Lumber City Corporation, f.k.a. Neiman-Reed Lumber and Supply Company, Inc. - Page 14

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              Within one year of becoming petitioner's CEO, Mr. Ruf nego-            
          tiated releases from the leases for three of petitioner's stores            
          that were adversely affecting its profits and closed those                  
          stores.  Mr. Ruf also renegotiated the leases for petitioner's              
          remaining stores, most of which were with the former sharehold-             
          ers.  Those leases were changed from percentage leases, where the           
          amount of the rent increased as the sales volume increased, to              
          fixed-rent leases.  Mr. Ruf purchased an interest in at least one           
          of the stores leased by petitioner.                                         
               In addition to renegotiating petitioner's leases, within two           
          years after becoming petitioner's CEO, Mr. Ruf also negotiated a            
          $250,000 reduction in the amount owed by petitioner under the UBM           
          note.  The UBM note was subsequently purchased by the former                
          shareholders and Mr. Ruf.11                                                 
               As petitioner's CEO, Mr. Ruf changed petitioner's retail               
          marketing strategy.  In order to compete with the large discount            
          home centers that had entered petitioner's market, Mr. Ruf de-              
          cided that petitioner needed to provide better customer service             
          and make its stores more convenient to the customers.  He at-               
          tempted to make petitioner's stores attractive and clean places             
          in which to shop.  He changed petitioner's tradename to Lumber              
          City, The City of Home Improvement.  Along with the change in               


          11  The precise portion of the UBM note owned by each of the                
          former shareholders and Mr. Ruf is unclear, although Mr. Ruf                
          purchased only a "small piece" of it.                                       



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Last modified: May 25, 2011