FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 1997
Commission File Number 0-14827
NATIONAL SANITARY SUPPLY COMPANY
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1079482
- ------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer Identification
incorporation of organization) No.)
255 E. 5th St, Suite 2900 Cincinnati, OH 45202-4790
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(513) 762-6500
- ------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Amount Date
- ----- ------ ----
Common Stock 6,269,824 Shares July 31, 1997
$1 Par Value
Page 1 of 9<PAGE>
NATIONAL SANITARY SUPPLY COMPANY
Index
Page No.
Part I. Financial Information: --------
Item 1. Financial Statements:
Consolidated Balance Sheet--
June 30, 1997 and
December 31, 1996 . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statement of Income--
Six months ended
June 30, 1997 and 1996. . . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Cash Flows--
Six months ended
June 30, 1997 and 1996. . . . . . . . . . . . . . . . . . . 5
Notes to Consolidated Financial
Statements. . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . 7
Part II. Other Information:
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 8
Page 2 of 9<PAGE>
Part I. Financial Information
Item 1. Financial Statements
NATIONAL SANITARY SUPPLY COMPANY
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
(thousands, except share data) 1997 1996
- ----------------------------------- ---------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalants $ 1,114 $ 1,425
Accounts receivable, less allowances
(1997- $1,064; 1996- $1,071) 36,080 34,856
Inventories 27,049 27,614
Deferred income taxes 2,230 2,366
Prepaid expenses and other current assets 1,786 1,088
---------- ----------
Total current assets 68,259 67,349
Properties and equipment, at cost, less
accumulated depreciation 23,055 21,992
Goodwill, less accumulated amortization 25,679 25,872
Other assets 1,022 771
---------- ----------
Total assets $ 118,015 $ 115,984
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 19,467 $ 19,424
Accrued liabilities 11,186 13,349
Loans payable to Chemed Corporation 3,097 540
Current portion of notes to Chemed Corporation 9,000 1,000
---------- ----------
Total current liabilities 42,750 34,313
Notes to Chemed Corporation 6,000 14,000
Deferred income taxes 893 849
Other noncurrent liabilities 1,153 1,298
---------- ----------
Total liabilities 50,796 50,460
---------- ----------
Stockholders' equity:
Preferred stock - 1,000,000 shares authorized,
$1 par value (none issued) - -
Common stock - 7,000,000 shares authorized,
$1 par value (issued: 1997- 6,870,288 shares;
1996- 6,644,466 shares) 6,870 6,644
Paid-in capital 29,833 27,658
Retained earnings 35,348 35,499
Treasury stock, at cost (1997- 600,464
shares; 1996- 482,447 shares) (5,832) (4,277)
---------- ----------
Total stockholders' equity 67,219 65,524
---------- ----------
Total liabilities and stockholders' equity $ 118,015 $ 115,984
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 3 of 9<PAGE>
NATIONAL SANITARY SUPPLY COMPANY
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, June 30,
-------------------- -------------------
(thousands, except per share data) 1997 1996 1997 1996
- ---------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Sales $ 78,353 $ 77,210 $152,702 $154,487
Cost of sales 52,313 51,585 101,804 103,997
--------- --------- --------- ---------
Gross profit 26,040 25,625 50,898 50,490
--------- --------- --------- ---------
Expenses and other income:
Operating expenses 23,418 22,823 46,616 45,582
Amortization of goodwill 227 224 453 446
Chemed Corporation interest 376 387 747 817
Other income, net (24) (69) (74) (123)
--------- --------- --------- ---------
Total expenses and other income 23,997 23,365 47,742 46,722
--------- --------- --------- ---------
Income before income taxes 2,043 2,260 3,156 3,768
Income taxes 826 939 1,314 1,615
--------- --------- --------- ---------
Net income $ 1,217 $ 1,312 $ 1,842 $ 2,153
========= ========= ========= =========
Earnings per share $ 0.20 $ 0.22 $ 0.30 $ 0.35
========= ========= ========= =========
Cash dividends paid per share $ 0.080 $ 0.075 $ 0.160 $ 0.150
========= ========= ========= =========
Average shares outstanding 6,226 6,140 6,204 6,132
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 4 of 9<PAGE>
NATIONAL SANITARY SUPPLY COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
---------------------
(thousands of dollars) 1997 1996
- ---------------------------------------------- --------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,842 $ 2,153
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 1,674 1,666
Amortization of goodwill and deferred charges 746 769
Deferred income tax provision 179 (260)
Provision for losses on accounts receivable 292 374
Changes in operating assets and liabilities,
excluding amounts acquired in business
combinations:
(Increase)/decrease in accounts receivable (1,352) 5,497
Decrease in inventories 648 1,765
Increase in other assets (802) (808)
Increase/(decrease) in accounts payable 43 (177)
Decrease in other liabilities (2,335) (2,649)
--------- --------
Net cash provided by operating activities 935 8,330
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Business combinations (494) (241)
Capital expenditures (2,791) (2,009)
Other 77 75
--------- --------
Net cash used for investing activities (3,208) (2,175)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from/(payments on)loans payable
to Chemed Corporation 2,557 (4,538)
Principal payments on other long-term debt (9) (25)
Dividends paid (993) (922)
Proceeds from/(purchase of) common stock 407 (50)
--------- --------
Net cash provided by/(used for) financing
activities 1,962 (5,535)
--------- --------
Increase in cash equivalents (311) 620
Cash and cash equivalents at beginning of period 1,425 1,491
--------- --------
Cash and cash equivalents at end of period $ 1,114 $ 2,111
========= ========
</TABLE>
The accompanying notes are an integral part of the financial statements.
Page 5 of 9<PAGE>
NATIONAL SANITARY SUPPLY COMPANY
Notes to Consolidated Financial Statements
(unaudited)
NOTE A. The accompanying unaudited financial statements have been prepared in
accordance with Rule 10-01 of SEC Regulation S-X. Consequently, they do not
include all the disclosures required under generally accepted accounting
principles for complete financial statements. However, in the opinion of the
management of National Sanitary Supply Company ("National"), the financial
statements presented herein contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position, the
results of operations, and cash flows of National and its subsidiaries for the
periods indicated. For additional information concerning the accounting
policies of National, refer to the consolidated financial statements included in
the 1996 Annual Report on Form 10-K filed with the SEC on March 28, 1997.
NOTE B. Earnings per common share are computed on the basis of the weighted
average number of shares of common stock outstanding during the respective
periods. The dilution that would result from shares issuable under National's
Stock Incentive Plans is not material.
NOTE C. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings Per
Share, effective for reporting periods ending after December 15, 1997. Adoption
of SFAS 128 in December 1997 will not impact the Company's reported earnings per
share.
NOTE D. On August 11, 1997, National announced that it had signed a
definitive merger agreement with Unisource Worldwide Inc. ("Unisource") whereby
National will be merged into a wholly owned subsidiary of Unisource. Chemed
Corporation, owner of 82% of the outstanding common stock of National, consented
to the transaction by a vote of its Board of Directors. The merger, which is
subject to normal and customary conditions as well as completion of due
diligence by Unisource, is expected to be consummated within 90 days. Upon
completion of the transaction National's shareholders will receive a cash
payment of $21 per share.
Page 6 of 9<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Results of Operations
- ---------------------
National Sanitary Supply Company's sales for the second quarter ended June 30,
1997 were $78,353,000 a 1.5% increase from sales of $77,210,000 in the second
quarter of 1996. Net income for the second quarter of 1997 was $1,217,000, a
7.9% decrease from net income of $1,321,000 in the prior-year second quarter.
Earnings per share of $0.20 for the second quarter of 1997 decreased 9.1% from
earnings per share of $0.22 in the comparable prior-year quarter.
National's second-quarter results reflect the impact of deflationary pricing in
the paper segment and the loss of sales to certain foodservice accounts.
Continued growth in our core sanitary maintenance supply business and tight
expense control, especially in reducing casualty insurance claims cost,
partially offset these adverse factors. Safety meetings and programs initiated
over the past few years are having a favorable impact on our workers' compensa-
tion and automobile liability claims.
The gross profit margin of 33.2% for the second quarter of 1997 was the same as
the gross profit margin of the prior-year period. Operating expenses as a
percentage of sales in the second quarter of 1997 increased 0.3% point from
29.6% in 1996 to 29.9% in 1997.
The effective tax rate for the second quarter decreased from 41.5% in 1996 to
40.4% in 1997, primarily due to lower income in states with higher tax rates.
For the six months ended June 30, 1997, National's sales of $152,702,000
decreased 1.2% from sales of $154,487,000 in the comparable period of 1996. Net
income for the first half of 1997 was $1,842,000, a 14.4% decrease from the
prior-year first half net income of $2,153,000. Earnings per share of $0.30 for
the first six months of 1997 were 5 cents lower than those recorded for the
comparable prior-year period.
The improvement in the gross profit margin for the first six months of 1997
compared with the same period of 1996 was offset by an increase in operating
expenses as a percent of sales. The change in both categories was primarily due
to the loss of sales to certain foodservice accounts.
The decrease in Chemed interest expense from $817,000 in the first six months of
1996 to $747,000 in the first six months of 1997 reflects a reduction in debt
with Chemed Corporation from June 30, 1996 to June 30, 1997 of $354,000.
The improvement in the effective tax rate from 42.9% for the first six months of
1996 to 41.6% for the first six months of 1997 reflects lower state income
taxes.
Liquidity and capital resources
- -------------------------------
The reduction in accrued liabilities primarily reflects the payment of 1996
incentive-oriented programs.
Management believes that the company's cash flow from operations and other
sources of liquidity are sufficient for its needs in the forseeable future.
Page 7 of 9<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
<TABLE>
<CAPTION>
SK 601
Exhibit No. Ref. No. Description Page No.
- ----------- -------- ----------- --------
<C> <C> <S> <C>
1 (11) Statement re: E-1
Computation of
Earnings Per Share
2 (27) Financial Data Schedule E-2
3 (10) Sublease Agreement E-3 through E-8
of March 15, 1991 with
Chemed Corporation
</TABLE>
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended June 30, 1997.
SIGNATURES
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.
National Sanitary Supply Company
--------------------------------
(Registrant)
Date August 14, 1997 By /s/Paul C. Voet
------------------ ----------------------------------
Paul C. Voet
President and
Chief Executive Officer
Date August 14, 1997 By /s/Gary H. Sander
------------------ ----------------------------------
Gary H. Sander
Senior Vice President,
Treasurer, and
Chief Financial Officer
Page 8 of 9<PAGE>
EXHIBIT 11
NATIONAL SANITARY SUPPLY COMPANY
COMPUTATION OF EARNINGS PER SHARE (a)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
(thousands, except per share data) June 30, June 30,
- ---------------------------------- ------------------- ------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Computation of Earnings Per Common
and Common Equivalent Share
Net Income $ 1,217 $ 1,321 $ 1,842 $ 2,153
======= ======= ======= =======
Average Number of Shares of
Common Stock Outstanding 6,226 6,140 6,204 6,132
Incremental Effect of
Unexercised Stock Options 52 86 63 76
------- ------- ------- -------
Average Number of Shares of
Common Stock and Common Stock
Equivalents Outstanding 6,278 6,226 6,267 6,208
======= ======= ======= =======
Earnings per Common and Common
Equivalent Share $ 0.19 $ 0.21 $ 0.29 $ 0.35
======= ======= ======= =======
Computation of Earnings Per Common
Share Assuming Full Dilution
Net Income $ 1,217 $ 1,321 $ 1,842 $ 2,153
======= ======= ======= =======
Average Number of Shares of
Common Stock Outstanding 6,226 6,140 6,204 6,132
Incremental Effect of
Unexercised Stock Options 96 91 85 95
------- ------- ------- -------
Average Number of Shares of
Common Stock Assuming
Full Dilution 6,322 6,231 6,289 6,227
======= ======= ======= =======
Earnings Per Common Share
Assuming Full Dilution $ 0.19 $ 0.21 $ 0.29 $ 0.35
======= ======= ======= =======
(a) This calculation is submitted in accordance with the Securities Exchange Act of
1934. Because the incremental effect of unexercised stock options results in dilution
of less than 3%, the per share data presented in the consolidated statement of income
excludes the impact of common stock equivalents.
</TABLE>
E-1
Page 9 of 9<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10Q FOR
THE SECOND QUARTER ENDED JUNE 30, 1997 FOR NATIONAL SANITARY SUPPLY COMPANY AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000795000
<NAME> NATIONAL SANITARY SUPPLY CO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,114
<SECURITIES> 0
<RECEIVABLES> 33,684
<ALLOWANCES> (1,064)
<INVENTORY> 27,049
<CURRENT-ASSETS> 68,259
<PP&E> 47,442
<DEPRECIATION> (24,387)
<TOTAL-ASSETS> 118,015
<CURRENT-LIABILITIES> 42,750
<BONDS> 6,000
0
0
<COMMON> 6,870
<OTHER-SE> 29,833
<TOTAL-LIABILITY-AND-EQUITY> 118,015
<SALES> 152,702
<TOTAL-REVENUES> 152,702
<CGS> 101,804
<TOTAL-COSTS> 101,804
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 292
<INTEREST-EXPENSE> 753
<INCOME-PRETAX> 3,156
<INCOME-TAX> 1,314
<INCOME-CONTINUING> 1,842
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,842
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
</TABLE>
SUBLEASE AGREEMENT
AGREEMENT OF SUBLEASE, dated March 15, 1991 and
effective as of April 15, 1991 between Chemed Corporation, a
Delaware corporation with offices at 2600 Chemed Center, 255 E.
Fifth Street, Cincinnati, Ohio 45202 ("Sublessor"), and National
Sanitary Supply Company, a Delaware corporation, with offices at
2900 Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio 45202
("Sublessee").
WITNESSETH:
WHEREAS, Sublessor represents and warrants that it has
leased the real estate and premises described as the 29th floor,
Chemed Center, Cincinnati, Ohio (more particularly described on
Exhibit A hereto) (hereinafter the "Premises") pursuant to a
certain lease, between 255 Fifth Limited Partnership (hereinafter
"Landlord"), and Sublessor, as tenant (hereinafter the "Lease"),
a copy of which Lease has been delivered to the Sublessee and is
incorporated herein by reference.
WHEREAS, Sublessee desires to sublet the Premises and
Sublessor is willing to sublet the same on the terms and
conditions hereinafter set forth, provided Landlord shall give
its written consent thereto.
NOW, THEREFORE, Sublessor, for and in consideration of the
rents, covenants and agreements hereinafter contained on the part
of Sublessee to be paid, kept and performed, does hereby sublet
and demise unto Sublessee, and Sublessee hereby takes and hires
from Sublessor, the Premises.
TO HAVE AND TO HOLD the same unto Sublessee, its successors
and assigns for a term to commence on the commencement date of
the Lease (the "Commencement Date"), and to expire on
April 14, 2006, subject to the Lease and upon the rentals, terms,
covenants, conditions and provisions hereinafter set forth. If
the Lease is terminated or cancelled for any reason, this
Sublease shall terminate simultaneously and, as sole damage in
respect of such termination, any unearned rent theretofore paid
shall be refunded to Sublessee.
AND Sublessor and Sublessee hereby agree as follows:
E-3<PAGE>
1. Sublessee covenants and agrees to pay to Sublessor
at 2600 Chemed Center, 255 E. Fifth Street, Cincinnati,
Ohio, in equal monthly installments in advance commencing on
the Commencement Date and continuing thereafter on the 1st
day of each month during the term hereof until April 14, 2006,
without notice or demand and without abatement, deduction or
set-off of any amount whatsoever, a base rental equal to the
rental paid by Sublessor to Landlord for Sublessee's
proportionate share of the total square footage rented by
Sublessor from Landlord pursuant to Lease.
Sublessee further covenants and agrees to pay as
additional rental its pro rata share of any
adjustments and additional rent made by Landlord
pursuant to Article 3 of the Lease, which
adjustments and additional rent shall reflect
increases in Landlord's certain operating expenses
and real estate taxes as therein defined. Such
additional rental shall become payable upon
Landlord's presentation of a statement setting
forth in detail the base period operating expense
and the base period tax expense, as defined in
Article 3 of the Lease.
2. Sublessee agrees to accept the Premises in an "as
is" condition and Sublessee acknowledges that no
representations with respect to the condition
thereof have been made to it other than with
respect to the construction of basic building
appointments. Sublessee shall be entitled to a
proportionate share of all tenant concessions set
forth in the Lease based upon the proportionate
share of the total square footage rented by
Sublessor from Landlord pursuant to the Lease.
3. To the extent not otherwise inconsistent with the
agreements and understandings expressed in this
Sublease or applicable only to the original parties
to the Lease, the terms, provisions, covenants and
conditions of the Lease are hereby incorporated
herein by reference on the following
understandings:
(a) The term "Landlord" as used therein shall
refer to Sublessor hereunder, its successors and
assigns, and the term "Tenant" as used therein
shall refer to Sublessee hereunder, its successors
and assigns.
E-4<PAGE>
(b) In any case where the Landlord reserves the
right to enter the Premises, said right shall inure
to the benefit of the Landlord as well as to
Sublessor.
(c) Sublessee agrees to perform and comply with
the terms, provisions, covenants and conditions of
the Lease and not to do or suffer or permit
anything to be done which would result in a default
under or cause the Lease to be terminated or
forfeited.
(d) Sublessee shall not assign or sublet the
Premises without obtaining Sublessor's prior
written consent thereto, which may be withheld for
any reason.
4. Sublessee agrees and covenants with Sublessor that
Sublessor shall not be liable for any injuries to
persons (including death) or damages to property
arising from any cause whatsoever which shall occur
in any manner in or about the Premises, and
Sublessee hereby agrees to protect, defend,
indemnify and save harmless Sublessor from any and
all claims, damages, loss, cost, expense and
liability, including attorneys' fees, for injuries
to persons (including death) or damages to property
arising from any cause whatsoever, which shall
occur in any manner in or about the Premises.
Sublessor shall not be liable for any damage to the
Premises, or to any part thereof, or to any
property or effects therein or thereon or for any
damage caused or occasioned by a default by the
Landlord, provided Sublessor forwards on a timely
basis all complaints of Sublessee to Landlord.
5. Sublessee agrees and covenants with Sublessor that
it will carry and maintain in full force and effect
during the term of this Lease and any extension or
renewal thereof, at Sublessee's expense, public
liability insurance covering bodily injury
(including death) and property damage liability, in
a form and with an insurance company acceptable to
Sublessor, with limits of coverage of not less than
$1,000,000.00 for each person and $1,000,000.00 in
the aggregate for bodily injury or death liability
for each accident and $10,000,000.00 for property
E-5<PAGE>
damage liability, as protection against all
liability claims arising from the premises, and to
deliver a copy thereof to Sublessor. Sublessee
further agrees that Sublessor shall be named as an
additional insured on said public liability
insurance policies. Sublessee further agrees that
Sublessor shall be given 15 (fifteen) days written
notice of any proposed cancellation of said
policies.
6. (a) If (i) Sublessee shall default in fulfilling
any of the terms, covenants or agreements hereof,
other than the covenant to pay rent and additional
rent, or of the Lease as herein incorporated, and
such default shall not have been remedied (or
proper corrective measures to cure such default
commenced and diligently pursued) within five days
after written notice from Sublessor, Sublessor may
give Sublessee three days notice of intention to
end the term of Sublease, and at the end of said
three days the term of this Sublease shall expire
with the same effect as if that day were the date
hereinbefore set forth for the termination of the
term hereof, and Sublessee shall remain liable to
the extent provided in the Lease; if (ii) Sublessee
shall fail to pay the rent and additional rent as
provided herein, the Sublessor may, unless
Sublessee shall have cured such default within
three days after written notice thereof from
Sublessor, exercise any of the remedies of the
Landlord set forth in the Lease and Sublessee shall
remain liable to the extent provided therein.
(b) In the event of Sublessee's default, Sublessor
shall have available not only those remedies of
Landlord specified in the Lease and in this
Sublease, but in addition thereto those remedies
available at law and in equity.
7. Sublessee may use the premises only for general
office facilities, or such other uses to which
Landlord and Sublessor have consented in writing in
advance.
8. Sublessee shall obtain Sublessor's written consent
prior to the making of any alteration valued at
over $50,000 (Fifty Thousand Dollars) to the
Premises.
9. Upon termination of this Sublease, Sublessee shall
surrender the Premises to Sublessor in the same
condition and configuration as at the Commencement
Date of this Sublease, ordinary wear and tear
expected.
E-6<PAGE>
10. Sublessee shall execute a recordable memorandum of
lease, or such other recordable instrument as may
be reasonably requested, upon the written request
of Sublessor.
11. In the event of any holding over by Sublessee after
the expiration or termination of this Sublease,
Sublessee shall pay in lieu of rent but not other
obligations, an amount equal to three times the
rent which Sublessee was obligated to pay for the
month immediately preceding the end of the term of
this Sublease, for each month or any part thereof
of any such holdover period. No holding over by
Sublessee after the term of this Sublease shall
operate to extend the term hereof. In the event of
any unauthorized holding over, Sublessee shall
indemnify Sublessor against all claims for damages
by any other lessee to whom Sublessor may have
leased all or any part of the Premises effective
upon the termination of this Sublease.
12. Any notices or demands to be given pursuant to the
Lease or this Sublease shall be sent by certified
mail or personally delivered to Sublessee, at the
address above set forth, and to Sublessor as
follows:
Chemed Corporation
2600 Chemed Center
255 E. Fifth Street
Cincinnati, Ohio 45202
Attention: Kevin J. McNamara, President
(Sublessee)
National Sanitary Supply Company
2900 Chemed Center
255 E. Fifth Street
Cincinnati, Ohio 45202
Attention: Paul C. Voet, President
or at such other address as either such party shall
designate by written notice to the other party.
Said notices shall be deemed effective on receipt.
E-7<PAGE>
13. This Agreement shall be governed by and construed
and enforced in accordance with the law of the
State of Ohio.
14. This Agreement sets forth the entire understanding
of the parties in respect hereto and supersedes all
prior agreements, arrangements and understandings
relating to the subject matter hereof.
15. All of the terms and conditions of this Agreement
shall be binding upon and inure to the benefit of
and be enforceable by, the parties hereto and their
respective successors.
16. This Agreement may be amended, modified, superseded
or cancelled, and any of the terms or conditions
hereof may be waived, only by a written instrument
executed by both of the parties hereto, or, in the
case of waiver, by or on behalf of the party
waiving compliance. The failure of any party at
any time or times to require performance of any
provision hereof shall in no manner affect the
right at a later time to enforce the same. No
waiver by any party of any condition, or of any
breach of any term contained in this Agreement, in
any one or more instances, shall be deemed to be or
construed as a further or continuing waiver of any
such condition or breach or a waiver of any other
condition or of any breach of any other term.
WITNESS WHEREOF, Sublessor and Sublessee have hereunto
set their hands effective the day and year first above written.
CHEMED CORPORATION
(Sublessor)
By: /s/ Naomi C. Dallob
Vice President and Secretary
NATIONAL SANITARY SUPPLY COMPANY
By: /s/ Edward L. Hutton
Chairman
E-8<PAGE>
