Washington County, Wisconsin, on September 29, 1996, (Case Number 96
CV 390). The Landlord's counsel, James O'Meara, granted various
extensions of the defendants' time to answer until January 6, 1997.
Lon Novatt, of CSK Auto, Inc., made arrangements with an attorney in
Wisconsin to act as local counsel. We understand that an answer was
filed by the local counsel on January 6, 1997.
Store No. 3343: 2968 S. Chase, Milwaukee, Wisconsin. Auto
Works has received no contact from the Landlord in connection with
this Lease.
Store No. 3344: 241 S. Bolingbrook, Bolingbrook, Illinois.
The Landlord sent a default notice to Auto Works on August 15, 1996,
demanding payment of $27,376.00 for outstanding base rent, real estate
taxes and common area maintenance charges. A settlement was reached
with the Landlord pursuant to which Auto Works agreed to pay the
Landlord $100,000.00 ($50,000.00 up front and the remaining $50,000.00
in nine equal monthly installments) and Auto Works was released from
any further liability under the lease.
Store No. 3369: 5325 W. Fond Du Lac Avenue, Milwaukee,
Wisconsin. Auto Works has received no contact from the Landlord in
connection with this property, which is believed to have been
transferred to The Whitlock Corporation in fee.
Store No. 3514: 4646 Western Avenue, South Bend, Indiana.
Auto Works has received no contact from the Landlord in connection
with this Lease.
Store No. 3532: 4043 S. Michigan, South Bend, Indiana.
Auto Works has received no contact from the Landlord in connection
with this Lease.
Store No. 3538: 1915 N. Cassapolis Street, Elkhart,
Indiana. Auto Works has received no contact from the Landlord in
connection with this Lease.
Store No. 3540: 51978 U.S. 31 North, South Bend, Indiana.
Auto Works has received no contact from the Landlord in connection
with this Lease.
Store No. 3541: 1640 Route #41, Schererville, Indiana.
Auto Works has received no contact from the Landlord in connection
with this Lease.
Store No. 3553: 2528 Peddlers Village, Goshen, Indiana.
Auto Works has received no contact from the Landlord in connection
with this Lease.
Store No. 3555: 1911 N. Michigan, Plymouth, Indiana. Auto
Works has received no contact from the Landlord in connection with
this Lease.
Store No. 3579: 322 N. Detroit Street, Warsaw, Indiana.
Auto Works has received no contact from the Landlord in connection
with this Lease.
Store No. 3584: 5398 Broadway, Merrillville, Indiana. Auto
Works has received no contact from the Landlord in connection with
this Lease.
Store No. 3725: 3430 52nd Street, Kenosha, Wisconsin. Auto
Works has received no contact from the Landlord in connection with
this Lease.
Store No. 3726: 4283 S. 76th Street, Greenfield, Wisconsin.
Auto Works has received no contact from the Landlord in connection
with this Lease.
Store No. 3729: 320 E. Capital Drive, Milwaukee, Wisconsin.
Auto Works has received no contact from the Landlord in connection
with this Lease.
Store No. 3741: 136 E. McKinley, Mishawaka, Indiana. The
Landlord, Magnum Investments, Inc., filed a complaint against Auto
Works on March 12, 1996, in the St. Joseph Circuit Court, St. Joseph
County, State of Indiana (Cause No. 71C01-9603-CP-00312) demanding
payment of $4,896.99 for past due rent. On May 22, 1996, Auto Works
paid such amount to the Landlord and the case was dismissed without
prejudice. On July 29, 1996, the Landlord filed another complaint in
the same court (Cause No. 71CZ01-9607-CP-00864), which claimed that
Whitlock rejected the Lease in bankruptcy and that the Tenant failed
to make payments due under the Lease. Demand was made for all amounts
due under the Lease, reasonable attorney's fees, interest and the cost
of the action. In September of 1996, Auto Works paid the Landlord
$5,000.00 for the Landlord to delay taking any further action under
the lawsuit. On November 25, 1996, Auto Works paid the Landlord an
additional $36,228.36 and the Landlord dismissed the lawsuit without
prejudice. The payments made by Auto Works were applied by the
Landlord as payment in full for the rents due for the months of July
through November of 1996 and the property taxes due November 10, 1996,
under the Lease. The Landlord's counsel, Joseph Simeri, sent a letter
dated December 10, 1996, confirming this agreement.
Store No. 3743: 1957 Oak Street, Niles, Michigan. Auto
Works has received no contact from the Landlord in connection with
this Lease.
Store No. 3773: U.S. Highway 31-33, Dardon, South Bend,
Indiana. The Landlord, Apex Properties, Inc., has filed two lawsuits
against Auto Works. The two suits were brought as joint actions with
the suits for Store No. 3741 described in Paragraph 21 above. The
first suit was for unpaid rent of $3,801.73. Auto Works paid such
amount on May 22, 1996, and the suit was dismissed without prejudice.
The second suit was for outstanding real estate taxes in the amount of
$3,683.50, plus attorney's fees, interest and the cost of the action.
The second lawsuit was dismissed without prejudice. No payments have
been made by Auto Works on account of the second lawsuit.
Exhibit 27
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 889
<SECURITIES> 0
<RECEIVABLES> 17,553
<ALLOWANCES> 0
<INVENTORY> 76,658
<CURRENT-ASSETS> 97,360
<PP&E> 13,472
<DEPRECIATION> 0
<TOTAL-ASSETS> 115,017
<CURRENT-LIABILITIES> 30,060
<BONDS> 0
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<COMMON> 46
<OTHER-SE> 33,569
<TOTAL-LIABILITY-AND-EQUITY> 115,017
<SALES> 51,828
<TOTAL-REVENUES> 51,828
<CGS> 30,940
<TOTAL-COSTS> 19,055
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,071
<INCOME-PRETAX> 119
<INCOME-TAX> 47
<INCOME-CONTINUING> 72
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 72
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>