<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ________________ TO _______________
Commission File No. O-27424
WILMAR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-2232386
(State of incorporation or (I.R.S. Employer
organization) Identification No.)
303 Harper Drive
Moorestown, New Jersey 08057
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (609) 439-1222
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 [_] No [X]
The number of shares of the registrant's common stock, no par value,
outstanding as of April 30, 1996
was 10,374,545.
* Registrant has filed all reports required to be filed by Section 13 or 15(d)
but has only been subject to filing requirements since January 23, 1996.
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1--FINANCIAL STATEMENTS
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 29,
1996 1995
--------- ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 4,310,483 $ 25,043
Cash-restricted 200,000 200,000
Short term investment 1,765,035
Accounts receivable-trade, net of allowance for
doubtful accounts of $300,000 and $236,070,
respectively 10,204,716 9,575,307
Inventory 12,978,101 12,699,376
Prepaid expenses and other current assets 510,526 244,798
Deferred income taxes 486,000 408,000
----------- -----------
Total current assets 30,454,861 23,152,524
PROPERTY AND EQUIPMENT, Net 1,385,164 1,337,308
OTHER ASSETS 2,151,843 2,380,672
----------- -----------
TOTAL ASSETS $33,991,868 $26,870,504
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE>
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS, CONTINUED
LIABILITIES MANDATORILY REDEEMABLE PREFERRED
STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 29,
1996 1995
--------- ------------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES
Demand notes payable-bank $ $ 9,922,510
Current portion of long-term debt:
Banks 666,668
Related parties 2,107,050
Accounts payable 6,513,785 7,889,405
Accrued expenses and other current liabilities 1,622,222 1,387,524
Accrued interest 212,823
Income taxes payable 949,091 1,020,991
------------ ------------
Total current liabilities 9,085,098 23,206,971
LONG-TERM DEBT-Net of current portion:
Banks 833,331
Related parties 833,872
Subordinated debentures 4,000,000
------------ ------------
Total liabilities 9,085,098 28,874,174
------------ ------------
COMMITMENTS AND CONTINGENT LIABILITIES
Mandatorily Redeemable Series A Senior Preferred
Stock, $.01 par value; 129,450 shares, authorized,
issued and outstanding with a redemption value of
$100 per share, plus accrued dividends 13,782,110
------------ ------------
Mandatorily Redeemable Series B Junior Preferred
Stock, $.01 par value, 105,914 shares, authorized,
issued and outstanding with a redemption value of
$100 per share, plus accrued dividends 11,276,311
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.01 par value, 5,000,000 shares
authorized; none issued
Common stock, no par value-50,000,000 shares
authorized; 10,374,545 shares issued and
outstanding in 1996, 5,320,000 shares issued
and outstanding in 1995 51,289,412 124,231
Retained earnings (accumulated deficit) (26,382,642) (27,186,322)
------------ ------------
Total stockholders' equity (deficit) 24,906,770 (27,062,091)
------------ ------------
TOTAL LIABILITIES, MANDATORILY REDEEMABLE
PREFERRED STOCK AND STOCKHOLDERS' EQUITY $ 33,991,868 $ 26,870,504
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 29, 1996 MARCH 31, 1995
-------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
SALES $19,308,359 $13,457,519
COST OF SALES 13,372,953 9,212,037
----------- -----------
Gross profit 5,935,606 4,245,482
OPERATING EXPENSES:
Operating and selling expenses 2,987,245 2,015,424
Corporate general and administrative expenses 1,242,045 1,059,813
----------- -----------
4,229,290 3,075,237
----------- -----------
Operating income 1,706,316 1,170,245
INTEREST EXPENSE, NET 80,704 200,969
----------- -----------
Income before income taxes 1,625,612 969,276
PROVISION (CREDIT) FOR INCOME TAXES 666,000 (54,629)(1)
----------- -----------
Net income $ 959,612 $ 1,023,905
=========== ===========
Net income per share $ 0.10
===========
Weighted average shares outstanding $ 9,946,286
===========
UNAUDITED PRO FORMA DATA
Income before income taxes $ 969,276
Provision for income taxes 388,000(2)
-----------
Pro forma net income $ 581,276(2)
===========
Pro forma net income per share $ 0.07(2)
===========
Weighted average shares outstanding 8,596,307
===========
</TABLE>
(1) Upon termination of its S Corporation status on March 1, 1995, the Company
became subject to federal income taxes and certain additional state income
taxes and, in connection therewith, recorded a deferred tax asset of
approximately $230,000 in accordance with FAS 109.
(2) Prior to March 1, 1995, the Company elected to be taxed as an S Corporation
for federal (and certain state) income tax purposes. Pro forma information
has been computed as if the Company had been subject to federal income taxes
and all applicable state corporate income taxes for each period presented.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 29, 1996 March 31, 1995
________________ ________________
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 959,612 $ 1,023,905
Adjustments to reconcile net income net cash provided by
(used in) operating activities:
Depreciation and amortization 112,144 60,000
Deferred income taxes (78,000) (230,000)
Changes in assets and liabilities:
Accounts receivable (629,409) (812,285)
Inventory (278,725) (485,299)
Prepaid expenses and other current assets (265,728) (37,541)
Other assets 202,792 1,131
Accounts Payable (1,375,620) 307,168
Accrued expenses and other current liabilities 234,698 117,376
Accrued interest (212,823) 9,078
Income taxes payable (71,900) 170,921
---------------- ----------------
Net cash provided by (used in) operating activities (1,402,959) 124,454
---------------- ----------------
INVESTING ACTIVITIES:
Purchase of property and equipment (133,963) (90,339)
Purchase of short term investment (1,765,035)
---------------- ----------------
Net cash used in investing activities (1,898,998) (90,339)
---------------- ----------------
FINANCING ACTIVITIES:
Net Proceeds (borrowings) of demand notes payable - Bank (9,922,510) 2,059,606
Principal payments on long-term debt:
Banks (1,499,999) (229,634)
Related parties (2,940,922) (25,090)
Issuance of Common Stock 55,000
Repurchase of Common Stock (15,117,000)
Repurchase of Series A Preferred Stock, plus accrued dividends (13,870,928)
Repurchase of Series B Preferred Stock, plus accrued dividends (6,343,425)
Proceeds from the issuance (repayment) of subordinated debentures (4,000,000) 4,000,000
Net proceeds from issuance of Common Stock - initial public offering 46,165,181
Issuance of Series A Preferred Stock 12,945,000
Distributions to stockholders (3,721,809)
---------------- ----------------
Net cash provided by (used in) financing activities 7,587,397 (33,927)
---------------- ----------------
NET INCREASE IN CASH 4,285,440 188
CASH, BEGINNING OF PERIOD 25,043 91,117
---------------- ----------------
CASH, END OF PERIOD $ 4,310,483 91,305
================ ================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 344,599 192,239
================ ================
Income taxes $ 815,900 4,449
================ ================
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES
Accretion of mandatorily redeemable Series A Senior and
Series B Junior Preferred Stock redemption values $ 155,932 $ 109,837
Conversion of Series B Junior Preferred stock into 454,545 shares of Common Stock $ 5,000,000 $ -
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
<PAGE>
WILMAR INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (UNAUDITED)
<TABLE>
<CAPTION>
RETAINED TOTAL
EARNINGS STOCKHOLDERS'
COMMON STOCK (ACCUMULATED TREASURY EQUITY
a SHARES AMOUNT DEFICIT) STOCK (DEFICIT)
------ ------ ------------- -------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 29, 1995 5,320,000 $ 124,231 $(27,186,322) $ -- $(27,062,091)
Accretion of Mandatorily Redeemable
Preferred Stock (155,932) (155,932)
Conversion of Series B Preferred Stock 454,545 5,000,000 5,000,000
Issuance of common stock-initial public
offering 4,600,000 46,165,181 46,165,181
Net income 959,612 959,612
---------- ----------- ------------ ---- ------------
BALANCE MARCH 29, 1996 10,374,545 $51,289,412 $(26,382,642) $ -- $ 24,906,770
---------- ----------- ------------ ---- ------------
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
WILMAR INDUSTRIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The condensed consolidated financial statements include the accounts of Wilmar
Industries, Inc. ("Wilmar" or the "Company") and its subsidiary One Source
Supply, Inc. ("One Source") from November 17, 1995 the date of its acquisition.
Material intercompany balances and transactions have been eliminated.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10-01 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, such interim statements reflect all adjustments
(consisting of normal recurring adjustments) necessary to present fairly the
financial position and the results of operations and cash flows for the interim
periods presented. The results of operations for these interim periods are not
necessarily indicative of the results to be expected for the full year ending
December 27, 1996. These financial statements should be read in conjunction
with the audited consolidated financial statements and footnotes included in the
Company's Form 10-K for the year ended December 29, 1995.
NOTE 2 - INITIAL PUBLIC OFFERING
On January 24, 1996, the Company completed an initial public offering of
4,600,000 shares of its Common Stock for $11.00 per share resulting in net
proceeds (after deducting underwriters' issuance costs) of $47,058,000.
The proceeds of the offering were used as follows:
<TABLE>
<CAPTION>
<S> <C>
Redemption of Preferred Stock and accumulated dividends $20,188,000
Repayment of bank debt and interest 12,987,000
Repayment of Subordinated Debentures and interest 4,037,000
Repayment of notes payable and interest 2,967,000
Working capital and IPO costs 6,879,000
-----------
$47,058,000
</TABLE>
Prior to the offering, $5,000,000 of the Mandatorily Redeemable Series B Junior
Preferred Stock was converted into $5,000,000 of Series B Junior Preferred Stock
with conversion rights. Upon consummation of the offering, $5,000,000 of the
Series B Junior Preferred Stock with conversion rights was converted into
454,545 shares of Common Stock.
The pro forma effects of the above transactions for the related balance sheet
accounts are summarized below. Pro forma balance sheet information is presented
as though the transactions occurred on December 29, 1995 (in 000's):
<TABLE>
<CAPTION>
As Pro Forma
Reported (Unaudited)
--------- -----------
<S> <C> <C> <C>
Current assets $ 23,153 $30,823
Property and equipment, net 1,337 1,337
Other assets 2,381 2,133
-------- -------
$ 26,871 $34,293
======== =======
Current liabilities $ 23,207 $10,297
Long-term debt 5,667 --
-------- -------
28,874 10,297
Mandatorily redeemable preferred stock 25,059 --
Stockholders' equity (27,062) 23,996
-------- -------
$ 26,871 $34,293
======== =======
</TABLE>
<PAGE>
WILMAR INDUSTRIES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
NOTE 3 - INVESTMENT
At March 29, 1996 the Company has an investment in a United States Treasury bill
with a cost basis of $1,765,035. The Company has designated this investment as
available for sale. At March 29, 1996, the cost basis approximates the market
value of this security.
NOTE 4 - INCOME TAXES
Prior to February 24, 1995, the Company had elected to be taxed as an S
Corporation under provisions of the Internal Revenue Code. As such, current
taxable income had been included on the income tax returns of the sole
stockholder for federal income tax purposes and no provision had been made for
federal income taxes. However, the Company changed its election to be taxed as
a C Corporation under the Internal Revenue Code, and in connection with this
change in tax reporting, taxes on income are provided based upon Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes",
which requires an asset and liability approach to financial accounting and
reporting for income taxes.
NOTE 5 - COMPUTATION OF NET INCOME PER COMMON SHARE AND PRO FORMA NET INCOME
PER SHARE
Net income per share and pro forma net income per common share represents net
income and pro forma net income (after a pro forma provision for income taxes as
if the Company had been subject to federal and state income taxation as a C
Corporation since inception) divided by the weighted average number of shares of
Common Stock and Common Stock equivalents outstanding during the period plus the
number of shares of Common Stock required to be sold at the assumed initial
public offering price to raise sufficient proceeds to redeem the mandatorily
redeemable Preferred Stock (including accrued but unpaid dividends thereon). Net
income and proforma net income are not reduced by the provision for accretion of
Preferred Stock redemption values of $155,932 in 1996 and $109,837 in 1995
because the calculation assumes the related Common Stock was outstanding in lieu
of the Preferred Stock.
Common Stock equivalents include shares from the exercise of stock options
(using the treasury stock method). Pursuant to the rules of the Securities and
Exchange Commission, common stock issued and stock options granted at prices
lower than the assumed initial public offering price within a one year period
prior to an initial public offering are included in the calculation (using the
treasury stock method and the assumed initial public offering price) as if they
were outstanding for all periods presented.
NOTE 6 - CONTINGENCIES
The Company is involved in various legal proceedings in the ordinary course of
its business which are not anticipated to have a material adverse effect on the
Company's results of operations or financial position.
NOTE 7 - SUBSEQUENT EVENTS
On April 29, 1996 Wilmar entered into an operating lease agreement with a
company, owned by certain stockholders of Wilmar, to lease a warehouse and
customer service center. The original term of the lease is ten years with an
option to terminate the lease after five years, exercisable by Wilmar, subject
to a termination fee. The lease requires annual payments of $288,625 plus all
real estate taxes and assessments, cost of repairs, utilities and insurance
related to the leased premises. The Company believes that the terms of the lease
are no less favorable to it than could be obtained from an unaffiliated party.
On May 6, 1996, the Company entered into a definitive agreement to acquire 100%
of the capital stock of Mile High Maintenance Supply, Inc. based in Denver,
Colorado for a cash payment of $1.5 million, plus contingent consideration to
the owner based on future performance.
<PAGE>
WILMAR INDUSTRIES, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 29, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995
Net Sales. Net sales increased by $5.8 million, or 43.0%, to $19.3 million for
the quarter ended March 29, 1996 from $13.5 million for the corresponding
quarter in 1995. Of this increase, 36.9% was attributable to higher sales
volumes shipped from distribution centers open for all of both periods, and the
balance was attributable to the three distribution centers (Tampa, Columbus and
Seattle) opened between December 1, 1994 and December 29, 1995 and the One
Source acquisition which occurred on November 17, 1995. The higher net sales
from distribution centers open during all of both periods resulted primarily
from the increased experience of the Company's direct sales and telesales forces
and increased sales to national accounts. The Company's salesforce at the end
of the first quarter of 1996 was 86, an increase of 35 when compared with the
corresponding quarter of 1995. Price increases during both quarters were modest
and made only on selected items. During the quarter ended March 29, 1996,
Wilmar generated approximately $436,000 in net sales to new end markets as a
result of the Company's decision to target customers outside its core apartment
housing market beginning in the first quarter of 1995.
Gross Profit. Cost of sales includes merchandise, freight, distribution center
occupancy and delivery costs. As a percentage of net sales, gross profit was
30.7% for the quarter ended March 29, 1996 compared to 31.6% for the
corresponding quarter in 1995. This decrease in the gross margin resulted from
increased delivery expenses associated with "line-hauling" (the use of third
party trucks to ship multiple orders from a distribution center to other markets
overnight followed by next day local delivery) to new markets, higher relative
occupancy costs relating to the operation of two immature, less efficient
distribution centers opened after the first quarter of 1995 (Columbus and
Seattle) and a decrease in vendor allowances and discounts when compared with
the first quarter of 1995.
Operating and Selling Expenses. Operating and selling expenses consist of labor
and other costs associated with opening and operating a distribution center as
well as selling expenses and commissions. The Company expenses all distribution
center pre-opening costs when incurred. Operating and selling expenses
increased by $1.0 million, or 50.0%, to $3.0 million for the quarter ended March
29, 1996 from $2.0 million for the corresponding quarter in 1995. This
increase resulted primarily from increased commissions related to higher sales
volumes, costs associated with the distribution centers opened after the first
quarter of 1995, the distribution center acquired from One Source (Miami) in
November 1995 and an expanded sales force and higher operating costs associated
with increased sales volumes at the other distribution centers. As a percentage
of net sales, these expenses represent 15.5% for the quarter ended March 29,
1996 compared to 14.8% for the corresponding quarter in 1995.
Corporate General and Administrative Expenses. Corporate general and
administrative expenses increased by $182,000, or 18.2%, to $1.2 million for the
quarter ended March 29, 1996 from $1.0 million for the corresponding quarter in
1995. During the first quarter of 1995, the Company incurred $207,000 in
expenses related to the 1995 Recapitalization excluding the expenses associated
with the 1995 Recapitalization, corporate general and administrative expenses as
a percentage of net sales were 6.2% for the quarter ended March 29, 1996
compared to 6.7% for the corresponding quarter in 1995.
Operating Income. Operating income increased by $536,000, or 45.8%, to $1.7
million for the quarter ended March 29, 1996 from $1.2 million for the
corresponding quarter in 1995. As a percentage of net sales, operating income
was 8.8% for the quarter ended March 29, 1996 compared to 8.7% for the
corresponding quarter in 1995. Excluding the one-time expenses associated with
the 1995 Recapitalization, operating income would have increased by $329,000, or
28.1%. As a percentage of net sales, operating income (excluding the 1995
Recapitalization expenses) would have decreased to 8.8% for the quarter ended
March 29, 1996 from 10.4% for the corresponding quarter in 1995 due primarily to
the effects of operating two immature, less efficient distribution
<PAGE>
centers and increases in sales and operating personnel.
Interest Expense, Net. Net interest expense decreased by $120,000 to $81,000
for the quarter ended March 29, 1996 from $201,000 for the corresponding quarter
in 1995 as a result of the reduction in debt made from the proceeds of the
initial public offering.
LIQUIDITY AND CAPITAL RESOURCES
Historically, Wilmar's primary source of liquidity has been cash flow from
operations, supplemented by borrowings under its revolving bank line of credit
to support increases in accounts receivable and inventory, net of accounts
payable.
During the first quarter 1996, the Company completed an initial public offering
of 4,600,000 shares of its common stock for $11.00 per share resulting in net
proceeds (after deducting underwriters' issuance costs) of $47,058,000.
Cash used in operating activities was $1.4 million during the first quarter of
1996. Cash used in operating activities during the first quarter of 1996
consisted of $1.0 million of net income before depreciation and amortization and
other non-cash charges, offset by $2.4 million of changes in operating assets
and liabilities primarily resulting from a $1.4 million decrease in accounts
payable and increases in the Company's accounts receivable and inventory of
$908,000, consistent with its higher volume of business.
Cash used in investing activities for the first quarter of 1996 was $1.9
million, related to the purchase of short-term investments and the purchase of
property and equipment. Cash provided by financing activities during the first
quarter of 1996 was $7.6 million, consisting primarily of the net proceeds of an
initial public offering less the repayment of all debt and the redemption of the
outstanding preferred stock.
Capital expenditures were $134,000 for the first quarter of 1996. The Company
expects to spend approximately $450,000 on capital expenditures in fiscal 1996
primarily for office, computer and distribution center equipment. Additionally,
the Company expects to spend approximately $500,000 to equip its new
Philadelphia distribution center in connection with a lease agreement entered
into on April 29, 1996. Historically, capital expenditures have been primarily
for similar items, except for fiscal 1994 when the Company made additional
capital expenditures related to the relocation of its headquarters to its
present Moorestown, New Jersey location. A typical distribution center requires
a capital investment of approximately $75,000 to $80,000 for equipment and
leasehold improvements and an initial commitment of approximately $250,000 for
working capital (net of accounts payable attributable to new inventory). The
Company typically incurs expenses of approximately $50,000 before a new
distribution center becomes operational. The Company expects that newer
distribution center operating margins will continue to improve over time as the
Company leverages fixed costs of operations over higher sales of products
shipped from these distribution centers. The Company intends to finance its
future capital expenditures with cash flow from operations and possibly with a
portion of the proceeds of the initial public offering, term debt or capital
leases.
Wilmar's credit facility consists of a $10.0 million unsecured bank line of
credit. This line of credit had a zero balance as of March 29, 1996, having
been repaid with a portion of the proceeds of the initial public offering. In
March 1996, the Company replaced its existing secured bank line of credit with
the $10.0 million unsecured bank line of credit, which bears interest at three
quarter percent below the bank's prime rate and expires March 1997.
A portion of the net proceeds of the initial public offering was used to repay
the revolving bank line of credit and the term debt and to redeem the $4.0
million of 11.5% Subordinated Debentures issued to certain of the Summit
Investors. The reduction in these borrowings and the increase in stockholders'
equity as a result of this offering decreased the Company's financial leverage.
The Company expects to renew its revolving line of credit when it expires in
March 1997 and believes it could increase the amount of this credit facility if
needed.
The Company believes that its existing cash balances, supplemented by borrowings
under the revolving line of credit, are adequate to meet planned operating and
capital expenditure needs at least through 1996. However, if the Company were
to make any significant acquisitions for cash, it may be necessary for the
Company to obtain additional debt or equity financing.
<PAGE>
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Lease Agreement dated April 29, 1996 between the Company and 804
Eastgate Associates, L.L.C.
10.2 Assumption Agreement dated as of June 1, 1996 between the Company and
804 Eastgate Associates, L.L.C.
11.1 Computation of Earnings Per Share
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file a report on Form 8-K during the quarter ended
March 29, 1996.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WILMAR INDUSTRIES, INC.
/s/ Michael T. Toomey
By: ___________________________________
Michael T. Toomey
Chief Financial Officer and Treasurer
Date: May 13, 1996
<PAGE>
LEASE
This Agreement of Lease made this 29th day of April, 1996, by and between
804 Eastgate Associates, a New Jersey Limited Liability Company, with an address
c\o Markeim-Chalmers, Commerce Atrium-Suite 304, 1701 Route 70 East, Cherry
Hill, New Jersey 08003-2337 (hereinafter called "Landlord") and Wilmar
Industries, Inc., a New Jersey corporation, with an address at 303 Harper Drive,
Moorestown, New Jersey 08057 (hereinafter called "Tenant").
W I T N E S S E T H:
Landlord and Tenant, in consideration of the mutual covenants herein
contained, and other good and valuable consideration, receipt of which is hereby
acknowledged, and intending to be legally bound agree as follows:
1. Lease and Premises. Landlord hereby demises and leases to Tenant and
Tenant hereby hires from Landlord that certain real property together with the
building and improvements thereon erected, situate in Mt. Laurel, New Jersey
known as 804 East Gate Drive, consisting of a warehouse and office building
containing approximately 70,000 square feet of space and more fully described in
Exhibit "A" attached hereto and hereby made a part hereof (the "Premises") on
the terms and conditions hereinafter set forth.
2. Term. (a) The term of this Lease shall commence on June 1, 1996 and
shall expire, without the necessity of any notice from either party to the
other, at 11:59 P.M. on May 31, 2006. Possession of the Premises shall be
delivered to Tenant on the first day of the term.
(b) Upon the expiration or sooner termination of this Lease, Tenant
shall peacefully vacate and surrender the Premises to Landlord in good condition
and repair.
(c) If Tenant remains in possession of the Premises after the
expiration or sooner termination of this Lease with Landlord's consent, it shall
be deemed to be occupying the Premises as a tenant from month-to-month, at the
minimum annual rent and additional rent herein specified (prorated on a monthly
basis), subject to all conditions, provisions and obligations of this Lease
insofar as the same are applicable to a month-to-month tenancy. If Tenant
remains in possession of the Premises after
<PAGE>
the expiration or sooner termination of this Lease without Landlord's consent,
Tenant shall be deemed to be occupying the Premises at one hundred fifty percent
(150%) of the minimum annual rent and additional rent herein specified (prorated
on a monthly basis) subject to all conditions, provisions and obligations of
this Lease, and Landlord shall have all of the rights and remedies it would have
hereunder in the event of a default by Tenant.
(d) Landlord shall not be liable to Tenant in any respect in the
event that Landlord is unable to deliver possession of the Premises to Tenant as
set forth in paragraph (a) hereof, provided, Tenant shall not be required to pay
rent until such time as Landlord delivers possession. Tenant acknowledges and
confirms that Landlord is the contract purchaser of the Demised Premises
pursuant to an Agreement of Sale dated March 15, 1996 by and between the
Landlord and Valley National Bank. If Landlord fails to acquire the Demised
Premises for any reason whatsoever, this Lease shall be terminated, and neither
party shall owe any further obligation to the other.
(e) Each period of one year commencing on June 1, 1996 on any
anniversary thereof during the term shall constitute a "Lease Year."
3. Rent and Additional Rent.
(a) The minimum annual rent payable by Tenant to Landlord shall be:
(i) $222,000.00 per year from September 1, 1996 until and including
December 31, 1996 payable in equal monthly installments of $18,500.00 each;
(ii) $288,624 per year from January 1, 1997 until and including May
31, 2001 payable in equal monthly installments of $24,052 each;
(iii) The Minimum Annual Rent for the Lease Years from 2001 through
May 31, 2006 (the 6th Lease Year through and including the 10th Lease Year)
shall be increased each Lease Year pursuant to increases in the Consumer Price
Index as determined in accordance with this Section. In the event the
Consumer Price Index for Urban Wage Earners and Clerical Workers in the City of
Philadelphia published by the Bureau of Labor Statistics of the U.S. Department
of Labor (1982-84 equals 100) (hereinafter called the "Price Index") or a
successor or substitute index appropriately adjusted reflects an increase in the
cost of living in the last full month of the immediately preceding Lease Year
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(hereinafter called the "Adjustment Month") over and above such cost of living
as reflected by the Price Index as it exists for the first month of the 5th
Lease Year (June, 2000) (hereinafter called the "Base Index"), the minimum
annual rent during the Lease Year for which the computation is being made shall
be recomputed by multiplying $288,624 by a fraction, the numerator of which
shall be the Price Index for the Adjustment Month and the denominator of which
shall be the Base Index. In the event that such determination cannot be made
until after the commencement of the Lease Year, the increase or decrease of the
monthly rental payments due for the month(s) of the Lease Year prior to such
determination shall be paid to Landlord or refunded to Tenant upon the date the
next payment of rent is due after such determination. In no event shall the
minimum annual rent be less than the minimum annual rent for the immediately
preceding Lease Year.
To illustrate, if the Base Index were 150.00 and the Price Index for the
month immediately preceding the commencement of the first Lease Year of the
Renewal Term were 165.00, the minimum annual rent payable during the 6th Lease
Year $288,624 multiplied by 165.00/150.00 would equal $317,486 payable in equal
monthly installments of $26,457.17 each.
All such monthly installments shall be payable without prior notice or
demand at the office of Landlord to which notices are to be delivered (as set
forth below), or at such other place as Landlord shall by written notice
specify, in advance, without set-off or deduction, on the first day of each and
every month throughout the term hereof.
(b) As additional rent hereunder, Tenant shall pay the following:
(i)(A) All real estate and personal property taxes, water and sewer
charges, assessments of any kind or nature whatsoever, and any other public
charges levied upon or assessed against the Premises or any portion thereof, or
any buildings or improvements now or hereafter located thereon, or arising by
reason of the occupancy, use or possession thereof, and any taxes on rent now or
hereafter in force, including use and occupancy taxes, and any other similar
charges now or hereafter in effect (but not income taxes (except to the extent
levied in lieu of real estate taxes) or inheritance or estate taxes) whether or
not such charges or any of them are or may become a lien on the Premises (all of
which are hereinafter collectively referred to as "Taxes"), at least fifteen
(15) days before the last day on which the Taxes become due and payable without
penalty, interest or other cost which may be added thereto for non-payment.
Landlord
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shall promptly forward to Tenant all bills received by Landlord for Taxes which
shall be assessed or levied against Landlord. Promptly after payment of any
Taxes, Tenant shall deliver to Landlord an official receipt evidencing such
payment.
(B) After prior written notice to Landlord, Tenant, at its own
expense, may contest, by appropriate legal proceedings promptly instituted and
thereafter conducted in good faith and with due diligence, the amount or
validity, in whole or in part, of any Taxes; provided (I) in the case of any
unpaid Taxes, such proceedings shall suspend the collection thereof from
Landlord, from Tenant, and from the Premises; (II) neither the Premises nor any
part thereof nor any interest therein will be in danger of being sold,
forfeited, terminated, cancelled or lost; and (III) Tenant shall have deposited
with Landlord such security for payment of the contested Taxes, with interest
and penalties, as may reasonably be required by Landlord.
(C) Taxes for the years in which this Lease commences and terminates
shall be prorated between Landlord and Tenant on the basis of the fiscal period
for which the Taxes are levied or assessed.
(ii) All premiums on the insurance policies referred to in Article 8
hereof.
(iii) Any other amount required to be paid pursuant to this Lease.
(iv) All sums which may become due by reason of the failure of Tenant
to comply with any of the terms, covenants and conditions of this Lease to be
kept and observed by Tenant, and any and all damages, costs and expenses
(including, without limitation thereto, reasonable attorney's fees) which
Landlord may suffer or incur by reason of any default of Tenant and any damages
to the Premises caused by any act or omission of Tenant.
(c) Upon request of Landlord, Tenant, in lieu of its obligation to
make direct payments, will pay to Landlord, together with each monthly
installment of rent, an amount equal to l/12 of the aggregate annual amount of
(i) the Taxes and (ii) the insurance premiums referred to in subparagraph
3(b)(ii) of this Article 3, and (iii) any regularly occurring or anticipated
expenditure referred to in subparagraph 3(b)(iii) of this Article 3, all as
estimated by Landlord; such amounts shall be held in escrow by Landlord (or
transmitted to any mortgagee requiring such payments) and applied on account of
the Taxes and the insurance premiums, as and when payments therefor are due.
Without
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limitation of the foregoing, Tenant shall also pay to Landlord such additional
amounts as Landlord may request from time to time to provide a sufficient fund,
at least 15 days prior to the due date of the Taxes, insurance premiums or other
regularly occurring or anticipated expenditure (or, in the case of any Taxes
which may be paid in installments, the due date of the next installment
thereof), for payment of such Taxes, premiums and expenditures. Any amounts
held in escrow pursuant to this Paragraph shall bear no interest and may be
commingled with other funds of Landlord (or transmitted to a mortgagee as
aforesaid). In the event Landlord assigns his interest in this Lease, Landlord
shall have the right to pay the balance of such amounts then in his possession
to the assignee, and Landlord shall thereupon be completely released from any
liability with respect to such amounts.
(d) The obligations of Tenant to pay minimum annual rent and
additional rent shall survive expiration or sooner termination of this Lease.
4. Use. (a) The Premises may be used only as a warehouse, distribution
facility, and related office use and all other ancillary purposes and for no
other purpose, but in any event only in compliance with any applicable
ordinances now or hereafter in force.
(b) Tenant shall be responsible to obtain and maintain all use or
occupancy permits necessary to operate the Premises.
5. Utilities and Services. (a) Tenant shall pay all charges of utility
companies or public authorities for electricity, gas, telephone, water, steam or
other services or utilities furnished to the Premises. Tenant shall provide and
pay for all heating, cooling, trash removal, security, and other services for
the Premises. Under no circumstances shall Landlord be required to furnish any
utilities or any other services of any kind to the Premises or any part thereof.
Landlord shall not be liable for any failure in connection with the delivery of
such utilities and services. Tenant shall not be entitled to any abatement of
rent, nor shall the Landlord be liable for any damages, compensation or claim by
reason of inconvenience, annoyance, injury, or loss as a result of a failure in
connection with the delivery of such utilities and services.
(b) Utility costs not billed to Tenant's account as of the expiration
or sooner termination of the Lease and to Landlord as of the day after the
expiration or sooner termination of this Lease shall be prorated between
Landlord and Tenant based upon the current billings.
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6. Repairs - Maintenance. (a) Tenant agrees to accept the Premises in
the physical order and condition existing on the date of commencement of the
term of this Lease and Tenant shall, throughout the term hereof, at Tenant's
sole expense, make all necessary or appropriate repairs, replacements, renewals
and additions, interior and exterior, ordinary and extraordinary, foreseen and
unforeseen, required to keep and maintain the Premises and all systems,
equipment and apparatus appurtenant thereto or used in connection therewith in
good order and condition, including but not limited to the HVAC system serving
the Premises (except for replacements thereto as set forth below) and all
plumbing and electric systems, and the parking areas. Tenant shall, at Tenant's
expense, engage a contractor acceptable to Tenant to provide ordinary
maintenance to the HVAC system. Any repairs, replacements, renewals, and
additions, and any labor performed or materials furnished in, on or about the
Premises shall be performed and furnished in strict compliance with all
applicable laws, regulations, ordinances and requirements of all duly
constituted municipal authorities or other governmental bodies having
jurisdiction over the Premises and the requirements of any Board of Underwriters
having jurisdiction thereover. Except as expressly set forth herein, the
Landlord shall be responsible for the repair and replacement of the structural
components of the Premises, including but not limited to support columns, beams
and load bearing walls and the roof and floors, provided that the need for
repair or replacement of such items is not caused by any act or ommission of
Tenant. Notwithstanding anything contained in this Section to the contrary,
Landlord shall be responsible for the replacement of the HVAC system, provided
that the need for replacement is not is not the result of an act or ommission of
Tenant. At the commencement of the term hereof, the heating, ventilation and
air-conditioning systems shall be in good working order.
(b) Throughout the term of this Lease, Tenant, at its sole cost and
expense, shall promptly remove any violation and shall promptly comply with all
present and future laws, ordinances, orders, rules, regulations and requirements
of all federal, state and municipal governments, courts, departments,
commissions, boards, any national or local Insurance Rating Bureau, or any other
body exercising functions similar to those of any of the foregoing, which may be
applicable to the Premises, or any part thereof, or the sidewalks, curbs,
passageways, alleys, entrances, coverings or rooflike structures placed upon or
extending over any sidewalk, or any space adjacent thereto, or to the use or
manner of use of the Premises, or any part thereof. Tenant shall likewise
observe and comply with, or shall cause to be observed and complied with, all
the requirements of all
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policies of public liability, fire and other insurance at any time in force with
respect to the Premises.
7. Alterations and Improvements.
(a) Tenant may not demolish any building on the Premises, or make any
structural additions or alteration without the prior written consent of
Landlord. Tenant may, however, make such non-structural, alterations or
improvements as Tenant may reasonably require in connection with use of the
Premises, provided (i) the prior written consent of Landlord shall be required
in the event the aggregate cost of all such additions, alterations or
improvements exceeds $25,000; (ii) such alterations, or improvements shall not
adversely affect the structural soundness or reduce the value of any existing
building; and (iii) such alterations or improvements, if and when made, shall
become a part of the Premises and subject to the terms hereof, although Landlord
reserves the right, at its option, to require that any such alterations and
improvements be removed at the expiration of the term hereof and the Premises be
restored to the condition they are now in, reasonable wear and tear excepted.
(b) Landlord may, at its option, in any case in which its approval is
required pursuant to Paragraph (a) of this Article, require Tenant to furnish it
with copies of the applicable plans and specifications and any relevant contract
between Tenant and any contractor or supplier. Landlord may also require, at
its option and as a condition precedent to giving any approval, (i) a
performance bond and a labor and material payment bond, both in form and
substance satisfactory to Landlord, given by an independent financially
responsible corporate surety, to assure completion of the work in accordance
with the plans and specifications, free of liens and (ii) evidence that each
contractor has adequate workmen's compensation insurance and general liability
insurance with limits of at least $500,000, for injury to any one person,
$1,000,000, for injuries in any one occurrence and property damage of $50,000.,
together with a certificate from the insurer to the effect that such insurance
may not be cancelled or substantially modified without at least 10 days prior
written notice to Landlord.
8. Insurance. Tenant shall, at its own sole cost and expense, take out,
maintain, and keep in force throughout the term hereof the following insurance:
(a) Insurance against loss by fire and such other hazards, casualties
and contingencies as are usually covered by the broadest form of extended
coverage policy available in the
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South New Jersey area, boiler insurance (if appropriate), and such other
insurance as may be specified by Landlord from time to time. The fire and
extended coverage insurance shall be in the amount of the full insurable value
of the Premises, without deduction for depreciation, and the boiler insurance
and other insurance (if any) shall be in such amounts as Landlord may reasonably
require. Such policies shall name as insured Landlord, Tenant, and, where
appropriate, the holder of any mortgage, as their respective interests may
appear.
(b) Comprehensive general liability insurance protecting Landlord and
Tenant against any injury or damage to any person or property occurring in, on
or about the Premises, or any sidewalks, driveways, or other areas appurtenant
to the Premises. Such insurance shall be in the amount of at least $3,000,000
for injury to any one person, $1,000,000 for injuries in any one occurrence, and
$1,000,000 for property damage. Such policies shall name Landlord and Tenant as
insureds and shall be written on an "occurrence basis."
(c) Tenant shall not take out separate insurance concurrent in form
or contributing, in the event of loss, with that required to be furnished by
Tenant pursuant to this Article, nor shall Tenant increase the amounts of any
then existing insurance by securing an additional policy or additional policies,
without in either instance including Landlord as an insured party.
(d) The insurance policies referred to in Paragraphs (a) and (b)
above shall be underwritten by insurance companies with Best's "A" rating or
better. Tenant shall deliver to Landlord certificates of all insurance policies
on or before the first day of the term hereof and thereafter at least thirty
(30) days prior to the expiration of any such policy, or within ten (10) days of
receipt of said policies from the insurance companies, whichever is later.
Tenant shall also deliver to Landlord receipts evidencing payment of all
insurance premiums, which delivery shall be at least ten (10) days prior to the
date such premiums are due.
(e) Each of the parties hereto hereby releases the other, to the
extent of each party's insurance coverage, from any and all liability for any
loss or damage which may be inflicted upon the property of such party even if
such loss or damage shall be brought about by the fault or negligence of the
other party, its agents or employees; and that all policies of fire and/or
extended coverage or other insurance covering the Premises or the contents
thereof shall contain a clause or endorsement providing in substance that such
insurance shall not be prejudiced if the
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insureds thereunder have waived the right of recovery from any person or persons
prior to the date and time of loss or damage, if any.
9. Tenant's Fixtures. Tenant shall have the right to install trade
fixtures upon the Premises and to remove and permit to be removed any or all
such trade fixtures from time to time. Provided Tenant is not in default
hereunder, Tenant may remove all such trade fixtures at the expiration or sooner
termination of this Lease; provided, however, that Tenant shall repair and
restore or cause to be repaired and restored any damage or injury to the
building and improvements now or hereafter erected on the Premises caused by the
installation and/or removal of any such trade fixtures. Any permits for
operation of the Premises shall be delivered to Landlord and all appropriate
steps for the assignment of such permits to Landlord shall be completed by
Tenant.
10. Net Lease. The parties intend this to be a "net-net-net" or "triple
net" Lease pursuant to which the rent payable hereunder shall be an absolutely
net return to Landlord for the term of this Lease, undiminished by the Taxes,
insurance, or any other carrying charges, maintenance charges or any other
charges of any kind or nature whatsoever except any mortgage now or hereafter
placed upon the Premises by Landlord, and except as specifically set forth in
this Lease, Landlord shall not be required to perform any services or furnish
any utilities of any kind or nature whatsoever.
11. Requirements of Public Authorities and Environmental Matters.
(a) Tenant will promptly and faithfully comply with, conform to, and
obey all present and future laws, ordinances, rules, regulations and
requirements of every duly constituted governmental authority or agency having
jurisdiction over Tenant and/or the Premises or any part thereof, and of every
Board of Underwriters having jurisdiction, or any similar body exercising
similar functions, which may be applicable to Tenant or to the Premises, or any
part thereof, or to the use or manner of use, occupancy, possession, operation,
maintenance, alteration, repair or reconstruction of the Premises, or any part
thereof, whether or not such laws, ordinances, rules, regulations, and
requirement shall necessitate structural changes or improvements to, or
interfere with the use or enjoyment, of the Premises, or any part thereof.
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(b) Tenant shall not engage in operations at the Premises which
involve the generation, manufacture, refining, transportation, treatment,
storage, handling or disposal of any "hazardous substance" or "hazardous waste"
as such terms are defined under the Industrial Site Recovery Act, N.J.S.A.
13"1K-6 et seq. (West Supp. 1989), as amended ("ISRA"), or of "hazardous
substances" as defined in section 101 (14) of the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. 9601 (14), as
amended by the Superfund Amendments and Reauthorization Act of 1986 ("SARA"), in
violation of applicable laws.
Upon written request of Landlord, Tenant shall cooperate with Landlord in
obtaining evidence of compliance with ISRA or with any other law, regulation, or
order of any governmental authority, which cooperation shall include, without
limitation, providing affidavits, reports or responses to questions.
Tenant has disclosed to Landlord that its Standard Industrial
Classification ("SIC") number, as designated in the Standard Classification
Manual prepared by the Office of Management and Budget, Executive Office of the
President of the United States, will not create an Industrial Establishment (as
defined in ISRA). Tenant recognizes that for purposes of ISRA, Tenant will
acquire the SIC number of any entity for which it provides all or substantially
all of its services or products.
Tenant represents and warrants that the specific activities intended to be
conducted on the Premises will not constitute an "Industrial Establishment:
subject to the requirements of ISRA. Tenant covenants that it will do or suffer
nothing which will cause its SIC number to fall within any of the following
"major group" classifications of SIC numbers during the Term: 22 through 39,
inclusive, 46 through 49, inclusive, and 51 or 76 (the "Covered Numbers").
Tenant further covenants to notify Landlord in writing at least thirty (30) days
prior to any change of facts which would result in the change of Tenant's SIC
number to any of the Covered Numbers. Upon such notice, Landlord shall have
the right, at its option, to terminate this Lease within thirty (30) days of
receipt of such notice by notifying the Tenant in writing.
Tenant further covenants that it will not cause or permit to exist, as a
result of an intentional or unintentional action or omission on its part, the
releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping on
or about the Premises of any "hazardous substance: (as such term is defined in
N.J.S.A. 58:10-23.11b (k) and N.J.A.C. 7:1-3.3).
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If Tenant, in violation of the foregoing covenants, ever causes the
Premises to become an Industrial Establishment, then Tenant shall:
(i) indemnify and hold harmless Landlord, its successors and assigns,
and any partner and any other agent or employee of Landlord, or its
successors or assigns (collectively, the "Indemnified Parties"), from
and against any and all liability, damages, losses, claims, suits,
actions, legal or administrative proceedings, interest, expenses, and
attorney's fees (including any such fees and expenses incurred in
enforcing this indemnity) resulting from, arising out of, or in any
way connected with injury to or the death of any person (including any
Indemnified Party) or physical damage to property of any kind wherever
located and by whomever owned (including any Indemnified Party)
arising out of or in any way connected with the presence on, in or
under the Premises of any asbestos, polychlorinated biphenyls (PCB's)
or any "hazardous substance" or "hazardous waste" as such terms are
defined by ISRA, CERCLA or the Spill Act (as hereinafter defined) or
of any other hazardous, toxic or polluting substance or material; and
(ii) at its expense, comply with all applicable requirements of
ISRA pertaining to the transfer or closure of an Industrial
Establishment. Without limitation of the foregoing, Tenant
understands that its obligations might include (1) the proper filing
of an initial notice to the New Jersey Department of Environmental
Protection (the "DEP"), (2) the performance of any soil, groundwater
and surface water sampling and test required by the DEP, and (3)
either the filing of a "negative declaration" with the DEP or the
performance of a proper and approved cleanup plan to the satisfaction
of the DEP. Further, in the event Landlord enters into an agreement
to sell the Premises at any time during the Term, Tenant will, upon
request, and at Landlord's expense, furnish to Landlord such
statements, affidavits and information as Landlord may require in
order to file an initial notice and thereafter obtain a negative
declaration. In the event that the DEP requires the implementation of
a cleanup plan prior to issuance of a negative declaration, which plan
is required due to Tenant's operations at the Premises, then Tenant
shall bear the cost implementation of the cleanup plan.
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(iii) Within ten (10) days after request therefor, Tenant shall
provide all information requested from time to time by Landlord, or by
any Enforcement Agency for the preparation of notices, submissions or
affidavits (including, without limitation, Non-applicability
Affidavit, de Minimis Quantity Exemption Application, Limited
Conveyance Application or Administrative Consent Order). Within ten
(10) days after request therefor, Tenant shall execute and deliver any
document reasonably required in order to comply with any Environmental
Law.
(iv) Tenant shall promptly deliver to Landlord copies of all notices
made by Tenant to, or received by Tenant from, any Enforcement Agency
or from the United States Occupational Safety and Health
Administration concerning environmental matters or Hazardous
Substances at the Premises.
Tenant shall not operate a "major facility" at the Premises within the
meaning of the New Jersey Spill Compensation and Control Act (the "Spill Act"),
N.J.S.A. 58:10-23.11 to 58:10-23.11z (West 1982 and Supp. 1989) as such law may
be amended from time to time. Tenant has no knowledge of any lien imposed upon
its revenues, real or personal property pursuant to Section 7 (f) of the Spill
Act, N.J.S.A. 58:10-23.11f (f) (West Supp. 1989), as such section may be amended
from time to time, and Tenant has no actual or constructive knowledge of any
circumstances which might lead to the imposition of such a lien.
In the event of Tenant's failure to comply in full with this Paragraph 11,
Landlord may, at its option, perform any and all of Tenant's obligations as
aforesaid and all reasonable costs and expenses incurred by Landlord in the
exercise of this right shall be deemed to be Additional Rent payable upon
demand.
This Paragraph 11 shall survive the expiration or some determination of
this Lease.
12. Inspection - Access. (a) Landlord or Landlord's agents shall have
the right to enter the Premises at any reasonable times to examine the same and
to show them to prospective mortgagees, and purchasers of the Premises, and to
make such repairs which Tenant shall have failed to make. Landlord may take
into and on the Premises all workmen, material, and equipment that may be
required therefor without the same constituting an eviction of Tenant in whole
or in part, and the rent reserved shall not abate in whole or in part while said
repairs are being made, by reason of loss or interruption of
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business of Tenant or otherwise, and Landlord shall not be liable to Tenant for
any damage to or decrease in Tenant's business at the time of such work or
thereafter.
(b) The cost of any such repairs shall, unless the same are the
responsibility of the Landlord, be payable by Tenant to Landlord as additional
rent hereunder, immediately upon demand.
(c) During the six (6) months prior to the expiration of the term of
this Lease, Landlord may place upon the Leased Premises "For Rent" signs, and
Landlord may, at any time, place "For Sale" signs on the Premises. Tenant shall
permit such signs to remain. If Tenant shall not be personally present to open
and permit an entry into the Premises at any time when for any reason an entry
therein shall be necessary or permissible, Landlord or Landlord's agents may
enter the same by a master key and without in any manner affecting the
obligations and covenants of this Lease. Nothing in this paragraph shall be
deemed or construed to impose upon Landlord any obligation, responsibility or
liability whatsoever for the care, maintenance or repair of the Premises or any
part thereof.
13. Assignment. Tenant shall not assign, pledge, mortgage or hypothecate
its interest under this Lease, nor sub-lease the whole or any part of the
Premises, without the written consent of Landlord, which consent shall not be
unreasonably withheld. Any assignment, pledge, mortgage, hypothecation or sub-
lease, even if consented to by Landlord, shall not relieve Tenant of any of its
liabilities hereunder.
14. Termination. Tenant shall not have the right of termination of this
Lease or an abatement of rent, except as specifically set forth in this Lease.
Notwithstanding the foregoing to the contrary, Tenant shall have the option,
exercisable at any time prior to the expiration of the Fifth Lease Year to
terminate this Lease, which termination shall be effective on May 31, 2001, for
the remainder of the Term. If Tenant exercises its right to terminate this
Lease as aforesaid, Tenant shall vacate the Premises on May 31, 2001, and shall
leave the Premises in the condition required under this Lease. Within thirty
(30) days after Tenant has sent written notice hereunder, Tenant shall pay
Landlord a Lease termination fee in an amount equal to the actual amount paid by
Landlord for on behalf of Tenant to Mt. Ephraim Fidoreo, L.S., Inc. pursuant to
the provisions of that certain Assumption Agreement dated even date herewith by
and between Landlord and Tenant, relating to Tenant's obligations in connection
with its lease of certain premises located at 2600 Mt. Ephriam Avenue, Camden,
New Jersey (the "Lease
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Termination Fee") by certified check or wire transfer of immediately available
funds. Tenant's right to terminate this Lease pursuant to this Section 14 shall
not be effective if at the time of such notice, or on May 31, 2001, Tenant is in
default under this Lease. If Tenant fails to pay the Lease Termination Fee
within the time set forth herein, or vacate the Premises on or before May 31,
2001, Tenant shall be deemed to have waived its right to terminate this Lease
pursuant to the provisions hereof.
15. Fire or Other Casualty.
(a) Damage or destruction of all or any portion of the Premises, or
any buildings or other improvements now or hereafter erected thereon, by fire,
the elements, or any other cause whatsoever, whether or not insured, shall not
cause an abatement of rent or entitle Tenant to surrender the Premises or in any
other way affect the respective obligations of Landlord and Tenant hereunder.
(b) In the event of any such damage or destruction Tenant hereby
authorizes Landlord, and appoints Landlord as its attorney-in-fact, to endorse
any check drawn to the order of both Landlord and Tenant for the proceeds of any
insurance, and Landlord may deposit any such check in its own account and apply
the proceeds thereof as set forth in this Article 15.
(c) Tenant shall, at its own expense, promptly repair any damage and
restore the Premises to at least as good condition as they were in immediately
prior to occurrence of the fire or other casualty. If the damage is such that
the proceeds of the fire and extended coverage insurance referred to in Article
8 hereof do not exceed $15,000., Tenant shall restore the Premises as aforesaid
and upon completion of the work Landlord shall release the net proceeds of
insurance (after collection expenses, if any) to Tenant; if damage is such that
the fire and extended coverage insurance proceeds referred to in Article 8
exceed $15,000., advances shall be made out of the insurance proceeds from time
to time as work progresses to cover costs of restoration as more fully set forth
in Paragraph (d) below. In either event, Landlord shall not be required to pay
Tenant any sums except the net proceeds of the fire and extended coverage or
other insurance proceeds paid to Landlord. In the event such insurance proceeds
are less than the total cost of such repair and restoration, Tenant shall be
responsible for the payment of such deficit, and if such anticipated deficit
exceeds $10,000. Tenant shall deposit with Landlord, prior to the commencement
of such repairs and restoration, the amount of such anticipated deficit, to be
advanced in the same manner as the insurance proceeds. Any
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insurance proceeds in excess of amounts required to reimburse Tenant's
expenditures for such repair and restoration shall be the property of Tenant,
and shall be paid to Tenant promptly after final completion of the
reconstruction.
(d) Where the damage is such that the anticipated proceeds exceed
$15,000., plans and specifications for the work of repairing and restoring the
Premises shall be prepared under the supervision of an architect selected by
Tenant and approved in writing by Landlord. The work shall be performed by a
reputable general contractor selected by Tenant and approved in writing by
Landlord, and Landlord may, at its option, require any contractor to furnish a
performance bond and a labor and material payment bond in the full amount of the
contract price, given by an independent financially responsible corporate
surety, to guarantee completion of the work free of any mechanic's or
materialmen's liens. All contracts for the purchase of materials and the
performance of such restoration work shall be made in Tenant's name, and Tenant
shall pay all costs and expenses of the work as and when they become due.
Landlord shall advance to Tenant, or to any contractors or subcontractors, as
Landlord may elect, within 15 days after receipt of Tenant's written request,
the amounts expended by Tenant (to the extent that the insurance proceeds are
available for such purpose as aforesaid); provided, however, the aggregate of
the amounts so advanced shall not exceed 90% of the actual value of the labor
and materials incorporated into the work at the time payment is requested, such
"value" to be based upon the contract prices set forth in the general contract,
or any applicable subcontract, as the case may be; and provided, further, that
Landlord shall not be required to make such advances more often than once in any
calendar month or in amounts less than $5,000. Upon completion of the work,
Landlord shall advance the remaining cost of the work from the balance of any
insurance proceeds in Landlord's possession not previously advanced to Tenant.
Each request for any advance shall be subject to the approval of the holder of
any first mortgage on the Premises and shall be accompanied by an architect's
statement certifying that the labor and materials for which payment is requested
have been incorporated into the work or delivered to the site and safely stored
thereon, that the value is as estimated, and that the work has been performed in
accordance with the plans and specifications. Landlord shall have the right to
inspect such restoration as the work progresses, but any such inspection shall
not be construed as a waiver of any misstatement or omission in any of the
aforesaid architect's statements.
(e) If the holder of any mortgage on the Premises has the right to
apply the aforesaid insurance proceeds on account of
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the mortgage debt and does in fact apply such proceeds on account of the
mortgage debt, Landlord may, at its option, either (i) make available to Tenant
funds equivalent to the insurance proceeds on the terms and conditions set forth
herein, or (ii) terminate this Lease by written notice to Tenant. Such option
shall be exercised by notice given to Tenant within 10 days after the aforesaid
mortgagee has elected to apply the insurance proceeds on account of the mortgage
debt, and in any event within 90 days after occurrence of the damage. In the
event Landlord elects to terminate this Lease pursuant to this Paragraph, such
termination shall be effective on the last day of the calendar month in which
such notice is given.
(f) The requirements of Article 7(b) (pertaining to the contractor's
insurance coverage) and of Article 11 (pertaining to compliance with the
requirements of public authorities) shall be applicable to all work done
pursuant to this Article.
16. Eminent Domain.
(a) In the event the Premises or any part thereof shall be condemned
and taken for a public or a quasi-public use, Tenant will promptly give written
notice thereof to Landlord generally describing the nature and extent of such
condemnation or taking or the nature of such proceedings and negotiations and
the nature and extent of the taking which might result therefrom, as the case
may be. Any award made to compensate either Landlord or Tenant for its damages
or loss shall be deposited with Landlord (or with any holder of a mortgage
encumbering the Premises, if required by said holder).
(b) In the event that a portion of the Premises, but less than the
entire Premises, is taken or condemned by eminent domain as aforesaid, Landlord
shall have the right, at its option, to require Tenant to make such repairs as
are necessary to restore the Premises as nearly as possible to the condition
they were in immediately prior to the taking. If Landlord elects to cause
Tenant to restore the Premises, Landlord shall make available to Tenant the net
proceeds of the condemnation award (which shall be the total award less the sum
of (i) any costs or expenses incurred by Landlord in collecting the award and
(ii) so much of the award as may be allocable to land value) on the same terms
and conditions as contained in Article 15 hereof with respect to restoration or
repair of the Premises in the event of damage by fire or other casualty.
(c) If the property in question cannot be restored to a complete
architectural unit, or if the taking is so extensive that
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the premises in question would not, after restoration, be suitable for its
present use, the taking shall be considered a total taking and Paragraph (f)
below will apply.
(d) If the holder of any mortgage on the Premises shall apply the
award to the principal balance of such mortgage, Landlord shall make the
election provided in Article 15(e) hereof.
(e) In the event of a partial taking rent shall abate equitably in
proportion to the area of the Premises condemned as of the day on which the
condemning authority shall take possession of the condemned property.
(f) In the event the entire Premises are taken or condemned by any
public or quasi-public authority exercising the right of eminent domain, this
Lease shall terminate as of the date the condemning authority takes possession
of the Premises, with the same force and effect as though such date were the
date fixed herein for expiration of the term. The entire amount of any award
for such taking shall belong to Landlord, except for moving and business
interruption expenses, if any, awarded directly to Tenant, and Tenant hereby
waives any other right it may have to any portion of such award, except for such
expenses as are directly awarded to Tenant, provided that same do not diminish
Landlord's award.
(g) If the condemning authority should take only the right to
possession for a fixed period of time or for the duration of an emergency or
other temporary condition, then, notwithstanding anything hereinabove provided,
this Lease shall continue in full force and effect without any abatement of
rent, and the amounts payable by the condemning authority with respect to any
period of time prior to the expiration or sooner termination of this Lease shall
be paid by Landlord to Tenant out of the amount of the award and the condemning
authority shall be considered a subtenant of Tenant.
(h) If Landlord and Tenant are unable to agree as to whether any
taking is so substantial as to constitute a total taking for purposes of this
Lease, or as to the amount of abatement of rent after a partial taking, the
matter shall be submitted to arbitration in Southern New Jersey in accordance
with the rules of the American Arbitration Association then in force and the
decision of the arbitrator shall be final and binding on both parties.
(i) In the event of a partial taking, if and to the extent the
condemnation award exceeds the cost of reconstruction
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(as in the case of a road widening which requires no reconstruction) such excess
shall belong to Landlord.
17. Mechanics' Liens. Tenant shall not permit any mechanics',
materialmen's or similar liens to remain upon the Premises for labor or material
furnished to Tenant or claimed to have been furnished to Tenant in connection
with work of any character performed or claimed to have been performed on the
Premises or at the direction or with the consent of Tenant, whether such work
was performed or materials furnished before or after the commencement of the
term of this Lease. Tenant may, however, contest the validity of any such lien
or claim, provided Tenant shall give the Landlord such reasonable security to
insure payment and to prevent any sale, foreclosure or forfeiture of the
Premises by reason of such non-payment as Landlord may require. Upon final
determination of the validity of any such lien or claim, Tenant shall
immediately pay any judgment or decree rendered against Tenant or Landlord with
all proper costs and charges and shall cause such lien to be released of record
without cost to Landlord.
18. Relationship of Parties. The relationship between the parties hereto
shall be that of Landlord and Tenant and nothing contained herein shall be
construed to change or modify that relationship so as to make Landlord and
Tenant partners, joint venturers, or debtor and creditor.
19. Quiet Enjoyment. Tenant, upon paying the minimum annual rent and all
additional rent and upon observing and keeping the covenants, agreements and
conditions of this Lease on its part to be performed, shall quietly have and
enjoy the Premises during the term of this Lease without hindrance or
molestation by Landlord or by anyone claiming through or under Landlord, subject
to the terms, covenants, conditions and exceptions herein contained, and subject
also to any restrictions, easements or other agreements of record. This
covenant is given in lieu of any implied covenant of quiet enjoyment.
20. Events of Default - Remedies.
(a) The following events or any one or more of them shall each be an
"Event of Default" under this Lease:
(i) Tenant shall fail to pay any minimum annual rent or additional
rent payable hereunder within ten days after written notice that the same is due
and payable; or
(ii) Tenant shall fail to perform or comply with any of the other
terms, covenants, agreements or conditions hereof
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and such failure shall continue for more than twenty (20) days after written
notice thereof from Landlord, provided, if the default is susceptible to being
cured but cannot be cured within twenty (20) days, Tenant shall not be
considered in default if Tenant shall, within such period, have commenced with
due diligence and dispatch to cure such default, and shall thereafter complete
with due diligence the curing of such default; or
(iii) Tenant shall make a general assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts as they
become due, or shall file a petition in bankruptcy, or shall be adjudicated a
bankrupt or insolvent, or shall file a petition seeking any reorganization,
arrangement, composition readjustment, liquidation, dissolution or similar
relief under any present or future statute, law or regulation, or shall file an
answer admitting or not contesting the material allegations of a petition
against it in any such proceeding, or shall seek or consent to or acquiesce in
the appointment of any trustee, receiver or liquidator of Tenant or any material
part of its properties; or
(iv) if within 60 days after the commencement of any proceeding
against Tenant seeking any reorganization, arrangement, composition,
readjustment, liquidation or dissolution or similar relief under any present or
future statute, law or regulation, such proceeding shall not have been
dismissed, or if, within 60 days after the appointment without the consent or
acquiescence of Tenant, of any trustee, receiver or liquidator of Tenant, or of
any material part of its properties, such appointment shall not have been
vacated.
The notice and grace period provisions in subparagraphs (i) and (ii)
above shall have no application to the defaults referred to in subparagraphs
(iii) and (iv) above.
(b) (i) In the event of any Event of Default (regardless of the
pendency of any proceeding which has or might have the effect of preventing
Tenant from complying with the terms of this Lease), Landlord at any time
thereafter may exercise any one or more of the following remedies:
(A) Termination of Lease. Landlord may terminate this Lease, without
any right by Tenant to reinstate its rights by payment of rent due or other
performance of the terms and conditions hereof. Upon such termination Tenant
shall immediately surrender possession of the Premises to Landlord and Landlord
shall immediately become entitled to receive from Tenant damages equal to the
difference between the aggregate rentals
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reserved for the balance of the term, and the fair rental value of the Premises
for that period, determined as of the date of such termination; provided, that
the amount of such damages shall be discounted at the rate of 5% per annum for
the period from the date of payment by Tenant to Landlord to the date of
expiration of the term of the Lease.
(B) (I) Reletting. With or without terminating this Lease, as
Landlord may elect, Landlord may re-enter and repossess the Premises, or any
part thereof, and lease them to any other person or entity upon such terms as
Landlord shall deem reasonable, for a term within or beyond the term of this
Lease. Any such reletting prior to termination shall be for the account of
Tenant. Tenant shall remain liable for (X) all minimum annual rent and
additional rent which would be payable under this Lease by Tenant in the absence
of such expiration, termination or repossession, less the net proceeds, if any,
of any reletting effected for the account of Tenant, and for (Y) all of
Landlord's expenses in connection with such reletting (including, without
limitation, all repossession costs, brokerage commissions, legal expenses,
attorneys' fees and expenses, employees' expenses, reasonable alteration costs,
and expenses of preparation for such reletting).
(II) If the Premises are at the time of the occurrence of the Event
of Default sublet or leased by Tenant to others Landlord may, as Tenant's agent,
collect rents due from any subtenant or other tenant and apply such rents to the
rent and other amounts due hereunder without in any way affecting Tenant's
obligation to Landlord hereunder. Such agency, being given for security, is
hereby declared to be irrevocable.
(C) Acceleration of Rent. Landlord may declare minimum annual rent
and all items of additional rent for the entire balance of the then current term
immediately due and payable, as though such amounts were payable in advance on
the date the event of default occurred, and which accelerated rent, when paid by
Tenant shall be discounted to its present value, based upon the then existing
interest rate on one year Treasury securities.
(ii) No expiration or termination of this Lease term pursuant to
subparagraph (b)(i) above or by operation of law or otherwise (except as
expressly provided herein), and no repossession of the Premises or any part
thereof pursuant to Paragraph (b) above or otherwise shall relieve Tenant of its
liabilities and obligations hereunder, all of which shall survive such
expiration, termination or repossession, and Landlord may, at its option, sue
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for and collect rent and other charges due hereunder at any time and from time
to time as and when such charges accrue.
(iii) With respect to any portion of the Premises which is vacant or
which is physically occupied by Tenant, Landlord may remove all persons and
property therefrom, and store such property in a public warehouse or elsewhere
at the cost of and for the account of Tenant, without service of notice or
resort to legal process (all of which Tenant expressly waives) and without being
deemed guilty of trespass or becoming liable for any loss or damage which may be
occasioned thereby. Landlord shall have a lien for the payment of all sums
agreed to be paid by Tenant herein upon all Tenant's property, which lien is to
be in addition to any Landlord's lien now or hereafter provided by law.
(iv) The parties hereby waive trial by jury in any action,
proceeding, or counterclaim brought by either of them against the other on any
matters arising out of or in any way connected with this Lease, the relationship
of Landlord and Tenant, Tenant's use or occupancy of the Premises, and/or any
claim of injury or damage. In the event Landlord commences any proceedings for
non-payment of minimum annual rent or additional rent, Tenant will not interpose
any counterclaim of any nature or description in any such proceedings. This
shall not be construed, however, as a waiver of Tenant's right to assert any
such claims in any separate action brought by Tenant.
(v) Tenant hereby expressly waives any and all rights of redemption
granted by or under any present or future law in the event this Lease is
terminated or Tenant is evicted or dispossessed by reason of violation by Tenant
of any of the provisions of this Lease.
(vi) In the event of breach or threatened breach by Tenant of any
provision of this Lease, Landlord shall have the right of injunction as if other
remedies were not provided for herein.
(vii) No right or remedy herein conferred upon or reserved to
Landlord is intended to be exclusive of any other right or remedy herein or by
law provided, but each shall be cumulative and in addition to every other right
or remedy given herein or now or hereafter existing at law or in equity or by
statute.
(viii) Any minimum annual rent and additional rent overdue for a
period of more than ten days shall bear interest at the rate of 10% per annum
until paid, or shall incur a late charge
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of 5% of the amount due for each month or part thereof that the payment is late
to compensate Landlord for the extra expense of dealing with and monitoring late
payments.
(ix) If Tenant shall default in the performance of any covenant
required to be performed by it under this Lease, Landlord may perform the same
for the account and at the expense of Tenant, after first giving notice to
Tenant of its intention to do so. If Landlord at any time is compelled to pay,
or elects to pay, any sum of money, or to do any act which will require the
payment of any sum of money, by reason of the failure of Tenant to comply with
any provisions hereof, or if Landlord incurs any expense, including reasonable
counsel fees, in instituting, prosecuting or defending against any action or
proceeding instituted by reason of any default of Tenant hereunder, the amount
of such payments or expenses shall be paid by Tenant to Landlord as additional
rent on the next day following such payment or the incurring of such expenses
upon which a regular monthly rental payment is due, together with interest
thereon at the rate of 10% per annum.
(x) No waiver by Landlord of any breach by Tenant of any of its
obligations, agreements or covenants hereunder shall be a waiver of any
subsequent breach or of any other obligation, agreement or covenant, nor shall
any forbearance by Landlord to seek a remedy for any breach by Tenant be a
waiver by Landlord of its rights and remedies with respect to such or any
subsequent breach. Landlord shall have the right at all times, any law, usage
or custom notwithstanding, to enforce strictly the provisions of this Lease, and
the failure of Landlord at any time or times strictly to enforce any provision
hereof shall not be construed as having created a custom or waiver in any way
contrary to the specific provisions of this Lease or as having in any way or
manner modified this Lease.
(xi) Tenant expressly waives any right of defense which it may have
based on any purported merger of any cause of action, and neither the
commencement of any action or proceeding nor the settlement thereof or entering
of judgment therein shall bar Landlord from bringing subsequent actions or
proceedings from time to time.
21. Subordination of Lease. In the event Landlord elects to place any
new mortgage on the Premises, or any part thereof, this Lease shall be
subordinate in all respects to the lien of any such mortgage with the same force
and effect as if such mortgage had been executed, acknowledged, delivered and
recorded prior to execution of this Lease. The subordination contained in this
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Article 21 is and shall be effective without the necessity of any further act or
writing by either party hereto, but Tenant agrees that it will, immediately upon
Landlord's request, deliver such additional documents as any mortgagee may
require to confirm such subordination.
(a) The foregoing provisions of this Paragraph shall be effective only
in the event that the mortgagee under any such mortgage shall furnish Tenant
with a written agreement in recordable form and binding upon the mortgagee and
its successors and assigns, satisfactory to Tenant, providing that so long as
Tenant, its successors, assigns or subtenants are not in default under this
Lease, Tenant's possession of the Premises and its rights under this Lease shall
not be interfered with by the mortgagee (whether or not the mortgage is in
default and notwithstanding any foreclosure action), any insurance proceeds and
any condemnation award shall be applied as provided in the Lease, and the lien
of the mortgage shall not cover any equipment used in Tenant's business on the
Premises. If Landlord fails to obtain such agreement prior to the commencement
date of this Lease, Tenant shall have the right to terminate this Lease.
(b) Tenant, at the request of any mortgagee, or anyone acquiring title
to the Landlord's estate or the Premises by foreclosure, deed in lieu of
foreclosure, or otherwise, shall attorn to the then owner and recognize such
owner as Landlord for the balance of the term of this Lease, subject to all the
terms and provisions hereof. Such mortgagee or purchaser at said foreclosure
sale shall not be (i) liable for any act or omission of Landlord, (ii) subject
to any off-sets or defenses which Tenant may have against Landlord, (iii) bound
by any rent or additional rent which Tenant may have paid to Landlord for more
than the current month, or (iv) bound by any amendment or modification of the
Lease made without its consent.
22. Estoppel Certificate. Tenant agrees to execute and deliver to
Landlord, within one (1) week after any written request, an "estoppel
certificate" stating the amount of rent due from Tenant hereunder, that this
Lease remains in full force and effect without modification, the date to which
rent has been paid that Tenant has no set-offs against rent, and such other
information concerning this Lease as Landlord may reasonably request; or, if
this Lease has been modified, or if Tenant has any set-offs against rent, the
exact nature of the modifications and the precise amount of the set-offs. Such
estopped certificates may be relied upon by Landlord and by any prospective
mortgagee or purchaser of the Premises.
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23. No Brokers. Tenant represents and warrants to Landlord that Tenant
has had no dealings, negotiations or consultations with respect to the Premises
or this transaction with any broker or intermediary and that no broker or
intermediary called the Premises to Tenant's attention for lease or took any
part in any dealings, negotiations or consultations with respect to the Premises
or this Lease. In the event that any broker or intermediary claims to have
submitted the Premises to Tenant, to have induced Tenant to lease the Premises
or to have taken part in any dealings, negotiations or consultations with
respect to the Premises or this Lease, Tenant will be responsible for and will
indemnify and save Landlord harmless from and against all costs, fees (including
without limitation, attorney's fees), expenses, liabilities, and claims incurred
or suffered by Landlord as a result thereof.
24. Security Deposit. Tenant shall, upon execution hereof, deposit with
Landlord, as security for the performance of all the terms, covenants, and
conditions of this Lease, the sum of $24,052. This deposit may be mingled with
other funds of Landlord and shall be retained by Landlord until the expiration
or sooner termination of this Lease and shall be returnable to Tenant, provided
that (A) the Premises have been vacated; and (B) Tenant shall have complied with
all of the terms, covenants, and conditions of this Lease, in which event the
aforesaid deposit shall be returned to Tenant; otherwise the deposit or any part
thereof may be retained by Landlord, at its option, as liquidated damages, or
may be applied by Landlord against any actual loss, damage or injury chargeable
to Tenant hereunder or otherwise, if Landlord determines that such loss, damage
or injury exceeds the sum so deposited. Landlord's determination of the amount,
if any, to be returned to Tenant shall be final. It is understood that the
deposit is not to be considered as the last rentals due under this Lease. If
Landlord shall sell or otherwise transfer the Premises, Landlord shall assign
such deposit to such purchaser or transferee and in the event of such assignment
and written notice thereof to Tenant, Landlord shall be relieved of all further
liability to Tenant with regard to the return of said security deposit.
25. Accord and Satisfaction
No payment by Tenant or receipt by Landlord of a lesser amount than is due
hereby shall be deemed to be other than on account of the earliest annual
minimum rent or additional rent due, nor shall any endorsement or statement on
any check or any letter accompanying any check or payment be deemed an accord
and satisfaction, and Landlord may accept such check or payment
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without prejudice to Landlord's right to recover the balance of sums owed or
pursue any other remedy.
26. Parties Bound. Subject to the provisions of Article 13 hereof, this
Lease shall be binding upon the parties hereto and shall be binding upon and
inure to the benefit of and be enforceable by their respective successors and
assigns.
27. Notices. Any notices required or permitted to be given hereunder
shall be in writing and delivered personally or sent by United States certified
or registered mail, return receipt requested, addressed as follows:
If to Landlord: c\o Markeim-Chalmers
Commerce Atrium- Suite 304
1701 Route 70 East
Cherry Hill, NJ 08003-2337
If to Tenant: 303 Harper Drive
Moorestown, New Jersey 08057
Attention Michael Toomey, Chief
Financial Officer
or to such other person or address as the party to be charged with such notice
may direct by notice given in the aforesaid manner.
28. Indemnity.
(a) Landlord shall not be liable for, and is hereby relieved from all
liability for any damage, expenses, causes of actions, fines, suits, demands,
judgments, and claims of any nature whatsoever, including negligence of
Landlord, its agents, servants, or employees, arising from or by reason of any
damage to property of Tenant or of others located on the Premises, the loss of,
or damage to, any property of Tenant or of others by theft or otherwise, injury
or damage to persons or property resulting from fire, explosion, collapse,
falling plaster, steam, gas, electricity, water, rain or snow or leaks from any
part of the Premises or from the pipes, sprinklers, appliances or plumbing works
or from the roof, street or subsurface or from any other place or by dampness or
by any other cause, or present or future latent defects, including structural
defects, or other conditions in, on or about the Premises or any part thereof or
any sidewalks, streets, driveways, railroad sidings, rights-of-way or roadways
adjacent thereto, or in any manner growing out of or connected with the use and
occupancy of the Premises or any part thereof by Tenant or any other party
during the term of this Lease or any
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renewal or extension thereof. Tenant hereby accepts and assumes such liability
and agrees to protect, indemnify and save Landlord harmless from and against all
of the aforesaid. All property of Tenant kept or stored on the Leased Premises
shall be kept or stored at Tenant's own risk and Tenant shall hold Landlord
harmless from any claims arising out of damage to the same, including
subrogation claims by Tenant's insurance carriers.
(b) Landlord shall not be liable for, and is hereby relieved from all
liability for any damages, expenses, causes of action, fire, suits, demands,
judgments, and claims of any nature whatsoever arising from or by reason of
injury to the feelings of any person or to his or her reputation, including
trauma, psychological injury, mental anguish or similar results, whether from
false eviction, false arrest, malicious prosecution, libel, slander, defamation,
invasion of privacy, wrongful entry, or otherwise occasioned wholly or in part
by any act or omission of Tenant, its agents, contractors, employees, servants,
licensees or concessionaires. Tenant hereby accepts and assumes such liability
and agrees to protect, indemnify, and save Landlord harmless from and against
all the aforesaid. If Landlord shall be made a party to any litigation
commenced by or against Tenant, then Tenant shall protect and hold Landlord
harmless and shall pay all costs, expenses and reasonable attorney's fees
incurred or paid by Landlord in connection with such litigation.
(c) Tenant shall pay all costs, expenses and reasonable attorney's
fees that may be incurred or paid by Landlord in enforcing the terms and
conditions of this Lease.
29. Number and Gender. For purposes of this Lease, the singular shall
include the plural and the plural shall include the singular, and the masculine
shall include the feminine and the neuter, as the context may require. The word
"Landlord" as used herein shall mean the owner from time to time of fee title to
the Premises, and upon transfer of fee title, the person named herein as
Landlord shall have no further liability or obligation hereunder.
30. Captions. The captions contained herein are for the convenience of
the parties only. They do not in any way modify, amplify, alter or give full
notice of the provisions hereof.
31. Amendments. This Lease may be changed, waived, discharged or
terminated only by an instrument in writing signed by the party against which
enforcement of such change, waiver, discharge or termination is sought.
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32. Partial Invalidity. If any clause or provision of this Lease, or the
application thereof to any person or in any circumstance, shall to any extent be
invalid or unenforceable, the remainder of this Lease, or the application of
such clause or provision to persons or in circumstances other than those as to
which it is invalid or unenforceable, shall not be affected thereby, and each
clause and provision of this Lease shall be valid and enforceable to the fullest
extent permitted by law.
33. Entire Agreement. This Lease constitutes the entire agreement
between the parties hereto. Except as set forth herein, there are no promises,
representations or understandings between the parties of any kind or nature
whatsoever.
34. Limitation of Liability.
The liability of Landlord under this Lease shall be limited to Landlord's
estate in the Premises. No member of Landlord shall be personally liable to
Tenant for any obligation of Landlord
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created by or arising by reason of this Lease.
IN WITNESS WHEREOF, the parties hereto have executed this Lease the day and
year first above written.
Tenant:
Wilmar Industries, Inc.
By: /s/ Michael T. Toomey
-------------------------------
Michael T. Toomey,
Chief Financial Officer and
Treasurer
(Corporate Seal)
Attest: /s/ Fred B. Gross
---------------------------
Secretary
Landlord:
804 Eastgate Associates, L.L.C.
By: /s/ Fred S. Berlinksy
-------------------------------
Fred S. Berlinsky, Member
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ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT is made and dated as of June 1, 1996 by and
between 804 Eastgate Associates, L.L.C., a New Jersey Limited Liability Company
("Eastgate") and Wilmar Industries, Inc., a New Jersey Corporation ("Wilmar").
BACKGROUND:
A. Wilmar is the tenant of certain premises located at 2600 Mt. Ephraim
Avenue, Camden, New Jersey (the "Camden Premises"), pursuant to the provisions
of a certain Lease dated January, 1987 by and between Mt. Ephraim Associates, a
Partnership, as the Landlord (the "Landlord"), and Wilmar, as the Tenant (the
"Lease").
B. Eastgate is, or is about to become the owner of that certain real
property and improvements thereon situate in Mt. Laurel, New Jersey, known as
804 East Gate Drive, Mt Laurel, New Jersey (the "Eastgate Property"), and has
entered into a Lease Agreement dated April 29, 1996 with Wilmar pursuant to the
terms of which Wilmar has agreed to lease Eastgate Property (the "Eastgate
Lease").
C. As an inducement to Wilmar to lease the Eastgate Property from
Eastgate, Eastgate has agreed to assume certain obligations under the Lease
pursuant to the provisions hereof.
Now, Therefore, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties agree as follows:
1. Eastgate shall, and hereby does assume all of Wilmar's obligations to
pay to the Landlord of the Camden Premises the following sums as and when the
same become due and payable under the Lease:
(a) Fixed Annul Rent pursuant of Section 37 of the Lease which
obligations become due and payable from and after June 1, 1996.
(b) Increases in Real Estate Taxes as set forth in Section 42 of the
Lease, which obligations relate to periods from and after June 1, 1996.
1
<PAGE>
The obligations assumed by Eastgate as set forth herein are sometimes
collectively referred to as the "Assumed Obligations".
2. Nothing contained herein shall be deemed to constitute an assignment of
the Lease or sublease of all or any portion of the Camden Premises. Eastgate
shall have no rights to possession of the Camden Premises, nor any other rights
of a tenant under the Lease. Notwithstanding the foregoing to the contrary, if
Wilmar vacates the Camden Premises, Eastgate may present to Wilmar potential
assignees of the Lease or subtenants of the Camden Premises in order to mitigate
Eastgate's liability under the Assumed Obligations, and Wilmar shall request the
Landlord to consent to any such assignment or sublease proposed by Eastgate.
3. Wilmar shall continue to maintain, at its expense, any and all
insurance with respect to the Camden Premises and the Lease as Wilmar currently
maintains. Any and all utility costs and expenses in connection with the Camden
Premises shall be paid by Wilmar.
4. Eastgate shall have no liability under the Lease for any repair or
maintenance obligations of Wilmar thereunder, or any other obligation of Wilmar
under the Lease unless expressly assumed by Eastgate under this Assumption
Agreement.
5. As security for Eastgate's assumption of the Assumed Obligations under
this Agreement, Eastgate shall maintain a cash balance in its accounts in an
amount equal to the aggregate outstanding balance of the Assumed Obligations
(the "Account"). Wilmar and Eastgate acknowledge and confirm that the Account
shall have an initial cash balance of $300,000, and that this sum is sufficient
to pay for all of the Assumed Obligations. The Account shall be an interest
bearing account or certificate of deposit maintained by a financial institution
whose deposits are insured by the Federal Deposit Insurance Corporation. All
interest on earned on the Account shall be and remain the sole property of
Eastgate. Eastgate may withdraw such sums from the Account as may be necessary
from time to time to pay the Assumed Obligations. Except as expressly provided
in the Eastgate Lease, any amount in the Account in excess of the Assumed
Obligations (or settlement thereof negotiated with the Landlord) shall be and
remain the sole property of Eastgate.
6. Wilmar represents and warrants to Eastgate as follows:
(a) The Lease attached hereto as Exhibit "A" is a true and correct
copy of the Lease, and the Lease has not been modified or amended except as
specifically set forth on Exhibit "A";
2
<PAGE>
(b) The Lease remains in full force and effect in accordance with its
terms, and there is no default or event of default under the Lease which has not
been cured;
(c) Wilmar has received no notice of default under the Lease from the
Landlord, and Wilmar has received no notice of any violation of any federal,
state or local law, ordinance, statute, ordinance, rule or regulation relating
to the Camden Premises or Wilmar's use and occupancy thereof;
(d) Fixed Annual Rent and all items of Additional Rent under the Lease
have been paid in full up to and including June 1, 1996, and Wilmar has paid no
rent more than 30 days in advance of the date the same is due.
7. Wilmar hereby appoints Eastgate as Wilmar's agent for the sole and
exclusive purpose of negotiating with the Landlord for a termination and release
of all of Wilmar's obligations under the Lease, including, but not limited to
the Assumed Obligations. Eastgate shall have the authority to negotiate any
settlement with the Landlord for a release of Wilmar under the Lease, provided
that such settlement does not require Wilmar or Eastgate to pay any sum in
excess of the then outstanding balance of the Assumed Obligations.
8. Eastgate shall indemnify, defend and save Wilmar harmless from and
against any loss, cost, damage or expense (including reasonable attorney's fees)
arising from the Assumed Obligations. Notwithstanding the foregoing to the
contrary, Wilmar acknowledges and confirms that the vacation or abandonment of
the Camden Premises may constitute a default under the Lease. Except for the
payment of the Assumed Obligations, Eastgate shall have no liability, and the
indemnification set forth herein shall not extend to any damages suffered by
Wilmar as a consequence of a default by Wilmar under the Lease.
9. This Agreement represents the entire understanding of the parties with
respect to the subject matter contained herein. This Agreement may not be
amended or modified except by a writing signed by all of the parties to this
Agreement.
10. This Agreement shall be construed in accordance with the laws of the
State of New Jersey.
11. This Agreement shall be binding upon the parties hereto, and their
respective successors and assigns.
12. Wilmar and Eastgate shall keep the terms and provisions of this
Agreement confidential, and shall not disclose the provisions of this Agreement
to any third party except as may be required by law, or in order to comply with
the provisions hereof.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date and year first above written.
Wilmar Industries, Inc.
By: /s/ Michael T. Toomey
----------------------------
Michael T. Toomey,
Chief Financial Officer and Treasurer
(Corporate Seal)
Attest: /s/ Fred B. Gross
------------------------
Secretary
Landlord:
804 Eastgate Associates, L.L.C.
By: /s/ Fred S. Berlinsky
---------------------------
Fred S. Berlinsky, Member
4
<PAGE>
EXHIBIT 11.1
Wilmar Industries, Inc.
Statement Regarding Computation of Net Income Per Share
<TABLE>
<CAPTION>
PRIMARY EARNINGS PER SHARE
<S> <C> <C>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 29, 1996 MARCH 31, 1995
-------------- --------------
Income Before Income Taxes (2) $1,625,612 $ 969,276
Provision for Income Taxes (2) 666,000 389,000
---------- ----------
Net Income 959,612 $ 580,276
========== ==========
Weighted Average Shares Outstanding 8,985,934 5,656,001
Common Stock Equivalents:
Preferred Stock 731,972 717,979
Items issued within one year of IPO: (1)
Common Stock 2,050,000
Stock Options 228,380 172,327
Total Weighted Average Shares Outstanding 9,946,286 8,596,307
========== ==========
Net Income Per Share (2) $.10 $.07
========== ==========
</TABLE>
(1) Common stock issued and stock options granted at prices lower than the
assumed initial public offering price within a one year period prior to an
initial public offering are included in the calculation (using the treasury
stock method and the assumed initial public offering price) as if they were
outstanding for all periods presented (see Notes 2 and 4).
(2) The provision for income taxes, net income, and net income per share
amounts reflected for the period ended March 31, 1995 represent pro forma
amounts as if the Company had been subject to federal and state income taxation
as a C Corporation since inception.
FULLY DILUTED EARNINGS PER SHARE
Fully diluted earnings per share differs from primary earnings per share by less
than 3%.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-29-1995
<PERIOD-END> MAR-29-1996
<CASH> 4,510,483
<SECURITIES> 1,765,035
<RECEIVABLES> 10,504,716
<ALLOWANCES> (300,000)
<INVENTORY> 12,978,101
<CURRENT-ASSETS> 30,454,861
<PP&E> 2,588,712
<DEPRECIATION> (1,203,548)
<TOTAL-ASSETS> 33,991,868
<CURRENT-LIABILITIES> 9,085,098
<BONDS> 0
0
0
<COMMON> 51,289,412
<OTHER-SE> (26,382,642)
<TOTAL-LIABILITY-AND-EQUITY> 24,906,770
<SALES> 19,308,559
<TOTAL-REVENUES> 19,308,559
<CGS> 13,372,953
<TOTAL-COSTS> 4,229,290
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 65,951
<INTEREST-EXPENSE> 80,704
<INCOME-PRETAX> 1,625,612
<INCOME-TAX> 666,000
<INCOME-CONTINUING> 959,612
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 959,612
<EPS-PRIMARY> 0
<EPS-DILUTED> 0.10
</TABLE>
