FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM ................ TO ................
COMMISSION FILE NUMBER: 0-15339
THE STROBER ORGANIZATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-2822910
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
550 HAMILTON AVENUE
BROOKLYN, NEW YORK 11232
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE: (718) 832-1212
_________________
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
Aggregate market value on March 14, 1996 of the voting stock held by non-
affiliates of the Registrant was approximately $9,805,414 based upon the $4.50
per share closing price of the Common Stock on that date. (For this purpose
all outstanding shares of Common Stock have been considered held by non-
affiliates, other than those owned by directors, officers, and 5% stockholders
of the Registrant; certain of such persons disclaim that they are affiliates of
the Registrant.)
The number of shares of Common Stock outstanding at March 14, 1996 was
5,027,447.
<PAGE>
PART 1
ITEM 1. BUSINESS
GENERAL
The Strober Organization, Inc., is a supplier of building materials
serving professional building contractors out of its eleven building supply
centers in New York, New Jersey, Connecticut, and Pennsylvania.
The Company was incorporated in Delaware in 1986 as the parent of the
various affiliated companies which had previously conducted the Strober
business for more than 80 years. Unless the context otherwise requires, the
terms "STROBER" and "COMPANY" refer to The Strober Organization, Inc. and its
subsidiaries and predecessors.
Strober's marketing strategy is to provide professional customers with
one-stop shopping by offering a broad selection of inventory, technical product
advice, timely delivery and extension of credit. Builders, carpenters,
drywall, roofing and acoustical contractors and other professional customers
account for an estimated 90 to 95% of the Company's sales, with the balance to
the "do-it-yourself" market. The Company carries a wide range of product
lines, such as lumber, gypsum wallboard, roofing, insulation, acoustical
materials, millwork and hardware items.
Since 1972, the Company has grown from a single location serving
primarily the New York City roofing market to a network of eleven building
supply centers in New York, New Jersey, Connecticut and Pennsylvania. The
Company also operates a Kitchen and Bath Center and a Peachtree Planning Center
(window and door showroom). The Company's expansion strategy has been to grow
by adding new locations, expanding existing locations, acquiring building
supply centers from others and adding product lines.
During the period 1993-1995, sales have increased by 14%, 5% and 3/10%,
respectively. The Company believes that sales were adversely impacted in 1995
by a decline in new residential construction in the Northeast as well as by
price deflation primarily affecting lumber products.
RETENTION OF FINANCIAL ADVISOR
In February 1996, the Company announced that it had retained Hill
Thompson Capital Markets, Inc. as its financial advisor to explore strategic
alternatives in order to maximize stockholder value, including the possible
merger or sale of all or part of the Company.
PRODUCTS, CUSTOMERS AND SUPPLIERS
Strober sells a broad selection of building materials including lumber
and plywood, gypsum wallboard and other drywall products, millwork, roofing,
acoustical materials, siding products, insulation materials, metal specialties,
hardware and tools. Lumber and related products, gypsum wallboard and related
products and millwork accounted for an estimated 32%, 27% and 14% respectively,
of the Company's total revenues during 1995; 36%, 23% and 14% respectively for
1994; and 39%, 21% and 14% respectively for 1993. The Company currently has
over 3,000 active customers, with no single customer accounting for more than
2% of the Company's total sales during 1995.
The Company's sales are generally somewhat lower during the first quarter
of each calendar year, with higher sales volumes generally occurring during the
months of April through October when most construction occurs in the markets
which the Company serves.
Strober purchases its products from a supplier group totaling over 250
manufacturers and wholesale distributors, although it believes approximately
half of the dollar amount of its purchases is from twenty principal vendors.
During 1995, gypsum wallboard and related products purchased from the Company's
largest supplier represented an estimated 12% of the dollar amount of the
Company's purchases. Strober has not experienced significant delays in
obtaining products from its current suppliers, but should such delays occur,
management believes that similar products would be available from other
sources. There are no written agreements between the Company and its
suppliers.
MARKETING
Strober's marketing strategy focuses on the professional contractor. The
Company provides "one-stop shopping" by offering a broad selection of
inventory, technical product advice, timely delivery and extension of credit.
The Company currently operates from eleven building supply centers, a
Kitchen and Bath Center, and a Peachtree Planning Center (window and door
showroom), with a total of approximately 460,000 square feet of covered space
on sites totaling approximately 42 acres. Strober maintains inventories of
over 15,000 products. This level of inventory is important to professional
contractors in that it permits the purchase of a wide variety of building
supplies from a single source.
Prompt delivery is particularly important to the Company's customers, as
meeting tight time schedules in the construction industry is often more
important than other considerations. In order to deliver on a timely and
convenient basis, the Company maintains a fleet of trucks, many of which are
equipped with booms capable of hoisting materials in excess of six stories.
The Company's sales force and management have a high level of expertise
regarding products and relevant construction techniques. The sales force has
access through the Company's management information systems to data about
customer sales, purchasing and credit histories as well as detailed inventory
information. Strober believes that its responsiveness to its customers' needs
has contributed to its ability to maintain long-term customer relationships.
Extension of credit is an important factor in selling to professional
contractors. Through established credit procedures, credit limits are
determined and outstanding balances are continuously monitored for such
customer. Although management believes that such procedures help avoid
potential credit problems, there can be no assurance that such procedures will
prevent failures or delays in the collection of customer receivables.
Each building supply center contains a showroom where the professional
contractor and the "do-it-yourself" customer can examine and purchase a wide
variety of products. These areas also provide an opportunity for such
customers to meet with sales personnel.
ORGANIZATION AND MANAGEMENT CONTROL
The Company's operations are organized into six regions: New York City;
Long Island, New York; New York's Hudson Valley; New Jersey; East Hartford,
Connecticut and Scranton/Wilkes-Barre and Allentown/Bethlehem, Pennsylvania.
The Company's regions have regional managers whose focus is to achieve greater
sales and more efficient operations in those regions.
The Company's regions and building supply centers are operated as
independent profit centers, with individually targeted earnings and performance
goals (covering, for example, sales by product, margins, individual items of
overhead and operating expense and other financial and management information),
which are monitored and reviewed on a monthly basis. The regions and centers
have senior managers who are responsible for their day-to-day business,
including sales, customer relations, personnel, collections, inventory
management and cost control. Major decisions affecting Company policy,
facilities and capital outlays are made by the Company's Board of Directors and
central management.
The Company, its regions and its building supply centers are headed by
senior managers with extensive experience in the building supply industry and
who have an incentive compensation stake in the performance of the Company and
its respective building supply centers. These managers have extensive years of
experience in the building supply industry. In the aggregate, senior managers
own approximately 20% of the outstanding shares of the Company's Common Stock.
Because inventory and accounts receivable constitute a substantial
portion of the Company's total assets, efficient control of inventory and
receivables is an important management priority. The Company regularly
monitors detailed computer-generated reports showing sales, inventory turnover,
margins and quantities on hand for each item in the Company's inventory, as
well as aging and other pertinent information regarding accounts receivable.
The Company believes that it maintains management reports that are standard in
the industry.
EXPANSION AND MARKET
Since 1980, the Company has grown from three to presently eleven building
supply centers located in New York, New Jersey, Connecticut and Pennsylvania,
today serving customers in these four states and Massachusetts. The Company
also operates a Kitchen and Bath Center in East Hartford, Connecticut and a
Peachtree Planning Center (window and door showroom) in Brooklyn, New York.
During 1995, due to a lease termination, the Company relocated its
Farmingdale, New York facility to a larger facility also located in
Farmingdale, New York. In November, 1995, the Company opened its second
facility in the eastern Pennsylvania region, a 30,000 square foot facility
located in Bethlehem, Pennsylvania.
In October 1995, the Company formed Architectural Wall Systems LLC, a
joint venture with Architectural Wall Systems, Inc. of Basking Ridge, New
Jersey. This new venture has become an exclusive distributor of Dryvit
Systems, Inc. (of West Warwick, Rhode Island) to market and sell "Dryvit"
exterior wall systems and other related products to certified commercial and
residential applicators in designated counties located in New York State, New
Jersey and all of New York City and Long Island.
Among the avenues for expansion which may be considered by the Company
are the opening of new building supply centers in geographic areas constituting
natural extensions of its existing markets and the acquisition of centers or
groups of centers from others. The Company does not anticipate that any newly
opened centers (other than those replacing other facilities) will be profitable
during their first year of operation.
In addition to expanding geographically, the Company may expand its
product lines as well as its customer groups. The Company frequently
re-evaluates its product lines to expand the range of products offered to
generate sales to new customers and to add, modify or delete product lines to
seek to increase sales, profit margins and inventory turnover. New products
are presented regularly to the Company by manufacturers and the Company chooses
those which it believes fit within its marketing strategy.
COMPETITION
The sale of building supplies is highly competitive. The principal
methods by which the Company competes are selection of inventory, availability
of technical product advice, timely delivery and extension of credit. The
Company believes that with respect to each of these factors it effectively
competes in its market. The Company competes with companies which carry one or
more product lines similar to, or the same as, those sold by Strober, including
building supply centers, lumber yards, hardware stores, home center chains and
manufacturers who sell directly to builders, professional contractors and other
customers. One such competitor is the country's largest producer of gypsum
wallboard, which makes such direct sales and since 1970 has operated building
supply centers in the Company's market. Although some of the Company's
competitors have significantly greater resources than Strober, the Company
believes that the majority of sales to building contractors and other customers
in its market are made by companies which are smaller than Strober.
EMPLOYEES
The Company employs approximately 339 persons, of whom approximately 77
employees in four of the Company's eleven building supply centers are subject
to collective bargaining agreements expiring December 1996, December 1997 and
December 2000. The Company has generally had satisfactory relations with the
unions representing its unionized employees and considers its relationship with
all of its employees to be good.
EXECUTIVE OFFICERS OF REGISTRANT{(1)}
The executive officers of Strober are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
<S> <C> <C>
Robert J. Gaites 54 Chairman of the Board,
Chief Executive Officer and
President
John Yanuklis 59 Executive Vice President and Director
Albert C. Brower 61 Senior Vice President
Richard W. Young 45 Senior Vice President
Edward N. Zieky 44 Senior Vice President
Eliott S. Zieky 44 Senior Vice President and Director
Richard Schaefer 48 Vice President
David J. Polishook 54 Chief Financial Officer, Secretary and Treasurer
</TABLE>
(1) Robert J. Gaites was elected Chief Executive Officer and President on
July 10, 1991. He was elected Chairman of the Board on March 12, 1992.
John Yanuklis served as Senior Vice President since 1986 and was elected
Executive Vice President on May 28, 1992. Messrs. Brower and Young were
elected as Senior Vice Presidents in October 1986. Richard Schaefer was
elected as Vice President of the Company on July 20, 1989. Edward N.
Zieky and Eliott S. Zieky were elected as Senior Vice Presidents and
Directors of the Company as of January 25, 1988. Edward N. Zieky
resigned as a Director on February 28, 1991. David J. Polishook was
elected to the Board of Directors on January 31, 1988, elected Chief
Financial Officer and Treasurer of the Company on June 28, 1988 and was
elected Secretary on November 12, 1991. He resigned as a Director on
February 28, 1991.
<PAGE>
ITEM 2. PROPERTIES
The Company has eleven building supply centers, of which one is located
in New York City, two on Long Island, two in New York's Hudson Valley, two in
New Jersey, two in the Hartford, Connecticut region and two in Pennsylvania.
Each of the centers has showroom, office and warehouse space, as well as
outside storage areas, except for the center in Kingston, Pennsylvania. The
Company's showroom, office and warehouse space totals approximately 460,000
square feet on sites totaling approximately 42 acres. In the opinion of
management, these premises are suitable and adequate to meet the Company's
requirements. All of the Company's locations are leased.
The following table describes certain terms of the Company's leases:
<TABLE>
<CAPTION>
LOCATIONS Last Expiration Approximate Approx- Current
Date Assuming Square Footage imate Annual
Initial Exercise of all of Showroom, Acreage Rent{(2)}
Expiration Renewal Office and of
Date Option Warehouse Space Site
<S> <C> <C> <C> <C> <C> <C>
1. *550 Hamilton Avenue
Brooklyn, New York{(1)} 12/31/96 12/31/96 59,100 4.0 $709,400
Long Island Region
1. 1294 Route 110 04/01/00 04/30/05 37,500 3.0 $140,100
Farmingdale, New York
2. *370 West Merrick Road 12/31/96 12/31/96 30,000 1.8 $262,000
Valley Stream, New York{(3)}
*345 West Merrick Road 12/31/96 12/31/96 16,000 0.6 $137,700
Valley Stream, New York{(3)}
362 West Merrick Road 07/31/89 12/31/96 -- 0.2 $26,400
Valley Stream, New York{(3)}
HUDSON VALLEY REGION
1. *102 N. Route 9W 12/31/98 12/31/08 32,350 5.0 $260,900
Congers, New York
2. *125 Temple Hill Road 09/01/00 09/01/00 27,100 4.5 $69,500
Vails Gate, New York
NEW JERSEY REGION
1. 20 Truman Drive So. 04/30/99 04/30/09 60,000 6.0 $337,000
Edison, NJ
2. *Route 173 West 04/30/98 04/30/08 37,300 5.3 $328,700
Hampton, NJ
CONNECTICUT REGION
1. *363, 367 and 405 01/31/93 01/31/08 81,000 8.2 $350,400
Ellington Road
East Hartford, CT
*580 Tolland Street 04/30/93 04/30/98 31,000 2.0 $138,200
East Hartford, CT
2. 75 John Fitch Boulevard 02/29/88 12/31/99 3,100 -- $32,900
South Windsor, CT
PENNSYLVANIA REGION
1. 695 Wyoming Avenue 05/31/92 06/30/04 17,250 -- $33,500
Kingston, PA
2. 1005-C West Lehigh Street 11/30/97 11/30/07 28,500 1.5 $59,900
Bethlehem, PA
460,200 42.1 $2,886,600
</TABLE>
* The lessors for these facilities are entities owned in whole or in part
by members of management and their families. The terms of the leases with such
affiliated parties, at the time the leases were entered into, were believed to
be no less favorable to the Company than it could have obtained in arm's-length
negotiations with unrelated third parties.
(1) The Company is currently negotiating a ten year lease agreement for a new
location within approximately two miles of the existing location but
there can be no assurance that such new lease agreement will be entered
into.
(2) All the Company's real estate leases require the Company to pay liability
insurance, some or all real estate taxes and all utilities. Rental
payments for the Brooklyn and 345 and 370 West Merrick Rd., Valley Stream
centers increase annually by 3% during the terms of the leases. The
rental payments for the Farmingdale center for the initial five year
lease term are $140,070, $150,844, $161,618, $172,393 and $183,168
respectively. The annual rental payments during the first three years of
the option period is $193,942 and increases to $205,914 during the last
two years of the option period. The rent payable on the Edison center
increases to $400,500 per year in the first five year renewal term and
$425,000 in the second five year renewal term. Rental payments for the
Congers and Hampton centers increase annually by the percentage increase
in the applicable consumer price index or 4%, whichever is lower. Rental
payments for the Vails Gate center are in amounts sufficient to service
industrial development bond financing by the lessor of such facility and
fluctuate with changes in interest and tax rates. Rental payments for
the Ellington Road, East Hartford center increase to the then fair market
rental at the commencement of the second five year option renewal period.
Rental payments for the Kingston center increase by the percentage
increase in the applicable consumer price index or by 5%, whichever is
lower. Rental payments for the Bethlehem center increase in the fourth
year of the first five year renewal option (December 1, 2000) determined
by the average annual percentage increases in the applicable consumer
price index that occurred since the lease inception date, such increase
capped at 3% per year. The rent is further increased in the second five
year renewal term commencing December 1, 2002 as determined by increasing
the annual rental at November 30, 2002 by the annual percentage increases
in the applicable consumer price index that occurred between December 1,
2000 and December 1, 2002 such increase capped at 3% per year.
(3) The Company is currently negotiating with the landlord to extend the
lease term for an additional ten years but there can be no assurance that
such lease term will be extended.
[The balance of this page is intentionally blank]
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Strober is not a party to any material legal proceedings. The Company
is, however, involved in litigation relating to claims arising out of its
operations in the normal course of business. Such claims against Strober are
generally covered by insurance. It is the opinion of management that any
uninsured liability resulting from any such litigation would not have a
material adverse effect on Strober's business, financial position or earnings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders through
solicitation of proxies or otherwise during the fourth quarter of 1995.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The Company's common stock trades on the NASDAQ National Market under the
symbol: STRB.
The high and low sales price for the first quarter of 1996 (through March
14, 1996) and each of the four quarters of 1995 and 1994 as reported by the
National Association of Securities Dealers, Inc., are set forth below. Such
quotations reflect interdealer prices, without retail mark-up, mark-down or
commissions and may not necessarily represent actual transactions.
1996* HIGH LOW
First Quarter* $4-5/8 $3-1/2
1995 HIGH LOW
1st Quarter $4-1/8 $3
2nd Quarter 4-1/2 3-1/4
3rd Quarter 5-7/8 4
4th Quarter 4-3/4 3-1/2
1994 HIGH LOW
1st Quarter $5-5/16 $3-3/4
2nd Quarter 4-7/8 3-1/2
3rd Quarter 4-5/8 2-1/2
4th Quarter 3-7/8 3-1/8
* through March 14, 1996
There were 495 holders of record at March 14, 1996.
The Company intends to reinvest all of its earnings for use in its
business and to finance future growth. Accordingly, the Company does not
anticipate paying cash dividends in the foreseeable future. Any further
determination as to the payment of dividends will depend upon the Company's
financial condition, results of operations, commitments and such other factors
as the Board of Directors deems relevant. See Management's Discussion and
Analysis of Financial Condition and Results of Operations.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
(In thousands of dollars, except percentage and per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
INCOME STATEMENT DATA:
Net sales $125,812 $125,378 $118,975 $104,812 $90,150
Gross profit 33,186 32,670 31,703 27,787 24,897
Gross profit percentage 26% 26% 27% 27% 28%
Selling, general and administrative
expenses 27,858 28,395 28,090 26,955 26,707
Amortization of acquisition
costs 210 210 268 910 910
Income (loss) from operations 5,118 4,065 3,345 (78) (2,720)
Net interest (income) and other (230) 332 787 812 686
expenses
Income (loss) before income tax 5,348 3,733 2,558 (890) (3,406)
Net income (loss) $ 3,082 $ 2,576 $ 1,650 $ (763) $(2,072)
Net income (loss) per share $0.59 $0.50 $ 0.33 $(0.15) $(0.41)
Weighted average number of 5,247 5,165 5,031 5,021 5,044
shares outstanding
</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C>
Working capital $23,691 $21,844 $20,158 $22,032 $24,769
Total assets 44,544 42,649 44,328 43,145 47,814
Long-term debt less current 1,224 1,171 2,407 8,584 11,551
installments
Stockholders' Equity $33,524 $30,687 $28,569 $26,511 $27,265
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth certain income statement amounts
expressed as a percentage of sales:
<TABLE>
<CAPTION>
Year Ended December 31,
<S> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991
INCOME STATEMENT DATA:
Net sales 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 73.6% 73.9% 73.4% 73.5% 72.4%
Gross profit percentage 26.4% 26.1% 26.6% 26.5% 27.6%
Selling, general and 22.1% 22.6% 23.6% 25.7% 29.6%
administrative expenses
Amortization of acquisition 0.2% 0.2% 0.2% 0.9% 1.0%
costs
Income (loss) from operations 4.1% 3.3% 2.8% 0.0% (3.0)%
Net interest (income) and (0.2)% 0.3% 0.7% 0.8% 0.8%
other expenses
Income (loss) before income 4.3% 3.0% 2.1% (0.8)% (3.8)%
taxes
Provision (benefit) for income 1.8% 0.9% 0.7% (0.1)% (1.5)%
tax
Net income (loss) 2.5% 2.1% 1.4% (0.7)% (2.3)%
</TABLE>
1995 COMPARED TO 1994
Net sales for 1995 increased by $434,000 (less than 1%) compared to net
sales for 1994. Sales benefited by a milder winter season during 1995 compared
to 1994 and were negatively impacted by a reduction in new residential
construction in the Northeast as well as by price deflation in lumber products.
Cost of goods sold as a percentage of sales decreased slightly from 73.9%
to 73.6% during 1995 as compared to 1994. Gross profit for 1995 increased by
$516,000 (2%) due to the increased sales volume and a higher gross profit
margin percentage. Gross profit as a percent of sales increased to 26.4% in
1995 from 26.1% in 1994.
<PAGE>
Selling, general and administrative ("SG&A") expenses decreased by
$537,000 (2%) over the prior year. The following table shows the components of
the SG&A expenses:
<TABLE>
<CAPTION>
(In thousands) Year Ended Year Ended
12/31/95 12/31/94
<S> <C> <C>
Delivery $10,899 $10,961
Selling 4,191 4,115
Administrative 12,768 13,319
$27,858 $28,395
</TABLE>
The decrease in delivery expense of $62,000 (less than 1%) was due to
lower truck maintenance costs offset partially by higher delivery labor costs.
The Company believes that the lower truck maintenance costs were attributable
to the replacement of older delivery vehicles in 1995. The increase in selling
expense of $76,000 (2%) was due to higher selling salaries partially offset by
lower advertising and promotional expenses.
The decrease in administrative expenses of $551,000 (4%) was attributable
to decreases in bad debt expense, insurance and facility maintenance and the
elimination of non-recurring 1994 charges for pension and closed facility
costs. These decreases were partially offset by increases in medical insurance
costs, executive salaries and legal fees.
Interest expense and other deductions decreased by $504,000 in 1995
compared to 1994, primarily due to reduced amounts outstanding on the Company's
working capital loan facility and subordinated debt. The decrease in interest
expense was partially offset by increases in interest expense associated with
newly incurred capital lease transactions to fund new delivery equipment.
The net income for 1995 reflects an income tax provision of $2,267,000
compared to $1,157,000 in 1994. The 1995 income tax provision reflects an
increase in the effective tax rate due to the full utilization prior to 1995 of
the federal alternative minimum tax carryforward and various state income tax
carryforwards. SEE NOTE 5 TO THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS.
1994 COMPARED TO 1993
Net sales for 1994 increased by $6.4 million (5%) compared to net sales
for 1993. The increase in sales was attributable to several factors including
increased construction activity and increased prices on construction materials
sold during 1994. Management believed that continued sales growth in 1995
would come from expanding product mix and continued increases in construction
activity anticipated from the Company's traditional professional contractor
customer base. Management also believed that the trend toward higher prices
for products sold by the Company should also continue throughout 1995.
Cost of goods sold as a percentage of sales increased from 73.4% to 73.9%
during 1994 as compared to 1993. This increase was largely attributable to
competitive pricing of products sold in the Company's marketing region. Gross
profit for 1994 increased by $967,000 (3%) due primarily to increased sales
volume. Gross profit as a percent of sales decreased to 26.1% in 1994 from
26.6% in 1993.
<PAGE>
Selling, general and administrative expenses increased $305,000 (1%) over
the prior year. The following table shows the components of the SG&A expenses:
<TABLE>
<CAPTION>
(In thousands) Year Ended Year Ended
12/31/94 12/31/93
<S> <C> <C>
Delivery $10,961 $10,511
Selling 4,115 4,034
Administrative 13,319 13,545
$28,395 $28,090
</TABLE>
The increase in delivery expenses of $450,000 (4%) was due to increases
in delivery labor and trucking costs associated with the increase in sales
volume. The increase in selling expenses of $81,000 (2%) was due to increased
selling salaries. The decrease in administrative expenses of $226,000 (2%) was
due to lower bad debt expenses, insurance costs and administrative salaries,
partially offset by increases in employee bonuses and employee retirement plan
expense.
Amortization of acquisition costs stems from the 1988 acquisition of The
General Building Supply Company. Commencing in 1994, the remaining portion of
the deferred acquisition costs represents goodwill and is being amortized at
the rate of $210,000 per year.
Interest expense and other deductions decreased by $386,000 in 1994 as
compared to 1993. This decrease is primarily attributable to lower loan
balances outstanding on the Company's working capital loan facility and
subordinated debt. It also reflects a lower provision for interest in 1994 as
compared to 1993 associated with a proposed disallowance of losses by the
Internal Revenue Service deducted by the Company on its 1980 and 1981 Federal,
New York State and New York City income tax returns.
The net income for the year ended 1994 reflects an income tax provision
of $1,157,000 compared to an income tax provision of $908,000 in 1993. The
income tax provision for 1994 was decreased by a reduction in the deferred
valuation allowance of $644,000. This decrease is primarily attributable to
the utilization of the federal alternative minimum tax carryforward and state
tax income tax carryforwards. SEE NOTE 5 TO THE COMPANY'S CONSOLIDATED
FINANCIAL STATEMENTS.
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased by $1.8 million to $23.7 million at December
31, 1995. The Company financed its operations in 1995 with cash generated from
operations and capital lease transactions to fund capital expenditures.
The Company has a $10,000,000 working capital line of credit with the
Chase Manhattan Bank, N.A. Borrowings under the credit facility are made as
needed, up to a maximum of 75% of eligible accounts receivable and bear
interest at the rate of 1/2 a percentage point over the prime rate of interest
or, at the option of the Company, at various fixed London Interbank Offered
Rate interest rates. The Company pledged as collateral for the credit facility
its accounts receivable and is required to maintain certain financial
covenants. The credit facility expires January 31, 1997 and may be extended at
the option of the Company for an additional one year period. At December 31,
1995 and December 31, 1994, there were no balances owed under this credit line.
The Company believes that this credit facility will provide sufficient working
capital to support current and future operations. SEE NOTE 4 TO THE COMPANY'S
CONSOLIDATED FINANCIAL STATEMENTS.
In March 1995, the Company entered into a master lease agreement with
Chase Equipment Leasing Inc. to lease certain trucks and forklift equipment.
The agreement provides for a monthly rental payment adjusted upon changes in
the one month London Interbank Offered Rate. The current lease term is 60
months. SEE NOTE 4 TO THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS.
At December 31, 1995, the Company's outstanding balance of subordinated
notes payable was $583,000 compared to $2,042,000 at December 31, 1994. These
notes were issued pursuant to the acquisition of The General Building Supply
Company in January 1988. The notes are due September 1, 1996 and are paid with
36 consecutive monthly payments of $97,222 plus interest at 8% per annum.
During 1995, the Company prepaid three monthly principal payments on the notes
amounting to $292,000. SEE NOTE 4 TO THE COMPANY'S CONSOLIDATED FINANCIAL
STATEMENTS.
In November 1990, the Company received insurance proceeds from policies
on the life of the Company's late chairman, Mr. Eric D. Strober. The Company
was obligated under a stock repurchase agreement to use $8,448,000 of the
proceeds to purchase the Company's common stock from Mr. Strober's estate. In
accordance with the agreement, the Company withheld $845,000 to pay the
estimated Federal alternative minimum tax related to the insurance proceeds.
To the extent the actual alternative tax paid on the Company's 1990 Federal tax
return was less than the $845,000 withheld and to the extent the alternative
minimum tax was used in subsequent years to reduce current Federal taxes
payable, the Company was required to offer to purchase additional shares from
Mr. Strober's estate at the then-market price. The alternative minimum tax
paid on the Company's 1990 Federal tax return was $116,790 less than the
$845,000 withheld and the Company during 1991 purchased 55,667 shares at $2.098
per share which represented the market price of the Company's stock when the
amount of the alternative minimum tax for 1990 was determined. For the year
1993, the Company's regular income tax was reduced by $485,000 due to the
alternative minimum tax carryover and the Company during 1994 purchased 111,789
shares at $4.33 per share. For 1994, the Company's regular income tax was
reduced by $241,000 due to the alternative minimum tax carryover and the
Company during 1995 purchased 63,812 shares at $3.78 per share. As the
alternative minimum tax carryover was fully exhausted during 1994, no further
shares are eligible for redemption by Mr. Strober's estate.
Capital expenditures, net of dispositions, amounted to $576,000 and
$424,000 for 1995 and 1994 respectively. Such expenditures in 1995 were
principally attributable to leasehold improvements and business fixtures.
IMPACT OF NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) Statement No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" must be adopted by the Company in 1996. Statement No. 121
requires, among other things, that long-lived assets held and used by an entity
be reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Management does
not believe that the implementation of Statement No. 121 will have a material
impact on the Company's financial position or results of operations.
In October 1995, FASB issued Statement No. 123, "Accounting for Stock-
Based Compensation" which must be adopted by the Company in 1996. The Company
has elected not to implement the fair value based accounting method for
employee stock options, but has elected to disclose, commencing in 1996, the
pro forma net income and earnings per share as if such method had been used to
account for stock-based compensation cost as described in Statement No. 123.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Table of Contents to Financial Statements and Schedule in Item 14
below.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been no events or conditions requiring reporting under the
requirements of this item.
<PAGE>
PART III
ITEM 10. DIRECTORS OF THE REGISTRANT.
<TABLE>
<CAPTION>
NAME AND POSITION AGE BIOGRAPHICAL DATA (1)
<S> <C> <C>
ROBERT J. GAITES 54 Mr. Gaites has been with the
Class II Director, Chairman of Company since 1976. He was
the Board, Chief Executive Senior Vice President since
Officer and President of the 1986 and CEO since June
Company; Director since 1986; 1991. He has 29 years of
Current term to expire at 1997 experience in the industry.
Stockholder Meeting
JOHN YANUKLIS 59 Mr. Yanuklis has been with
Executive Vice President and the Company since 1981 and
Class III Director of the manages its Hudson Valley,
Company; Director since 1986; New York region. He was a
Current term to expire at 1998 Senior Vice President since
Stockholder Meeting 1986 and an Executive Vice
President since June 1992.
He has over 30 years of
experience in the industry.
ELIOTT ZIEKY 44 Mr. Zieky has been with the
Senior Vice President Company since 1988 as a
and Class I Director of the Senior Vice President and
Company; Director since 1988; with his cousin, Edward
Current term to expire at 1996 Zieky, manages its Hartford,
Stockholder Meeting Connecticut region. He was
an officer of The General
Building Supply Company
prior to its acquisition by
the Company. He has over 20
years of experience in the
industry.
DAVID W. BERNSTEIN 70 Mr. Bernstein is an attorney
Class III Director of the engaged in private practice
Company; Director since 1986; and served as general
Current term to expire at 1998 counsel to the Company from
Stockholder Meeting 1953 through 1990.
JOSEPH MANGINO, SR. 59 Mr. Mangino has been the
Class II Director of the President of Metropolitan
Company; Director since 1992; Trucking, Inc. a privately
Current term to expire at 1997 held trucking company since
Stockholder Meeting 1980. He is a regional
director of Bank of New
York, National Community
Division.
ALVIN MURSTEIN 61 Mr. Murstein has been
Class III Director of the President and Chairman of
Company; Director since 1989; the Board of Directors of
Current term to expire at 1998 Tri-Magna Corporation, the
Stockholder Meeting parent corporation of
Medallion Funding Corp.,
since 1989 and the President
and Chairman of the Board of
Directors of Medallion
Funding Corp. since 1979.
EMIL W. SOLIMINE 51 Mr. Solimine is the Chairman
Class I Director of the of the Board of Directors
Company; Director since 1989; and Chief Executive Officer
Current term to expire at 1996 of Emar Group, Inc., an
Stockholder Meeting insurance brokerage concern
which he started in 1971 and
which has served as
insurance broker for the
Company's property and
casualty insurance since
1983. Mr. Solimine is also
a director of Di Giorgio
Corporation, an independent
wholesale food distributor.
</TABLE>
________________________
(1) The Strober Organization, Inc. was organized in connection with the
Company's initial public offering in 1986 to act as the parent of the companies
previously conducting the Strober business. References to employment with the
"Company" in the table above, where appropriate, include positions with
Strober's predecessor companies.
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of such securities with the Securities and
Exchange Commission and the National Association of Securities Dealers, Inc.
Officers, directors and greater than ten percent beneficial owners are required
by applicable regulations to furnish the Company with copies of all Section
16(a) forms they file.
Based solely upon a review of the copies of the forms furnished to the
Company, or written representations from certain reporting persons that no
Forms 5 were required, the Company believes that during the 1995 fiscal year
all of its officers and directors complied with all applicable filing
requirements.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the annual and
long-term compensation for services rendered in all capacities to the Company
by those persons who were, at December 31, 1995, the Named Executive Officers.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
<S> <C> <C> <C> <C> <C> <C>
NAME AND PRINCIPAL POSITION FISCAL SALARY ($) BONUS ($) OTHER ANNUAL STOCK ALL OTHER
YEAR COMPENSATION OPTION COMPENSATION
($)(1) GRANTS(#) ($)(1)(3)
ROBERT J. GAITES 1995 $275,000 $225,000 -- 37,500 $795
Chairman, President, 1994 $250,000 $225,000 -- 25,000 $900
Chief Executive Officer 1993 $250,000 $160,000 -- 25,000 $814
JOHN YANUKLIS 1995 $154,000 $184,905 -- 23,503 $409
Executive Vice President, 1994 $142,000 $136,186 -- 22,737 $505
Director 1993 $135,000 $149,745 -- 14,286 $503
RICHARD SCHAEFER 1995 $125,000 $116,988 -- 27,586 $397
Vice President 1994 $125,000 $136,619 -- 15,789 $450
1993 $125,000 $108,950 -- 51,429 $475
EDWARD ZIEKY 1995 $127,000 $93,214 -- 10,152 $511
Senior Vice President 1994 $115,000 $91,923 -- 1,684 $580
1993 $100,000 $25,268 $18,300(2) -- $546
ELIOTT ZIEKY 1995 $127,000 $93,214 -- 10,152 $511
Senior Vice President, 1994 $115,000 $91,923 -- 1,684 $580
Director 1993 $100,000 $25,268 $18,300(2) -- $546
</TABLE>
(1) Amounts for "Other Annual Compensation" are not shown in the table as
none of these perquisites exceed the lesser of (i) $50,000 or (ii) 10%
of the Named Executive Officer's combined Salary and Bonus, except for
Messrs. Edward and Eliott Zieky in 1993.
(2) Indicates a $10,200 car allowance which accounts for more than 25% of
the perquisites of Messrs. Edward and Eliott Zieky.
(3) Includes only premiums paid by the Company attributable to term life
insurance coverage for the Named Executive Officers.
OPTION GRANTS TABLE
The following table sets forth information on grants of stock options to
the Named Executive Officers pursuant to the Company's Restated 1986 Non-
Qualified Stock Option Plan during the fiscal year ended December 31, 1995.
<TABLE>
<CAPTION>
Name Options % of Total Exercise Expiration Potential Realizable Value at Assumed
Granted(#) Options Price ($/Share) Date Annual Rates of Stock Price
Granted to Appreciation for Option Term
Employees
in Fiscal
Year
<S> <C> <C> <C> <C> <C> <C>
5%($) 10%($)
Robert J. Gaites 37,500 20.43% $3.625 03/08/00 $37,560 $82,990
John Yanuklis 23,503 12.81% $3.625 03/08/00 $23,540 $52,014
Richard Schaefer 27,586 15.03% $3.625 03/08/00 $27,630 $61,050
Edward Zieky 10,152 5.53% $3.625 03/08/00 $10,168 $22,467
Eliott Zieky 10,152 5.53% $3.625 03/08/00 $10,168 $22,467
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUE TABLE
The following table sets forth information concerning the aggregate
number and value of unexercised options to purchase Common Stock held by each
of the Named Executive Officers as of December 31, 1995.
<TABLE>
<CAPTION>
SHARES ACQUIRED ON VALUE NUMBER OF VALUE OF
EXERCISE (#) REALIZED ($) UNEXERCISED UNEXERCISED
OPTIONS IN-THE-MONEY
NAME AT FY-END(#) OPTIONS
ALL AT FY-END ($)
EXERCISABLE ALL
EXERCISABLE
<S> <C> <C> <C> <C>
Robert J. Gaites -- -- 87,500 $45,312
John Yanuklis -- -- 69,526 $47,831
Richard Schaefer -- -- 117,304 $148,059
Edward Zieky -- -- 11,836 --
Eliott Zieky -- -- 11,836 --
</TABLE>
<PAGE>
COMPENSATION OF DIRECTORS
During 1995, members of the Board who were not employees of the Company
received an annual retainer of $12,500, plus a fee of $1,000 for each Board and
Board committee meeting attended.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Company's Compensation Committee during the fiscal
year ended December 31, 1995 were Messrs. Bernstein, Gaites, Yanuklis, Mangino
and Solimine. Mr. Gaites also served as President and Chief Executive Officer
during the fiscal year ended December 31, 1995.
Mr. Gaites and Mr. Yanuklis are owners in entities that lease facilities
to the Company in Brooklyn, New York; Congers, New York; Vails Gate, New York
and Hampton, New Jersey. Mr. Gaites' equity interests in these entities are
10%, 2%, 2% and 2%, respectively. Mr. Yanuklis' equity interests in these
entities are 0%, 16%, 16% and 16%, respectively. The current annual rent on
these facilities is $709,400, $260,900, $69,500 and $328,700, respectively.
The lessors of such facilities have granted the Company a right of first
refusal in the event that any of the lessors desire to sell their respective
properties to a third party. The Company believes that the leases with such
affiliated parties are on terms no less favorable to the Company than it could
obtain in arms-length negotiations with unrelated parties for similar locations
in similar geographic areas.
During 1995, the Company paid $1,052,080 in insurance premiums for the
Company's property and casualty insurance to Emar Group, Inc., the insurance
broker of which Mr. Solimine is president. The Company believes that the
insurance premiums it pays to Emar Group, Inc. are on terms no less favorable
to the Company than it could obtain in arms-length negotiations with unrelated
parties for similar property and casualty insurance.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Under a stockholder agreement entered into as part of the 1986 IPO (as
described hereinafter) among the Company, Messrs. Gaites, Yanuklis, Edward
Zieky and Eliott Zieky, two other executive officers and other Company
stockholders and former officers, in the event the Company terminates without
cause the employment of a party to such stockholder agreement, the Company is
obligated to engage the terminated party as a consultant for two years with a
retainer equal to 75% of that individual's then current base salary. During
such period the consultant would be barred from competing against the Company
in its existing markets.
The Company has employment agreements with each of Edward Zieky and
Eliott Zieky, Named Executive Officers, providing for a current base salary of
$127,000. Under their respective employment agreements, Messrs. Edward and
Eliott Zieky are entitled to such group life insurance, pension, medical
insurance, hospitalization, disability and similar employee benefit plans as
may exist for the benefit of the executive officers of the Company generally.
The employment agreements bar solicitation of similar business to that of the
Company during Messrs. Edward and Eliott Zieky's respective employment and for
three years thereafter. They are also barred from directly or indirectly
competing with the business of the Company in a 75 mile radius for a period of
two years after ceasing to be employed by the Company. If either Messrs.
Edward or Eliott Zieky leave the Company for a reason other than termination
for cause, at the option of the Board, they may become a consultant to the
Company for a term of two years. If either or both are terminated without
cause, the Company is obligated to engage them as a consultant for two years
for a retainer equal to 75% of their then current base salary.
Except as set forth above, the Company has no other termination of
employment or change-in-control arrangements for the remaining Named Executive
Officers.
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS.
The following table, prepared from the records of the Company and from
information furnished to it, sets forth, as of March 14, 1996, the name and
holdings of each person (including any "group" as defined in Section 13(d) of
the Securities Exchange Act of 1934) known by the Company to be the beneficial
owner of more than five percent of its Common Stock. Unless otherwise
indicated, the persons listed below have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED OF CLASS
<S> <C> <C>
Sue Strober(1)(4) 948,951 18.9%
c/o The Strober Organization, Inc.
550 Hamilton Avenue
Brooklyn, New York 11232
Robert J. Gaites (2)(4) 457,135 9.1%
c/o The Strober Organization, Inc.
550 Hamilton Avenue
Brooklyn, New York 11232
John Yanuklis (3)(4) 453,255 9.0%
c/o The Strober Organization, Inc.
550 Hamilton Avenue
Brooklyn, New York 11232
John T. Guerin (4) 422,250 8.4%
14 Summit Road
Morristown, New Jersey 07960
Gordon Sandler (4) 384,486 7.6%
6468 Via Rosa
Boca Raton, Florida 33433
</TABLE>
___________________
(1) Ms. Strober is the trustee with respect to an aggregate of 84,650
shares held in trusts for her son and daughter. Ms. Strober disclaims
beneficial ownership of such shares.
(2) Excludes 25,000, 25,000, 37,500 and 25,553 shares of Common Stock
subject to presently exercisable options held by Mr. Gaites at exercise prices
of $1.75, $4.75, $3.625 and $4.50 per share which expire on December 31, 1996,
1997, March 8, 2000 and March 12, 2001, respectively. Includes 2,000 shares
held by Mr. Gaites' spouse as trustee for their son. Mr. Gaites disclaims
beneficial ownership of such shares.
(3) Excludes 9,000, 14,286, 22,737, 23,503 and 27,378 shares of Common
Stock subject to presently exercisable options held by Mr. Yanuklis at exercise
prices of $1.125, $1.75, $4.75,$3.625 and $4.50 per share of which 23,286
expire on December 31, 1996, 22,737 expire on December 31, 1997, 23,503 expire
on March 8, 2000 and 27,378 expire on March 12, 2001.
(4) The above-named beneficial owner is a party to an agreement providing
such beneficial owner with a right of prior notice and first refusal to
purchase shares of the Company's Common Stock which any other party to the
agreement desires to sell. (See "Certain Transactions")
(B) SECURITY OWNERSHIP OF MANAGEMENT.
The following table, prepared from the records of the Company and from
information furnished to it, sets forth, as of March 14, 1996, the number of
shares of Common Stock beneficially owned by each director, the chief executive
officer and the four other most highly compensated executive officers
(collectively, the "Named Executive Officers") and all directors and executive
officers of the Company as a group. Unless otherwise indicated, the persons
listed below have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
COMMON STOCK
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED PERCENT OF CLASS
<S> <C> <C>
Robert J. Gaites 457,135 (1)(8) 9.1%
David W. Bernstein 29,100 (2)(3) *
Joseph Mangino, Sr. 10,500 (3) *
Alvin Murstein 15,000 (3) *
Emil W. Solimine 18,500 (3)(4) *
John Yanuklis 453,255 (5)(8) 9.0%
Edward Zieky 0 (6)(8) *
Eliott Zieky 0 (6)(8) *
Richard Schaefer 3,120 (7) *
All Officers and Directors as a group 1,092,779 21.7%
(12 persons) (9)
</TABLE>
________________________
* Less than one percent of the outstanding shares of Common Stock.
<PAGE>
(1) Excludes 25,000, 25,000, 37,500 and 25,553 shares of Common Stock
subject to presently exercisable options held by Mr. Gaites at exercise prices
of $1.75, $4.75, $3.625 and $4.50 per share which expire on December 31, 1996,
1997, March 8, 2000 and March 12, 2001, respectively. Includes 2,000 shares
held by Mr. Gaites' spouse as trustee for their son. Mr. Gaites disclaims
beneficial ownership of such shares.
(2) Includes 100 shares owned by Mr. Bernstein's wife. Mr. Bernstein
disclaims beneficial ownership of such shares. Excludes 100,000 shares of
Common Stock subject to a presently exercisable warrant held by Mr. Bernstein
at an exercise price of $12.00 per share which expires on November 7, 1996.
(3) Excludes 12,500 and 18,750 shares subject to presently exercisable
options and 18,750 shares subject to options still requiring Stockholder
ratification each held by the outside directors at an exercise price of $4.75,
$3.625 and $4.50 per share which expire on March 9, 1997, March 8, 2000 and
March 12, 2001, respectively.
(4) 1,000 of these shares are owned by Emar, Ltd., of which Mr. Solimine
is the sole shareholder and 17,500 of these shares are owned by Deye Limited
Partnership of which Mr. Solimine is a general partner.
(5) Excludes 9,000, 14,286, 22,737, 23,503 and 27,378 shares of Common
Stock subject to presently exercisable options held by Mr. Yanuklis at exercise
prices of $1.125, $1.75, $4.75,$3.625 and $4.50 per share of which 23,286
expire on December 31, 1996, 22,737 expire on December 31, 1997, 23,503 expire
on March 8, 2000 and 27,378 expire on March 12, 2001.
(6) Excludes 1,684, 10,152 and 9,031 shares of Common Stock subject to a
presently exercisable option held by each of Edward and Eliott Zieky at an
exercise price of $4.75, $3.625 and $4.50 per share which expire on December
31, 1997, March 8, 2000 and March 12, 2001, respectively.
(7) Excludes 22,500, 51,429, 15,789, 27,586 and 22,222 shares of Common
Stock subject to presently exercisable options held by Mr. Schaefer at exercise
prices of $1.125, $1.75, $4.75, $3.625 and $4.50 per share, respectively. Of
these options, 73,929 expire on December 31, 1996, 15,789 expire on December
31, 1997, 27,586 expire on March 8, 2000 and 22,222 expire on March 12, 2001.
(8) The above-named director or member of management is a party to an
agreement providing such individual with a right of prior notice and first
refusal to purchase shares of Common Stock which any other party to the
agreement desires to sell. (See "Certain Transactions")
(9) Excludes 942,438 shares of Common Stock subject to presently
exercisable options and warrants held by certain directors and executive
officers of the Company at exercise prices ranging from $12.00 to $1.125 per
share. Excludes 150 shares owned by a relative of Mr. Albert Brower. Mr.
Brower disclaims beneficial ownership of such shares..
_______________________________
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain of the Company's building supply centers are leased from
corporations or partnerships wholly-owned by existing and former members of
management, major stockholders and their families, including Messrs. Brower,
Gaites, Guerin, Schaefer, Yanuklis, Young, Edward N. Zieky, Eliott Zieky and
Ms. Sue Strober, as follows: 550 Hamilton Avenue, Brooklyn, New York, (current
annual rental of $709,400); 370 West Merrick Road, Valley Stream, New York
(current annual rental of $262,000); 345 West Merrick Road, Valley Stream, New
York (current annual rental of $137,700); 102 North Route 9W, Congers, New York
(current annual rental of $260,900); 125 Temple Hill Road, Vails Gate, New York
(current annual rental of $69,500); Route 175 West, Hampton, New Jersey
(current annual rental of $328,700); 363, 367, 405 Ellington Road, East
Hartford, Connecticut (current annual rental of $350,400); and 580 Tolland
Street, East Hartford, Connecticut (current annual rental $138,200).
The Company believes that the leases with such affiliated parties, at the
time the leases were entered into, were on terms no less favorable to the
Company than it could have obtained in arms-length negotiations with unrelated
third parties for similar locations in similar geographic areas. It is
contemplated that all future locations of the Company will either be owned by
the Company or leased from unrelated third parties.
The Company, Sue Strober, certain current executive officers of the
Company and certain former executive officers and directors of the Company
(including the estate of Eric D. Strober) are parties to an agreement entered
into in 1986 and subsequently amended providing such parties with prior notice
and a right of first refusal to purchase shares of the Company's Common Stock
which any of the parties desires to sell.
During 1993, the Company refinanced its subordinated debt with the former
owners of The General Building Supply Company which the Company purchased in
1988. This debt had a maturity date of January 15, 1994 in the amount of
$3,500,000. On October 1, 1993, the subordinated noteholders exchanged
$3,500,000 of subordinated notes ("old notes") for new subordinated notes ("new
notes") in the like amount of $3,500,000. The "new notes" are due September 1,
1996 and were to be paid with 36 consecutive monthly payments of $97,222 plus
interest at 8% per annum. Also, on October 1, 1993, the accrued interest on
the "old notes" in the amount of $195,808 was paid and the noteholders
surrendered warrants to acquire 300,000 shares of common stock at an exercise
price of $2.00 per share.
At December 31, 1995 two of the noteholders, Eliott Zieky and Edward
Zieky, were employed by the Company as senior vice presidents. The amounts
owed to Eliott Zieky and Edward Zieky at December 31, 1995 were $81,083 and
$91,000, respectively. Edward Zieky's brother (who is also Eliott Zieky's
first cousin) is a building contractor who purchased $388,000 of building
supplies from the Company in 1995 on terms no less favorable to the Company
that it could obtain in arms-length negotiations with unrelated third parties.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The following documents are filed as a part of this report:
(a)(1)Financial Statements:
Independent Auditors' Report
Consolidated Balance Sheets at December 31, 1995 and 1994
Consolidated Statements of Operations for Years Ended December 31,
1995,
1994 and 1993
Consolidated Statements of Stockholders' Equity for Years Ended
December 31, 1995,
1994 and 1993
Consolidated Statements of Cash Flows for Years Ended December 31,
1995, 1994 and
1993
Notes to Consolidated Financial Statements
(2)Financial Statements Schedule required by Item 8 of this form is
filed as an exhibit to this form:
Schedule II Valuation and Qualifying Accounts
(3)Exhibits:
3(i) Restated and Amended Certificate of Incorporation of the
Company incorporated by reference to Exhibit 3(i) to
Quarterly Report on Form 10-Q for the three months ended June
30, 1995.
3(ii) Restated and amended By-Laws of the Company incorporated by
reference to Exhibit 3(ii) to Quarterly Report on Form 10-Q
for the three months ended June 30, 1995.
4(a) Form of Common Stock Certificate incorporated by reference to
Exhibit 4(a) to Annual Report on Form 10-K for the year ended
December 31, 1986.
4(b) Amendatory Agreement dated December 14, 1990 as amended by
Amendment No. 1 dated as of October 1, 1993 together with
Amended and Restated Subordinated Note Due September 1, 1996
and form of Amendment to Employment Agreement incorporated by
reference to Exhibit 4(c) to the Company's Annual Report on
Form 10-K for the year ended December 31, 1994.
4(c) Reserved
4(d) Reserved
4(e) Form of Warrant Extension Amendment between Strober and David
W. Bernstein amending the Warrant Agreement between Strober
and David W. Bernstein dated November 6, 1988 incorporated by
reference to Exhibit 4(e) to Annual Report on Form 10-K for
the year ended December 31, 1991.
10(a) 1986 Non-Qualified Stock Option Plan incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-8 (Commission File No. 33-71968), filed
on November 16, 1993.
10(b) Form of Profit-Sharing Plans incorporated by reference to
Exhibit 10(b) to the Company's Registration Statement on Form
S-1 (Commission File No. 33-9348), filed on October 8, 1986
and Exhibit 10(b) to Amendment No. 2 to the Company's
Registration Statement on Form S-1 (Commission File No.
33-9348), filed on November 7, 1986.
10(c) Form of Target Benefit Plan incorporated by reference to
Exhibit 10(c) to the Company's Registration Statement on Form
S-1 (Commission File No. 33-9348), filed on October 8, 1986.
10(d) Restricted Stock Plan incorporated by reference to Exhibit
10(d) to Amendment No. 2 to the Company's Registration
Statement on Form S-1 (Commission File No. 33-0348), filed on
November 7, 1986.
10(e) Form of Lease between: (i) JNR Realty Company and Strober -
L.I. Bldg. - Supply Centers, Inc.; (ii) Strober Realty
Company and Strober Bros. Inc. Bldg. Supply Centers, Inc.;
(iii) SCONN Realty and Strober Connecticut Bldg. Supply
Centers, Inc.; and (iv) SY Realty Corp. and Strober - King
Bldg. Supply Centers, Inc. incorporated by reference to
Exhibit 10(f) to Amendment No. 1 to the Company's
Registration Statement on Form S-1 (Commission File No.
33-9348), filed on November 4, 1986 and Exhibit 10(f) to
Amendment No. 2 to the Company's Registration Statement on
Form S-1 (Commission File No. 33-9348), filed on November 7,
1986.
10(f) Form of Lease between: (i) General Realty Associates and
General Building Supply Company, (ii) P&Z Realty and General
Building Company; (iii) 3IS Associates and General Building
Supply Company; and (iv) Peter L. Churilo and General
Building Supply Company incorporated by reference to Exhibit
10(f) to Annual Report on Form 10-K for the year ended
December 31, 1987.
10(g) Form of Lease between: (i) SAY Realty Corp. and Strober-King
Bldg. Supply Centers, Inc.; (ii) P&Z Realty and General
Building Supply Company; and (iii) SG Realty Corp. and
Strober New Jersey Building Supply Center, Inc. incorporated
by reference to Exhibit 10(g) to Annual Report on Form 10-K
for the year ended December 31, 1988.
10(h) Form of Lease between Strober Bros. Inc. Building Supply
Centers and Elstro Company incorporated by reference to
Exhibit 10(h) to Annual Report on Form 10-K for the year
ended December 31, 1989.
10(i) Form of Agreement and Plan of Reorganization among the
Company and certain of its affiliates incorporated by
reference to Exhibit 2 to the Company's Registration
Statement on Form S-1 (Commission File No. 33-9348), filed on
October 8, 1986.
10(j) Amendment to Agreement and Plan of Reorganization dated
January 25, 1988 incorporated by reference to Exhibit 4(d) to
Current Report on Form 8-K filed by the Company to report an
event of January 25, 1988.
10(k) Purchasers' Purchase Agreement between the Company and
certain of its affiliates incorporated by reference to
Exhibit 4(e) to Current Report on Form 8-K filed by the
Company to report an event of January 25, 1988.
10(l) Amendment to Purchasers' Purchase Agreement dated January 25,
1988 incorporated by reference to Exhibit 4(v) to Current
Report on Form 8-K filed by the Company to report an event of
January 25, 1988.
10(m) Corporate Purchase Agreement dated November 7, 1986
incorporated by reference to Exhibit (g) to Current Report on
Form 8-K filed by the Company to report an event of January
25, 1988.
10(n) Metal and Roofing Contract between Strober-Price Building
Supply Corp. and Local 282 effective January 1, 1991
incorporated by reference to Exhibit 10(v) to Annual Report
on Form 10-K for the year ended December 31, 1990.
10(o) Lease dated June 14, 1991 between The Chapin Trust and
Strober Building Supply Center, Inc., incorporated by
reference to Exhibit 10(w) to Annual Report on Form 10-K for
the year ended December 31, 1991.
10(p) Agreements between The General Building Supply Company and
Grocery, Bakery, Construction Drivers and Helpers, Teamsters
Local Union 559, for the years 1995 through 1998 incorporated
by reference to Exhibit 10(p) to Annual Report on Form 10-K
for the year ended December 31, 1994.
10(q) Form of Senior Subordinated Note due September 1, 1996 and
form of Employment Agreement incorporated by reference to
Exhibit 10(q) to Annual Report on Form 10-K for the year
ended December 31, 1993.
10(r) Credit Agreement dated as of December 9, 1994 between and
among the Company, certain of its subsidiaries and The Chase
Manhattan Bank (National Association) incorporated by
reference to Exhibit 10(r) to Annual Report on Form 10-K for
the year ended December 31, 1994.
10(s) Contract between the Marda Group of Building Materials
Distributors, Inc. and International Brotherhood of
Teamsters, Chauffeurs, Warehousemen of Local 807 and Helpers
of America for the period ending December 3, 2000.
10(t) Form of The Strober Organization, Inc. Fiduciary
Reimbursement and Indemnification Agreement, incorporated by
reference to Exhibit 10(t) to Annual Report on Form 10-K for
the year ended December 31, 1992.
10(u) Addendum to Lease dated December 23, 1993 by and between The
Chapin Trust and Strober Building Supply Center, Inc.
incorporated by reference to Exhibit 10(u) to Annual Report
on Form 10-K for the year ended December 31, 1993.
10(v) Memorandum of Agreement by and between Local 282, IBT and
Strober Long Building Material Centers, Inc. incorporated by
reference to Exhibit 10(v) to Annual Report on Form 10-K for
the year ended December 31, 1993.
10(w) 1993 Outside Director Stock Option Plan incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-8 (Commission File No. 33-71766), filed
November 16, 1993.
10(x) Form of 1994 Non-Qualified Stock Option Agreement between the
Company and each of its outside directors incorporated by
reference to Exhibit 10(x) to Annual Report on Form 10-K for
the year ended December 31, 1993.
10(y) Lease effective May 1, 1995 by and among Carman Road Realty
Inc. and Broad Properties Inc. and Strober Long Island
Building Materials Centers, Inc. incorporated by reference to
Exhibit 10(y) to Annual Report on Form 10-K for the year
ended December 31, 1994.
10(z) Form of Master Capital Lease Agreement between the Company
and The Chase Equipment Leasing Inc. dated as of March 24,
1995 incorporated by reference to Exhibit 10(z) to Quarterly
Report on Form 10-Q for the three months ended March 31,
1995.
10(aa)1995 Outside Director Stock Option Plan incorporated by
reference to Exhibit 4.1 to the Company's Registration
Statement on Form S-8 (Commission File No. 333-693), filed
February 5, 1996.
10(bb)Commercial Space Lease dated October 6, 1995 between Michael
Albarell and Strober Building Supply Center, Inc.
10(cc)Agreement dated May 15, 1995 between Carman Road Realty, Inc.
and Broad Properties, Inc. (as landlord) and Strober Long
Island Building Material Centers, Inc.
21 List of Subsidiaries of the Company incorporated by reference
to Exhibit 22(a) to Annual Report on Form 10-K for the year
ended December 31, 1994.
23 Consent of Independent Auditors.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
During the three month period ended December 31, 1995, the Company did
not file any reports on Form 8-K with the Securities and Exchange Commission.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
THE STROBER ORGANIZATION, INC.
By: /S/ ROBERT J. GAITES
Robert J. Gaites, Chief
Executive Officer and President
Dated: March 26, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Name Title Date
/S/ ROBERT J. GAITES Chief Executive Officer, March 26, 1996
Robert J. Gaites President and Chairman
of the Board
/S/ DAVID J. POLISHOOK Principal Accounting and March 26, 1996
David J. Polishook Financial Officer, Secretary
and Treasurer
/S/ JOHN YANUKLIS Executive Vice President March 26, 1996
John Yanuklis and Director
/S/ ELIOTT S. ZIEKY Senior Vice President March 26, 1996
Eliott Zieky and Director
/S/ DAVID W. BERNSTEIN Director March 26, 1996
David W. Bernstein
/S/ JOSEPH MANGINO, SR. Director March 26, 1996
Joseph Mangino, Sr.
/S/ ALVIN MURSTEIN Director March 26, 1996
Alvin Murstein
/S/ EMIL W. SOLIMINE Director March 26, 1996
Emil W. Solimine
<PAGE>
THE STROBER ORGANIZATION, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements
Independent Auditors' Report ........................................F1
Financial Statements:
Consolidated Balance Sheets as of December 31, 1995 and 1994......F2
Consolidated Statements of Operations for the years ended December
31, 1995, 1994 and 1993.........................................F3
Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1995, 1994 and 1993................................F4
Consolidated Statements of Cash Flows for the years ended December
31, 1995, 1994 and 1993.........................................F5
Notes to Consolidated Financial Statements...........................F6
The following financial statement schedule of The Strober
Organization, Inc. and subsidiaries is included in Item 14(a)(2):
Schedule II - Valuation and Qualifying Accounts...................S1
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are
not required under the related instructions or are inapplicable, and
therefore have not been included.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
The Strober Organization, Inc.:
We have audited the consolidated financial statements of The Strober
Organization, Inc. and subsidiaries as listed in the accompanying index.
In connection with our audits of the consolidated financial statements,
we also have audited the financial statement schedule as listed in the
accompanying index. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of The
Strober Organization, Inc. and subsidiaries at December 31, 1995 and
1994, and the results of their operations and their cash flows for each
of the years in the three-year period ended December 31, 1995, in
conformity with generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth
therein.
KPMG PEAT MARWICK LLP
Jericho, New York
March 1, 1996
<PAGE>
THE STROBER ORGANIZATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 1995 and 1994
(In thousands)
<TABLE>
<CAPTION>
ASSETS 1995 1994
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 6,007 3,890
Accounts receivable, net of allowance for doubtful accounts of
$2,321 and $2,320 in 1995 and 1994, respectively 15,907 16,651
Inventory 10,305 10,741
Deferred income taxes 921 926
Other current assets 347 350
Total current assets 33,487 32,558
Property and equipment, net 3,627 2,518
Goodwill, net of accumulated amortization of $1,661 and $1,451
in 1995 and 1994, respectively 6,726 6,936
Other assets 704 637
Total assets $ 44,544 42,649
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt 908 1,233
Accounts payable 4,738 5,056
Income taxes payable 791 834
Accrued salaries and bonuses 1,345 1,342
Accrued taxes, other than income taxes 362 615
Accrued interest 205 192
Other accrued liabilities 1,447 1,442
Total current liabilities 9,796 10,714
Long-term debt, less current installments 1,224 1,171
Deferred income taxes - 77
Total liabilities 11,020 11,962
Stockholders' equity:
Preferred stock, $.01 par value, 1,000 shares authorized
and unissued - -
Common stock, $.01 par value, 20,000 shares authorized; issued:
5,178 shares in 1995 and 5,167 shares in 1994; outstanding:
4,987 shares in 1995 and 5,055 shares in 1994 52 52
Additional paid-in capital 7,029 7,013
Retained earnings 27,189 24,107
Less: Treasury stock, at cost, 191 shares in 1995 and 112 shares
in 1994 (746) (485)
Total stockholders' equity 33,524 30,687
Commitments and contingencies
Total liabilities and stockholders' equity $ 44,544 42,649
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE STROBER ORGANIZATION, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended December 31, 1995, 1994 and 1993
(In thousands, except per share data)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C>
Net sales $ 125,813 125,378 118,975
Cost of goods sold 92,627 92,708 87,272
Gross profit 33,186 32,670 31,703
Selling, general and administrative expenses 27,858 28,395 28,090
Amortization of goodwill and non-competition
agreement 210 210 268
Income from operations 5,118 4,065 3,345
Other income (expense):
Interest expense (228) (667) (880)
Interest income 480 422 353
Other (22) (87) (260)
Income before income taxes 5,348 3,733 2,558
Provision for income taxes 2,266 1,157 908
Net income $ 3,082 2,576 1,650
Net income per common share $ .59 .50 .33
Weighted average number of shares outstanding 5,247 5,165 5,031
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE STROBER ORGANIZATION, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1995, 1994 and 1993
(In thousands)
<TABLE>
<CAPTION>
COMMON STOCK
Number Additional
of paid-in Retained Treasury
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1992 5,021 $ 50 6,580 19,881 - 26,511
Net income - - - 1,650 - 1,650
Exercise of stock options 139 2 406 - - 408
Balance at December 31,
1993 5,160 52 6,986 21,531 - 28,569
Net income - - - 2,576 - 2,576
Exercise of stock options 7 - 27 - - 27
Purchase of treasury stock - - - - (485) (485)
Balance at December 31,
1994 5,167 52 7,013 24,107 (485) 30,687
Net income - - - 3,082 - 3,082
Exercise of stock options 11 - 16 - - 16
Purchase of treasury stock - - - - (261) (261)
Balance at December 31,
1995 5,178 $ 52 7,029 27,189 (746) 33,524
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE STROBER ORGANIZATION, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 1995, 1994 and 1993
(In thousands)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 3,082 2,576 1,650
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 1,129 1,226 1,159
Provision for estimated losses on accounts receivable 566 968 1,548
Amortization of goodwill and non-competition
agreement 210 210 268
Benefit for deferred income taxes (72) (423) (478)
Changes in operating assets and liabilities:
Accounts receivable 178 (296) (2,442)
Inventory 436 (574) (740)
Other assets (84) 454 (51)
Accounts payable (318) (394) 758
Income taxes payable (43) (838) 1,222
Accrued expenses (232) (250) 1,795
Net cash provided by operating activities 4,852 2,659 4,689
Cash flows from investing activities:
Additions to property and equipment, net (576) (424) (287)
Cash flows from financing activities:
Repayment of long-term debt (1,914) (1,969) (4,500)
Proceeds from long-term debt - - 92
Proceeds from exercise of stock options 16 27 408
Change in restricted cash - 1,000 -
Payment for treasury stock (261) (485) -
Net cash used for financing activities (2,159) (1,427) (4,000)
Net increase in cash 2,117 808 402
Cash at beginning of year 3,890 3,082 2,680
Cash at end of year 6,007 3,890 3,082
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
THE STROBER ORGANIZATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements, Continued
THE STROBER ORGANIZATION, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 1995, 1994 and 1993
(1)SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
The Strober Organization, Inc. and its subsidiaries (the Company) supply
building materials to professional building contractors from eleven
building supply centers in New York, New Jersey, Connecticut and
Pennsylvania.
The Company currently has over 3,000 active customers, with no single
customer accounting for more than 2% of the Company's total sales during
1995. The Company sells a broad selection of building materials
including lumber and plywood, gypsum wallboard and other drywall
products, millwork, roofing, acoustical materials, siding products,
insulation materials, metal specialties, hardware and tools. The sales
of lumber, gypsum wallboard and millwork collectively accounted for an
estimated 73%, 73% and 74% of the Company's total sales in 1995, 1994 and
1993, respectively.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of The Strober
Organization, Inc. and its wholly-owned subsidiaries. Significant
intercompany balances and transactions have been eliminated.
INVENTORIES
Inventories consist of finished goods held for resale and are stated at the
lower of cost or market, utilizing the average cost method.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. The Company provides for
depreciation and amortization utilizing the straight-line method by
charges to operations over the estimated useful lives or, with respect
to leasehold improvements, the shorter of the useful life or remaining
lease term. The established useful lives are seven to ten years for
delivery equipment, machinery, furniture and fixtures and two to ten
years for leasehold improvements.
GOODWILL AND DEFERRED COSTS
Goodwill and deferred costs resulted from the Company's acquisition of The
General Building Supply Company in 1988. Of the total purchase price,
$3.5 million was allocated to a non-competition provision with certain
present and former officers of General, which was amortized on a
straight-line basis over the five year period ending in January 1993.
Approximately $8.4 million of excess of acquisition costs over fair
value of the net assets acquired (goodwill) is being amortized on a
straight-line basis over forty years. The Company continually evaluates
the recoverability of this intangible asset by assessing whether the
amortization of the goodwill balance over its remaining life can be
recovered through expected undiscounted future operating cash flows.
INCOME TAXES
The Company accounts for income taxes under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled.
NET INCOME PER COMMON SHARE
Net income per common share is computed by dividing net income by the
weighted average number of common shares outstanding during the period
plus (in periods in which they have a dilutive effect) the effect of
common shares contingently issuable from stock options and warrants.
STATEMENT OF CASH FLOWS
The Company considers all short-term investments with a maturity at date of
purchase of three months or less to be cash equivalents. Cash
equivalents are $4,827,000 at December 31, 1995. There were no cash
equivalents at December 31, 1994.
Amounts paid for interest and income taxes for the years ended December 31,
1995, 1994 and 1993 (in thousands):
1995 1994 1993
Interest $ 172 524 859
Income taxes $2,256 2,418 165
In 1995, the Company acquired $1,642,000 of equipment financed by capital
leases.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
The Company estimates an allowance for doubtful accounts based on the credit
worthiness of its customers, as well as general economic conditions.
Consequently, an adverse change in these factors could effect the
Company's estimate of these bad debts. The Company as a policy, does not
require collateral from its customers.
(2)PROPERTY AND EQUIPMENT
Property and equipment, net of accumulated depreciation and amortization,
consists of the following (in thousands):
1995 1994
Delivery equipment $ 6,367 5,852
Machinery and equipment 1,706 2,054
Furniture and fixtures 2,388 2,504
Leasehold improvements 2,215 2,553
12,676 12,963
Accumulated depreciation
and amortization 9,049 10,445
$ 3,627 2,518
(3)FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is defined as the amount at which
the instrument could be exchanged in a current transaction between
willing parties. The carrying amounts of the Company's financial
instruments approximate fair value at December 31, 1995 and 1994.
(4)LONG-TERM DEBT
Long-term debt at December 31, 1995 and 1994 consists of the following (in
thousands):
1995 1994
Revolving credit facilities (a) $ - -
Subordinated note payable (b) 583 2,042
Installment notes payable, due monthly through
1995 with interest rates principally at the
prime rate plus 1/2%, secured by certain
equipment (c) - 11
Capital lease obligations (d) 1,493 -
Other 56 351
2,132 2,404
Less current installments 908 1,233
$1,224 1,171
(a)In December 1994, the Company entered into a $10,000,000 revolving
working capital agreement. The term of the agreement is two years
expiring January 31, 1997 and may be extended at the option of the
Company for an additional one year period. As collateral for the
agreement, the Company pledged its accounts receivable and the
available advance is based on 75% of eligible accounts receivable,
as defined. The credit facility bears interest at 1/2 of 1% over
the bank's prime rate or, at the option of the Company, at various
fixed interest rates. The credit agreement contains various
covenants including the maintenance of debt coverage and leverage
ratios. There was no outstanding balance under the credit facility
at December 31, 1995 and 1994.
(b)The subordinated note payable was issued pursuant to the acquisition of
The General Building Supply Company in January 1988 and was due on
January 15, 1994. The note bore interest at 10% per annum with 8%
payable monthly and 2% added to the notes. At the noteholders option,
the accrued interest of 2% could have been used to purchase a warrant
to acquire 300,000 shares of common stock at an exercise price of $2.00
per share. The warrants expired in December 1995 without being
exercised.
In October 1993, the Company and noteholders renegotiated the terms of
the subordinated notes payable. The new notes bear interest at 8% per
annum to be paid in 36 consecutive payments of $97,222 plus interest
through September 1996. In addition, the accrued interest on the notes
in the amount of $196,000 was paid in 1994 as the noteholders elected
not to purchase the warrant.
At December 31, 1995, two of the noteholders are employed by the Company
as senior vice presidents. The amounts owed to these individuals at
December 31, 1995 totaled $172,083 and at December 31, 1994 totaled
$602,292.
(c)The installment notes payable were funded pursuant to a secured equipment
line of credit. Under this line, the Company was able to borrow at a
floating rate of prime rate plus 1/2%. The notes are repaid in equal
monthly principal payments over 36 to 48 month periods depending on the
amount of the loan.
(d)In March 1995, the Company entered into a master lease agreement with
Chase Equipment Leasing Inc. to lease certain equipment which provides
for a monthly rental payment adjusted upon changes in the one month
London Interbank Offered Rate. The current noncancellable lease term
is 60 months. The minimum annual payments for the capital lease
obligations are as follows:
Year ended December 31:
1996 $ 384,000
1997 384,000
1998 384,000
1999 384,000
2000 217,000
Total minimum lease payments 1,753,000
Less amounts representing
interest (at rates varying
from 7.4% to 7.6%) 260,000
Present value of net minimum
lease obligations $1,493,000
(e)The aggregate annual maturities of long-term debt (excluding capital
lease obligations) are approximately as follows: 1996, $624,000; 1997,
$15,000; and none thereafter.
(5)INCOME TAXES
The components of the income tax expense (benefit) are as follows (in
thousands):
1995 1994 1993
Current:
Federal $1,849 1,356 1,139
State and local 489 224 248
Total current 2,338 1,580 1,387
Deferred:
Federal (103) 68 (246)
State and local 23 153 166
Total deferred (80) 221 (80)
Change in valuation
allowance 8 (644) (399)
$ 2,266 1,157 908
The income tax expense differs from the amount that would result by applying
the applicable Federal statutory rate of 34% to income before income
taxes due to the following (in thousands):
1995 1994 1993
Provision at the statutory
rate $1,818 1,269 870
Increases (decreases):
State and local income
taxes, net of Federal
benefit 338 323 273
Nondeductible goodwill 71 71 71
Disallowance of partnership
losses - - 220
Discharge of White Rim
note payable not taxable - - (153)
Change in valuation allowance 8 (644) (399)
Other, net 31 138 26
$ 2,266 1,157 908
During 1993, the Company recorded a provision for interest expense related
to a proposed disallowance by the Internal Revenue Service of partnership
losses deducted by the Company on its 1980 and 1981 Federal, New York
State and New York City income tax returns. These partnership losses
resulted from the Company's investment in limited partnership interests
in White Rim Oil & Gas Associates 1980-II (White Rim). A class action
lawsuit brought by White Rim's limited partners (and which the Company
was a party to) against the general partner has been settled with the
discharge of the liability of the limited partners for the balance of
their unpaid investment in the partnership as represented by the notes
payable. The interest expense provision of $710,000 has been offset by
the discharge of the Company's note payable to White Rim in the amount of
$450,000, resulting in a net expense of $260,000 which is reflected as
other expense in the accompanying consolidated statement of operations
for the year ended December 31, 1993.
The additional Federal, State and City income taxes due as the result of
the disallowances of approximately $220,000 is included in income tax
expense for the year ended December 31, 1993.
The tax effect of temporary differences that give rise to significant
portions of the net deferred tax asset at December 31, 1995 and 1994 (in
thousands):
1995 1994
Deferred tax asset:
Accounts receivable $ 960 987
Inventory 53 52
Accrued expenses 176 295
Depreciation 140 -
State net operating loss carryforwards,
net of Federal benefit 705 697
Total gross deferred tax asset2,0342,031
Valuation allowance (1,113) (1,105)
Total deferred tax asset 921 926
Deferred tax liability:
Fixed assets - (77)
Net deferred tax asset $ 921 849
The net increase in the valuation allowance for the year ended December 31,
1995 was $8,000 which was attributable to the creation, utilization and
expiration of state income tax carryforwards. The net decreases in the
valuation allowance for the years ended December 31, 1994 and 1993 were
$644,000 and $399,000, respectively, which were attributable to the
utilization of the Federal alternative minimum tax carryforwards and
state income tax carryforwards. In assessing the realizability of
deferred tax assets, management considers whether it is more likely than
not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent
upon the generation of future taxable income during the periods in which
those temporary differences become deductible. Management considered
the scheduled reversal of deferred tax liabilities and tax planning
strategies in making this assessment. Based upon the ability to
carryback deductible amounts that are scheduled to reverse in the next
three years, management believes it is more likely than not the Company
will realize the benefits of these deductible differences, net of the
existing valuation allowance at December 31, 1995.
(6)STOCK OPTION PLANS
The Company has a non-qualified stock option plan which provides for
granting of options to executive officers, key employees and other
persons whose efforts are expected to be of substantial benefit to the
Company. Options are granted at an exercise price equal to the market
value of the common stock at the date of grant. The options become
exercisable on the date of grant, and must be exercised within three to
five years of the grant date. The Company amended the number of shares
available under this plan from 600,000 to 800,000 shares in 1994.
In March 1993, the Company established a stock option plan for its outside
directors pursuant to which each existing director as of March 1993 and
all new outside directors upon their election to the Board shall be
granted an option for 10,000 shares of the Company's common stock.
During 1993, the Company issued 40,000 options of the 60,000 options
available under the Plan. During 1994, the Company amended the number of
options available under the Plan from 60,000 to 110,000 and granted an
additional 12,500 options to each of the Company's four outside
directors. The options are granted at an exercise price equal to the
closing market price on the date of grant, vest immediately and expire
within three years of the date of grant.
On March 8, 1995, the Company established an additional stock option plan
for its outside directors pursuant to which each outside director was
granted an option for 18,750 shares of the Company's common stock. The
options are granted at an exercise price equal to the closing market
price on the date of grant, vest immediately and expire within five years
of the date of grant.
Changes in options outstanding for the three years ended December 31, 1995
are as follows:
Number Price
OF SHARES PER SHARE
Balance - December 31, 1992 222,832 1.13 - 3.38
Options granted 173,929 1.75
Options exercised (139,092) 1.13 - 3.00
Options terminated (26,523) 3.00
Balance - December 31, 1993 231,146 1.13 - 3.38
Options granted 165,730 4.75
Options exercised (7,704) 3.38
Options terminated (5,926) 3.38
Balance - December 31, 1994 383,246 1.13-4.75
Options granted 258,542 3.63
Options exercised (10,766) 1.13-1.75
Options terminated - -
Balance - December 31, 1995 631,022 1.13-4.75
In October 1995, the Financial Accounting Standards Board issued Statement
No.123, ACCOUNTING FOR STOCK-BASED COMPENSATION, which must be adopted
by the Company in 1996. The Company has elected not to implement the
fair value based accounting method for employee stock options, but has
elected to disclose, commencing in 1996, the pro forma net income and
earnings per share as if such method had been used to account for stock-
based compensation cost as described in the Statement.
(7)STOCKHOLDERS' EQUITY
In connection with the Company's initial public offering of its common
stock on November 7, 1986, the Company sold a warrant to a director
exercisable into 100,000 common shares at $12.00 per share.
In exchange for the director agreeing to provide advisory services for a
period of five years, the director's warrant was extended to November
1996. No expense was recorded since the exercise prices of the warrant
was above the market price of the Company's common stock ($1.00 per
share) on the date of the extension.
In December 1990, a major shareholder made a cash contribution of
$2,200,000 to the Company. In exchange, the Company issued the
shareholder a warrant to purchase 300,000 shares of common stock through
December 14, 1995 at an exercise price of $3.25 per share. The Company
valued the warrant at $300,000 and the balance of the payment received
was reflected as an additional capital contribution. The warrants
expired in December 1995 without being exercised.
In November 1990, the Company received insurance proceeds from policies on
the life of the Company's late chairman, Mr. Eric D. Strober. The
Company was obligated under a stock repurchase agreement to use
$8,448,000 of the proceeds to purchase the Company's common stock from
Mr. Strober's estate. In accordance with the agreement, the Company
withheld $845,000 to pay the estimated Federal alternative minimum tax
related to the insurance proceeds. To the extent the actual alternative
minimum tax paid on the Company's 1990 Federal tax return was less than
the $845,000 withheld and to the extent the alternative minimum tax is
used in subsequent years to reduce current Federal taxes payable, the
Company was required to offer to purchase additional shares from Mr.
Strober's estate at the then market price.
The alternative minimum tax paid on the Company's 1990 Federal tax return
attributable to the life insurance proceeds was $117,000 less than the
$845,000 withheld and the Company utilized alternative minimum tax
carryforwards of $241,000 and $485,000 in 1995 and 1993, respectively.
The Company purchased from Mr. Strober's estate 55,667 shares at $2.098
per share in June 1991, 111,789 shares at $4.33 per share in December
1994 and 63,812 shares at $3.78 per share in October 1995, which
represented the market prices of the Company's common stock when the
alternative minimum tax amounts were calculated. As the alternative
minimum tax carryover was fully exhausted during 1994, no further shares
are eligible for redemption by Mr. Strober's estate.
(8)EMPLOYEE BENEFIT PLANS
The Company has adopted a discretionary defined contribution plan for all
employees who have completed one year of service, attained age 21, and
are not a party to a collective bargaining agreement in which such
benefits are provided. The amount of the annual plan contribution is at
the sole discretion of the Board of Directors. A contribution of
$275,000, $250,000 and $175,000 was made for the years ended December
31, 1995, 1994 and 1993, respectively.
Contributions to union sponsored, multiemployer pension plans were
approximately $193,000, $186,000 and $177,000, for the years ended
December 31, 1995, 1994 and 1993, respectively. These plans are not
administered by the Company and contributions are determined in
accordance with the provisions of negotiated labor contracts. In 1994,
the Company elected to withdraw from one of the three union plans to
which it contributes, effective July 1995. The Company will be required
to contribute a withdrawal assessment of approximately $262,000 which
has been included in other accrued liabilities at December 31, 1995.
The employees covered under this plan participate in a separate Company
sponsored defined contribution plan which was established on July 1,
1995. The Company has no present intention of withdrawing from the
remaining two plans and management believes that should the Company
elect to withdraw from these plans, any withdrawal liability would not
be material to the consolidated financial position or operations of the
Company.
(9)QUARTERLY FINANCIAL DATA (UNAUDITED)
The following table sets forth unaudited quarterly financial information for
1995 and 1994:
First Second Third Fourth
QUARTER QUARTER QUARTER QUARTER
(in thousands, except per share amounts)
1995:
Revenues $28,167 34,035 33,864 29,747
Gross profit 7,390 8,810 9,043 7,943
Net income 239 988 1,134 721
Net income per
common share .05 .19 .21 .14
1994:
Revenues $20,455 34,709 36,368 33,846
Gross profit 5,679 8,706 9,517 8,768
Net income (loss) (632) 958 1,314 936
Net income (loss)
per common share (.12) .19 .25 .18
(10)COMMITMENTS AND CONTINGENCIES
The Company has non-cancelable leases for various facilities and equipment
under operating leases. Rental expense was approximately $2.9 million,
$3.0 million and $2.8 million for the years ended December 31, 1995, 1994
and 1993, respectively. Future minimum annual rental payments for the
next five years under these leases as of December 31, 1995 are
approximately $3.1 million for 1996; $2.0 million for 1997; $1.1 million
for 1998; $.4 million for 1999 and $.1 million for 2000.
The Company's building supply centers in Brooklyn, Valley Stream, Congers,
Vails Gate, Hampton and East Hartford are leased from corporations and
partnerships that are controlled by current and past members of
management and/or their families. The terms of the leases with such
affiliated parties, at the time the leases were entered into, were
believed to be no less favorable to the Company than it could have
obtained in arm's-length negotiations with unrelated parties. The
aggregate annual rental on such properties was approximately $2.2 million
in 1995, $2.3 million in 1994 and $2.1 million in 1993.
The Internal Revenue Service is conducting examinations of the Company's
Federal income tax returns for the years 1989 through 1992. Management
believes that the ultimate resolution of these examinations will not
result in a material adverse impact on the Company's consolidated
financial position or operations.
During 1991, the prior owner of property previously leased by the Company
advised the Company that he would be seeking contribution for unspecified
costs and expenses incurred in connection with the remediation of two
leaking underground storage tanks located on the property. In May 1993,
the New Jersey Department of Environmental Protection (DEP) advised the
Company that it was jointly and severally liable, along with the prior
owner, for compliance with the New Jersey regulations governing
underground storage tanks and demanded the submission of a remedial
action workplan. To date, submissions of the workplan and any follow-up
letters have been supplied by the prior owner. The DEP has not required
separate submissions from the Company. In 1994, the prior owner filed a
complaint against the Company which seeks recovery of cleanup costs and
other damages which, at December 31, 1995, range between $300,000 and
$400,000. The Company has notified its insurers of the complaint and
they have agreed to defend the Company but reserve their right to not
indemnify the Company for any losses. The Company continues to deny any
liability and will vigorously oppose the claim. Management does not
believe the ultimate outcome of this matter will have a material adverse
effect on its consolidated financial position or operations.
The Company is a defendant in litigation arising from the normal conduct of
its affairs. Management is of the opinion that any litigation in which
the Company is a defendant is covered by its liability insurance.
<PAGE>
SCHEDULE II
THE STROBER ORGANIZATION, INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
Col.A Col.B Col.C Col.D Col.E
Balance at Charged to Balance at
Beginning Costs and end of
CLASSIFICATION OF PERIOD EXPENSES DEDUCTIONS (1)PERIOD
<S> <C> <C> <C>
Year ended December 31, 1993:
Allowance for doubtful accounts
(deducted from accounts receivable) $1,220,000 1,548,000 732,000 2,036,000
Year ended December 31, 1994:
Allowance for doubtful accounts
(deducted from accounts receivable) $2,036,000 968,000 684,000 2,320,000
Year ended December 31, 1995:
Allowance for doubtful accounts
(deducted from accounts receivable) $2,320,000 566,000 565,000 2,321,000
(1)Deductions relate to uncollectible accounts charged off to the allowance for
doubtful accounts, net of recoveries.
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION SEQUENTIALLY
NUMBER NUMBERED PAGE
<S> <C> <C>
10(s) Contract between the Marda Group of
Building Materials Distributors, Inc. and
International Brotherhood of Teamsters,
Chauffeurs, Warehousemen of Local 807 and
Helpers of America for the period ending
December 3, 2000.
10(bb) Commercial Space Lease dated October 6,
1995 between Michael Albarell and Strober
Building Supply Center, Inc.
10(cc) Agreement dated May 15, 1995 between
Carman Road Realty, Inc. and Broad
Properties, Inc. (as landlord) and Strober
Long Island Building Material Centers,
Inc.
23 Consent of Independent Auditors
27 Financial Data Schedule
</TABLE>
<PAGE>
EXHIBIT 10(S)
Contract between the Marda Group of Building Materials Distributors, Inc.
and International Brotherhood of Teamsters, Chauffeurs,
Warehousemen of Local 807 and Helpers of America
for the period ending December 3, 2000.
<PAGE>
1995-2000
MARDA
GROUP CONTRACT
TRUCK DRIVERS LOCAL UNION
NO. 807
Affiliated with the
INTERNATIONAL BROTHERHOOD OF
TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN
AND HELPERS OF AMERICA
32-43 49TH STREET
LONG ISLAND CITY, NY 11103
TELEPHONE (718) 726-2525
<PAGE>
SECTION 1. UNION SECURITY
(a)Recognition of the Union (Local 807 International Brotherhood of
Teamsters) and the Union Shop Provisions:
In order to carry out the purpose of this agreement all employees shall
be required, as a condition of employment, to be members of the Union, thirty
(30) working days after the beginning of their employment of thirty (30)
working days after the signing of this agreement, whichever is latest.
(b)The Superintendent or man in charge shall, immediately notify the Union
in writing, of the employment of any man who, under this agreement, is required
to be a member of the Union. Upon notice from the Union that any employee who
has been working for more than thirty (30) working days has failed to tender
the periodic dues and initiation fee uniformly required as a condition of
acquiring and retaining membership, the Employer agrees to discharge such
employee within seven (7) days after the receipt of written notice from a
properly authorized official of the Union.
(c)DUES CHECK-OFF. The Employer agrees to accept all appropriate
authorizations from bargaining unit employees with respect to payroll
deductions for Union dues and initiation fees and, following receipt of said
authorization(s), to deduct such dues and initiation fees for all periods of
employment following the 31st day of employment.
SECTION 2. DURATION OF AGREEMENT
This contract shall be operative commencing with the 4th day of December
1995, and shall terminate and expire five (5) years later, on the 3rd day of
December, 2000.
SECTION 3. WORK DAY & WORK WEEK
(a)The regular day's work may commence any time between 5:00 A.M. and 8:00
A.M. All work done before 5:00 A.M. shall be considered overtime. Eight (8)
hours shall constitute a minimum day's work from Monday to Friday inclusive.
All work in excess of eight (8) hours per day shall constitute overtime. The
overtime rate shall be one and one-half (1 1/2) times the straight time rate.
Overtime cannot be refused. The Employer shall give reasonable notice of
overtime where possible.
(b) One (1) hour shall be allowed for lunch
between the hours of 11:30 A.M. and 1:30 P.M.
(c)Where an employee reports for work after the scheduled starting time,
special consideration shall be given to delays caused by emergency conditions
or Acts of God.
(d)Any work done on Saturday shall be considered overtime and paid for at
the rate of time and one-half with a minimum of five (5) hours twenty (20)
minutes work guaranteed.
(e)Any work done on Sunday shall be paid for at two and one-half (2 1/2)
times the straight time rate.
(f)Any work performed on a Saturday holiday will be paid for at three (3)
times straight time plus holiday pay.
SECTION 4. SECOND AND OFF-SHIFT WORK
(a)SECOND SHIFT. In the event any Employer shall provide for and maintain a
second shift of work, which shall be defined as a full shift of work commencing
after 4:00 P.M., the employees engaged in such second-shift work shall receive
their regular rate of compensation provided for in the agreement, plus a second
shift differential of thirty (30) cents per hour.
(b)OFF SHIFT. Any shop may start an "off-shift", commencing at 11:00 A.M.,
pursuant to the following terms and conditions:
i.Seniority shall prevail in the staffing of such a shift.
ii.The shift must be for a minimum of five (5) days.
iii.The persons employed on the shift on Monday remains on the shift for
the entire week.
iv.Employees on such off-shift shall receive a thirty (30) cent per hour
differential.
v.Any shop working a second shift may not work on off-shift.
SECTION 5. TRIAL PERIOD
When an Employer hires additional or replacement employees their trial
period shall be three (3) months.
SECTION 6. REPORTING LATE FOR WORK
Each company shall provide a telephone answering device or service that
employees may access during hours where the place of business is closed.
Where an employee will report to work more than 1/2 hour after the scheduled
starting time, the employee must call said answering device or service in
advance to notify the company of such lateness, except in the case of an Act of
God or a provable extreme emergency.
If the employee fails to do so, the employer shall have the option to send
such employee home when he reports to work.
If the company fails to use the answering device or service and no
Supervisor is present to receive such call, this paragraph shall not be
effective.
SECTION 7. SENIORITY
(a)Seniority shall prevail in that the Employers and employees recognize the
general principle that senior employees shall have preference to work at the
job for which is highest, so long as they are qualified and, where there is
more than one (1) shift, to choose their shift. Seniority does not give an
employee the right to choose a specific unit, run, trip or load.
(b)The job must be manned at all times in that the qualified man or men with
the least seniority must perform the work.
(c)With respect to overtime, seniority shall prevail only as to starting
time (except as set forth in (h) below).
(d) An employee must work thirty (30) days within a sixty (60) calendar
day period before he can be placed on the seniority list.
(e)Seniority shall not apply to employees hired as summer help (employed
between May 1st and July 1st, and terminated prior to October 1st).
(f)Seniority shall be lost by:
(1)Unauthorized leave of absence.
(2)Unauthorized failure to report for work for five (5) consecutive days
when work is available.
(3)Employees who are absent because of a proven illness or injury shall
retain their seniority.
(g)When it becomes necessary to reduce the working force, the last man on
the seniority list shall be laid off first; when the force is again increased,
the man last laid off shall be first to return to work.
(h) Seniority shall not prevail:
(1)With respect to starting time, when warehousemen may be called in
first to load or unload trucks.
(2)With respect to days where there are no deliveries scheduled due to
weather conditions or other unusual circumstances, when warehousemen may be
called in to perform warehouse work only.
(i)Senior warehousemen and drivers shall be asked first to perform any work.
In the event senior men are unable to perform the work, the junior man or men
must then perform the work. The job must be manned.
(j)Drivers who have seniority and become unable to perform work as a
chauffeur shall be given warehouse work, and shall receive warehousemen's pay,
but shall retain payroll seniority.
(k)A driver who has his license revoked cannot "bump" a warehouseman unless
he is qualified to do warehouse work.
SECTION 8. SHOP STEWARD
(a)The Union shall appoint one of its members to act as Shop Steward. It
shall be his duty to see that the conditions of this agreement are not broken
by either the Employer or employees, and under no circumstances shall he be
discriminated against, nor shall he be permitted to stop the job without the
Union's consent.
(b)The Shop Steward shall be granted superseniority for all purposes
including layoffs, rehire & job preferences providing he is capable of doing
such work. The Union reserves the right to replace the Shop Steward at any
time for the good of the Union. The Shop Steward is recognized by the Employer
to have no right to as authorized by the Union.
(c)Shop Stewards shall be permitted reasonable time to investigate present
and process grievances on the employers property without loss of pay during
regular working hours.
Such time spent in handling grievances during the Steward's regular working
hours shall be considered working hours in computing daily and/or weekly
overtime if within the regular scheduled of the Steward.
(d)No Shop Steward shall be discharged without a Business Agent or his
designee being present - as long as such person is present - as long as such
person is present by the end of the workday or prior to the start of the next
business day. The employer shall have the right to suspend such Steward
without pay until such meeting.
SECTION 9. WAGES
(a)SCHEDULE OF WAGES
<TABLE>
<CAPTION>
12/1/95 12/1/96 12/1/97 12/1/98 12/1/99
<S> <C> <C> <C> <C> <C>
JOURNEYMEN $13.83 $14.33 $14.83 $15.33 $16.08
Drivers,
Warehousemen,
Hi-Lo
Operators
and Mixes
INEXPERIENCED $11.33 $11.83 $12.33 $12.83 $13.58
Straight
Truck Drivers,
Warehousemen,
Hi-Lo Operators
and Mixes
</TABLE>
(b) SPECIAL SKILLS - WAGE RATES
i.Drivers employed on tractor trailers and third axle vehicles shall
receive an additional twenty-five (25) cents per hour above the wages paid to
an experienced driver, and operators of high-lift booms going over two (2)
stories up shall receive an additional thirty-five (35) cents per hour with not
less than eight (8) hours pay at the rate on any day on which they operate such
vehicles.
ii."Crane Operator" shall receive the same rate of wages as straight
truck driver. This applies only to crane on an automotive truck. Does not
apply to overhead cranes in warehouse.
iii.Any man who performs more than two (2) hours of overtime work shall
be entitled to a twenty (20) minute meal period after the tenth hour of work.
iv.Drivers on overnight trips shall be reimbursed for all reasonable
expenses including supper and breakfast.
(c)NEW EMPLOYEES. Any new employee who does not have immediate prior
experience in the job of warehousing and distributing building materials in
Greater New York Metropolitan area shall be paid a starting wage of $2.50 per
hour below journeyman rate and shall, starting December 4, 1995, receive fifty
(50) cents increases for each four (4) months work completed, until such time
as he reaches driver's pay.
An employee who regularly operates a "boom" shall be considered an
experienced employee.
SECTION 10. PAID HOLIDAYS
(a)New Year's Day, Lincoln's Birthday*, Washington's Birthday*, Memorial
Day, July 4th, Labor Day, Thanksgiving Day, Day after Thanksgiving, Christmas
Day, and, at the election of the employee either Yom Kippur or Good Friday.
(b)An Employer, with the consent of a majority of his employees, may change
any holiday set forth above for any other holiday.
(c)If men have worked on any of the days listed as holidays, they shall be
paid twenty (20) hours pay for minimum of eight (8) hours work. If men have to
work on any of the starred holidays, they shall be paid sixteen (16) hours pay
for minimum of eight (8) hours work. Overtime work on a holiday shall be paid
for at three (3) times straight time pay.
(d)If a holiday falls on a day which would otherwise be a pay day, the
Employer shall pay wages to employees the day before the holiday.
(e)Any employee covered by this agreement shall work the entire day before
and the entire day after the holiday receive the holiday pay, unless that
employee was suffering from a bonafide illness, supported by a doctor's note or
a compensatory injury.
(i)Any man who is unable to work the day before and the day after the
holiday because his Employer has shut down his plant or warehouse for less than
a full week, shall, nevertheless receive the holiday pay.
(ii) Any man who fails to work the entire day before and the entire day
after the holiday because he has been suffering a bonafide illness or workmen's
compensation injury which keeps him out of work for five (5) consecutive work
days (excluding holidays) shall nevertheless receive the holiday pay.
(iii) Any man who suffers a bonafide illness or Workmen's Compensation
injury which keeps him out of work for more than thirty (30) consecutive days
shall receive payment for all holidays falling within the first thirty (30)
days of that continuing illness or injury.
(f)When a shop is open on a starred holiday, the job must be adequately
manned. Any employee who because of the seniority status is asked to work the
job, and refuses, or any employee who agrees to work the day and fails to show
up for work shall forfeit the holiday pay unless such failure is the result of
a compensatory injury or a bonafide illness supported by a doctor's note.
SECTION 11. PAID VACATIONS
(a)Computation. All vacation time shall be computed from the anniversary
date of the contract.
(1)Vacation benefits for any contract year (December 1 - November 30)
shall be based upon days worked during the prior contract year. An employee
shall be deemed to have worked the entire contract year once he completes 170
days of actual work.
An employee who worked less than 170 days during the prior contract year shall
receive a pro rata benefit pursuant to the following formula:
# days worked
______________ X full vacation benefit = pro rata vacation
170
(b)Vacation Schedule. The Employer shall, during the current contract year,
grant annual vacations with pay as follows:
1) Each newly hired man will receive one (1) week of vacation after one (1)
year of service.
2) Each employee with two (2) years or more of service, but less than five
(5) years of service with his Employer, shall receive two (2) weeks of
vacation.
3) Each employee with five (5) years or more of service, but less than
fifteen (15) years of service with his Employer, shall receive a third week of
vacation. The third week shall be taken during the winter months only.
4) Each employee with fifteen (15) years or more of service with his
Employer shall receive four (4) weeks of vacation, two (2) weeks of which shall
be taken in the following summer months.
5) "Summer vacation" shall commence June 21st and terminate September 21st.
"Winter vacation" shall commence December 15th and terminate February 28th.
6) With respect to any employee who is entitled to receive either three (3)
or four (4) weeks of vacation, the Employer shall have the option to schedule
one (1) week between Christmas and New Year's Day.
7) The Employer and employee, with the consent of the Union, may provide for
an alternate vacation date.
8) No more than the per cent (10%) of the working force, or one (1)
man, whichever is grater, shall be permitted to take a vacation at any time.
9) Pay for unused vacation shall be given within ten (10) days of the end of
the contract year.
10)If a paid holiday occurs during the week of vacation of any employee, he
shall receive either an additional eight (8) hours of pay or an additional day
off, with pay.
11)An employee must have received pay for 270 days during the preceding
contract year to earn his full vacation. Employees receiving pay for less than
170 days shall be entitled to pro-rated vacation, which shall be determined by
dividing the number of days paid for by 170 and multiplying the resulting
fraction by the number of days of vacation he would be entitled to had he
worked 170 days.
12)Any employee on the Seniority List whose employment is terminated for any
reason shall receive vacation pay pursuant to the provisions of this section.
13)Vacation pay shall be at the prevailing rate.
(c)Example of Holiday Pay Computation:
START WORK 6/1/95
<TABLE>
<CAPTION>
12/1/95 12/1/96 12/1/97
<S> <C> <C> <C>
VACATION EARNED 4 DAYS 5 DAYS 10 DAYS
VACATION TAKEN
12/1/95 12/1/96 12/1/97
170 DAYS WORKED
VACATION EARNED 5 DAYS 10 DAYS
VACATION TAKEN
</TABLE>
SECTION 11A. VACATION BONUS
All employees shall receive a bonus of one (10) hour's pay for each full
year of service, payable with the last week of vacation.
SECTION 12. SICK LEAVE
All sick leave shall be computed as of the contract anniversary (December
1).
(a)All employees who on an anniversary date of the contract have not
completed one (1) year of employment shall be entitled to one (1) day of sick
leave for each three (3) months they have worked during that initial year.
(b)Sick leave benefits for any contract year (December 1 - November 30)
shall be based upon days worked during the prior contract year. An employee
shall be deemed to have worked the entire contract year once he completes 170
days of actual work and shall be entitled to five (5) days sick leave.
(c)An Employee who worked less than 170 days during the prior contract year
shall receive a pro rata benefit pursuant to the following formula:
# days worked
_____________ X 5 days = pro rata sick leave
170
Any employee who has worked ninety (90) days during the contract year and
who then goes on Workmen's Compensation shall have the compensation time
included in computing sick leave.
(d)Unused sick leave to be paid within ten (10) days from the end of the
contract year.
SECTION 13. PERSONAL DAYS
Each employee, upon entitlement to Holiday Pay shall receive two personal
days to be taken at his discretion, although no more that 10% of the workforce
may take Personal Days at one time (Seniority prevails).
SECTION 14. BEREAVEMENT LEAVE
In case of death in an employee's immediate family, (i.e., spouse, mother,
father, sister, brother and children), the Employer shall grant such employees
a maximum of three (3) days off, with pay, for express purpose of attending
services for the deceased. Death certificate or other satisfactory proof of
death must be submitted to the Employer. Bereavement pay will apply only to
work days missed during the three (3) days following death of relative.
Any man attending funeral services for his father-in-law or mother-in-law
shall receive day of funeral off, with pay.
The employee Must be on the seniority list for at least six (6) months to be
entitled to this leave.
SECTION 15. MAN HURT AT WORK
B. If an employee is treated by a Workmen's Compensation doctor at the time
he sustains a compensable injury, and the doctor directs him to go to his home
or a hospital because of the seriousness of his injury, the worker shall
receive a full day's pay for that day.
SECTION 16. DRUG & ALCOHOL TESTING PROGRAM
The Union and Association agree to a Drug and Alcohol Testing Program
pursuant to the provisions of the Federal Highway & Transportation Drug Testing
Act a more fully set forth in "Addendum A" to this contract. Addendum "A"
shall be continuously updated so as to conform with all relative Federal and
State laws and all current, agreed-upon operating procedures. The Association,
with consent of the Union, may produce updated versions of said Addendum "A".
SECTION 17. PHYSICAL EXAMINATIONS
(a)ICC PHYSICALS. All employees shall be required to pass an ICC physical
examination including any drug testing as set forth in Addendum "A".
(b)PROLONGED ABSENCE - PHYSICAL EXAMINATION
1)Any employee absent for more than ten (10) consecutive days shall be
required to present a letter from his doctor to the effect that he is fit to
return to work. Such letter must acknowledge the nature of the work performed
by the employee.
2)If an employee is absent for more than thirty (30) days, the company
shall have the right to require him to submit to an examination by the
Company's physician, which may include testing for substance abuse.
SECTION 18. CALL-IN PROVISIONS
(a)Any employee who reports to work without having been notified at least
two (2) hours prior to his assigned starting time that no work was available
for him shall be entitled to eight (8) hours call-in pay.
(b)Any employee who reports in sick in the morning must phone the Employer
prior to quitting time to advise whether he will be available for work the
following day. If the employee reports for work without having phoned the
Employer, the Employer may send him home without pay.
(c)Any employee who advises his employer that he will miss more than one (1)
day of work is not required to call in each day. However, he MUST call in
prior to quitting time of the day before he wishes to return to work. If he
fails to so notify the Employer, he may be sent home without pay.
SECTION 19. LAYOFFS
(a)LAYOFF NOTICE. employees wo are laid off for a period of more than one
(1) week, shall be given notice of the layoff prior to closing time the day
before the layoff.
(b)NOTICE TO RETURN TO WORK. Any employee who is on layoff, must return to
work within three (3) working days from the time a telegram is received
advising him that work is available, provided that any employee leaving his
residence advises his Employer of the address to which notice can be delivered.
If he fails to provide said address, the three (3) working days shall be
computed from the first date delivery was attempted.
SECTION 20. STRIKE BOUND JOBS
It shall not be a violation of this agreement, and it shall not be cause for
discharge or disciplinary action, in the event an employee refuses to enter
upon any property involved in a primary labor dispute or refuses to go through
or work behind any primary picket line, including the primary picket lines at
the Employer's place of business.
SECTION 21. MILITARY SERVICE
Men called for military service by the United States Government shall resume
seniority with their form Employer when discharged from military service.
SECTION 22. EXTRA TRUCKING
The Employer agrees to refrain from using the services of any person who
does not observe at least the wages, hours and conditions of employment set
forth in this agreement.
SECTION 23. HELPER PROVISIONS
No driver will be required t make a difficult delivery above or below the
street level without assistance.
SECTION 24. COFFEE BREAK
There shall be a fifteen (15) minute break between 9:15 A.M. and 10:15 A.M.
but the shop or job shall remain manned at all times.
SECTION 25. TERMINATION OF EMPLOYMENT
Employees who are laid off or who are not otherwise employed by their
Employer, for more than one (1) year, shall be deemed to have left employ of
Employer.
SECTION 26. DISCHARGE OR SUSPENSION
(a)The Employer shall not discharge nor suspend any employee without just
cause and written notice of discharge or suspension must set forth the specific
reasons for such action. In respect to discharge or suspension, the Employer
shall give at least one (1) warning notice of the specific complaint against
such employee, in writing, and a copy of the same to the Union and the Shop
Steward, except that no warning need be given to any employee before he is
discharged or suspended for any of the causes listed in Section B below or
suspended for theft of time. The Employer shall not discipline any employee
without just cause based upon valid written warning notices sent within the
applicable time periods set forth hereinafter.
(1)No disciplinary notice shall be considered valid unless it is:
(a)in writing
(b)has been delivered to the employee
personally or by certified mail to the address given to the Employer by the
employee or his Shop Steward and sent certified mail to the Union, and,
(c)sets forth therein the specific
grounds and circumstances upon which it is based.
(2)No warning letter or letter of suspension shall be considered valid
unless issued by the Employer within seven (7) days from the date of the
Employer knew of or reasonably should have become aware of the specific grounds
and circumstances upon which it is based.
(b)CAUSES FOR IMMEDIATE DISCHARGE OR SUSPENSION SHALL BE AS FOLLOWS:
(1) Dishonesty.
(2)Under influence of liquor or drugs while on duty.
(3)Unauthorized persons on vehicle.
(4) Proven recklessness.
(5)Direct refusal to obey orders given by the proper party unless such
orders jeopardize life or health.
(6)Calling an unauthorized strike or a walkout.
(7) Assault.
(8)Failure of employee to notify his Employer within twenty-four (24)
hours of any accident in which he was involved while using company equipment
or while in employ of company.
(9)Operation of a company vehicle while having a suspended or revoked
license (provided the employee had actual knowledge of the suspension or
revocation).
(c)ABUSE OF EQUIPMENT AND MATERIALS AND VIOLATION OF SAFETY RULES
Abuse of equipment and materials or continued failure to comply with
company safety regulations which are part of the Union approved safety program
shall be grounds for discharge subject to arbitrator's award.
In the event of dispute, any matter herein shall be decided as provided
in Section 27 of this agreement.
(d) THEFT OF TIME
Although theft of time shall not be cause for immediate discharge, it is
recognized as an offense for which severe disciplinary measures may be invoked.
SECTION 27. ARBITRATION
Should any dispute arise between the Employer and the Union or any Employer
and employee the dispute shall be submitted to the New York City Trucking
Authority as impartial arbitrator and said arbitrator's decision shall be final
and binding upon parties to the dispute.
(a)THE UNION SHALL SERVE A COPY OF ITS REQUEST FOR ARBITRATION UPON THE
EMPLOYER AND THE ASSOCIATION WITHIN SEVEN (7) DAYS OF THE OCCURRENCE OF THE
ACTION THAT IS BEING ARBITRATED.
SECTION 28. JURY DUTY PAY
Each employee shall receive $40 per day for each day served on jury duty
with a maximum of ten (10) days benefit juring the life of this contract.
To receive this benefit the employee must:
(a)Notify the Employer at least one (1) week in advance that he or she is
subject to call for jury duty.
(b)Notify the Employer on each morning he or she actually serves on jury
duty and,
(c)Provide actual proof of service on a jury.
SECTION 29. SEVERANCE PAY
In the event an employer ceases operating or moves its operations more than
fifty (50) miles from its previous location and an employee is not given the
opportunity to follow the job, the Employer shall pay one (1) day's wages for
each full year of service.
SECTION 30. MAINTENANCE OF STANDARDS
The Employer agrees that all conditions of employment relating to wages,
hours of work, overtime differentials and general working conditions which are
better, higher or more favorable to the employer's employees than those
provided for by of under the Agreement shall be maintained and the Employer
agrees that its employees shall continue to enjoy these better, higher and more
favorable practices, standards and/or benefits.
SECTION 31. HEALTH BENEFITS
During the term of this agreement the Employer shall participate in Local
807 Labor-Management Health Fund ("Health Fund"). The benefits of that program
shall be those prescribed by the Trustees of the Fund.
(a)The Employer shall continue to contribute the sum of $2.59 per hour to
said fund.
SECTION 32. PENSION BENEFITS
During the term of this agreement the Employer shall participate in Local
807 Labor-Management Pension Fund ("Pension Fund"). The benefits of that
program shall be those prescribed by the Trustees of the Fund.
a)The Employer shall contribute $2.835 per hour into the fund for all men
hired prior to December 1, 1978 and $1.69 for all men hired after that date.
SECTION 33. INCREASES IN WELFARE AND PENSION CONTRIBUTIONS
The following Welfare/Pension increases shall be allocated by the Welfare
and Pension Fund Trustees amongst the two funds:
December 1, 1996 35 cents
December 1, 1997 35 cents
December 1, 1998 35 cents
December 1, 1999 15 cents
SECTION 34. CONTRIBUTION LIMITATIONS
(a)All of the Health and Pension Fund contributions as set forth in
Paragraphs 29, 30 and 31, including additional contributions, shall be made for
all hours worked with a maximum of forty (40) hours in the Monday through
Sunday week.
(b)No contribution shall be due for unused sick days for which the employee
is paid a lump sum, at the end of the contract year, on vacation pay where an
employee works during his vacation are received double pay for that period or
for jury duty pay.
SECTION 35. HEALTH AND PENSION-MISCELLANEOUS RULES
(a)The Trustees of the Health and Pension Funds shall establish rules which
shall include, among other things, the requirements for eligibility,
distribution of Health and/or Pension Fund assets and the rights to
beneficiaries thereunder. The Trustees of said Funds shall also set forth the
rules and regulations governing the administration of the Health and Pension
Funds.
(b)the Trustees of the Health and Pension Funds may assess penalties for any
and all delinquent payments in amounts which they, in their discretion, deem
justified to offset the added cost of collection.
(c)In the event any Employer defaults in the payment of Health or Pension
Fund contributions or penalties and notice of such default is forwarded to said
Employer via ordinary mail by the Administrator of Funds and, if said default
is not paid within ten (10) working days after said notice of default was
mailed, then the provisions for arbitration under this agreement shall be
deemed cancelled, withdrawn and waived by said Employer and the Union shall
thereupon order and enforce a strike against sad Employer in default which
shall not be considered a breach of the agreement.
(d) Each Employer shall within twenty (20) days following the last day of
the preceding month submit to the Administrator of the Health and Pension Funds
a statement, under oath, setting forth the names and social security number of
all employees, both Union and non-Union, who have worked during the preceding
month in any classification covered by the terms of this agreement and such
statement shall set forth the contributions made on behalf of such employees.
The Health and Pension Funds Administrators, on his own motion, shall have the
right to inspect the books and/or records relative to such statement and to
interview all covered employees of the Employers. The Administrator shall
forthwith report, in writing, the results of any inspection or interview of the
Employers and the Trustees.
SECTION 36. NON DISCRIMINATION
Al employees covered by this agreement shall be treated equally and without
discrimination as to race, creed, color, national origin, sex, age, handicap,
marital status, sexual orientation or affectional preference in all employment
decisions, including, but not limited to hiring, compensation, training,
promotion, demotion, transfer, layoff and termination, and all other terms and
conditions of employment.
SECTION 37. UNION DISCLAIMER
The Union agrees that it will neither sanction nor support any wildcat
strike, slowdown or curtailment in the operation of any MARDA member. The
Association agrees that it will not during the term of the Agreement engage in
a lockout.
SECTION 38. SEVERABILITY
In the event any court shall hold any portion of this agreement to be in
violation of either federal or state law, then the clause shall be deemed
struck from this agreement and the balance of the agreement shall remain in
full force and effect.
SECTION 39. CDL LICENSES
Any employee hired after December 4, 1995 may be required, as a condition of
employment, to obtain a Commercial Drivers License within 120 days of
employment.
Employees hired prior to December 4, 1995 shall not be required to obtain
said license unless an agreement had been reached prior to December 4, 1995 for
having to obtain said license. here possible the Employee will provide
training.
SECTION 40. MODIFICATIONS
Neither the Employer nor any worker or group of workers shall have the right
to modify or waive any provision of this agreement without the knowledge and
written consent of a business agent. Any such agreement without the consent
shall be null and void.
SECTION 41.
The following companies have authorized the MARDA GROUP OF BUILDING
MATERIALS DISTRIBUTORS, INC. to sign for them:
American Roofing & Metal Supply Corp.
Belco Steel Co.
Brothers Roofing Supplies Co., Inc.
Dryolin Corp.
Florence Corp.
H. Verby & Co., Inc.
Huntington American Building Supply Corp.
J & S Supply Corp.
Kamco Supply Corp.
Long Island Tinsmith Supply Corp.
McDonald Metal & Roofing Supply Corp.
National Tinsmith Distributors, Inc.
Roofers R.S. Supply Co., Inc.
Sheet Metal Mfg. Co., Inc.
The Stainless Place Inc.
Strober Bros., Inc.
Strober Long Island Building Material Centers, Inc.
FOR THE UNION FOR THE ASSOCIATION
International Brotherhood of The MARDA Group of Building
Teamsters, Chauffeurs, Material Distributors, Inc.
Warehousemen Local 807,
and Helpers of America
/S/ /S/
By: Business Agent By: ALLEN SWERDLICK, President
/S/
By: Asst. Trustee
<PAGE>
EXHIBIT 10(BB)
Commercial Space Lease dated October 6, 1995
between Michael Albarell and
Strober Building Supply Center, Inc.
<PAGE>
COMMERCIAL SPACE LEASE
THIS LEASE made this ___ day of _____ by and between MICHAEL ALBARELL
(hereinafter called "Lessor") and STROBER BUILDING SUPPLY CENTER, INC.,
(hereinafter called "Lessee").
WITNESSETH:
WHEREAS, Lessor is the equitable owner of a certain parcel of land at 901
WEST LEHIGH STREET, CITY OF BETHLEHEM, NORTHHAMPTON COUNTY, PENNSYLVANIA upon
which is constructed a 60,000 square foot industrial warehouse.
WHEREAS, Lessor desires to lease to Lessee, and Lessee desires to lease from
Lessor, certain space in said industrial warehouse.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound, the parties agree as follows:
1. LEASED PREMISES. Lessor demises and leases to Lessee, and Lessee hires
and takes from Lessor 28,500 square feet of warehousing space in the western
end of the building located at 901 WEST LEHIGH STREET, BETHLEHEM, PA. Said
site is hereinafter referred to as the "Building", and said 28,500 square feet
of demised area is hereinafter referred to as the "Leased Premises".
2. TERM OF LEASE. Subject to the terms and conditions of the Lease, the
initial period of the lease shall be two year term (24 months), to commence on
DECEMBER 1, 1995. Initial term shall expire at the end of 24 months from the
commencement date of the lease. Two additional 5 year options will be
available to the Lessee which will commence on December 1, 1997, if the tenant
choose to exercise said option. The first option will run from December 1, 1997
to November 30, 2002. If the second 5 year option is exercised by the Lessee,
it will commence on December 1, 2002 and will remain in effect until November
30, 2007.
Lessee will give the Lessor 60 days written notice of the Lessee's intent to
exercise any of the stated 5 year options prior to the commencement dates
stipulated above.
If Lessee chosen not to exercise first 5 year option at end of initial 24
month term, the Lessee agrees to reimburse the Lessor for all unamortized costs
incurred in constructing and finishing the Leased Premises as initially agreed
upon the Lessor and Lessee. Excluded from this cost reimbursement will be the
value of any of the materials supplied by the Lessee to the Lessor's chosen
contractor. The Lessee agrees to only reimburse for unamortized labor and
material costs that the Lessor supplied, as documented in Exhibit "A". The
amortization of the documented fitout costs will be on a 5 year schedule
commencing on the December 1, 1995
3. BASE RENT. Lessee shall pay Lessor an annual rental rate of $2.10 per
square foot based on 28,500 square feet. This translates into annual payment
of $39,850 or $4,987.50 per month. ($2.10/square foot x 28,500 square feet by
12 months) as rent for the use of the Leased Premises (hereinafter "Base
Rent"). The Base Rent shall be paid in consecutive monthly installments,
beginning on the first day of the initial lease term and continuing on the same
day of each month thereafter throughout the lease term and any options period
exercised by lessee.
In the event the Lessee executes either of the five year options subsequent
to the initial 24 month term, the base rent during the option periods will
be as follows:
FIRST FIVE YEAR OPTION PERIOD DECEMBER 1, 1997 - NOVEMBER 30, 2002
Years 1-3= Base rent remains at $2.10 per
square foot. Tenant shall pay its
pro-rate share of the annual
increase in the real estate taxes
on the leased premises in excess
if the real estate taxes assessed
in the tax year 1996.
Years 4-5= The base rent of $2.10 will be
adjusted by the percentage
increase in the Consumer Price
Index as determined by the
Department of Labor for the
Allentown-Bethlehem, Pennsylvania
area. The increase will be
determined by the average of the
annual percentage increases in the
index that occurred between
December 1, 1996 - December 1,
2000. This average increase is
capped at 3% per year. Tenant
pays its pro-rate share of the
annual increase in real estate
taxes on the leased premises.
SECOND FIVE YEAR OPTION PERIOD DECEMBER 1, 2002 - NOVEMBER 30, 2007
The base rent during this period shall be the base rent existing at the end
of the first option period increased by the percentage annual increase in
the above stated Consumer Price Index that occurred between December 1, 2000
- December 1, 2002 not to exceed an increase of 3% per year. Tenant shall
pay its pro-rata share of the annual increase in the real estate taxes
assessed on the leased premises.
In the event that the commencement date of the term of this Lease shall be
on the day other than the first day of any calendar month, Lessee's first
payment of base rent shall be prorated for the fractional month. In such
event Lessee shall pay, on the commencement date of the term, a prorated
amount for the fractional month between the commencement date and the first
day of the first full calendar month of the term hereof, prorated on a per
diem basis upon a thirty (30) day month. Tenant shall provide owner with
payment on the First (1st) of each month over the life of the lease.
4. IMPROVEMENTS. Lessor will deliver to Lessee an initial area of 28,500
square feet, which will be unfinished and open warehouse space to the extent
that there will be concrete flooring, lighting, no heat, except for the
office/showroom finish the Lessor will construct for the Lesee. Said
office/showroom area will be constructed according to all city, state, and
federal construction code requirements and will have a layout as shown in
Exhibit A. Also, the Lessor will construct an enclosed, heated storage room to
be contiguous to the office area. The storage room will be for the storage of
the Lessee' products which are subject to freezing.
The Leased Premises area will be secured and self-contained. With respect
to any future improvements of the Leased Premises beyond those defined, Lessee
will inform Lessor in writing of any proposed changes, alterations, or
improvements for Lessor's review and approval. Lessee shall make no such
change, alteration or improvement without the prior written approval of Lessor.
Any improvement will be at the Lessee's sole expense and will be mutually
exclusive of the improvements and terms previously described in this Lease.
5. EXPENSES ASSOCIATED WITH LEASED PREMISES. Lesee will be responsible for
Electricity usage and trash removal associated with the Leased Premises. Said
electrical service will be metered separately and will be the Lessee's sole
responsibility. Lessor shall be responsible for all other expenses associated
with Leased Premises including: real estate taxes and real estate insurance,
snow removal, and building maintenance beyond daily repairs. Said electrical
service will be metered separately and at Lessor's expense.
6. IMPROVEMENTS, ALTERATIONS AND TRADE FIXTURES.
A) Lessee may not without lessor's consent, make alterations to the demised
rental premises.
B) After written approval from the Lessor and in making any alterations,
additions and improvements to the demised premises and in installing such
chattels, equipment and fixtures, Lessee prior to commencing any work shall
file or cause its contractor to file in the appropriate office a waiver of
mechanic's liens binding upon contractor and all subcontractors and material
men and shall thereafter promptly pay all contractors and material men so as to
minimize the possibility of a lien attaching to the demised premises or the
Building, and should any such lien be made or filed, Lessee shall bond against
or discharge the same within ten (10) days after written request by Lessor. If
Lessee shall fail to cause such lien to be bonded against or to be discharged
within the period aforesaid, than, in addition to any other right or remedy
which Lessor may have under this Lease at law or in equity, Lessor may, but
shall not be obligated to, discharge the same either by paying the amount
claimed to be due or by procuring the discharge of such lien by deposit or by
bonding proceedings and, in any such event, Lessor shall be entitled, if Lessor
so elects, to compel the prosecution of any action for the foreclosure of such
lien by the lienor with interest, costs and expenses. Any amount so paid by
Lessor and all costs and expenses incurred by lessor in connection therewith,
together with interest thereon at the highest rate permitted by law, but in no
event higher than eighteen (18%) percent per annum from the respective dates of
Lessor's making of the payment and incurring of the cost and expense, shall
constitute additional rent payable by Lessee under this Lease and shall be paid
by Lessee to Lessor on demand.
If alternation pre-approved, all trade fixtures hereafter installed by
Lessee in the demised premises shall be new and, shall remain the property of
Lessee and shall be removable by Lessee at the expiration of the earlier
termination of the term of this Lease provided that: (1) Lessee shall not at
such time be in default under this Lease and (2) in the event of the removal of
any or all such trade fixtures Lessee shall promptly restore the damage done to
the premises by such removal. Should Lessee fail to so remove Lessee's trade
fixtures and/or to so restore the premises, Lessor may do so, collecting at
Lessor's option, the cost and expense thereof as additional rent, upon demand.
Any such trade fixtures which are not removed and those which by the terms of
the Lease are not removable by Lessee at or prior to any termination of this
Lease including, but not limited to, a termination by Lessor pursuant to this
Lease, shall unless Lessor gives Lessee notice to remove any or all of such
trade fixtures, be and become the property of Lessor (without any obligation by
Lessor to pay compensation for such trade fixtures). In the event Lessor gives
Lessee such notice to remove any or all of such trade fixtures, Lessee shall
promptly remove such of the trade fixtures as any be specified by Lessor in
such notice.
7. USE OF LEASED PREMISES.
A) Except as otherwise specifically provided herein, Lessee shall
continuously occupy and use the demised premises solely for the retail,
wholesale, warehousing, and distribution operations of BUILDING MATERIALS which
shall be the sole permitted use, and Lessee will not use or permit or suffer
the use of the demised premises for any other business or purpose.
B) The Lessee will have use of four designated parking space at the main
entrance of the Leased Premises as well as parking for 8 to 12 employees and
access to the rear portion of the lot enclosed with a chain link fence. The
chain link fence area will be used by the Lessee only for the loading/unloading
of materials/supplies in the operation of their business. See Exhibit ___.
8. SCHEDULE OF RULES AND REGULATIONS. Lessee covenants and agrees that
Lesee at its own cost and expense:
A) Will keep all exterior and interior portions of the demised premises in a
clean, orderly and sanitary condition and free of refuse and debris.
B) Will comply with all laws and ordinances and all rules and regulations of
governmental authorities and all recommendations of the Association of Fire
Underwriters, Factory Mutual Insurance Companies, the Insurance Service
Organization of Pennsylvania, or other similar premises by Lessee.
9. CASUALTY. If the Leased Premises or any portion thereof shall be
partially damaged by fire or other casualty, the same shall be repaired as
speedily as possible at the expense of Lessor. If the damages shall be so
extensive as to render the Leased Premises untenantable, or if as a consequence
of any fire or other casualty or Lessor's repair activities on the Leased
Premises, Lessee is unable to obtain access to the Leased Premises or Lessee is
unable to reasonably utilize the Leased Premises for the purposes set forth
hereinabove for a period of time in excess of twenty-four (24) hours, then all
rent hereunder shall abate until such time as the Leased Premises shall be made
tenantable or Lessee's access is unimpeded or Lessee is able to reasonably
utilize the Leased Premises for the purposes set forth hereinabove. If the
Leased Premises shall be totally destroyed by fire or other casualty, Lessee
shall pay all rent and other sums hereunder due and accrued up to the time of
such destruction, and thereafter this Lease shall terminate and come to an end.
In no event shall Lessor be liable for any damage, compensation of claim by
reason of any inconvenience or annoyance arising from the necessity of
repairing any portion of the Leased Premises or Building, or the termination of
this Lease by reason of damage to or the destruction of the Leased Premises or
any portion of the Building by fire or other casualty.
10.EMINENT DOMAIN. If during the term of this Lease, as a result of a
condemnation proceeding, the Building is taken and the Leased Premises cannot
thereafter be reasonably used for the purposes provided in this Lease, then
this Lease shall terminate and come to an end on the date Lessee is deprived of
such reasonable use of the Leased Premises. Lessee shall pay all rent and
other sums hereunder due and accrued up to the time of such termination. In
the event of a taking which does not result in the termination of this Lease,
the rent hereunder shall abate, but Lessor shall use as much of the
condemnation award as may be necessary to restore the Leased Premises and the
Building to as nearly a useful and orderly condition as they existed prior to
the taking. In the event of any condemnation or acquiring in lieu of the
exercise of eminent domain, Lessee shall have no claim against Lessor or
against the condemning authority for the value of any leasehold estate or for
the value of the unexpired term of this Lease. All compensation awarded or
paid upon a total or partial taking of the Leased Premises or the Building
shall belong to and be the exclusive property of Lessor without any
participation by Lessee. However, Lessee shall not be prohibited from
prosecuting a claim directly against the condemning authority for loss of
business, or for damage to, or cost of removal of, trade fixtures, furniture
and other personal property belonging exclusively to Lessee, provided, however,
that no such claim shall be made by Lessee which would in any manner diminish
or adversely affect any award to Lessor.
11.AFFIRMATIVE COVENANTS OF LESSEE. Lessee covenants and agrees that it
will, without demand, during the lease term:
A) Pay all Base Rent, in a timely fashion as previously stipulated.
Lessor's acceptance of any such payments after due date shall not excuse delay
upon subsequent occasions, or constitute or be construed as a waiver of any of
Lessor's rights.
B) Keep the Leased Premises clean and free of refuse matter and make all
necessary daily repairs and non-structural replacements, and generally keep the
Leased Premises in as good of order and repair as the same is on the day Lessee
assumed possession thereof, reasonable wear and tear and damage by accidental
fire or other casualty not occurring through the negligence of Lessee or those
employed by acting for Lessee alone excepted.
C) Comply with any and all requirements of any of the constituted public
authorities, including but not limited to the terms of the State or Federal
statute or local ordinance or regulation applicable to the Leased Premises or
to Lessee's use thereof. Lessee agrees to save Lessor harmless from any and
all penalties, fines, cost or damages from Lessee's breach of this covenant.
D) Use every reasonable precaution against accidents and fire, and give
Lessor prompt written notice of any accident, fire or damage occurring on or to
the Lease Premises.
E) Peaceably deliver up and surrender possession of the Leased Premises to
Lessor at the expiration or sooner termination of this Lease, promptly
delivering all keys for the Leased Premises to Lessor.
G) Give the Lessor 60 days written notice of Lessee's intent to exercise any
renewal options previously defined.
12.NEGATIVE COVENANTS OF LESSEE. Lessee covenants and agrees that it will
do none of the following things:
A) Assign, mortgage or pledge this Lease, or underlet or sub-lease the
Leased Premises, or any part thereof, or permit, any other person or entity to
occupy the Leased Premises, or any part thereof, without the prior written
consent of Lessor. The parties hereby agree and declare that any such
assignment, mortgage or pledge of this Lease, or underlet or sub-lease of the
Leased Premises, without the prior written consent of Lessor, such consent not
to be unreasonably withheld, shall be null and void, and shall constitute a
material breach of this Lease by Lessee, entitling Lessor to exercise any and
all of the remedies set forth herein.
B) Use or operate any machinery that, in Lessor's opinion, is harmful to the
Leased Premises or disturbing to other lessees occupying the Building.
C) Remove, attempt to remove, or manifest an intention to remove Lessee's
goods or property from or out of the Leased Premises without having first paid
and satisfied Lessor for all Base Rent, and other sums which are herein
provided to become due during the life of the lease term.
D) Bring into or permit to be kept in the Leased Premises and odorous,
dangerous, toxic, or explosive substance without written consent of Lessor.
E) Conduct itself or permit its agents, employees, invitees or guests to
conduct themselves in a manner which, in Lessor's reasonable judgment is
improper or unsafe, or interferes with the rights granted by Lessor to other
Lessees of the Building.
F) Do or permit to be done anything that might constitute a public or
private nuisance.
13.INSPECTION AND REPAIR OF LEASED PREMISES. Lessee covenants and agrees
that Lessor and its agents shall have the right at all times, upon reasonable
advance notice (24 hours) to Lessee, to go upon and inspect the leased Premises
and every part thereof, and at its option, to make repairs, alterations or
additions to the Leased Premise or to any other portion of the Building, so
long as lessor's presence on the Leased Premises or in the Building does not
absolutely prohibit Lessee's conduct of business on the Leased Premises.
During the Life of Lease term, Lessor shall have the right to exhibit the
Leased Premises to prospective Lessees only during the last 6 months of the
initial 24 month lease period or during the last 6 months of any exercised
lease option period.
14. SIGNS.
Lessor agrees to install signage designating the ingress and egress to Leased
Premises along with a canopy over the entrance way to the Lessee's
office/showroom area in order to designate Lessee's location within the
Building. See Exhibit ___.
15.ACTS OBJECTIONABLE TO INSURERS. Lessee agrees that it will not do, nor
suffer to be done, upon the Leased Premises, the Building, any act, matter or
thing objectionable to insurance companies, where by the fire insurance or any
other insurance now in force or hereafter placed upon such property or any part
thereof shall become void or suspended, or whereby the same shall be rated at a
more hazardous risk, or employ any person or persons objectionable to such
insurance companies. In the event of a breach of this covenant, Lessee agrees
to pay lessor, as additional rental, any increases in insurance premiums caused
in any way by the occupancy of the lessee.
16.DEFAULT BY LESSEE. In the event Lessee does not pay in full any
installment of Base Rent, or any other sum herein agreed to paid by Lessee, on
or before the day the same is due and payable hereunder, or in the event Lessee
violates or fails to perform or otherwise breaches any other term, covenant or
condition set forth in this Lease and fails to cure such default within thirty
(30) days after written notice thereof from Lessor, or in the event Lessee
shall become insolvent or makes an assignment for the benefit of creditors, or
shall file a petition under any Section or Chapter of the federal Bankruptcy
Code, as amended, or under any similar law or statute, or if such petition
shall be filed against Lessee, then Lessee shall be in default under this
Lease, and upon such a default Lessor shall have the right to exercise any one
or more, or all, of the remedies provided to Lessor in this Lease, as well as
any and all other rights and/or remedies granted or allowed to lessors by any
existing or future statute, regulation or judicial decision in the event of a
lessee's material default under the terms of a commercial lease agreement.
17.TERMINATION OF LEASE. Lessee will provide Lessor with 30 days written
notice as to the termination date of lease. Lessee shall vacate premises at
end of 30 days period. However, tenant will have right of first refusal to
negotiate longer term lease (3-5 years) at that time with terms acceptable to
Lessor and Lessee. In the event of a default by Lessee as described above,
Lessor may immediately terminate this Lease by written notice to Lessor. Upon
such a termination of this Lease, Lessee shall have no further rights or
interest in the Leased Premises and shall vacate the same within ten (10) days
after such termination. Lessor shall have the right to enter upon and take
possession of the Leased Premises and to expel or remove Lessee and Lessee's
property and any other person or property which may be occupying the Leased
Premises or any part thereof, without being liable for prosecution or any claim
of damages as a result of such actions.
18.LESSER'S COSTS AND EXPENSES. Lessee agrees to pay Lessor all costs and
expenses incurred by Lessor in enforcing this Lease, including but not limited
to the reasonable attorney's fees.
19.Liability Insurance. The Lessee shall maintain, at their own costs, a
liability insurance policy with no less than a $1,000,000 dollar coverage to
indemnify the Lessor against any injuries to Strober's employees and/or the
customers that occupy, utilities, and/or visit the Leased Premises.
20.LESSOR'S REMEDIES. All of the right and remedies herein given to Lessor
and all of the rights and remedies given Lessor by law and equity shall be
cumulative and concurrent. No termination of this Lease or taking or
recovering possession of the Leased Premises shall deprive Lessor of any
remedies or actions against Lessee for sums due from Lessee hereunder be
construed as a waiver of the right to obtain possession of the Leased Premises.
The parties hereby covenant and agree, any law, usage or custom to the contrary
notwithstanding, that Lessor shall have the right at all times to enforce each
and every one of the terms, covenants conditions of this Lease in strict
accordance with the provisions hereof, notwithstanding any conduct or custom on
the part of the Lessor in restraining from doing so at any time or times, and
further, that the failure of Lessor at any time or times to enforce any of his
rights hereunder strictly in accordance with the same shall not constitute or
be constituted as a waiver of the same or as having created a custom in any way
or manner contrary to the specific terms, covenants and conditions of this
Lease, or as having in any way or manner modified the same. No action taken by
or on behalf of Lessor shall be deemed or construed to be an acceptance of a
surrender of this Lease.
21.SURRENDER OF POSSESSION. Lessee agrees to surrender possession of the
Lease Premises to lessor upon the expiration or sooner termination of the lease
term without any notice whatsoever from Lessor. Lessee expressly waives and
releases any right or benefit Lessee may now or hereafter possess by reason of
any present or future law concerning notice to quit or lease termination,
including, but not limited to, the three (3) months notice to quit provided by
the Act of April 6, 1951, as amended.
22.WAIVERS. Notwithstanding any statute or law to the contrary, Lessee
waives and releases the benefit of all appraisement, stay of execution,
exemption, bankruptcy and insolvency laws now in force or hereafter enacted,
upon any proceeding instituted for the recovery of sums due hereunder or for
recovery of possession of the Leased Premises. Furthermore, Lessee waives and
releases any and all errors in any procedure or action to enter judgments by
confession by virtue of the warrants of attorney contained in this Lease, and
Lessee releases Lessor and any attorney who may appear for Lessee or Lessor
from liability for any such errors.
23.RELEASE AND INDEMNIFICATION. Lessee releases and forever discharges
Lessor from and agrees to indemnify and safe Lessor harmless against, all
liability by reason of injury to any person occurring on or about the Leased
Premises or by reason of any damage to any property situate on the Leased
Premises, whether belonging to Lessee or any other person or entity, caused by
force whatsoever other than the intentional act or the negligence of Lessor,
its employees or agents.
24.NO RECORDATION. Lessor and Lessee agree that neither this Lease nor any
memorandum hereof shall be recorded in any public office.
25.SECURITY DEPOSIT. Upon the execution of this Lease, Lessee shall deposit
with Lessor the sum of $__________ or 1.5 times the monthly rental, as a
security deposit. This deposit shall secure unto Lessor the full and faithful
performance by Lessee of all the terms, covenants and conditions of this Lease.
Lessee shall not be entitled to the payment of any interest on his security
deposit. In the event Lessee shall at any time be in default under any
provision of this Lease, lessor may, entirely at Lessor's option, at any time
and from time to time, apply this security deposit or any portion therefore the
purpose of curing any such default or for the purpose of reimbursing Lessor for
any costs, expenses or damages occasioned by Lessor as a result of such
default, and any such application by Lessor shall in no way affect any other
right or remedies reserved to Lessor under the terms of this Lease. If the
security deposit or any portion thereof is so applied by lessor, Lesee shall,
within ten (10) days after written demand by lessor, deposit additional funds
with Lessor so as to restore the security deposit to its original amount, and
Lessee's failure to do so shall constitute a default under this Lease. The
security deposit shall be refunded to Lessee at the expiration of the lease
term if Lessee shall have faithfully complied with all the terms, covenants and
conditions of this Lease throughout the entire lease term, provided, however,
that Lesee shall have first vacated the Leased Premises and surrendered
possession thereof to Lessor in accordance with the provisions of this Lease.
Lessor shall not be required to or be deemed to hold the security deposit in
trust, and the existence of this security deposit shall not establish any
relationship between Lessor and Lessee other than that of debtor and creditor.
In the event Lessor shall assign or otherwise transfer its interest in the
Lease, Lessor shall have the right at anytime, and without notice to Lessee, to
transfer the security deposit to the assignee or other transferee of such
interest, and upon such transfer Lessor shall be released from all liability
with respect to the security deposit and/or its return or application.
26.LESSOR'S OBLIGATIONS. Lessor's obligations under this Lease shall
be binding upon Lessor only for the period of time that Lessor is equitable or
legal and equitable owner of the Building. Upon the termination of such
ownership Lessee shall look solely to Lessor's successors in interest in the
Building for the satisfaction of each and every obligation of Lessor under this
Lease, except as to any obligations which shall have matured prior to the
termination of such ownership by Lessor.
27.NOTICES. All notices to be given hereunder shall be in writing. All
notices to be given to Lessor and Lessee shall be hand delivered or sent by
certified or registered mail to:
LESSOR LESSEE
Michael Albarell Larry Hamshock
Albarell Electric Strober Building Supply Center, Inc.
901 W. Lehigh Street 695 Wyoming Avenue
Bethlehem, PA 18018 Kingston, PA 18704
Either party may change the addresses set forth above by written notice thereof
to the other. Lessor shall at all times have the option of giving Lesee notice
hereunder by posting the same in or on the Leased Premises. All payments to be
made hereunder shall be hand delivered or sent by regular mail to the parties
at the above addresses.
28.ENTIRE AGREEMENT. It is expressly understood and agreed by the parties
hereto that this Lease sets forth all the promises, agreements, conditions and
understandings between Lessor and Lessee relative to this transaction, and that
there are no promises, agreements, conditions or understandings, either oral or
written, between them other than as are set forth herein. It is further agreed
that no alteration, amendments, change or additions to this Lease shall be
binding or effective unless reduced to writing and signed by both Lessor and
Lesee.
29.HEIRS AND ASSIGNS. Subject to any provisions hereinabove to the
contrary, all the rights, obligations, conditions and terms set forth herein
shall insure to the benefit of and shall be binding upon the parties hereto and
their respective heirs, executors, administrators, successors and assigns.
30.ASSIGNABILITY. This Lease shall not be assignable by Lessee.
31.GOVERNING LAW AND SEVERABILITY. This Lease shall be governed by the laws
of the Commonwealth of Pennsylvania. If any provision of this Lease shall be
declared invalid by judicial determination, or by Act of Pennsylvania Assembly,
or by act of any other legislative body with authority to affect this lease,
only such provision so declared invalid shall be thus affected, and all other
provisions not inconsistent therewith or directly dependent thereon shall
remain in full force and effect.
32.EFFECT OF PARAGRAPH HEADINGS. The subject headings of the paragraphs
of this Lease are included for the purpose of convenience only, and shall in no
way affect the meaning, construction or interpretation of any of the provisions
or terms hereof.
33.GENDER OR NUMBER. For the purposes of interpreting this Lease, the
masculine shall include the feminine and neuter, and the singular shall include
the plural, and vice versa, unless contrary intent appears.
IN WITNESS WHEREOF, and intending to be legally bound, the parties have
their hands and seals hereto the day and year first above written.
LESSEE: LESSOR:
/S/LARRY HAMERSHOCK /S/MICHAEL ALBARELL
Larry Hamershock, Vice President Michael Albarell, Principal
DATE: DATE:
10/6/95 OCTOBER 6, 1995
WITNESS:
_________________________
DATE:
<PAGE>
EXHIBIT 10(CC)
Agreement dated May 15, 1995 between Carman Road Realty, Inc.
and Broad Properties, Inc. (as landlord) and
Strober Long Island Building Material Centers, Inc.
<PAGE>
THIS AGREEMENT BETWEEN CARMAN ROAD REALTY, INC., and BROAD PROPERTIES, INC.,
both New York corporations with their principal place of business at 1637 Broad
Hollow Road, E. Farmingdale, N.Y. 11735 hereinafter collectively referred to as
Landlord and STROBER LONG ISLAND BUILDING MATERIAL CENTERS, INC., a domestic
corporation having its principal place of business at
as Tenant
WITNESSETH: The Landlord hereby leases to the Tenant the following
premises: the buildings known as 75, 77 and 79 E. Carmans Road and 1294 Route
110 and approximately 1 acre of vacant land (which is part of tax lot 100-48-2-
9.9), E. Farmingdale, New York 11735, as shown in the sketch annexed to this
Lease as Exhibit "A" (the "Premises") for the term os five (5) years to
commence from the 1st day of May 1995 and to end on the 30th day of April 2000
to be used and occupied only for the sale, warehousing, storage and indoor and
outdoor display of building materials including lumber, provided that Tenant,
at its sole cost and expense, shall first obtain all necessary governmental
approvals permitting said use and further provided that said use is permissible
under the Certificate of Occupancy for the premises, if any, or any zoning law
or ordinance of the Town of Babylon, State of New York or United States, upon
the conditions and covenants following:
1st.That the Tenant shall pay the annual rent as provided in Exhibit B annexed
hereto, said rent to be paid in equal monthly payments in advance on the 1st
day of each and every month during the term aforesaid, as provided in Exhibit B
annexed hereto.
2nd. That the Tenant shall take good care of the premises and shall at the
Tenant's own cost and expense make all repairs except structural repairs unless
said repairs are made necessary by the negligence of Tenant, its servants,
agents, employees, or invitees, and at the end of or other expiration of the
term, shall deliver up the demised premises in good order or condition, damages
being the elements excepted.
3rd. That the Tenant shall promptly execute and comply with all statutes,
ordinances, rules, orders, regulations and requirements of the Federal, State
and Local Governments and of any and all their Departments and Bureaus
applicable to said premises, for the correction, prevention and abatement of
nuisances or other grievances, in, upon, or connected with said premises during
said term; and shall also promptly comply with and execute all rules, orders
and regulations of the New York Board of Fire Underwriters, or any other
similar body, at the Tenant's own cost and expense. To the best of Landlord's
knowledge, there are no current violations.
4th.That the Tenant, successors, heirs, executors or administrators shall not
assign this agreement, or underlet or underlease the premises, or any part
thereof, or make any alterations on the premises, without the Landlord's
consent in writing, such consent shall not be unreasonably withheld, or occupy,
or permit or suffer the same to be occupied for any business or purpose deemed
disreputable or extra-hazardous on account of fire, under the penalty of
damages and forfeiture, and in the event of a breach thereof, the term herein
shall immediately cease and determine at the option of the Landlord as if it
were the expiration of the original term.
5th.Tenant must give Landlord prompt notice of fire, accident, damage or
dangerous or defective condition. If the Premises cannot be used because of
fire or other casualty, Tenant is not required to pay rent for the time the
Premises are unusable. If part of the Premises cannot be used, Tenant must pay
rent for the usable part. Landlord shall have the right to decide which part
of the Premises is usable. Landlord need only repair the damaged structural
parts of the Premises. Landlord is not required to repair or replace any
equipment, fixtures, furnishings or decorations unless originally installed by
Landlord. Landlord is not responsible for delays due to settling insurance
claims, obtaining estimates, labor and supply problems or any other cause not
fully under Landlord's control.
If the fire or other casualty is caused by an act or neglect of Tenant,
Tenant's employees or invitees, or at the time the fire or casualty Tenant is
in default in any term of this Lease then all repairs will be made at Tenant's
expense and Tenant must pay the full rent with no adjustment. The cost of the
repairs will be added rent.
Landlord has the right to demolish or rebuild the Building if there is
substantial damage by fire or other casualty, Landlord may cancel this Lease
within 30 days after the substantial fire or casualty by giving Tenant notice
of Landlord's intention to demolish or rebuild. The Lease will end 30 days
after Landlord's cancellation notice to Tenant. Tenant must deliver the
Premises to Landlord on or before the cancellation date in the notice and pay
all rent due to the date of the fire or casualty. If the Lease is cancelled
Landlord is not required to repair the Premises or Building. The cancellation
does not release Tenant of liability in connection with the fire or casualty.
This Section is intended to replace the terms of New York Real Property Law
Section 227. If, during he first two (2) years of the term, more than 50% of
the Demised premises is destroyed by fire or other casualty, Landlord shall
have the option to cancel the Lease. If during the last three (3) years of the
term, more than 25% of the Demised Premises is destroyed by fire or other
casualty, Landlord shall have the option of cancelling the lease, unless Tenant
exercises its option to extend the term of the Lease no later than thirty (30)
days from the date of damage or destruction.
6th.The said Tenant agrees the said Landlord and the Landlord's agent and other
representatives shall have the right to enter into and upon said premises, or
any part thereof, at all reasonable times for the purpose of examining the
same, or making such repairs or alterations therein as may be necessary for the
safety and preservation thereof.
7th.The Tenant also agrees to permit the Landlord or the Landlord's agents to
show the premises to persons wishing to hire or purchase the same; and the
Tenant further agrees that on and after the fourth month next preceding the
expiration of the term hereby granted, the Landlord or the Landlord's agents
shall have the right to place notices on the front of said premises, or any
part thereof, offering the premises "To Let" or "For Sale", and the Tenant
hereby agrees to permit the same to remain thereon without hindrance or
molestation.
8th.That if the said premises, or any part thereof shall be deserted or become
vacant during said term, and if any default be made in the payment of the said
rent or any part thereof, or if any default be made in the performance of any
of the covenants herein contained, the Landlord or representatives may re-enter
the said premises by summary proceedings or otherwise, and remove all persons
therefrom, without being liable to prosecution therefor, and the Tenant shall
pay at the same time as the rent becomes payable under the terms hereof a sum
equivalent to the rent reserved herein, and the Landlord may rent the premises
on behalf of the Tenant, reserving the right to rent the premises for a longer
period of time than fixed in the original lease without releasing the original
Tenant from any liability, applying any moneys collected, first to the expense
of resuming or obtaining possession, second to restoring the premises to a
rentable condition, and then to the payment of the rent and all other charges
due and to grow due to the Landlord, any surplus to be paid to the Tenant, who
shall remain liable for any deficiency.
9th.Landlord may replace, at the expense of Tenant, any and all broken glass in
and about the demises premises. In the event Tenant fails to timely repair
same, Landlord may insure, and keep insured, all plate glass in the demised
premises for and in the name of Landlord. Bills, for the premiums therefor
shall be rendered by Landlord to Tenant at such times as Landlord may elect,
and shall be due from, and payable by Tenant when rendered, and the amount
thereon shall be deemed to be, and be paid as, additional rental. Damage and
injury to the said premises, caused by the carelessness, negligence or improper
conduct on the part of the said Tenant or the Tenant's agents or employees
shall be repaired as speedily as possible by the Tenant at the Tenant's own
cost and expenses.
10th. That the Tenant shall neither encumber nor obstruct the sidewalk in front
of, entrance to, or halls and stairs of said premiss, nor allow the same to be
obstructed or encumbered in any manner.
11th. The Tenant shall neither place, or cause or allow to be placed, any sign
or signs of any kind whatsoever at, in or about the entrance to said premises
or any other part of same, except in or at such place or places as may be
indicated by the Landlord and consented to by the Landlord in writing, which
consent shall not be unreasonably withheld. And in case the Landlord or the
Landlord's representatives shall deem it necessary to remove any such sign or
signs in order to paint the said premises or the building wherein same is
situated or make any other repairs, alterations or improvements in or upon and
premises or building or any part thereof, the Landlord shall have the right to
do so, providing the same be removed and replaced at the Landlord's expense,
whenever the said repairs, alterations or improvements shall be completed.
12th. That the Landlord is exempt from any and all liability for any damage or
injury to person or property caused by or resulting from steam, electricity,
gas, water, rain, ice or snow, or any leak or flow from or into any part of
said building or from any damage or injury resulting or arising from any other
cause or happening whatsoever unless said damage or injury be caused by or be
due to the negligence of the Landlord.
13th. [Intentionally Deleted].
14th. That this instrument shall not be a lien against said premises in respect
to any mortgages that are now on or that hereafter may be placed against said
premises, and that the recording of such mortgage or mortgages shall have
preference and precedence and be superior and prior in lien of this lease,
irrespective of the date of recording and the Tenant agrees to execute without
cost, any such instrument which may be deemed necessary or desirable to further
effect the subordination of this lease to any such mortgage or mortgages, and a
refusal to execute such instrument shall entitle the Landlord, or the
Landlord's assigns and legal representatives to the option of cancelling this
lease without incurring any expenses or damage and the term hereby granted is
expressly limited accordingly.
15th. The Tenant has this day deposited with the Landlord the sum of $23,345.00
as security for the full and faithful performance by the Tenant of all the
terms, covenants and conditions of the lease upon the Tenant's part to be
performed, which said sum shall be returned to the Tenant after the time fixed
as the expiration of the term herein, provided the Tenant has fully and
faithfully carried out all of said terms, covenants and conditions on Tenant's
part to be performed. In the event of a bona fide sale, subject to this lease,
the Landlord shall have the right to transfer the security to the vendee for
the benefit of the Tenant and the Landlord shall be considered released by the
Tenant from all liability for the return of such security; and the Tenant
agrees to look to the new Landlord solely for the return of the said security,
and it is agreed that this shall apply to every transfer or assignment made of
the security to a new Landlord.
16th. That the security deposited under the lease shall not be mortgaged,
assigned or encumbered by the Tenant without the written consent of the
Landlord.
17th. It is expressly understood and agreed that in case the demised premises
shall be deserted or vacated, and if default be made in the payment of the rent
or any part thereof as herein specified, or if, without the consent of the
Landlord, the Tenant shall sell, assign, or mortgage this lease or if default
be made in the performance of any of the covenants and agreements in this
lease contained on the part of the Tenant to be kept and performed, or if the
Tenant shall fail to comply with any of the statutes, ordinances, rules,
orders, regulations and requirements of the Federal, State and Local
Governments or of any and all their Departments and Bureaus, applicable to said
premises, or if the Tenant shall file or there by filed against Tenant a
petition for bankruptcy or arrangement, or Tenant be adjudicated a bankrupt or
make an assignment for the benefit of creditors or take advantage of any
insolvency act, the Landlord may, if the Landlord so elects, at any time
thereafter terminate this lease and the term hereof shall expire and come to
and end on the date fixed in such notice as if the said date were the date
originally fixed in this lease for the expiration hereof. Such notice may be
given by mail to the Tenant addressed to the demised premises.
18th. Tenant shall pay to Landlord the rent or charge, which may, during the
demised term, be assessed or imposed for the water used or consumed in or on
the said premises, whether determined by meter or otherwise, as soon as and
when the same may be assessed or imposed. Tenant shall pay Tenant's
proportionate part of the sewer rent or charge imposed upon the building. All
such rents or charges or expenses shall be paid as additional rent and shall be
added to the next month's rent thereafter to become due.
19th. That the Tenant will not nor will the Tenant permit undertenants or other
persons to do anything in said premises, or bring anything into said premises,
or permit anything to be brought into said premises or to be kept therein,
which will in any way increase the rate of fire insurance on said demised
premises, nor use the demised premises or any part thereof, nor suffer or
permit their use for any business or purpose which would cause an increase in
the rate of the fire insurance on said building, and the Tenant agrees to pay
on demand any such increase.
20th. The failure of the Landlord to insist upon a strict performance of any of
the terms, conditions and covenants herein shall not be deemed a waiver of any
rights or remedies that the Landlord may have, and shall not be deemed a
waiver of any subsequent breach or default in the terms, conditions and
covenants herein contained. This instrument may not be changed, modified,
discharged or terminated orally.
21th. If the whole or any part of the demised premises shall be acquired or
condemned by Eminent Domain for any public or quasi public use or purpose, then
and in that event, the term of this lease shall cease and terminate from the
date of title vesting in such proceeding and Tenant shall have no claim against
Landlord for the value of any unexpired term of said lease. No part of any
award shall belong to the Tenant. Notwithstanding anything herein to the
contrary, after any such taking, said Lease shall not terminate provided Tenant
continues to comply with all the terms of said Lease.
22nd. If after default in payment of rent or violations of any other provision
of this lease, or upon the expiration of this Lease, the Tenant moves out or is
dispossessed and fails to remove any trade fixtures or other property prior to
such said default, removal, expiration of lease, or prior the issuance of the
final order or execution of the warrant, then and in that event, the said
fixtures and property shall be deemed abandoned by the said Tenant and shall
become the property of the Landlord.
23rd. In the event that the relation of the Landlord and Tenant may cease or
terminate by reason of the re-entry of the Landlord under the terms and
covenants contained in this Lease or by the ejectment of the Tenant by summary
proceedings or otherwise, or after the abandonment of the premises by the
Tenant, it is hereby agreed that the Tenant shall remain liable and shall pay
in monthly payments the rent which accrues subsequent to the re-entry by the
Landlord, and the Tenant expressly agrees to pay as damages for the breach of
the covenants herein contained, the differences between the rent reserved and
the rent collected and received, if any, by the Landlord during the remainder
of the unexpired term, such difference or deficiency between the rent herein
reserved and the rent collected if any, shall become due and payable in monthly
payments during the remainder of the unexpired term, as the amounts of such
difference or deficiency shall from time to time be ascertained; and it is
mutually agreed between Landlord and Tenant that the respective parties hereto
shall and hereby do waive trial by jury in any action, proceeding or
counterclaim brought by either of the parties against the other on any matters
whatsoever arising out of or in any way connected with this lease, the Tenant's
use or occupancy of said premises, and/or any claim of injury or damage.
24th. The Tenant waives all rights to redeem under any law of the State of New
York.
25th. This lease and the obligation of Tenant to pay rent hereunder and perform
all of the other covenants and agreements hereunder on part of Tenant to be
performed shall in nowise be affected, impaired or excused because Landlord is
unable to supply or is delayed in supplying any service expressly or impliedly
to be supplied or is unable to make, or is delayed in making any repairs,
additions, alterations or decorations or is unable to supply or is delayed in
supplying any equipment or fixtures if Landlord is prevented or delayed from
so doing by reason of governmental preemption in connection with a National
Emergency or in connection with any rule, order or regulation of any department
or subdivision thereof of any governmental agency or by reason of the condition
of supply and demand which have been or are affected by war or other emergency.
26th. No diminution or abatement of rent, or other compensation, shall be
claimed or allowed for inconvenience or discomfort arising from the making of
repairs or improvements to the buildings or to its appliances, nor for any
space taken to comply with any law, ordinance or order of a governmental
authority. In respect to the various "services," if any, herein expressly or
impliedly agreed to be furnished by the Landlord to the Tenant, it is agreed
that there shall be no diminution or abatement of the rent, or any other
compensation, for interruption or curtailment of such "service" when such
interruption or curtailment shall be due to accident, alterations or repairs
desirable or necessary to be made or to inability or difficulty in securing
supplies or labor for the maintenance of such "service" or to some other cause,
not gross negligence on the part of the Landlord. No such interruption or
curtailment of any such "service" shall be deemed a constructive eviction. The
Landlord shall not be required to furnish, and the Tenant shall not be entitled
to receive, any of such "services" during any period wherein the Tenant shall
be in default in respect to the payment of rent. Neither shall there be any
abatement or diminution of rent because of making of repairs, improvements or
decorations to the demised premises after the date above fixed for the
commencement of the term, it being understood that rent shall, in any event,
commence to run at such date so above fixed.
27th. Landlord shall not be liable for failure to give possession of the
premises upon commencement date by reason of the fact that premises are not
ready for occupancy or because a prior Tenant or any other person is wrongfully
holding over or is in wrongful possession, or for any other reason. The rent
shall not commence until possession is given or is available, but the term
herein shall not be extended.
[SEE RIDER ANNEXED HERETO AND MADE A PART HEREOF]
And the said Landlord doth covenant that the said Tenant on paying the said
yearly rent, and performing the covenants aforesaid, shall and may peacefully
and quietly have, hold and enjoy the said demised premises for the term
aforesaid, provided, however, that this covenant shall be conditioned upon the
retention of title to the premises by the Landlord.
AND IT IS MUTUALLY UNDERSTOOD AND AGREED that the covenants and agreements
contained in the within lease shall be binding upon the parties hereto and upon
their respective successors, heirs, executors and administrators.
IN WITNESS WHEREOF, the parties have interchangeably set their hands and
seals (or caused these presents to be signed by their proper corporate officers
and caused their proper corporate seal to be hereto affixed) this 15th day of
May 1995.
Signed, sealed and delivered CARMAN ROAD REALTY, INC. and
in the presence of BROAD PROPERTIES, INC.
By:/S/L.S.
Joseph
Picone, Jr., Pres. (Landlord)
STROBER LONG ISLAND BUILDING
MATERIALS CENTERS, INC.
By:/S/L.S.
<PAGE>
RIDER TO LEASE BETWEEN CARMAN ROAD REALTY, INC. and BROAD PROPERTIES, INC. as
Landlord, and STROBER LONG ISLAND BUILDING MATERIAL CENTERS, INC. as Tenant.
DATED: May 15, 1995
- -------------------------------------------------------------------------------
28th. At the expiration or sooner termination of this Lease, or any extension
or renewal thereof, all improvements made by the Tenant in or upon the demised
premises, except trade fixtures, shall, unless the Landlord elects otherwise,
become the property of the Landlord and shall remain upon and be surrendered
with said premises as part thereof at the end of the tenancy as aforesaid.
Tenant shall remove all debris and other property of Tenant located in and
around the premises. Tenant shall repair any damage in connection with the
removal of its property and restore the premises to its original condition
after Tenant's improvements made as per drawings amended hereto as Exhibit "C",
ordinary wear and tear excepted. This provision shall survive the termination
of this lease.
29th. If the Tenant shall at any time during the term of this Lease or any
extension or renewal thereof be in default hereunder, and if the Landlord shall
institute an action or summary or other proceeding against the Tenant based on
such default and should Landlord prevail, then the Tenant shall reimburse the
Landlord for the expenses of attorneys' fees and disbursements thereby incurred
by the Landlord so far as the same are reasonable in amount. The amount of
such expenses shall be deemed to be additional rent hereunder.
30th. Tenant will keep the open areas in front of and around the Demised
Premises, including the Fire Lane as shown on Exhibit "A" annexed hereto, clean
at all times and free from weeds, snow, debris and ice at its own expense.
31th. The Tenant shall procure liability insurance and will fully protect and
indemnify the Landlord and Joseph Picone & Son, Inc., as managing agent,
against any and all damages and claims, suits or actions for damage as a result
of the injury, or any alleged injury, to any person whomsoever, or any property
whatsoever in or about the Demised Premises, in form sufficient to insure and
protect the Landlord in the sum of:
$1,000,000.00 in respect of injury or death of any one person;
$2,000,000.00 in respect of any one accident; and
$ 500,000.00 in respect to property damage.
The Tenant shall pay all premiums for such insurance policies and shall deposit
the duplicate original policies with the Landlord. The Tenant shall furnish
such policies to the Landlord no later than ten (10) days prior to the
commencement of the terms of this Lease, and a renewal certificate thereof
within ten (10) days prior to the expiration of such policy. Tenant shall
deliver to Landlord the original renewals thereof. Upon the failure of the
Tenant to procure such policies or pay such premiums, the Landlord may, but
shall not be obligated to, procure such policies upon ten (10) days prior
written notice to Tenant and pay the premium therefor, and the amount paid by
the Landlord shall be added to the next month's rent to become due. Such
insurance shall name Landlord and Joseph Picone & Son, Inc., as managing agent,
as additional insured, and shall contain an endorsement that such insurance may
not be canceled or its limits or coverage reduced, except upon fifteen (15)
days prior written notice from the insurance company to Landlord, sent by
certified or registered mail.
32nd. If by reason of the use or the conduct of the Tenant's business in the
Demised Premises or of the failure of the Tenant to comply with all of the
terms of this Lease, the fire insurance rate for the building in which the
Demised Premises are located shall at any time be higher than it otherwise
would be, then the Tenant will reimburse the Landlord, as additional rent
hereunder, for the amount over such increases in such insurance rates for the
entire building in which the Demised Premises are located. Such reimbursement
shall be additional rent and shall be paid on the first day of the month
following such outlay by the Landlord.
33rd. (a) During the term or any extension or renewal of this Lease, in
addition to the other rents herein provided, and as additional rent, Tenant
agrees to pay to Landlord a percentage of all increases in real estate taxes
assessed against the land and/or buildings of which the Demised Premises form
a part which are in excess of said taxes for the 94/95 tax year. The Premises
of which the Demised Premises are or form a part and for which real estate tax
bill or bills are rendered are presently identified as follows:
TOWN OF BABYLON, COUNTY OF SUFFOLK PERCENTAGE OF INCREASES
Dist.100 Sec.48 Block 2 Lot (s) 9.14 78.97%
Dist.100 Sec.48 Block 2 Lot (s) 9.9 60.32%
(a.1)"Real Estate Taxes" shall be deemed to include all taxes and general
and special assessments, whether ordinary or extraordinary, seen or unforeseen,
imposed, levied or assessed upon the land and the aforesaid building. Tenant
shall pay to Landlord the aforesaid real estate taxes in two (2) payments, upon
due demand thereof, in writing by the Landlord to the Tenant, after the
Landlord has received from the taxing authorities the tax bill for the Demised
Premises. Said taxes shall be deemed additional rent and the Landlord shall
have all of the rights and remedies granted to it herein for the collection
thereof as though the same were rent.
(a.2)Any future changes of description on the Tax Map shall not diminish the
tax burden chargeable to Tenant, except if any change in the description on the
Tax Map alters the District, Section, Block, Lot or Lots, or any of them as
presently constituted. Tenant shall pay the entire amount of the tax bill if
the Demised Premises constitute all the land and buildings on such changed
description on the Tax Map as aforesaid, Tenant shall pay its pro rata share
thereof which shall be equal to the amount of such tax bill multiplied by the
fraction, the numerator of which is the square foot area of that part of the
building demised to Tenant and the denominator of which is the square foot area
of the building or buildings included in such tax bill.
(b)It is further understood and agreed that the Tenant's obligation to pay,
as additional rent hereunder, the increase in real estate taxes, shall include
taxes which result in all or any part as the result of a shift or substitution
of the incidence of taxes now or ordinarily imposed on realty, including, but
not limited to, value added tax. Tenant shall also pay any tax which may be
imposed on the rents received by Landlord or any license fee measured by the
rent received by Landlord from the Tenant. Tenant shall not be liable for
Landlord's income or inheritance taxes.
34th. Tenant agrees to pay for all utilities consumed by it in the Premises
including, without limitation, electric, heating, sewer, rent, water and any
other utility. Landlord will not be obligated to supply heat or any utilities
to Tenant. Landlord represents that all utilities are separately metered.
35th. All municipal, Village, Town, City, State and Federal inspection fees,
licenses, general fees and permits for the Demised Premises and for the conduct
and operation of Tenant's business therein, are to be procured by Tenant at its
cost and expense.
36th. Except as provided in the work letter amended hereto as Exhibit "D", the
Tenant agrees to accept the Demised Premises in their present condition, "as
is".
37th. It is agreed and understood that in the event the Lease contains two (2)
provisions that are repugnant to each other, and one is printed and the other
typewritten, the typewritten provisions shall control and over-ride the printed
provisions. This Lease and the exhibits and rider set forth all the covenants,
promises and conditions and understandings between the parties herein.
38th. As an inducement to Landlord to enter into this Lease, Tenant covenants,
warrants and represents that at the inception of and at all times during the
term of this Lease, Tenant shall fully insure all its fixtures, stock and
equipment and property of others in the care and custody of Tenant against the
perils of fire, water damage or any other damages or casualty with insurance
carriers selected by Tenant and authorized to do business in New York.
38.1 Tenant shall deliver to Landlord a copy of all insurance policies
required under the terms of this Lease, together with all renewals and
extensions upon Landlord's demand or within ten (10) days prior to the
commencement of the term of this lease or ten (10) days prior to the expiration
of any said coverage. Tenant may provide insurance certificates until said
policies are made available to Tenant.
38.2 In the event Tenant fails or neglects to obtain such insurance policies
as set forth hereinbefore, or fails or neglects to pay the insurance premiums
when due, any damage sustained by Tenant to its fixtures, stock or equipment or
damage to the property of others in the care and custody of Tenant by the
perils of fire, water damage, or any other damage or casualty shall be deemed
to have been insured against by Tenant with a solvent company which had waived
its rights of subrogation against Landlord, and Tenant shall be deemed to have
been fully paid for all damages under such policy of insurance.
38.3 In no event shall Tenant make any claim or be entitled to any damages or
any part thereof for which Tenant has been reimbursed under any policy of
insurance.
39th. As a consideration for granting of this Lease in all other insurance
policies obtained by Tenant insuring Tenant against loss or damage for any fire
or other casualty, or any public liability policy, Tenant warrants and
represents that such insurance policies shall contain a waiver by the insurance
carrier of all rights of subrogation against the Landlord, and Joseph Picone &
Son, Inc., managing agent, if obtainable from Tenant's insurance carrier. If
permissible by Landlord's insurance carriers, Landlord will seek to obtain a
waiver of the rights of subrogation which Landlord's insurance carriers may
have against the Tenant under Landlord's policy of insurance. Tenant's breach
of this covenant is a default under the terms of this Lease and, in addition to
any other remedies. Landlord shall be entitled to recover from Tenant all
damages sustained by Landlord plus reasonable attorney fees, investigation
fees, and disbursements.
40th. If Tenant is a corporation, each individual executing this Lease on
behalf of said corporation represents and warrants that he is duly authorized
to execute and deliver this Lease on behalf of said corporation, in accordance
with the by-laws of said corporation, and that this Lease is binding upon said
corporation.
41st. In addition to any other rights reserved to the Landlord hereunder, if
Tenant shall not have paid the rent by the fifth (5th) business day of any
month during the term of this Lease, there shall be a late charge of four (4%)
percent of the monthly rent for the handling of the delinquent account. The
said late charge is additional rent and collectible as rent.
42nd. Tenant warrants and represents that Tenant has dealt with no broker
knowing that Landlord is relying thereon.
43rd. Tenant shall not use or permit the use of the sewerage waste systems for
the disposal of cleaning fluids, solvents or any hazardous wastes.
44th. The waiver by Landlord of any term, covenant or condition herein
contained shall not be deemed to be a waiver of such term, covenant or
condition or any subsequent breach of the same of any other term, covenant or
condition herein contained. The subsequent acceptance of rent hereunder by
Landlord shall not be deemed to be waiver of any preceding default by Tenant of
any term, covenant or condition of this Lease, other than the failure of the
Tenant to pay the particular ental so accepted, regardless of Landlord's
knowledge of such preceding default at the time of the acceptance of such rent.
45th. This agreement shall not constitute an offer to create any rights in
favor of Tenant and shall not obligate or be binding upon Landlord and shall
have no force or effect unless and until this agreement is duly executed copy
of this agreement is delivered by Landlord to Tenant.
46th. The security set forth in Paragraph 15th hereof is intended to be an
amount equal to two (2) months of the then current annual rent. If the annual
rent is increased, at the beginning of each year of such increase the Tenant
shall deposit with Landlord such additional sums so that the said security will
be an amount equal to two (2) months of the then current annual rent.
47th. All notices desired or required to be given under this Lease shall be in
writing and sent by certified or registered mail, postage prepaid, return
receipt requested, as follows:
(a)If to Landlord, at Landlord's
address set forth on the first page of this Lease, or to such other
addresses as landlord may designate.
(b)If to Tenant, at Tenant's
address set forth on the first page of this Lease, or to such other
address as Tenant may designate.
48th. Except as otherwise provided in Paragraph 2nd and the work letter annexed
hereto as Exhibit "D", the Landlord shall be under no obligation to make,
repair, alter or decorate any portion or all of the Demised Premises, in
connection with the use and occupation of the Tenant; or to institute or defend
any action with respect to the Tenant's use and occupation of the Demised
Premises; and the Tenant agrees that all repairs, alterations, additional
decorations or otherwise, necessary for the Tenant's use and occupation shall
be the sole responsibility and shall be done at the sole cost and expense of
the Tenant, except as herein provided.
49th. Tenant shall have no right to occupy the Leased Premises or any portion
thereof after the expiration of the Lease. In the event Tenant or any party
claiming by, through or under Tenant, holds over, Landlord may exercise any and
all remedies available to it at law or in equity to recover possession of the
Leased Premises, and for damages. For each and every month or partial month
that Tenant or any party claiming by, through or under Tenant, remains in
occupancy of all or any portion of the Leased Premises after the expiration of
the Lease, or after termination of the Lease, Tenant shall pay, as minimum
damages and not as a penalty, monthly rental at a rate equal to double the rate
of rent and other charges payable by Tenant hereunder immediately prior to the
expiration or other termination of the Lease. The acceptance by Landlord of
any lesser sum shall be construed as a payment on account and not in
satisfaction of damages for such holding over. If the holding over occurs at
the expiration of the Lease term or by reason of a termination by mutual
agreement of the parties, the Landlord may, as an alternative remedy, elect
that such holding over shall constitute a renewal of this Lease for one (1)
year at a rental equal to 150% of the rate of the rent payable hereunder
immediately prior to the expiration of the Lease, and upon all of the other
covenants and agreements contained in this lease.
50th. The security, if any, deposited with Landlord pursuant to the provisions
of Paragraph 15 hereinabove, is deposited by the Tenant with the Landlord on
the understanding that: (a) the Security Deposit or any portion thereof not
previously applied, or from time to time such other portions thereof, may be
applied to the curing of any default that may then exist, without prejudice to
any other remedy or remedies which the Landlord may have on account thereof,
and upon such application Tenant shall pay Landlord on demand the amount so
applied which may be added to the Security Deposit so that the same may be
restored to its original amount; (b) if Tenant shall faithfully fulfill, keep,
perform and observe all of the covenants, conditions, and agreements in this
Lease set forth and contained on the part of the Tenant to be fulfilled, kept,
performed and observed, the Security Deposit or the part or portion thereof not
previously applied shall be returned to the Tenant no later than thirty (30)
days after the expiration of this Lease or any renewal or extension thereof,
provided Tenant has vacated the leased Premises and surrendered possession
thereof to the Landlord at the expiration of said term or any extension or
renewal thereof as provided herein; (c) in the event that Landlord terminates
the Lease, Landlord may apply the Security Deposit against all damages suffered
to the date of such termination and/or may retain the Security Deposit to apply
against such damages as may be suffered or shall accrue thereafter by reason of
Tenant's default; (d) in the event of any bankruptcy, insolvency or
reorganization shall be instituted by or against Tenant, or its successors or
assigns, the Security Deposit shall be deemed to be applied first to the
payment of any rents and/or other charges due Landlord for all periods prior
too the institution of such proceedings, and the balance if any, of the
Security Deposit may be retained or paid to Landlord in partial liquidation of
Landlord's damages; and (e) the provisions of Section 7-103 of the General
Obligations Law of the State of New York as amended; and to the extent that the
provisions of this Article may be inconsistent therewith, the said Section 7-
103 of the General Obligations Law shall supersede.
51st. Tenant shall pay its proportionate share of the annual water, sprinkler,
stand-by, and maintenance expenses for the Demised Premises, if any.
52nd. Whenever under the terms of this Lease any sum of money is required to be
paid by Tenant in addition to the rental herein reserved, and said additional
amount so to be paid is not designated as "additional rent", or provision is
not made in the Article covering such payment for the collection of said amount
as "additional rent", then said amount shall nevertheless, at the option of
Landlord, if not paid when due, be deemed "additional rent" and collectible as
such with any installment of rental thereafter failing due hereunder; but
nothing herein contained shall be deemed to suspend or delay the payment of any
sum at the time the same becomes due and payable hereunder, or limit any other
remedy of Landlord.
53rd. There shall be no storage of any kind or nature outside the actual
building demised to the Tenant except as permissible under applicable law, or
exceptions thereto lawfully obtained by Tenant.
54th. Tenant shall keep all areas surrounding the Demised Premises free and
clear of any dirt or debris, failing which Landlord shall have the option of
cleaning or removing said debris (but shall not have the obligation therefor)
and charge the cost thereof to Tenant, upon five (5) days written notice to
Tenant.
55th. All garbage receptacles shall be kept or maintained in accordance with
applicable law.
56th. Tenant will at no time use or occupy the Premises in violation of the
Certificate of Occupancy issued for the building. The statement in this Lease
of the nature of the business to be conducted by Tenant is neither a
representation or inference by Landlord that such use is lawful or permissible
in the Premises under the Certificate of Occupancy for the building, if any.
57th. The invalidity or unenforceability of any portion of the within Lease
Agreement shall in no way affect the validity or enforceability of any other
provision hereof.
58th. Anything in this Lease to the contrary notwithstanding, it is agreed that
there shall be no allowance to Tenant for a diminution in rental by reason of
inconvenience, annoyance, or injury to business arising from Landlord, Tenant
or others making or failing to make any portion of the building or the Demised
Premises, or in and to the fixtures, appurtenances or equipment thereof.
59th. In addition to any other insurance policy to be supplied by Tenant as set
forth in this Lease, or any endorsement or endorsements in connection
therewith, Tenant agrees to pay on demand any increase in premiums that may be
charged on insurance carried by Landlord resulting from Tenant's use or
occupancy of the Demised Premises, or from any vacancy of the Demised Premises,
whether or not Landlord has consented to same. In determining whether
increased premiums are the result of Tenant's use or occupancy or vacancy of
the Demised Premises, a schedule or "make up" rate of the organization issuing
the fire insurance, extended coverage, vandalism and malicious mischief,
special extended coverage or any all-risk insurance rates for the Premises, or
any rule books issued by the rating organization or similar bodies, or by
rating procedures or rules of Landlord's insurance companies, shall be
conclusive evidence of the several items and charges which make up the
insurance rates and the premiums of the Demised Premises. If, due to (i)
occupancy, or (ii) abandonment, or (iii) Tenant's failure to occupy the Demised
Premises as herein provided, any such insurance shall be cancelled by the
insurance carrier, then, in any such events Tenant shall indemnify and hold
Landlord harmless against any loss which would have been covered by such
insurance. Tenant shall also pay any increase in premiums or such rent
insurance as may be carried by Landlord for its protection against rent loss
through fire or other casualty, if such increase shall result from any of the
foregoing events.
60th. BANKRUPTCY
(a)EVENTS OF BANKRUPTCY. The following shall be Events of Bankruptcy under
this Lease:
(i) Tenant's becoming insolvent, as that term is defined in Title 11 of
the United States Code, entitled Bankruptcy, 11 U.S.C. <section>101 et seq.
(the "Bankruptcy Code") or under the insolvency laws of any State, District,
Commonwealth or Territory of the United States ("Insolvency Laws");
(ii) the appointment of a receiver or custodian for any or all of
Tenant's property or assets;
(iii) the filing of a voluntary petition under the provisions of the
Bankruptcy Code or Insolvency Laws;
(iv) the filing of any involuntary petition against Tenant as the
subject debtor under the Bankruptcy Code of Insolvency Laws, which is either
not dismissed within sixty (60) days of filing, or results in the issuance of
an order for relief against the debtor, whichever is later; or
(v) Tenant's making or consenting to an assignment for the benefit of
creditors or a common law composition of creditors.
(b)LANDLORD'S REMEDIES
(i)TERMINATION OF LEASE. Upon the occurrence of an Event of Bankruptcy,
Landlord shall have the right to terminate this Lease by giving written notice
to Tenant, provided, however, that this <para>60(b)(i) shall have no effect
while a case in which Tenant is the subject debtor under the Bankruptcy Code is
pending, unless Tenant or its Trustee in bankruptcy is unable to comply with
the provisions of <para>60(b)(v) and <para>60(b)(vi) below. Otherwise, this
Lease shall automatically cease and terminate and Tenant shall be immediately
obligated to quit the Premises upon the giving of notice pursuant to this
<para>60(b)(i). Any other notice to quit, or notice of Landlord's intention to
re-enter is hereby expressly waived. If Landlord elects to terminate this
Lease, everything contained in this Lease on the part of Landlord to be done
and performed shall cease without prejudice, subject, however, to the right of
Landlord to recover from Tenant all rent and any other sums accrued up to the
time of termination or recovery of possession by Landlord, whichever is later,
and any other monetary damages or loss of reserved rent sustained by Landlord.
(ii)SUIT FOR POSSESSION. Upon termination of this Lease, pursuant to
<para>60(b)(i), Landlord may proceed to recover possession under and by virtue
of the provisions of the laws of the State of New York, or by such other
proceedings, as may be applicable.
(iii)RELETTING OF PREMISES. Upon termination of this Lease, pursuant to
<para>60(b)(i), the Premises may be relet by Landlord for such rent and upon
such terms as are not unreasonable under the circumstances and; if the full
rental reserved under this Lease (and any of the costs) expenses or damages
indicated below) shall not be realized by Landlord, Tenant shall be liable for
all damages sustained by Landlord, including, without limitation, deficiency in
rent, reasonable attorneys' fees, brokerage fees, and expenses of placing the
Premises in first class rentable condition. Landlord, in putting the Premises
in good order or preparing the same for rerental may, at Landlord's option,
make such alterations, repairs, or replacements in the Premises as necessary
for the purpose of reletting the Premises, and the making of such alterations,
repairs, or replacements shall not operate, or be construed to release Tenant
from liability hereunder as aforesaid. Landlord shall in no event be liable in
any way whatsoever for failure to relet the Premises, or in the event that the
Premises are relet, for failure to collect the rent thereof under such
reletting, and in no event shall Tenant be entitled to receive any excess, if
any, of such net rent collected over the sums payable by Tenant to Landlord
hereunder.
(iv)MONETARY DAMAGES. Any damage or loss or rent sustained by Landlord
as a result of an Event of Bankruptcy may be recovered by Landlord, at
Landlord's option, at the time of the reletting, or in separate actions, from
time to time, as said damage shall have been made more easily ascertainable by
successive relettings, or, in a single proceeding deferred until the expiration
of the terms of this Lease (in which event Tenant hereby agrees that the cause
of action shall not be deemed to have accrued until the date of expiration of
said term) or in a single proceeding prior to either the time of reletting or
the expiration of the term of this Lease, in which event Tenant agrees to pay
Landlord the difference between the present value of the rent reserved under
this Lease on the date of breach, discounted at eight (8%) percent per annum,
and the fair market value of the Lease on the date of breach. In the event
Tenant becomes the subject debtor in a case under the Bankruptcy Code, the
provisions of the <para>60(b)(iv) may be limited by the limitations of damage
provisions of the Bankruptcy Code.
(v)ASSUMPTION OR ASSIGNMENT BY TRUSTEE. In the event Tenant becomes the
subject debtor in a case pending under the Bankruptcy Code, Landlord's right to
terminate this Lease pursuant to this <para>60 shall be subject to the rights
of the Trustee in bankruptcy to assume or assign this Lease. The Trustee shall
not have the right to assume or assign this Lease unless the Trustee (A)
promptly cures all defaults under this Lease, (B) promptly compensates Landlord
for monetary damages incurred as a result of such default, and (C) provides
adequate assurance of future performance.
(vi)ADEQUATE ASSURANCE OF FUTURE PERFORMANCE. Landlord and Tenant hereby
agree in advance that adequate assurance of future performance, as used in
<para>60 (b) (v) above, shall mean that all of the following minimum criteria
must be met: (A) the Trustee must pay to Landlord, at the time the next
payment of rent is then due under this Lease, in addition to such payment of
rent, an amount equal to the next payment of rent due under this Lease, or the
next three (3) months rent due under this Lease, whichever is greater, said
amount to be held by Landlord in escrow until either the Trustee or Tenant
defaults in its payments of rent or other obligations under this Lease
(whereupon Landlord shall have the right to draw such escrowed funds) or until
the expiration of this Lease (whereupon the funds shall be returned to the
Trustee or Tenant); (B) the Tenant or Trustee must agree to pay to Landlord, at
any time the Landlord is authorized to and does draw on the funds escrowed
pursuant to <para>60(vi)(A) above, the amount necessary to restore such escrow
account to the original level required by said provision; (C) Tenant must pay
its estimated pro rata share of the cost of all services provided by Landlord
(whether directly or through agents or contractors, and whether or not the cost
of such services is passed through to Tenant) in advance of the performance or
provision of such services; (D) the Trustee must agree that Tenant's business
shall be conducted in a first class manner, and that no liquidating sales,
auctions, or other non first class business operations shall be conducted on
the Premises; (E) the Trustee must agree that the use of the Premises as stated
in this Lease will remain unchanged; (F) the Trustee must agree that the
assumption or assignment of this Lease will not violate or affect the rights of
other tenants in the building.
(vii)FAILURE TO PROVIDE ADEQUATE ASSURANCE. In the event Tenant is
unable to (A) cure its defaults, (B) reimburse Landlord for its monetary
damages, (C) pay the rent due under this Lease, or any other payments required
of Tenant under this Lease, on time (or within five (5) days of the due date),
or (D) meet the criteria and obligations imposed by <para>60(b)(vi) above, then
Tenant agrees in advance that it has not met its burden to provide adequate
assurance of future performance, and this Lease may be terminated by Landlord
in accordance with <para>60(b) above.
61st. Tenant shall indemnify and hold harmless from any and all claims,
lawsuits, administrative or governmental actions which may arise as a result of
the accidental or intentional spillage or discharge of any toxic or hazardous
wastes or hazardous substances in or about the Demised Premises caused by
Tenant, its servants, agents, employee or invitees, and Tenant shall bear the
entire cost for detecting, identifying and removing said substances from the
Premises, including, but not limited to, site assessment fees, environmental
audit fees, engineering fees, groundwater study fees, laboratory analysis fees,
and any other fees incurred in connection therewith, including reasonable
attorney fees in connection with the enforcement hereof.
For the purpose of this article, Hazardous Substance shall be defined as set
forth by either <section>9601(14) of Title 42 of the United States Code or any
successor or similar section, or any environmentally related statute enacted by
the State of New York (collectively called "Hazardous Substances").
Notwithstanding anything herein to the contrary, Tenant shall not be
responsible for any pre-existing conditions.
62nd. It is mutually agreed by and between Landlord and Tenant that the
respective parties hereto shall and they hereby do waive trial by jury in any
action, proceeding or counterclaim brought by either of the parties hereto
against the other (except for personal injury or property damage) on any
matters whatsoever arising out of or in any way connected with this Lease, the
relationship of Landlord and Tenant, Tenant's use of or occupancy of said
Premises, and any emergency statutory or any other statutory remedy. It is
further mutually agreed that in the event Landlord commences any summary
proceeding for possession of the Premises, Tenant will not interpose any
counterclaim of whatever nature or description in any such proceeding, except
those that are compulsory.
63rd. In addition to any other remedies which Landlord may have, in the event
of any default or breach by Tenant, Landlord may at any time thereafter, in its
sole discretion, with notice or demand and without limiting Landlord in the
exercise of a right or remedy which Landlord may have by reason of such default
or breach:
(a)Terminate Tenant's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Tenant shall immediately
surrender possession of the Premises to Landlord. In such event Landlord shall
be entitled to recover from Tenant all damages incurred by Landlord by reason
of Tenant's default including, but not limited to, the cost of recovering
possession of the Premises; expenses of reletting, including necessary
renovation and alteration of the Premises; reasonable attorney's fees; the
worth at the time of award by the court having jurisdiction thereof of the
amount by which the unpaid rent and other charges and Adjustments called for
herein for the balance of the term after the time of such award exceeds the
amount of such loss for the same period that Tenant probes could be reasonably
avoided; and that portion of any leasing commission paid by Landlord and
applicable to the unexpired term of this Lease. Unpaid installments of rent or
other sums shall bear interest from the date due at the maximum legal rate; or
(b)If Tenant shall make default in fulfilling any of the covenants of this
Lease, or other than the covenants for the payment of rent or "additional
rent", or if the Demised Premises become vacant or deserted, the Landlord may
give to the Tenant ten (10) days' notice of intention to end the term of this
Lease, and thereupon, at the expiration of said ten (10) days' (if said
condition which was the basis of said notice shall continue to exist) the term
of this Lease shall expire as fully and completely as if that day were the date
herein definitely fixed for the expiration of the term and the Tenant will then
quit and surrender the Demised Premises to the Landlord, but the Tenant shall
remain liable as hereinbefore and hereinafter provided;
(c)Upon the occurrence of any Event of Default, Landlord shall have the
election, forthwith to recover against Tenant as liquidated damages for loss
of the bargain and not as a penalty, a sum equal to the Fixed Minimum Rent
multiplied by the number of months and fractional months which would have
constituted the balance of the term, together with costs and attorneys' fees,
except that Landlord will use its best efforts to mitigate its damages.
64th. In the event that Tenant is in default in payment of any rent or any
additional rent, the Landlord is hereby authorized to apply any payments
received by Landlord to any default and in such amount or amounts as Landlord
may elect.
65th. No part of the Demised Premises shall be occupied by any person, firm or
entity other than Tenant. All goods, wares and merchandise brought into or
stored at the Demised Premises and not owned by Tenant (the "Goods"), shall not
give the Owner of such Goods (the Non-Tenant) any rights of any kind or nature
with respect to the Demised Premises or the use or occupation thereof.
65.1 In the event that all or any part of the Goods stored at the Demised
Premises are not owned by Tenant, but owned by the Non-Tenant, and the Non-
Tenant becomes insolvent while the Goods are at the Demised Premises, and a
voluntary or involuntary petition in bankruptcy is filed by or on behalf of the
Non-Tenant, or such Non-Tenant makes any assignment for the benefit of
creditors, Tenant shall within five (5) days of the filing of the said petition
or assignment by the Non-Tenant:
(a)deposit with the Landlord a sum equal to three (3) months of the then
current rent as further security and assurance to Landlord that the Tenant will
perform all the terms and covenants of this Lease to be performed by Tenant;
and
(b)remove or cause to be removed from the Demised Premises the Goods of the
Non-Tenant; and/or
(c)provide Landlord with adequate assurance, satisfactory to Landlord form
both the Tenant and Non-Tenant that at all times during the presence of the
Goods at the Demised Premises during the term of the Lease that all rent and
additional rent shall be paid when due.
66th. No memorandum of this Lease shall be recorded without the express written
consent of Landlord.
67th. At all times during the term of this Lease, or any extension or renewal
thereof, Tenant shall obtain and keep in full force and effect for the benefit
of Landlord an Tenant, with a responsible company doing business in Suffolk or
Nassau County, a service and repair and maintenance contract with respect to
the heating and air conditioning systems of the building. A copy of such
contracts and renewals thereof shall be delivered to Landlord upon the issuance
thereof (within thirty days of the commencement of the term of this Lease, or,
in the case of renewal, within ten days prior to the expiration thereof) with
proof of payment.
68th. The Tenant agrees to furnish Landlord with a financial statement or any
other instrument which may be required by a lending institution to which
Landlord has applied for a mortgage loan in accordance with SEC guidelines.
69th. As a condition to making this Lease, the Tenant agrees that it shall,
within twenty (20) days after the date of execution hereof or March 31, 1995,
whichever is later, deliver to the Landlord, in proper form, a resolution of
the Board of Directors of Tenant confirming and approving this Lease.
70th. Except as provided in Exhibit "C", Tenant shall not, without the express
written consent of Landlord, enter in or upon the roof of the Demised Premises
or install anything thereon or make any alterations thereto.
71st. Tenant shall be permitted to install a lawful sign on the existing pylon
shown on Exhibit "A", provided Tenant complies with all applicable regulations
and obtains Landlord's prior approval of design thereof, which approval shall
not be unreasonably withheld.
72nd. Tenant shall have the option to extend the term of this lease for a
period of five (5) years, to wit May 1, 2000 to April 30, 2005 (the "Extended
Term") upon condition that Tenant exercises the said option in writing on or
before DECEMBER 1, 1999. For the annual rent for the Extended Term see Exhibit
"B".
73rd. Tenant currently occupies the premises known as 1644 Route 110,
Farmingdale, New York, which premises are owned by Hollow Properties, Inc., (a
related entity to the Landlord herein), pursuant to a certain lease entered
into between the respective predecessors in interest of Hollow Properties,
Inc., and Tenant (the "1644 Lease"). At the time of the signing of this Lease,
the parties shall also sign an Amendment to the 1644 Lease, which signed
Amendment shall be annexed to this Lease as Exhibit "E" (the "1644 Amendment").
Tenant acknowledges that a default by Tenant under the terms of this Lease
shall also constitute a default under the terms of the 1644 Lease and 1644
Amendment.
74th. Tenant's performance of its obligations under the terms of this Lease
shall be expressly subject to and contingent upon Tenant receiving the
municipal permits and approvals required to permit the operation of Tenant's
business (as defined herein) at the Demised Premises. Upon the execution of
this Lease, Tenant shall immediately apply for any and all permits and
approvals so required, at Tenant's sole cost and expense. In the event Tenant
has failed to obtain said permits and approvals by July 1, 1995, either party
may cancel this Lease, upon five (5) days prior written notice to the other
party, except that Tenant may further extend the time to obtain said permits
and approvals by making prompt payment of all rent and additional rent due
under this Lease together with prompt payment to Hollow Properties, Inc. under
the terms of the 1644 Lease or the 1644 Amendment and by complying with all the
other terms and conditions of the 1644 Lease and 1644 Amendment.
75th. Landlord and Tenant acknowledge that Tenant shall make certain
improvements to the Demised Premises (Tenant's Work). Tenant, at his sole cost
and expense shall deliver to Landlord two (2) copies of complete, detailed
architectural, mechanical and electrical drawings and specifications for
Tenant's Work (Tenant's Plans). Tenant's Plans shall be prepared in accordance
with all applicable laws, ordinance, rules and regulations.
All work proposed by Tenant shall be subject to the prior approval of
Landlord, which approval shall not be unreasonably withheld. Upon Landlord's
approval of Tenant's Plans, three (3) sets of same shall be signed by Landlord
and Tenant, two (2) sets to be retained by Landlord and one (1) set by Tenant.
Thereafter, Tenant's Plans shall not be changed without the prior approval of
Landlord, which approval shall not be unreasonably withheld.
Landlord's approval of Tenant's Plans shall not constitute an opinion or
agreement by Landlord that said Plans are in compliance with applicable law,
nor shall such approval impose any present or future liability on Landlord, nor
constitute a waiver by Landlord of any of its rights under this Lease. Prior
to beginning Tenant's work, Tenant shall file said Plans with the appropriate
governmental agencies and obtain all necessary approvals for same. Tenant
shall provide Landlord with copies of all such approvals immediately upon
obtaining same.
The cost of Tenant's Work shall be paid by Tenant in cash or its equivalent,
so that the Demised Premises shall at all times be free of liens for labor and
materials supplied in connection with Tenant's Work. If at any time the
Demised Premises shall be encumbered by any mechanic's or materialmen's lien,
Tenant shall, within ten (10) days after receipt of notice of same or request
by Landlord, discharge (or post a bond in lieu thereof) said lien to the
satisfaction of Landlord. If Tenant fails to discharge or bond said lien or
liens after receiving the aforesaid notice or request by Landlord, Landlord may
discharge or bond said lien or liens, and Tenant shall be responsible for all
costs incurred by Landlord in discharging or bonding said lien or liens
including reasonable attorney's fees, with said costs to be payable to Landlord
as additional rent.
Tenant guarantees to Landlord the full, lien-free completion of Tenant's
Work in accordance with Tenant's Plans. During the course of Tenant's Work,
Tenant (and all of its contractors and subcontractors) will carry or cause to
be carried adequate Worker's Compensation Insurance, Builders Risk,
Comprehensive General Liability and such other insurance as may be required by
law to be carried by Landlord or Tenant in connection with such construction,
and such insurance (except the Worker's Compensation Insurance) shall name
Landlord, Landlord's managing agent as additional insureds.
All of Tenant's Work shall be done in such a manner so as not to impair the
structural integrity of the building nor affect the proper functioning of any
of the mechanical, electrical, HVAC, plumbing, sanitary or other systems of the
Demised Premises.
With respect to Tenant's Work, Tenant, at its sole cost and expense, shall
provide and deliver to Landlord, in form and substance satisfactory to
Landlord, (i) written partial releases of liens executed by contractors,
subcontractors, material suppliers and laborers simultaneously with and to the
extent of payment for the labor performed or materials furnished by such
contractor, subcontractor, material supplier or laborer, and (ii) final
releases of lien simultaneous with final payments to contractors,
subcontractors, material suppliers and laborers.
Promptly following the completion of all of Tenant's Work, Tenant shall
obtain and furnish to Landlord (i) all appropriate certifications from all
authorities having jurisdiction (including a certificate of occupancy or
certificate of completion, as the case may be) to the effect that all of
Tenant's Work has been performed and completed in accordance with Tenant's
Plans and with all Legal Requirements.
LANDLORD
CARMAN ROAD REALTY, INC. and
BROAD PROPERTIES, INC.
By:_________________________
Joseph Picone, Jr., Pres.
TENANT
STROBER LONG ISLAND BUILDING
MATERIAL CENTERS, INC.
By:_________________________
<PAGE>
"EXHIBIT B"
<TABLE>
<CAPTION>
PERIOD ANNUAL RENT
<S> <C>
May 1, 1995 to April 30, 1996 $140,070.00
May 1, 1996 to April 30, 1997 150,844.20
May 1, 1997 to April 30, 1998 161,618.16
May 1, 1998 to April 30, 1999 172,393.44
May 1, 1999 to April 30, 2000 183,168.00
PERIOD MONTHLY PAYMENTS
May 1, 1995 to April 30, 1996 $ 11,672.50
May 1, 1996 to April 30, 1997 12,570.35
May 1, 1997 to April 30, 1998 13,468.18
May 1, 1998 to April 30, 1999 14,366.12
May 1, 1999 to April 30, 2000 15,264.00
EXTENDED TERM
PERIOD ANNUAL RENT
May 1, 2000 to April 30, 2001 $193,942.08
May 1, 2001 to April 30, 2002 193,942.08
May 1, 2002 to April 30, 2003 193,942.08
May 1, 2003 to April 30, 2004 205,914.00
May 1, 2004 to April 30, 2005 205,914.00
PERIOD MONTHLY PAYMENTS
May 1, 2000 to April 30, 2001 $ 16,161.84
May 1, 2001 to April 30, 2002 16,161.84
May 1, 2002 to April 30, 2003 16,161.84
May 1, 2003 to April 30, 2004 17,159.50
May 1, 2004 to April 30, 2005 17,159.50
</TABLE>
It is intended hereby that upon the commencement of the term, Tenant's
obligation to pay rent hereunder will commence upon occupancy or July 1,1995
whichever is sooner.
If Tenant commences occupancy on June 1, 1995 then the annual rent for the
period June 1, 1995 to April 30, 1996 shall be $128,397.50 if the Tenant
commences occupancy on July 1, 1995 then the annual rent for the period July 1,
1995 to April 30, 1996 shall be $116,725.00.
<PAGE>
EXHIBIT "C"
Tenant's improvements to be competed at Tenant's sole cost and expense in
accordance with the terms of the Lease and all applicable law.
1. Convert 79 East Carmans Road into Office and Showroom.
2. Add overhead door to south wall of 77 East Carmans Road.
3. Add overhead door to south wall of 75 East Carmans Road.
4. Demolish block room in 79 East Carmans Road.
5. Demolish office space in 75 East Carmans Road.
6. Remove overhead door in east wall of 79 East Carmans Road.
7. Install windows and entrance in 79 East Carmans Road.
8. HVAC in 79 East Carmans Road.
9. Install two bathrooms in 79 East Carmans Road tie into new sewer line to be
run by landlord or pump up and through 77 and 75 East Carmans Road to tie
into existing sewer.
10.Close openings between 79 and 77 East Carmans Road install 6' passage door.
11.Open wall between 75 and 77 East Carmans Road.
12.Install water and waste in lunchroom.
13.Drop sprinkler heads below any finished ceilings. May convert wet sprinkler
system to dry type.
<PAGE>
EXHIBIT "D"
Picone Work Letter for Exhibit "D"
1. Relocate Fire Hydrant.
2. Finish Stucco on south wall only, as intended.
3. Fix blacktop as needed.
4. Remove concrete dividers between leased yard and fire lane.
5. Remove fence between leased yard and fire lane.
<PAGE>
State of New York )
) ss.:
County of )
On the day of 19 , before me personally came
to me known and known to me to be the individual described in, and who
executed the foregoing instrument, and acknowledged to me
that he executed the same.
State of New York )
) ss.:
County of )
On the day of 19 , before me personally came
to me known, who, being by me duly sworn, did depose and say that he
resides at No.
that he is the of
the corporation mentioned in, and which executed, the foregoing instrument that
he knows the seal of said corporation: that the seal affixed to said
instrument is such corporate seal; that it was so affixed by order of the Board
of of said corporation; and that he signed his
name thereto by like order.
In Consideration of the letting of the premises within mentioned in the
within named Tenant and the sum of $1.00 paid to the undersigned by the within
named Landlord, the undersigned do hereby covenant and agree, to and with
the Landlord and the Landlord's legal representatives, that if default shall at
any time be made by the said Tenant in payment of the rent and the performance
of the covenants contained in the within lease, on the Tenant's part to be paid
and performed, that the undersigned will well and truly pay the said rent, or
any arrears thereof, that may remain due unto the said Landlord, and also pay
all damages that may arise in consequence of the non-performance of said
covenants, or either of them, without requiring notice of any such default from
the said Landlord. The undersigned hereby waives all right to trial by jury in
any action or proceeding hereinafter instituted by the Landlord, to which the
undersigned may be a party.
IN WITNESS WHEREOF, the undersigned set hand and seal this day of
, 19 .
WITNESS _____________________________________L.S.
<PAGE>
EXHIBIT 23
Consent of Independent Auditors
<PAGE>
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
The Strober Organization, Inc.:
We consent to incorporation by reference in the Registration Statements Nos.
33-71768, 33-71766 and 333-693 on Form S-8 of The Strober Organization, Inc. of
our report dated March 1, 1996, relating to the consolidated balance sheets of
The Strober Organization, Inc. and subsidiaries as of December 31, 1995 and
1994 and the related consolidated statements of operations, stockholders'
equity and cash flows and related financial statement schedule for each of the
years in the three-year period ended December 31, 1995 which report appears in
the December 31, 1995 annual report on Form 10-K of The Strober Organization,
Inc.
KPMG PEAT MARWICK LLP
Jericho, New York
March 26, 1996
<PAGE>
EXHIBIT 27
Financial Data Schedule
<PAGE>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE STROBER
ORGANIZATION, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Dec-31-95
<PERIOD-START> Jan-01-95
<PERIOD-END> Dec-31-95
<CASH> 6,007
<SECURITIES> 0
<RECEIVABLES> 18,228
<ALLOWANCES> 2,321
<INVENTORY> 10,305
<CURRENT-ASSETS> 33,487
<PP&E> 12,676
<DEPRECIATION> 9,049
<TOTAL-ASSETS> 44,544
<CURRENT-LIABILITIES> 9,796
<BONDS> 0
<COMMON> 52
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 44,544
<SALES> 125,813
<TOTAL-REVENUES> 125,813
<CGS> 92,627
<TOTAL-COSTS> 92,627
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 566
<INTEREST-EXPENSE> 228
<INCOME-PRETAX> 5,348
<INCOME-TAX> 2,266
<INCOME-CONTINUING> 3,082
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,082
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.59
</TABLE>
