<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OR 1934
For the fiscal year ended June 1, 1996
Commission File No. 0-15696
PIEMONTE FOODS, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-0626121
(State of other jurisdiction of I. R. S. Employer
incorporation of Organization) Identification
400 Augusta Street, Greenville, South Carolina 29604
(Address of principal executive offices)
Registrant's telephone number, including area code: (864) 242-0424
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12 (g) of the Act:
COMMON STOCK
(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
Aggregate market value of the voting stock (which consist solely of
shares of Common Stock) held by non-affiliates of the registrant as of June 1,
1996, computed by reference to the closing price of the registrant's Common
Stock:
$7,015,854.
The number of shares of common stock outstanding as of August 22, 1996
was 1,476,209.
<PAGE>
PART I
ITEM 1. BUSINESS
Piemonte Foods, Inc. develops, produces and markets pizza-related
foods, primarily pre-baked pizza crusts and specialty meat toppings in addition
to icing cakes for supermarkets.
The Company's products are targeted to three specific segments in the
wholesale food market; Pre-made and frozen pizza industry, Institutional and
Foodservice distributors, and Supermarket delicatessens. Additionally,
Piemonte's products are sold through specialty fund raising programs for public
and private schools, clubs, and church groups in nineteen states.
The Company's products are sold through its own sales force as well as
a network of regional food brokers and sales agents.
Piemonte Foods, Inc. is a South Carolina Corporation with its principal
offices located at 400 Augusta Street, Greenville, South Carolina. As used
herein, the terms "Company" and "Piemonte" include Piemonte Foods, Inc. and its
wholly owned subsidiaries, Piemonte Foods of Indiana, Inc. and Origena, Inc.
The Company participates in a 50/50 joint venture with Sabatasso Pizza
Products in Breda, Holland, having formed a company named Piemonte Beheer MIJ
B.V. in 1994. The joint venture is a pizza crust producer.
BUSINESS OPERATIONS
WHOLESALE FOOD SALES
The Pre-made and Frozen Pizza Industry
The Company produces pre-baked pizza crusts and specialty meat toppings
for the pre-made and frozen pizza industry. The Company's production processes
enable the prompt fulfillment of orders to customers' own pizza specifications
such as thickness and sizes of crusts as well as special recipes.
Piemonte has historically been a leader in the pre-baked pizza crust
industry serving this market. Sales to the pre-made and frozen pizza industry
accounted for approximately 32%, 32%, and 33% of the Company's revenues during
1994, 1995, and 1996.
Institutional Distributors
The Company sells pizza ingredients and related products to the hotel,
restaurant, and institutional market and convenience food stores through
regional institutional and specialty food distributors in approximately thirty
states as both private label and proprietary products. Independent distributors
hold their own inventories and are solely responsible for the distribution
resale of Piemonte's products.
<PAGE>
Sales of pizza ingredients include the Company's pre-baked pizza crust,
specialty meat toppings, pizza cheeses, pizza sauces, mushrooms and related
items packaged under "Piemonte" brand names.
Sales through institutional distributors accounted for 29%, 27%, and
26% of the Company's revenues during 1994, 1995, and 1996.
Supermarkets
Competitive pressures from fast food chains advanced the rapid
emergence of supermarket delicatessens which offer fresh, healthful,
already-prepared foods.
Piemonte has capitalized on this national consumer trend and markets
its "Piemonte" brand name products in this section of the supermarket.
Refrigerated pizza sales represent one of the fastest growing segments in the
pizza industry. Piemonte's pizzas are prepared from the Company's products by
supermarket personnel and displayed in refrigerated display cases in the deli
area. These pizzas offer consumers a variety of toppings and crust thicknesses.
In response to customer demand, the Company has expanded its cake icing
services for Supermarkets. Cakes are iced for the supermarkets with both base
icing and decorative icing to include intricate rose pedals.
Supermarket sales have accounted for 30%, 31%, and 36% of the Company's
revenues during 1994, 1995, and 1996.
The Distribution Network
The Company distributes products to its wholesale customers from its
manufacturing facilities as well as a centralized warehouse in Simpsonville, SC.
Shipments are made to pre-made and frozen pizza manufacturers, warehouses of
independent institutional distributors (who then service individual accounts),
and supermarket chain divisional warehouses. Deliveries are made in refrigerated
delivery trucks, which the Company either owns or leases.
<PAGE>
FUNDRAISING PROGRAM
Piemonte Foods supplies pizza products to schools and other
organizations for fundraising purposes. Piemonte provides pre-packaged pizza
kits which can be sold at a profit by schools or sponsored organizations. The
kits offer a wide variety of pizza toppings, crusts, sauces and real cheeses.
Consumers assemble the ingredients and bake.
Fundraising programs such as Piemonte's are gaining popularity as local
funding is reduced in many communities across the country. Contacts with the
schools are made by independent commissioned agents. These agents provide
support for the fundraising organizations, providing materials and helping
organize the distribution.
We anticipate continued growth in the fundraising market because of the
popularity of pizza coupled with the surge in at-home consumption.
Sales of the Company's products to various fund raising programs
accounted for approximately 9%, 9% and 10% of the Company's revenues in 1993,
1994 and 1995.
MAJOR CUSTOMERS
The Company's business is not dependent on any single customer, but one
Company - Kroger at 19% - did account for more than 10% of the Company's
consolidated revenues for the last year.
SOURCES AND AVAILABILTY OF RAW MATERIALS
Flour, oils, meat, tomatoes, cheese, packaging materials and other
related products are essential to the business of the Company. The Company has
not experienced any shortages of these items essential to its operations. The
Company currently has several sources of supply. Flour, meat, cheese, and other
products used in production or for resale are subject to price fluctuations
related to the commodities market. The drought this spring did cause crop
problems in the grain-producing states, but we were partially protected by our
purchasing procedures.
The Company has not experienced any adverse effect on its operations as
a result of energy and fuel shortages. However, severe shortages of either in
the future could have an adverse effect on the Company's business.
<PAGE>
PATENTS, TRADEMARKS
The name "Piemonte" is a registered trademark. The brand name enjoys a
significant amount of brand equity among not only trade customers but consumers
as well.
SEASONAL AND CYCLICAL NATURE OF BUSINESS; BACKLOG
The pizza industry does experience volatility, decreasing significantly
in the summer when fundraising programs traditionally stall and picnics displace
pizza consumption.
Because the Company deals almost entirely in products which are sold
fresh to the consumer, it does not develop significant order backlogs.
COMPETITIVE CONDITIONS
All segments of the pizza business are extremely competitive. Primary
competition in the wholesale pre-baked pizza crust business includes Virga, TNT,
and a number of small regional processors. Competition for supermarket deli
sales includes Crestar Foods, Gilardi's and a number of regional pizza
processors. In the specialty meat topping market, competition includes Doskocil
Sausage Co., Capitol Wholesale Meats, H & M Meats, Arco Meats and many other
national and regional packers. Our most important goal is to produce products
that are superior in taste to our competition, and then support our customers
through merchandising, marketing, service, and value.
REGULATIONS
The Company is subject to various Federal, State and local laws
affecting its business, including various health, environment, sanitation, and
safety regulations. Our Frankfurt, IN facility operates under the United States
Department of Agriculture (USDA) supervision. The Company believes its
operations comply in all material respects with applicable laws and regulations.
EMPLOYEES
The Company has 301 full and part-time employees. Of these, there are
10 administrative and clerical positions and 18 sales and sales administrative
positions. The remaining employees are in manufacturing, warehousing, and
delivery.
<PAGE>
ITEM 2. PROPERTIES
The following table sets forth information concerning the Company's
facilities:
<TABLE>
<CAPTION>
Date Leased Exp. Of Approx.
or Acquired Lease Square
Location Description Term Footage
<S> <C> <C> <C>
Greenville, SC 1974 Corporate Headquarters, Bakery, 1998 67,000
Distribution, and Maintenance
Simpsonville, SC 1983 Warehousing and Distribution 1998 40,000
Chicago, IL 1990 Office and Bakery 1999 30,000
Frankfort, IN 1988 Office, USDA Meat Production and Owned 55,000
Regional Distribution
Nashville, TN 1996 Decorated Cake Production 2001 26,000
</TABLE>
The Company's manufacturing facilities were designed specifically for
the operations they support. The facilities are adequate for current production
and distribution needs.
ITEM 3. LEGAL PROCEEDINGS
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Matters subject to a vote at the regularly scheduled meeting are addressed in
the Proxy mailed to all security holders.
<PAGE>
PART II
ITEM 5. MARKET PRICE AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF STOCK
The Company's common stock trades on the NASDAQ Small-cap under the
symbol PIFI. The shares have been traded since 1969. The prices shown below
represent high and low bid prices exclusive of commissions and may not represent
actual transactions.
1995 High Low
1st 9 1/4 7 3/4
2nd 9 1/4 6 1/2
3rd 7 3/4 6 1/4
4th 6 1/2 4 1/2
1996
1st 5 3/4 4
2nd 6 4
3rd 5 1/4 4 1/2
4th 5 1/8 4 1/2
The principal market makers of the Company's shares are McDonald &
Company in Cleveland, Ohio, NatCity Securities in Indianapolis, Indiana and Carr
Securities in New York, New York.
APPROXIMATE NUMBER OF EQUITY SECURITIES HOLDERS
Approximate Number of Record Holders
as of June 1, 1996
Common Stock, No Par Value 400
DIVIDEND HISTORY
The following table sets forth information concerning cash dividends
per share paid during fiscal years 1994, 1995 and 1996.
1994 5% stock dividend (August 1993)
1995 5% stock dividend (August 1994)
1996 None
There were 1,477,022 shares of common stock outstanding as of June 1,
1996.
Bank covenants restrict the declaration of dividends only to the extent
such dividends would cause an Event of Default.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net Sales 31,148,458 30,483,161 29,874,548 24,072,414 23,504,519
Income (Loss)
from continuing
operations (638,599) 105,719 449,422 684,513 627,570
Income from
continuing oper
Per common
share (.42) 0.07 0.32 0.49 0.52
Total Assets 12,361,020 11,226,223 10,817,273 9,326,636 9,034,942
Long Term
Liabilities 3,329,524 1,357,224 889,510 1,335,070 1,780,630
Dividends per
Share (1) (2)
</TABLE>
(1) 5% Stock Dividend (August 1994)
(2) 5% Stock Dividend (August 1993)
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Working capital on June 2, 1996 was $3,497 thousand which was $1,051
thousand favorable versus last year. Available cash of $1,659 thousand remains
at an acceptable level. Receivables have increased 27% versus prior year
though our experience factor is improved and hence a favorable percentage
reserved for bad debt versus prior year. Emphasis was placed on reducing
inventories that were lowered 37% to $1,210 thousand; obsolete items were
discarded and a review of days of supply was initiated. Also, payables were
lowered 21%. The working capital level is well above the $1 million bank
requirement. Additionally, the Company has a $500 thousand unused line of
credit.
Current year capital expenditures of $573 thousand include continued
improvements in the Frankfort facility as well as preparing a new facility for
cake icing in Nashville. For the coming year capital expenditures are budgeted
at $450 thousand. Capital investments will be focused in Nashville within the
cake icing facility where capacities and productivity are being upgraded, as
well as productivity improvements in both the Chicago and Frankfort facilities.
$1 million was invested in our joint venture in Holland this year in
addition to the original $50 thousand. The facility began operations in March.
Total project costs are estimated at $6,750 thousand. This is financed in via a
bank loan of $4,230 thousand and the remainder split evenly between Piemonte
Foods and its joint venture partner. Additional funding in the coming year is
not projected above $230 thousand that was forwarded in the summer, 1996.
<PAGE>
RESULTS OF OPERATIONS
1996 compared to 1995
Revenues for 1996 were $31.1 million, an increase of 2% versus $30.5
million in the previous year. Sales gains in the Retail trade channel were
nearly offset by losses in Food Service. Retail gains were across numerous
supermarkets, but were most highly focused within accounts purchasing cakes that
are iced by the expanding Nashville business. Cake sales doubled between
business years. Fundraising sales remained relatively flat.
Gross margin declined to $6.4 million or 20.4% of sales, reflecting
over a 4% reduction in gross margin or a 17.5% decline versus last year's gross
margin percent. Raw material increases in flour, corrugated, and cheese were not
immediately passed on to the customers, partially due to competitive pressures.
Management has implemented measures to improve future profitability.
Continued focus on selling, general, and administrative expenses
resulted in costs of $6,676 thousand for the business year, or $566 thousand
lower than the previous year.
Financial performance for the Company's joint venture pizza crust
facility in Holland lowered the full year earnings by $261 thousand, which was
recognized in the Fourth Quarter. The joint venture losses are 50% of the total
losses through May 31, 1996, reflecting facility construction and initial
start-up phases. These costs were recognized in Holland as operational losses
rather than capitalized start-up costs.
Otherwise, Fourth Quarter earnings were low in the U.S. as well. Net
income was a loss of $371 thousand or $293 thousand unfavorable versus prior
year. $213 thousand of the loss represented numerous accounting adjustments;
$153 thousand of it recognizing fixed assets that had been previously disposed.
Due to the negative earnings recognized in the Fourth Quarter, the
Company was in default of its bank covenants for the fiscal year-end testing.
The Bank agreed to waive those covenant violations and new covenants have been
agreed upon within which the Company is in compliance. Interest costs are
increased approximately $50 thousand both in 1996 and the upcoming year due to
the new loan initiated during 1996.
<PAGE>
1995 compared to 1994
Revenues for 1995 were $30.5 million, a 2.0% increase from $29.9
million of 1994; 1995 includes a full year for Origena which was acquired in
October, 1993, versus eight moths in 1994. On a full year basis had Origena been
acquired at the beginning of FY 94, FY 95 revenues at $30.5 million declined
1.8% from $31.0 million. Piemonte "Focaccia" continued to grow in importance,
indicating that the market for a shelf-stable Italian flat bread exists.
Revenues in our institutional distributor were less than expected, the
supermarket deli and pre-made /frozen pizza manufacturer markets showed slight
growth and the fundraising segment grew 10 percent.
Gross margin declined to 24.6 percent in 1995 from 28.1 percent last
year. Margins were affected by significant increases in both corrugated and
plastic film supplies and by higher costs and lower sales in the Company's
Indiana facility. While packaging supply costs affected all manufacturers,
competition in our markets made passing on those costs difficult. Recently costs
have climbed for grain products used in our two bakeries, but these costs will
be passed on to our customers.
As indicated last year, spending was increased in our sales and
marketing areas. Additional penetration was achieved with "Focaccia" as over
2,000 supermarkets now carry the product. In addition our upscale pizza program
for supermarket delis has gained acceptance as retailers' focus on pizza
competition has shifted from the frozen goods case to the pizzeria in the same
shopping center. Our marketing focus produced a third product line that is
privilege to have potential. In early 1994 we began decorating birthday-type
cakes for a specific customer as a test to determine if overall cost savings for
the retailer could be obtained by offsite preparation. This test has proved
successful for our original customer and our ability to achieve cost savings for
delis is now being marketed to other supermarket chains. With more than 800
product offerings, the supermarket deli manager has a very broad focus. If we
can profitably prepare some of these products offsite, we believe we can help
the manager focus more on the remaining products and improve the department's
efficiency and profits.
Net income declined to $105,719 for 1995 as compared to $557,328 last
year. The commitment to upgrade the Indiana plant should reduce its operating
costs and allow positive contributions from that facility. Solid gains in cake
decorating, "Focaccia" and pizza crust sales which were achieved throughout 1995
will continue to be pursued through focused market strategies in fiscal 1996.
IMPACT OF INFLATION
The Company does not believe that inflation has had a material effect
on revenues or expenses for the previous three years. Inflation in raw material
and labor costs do, however, shrink Company margins, particularly in consonance
with raw material market volatility.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
Index to Consolidated Financial Statements and Schedules
<TABLE>
<CAPTION>
Financial Statements: Page No.
<S> <C> <C>
Report of Independent Certified Public Accountants II F-1
Consolidated Balance Sheets II F-2
Consolidated Statements of Stockholders' Equity II F-4
Consolidated Statements of Income II F-5
Consolidated Statements of Cash Flows II F-6
Notes to Consolidated Financial Statements II F-7
Schedules:
II Valuation and Qualifying Accounts II F-16
</TABLE>
Schedules I, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII
have been omitted because they are either not required or
inapplicable.
<PAGE>
Independent Auditors' Report
The Board of Directors
Piemonte Foods, Inc.
Greenville, South Carolina
We have audited the accompanying consolidated balance sheets of Piemonte Foods,
Inc. and Subsidiaries as of June 1, 1996 and June 3, 1995, and the related
consolidated statements of income and retained earnings, stockholders' equity,
and cash flows for each of the three fiscal years in the period ended June 1,
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements 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 Piemonte Foods, Inc.
and Subsidiaries as of June 1, 1996 and June 3, 1995, and the results of its
operations and its cash flows for each of the three fiscal years in the period
ended June 1, 1996 in conformity with generally accepted accounting principles.
Certified Public Accountants
Greenville, South Carolina
July 26, 1996
(except for Note 5, as to
which date is August 23, 1996)
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 1, 1996 and June 3, 1995
<TABLE>
<CAPTION>
ASSETS
1996 1995
------------------- -------------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,658,514 $ 885,967
Accounts Receivable, net 2,265,873 1,778,773
Inventories 1,210,154 1,909,104
Prepaid expenses 518,796 299,059
------------------- -------------------
TOTAL CURRENT ASSETS 5,653,337 4,872,903
------------------- -------------------
PROPERTY, PLANT AND EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION 5,044,217 5,373,892
------------------- -------------------
DEFERRED CHARGES, INTANGIBLE AND
OTHER ASSETS
Excess of cost over fair value of net assets acquired 770,358 803,310
Investment in European joint venture - at equity 794,913 50,000
Other assets 98,195 126,118
------------------- -------------------
1,663,466 979,428
------------------- -------------------
$ 12,361,020 $ 11,226,223
=================== ===================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
June 1, 1996 and June 3, 1995
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
1996 1995
------------------- -------------------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 502,857 $ 609,131
Accounts payable, trade 1,091,045 1,379,088
Accrued promotional allowances 76,163 78,069
Accrued compensation and payroll taxes 143,084 184,842
Accrued property taxes 70,075 76,762
Other accrued expenses 273,199 99,458
------------------- -------------------
TOTAL CURRENT LIABILITIES 2,156,423 2,427,350
------------------- -------------------
LONG-TERM DEBT 3,329,524 1,357,224
------------------- -------------------
DEFERRED INCOME TAXES 437,095 420,728
------------------- -------------------
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 5,000,000
shares; issued - 1,477,022 shares; outstanding -
1,477,022 and 1,448,261 in 1996 and 1995,
respectively. 14,770 14,481
Capital in excess of stated value of common stock 2,800,305 2,744,938
Retained earnings 3,622,903 4,261,502
------------------- -------------------
TOTAL STOCKHOLDERS' EQUITY 6,437,978 7,020,921
------------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 12,361,020 $ 11,226,223
=================== ===================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
For the Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
<TABLE>
<CAPTION>
Common Stock Treasury Stock
------------------------ --------------------------
Capital in
Number of Excess of Retained Number of
Shares Amount Stated Value Earnings Shares Amount
----------- --------- ------------- ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, May 29, 1993 1,335,457 $ 13,354 $ 1,978,782 $ 3,848,455 10,000 $ 23,751
Common stock issued 101,488 1,015 709,944 - - -
Net income - - - 557,328 - -
Dividends: Origena, Inc. - - - (250,000) - -
----------- --------- ------------- ------------ ------------ ----------
Balance, May 28, 1994 1,436,945 14,369 2,688,726 4,155,783 10,000 23,751
Treasury stock cancelled (10,000) (100) (23,651) - (10,000) (23,751)
Common stock issued 21,316 212 79,863 - - -
Net income - - - 105,719 - -
----------- --------- ------------- ------------ ------------ ----------
Balance, June 3, 1995 1,448,261 14,481 2,744,938 4,261,502 - -
Common stock issued 28,761 289 55,367 - - -
Net income (loss) - - - (638,599) - -
----------- --------- ------------- ------------ ------------ ----------
Balance, June 1, 1996 1,477,022 $ 14,770 $ 2,800,305 $ 3,622,903 - $ -
=========== ========= ============= ============ ============ ==========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
For the Fiscal Years Ended June 1, 1996, June 3, 1995, and May 28, 1994
<TABLE>
<CAPTION>
1996 1995 1994
(52 weeks) (53 weeks) (52 weeks)
----------- ----------- -----------
<S> <C> <C> <C>
NET SALES $ 31,148,458 $ 30,483,161 $ 29,874,548
----------- ----------- ------------
OPERATING EXPENSES
Cost of sales 24,771,803 22,871,329 21,439,486
Selling, general and administrative expenses 6,676,123 7,241,706 7,516,819
----------- ----------- ------------
Total 31,447,926 30,113,035 28,956,305
----------- ----------- ------------
OPERATING INCOME (LOSS) (299,468) 370,126 918,243
----------- ----------- ------------
OTHER EXPENSE (INCOME)
Interest expense 200,451 153,190 114,470
Loss on disposal of assets 182,807 98,980 -
Equity in loss on European joint venture 261,016 -
Interest income (45,724) (39,421) (33,910)
Other income (33,419) (49,342) (44,739)
----------- ----------- ------------
Net other expense 565,131 163,407 35,821
----------- ----------- ------------
INCOME (LOSS) BEFORE INCOME TAXES AND
CUMULATIVE EFFECT ADJUSTMENT (864,599) 206,719 882,422
PROVISION (BENEFIT) FOR INCOME TAXES (226,000) 101,000 383,000
----------- ----------- ------------
INCOME (LOSS) BEFORE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE (638,599) 105,719 499,422
----------- ----------- ------------
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE - - 57,906
----------- ----------- ------------
NET INCOME (LOSS) $ (638,599) $ 105,719 $ 557,328
=========== =========== ============
Earnings (loss) per common and common equivalent shares:
Before cumulative effect of change in accounting principle (0.42) 0.07 0.32
Cumulative effect of change in accounting principle - - 0.04
----------- ----------- ------------
(0.42) 0.07 0.36
=========== =========== ============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
<TABLE>
<CAPTION>
1996 1995 1994
(52 weeks) (53 weeks) (52 weeks)
------------ ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ (638,599) $ 105,719 $ 557,328
----------- ----------- -----------
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 742,640 751,722 662,410
Equity in loss on European joint venture 261,016 - -
Deferred income taxes 16,367 31,000 63,174
(Gain) loss on disposal of property 182,807 98,988 -
(Increase) decrease in accounts receivable (487,100) 387,058 (381,412)
(Increase) decrease in prepaid expenses (219,737) (66,207) 172,045
(Increase) decrease in inventories 698,950 (481,209) 90,710
(Increase) decrease in other assets 27,923 3,494 (27,731)
Increase (decrease) in accounts payable (288,043) 243,058 334,835
Increase (decrease) in accrued liabilities 95,164 (151,299) 164,854
Increase (decrease) in income taxes payable 28,226 - (29,938)
----------- ----------- -----------
Total adjustments 1,058,213 816,605 1,048,947
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 419,614 922,324 1,606,275
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash payments for the purchase of property (572,820) (1,319,203) (1,314,504)
Cash proceeds from the sale of property 10,000 90,100 -
Investment in European joint venture (1,005,929) (50,000) -
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (1,568,749) (1,279,103) (1,314,504)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 4,000,000 1,145,000 -
Proceeds from issuance of common stock 55,656 80,478 10,959
Net borrowings (repayment) on line of credit - (500,000) 500,000
Principal payments on long-term debt (2,133,974) (513,715) (445,560)
Dividends paid - - (250,000)
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 1,921,682 211,763 (184,601)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH 772,547 (145,016) 107,170
----------- ----------- -----------
CASH, BEGINNING OF YEAR 885,967 1,030,983 923,813
----------- ----------- -----------
CASH, END OF YEAR $ 1,658,514 $ 885,967 $ 1,030,983
=========== =========== ===========
Supplemental information
Cash paid for interest 200,451 153,190 125,651
Cash paid for income taxes 48,292 301,932 530,157
</TABLE>
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Piemonte Foods,
Inc. (the "Company"), and its subsidiaries, Piemonte Foods of Indiana, Inc. and
Origena, Inc., both of which are wholly owned. All significant intercompany
accounts and balances have been eliminated.
Cash
The Company maintains cash balances at several banks. Accounts at each
institution are insured by the Federal Deposit Insurance Corporation up to
$100,000. Amounts in excess of insured limits were $1,162,000 and $513,000 at
June 1, 1996 and June 3, 1995, respectively.
Accounts Receivable and Allowance for Doubtful Accounts
Income is charged and an allowance is credited with a provision for doubtful
accounts based on bad debt experience and the status of delinquent accounts at
year end. Accounts deemed uncollectible are charged against this allowance.
Accounts receivable are reported in the balance sheets net of such accumulated
allowance. The allowances were $170,000 and $160,000 at June 1, 1996 and June 3,
1995, respectively. The provisions for doubtful accounts were $76,000, $66,000
and $54,000 for 1996, 1995, and 1994, respectively.
The Company is engaged in the manufacture and distribution of Italian style food
products and the icing and distribution of cakes. The Company's primary sales
area is the eastern half of the United States. Credit is granted to its
customers which include grocery chains, wholesale food distributors and frozen
pizza manufacturers. Sales to its largest single customer were in excess of 19%
of net sales. In the prior year, two customers constituted in excess of 10% of
net sales each.
Substantially all accounts receivable are pledged as collateral for the line of
credit and long-term debt (See notes 4 and 5).
Inventories
Inventories are stated at the lower of cost (first-in, first-out method) or
market. Inventories are composed of the following:
June 1, June 3,
1996 1995
Raw materials $ 478,351 $ 776,130
Finished goods 731,803 1,132,974
$1,210,154 $1,909,104
Substantially all inventory is pledged as collateral for the line of credit and
long-term debt (See notes 4 and 5).
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Property, Plant and Equipment
Property, plant and equipment are stated at cost. Maintenance and repairs are
charged to expense as incurred. When property, plant and equipment are retired
or sold, the cost and related accumulated depreciation are removed from the
respective accounts and the resulting gain or loss, if any, is included in
income. Depreciation of property, plant and equipment is computed using the
straight-line method and estimated useful lives of the property for financial
reporting purposes and accelerated cost recovery methods and periods for income
tax purposes.
Substantially all property, plant and equipment in Indiana and Illinois is
pledged as collateral for the line of credit and long-term debt (See notes 4 and
5).
Excess of Cost over Fair Value of Net Assets Acquired
Excess cost over fair value of net assets acquired arises from the acquisition
in 1984 of Piemonte Foods of Indiana, Inc. and in 1993 of Origena, Inc. The
amounts and amortization periods are as follows:
Piemonte Foods of Indiana, Inc. $1,024,000 40 years
Origena, Inc. 74,000 25 years
Accumulated amortization at June 1, 1996 and June 3, 1995 was $328,000 and
$295,000, respectively.
Income Taxes
Effective May 30, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes"
and reported the cumulative effect of that change in the method of accounting
for income taxes in the consolidated statement of earnings.
Net Income Per Share
Net income per share is based upon the weighted average number of common and
common equivalent shares outstanding during the respective periods. See Note 8
regarding stock options outstanding which constitute the Company's common
equivalent shares. The common equivalent shares have had no material dilutive
effect.
Stock Dividends
On August 16, 1993 and on August 15, 1994, the Board of Directors declared a
five percent (5%) stock dividend. All relevant data has been adjusted to give
retroactive effect to these stock dividends.
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
NOTE 2 - PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of:
Estimated
Useful
1996 1995 Lives - Years
Land $ 25,000 $ 25,000
Buildings 1,972,157 1,825,566 4-30
Equipment 7,153,188 7,732,160 2-12
Vehicles 188,862 242,991 2-6
Furniture and fixtures 328,245 316,504 2-10
Leaseholds 536,190 536,190 3-10
Construction in progress 182,639 149,431
Total 10,386,281 10,827,842
Less Accumulated Depreciation and
Amortization 5,342,064 5,453,950
Net Property, Plant and
Equipment $5,044,217 $5,373,892
Depreciation and amortization of property, plant and equipment was $709,688,
$722,000 and $662,000 in 1996, 1995 and 1994, respectively.
Repairs and maintenance were $430,000, $354,000, and $338,000 in 1996, 1995 and
1994, respectively.
NOTE 3 - OPERATING LEASES
The Company leases its bakery manufacturing plants, distribution center,
automotive fleet, computer and various equipment under arrangements accounted
for as operating leases. Such leases expire at various times over the next eight
fiscal years. The approximate minimum annual commitments under these leases are
as follows:
Fiscal Year Amount
1997 $397,820
1998 371,268
1999 268,260
2000 260,160
2001 129,684
Thereafter 227,309
The Company leases certain transportation equipment (principally over-the-road
tractors and trailers) under cancelable leases for an approximate base rent of
$37,000 per month plus a charge for mileage and fuel.
Rent expense for operating leases totaled $862,000, $793,000 and $766,000 in
1996, 1995 and 1994, respectively.
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
NOTE 4 - NOTE PAYABLE - LINE OF CREDIT
A line of credit has been extended to the Company in the amount of $500,000. The
line is collateralized by all fixed assets, all accounts receivable and all
inventories and is guaranteed by the Company and its subsidiaries. The interest
rate charged is the 90 day LIBOR base rate plus 150 basis points. The line
expires October 31, 1996. It was not in use at June 1, 1996.
The line of credit and bank loans are cross collateralized and cross defaulted.
NOTE 5 - LONG-TERM DEBT AND DEBT COVENANT RESTRICTIONS
Long-term debt consists of:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Bank loans collateralized by all fixed assets, all accounts receivable and all
inventories; due in monthly installments indicated below plus interest at
the 90 day LIBOR base rate plus 150 basis points
$13,630 monthly, through November, 2001 $ - $ 1,076,485
$13,333 monthly, through October, 2000 1,546,667 262,600
$28,571 monthly, through October, 2000 2,285,714 627,270
3,832,381 1,966,355
Less current portion 502,857 609,131
LONG-TERM DEBT $ 3,329,524 $ 1,357,224
</TABLE>
The loan agreement contains restrictive covenants which, among other things,
requires that the Company limit the funding of the Piemonte/Sabatasso European
Project Joint Venture to $1,000,000 (See Note 10), have a debt coverage ratio of
1.25 to 1 at June 1996, and have a minimum net worth of $6,600,000 at June 1,
1996. At June 1, 1996, the Company was in violation of the three covenants
described above. The bank has agreed to waive these requirements for the fiscal
year end testing in a letter dated August 21, 1996. Also, on August 23, 1996,
Piemonte and the bank executed an amendment to the loan agreement which provides
less stringent requirements for future periods. The Company, at August 23, 1996,
was not in violation of any of the amended covenants.
The lines of credit and bank loans are cross collateralized and cross defaulted.
Long-term debt maturities are as follows:
Fiscal Year Amount
1997 $502,857
1998 502,857
1999 502,857
2000 502,857
2001 502,857
Thereafter 815,239
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
NOTE 6 - INCOME TAXES
As discussed in Note 1, the Company adopted SFAS 109 as of the beginning of the
fiscal year ended May 28, 1994. The cumulative effect of this change in
accounting for income taxes, which resulted in a $57,905 reduction of the
deferred income tax liability at May 30, 1993, has been reflected in the
consolidated statement of earnings for the fiscal year ended May 28, 1994.
The provision (benefit) for income taxes consists of:
1996 1995 1994
Current
Federal $(167,000) $ 88,000 $ 283,000
State 21,000 34,000 54,000
Total Current Provision (146,000) 122,000 337,000
Deferred (80,000) (21,000) 46,000
Provision (benefit) for income taxes $(226,000) $ 101,000 $ 383,000
Components of the deferred portion of the income tax provision which resulted
from timing differences in the recognition of expense for income tax and
financial accounting purposes are as follows:
1996 1995 1994
1986 Tax Reform Act changes
Bad debt $ (4,000) $(12,400) $ 10,000
Inventory capitalization (1,000) 10,000 4,000
Deferred marketing (29,000) -- --
Depreciation for income tax return
in excess of book depreciation 17,000 31,000 27,000
Accruals (31,000) (7,000) --
State income tax (32,000) -- 5,000
AMT credit carry forward -- (42,600) --
Deferred income taxes $(80,000) $(21,000) 46,000
The deferred tax asset and deferred tax liability comprised the following at
June 1, 1996:
Deferred tax asset:
Allowance for doubtful accounts $ 65,000
Inventory 8,000
Deferred costs 29,000
Accruals 3,000
Net operating loss and tax credit carryforward 74,000
179,000
Valuation allowance (143,000)
Net deferred tax asset $ 36,000
Deferred tax liability:
Depreciation $ 437,000
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
NOTE 6 - INCOME TAXES (Continued)
The income tax provision differs from the amount computed by applying the
statutory rate as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Tax expense (benefit) computed at statutory
federal income tax rate - 34% $(217,000) $ 70,000 $ 300,000
Increases (reductions) in taxes resulting from:
Benefit (cost) of graduated tax rates 20,000 (11,000) (45,000)
Foreign loss not taxable in U.S. (89,000) -- --
Amortization of the excess of cost
over fair value of net assets
acquired and meals and entertainment
not deductible for tax purposes 46,000 26,000 16,000
State income taxes, net of
federal benefit 14,000 16,000 132,000
Other items:
Cumulative effect of change in
accounting principle -- -- (20,000)
Provision (benefit) for income taxes $(226,000) $ 101,000 $ 383,000
</TABLE>
NOTE 7 - EMPLOYEES' SAVINGS PLAN (401K)
In November, 1990, the Company adopted a 401K savings plan. Full-time employees
with at least one year of service may elect to contribute up to 10% of annual
compensation to the plan. In addition, the Company contributes 50% of such
employee contributions up to 6% of his compensation. Company contributions
totaled approximately $68,000, $54,000 and $53,000 in 1996, 1995 and 1994,
respectively.
NOTE 8 - STOCK OPTIONS OUTSTANDING
In April 1994, the Board of Directors adopted the 1994 Stock Plan that provides
450,000 shares of common stock for options for key employees. In addition the
plan incorporates options outstanding under a previous plan. The plan was
ratified by stockholders at the 1994 Annual meeting.
Concurrent with adoption, options covering 150,000 shares were granted and
became exercisable at 25% per year beginning in 1994. Under provisions of the
Plan, options representing 6,300 shares were granted to non-employee Directors
in October, 1994.
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
NOTE 8 - STOCK OPTIONS OUTSTANDING (Continued)
At June 1, 1996, options granted and outstanding are as follows:
<TABLE>
<CAPTION>
Options Date Exercise Price Options Expiration Options
Granted Granted Per Share Exercised Date Outstanding
<S> <C> <C> <C> <C> <C>
79,380 Dec., 1991 $ 2.04 11,025 Dec., 1996 68,355
22,050 Jan., 1993 2.49 None Oct., 2002 22,050
17,850 Nov., 1993 8.33 None Nov., 2003 17,850
107,625 Apr., 1994 6.90 None Apr., 2004 107,625
5,000 Oct., 1994 6.75 None Oct., 2004 5,000
6,000 Oct., 1995 4.13 None Oct., 2005 6,000
26,500 Jan., 1996 4.52 None Jan., 2006 26,500
</TABLE>
NOTE 9 - RECLASSIFICATION
Certain accounts have been reclassified in prior years to conform to the
accounting presentation for the year ended June 1, 1996 relating to cost of
sales and selling, general and administrative expenses.
NOTE 10 - INVESTMENT IN EUROPEAN JOINT VENTURE
Piemonte Foods initiated a 50/50 joint venture with Sabatasso Pizza Products in
Breda, Holland, forming a company named Piemonte Beheer MIJ B.V. in 1994.
Sabatasso is an established pizza topper with sales throughout Europe. The joint
venture will produce pizza crusts for Sabatasso as well as other European
toppers. It was financed through bank loans of 7,050 thousand guilders
(approximately $4,230,000) and investments by both partners of one million
dollars each this fiscal year. This is in addition to $50,000 investments made
by each joint venture partner in fiscal year 1995. The Company is jointly and
severally liable for the joint venture debt.
Start-up losses recorded by the joint venture were 236 thousand guilders through
calendar year 1995 (the joint venture's fiscal year,) and 557 thousand guilders
through the first five months of 1996 (Piemonte's fiscal year-end). Piemonte's
one half of the total loss in dollars is $261,000. Start-up costs that are
recognized as operational losses in Holland are typically capitalized in the
United States. Piemonte accounts for its investment in the joint venture using
the equity method.
Piemonte Foods has advanced an additional $228,000 to Piemonte Beheer MIJ B.V.
since June 1, 1996. Piemonte Beheer MIJ B.V. does not anticipate a requirement
for any additional funding.
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
NOTE 10 - INVESTMENT IN EUROPEAN JOINT VENTURE (Continued)
The following is a summary of the financial position and results of operations
of Piemonte Beheer MIJ B.V.:
($ Thousands)
------------------
Current assets $ 168
Property, plant and equipment 6,277
Other assets 12
------------------
$ 6,457
------------------
Current liabilities $ 1,979
Long-term debt 2,938
Stockholders' equity 1,540
------------------
$ 6,457
------------------
Sales $ 110
Net loss $ (522)
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
NOTE 11 - UNAUDITED QUARTERLY FINANCIAL DATA, ($ IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $ 6,642 6,569 7,984 8,533
Operating Income (Loss) $ (338) 4 139 271
Net Income (Loss) $ (229) (1) 71 130
Per Share Net Income (Loss) $ (0.15) (0.00) 0.05 0.09
Bid Price Common Stock
High $ 5 3/4 9 1/4 6 9 1/4
Low $ 4 7 3/4 4 6 1/2
3rd Quarter 4th Quarter
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Sales $ 8,877 7,331 7,645 8,050
Operating Income (Loss) $ 278 112 (378) (17)
Net Income (Loss) $ 150 55 (632) (78)
Per Share Net Income (Loss) $ 0.10 0.04 (0.42) (0.06)
Bid Price Common Stock
High $ 5 1/4 7 3/4 5 1/8 6 1/2
Low $ 4 1/2 6 1/4 4 1/2 4 1/2
</TABLE>
<PAGE>
PIEMONTE FOODS, INC. AND SUBSIDIARIES
Schedule II - Valuation and Qualifying Accounts
For the Fiscal Years Ended June 1, 1996, June 3, 1995 and May 28, 1994
<TABLE>
<CAPTION>
Balance at Charged to Credited to Balance at
beginning of cost and other end
Description period expenses accounts Deductions of period
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1996
Allowance for doubtful
accounts $ 160,000 76,000 66,000 170,000
1995
Allowance for doubtful
accounts $ 127,000 67,000 34,000 160,000
1994
Allowance for doubtful
accounts $ 155,000 48,000 76,000 127,000
Balance at Charged to Credited to Balance at
beginning of cost and other end
Description period expenses accounts Deductions of period
--------------------------------------------------------------------------------
1996
Valuation account - deferred
tax assets $ (127,000) 21,000 (148,000)
1995
Valuation account - deferred
tax assets $ (127,000) (127,000)
1994
Valuation account - deferred
tax assets $ 127,000 (127,000)
</TABLE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE
<PAGE>
PART III
A definitive proxy statement, which will be filed with the Securities and
Exchange Commission pursuant to regulation 14A of the Securities Exchange Act of
1934 within 120 days of the end of the registrant's fiscal year ended June 1,
1996 is incorporated herein by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
EXECUTIVE OFFICERS OF THE REGISTRANT
The following is a list of names and ages of all the executive officers
of the registrant, indicating all positions and offices with the Company held by
each such person and each such person's principal occupation or employment
during the past five years.
<TABLE>
<CAPTION>
Name Title Age
<S> <C> <C>
Ronald T. Huth Chairman & Director 63
Virgil L. Clark President, CEO & Director 57
T. Patrick Costello Senior Vice-President & 53
Director
Roy E. Gogel Chief Financial Officer 47
David B. Ward Secretary 55
</TABLE>
Ronald T. Huth has served as a Director since 1984. He was elected
Chairman of the Board in February, 1993. Mr. Huth is a practicing CPA and Senior
Partner of Ronald T. Huth & Co. in Lafayette, Indiana.
Virgil L. Clark has served as Director since 1986. He was elected Chief
Executive Officer in October, 1992. Prior to1992, Mr. Clark was Chairman of M &
S Chemicals, Inc. in Greenville, South Carolina.
T. Patrick Costello was the President and sole shareholder of Origena,
Inc. since its founding in 1990.Origena was acquired by Piemonte in October,
1993. Mr. Costello previously was employed with Sara Lee Bakery, most recently
as Senior Vice-President and General Manager of two divisions.
Roy E. Gogel joined the Company in 1996 as Vice-President, Chief
Financial Officer, & Treasurer. Prior to 1996, he was Vice-President/Chief
Financial Officer of Sonopress, Inc. from 1994-1995, and Corporate Controller,
Ampex, 1993-1994. Prior to 1993 he was with Mobil Corp., most recently as a
Regional Controller.
David B. Ward was elected Secretary in September, 1985. Mr. Ward is a
practicing attorney with Horton, Drawdy, Ward & Johnson, P. A. in Greenville,
South Carolina.
Such information as required by the Securities and Exchange Commission
in Regulation S-K is contained in the Company's definitive Proxy Statement in
connection with its Annual Meeting to be held October 17, 1996.
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
The information with respect to executive compensation and transactions
is hereby incorporated by reference from the Company's definitive proxy
statement to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A of the Securities Exchange Act of 1934.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information with respect to security ownership of certain
beneficial owners and management is hereby incorporated by reference from the
Company's definitive proxy statement to be filed with the Securities and
Exchange Commission pursuant to Regulation 14A of the Securities and Exchange
Act of 1934.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. Van der Sprong became a Director in October, 1995. As Co-Managing
Director of the Joint Venture in Holland, he continued purchasing pizza crusts
as he had previously from the Company and from Origena prior to its acquisition
by the Company. During the joint venture's start-up and following his becoming
a director but before the business year-end, the Company sold $396 thousand of
crusts to Mr. Van der Sprong's company, Sabatasso Pizza Products B.V.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, REPORTS ON 8-K
<TABLE>
<CAPTION>
(a) (1) Financial Statements Page No.
<S> <C> <C>
Included in Part II of this report:
Report of Independent Certified Public Accountants II F-1
Consolidated Balance Sheets II F-2
Consolidated Statements of Stockholders' Equity II F-4
Consolidated Statements of Income II F-5
Consolidated Statements of Cash Flows II F-6
Notes to Consolidated Financial Statements II F-7
(a) (2) Financial Statement Schedules
Included in Part II of this report:
II. Valuation and Qualifying Accounts II-F-16
Schedules I, III, IV, V, VI, VII, VIII, IX, X, XI, XII, XIII
have been omitted because they are either not required or
inapplicable.
(a) (3) EXHIBITS
The Exhibits listed on the accompanying index to Exhibits are
filed as a part of this report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the fourth quarter of
the fiscal year ended June 1, 1996.
</TABLE>
<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.
PIEMONTE FOODS, INC.
(Registrant)
By s/Virgil L. Clark
Virgil L. Clark, CEO
Date August 30, 1996
By s/Roy E. Gogel
Roy E. Gogel, VP/CFO
Pursuant to the requirement 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 date indicated.
s/Virgil L. Clark _____________________
Virgil L. Clark, President, CEO Date
and Director
s/T. Patrick Costello _____________________
T. Patrick Costello, Sr. Vice Date
President and Director
s/Ronald T. Huth _____________________
Ronald T. Huth, Chairman and Date
Director
s/William P. Mahoney _____________________
William P. Mahoney, Director Date
s/Richard J. Stoner _____________________
Richard J. Stoner, Director Date
s/Carel Van der Sprong _____________________
Carel Van der Sprong Date
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Descriptions
3 (a) Articles of incorporation of Piemonte, as
amended, which was filed as an exhibit to the
Company's Form 10-K for the fiscal year ended May 30,
1987, is hereby incorporated by reference.
(b) By-Laws of Piemonte, which were filed as an exhibit
to the Company's Form 10-K for the fiscal year ended
May 30, 1987, are hereby incorporated by reference.
4 The Company agrees to furnish to the Securities and
Exchange Commission upon its request a copy of any
instrument which defines the rights of holders of
long-term debt of the Company and its consolidated
subsidiaries. No such instrument authorizes a total
amount of securities in excess of 10% of the total
assets of the Company and its subsidiaries on a
consolidated basis.
10 (c) The Lease Agreement dated October 28, 1983, between
Bakery Realty of Greenville, Inc. and the Company,
which was filed as an exhibit to the Company's Form
10-k for the fiscal year ended May 30, 1987, is
hereby incorporated by reference.
(e) The Lease Agreement dated March 1, 1983, between
Garrett & Garrett Warehouses and Garrett & Garrett,
SC Partnerships and the Company, which was filed as
an exhibit to the Company's Form 10-K for the fiscal
year ended May 30, 1987, is hereby incorporated by
reference.
(g) The Incentive Stock Option Plan, which was filed as
an exhibit to the Company's Form 10-K for the fiscal
year ended May 30, 1987, is hereby incorporated by
reference.
(l) The Loan and Security Agreement dated April 27, 1989,
between First Union National Bank of South Carolina
and the Company, which was filed as an exhibit to the
Company's 10-K for the fiscal year ended June 3,
1989, is hereby incorporated by reference.
(n) The Employment Agreement dated as of April 15, 1993,
between the Company and John A. Lindsay, which was
filed as an exhibit to the Company's Form 10-K for
the fiscal year ended May 29, 1993, is hereby
incorporated by reference.
(o) The Lease Extension and Option Agreement dated July
1, 1993, between Garrett & Garrett Warehouses and
Garrett & Garrett and the Company, which was filed as
an exhibit to the Company's Form 10-K for the fiscal
year ended May 29, 1993, is hereby incorporated by
reference.
(p) The Lease Agreement dated as of November 16, 1993,
between Institutional Wholesale Co., Inc. and the
Company , which was filed as an exhibit to the
Company's Form 10-K for the fiscal year ended June 3,
1995, is hereby incorporated by reference.
(q) The Employment Agreement dated as of April 22, 1994,
between the Company and Virgil L. Clark was filed as
an exhibit to the Company's Form 10-K for the fiscal
year ended June 3, 1995, is hereby incorporated by
reference.
<PAGE>
(r) The Loan Agreement dated January 4, 1996, between
First Union National Bank of South Carolina and the
Company, is attached.
(s) The Amendment to the Loan Agreement, dated July 18,
1996, relating to the Loan Agreement dated January 4,
1996, between First Union National Bank of
South Carolina and the Company, is attached.
(t) The Amendment to the Loan Agreement, dated August 23,
1996, relating to the Loan Agreement dated January 4,
1996, between First Union National Bank of South
Carolina and the Company is attached.
(u) The Lease Agreement dated as of March 26, 1996,
between Nashville International Airport and the
Company, is attached.
21 Subsidiaries of the registrant
27 Financial data schedule
<PAGE>
LOAN AGREEMENT
<TABLE>
<CAPTION>
<S> <C> <C>
Borrower: Piemonte Foods, Inc., a South Lender: First Union National Bank of South Carolina,
Carolina corporation ("Borrower") ("Lender"), a commercial banking institution
400 Augusta Street Post Office Box 1329
Greenville, South Carolina 29604 Greenville, South Carolina 29602
</TABLE>
THIS LOAN AGREEMENT (this "Loan Agreement") is made and entered into to
be effective as of the 4th day of January, 1996, by and between Lender,Borrower,
Piemonte Foods of Indiana, Inc. ("Piemonte of Indiana"), and Origena, Inc.
("Origena").
NOW, THEREFORE, in consideration of Lender making loans of $500,000.00,
$1,600,000.00 and $2,400,000.00 to Borrower for the purposes set forth in
Section , as evidenced by the Notes (as defined below), Lender, Borrower,
Piemonte of Indiana, and Origena enter into this Loan Agreement and hereby
covenant and agree as follows:
1. Definitions. For the purposes hereof:
1.1. "Business Day" means any day on which Lender is open for business.
1.2. "Closing" or "Closing Date" means the date of this Loan Agreement, on
which the closing of the transactions contemplated hereby shall occur.
1.3. "Collateral" means all real and personal property and other interests
securing the Loans as more particularly set forth in Section 5.1 and 5.2.
1.4. "Commitment Letter" means those certain commitment letters issued as
of October 16, 1995 by Lender to Borrower.
1.5. "Event of Default" shall have the meaning set forth in Section 6.
1.6. "GAAP" means generally accepted accounting principles, as in effect
from time to time, consistently applied.
1.8. "Guaranties" means unconditional and unlimited secured guaranties of
Guarantors in a form acceptable to Lender.
1.9. "Guarantors" means Piemonte Foods of Indiana, Inc. and Origena, Inc.,
each separately a "Guarantor".
1.10. "Hazardous Materials" means all materials described as hazardous
wastes or hazardous substances (or having a similar meaning) under any local,
state, or federal environmental law, rule, or
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regulation, and which material's use, storage, and disposal is regulated by such
local, state, or federal environmental law, rule or regulation, as well as any
petroleum, petroleum products, oil, and asbestos.
1.11. "Improvements" means that certain physical plant, as well as any
other buildings or improvements now or hereafter located on the Real Property.
1.12. "Loan No. 1" means the $1,600,000.00 term Loan described in Section
2(a).
1.13. "Loan No. 2" means the $2,400,000.00 term loan described in Section
2.1(b).
1.14. "Loan No. 3" means the line of credit in an amount not to exceed
$500,000.00 as set forth in Section 2.1(c).
1.15. "Loan No. 1 Maturity Date" means October 31, 2000.
1.16. "Loan No. 2 Maturity Date" means October 31, 2000.
1.17. "Loan No. 3 Maturity Date" means October 31, 1996.
1.18. "Loan No. 1 Note" means the note and security agreement of Borrower
of even date in favor of Lender in the amount of Loan No. 1 as set forth in
Section 2.1 (substantially in the form of Exhibit 1.18 attached hereto), as well
as any note or notes issued by Borrower in substitution, replacement, extension,
amendment, or renewal of the Loan No. 1 Note.
1.19. "Loan No. 2 Note" means the note and security agreement of Borrower
of even date in favor of Lender in the amount of Loan No. 2 as set forth in
Section 2.1 (substantially in the form of Exhibit 1.19 attached hereto), as well
as any note or notes issued by Borrower in substitution, replacement, extension,
amendment or renewal of the Loan No. 2 Note.
1.20. Loan No. 3 Note" means the note and security agreement of Borrower
of even date in favor of Lender in the amount of Loan No. 3 as set forth in
Section 2.1 (substantially in the form of Exhibit 1.20 attached hereto), as well
as any note or notes issued by Borrower in substitution, replacement, extension,
amendment or renewal of the Loan No. 3 Note.
1.21. "Loans" means Loan No. 1, Loan No. 2, and Loan No. 3, as further
described in Section 2.1.
1.22. "Loan Documents" means this Loan Agreement and any and all notes,
mortgages, guaranties, and all other documents, instruments, certificates and
agreements executed and/or delivered by Borrower or any third party in favor of
Lender in connection with the Loans or any Collateral.
1.23. "Mortgage" shall mean that certain mortgage substantially in the
form of Exhibit 1.23 attached hereto, as the same may be modified, amended or
supplemented from time-to-time, given by Mortgagor to Lender as collateral
security for the Loans.
1.24. "Mortgagor" shall mean Piemonte of Indiana.
1.25. "Notes" means, collectively, the Loan No. 1 Note, Loan No. 2 Note,
and Loan No. 3 Note.
1.26. "Obligations" means all obligations and liabilities of any nature
owed to Lender by Borrower and Guarantors, whether now or hereafter existing,
arising out of or related to the Loan Documents or the Commitment Letter or any
other financial transactions between Lender and Borrower, including all future
obligations and advances.
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1.27. "Piemonte/Sabatasso European Project" means the formation and
operation of Piemonte Pizza Crust Europe B.V. a wholly owned subsidiary of
Piemonte Beheer MIJ B.V., a private limited liability company jointly
incorporated by Piemonte Foods, Inc., a company incorporated in the State of
South Carolina, USA, and C.S.M. Van der Sprong B.V., a private limited liability
company registered in the Register of Companies of the Chamber of Commerce and
Industry for Westelijk Noord-Brabant at Breda.
1.28. "Real Property" means that certain parcel of real estate owned by
Mortgagor and located in Frankfort, Indiana, as more particularly described in
the Mortgage, and any and all improvements situate thereon.
2. The Loan and Advances.
2.1. Loans. Lender hereby agrees to make the Loans available to
Borrower as follows:
(a) Loan No. 1 - A term loan in the amount of $1,600,000.00 shall
be advanced in full at Closing. The obligation to repay Loan No. 1
shall be evidenced by the Loan No. 1 Note and shall have the
repayment terms and interest rates as set forth in the Loan No. 1
Note. All amounts outstanding under the Loan No. 1 Note shall be
due and payable on the Loan No. 1 Maturity Date; provided however,
that in its sole discretion Lender may exercise its option to
extend Loan No. 1 for an additional five (5) year period under the
same terms and conditions set forth herein. Repayment of principal
and interest following such extension, shall be based upon monthly
principal payments plus accrued interest, computed on a ten (10)
year amortization from the Closing Date with all outstanding
principal plus accrued but unpaid interest being due and payable
ten (10) years from the Closing Date. By way of clarification,
monthly principal payments following extension of Loan No. 1 shall
be in the same amount as prior to said extension. As a condition
precedent to such extension, Borrower shall execute a note
modification agreement consistent with the terms hereof.
(b) Loan No. 2 - A term loan in the amount of $2,400,000.00 shall
be advanced in full at Closing. The obligation to repay Loan No. 2
shall be evidenced by the Loan No. 2 Note and shall have the
repayment terms and interest rates as set forth in the Loan No. 2
Note. All amounts outstanding under Loan No. 2 shall be due and
payable on the Loan No. 2 Maturity Date; provided however, that in
its sole discretion Lender may exercise its option to extend Loan
No. 2 for an additional two (2) year period under the same terms
and conditions set forth herein. Repayment of principal and
interest following such extension, shall be based upon monthly
principal payments plus accrued interest, computed on a seven (7)
year amortization from the Closing Date with all outstanding
principal plus accrued but unpaid interest being due and payable
seven (7) years from the Closing Date. By way of clarification,
monthly principal payments following extension of Loan No. 2 shall
be in the same amount as prior to said extension. As a condition
precedent to such extension, Borrower shall execute a note
modification agreement consistent with the terms hereof.
(c) Loan No. 3 - Subject to Borrower's compliance with the terms
and conditions of this Loan Agreement, Lender shall make available
to Borrower advances, not exceeding $500,000.00 aggregately, from
the Closing Date through the Loan No. 3 Maturity Date. The
obligation to repay Loan No. 3 shall be evidenced by the Loan No.
3 Note and shall have the repayment terms and interest rates as
set forth in the Loan No. 3 Note. All amounts outstanding under
Loan No. 3 shall be due and payable on the Loan No. 3 Maturity
Date.
2.2. Purposes. The purposes of the Loans are as follows:
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(a) Loan No. 1 - The proceeds of Loan No. 1 shall be used to
refinance the existing indebtedness of Borrower.
(b) Loan No. 2 - The proceeds of Loan No. 2 shall be used to
provide funding for Borrower to invest in the Piemonte/Sabatasso
European Project, refinance any existing indebtedness, and upgrade
its equipment.
(c) Loan No. 3 - The proceeds of Loan No. 3 shall be used to
finance seasonal working capital needs of Borrower.
2.3. Fees. Borrower shall pay Lender at or before Closing, all
out-of-pocket costs and expenses, including, but not limited to, reasonable
attorney's fees for Lender's counsel, and all costs of mortgagee's title
insurance, environmental audits, surveys, appraisals, and recording fees.
2.4. Notice and Manner of Borrowing Under Loan No. 3. Borrower shall give
Lender at least one (1) Business Day's notice of its request for an advance
under Loan No. 3, specifying the date and amount of the requested advance. Any
such notice (including, but not limited to, telephonic notice), which Lender
believes in good faith to have been given by a duly authorized officer or
representative of Borrower shall be deemed given by Borrower. Any advance made
by Lender upon such notice shall, when wired to an account described in any
written wire transfer instructions delivered by Borrower, or deposited into
Borrower's depository account with Lender, be deemed a Loan No. 3 advance.
2.5 Existing Indebtedness. Any indebtedness from Borrower to Lender
existing prior to the Closing Date shall be paid in full by Borrower on or
before the Closing Date, including but not limited to those certain loans from
Lender to Borrower dated April 27, 1989, as amended on December 12, 1994, in the
original principal amounts of $1,600,000.00 and $2,000,000.00, and those certain
loans from Lender to Borrower dated December 12, 1994, in the original principal
amounts of $1,500,000.00, $1,145,000.00, and $1,000,000.00, each evidenced by a
promissory note and security agreement from Borrower to Lender.
2.6. Conditions Precedent. Lender shall disburse the proceeds of the Loans
to Borrower in accordance with the terms hereof, and the terms of the Notes. In
no event shall Lender be obligated to advance any sum to Borrower until all
matters, documents, papers, and certificates required hereunder have been
furnished to Lender's satisfaction or so long as any Event of Default has
occurred and is continuing. In addition to other matters set forth herein, the
following documents and matters shall be required to be executed or performed by
Borrower at or before Closing (unless otherwise noted):
(a) This Loan Agreement, duly executed and delivered;
(b) The Notes, duly executed and delivered;
(c) The Collateral documents required under Section 5.1 hereof
duly executed and delivered. The Mortgage shall be recorded in the
appropriate real estate records. Title policies required hereunder
shall be delivered to Lender within ten (10) Business Days
following the Closing Date;
(d) The Guaranties, duly executed and delivered;
(e) Borrowing Resolutions, duly certified by the corporate
secretary, and certificates of incumbency, duly executed by
corporate officers in form and substance satisfactory to Lender,
authorizing the execution, delivery, and performance of all Loan
Documents on behalf of Borrower;
(f) Resolutions of Piemonte of Indiana and Origena duly certified
by the corporate secretary, and certificates of incumbency, duly
executed by corporate officers in form and substance satisfactory
to Lender, authorizing the execution, performance, and delivery of
the Guaranties and this Loan Agreement;
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(g) Certificates of Existence of Borrower, Piemonte of Indiana,
and Origena from the Secretary of State of South Carolina,
Indiana, and Illinois, respectively, as well as Certificates of
Authority from the South Carolina Secretary of State evidencing
the authority of Piemonte of Indiana and Origena, Inc. to conduct
business in South Carolina.
(h) An opinion of Borrower's and Guarantors' counsel opining,
among other things, as to the due authorization and execution of
the Loan Documents, the enforceability of the Loan Documents in
accordance with the terms thereof, and the Lender's lien position
thereunder;
(i) Payment of all fees and closing costs required hereunder and
under the Loan Documents;
(j) The insurance policies required hereunder;
(k) Such other matters as Lender may reasonably require.
3. Representations and Warranties. To induce Lender to make the Loans, Borrower
and Guarantors make the following representations and warranties, as
appropriate, which representations and warranties shall survive the execution
and delivery of the Notes and other Loan Documents:
3.1. Good Standing. Borrower is duly organized, validly existing, and in
good standing under the laws of the State of South Carolina and has the power
and authority to own its property and to carry on its business in each
jurisdiction in which it does business. Piemonte of Indiana and Origena are duly
organized, validly existing, and in good standing under the laws of the State of
Indiana and Illinois, respectively, and each has the power and authority to own
its property and carry on its business in each jurisdiction in which it does
business, including South Carolina.
3.2. Authority and Compliance. Borrower and each Guarantor has full power
and authority to execute and deliver the Loan Documents and to incur and perform
the Obligations provided for therein, all of which have been duly authorized by
all proper and necessary action of the appropriate governing body of Borrower
and each Guarantor. No consent or approval of any public authority or other
third party is required as a condition to the validity of any of the Loan
Documents, and Borrower and each Guarantor is in compliance with all laws and
regulatory requirements to which it is subject.
3.3. Binding Agreement. This Loan Agreement and the other Loan Documents
executed by Borrower and each Guarantor constitute valid and legally binding
obligations of Borrower and each Guarantor, enforceable in accordance with their
terms.
3.4. Litigation. There is no proceeding involving Borrower or either
Guarantor pending or, to the knowledge of Borrower or either Guarantor,
threatened before any court or governmental authority, agency or arbitration
authority, except as disclosed to Lender in writing and acknowledged by Lender
prior to the date of this Loan Agreement.
3.5. No Conflicting Agreements. There is no charter, bylaw, stock
provision, or other document pertaining to the organization, power, or authority
of Borrower, or either Guarantor, and no provision of any existing agreement,
mortgage, indenture or contract binding on Borrower, or either Guarantor, or
affecting their properties, which would conflict with or in any way prevent the
execution, delivery, or carrying out of the terms of this Loan Agreement and the
other Loan Documents.
3.6. Ownership of Assets. Borrower and each Guarantor has good title to
its assets, and its assets are free and clear of all judgments, liens, and
encumbrances except those granted to Lender and as disclosed to Lender in
writing prior to the date of this Loan Agreement.
3.7. Taxes. All taxes and assessments due and payable by Borrower and each
Guarantor have been paid or are being contested in good faith by appropriate
proceedings, and Borrower and each Guarantor has filed all tax returns which it
is required to file.
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3.8. Environmental Matters. The conduct of Piemonte of Indiana's business
operations on the Real Property and the conduct of Borrower, Origena, and
Piemonte Foods on any real property otherwise leased or owned by them does not,
and will not, violate any federal laws, rules, or ordinances for environmental
protection, regulations of the Environmental Protection Agency, or any
applicable local or state law, rule, regulation, ordinance, or rule of common
law, or any judicial interpretation thereof, relating primarily to the
environment or Hazardous Materials, and Piemonte of Indiana will not use or
permit any other party to use any Hazardous Materials on the Real Property, and
Borrower, Origena, and Piemonte of Indiana will not use or permit any other
party to use any Hazardous Material on any other real property leased or owned
by them, except such materials as are incidental to their normal course of
business or any maintenance, or repairs, and which are handled in compliance
with all applicable environmental laws. Piemonte of Indiana agrees to permit
Lender, its agents, contractors, and employees to enter and inspect the Real
Property at reasonable times and for reasonable cause for the purposes of
conducting an environmental investigation and audit (including taking physical
samples) to insure that Piemonte of Indiana is complying with this covenant.
Piemonte of Indiana or Borrower shall reimburse Lender on demand for the
reasonable costs of any such environmental investigation and audit. Piemonte of
Indiana, Borrower, or Origena, as the case may be, shall provide Lender, its
agents, contractors, employees, and representatives with access to and copies of
any and all data and documents relating to or dealing with any Hazardous
Materials used, generated, manufactured, stored, or disposed of by their
business operations on the Real Property, or any other leased or owned real
property, within five (5) days of the request therefor.
3.9. Compliance with Laws. Borrower and each Guarantor to the best of
their knowledge, is in compliance with all federal, state, and local laws,
regulations and governmental requirements applicable to it or to any of its
property, business operations, employees, and transactions.
3.10. Facilities for Handicapped. To the best of their knowledge, Piemonte
of Indiana, and Borrower and Origena with regard to any property they lease, are
in compliance with all legal requirements regarding access and facilities for
handicapped or disabled persons, including the legal requirements set forth in
the Federal Architectural Barriers Act, the Fair Housing Amendments Act of 1988,
the Rehabilitation Act of 1973, the Americans with Disabilities Act of 1990, and
comparable state laws.
3.11. Accurate Financial Information. The financial information furnished
to Lender in connection with the Loans is complete and accurate and neither
Borrower nor either Guarantor has any undisclosed direct or contingent
liabilities. Since the date of such financial statements, there has been no
material adverse changes in the financial position of Borrower or either
Guarantor or in the results of their operations.
3.12. Solvency. (i) Borrower and each Guarantor is solvent; (ii) the
pledges of the Collateral as contemplated herein to Lender will not render
Borrower or either Guarantor insolvent; (iii) Borrower and each Guarantor has
made adequate provision for the payment of all of its creditors other than
Lender; and (iv) neither Borrower nor either Guarantor has entered into this
transaction to provide preferential treatment to Lender or any other creditor of
Borrower or either Guarantor in anticipation of seeking relief under the
Bankruptcy Code.
3.13. ERISA. No employee benefit plan established or maintained, or to
which contributions have been made, by Borrower or either Guarantor, which is
subject to Part 3 of Subtitle 13 of Title I of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), had an "accumulated funding
deficiency" (as such term is defined in Section 302 of ERISA) as of the last day
of the most recent fiscal year of such plan ended prior to the date hereof, or
would have had such an accumulated funding deficiency on such day if such year
were the first year of such plan to which such Part 3 applied; and no material
liability to the Pension Benefit Guaranty Corporation has been incurred with
respect to any such plan by such party.
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Each such employee benefit plan complies and will comply fully
with all applicable requirements of ERISA and of the Internal Revenue Code of
1986 as amended ("Code") and with all applicable rulings and regulations issued
under the provisions of ERISA and the Code. This Loan Agreement and the
consummation of the transactions contemplated herein will not involve any
prohibited transaction within the scope of ERISA or Section 4975 of the Code.
3.14. Subsidiaries. Piemonte of Indiana and Origena are wholly-owned
subsidiaries of Borrower. Borrower has no other subsidiaries and neither
Piemonte of Indiana nor Origena have any subsidiaries.
3.15. Ownership of Equipment. Borrower, Piemonte of Indiana, and Origena
are the absolute owners of all the machinery, equipment, accounts, and inventory
pledged pursuant to this Loan Agreement.
3.16. Ownership of Real Property. Piemonte of Indiana is the absolute
owner of the Real Property.
3.17 Consideration. Guarantors hereby acknowledge that they, as the
wholly-owned subsidiaries of Borrower, will benefit both directly and indirectly
from the Loans, and such benefit hereby serves as consideration for the
Guaranties.
4. Covenants.
4.1. Affirmative Covenants. During the term of this Loan Agreement:
(a) Continuation of Preclosing Conditions, Representations and
Warranties. Borrower and each Guarantor agree that all conditions
precedent to the making of the Loans shall remain satisfied at all
times during the term of the Loans, and that the representations
and warranties made by Borrower and each Guarantor in this Loan
Agreement and in the Loan Documents shall be deemed to be made at
all times during the term of this Loan Agreement.
(b) Maintenance. Borrower and each Guarantor shall maintain their
respective property in good condition and repair and make all
necessary replacements thereof and repairs thereto, and preserve
and maintain all licenses, trademarks, privileges, permits,
franchises, certificates and the like necessary for the operation
of their businesses.
(c) Financial Statements. Borrower and each Guarantor shall
furnish to Lender, on a consolidated basis: (i) audited fiscal
year-end financial statements within ninety (90) days after the
close of each fiscal year, prepared by independent certified
public accountants satisfactory to Lender; (ii) quarterly,
internally-prepared financial statements, within sixty (60) days
after the close of each quarter, certified by an officer of the
respective company, and (ii) such other information respecting the
financial condition and operations of Borrower or either Guarantor
as Lender may from time to time reasonably request. All financial
statements shall be prepared in accordance with GAAP, shall be in
form and content satisfactory to Lender, and shall include,
without limitation, a balance sheet, profit and loss statement,
and supporting schedules.
(d) Insurance. Borrower and each Guarantor shall maintain with
financially sound and reputable insurance companies insurance of
the kinds, covering the risks, and in the amounts usually carried
by entities and individuals engaged in businesses similar to those
of Borrower and Guarantors. Borrower and each Guarantor will also
exhibit or deliver such policies of insurance to Lender upon
request by Lender and provide appropriate loss payable or
mortgagee clauses in the insurance policies in favor of Lender, as
its interest may appear, when requested by Lender. If Borrower or
either Guarantor is in default hereunder,
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Lender shall have the right to settle and compromise any and all
claims under any policy required to be maintained by Borrower and
Guarantors hereunder and Borrower and Guarantors hereby appoint
Lender as their attorney-in-fact, with power to demand, receive,
and receipt for all monies payable thereunder, to execute in the
name of Borrower, either Guarantor, Lender, or a combination of
the aforementioned any proof of loss, notice, draft, or other
instruments in connection with such policies or any loss
thereunder and generally to do and perform any and all acts as
Borrower or either Guarantor, but for this appointment, might or
could perform. Unless otherwise agreed, Lender shall be entitled
to apply the proceeds of any such policies to satisfy the
indebtedness arising under the Loans. All insurance policies
provided hereunder shall be in an amount sufficient to avoid the
application of any co-insurance provisions and must include
provisions for a minimum thirty (30) day advance written notice of
any intended policy cancellation or non-renewal. The insurance
required hereunder shall be in addition to, and not a replacement
for, the insurance required under any other Loan Documents.
(e) Access to Collateral and Financial Information. Borrower and
each Guarantor shall permit any representative or agent of Lender
to examine and audit any or all of their books and records,
wherever located, as such books and records pertain to the
Collateral upon request by Lender and permit Lender to have access
to all Collateral for purposes of inspection and evaluation, at
reasonable times and after reasonable notice to Borrower.
(f) Notification of Environmental Claims. Borrower or either
Guarantor, as the case may be, shall immediately advise Lender in
writing of (i) any and all enforcement, cleanup, remedial,
removal, or other governmental or regulatory actions instituted,
completed, or threatened pursuant to any applicable federal,
state, or local laws, ordinances, or regulations relating to any
Hazardous Materials affecting the Real Property or any other
property owned or leased by Borrower or either Guarantor, and (ii)
all claims made or threatened by any third party against Borrower
or either Guarantor relating to damages, contributions, cost
recovery, compensation, loss, or injury resulting from any
Hazardous Materials on the Real Property. Piemonte of Indiana
shall immediately notify Lender of any remedial action it takes
with respect to its Real Property or any other property owned or
leased by Borrower or either Guarantor.
(g) Purpose of Loans. Borrower shall use the proceeds of the Loans
only for the purposes represented to Lender in Section 2.2.
(h) Adverse Changes. Borrower and each Guarantor shall provide
notice to Lender, as soon as possible, and in any event within
five (5) Business Days after Borrower or either Guarantor becomes
aware of the occurrence of an adverse change in its business,
properties, operations, or condition (financial or other),
including notice of (i) any default occurring with respect to
Borrower's or either Guarantor's obligations owed to any other
creditor, (ii) acceleration of any part of or demand for payment
in full of any outstanding obligation earlier than the scheduled
date, or (iii) of the intent by any person, firm, corporation or
other entity to whom Borrower or either Guarantor is indebted to
declare any debt due or determine that any provision of any
agreement between such party and the respective Borrower or
Guarantor has been violated. Such notice shall contain a statement
setting forth details of such material adverse change and the
action that is proposed in response thereto.
(i) Notice of Litigation. Borrower and each Guarantor will
promptly notify Lender in the event that any legal action is filed
against that Borrower or Guarantor; provided however, such notice
shall not be required with respect to any matters which, if
determined adversely to the respective Borrower or Guarantor,
would result in less than $25,000.00 when aggregated with other
then-pending litigation.
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(j) Notice of Default. Borrower and either Guarantor shall
immediately notify Lender, by telephone followed by written
notice, upon the occurrence of any Event of Default or
circumstances which, if uncured or with the lapse of time, would
create an Event of Default.
(k) Environmental Indemnification. Borrower and Guarantors shall
indemnify, defend and hold Lender and its successors and assigns
harmless from and against any and all claims, demands, suits,
losses, damages, assessments, fines, penalties, costs or other
expenses (including attorney fees and court costs) arising from or
in any way related to actual or threatened damage to the
environment, agency costs of investigation, personal injury or
death or property damage, due to the release or alleged release of
Hazardous Materials on or under the Real Property or any leased
property or in the surface or ground water located on or under the
Real Property or any leased property or gaseous emissions from the
Real Property or any leased property or any other condition
existing on the Real Property or any leased property resulting
from the use or existence of Hazardous Materials, whether such
claim proves to be true or false. Borrower and Guarantors further
agree that their indemnity obligation shall include, but not be
limited to, liability for damages resulting from the personal
injury or death of an employee of Piemonte of Indiana regardless
of whether Borrower or either Guarantor has paid the employee
under workers' compensation laws of the laws of any state or
similar federal or state legislation for the protection of
employees. The term "property damage" used herein shall include,
but not be limited to, damage to any real or personal property of
Guarantors, Lender or any third party. Borrower's obligation
hereunder shall survive repayment of the Loans.
4.2. Negative Covenants. During the term of this Loan Agreement, neither
Borrower nor either Guarantor, as the case may be, will, without prior written
consent of Lender:
(a) Assign, mortgage, pledge, encumber, or grant any security
interest in or transfer any of the Collateral, except for the
interests of Lender described herein.
(b) Sell, lease, transfer, or otherwise dispose of all or any
substantial part of its assets, whether now owned or hereafter
acquired, wherever such assets may be located.
(c) Enter into any merger or consolidation, or sell, lease,
transfer, or otherwise dispose of all or any substantial part of
its assets, whether now owned or hereafter acquired.
(d) Change its name or any name in which it does business or move
its principal place of business without giving written notice
thereof to Lender at least thirty (30) days prior thereto.
(e) Change the nature of its businesses in any material way.
(f) Permit any Hazardous Materials to be stored or maintained on
the Real Property or any other real estate on which it conducts
its operations, except as provided in Section 3.8.
(g) Provide funding to the Piemonte/Sabatasso European Project
Joint Venture in excess of the $1,000,000.00 capital contribution
(whether in the form of debt or equity or both) required by the
Piemonte/Sabatasso European Project joint venture agreement dated
___________________, plus any additional funding not to exceed
$100,000.00 aggregately.
(h) Incur any additional debt for borrowed money, whether secured
or unsecured, or enter into any capitalized leases, or incur any
contingent liability (the execution of any
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guaranty agreement or letter of credit agreement constituting
the incurrence of a contingent liability).
(i) Declare or pay a dividend if there shall exist an Event of
Default or condition which, with the lapse of time and/or notice
would become an Event of Default under this Agreement or the
Notes.
(j) Make or extend any loans (other than permitted loans to the
Piemonte/Sabatasso European Project authorized under Section 4.2
(g) hereof) or advances to any person or entity in amounts greater
than $25,000.00 aggregately at any time.
(k) Allow any number of judgments for the payment of money, or the
entry of any lien, in excess of the aggregate sum of $25,000.00,
excluding amounts with respect to which an insurance carrier
admits full coverage (except for the applicable deductible), to
remain unsatisfied against it for a period of thirty (30)
consecutive days, unless execution thereof is stayed.
4.3. Financial Covenants. During the term of this Loan Agreement, Borrower
and Guarantors, on a consolidated basis, will comply with the following
financial covenants, all determined in accordance with GAAP:
(a) Debt Coverage Ratio. A Debt Coverage Ratio of not less than:
(i) 1.0 to 1.0 in the quarter ending on February 28, 1996, (ii)
1.25 to 1.0 in the quarter ending on May 31, 1996, (iii) 1.25 to
1.0 in the quarter ending August 31, 1996, and (iv) 1.50 to 1.0 in
each quarter thereafter. The measurement to determine the Debt
Coverage Ratio shall be taken at the end of each respective
quarter. For the purposes of this Section, "Debt Coverage Ratio"
shall be defined as the sum of earnings before interest, taxes,
depreciation, and amortization divided by the sum of current
maturities of principal, interest expense, and dividends.
(b) Consolidated Working Capital. A Consolidated Working Capital,
at all times, of at least $1,000,000.00. For the purposes of this
Section "Consolidated Working Capital" shall mean the excess of
the Consolidated Current Assets of Borrower and its subsidiaries,
if any, over the Consolidated Current Liabilities of Borrower and
its subsidiaries, if any. "Consolidated Current Assets" shall mean
cash and all other assets or resources of Borrower and its
subsidiaries, if any, which are expected to be realized in cash,
sold in the ordinary course of business, or consumed within one
(1) year, all determined in accordance with GAAP. "Consolidated
Current Liabilities" shall mean the amount of all liabilities of
Borrower and its subsidiaries, if any, which by their terms are
payable within one (1) year (including all indebtedness payable on
demand or maturing not more than one (1) year from the date of
computation and the current portion of funded indebtedness), all
determined in accordance with GAAP.
(c) Minimum Net Worth. A Minimum Net Worth, at all times, of at
least $6,600,000.00 through 1996 fiscal year end. Beginning on
January 1, 1997 and continuing thereafter, through the life of the
Loans, Borrower shall maintain, at all times, a Minimum Net Worth
of at least $7,000,000.00 For the purpose of this Section,
"Minimum Net Worth" shall mean the excess of all assets of
Borrower and its subsidiaries over all liabilities of Borrower and
its subsidiaries, on a consolidated basis, all determined in
accordance with GAAP.
5. Security for Loans.
5.1. Collateral. Borrower, Piemonte of Indiana, and/or Origena, as the
case may be, hereby grant the following liens and security interests to Lender
as security for the Loans and at Closing will
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<PAGE>
execute and deliver to Lender appropriate security documents, in form
satisfactory to Lender, as follows:
(a) Real Property and Improvements. The Loans shall be secured by
a first priority real estate mortgage lien on the Real Property
and any Improvements located thereon as evidenced by a Mortgage to
be recorded in the real estate records of Clinton County, Indiana.
In addition, Lender shall be provided with collateral assignments,
satisfactory to Lender, of any leasehold interests, rents and
profits attendant to the Real Property. The Real Property and any
improvements thereon shall also serve to secure the Guaranty of
Piemonte of Indiana.
(b) Title Insurance. In connection with the lien pledged under the
Mortgage, a title insurance policy, at Borrower's sole expense,
written by a company acceptable to Lender and containing only such
exceptions as are acceptable to Lender.
(c) Machinery and Equipment. The Loans shall also be secured by
all machinery, equipment, furnishings and fixtures of Borrower and
each Guarantor, whether now owned or hereafter acquired or
arising, wherever located, as evidenced by security agreements
from Borrower and each Guarantor, in favor of Lender, as well as
any financing statements necessary to perfect Lender's first
priority security interests.
(d) Accounts, Inventory, Documents, Instruments, Chattel Paper,
and General Intangibles. The Loans shall also be secured by a
first priority lien on all inventory, accounts, documents,
instruments, chattel paper, and general intangibles of Borrower
and each Guarantor, now owned or hereafter acquired or arising,
wherever located, as evidenced by security agreements executed by
Borrower and each Guarantor in favor of Lender, as well as any
financing statements necessary to perfect Lender's first priority
security interest.
(e) Proceeds. All products, proceeds, and substitutions of the
foregoing.
(f) Assignment of Tenants' Interest In Leases. Borrower and each
Guarantor shall assign its respective leasehold interests in any
real property to Lender, whether now owned or hereafter acquired,
wherever located, as evidenced by an assignment of tenant's
interest in leases executed by the respective Borrower or
Guarantor in a form satisfactory to Lender in its sole discretion.
(g) Guaranties of Piemonte Foods and Origena. In consideration of
Lender making the Loans, Piemonte of Indiana and Origena shall
execute and deliver the Guaranties to Lender. All security
interests pledged or to be pledged by Piemonte Foods and/or
Origena as evidenced in this Section 5 shall also serve to secure
the Guaranty of each.
5.2 After Acquired Property. In addition to the foregoing, Borrower shall
and hereby does grant as security for the Loans a first priority security
interest in any real or personal property, including any leasehold interests,
acquired by it after the date of this Loan Agreement, wherever located,
including, without limitation, any property related to the Piemonte Comissary in
Nashville, Tennessee. Borrower agrees to execute, within a reasonable period of
time and in no event later than thirty (30) days following Borrower's
acquisition of title to or interest in such property, any agreements, financing
statements, or other documents, as required by Lender in its sole discretion, to
establish Lender's first priority security interest, in a form satisfactory to
Lender.
5.3 Cross-Collateralization. In addition to the foregoing, the Loans shall
be fully cross- collateralized with any other loans from Lender to Borrower,
whether now existing or hereafter arising.
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<PAGE>
6. Events of Default. The occurrence of any of the following shall constitute an
event of default under this Agreement ("Event of Default"):
6.1. Payment. Failure to make any payment of principal, interest, or other
sum owed to Lender under the Loan Documents or otherwise due from Borrower to
Lender when due.
6.2. Additional Defaults. Any provision or covenant of the Loan Documents
is breached, or any warranty, representation, or statement made or furnished to
Lender by Borrower, Mortgagor, or Guarantors, in connection with the Loans and
the Loan Documents (including any warranty, representation, or statement in
Borrower's financial statements) or to induce Lender to make the Loans, is
untrue or misleading in any material respect.
6.3. Cross-Default. Any default by Borrower on any other loan from Lender,
whether now existing or hereafter arising, which default is not corrected within
the cure period provided, if any. Also, any default on any indebtedness to
Lender or any third party creditor related to the Piemonte/Sabatasso European
Project by any party involved in the Piemonte/Sabatasso European Project.
6.4. Dissolution or Bankruptcy. Dissolution, termination of existence,
liquidation, insolvency, business failure, appointment of receiver of any part
of the property of, assignment for the benefit of creditors by, or the
commencement of any proceeding under state or federal bankruptcy laws or other
insolvency laws by Borrower or the commencement of an involuntary proceeding
under state or federal bankruptcy laws which is not dismissed within ninety (90)
days after such commencement, or a merger or consolidation or sale of Borrower's
assets other than a sale of assets in the ordinary course of business, which has
not been consented to by Lender in writing.
6.5. Judgments, etc. The entry of any monetary judgment or the assessment
and/or filing of any tax lien against Borrower or any Collateral in excess, at
any time, of the aggregate sum of $25,000.00, excluding amounts with respect to
which an insurance carrier admits full coverage (except for applicable
deductibles), which remains unsatisfied against it for a period of thirty (30)
days, unless execution thereof is stayed.
7. Lender's Remedies.
7.1. Acceleration. Upon the occurrence of an Event of Default, Lender
shall have the option to declare the entire unpaid principal amount of the
Loans, accrued interest and all other Obligations immediately due and payable,
without presentment, demand, or notice of any kind.
7.2. Remedies. Upon the occurrence of an Event of Default, Lender shall be
entitled to pursue all rights and remedies available under each of the Loan
Documents, as well as all rights and remedies available at law, or in equity,
and such rights and remedies shall be cumulative. Without in any way limiting
the generality of the foregoing, Lender shall also have the following
non-exclusive rights:
(a) Immediate Possession of Collateral. To take immediate
possession of all Collateral, whether now owned or hereafter
acquired, without notice, demand, presentment, or resort to legal
process, and, for those purposes, to enter any premises where any
of the Collateral is located and remove the Collateral therefrom
or render it unusable;
(b) Assembly of Collateral. To require Borrower and/or either
Guarantor to assemble and make the Collateral available to Lender
at a place to be designated by Lender which is also reasonably
convenient to Borrower and/or either Guarantor;
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<PAGE>
(c) Sale of Personal Property. To retain all non-real estate
Collateral in full or partial satisfaction of any unpaid
Obligations as provided under the Relevant Uniform Commercial Code
or sell the Collateral at public or private sale after giving at
least ten (10) days' notice of the time and place of the sale,
with or without having the Collateral physically present at the
place of the sale (such notice constituting reasonable notice
under the Relevant Uniform Commercial Code). As used herein,
"Relevant Uniform Commercial Code" means the Uniform Commercial
Code adopted and in effect for the state in which the owner of
such Collateral has its principal place of business;
(d) Repair of Collateral. To make any repairs to the Collateral
which Lender deems necessary or desirable for the purposes of
sale;
(e) Set-off. To exercise any and all rights of set-off which
Lender may have against any account, fund, or property of any
kind, tangible or intangible, belonging to Borrower and/or either
Guarantor which shall be in Lender's possession or under its
control.
(f) Cure. To cure any Event of Default in such manner as deemed
appropriate by Lender;
(g) Foreclosure. To foreclose pursuant to the terms of any Loan
Documents, or at law or in equity.
7.3. Proceeds. The proceeds from any disposition of the Collateral for the
Loans shall be used to satisfy the following items in the order they are listed:
(a) The expenses of taking, removing, storing, repairing, holding,
maintaining and selling the Collateral and otherwise enforcing the
rights of Lender under the Loan Documents, including any legal
costs and attorneys' fees.
(b) The expense of liquidating or satisfying any liens, security
interests, or encumbrances on the Collateral which may be prior to
the security interest of Lender that Lender, at its option, elects
to satisfy.
(c) Any unpaid fees, accrued interest and other sums due Lender
with respect to Loan Documents, and the then unpaid principal
amount of the Loans.
(d) Any other Obligations.
7.4. Resort to Borrower or Guarantors. Lender may, at its option, pursue
any and all rights and remedies directly against Borrower or either Guarantor
without resort to any Collateral.
7.5. Deficiency. To the extent the proceeds realized from the disposition
of the Collateral shall fail to satisfy any of the foregoing items, Borrower
shall remain liable to pay any deficiency to Lender.
7.6. Advances/Reimbursements. All amounts advanced by Lender under the
Loan Documents, or due Lender as a result of expenditures made by Lender or
losses suffered by Lender, shall bear interest at the rate applicable to past
due principal as specified in the Notes from the date demanded until paid in
full. Unless otherwise specified in the Loan Documents, such advances and other
sums, together with accrued interest, shall be due and payable on demand.
7.7. Default Rate of Interest. If Borrower shall fail to pay within
fifteen (15) days following the due date therefor, whether by acceleration or
otherwise, any principal or interest owing under any of the Loans, then interest
shall accrue on the entire unpaid principal balance of the Loans from the date
thereof until and including the date on which such amount is paid in full at a
rate of interest equal to the applicable rate of interest of each Loan, as
defined in its respective Note, plus an additional three
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<PAGE>
percent (3%) per annum. The increase of such interest rates shall not affect or
otherwise limit or apply in lieu of any other remedy available to Lender as
provided herein or under applicable law.
8. Miscellaneous.
8.1. Notice. All notices, demands, or other communications given under the
Loan Documents shall be in writing, and shall be mailed to the address of each
party as set forth below (or as set forth in any other Loan Document), said
mailing to be by first class United States government mail, postage prepaid, to
the Mailing Address set forth hereinbelow, with notice in each case to be
effective three (3) Business Days after mailing or upon receipt, whichever is
first. Either party must provide written direction to the other in order to
change the address to which said notice shall be sent.
<TABLE>
<CAPTION>
<S> <C>
Lender:
First Union National Bank of South Carolina
Mailing Address: Street Address:
P.O. Box 1329 1 Insignia Financial Plaza
Greenville, South Carolina 29602 Beattie Place
Attention: Mr. William A. Litchfield Greenville, South Carolina 29601
Title: Vice President
Telephone Number: (803) 255-8399
Facsimile Number: (803) 255-8357
Borrower:
Mailing Address: Street Address:
400 Augusta Street 400 Augusta Street
Greenville, South Carolina 29604 Greenville, South Carolina 29604
Attention: Virgil L. Clark
Title: President and Chief Executive Officer
Telephone Number: (803) 242-0424
Facsimile Number: (803) 235-0239
Guarantors:
Origena, Inc.
Mailing Address: Street Address:
400 Augusta Street 400 Augusta Street
Greenville, South Carolina 29604 Greenville, South Carolina 29604
Attention: Virgil L. Clark
Title: President and Chief Executive Officer
Telephone Number: (803) 242-0424
Facsimile Number: (803) 235-0239
Piemonte Foods of Indiana, Inc.
Mailing Address: Street Address:
400 Augusta Street 400 Augusta Street
Greenville, South Carolina 29604 Greenville, South Carolina 29604
Attention: Virgil L. Clark
Title: President and Chief Executive Officer
Telephone Number: (803) 242-0424
Facsimile Number: (803) 235-0239
</TABLE>
8.2. Waiver. No failure or delay on the part of Lender in exercising any
power or right hereunder, and no failure of Lender to give Borrower notice of an
Event of Default, shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power preclude any other
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<PAGE>
or further exercise thereof or the exercise of any other right or power
hereunder. No modification or waiver of any provision of any Loan Document or
consent to any departure by Borrower from any Loan Document shall in any event
be effective unless the same shall be in writing, and such waiver or consent
shall be effective only in the specific instance and for the particular purpose
for which it was given.
8.3. Benefit. The Loan Documents shall be binding upon and shall inure to
the benefit of Borrower and Lender and their respective successors and assigns.
8.4. Governing Law and Jurisdiction. The Loan Documents and this Loan
Agreement, unless otherwise specifically provided therein, and all matters
relating thereto, shall be governed by and construed and interpreted in
accordance with the laws of the State of South Carolina except to the extent
superseded by federal law.
8.5. Assignment. Neither party may assign the Loan Documents or any
interest therein without the other's prior written consent.
8.6. Severability. Invalidity of any one or more of the terms, conditions
or provisions of this Loan Agreement shall in no way affect the balance hereof,
which shall remain in full force and effect.
8.7. Construction. All parties signing any Loan Document other than Lender
shall be jointly and severally liable thereunder to the extent provided therein.
Whenever the context and construction so require, all words used in the singular
number herein shall be deemed to have been used in the plural, and vice versa,
and the masculine gender shall include the feminine and neuter and the neuter
shall include the masculine and feminine. All references to Sections shall mean
Sections of the Loan Document. The terms "herein," "hereinbelow," "hereunder,"
and similar terms are references to the particular Loan Document in its entirety
and not merely the particular Article, Section, or Exhibit in which any such
term appears. Captions are inserted only as a matter of convenience and for
reference and in no way define, limit or describe the scope of the Loan Document
nor the intent of any provision thereof. All references to any Loan Document
shall include all amendments, extensions, renewals, restatements or replacements
of the same. The terms "include", "including" and similar terms shall be
construed as if followed by the phrase "without being limited to" and "Real
Estate" and "Collateral" shall be construed as if followed by the phrase "or any
part thereon". No inference in favor of any party shall be drawn from the fact
that such party has drafted any portion of the Loan Document. In the event of
any inconsistency between the terms of the Loan Agreement and any other Loan
Document, the terms of the Loan Agreement shall control, provided that any
provision of any Loan Document, other than the Loan Agreement, which imposes
additional Obligations upon Borrower or provides additional rights or remedies
to Lender shall be deemed to be supplemental to, and not inconsistent with, the
Loan Agreement.
8.8. Execution in Counterparts. All Loan Documents may be executed in two
or more counterparts, each of which shall be deemed to be an original, but all
of which shall constitute one and the same instrument, and in making proof of
the Loan Document, it shall not be necessary to produce or account for more than
one such counterpart.
8.9. Examinations/Communications. Lender's examinations, inspections, or
receipt of information pertaining to the matters set forth in the Loan Documents
shall not in any way be deemed to reduce the full scope and protection of the
Loan Documents or the Obligations of Borrower related to the Loan Documents.
Borrower agrees that Lender shall have no duty or obligation of any nature to
(i) make any investigation, inspection or review regarding any Collateral at any
time, with any such investigation that is undertaken being solely for the
benefit of Lender; or (ii) communicate in any manner with Borrower, irrespective
of the fact that Lender's information, or lack thereof, could be material to
Borrower's actions with respect to the Obligations.
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<PAGE>
8.10. No Participation. Nothing in the Loan Documents, and no action or
inaction whatsoever on the part of Lender through the Closing Date, shall be
deemed to make Lender a partner or joint venturer with Borrower, and Borrower
indemnifies and holds Lender harmless from and against any and all claims,
losses, causes of action, expenses (including attorneys' fees) and damages
arising from the relationship between Lender and Borrower being construed as or
related to be anything other than that of lender and borrower. This provision
shall survive the termination of all Loan Documents.
8.11. Notice of Conduct. Upon request of Lender from time to time,
Borrower shall confirm in writing the status of the Loans, and the Obligations,
and provide other information reasonably requested by Lender.
8.12. Costs, Expenses and Attorneys' Fees. Borrower shall pay to Lender
immediately upon demand the full amount of all out-of-pocket costs and expenses,
including reasonable attorneys' fees, costs of experts and all other expenses,
incurred by Lender in connection with (a) the negotiation, preparation,
modification, renewal, restatement and replacement of this Loan Agreement and
each of the other Loan Documents, (b) the administration of the Loans, including
the costs of additional appraisals, environmental studies, title insurance,
survey updates and legal reviews, (c) the perfection, preservation, protection
and continuation of the liens and security interest granted Lender in the
Collateral and the custody, preservation, protection, repair and operation of
any of the Collateral, (d) the pursuit by Lender of its rights and remedies
under the Loan Documents and applicable law, and (e) defending any counterclaim,
cross-claim or other action, or participating in any bankruptcy proceeding,
mediation, arbitration, litigation or dispute resolution of any other nature
involving Lender, Borrower or any Collateral, except to the extent Lender has
been adjudicated to have engaged in wrongful conduct.
8.13. Further Assurances. At any time after the Closing Date, Borrower, at
the request of Lender, shall execute and deliver such further documents and
agreements and take such further actions as Lender deems necessary or
appropriate to permit each transaction contemplated by the Loan Documents to be
consummated in accordance with the provisions thereof and to perfect, preserve,
protect and continue all liens, security interests and rights of Lender under
the Loan Documents, security agreements, financing statements, continuation
statements, new or replacement Notes, and/or mortgages and agreements
supplementing, extending or otherwise modifying the Notes, this Loan Agreement,
and/or any mortgage or security agreement, and certificates as to the amount of
the indebtedness evidenced by the Notes. Borrower herein irrevocably with full
power of substitution constitutes and appoints Lender as its attorney-in-fact,
such appointment being coupled with an interest with the right to enforce
Lender's rights with respect to the above further assurances.
8.14. Incorporation by Reference. This Loan Agreement is incorporated by
reference into the Loan Documents, and shall govern each and every Loan
Document. In executing any Loan Document, the signatories thereto other than
Lender expressly agree to be bound by all provisions of this Loan Agreement
pertaining to Borrower.
8.15. Time of the Essence. Time is of the essence to all Loan
Documents.
9. Additional Provisions. Riders attached hereto, if any, which have been
initialed by Borrower and Lender, are hereby incorporated into this Loan
Agreement as if set forth verbatim.
[See Signature Page Attached]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Loan Agreement
under seal as of the date first above written.
BORROWER:
PIEMONTE FOODS, INC.
By: (Signature of ????)
Its: President
(SEAL)
LENDER:
FIRST UNION NATIONAL BANK
OF SOUTH CAROLINA
By:William A. Litchfield
(Signature of William A. Litchfield)
Its: Vice President
GUARANTORS:
PIEMONTE FOODS OF INDIANA, INC.
By: (Signature of ???)
Its: President
ORIGENA, INC.
By: (Signature of ???)
Its: Vice President
17
<PAGE>
EXHIBIT 1.23
Prepared by and after
recording return to:
Nexsen Pruet Jacobs & Pollard
1000 E. North Street
Second Floor
Greenville, South Carolina 29601
Attn: David Gossett
MORTGAGE
THIS INDENTURE WITNESSETH, that PIEMONTE FOODS OF INDIANA, INC., an Indiana
corporation (hereafter referred to as "Mortgagor") whose address is 1150 Vermont
Street, Frankfort, Indiana, MORTGAGES AND WARRANTS to FIRST UNION NATIONAL BANK
OF SOUTH CAROLINA, a national banking association, whose address is 1 Insignia
Financial Plaza, Greenville, South Carolina ("Bank")
THAT CERTAIN PROPERTY LISTED ON EXHIBIT A ATTACHED HERETO AND
INCORPORATED HEREIN BY REFERENCE
TOGETHER WITH: (i) all leasehold estate, and all right, title and interest
of Mortgagor in and to all leases or subleases covering such land now or
hereafter existing including, without limitation, all cash or security deposits
or advance rentals; (ii) all right, title and interest of Mortgagor in and to
all options to purchase or lease such land or any interest therein, and any
greater estate in such land owned or hereafter acquired by Mortgagor; (iii) all
easements, streets, alleys, rights-of-way and rights used in connection
therewith or as a means of access thereto; all tenements, hereditaments and
appurtenances thereof and thereto; and all water rights; (iv) all buildings,
structures and improvements now or hereafter erected thereon; (v) all fixtures,
appliances, machinery, equipment, furniture, furnishings and articles of
personal property now or hereafter affixed to such land, even though they may be
detached or detachable, and all building improvement and construction materials,
supplies and equipment hereafter delivered to such land contemplating affixation
thereon; (vi) all awards and proceeds of condemnation for such land and any
improvements thereon or any part thereof to which Mortgagor is entitled, and all
proceeds, including return premiums and choses in action arising under any
insurance policies maintained with respect to all or any part of the foregoing;
(vii) all rents, issues and profits of such land and improvements, and all the
estate, right, title and interest of every nature whatsoever of the Mortgagor in
and to the same; and (viii) all proceeds, products, replacements, additions,
substitutions, renewals, accessions and reversions of any of the foregoing
items. All of the real and personal property and property rights hereby conveyed
are referred to individually and collectively as the "Property."
<PAGE>
This Mortgage secures repayment of and performance of obligations
(collectively the "Obligations") under (i) that certain $1,600,000.00 Note and
Security Agreement dated of even date by Piemonte Foods, Inc., in favor of Bank
to be paid in full by October 31, 2000, unless such maturity date is extended to
October 31, 2005, as provided in the Loan Agreement (ii) that certain
$2,400,000.00 Note and Security Agreement dated of even date by Piemonte Foods,
Inc., in favor of Bank to be paid in full by October 31, 2000, unless such
maturity date is extended to October 31, 2002, as provided in the Loan
Agreement, (iii) that certain $500,000.00 Note and Security Agreement dated of
even date by Piemonte Foods, Inc., in favor of Bank to be repaid in full by
October 31, 1996; (the $1,600,000.00 Note and Security Agreement, the
$2,400,000.00 Note and Security Agreement, and the $500,000.00 Note and Security
Agreement together the "Notes"); (iv) that certain Unconditional Guaranty of
Mortgagor, for the benefit of Bank, of even date; (v) this Mortgage, (vi) other
Loan Documents (the "Loan Documents") as defined in that certain Loan Agreement
dated of even date by and among Bank, Mortgagor, Piemonte Foods, Inc., and
Origena, Inc. (the "Loan Agreement"); (vii) all other indebtedness of Piemonte
Foods, Inc., to Bank whenever borrowed or incurred, and (viii) any renewals,
extension or modifications of the foregoing, in consideration of these premises
and to induce Bank to enter into the loans evidenced by (a) the Loan Agreement;
(b) the Notes and (c) the Loan Documents.
Mortgagor WARRANTS AND REPRESENTS that Mortgagor is lawfully seized of
the Property in fee simple absolute, that Mortgagor has the legal right to
convey and encumber the same, and that the Property is free and clear of all
liens and encumbrances except as set forth in EXHIBIT B. Mortgagor further
warrants and will forever defend all and singular the Property and title thereto
to Bank and Bank's successors and assigns, against the lawful claims of all
persons whomsoever.
PROVIDED ALWAYS that if Mortgagor shall pay and perform all Obligations
and perform, comply with and abide by each and every representation, warranty,
agreement, and condition of this Mortgage and any other Loan Documents, this
Mortgage and the estate hereby created shall cease and be null, void, and
canceled of record.
To protect the security of this Mortgage, Mortgagor further represents
and agrees with Bank as follows:
1. Payment of Obligations. Mortgagor shall timely pay and perform the
Obligations when due.
2. Future Advances. It is the parties' intent that this Mortgage is given
to secure not only the existing Obligations, but all other indebtedness or
liability of every kind, character and description of Mortgagor whether such
liability be joint or individual or as a principal, surety, or guarantor to the
bank, and regardless of whether such debt is now existing or hereafter created,
including any and all future loans, advances, or other indebtedness of any kind
of the Mortgagor to the Bank. The principal amount that may be so secured may
decrease or increase from time to time, but the total amount so secured at any
one time shall not exceed the maximum principal amount of $9,000,000.00 plus all
interest, costs, reimbursements, fees and expenses due under this Mortgage and
secured hereby. Mortgagor shall not execute any document that impairs or
-2-
<PAGE>
otherwise impacts the priority of any future advances secured by this Mortgage
and this Mortgage shall remain binding until all indebtedness of the Mortgagor
(whether direct or by reason of its Guaranty of Piemonte Foods, Inc.) is paid in
full to the Bank.
3. Ground Leases, Leases, Subleases and Easements. Mortgagor shall
maintain, enforce and cause to be performed all of the terms and conditions
under any ground lease, lease, sublease or easement which may constitute a
portion of the Property. Mortgagor shall not, without the consent of Bank, agree
to the cancellation or surrender under any lease or sublease now or hereafter
covering the Property or any part thereof, or prepayment of rents, issues or
profits, other than rent paid at the signing of a lease or sublease, nor modify
any such lease or sublease so as to shorten the term, decrease the rent,
accelerate the payment of rent, or change the terms of any renewal option; and
any such purported cancellation, surrender, prepayment or modification made
without the consent of Bank shall be void as against Bank.
4. Required Insurance. Mortgagor shall maintain with respect to the
Property: (i) insurance against loss or damage by fire and other casualties and
hazards by insurance written on an "all risks" basis, including specifically
windstorm and/or hail damage (and flood and earthquake coverage, where
available), in an amount not less than the replacement cost thereof, naming Bank
as loss payee and mortgagee; (ii) liability insurance providing coverage in such
amount as Bank may require, naming Bank as an additional insured; and (iii) such
other insurance as Bank may require from time to time.
All casualty insurance policies shall contain an endorsement or agreement
by the insurer in form satisfactory to Bank that any loss shall be payable in
accordance with the terms of such policy notwithstanding any act or negligence
of Mortgagor and the further agreement of the insurer waiving rights of
subrogation against Bank, and rights of set-off, counterclaim or deductions
against Mortgagor.
All insurance policies shall be in form, provide coverages, be issued by
companies and be in amounts in each company, satisfactory to Bank, and Mortgagor
shall furnish Bank with an original of all policies. At least thirty (30) days
prior to the expiration of each such policy, Mortgagor shall furnish Bank with
evidence satisfactory to Bank of the payment of premium and the reissuance of a
policy continuing insurance in force as required by this Mortgage. All such
policies shall provide that the policy will not be canceled or materially
amended without at least thirty (30) days prior written notice to Bank. In the
event Mortgagor fails to provide, maintain, keep in force, and furnish to Bank
the policies of insurance required by this paragraph, Bank may procure such
insurance or single-interest insurance in such amounts, at such premium, for
such risks and by such means as Bank chooses, at Mortgagor's expense; provided,
however, that Bank shall have no responsibility to obtain any insurance, but if
Bank does obtain insurance, Bank shall have no responsibility to Mortgagor or
other persons that insurance obtained shall be adequate or provide any
protection to Mortgagor.
5. Insurance Proceeds. After occurrence of any loss to any of the
Property, Mortgagor shall give prompt written notice thereof to Bank.
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<PAGE>
(a) In the event of such loss all insurance proceeds shall be
payable to Bank, and Mortgagor hereby authorizes and directs any affected
insurance company to make payment of such proceeds directly to Bank. Bank is
hereby authorized by Mortgagor to settle, adjust or compromise any claims for
loss or damage under any policy or policies of insurance and Mortgagor appoints
Bank as its attorney-in-fact to receive and endorse any insurance proceeds to
Bank, which appointment is coupled with an interest and shall be irrevocable as
long as any Obligations remain unsatisfied.
(b) In the event of any damage to or destruction of the Property,
Bank shall have the option of applying or paying all or part of the insurance
proceeds to (i) the Obligations, in such order as Bank may determine in its sole
discretion, (ii) restoration of the Property, or (iii) Mortgagor. Nothing herein
shall be deemed to excuse Mortgagor from restoring, repairing and maintaining
the Property as required herein.
6. Impositions. Mortgagor will pay, before they are due, all taxes,
levies, assessments and other fees and charges imposed upon, or which may become
a lien upon, the Property under any law or ordinance (all of the foregoing
collectively "Impositions").
7. Use of Property. Mortgagor shall use and operate, and require its
lessees or licensees, if any, to use and operate, the Property in compliance
with all applicable laws and ordinances, covenants, and restrictions, and with
all applicable requirements of any lease or sublease now or hereafter affecting
the Property. Mortgagor shall not permit any unlawful use of the Property or any
use that may give rise to a claim of forfeiture of any of the Property.
Mortgagor shall not allow changes in the stated use of Property from that
disclosed to Bank at the time of execution hereof. Mortgagor shall not initiate
or acquiesce to a zoning change of the Property without prior notice to, and
written consent of, Bank.
8. Maintenance, Repairs and Alterations. Mortgagor shall keep and maintain
the Property in good condition and repair and fully protected from the elements
to the satisfaction of Bank. Mortgagor will not remove, demolish or structurally
alter any of the buildings or other improvements on the Property (except such
alterations as may be required by laws, ordinances or regulations) without the
prior written consent of Bank. Mortgagor shall promptly notify Bank in writing
of any material loss, damage or adverse condition affecting the Property.
9. Eminent Domain. Should the Property, or any interest therein or
thereon, be taken or damaged by reason of any public use or improvement or
condemnation proceeding ("Condemnation"), or should Mortgagor receive any notice
or other information regarding such Condemnation, Mortgagor shall give prompt
written notice thereof to Bank. Bank shall be entitled to all compensation,
awards and other payments or relief granted in connection with such Condemnation
and, at its option, may commence, appear in and prosecute in its own name any
action or proceedings relating thereto. Bank shall be entitled to make any
compromise or settlement in connection with such taking or damage. All
compensation, awards, and damages awarded to Mortgagor related to any
Condemnation (the "Proceeds") are hereby assigned to Bank and Mortgagor agrees
to execute such further assignments of the Proceeds as Bank may require. Bank
shall have the option of applying or paying the Proceeds in the same manner as
insurance
-4-
<PAGE>
proceeds as provided herein. Mortgagor appoints Bank as its attorney-in-fact to
receive and endorse the Proceeds to Bank, which appointment is coupled with an
interest and shall be irrevocable as long as any Obligations remain unsatisfied.
10. Environmental Condition of Property and Indemnity. Mortgagor warrants
and represents to Bank that: (i) Mortgagor has inspected and is familiar with
the environmental condition of the Property; (ii) the Property and Mortgagor,
and any occupants of the Property, are in compliance with and shall continue to
be in compliance with all applicable federal, state and local laws and
regulations intended to protect the environment and public health and safety as
the same may be amended from time to time ("Environmental Laws"); (iii) the
Property is not and has never been used to handle, treat, store or dispose of
oil, petroleum products, hazardous substances in any quantity, hazardous waste,
toxic substances, regulated substances or hazardous air pollutants ("Hazardous
Materials") in violation of any Environmental Laws; and (iv) no Hazardous
Materials (including asbestos or lead paint in any form) are located on, in or
under the Property or emanate from the Property except as reported by Mortgagor
to Bank in writing. Further, Mortgagor represents to Bank that no portion of the
Property is a protected wetland. Mortgagor agrees to notify Bank immediately
upon receipt of any citations, warnings, orders, notices, consent agreements,
process or claims alleging or relating to violations of any Environmental Laws
or to the environmental condition of the Property.
Mortgagor shall indemnify, hold harmless, and defend Bank from and
against any and all damages, penalties, fines, claims, suits, liabilities,
costs, judgments and expenses, including attorneys', consultants' or experts'
fees of every kind and nature incurred, suffered by or asserted against Bank as
a direct or indirect result of: (i) representations made by Mortgagor in this
paragraph being or becoming untrue in any material respect; or (ii) Mortgagor's
violation of or failure to meet the requirements of any Environmental Laws; or
(iii) Hazardous Materials which, while the Property is subject to this Mortgage,
exist on the Property. Bank shall have the right to arrange for or conduct
environmental inspections of the Property from time to time (including the
taking of soil, water, air or material samples). The cost of such inspections
made after Default or which are required by laws or regulations applicable to
Bank shall be borne by Mortgagor. Mortgagor's obligations under this paragraph
shall not be limited by the term of the Notes, and shall continue, survive and
remain in full force and effect notwithstanding foreclosure, satisfaction of
this Mortgage, or full satisfaction of the Obligations. However, Mortgagor's
indemnity shall not apply to any negligent act of Bank which takes place after
foreclosure, satisfaction of the Mortgages or full satisfaction of the
Obligations.
11. Appraisals. Mortgagor agrees that Bank may obtain an appraisal of the
Property when required by the regulations of the Federal Reserve Board or the
Office of the Comptroller of the Currency or at such other times as Bank may
reasonably require. Such appraisals shall be performed by an independent third
party appraiser selected by Bank. The cost of such appraisals shall be borne by
Mortgagor. If requested by Bank, Mortgagor shall execute an engagement letter
addressed to the appraiser selected by Bank. Mortgagor's failure or refusal to
sign such an engagement letter, however, shall not impair Bank's right to obtain
such an appraisal. Mortgagor agrees to pay the cost of such appraisal within ten
(10) days after receiving an invoice for such appraisal.
- 5 -
<PAGE>
12. Inspections. Bank, or its representatives or agents, are authorized
to enter at any reasonable time upon any part of the Property for the purpose of
inspecting the Property and for the purpose of performing any of the acts it is
authorized to perform under the terms of this Mortgage.
13. Liens and Subrogation. Mortgagor shall pay and promptly discharge all
liens, claims and encumbrances upon the Property except for those described in
EXHIBIT B, which are hereby acknowledged by Bank. Mortgagor shall have the right
to contest in good faith the validity of any such lien, claim or encumbrance,
provided: (i) such contest suspends the collection thereof or there is no danger
of the Property being sold or forfeited while such contest is pending; (ii)
Mortgagor first deposits with Bank a bond or other security satisfactory to Bank
in such amounts as Bank shall reasonably require; and (iii) Mortgagor thereafter
diligently proceeds to cause such lien, claim or encumbrance to be removed and
discharged.
Bank shall be subrogated to any liens, claims and encumbrances against
Mortgagor or the Property that are paid or discharged through payment by Bank or
with loan proceeds, notwithstanding the record cancellation or satisfaction
thereof.
14. Waiver of Mortgagor's Rights. Mortgagor waives any: (i) rights of
homestead or other exemption with regard to any of the Property; (ii) rights or
claims of equitable or statutory redemption; (iii) rights of appraisal; and (iv)
rights to require marshaling of assets.
15. Payments by Bank; Indemnification. If Mortgagor or Piemonte Foods,
Inc. defaults in the timely payment or performance of any of the Obligations,
Bank, at its option and without any duty on its part to determine the validity
or necessity thereof, may pay the sums for which Piemonte Foods, Inc. or
Mortgagor is obligated. Further, Bank may pay such sums as Bank deems
appropriate for the protection and maintenance of the Property including,
without limitation, sums to pay impositions and other levies, assessments or
liens, maintain insurance, make repairs, secure the Property, maintain utility
service, intervene in any condemnation, and attorneys' fees and other fees and
costs to enforce this Mortgage or protect the lien hereof (including foreclosure
and other proceedings affecting the Mortgage) or collect the Obligations. Any
amounts so paid shall bear interest at the default rate stated in the Notes and
shall be secured by this Mortgage.
In the event Bank shall become party to any suit or legal proceeding by
reason of its status as holder of this Mortgage, Mortgagor shall indemnify and
hold harmless Bank and reimburse Bank for any amounts paid or incurred by Bank,
including all reasonable costs, charges and attorneys' fees in any such suit or
proceeding.
16. Assignment of Rents. Mortgagor hereby absolutely assigns and
transfers to Bank all the leases, rents, issues and profits of the Property.
Conditional upon, and so long as, no Event of Default (as defined in the Loan
Agreement and herein) exists, Bank gives to and confers upon Mortgagor the
license and authority to collect such rents, issues and profits (collectively
"Rents") and to demand, receive and enforce payment, give receipts, releases and
satisfactions, and sue in the name of Mortgagor for all such Rents. Mortgagor
represents there has been no
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<PAGE>
prior assignment of leases or Rents, and agrees not to further assign such
leases or Rents. Upon any occurrence of any Event of Default as defined herein,
in the Loan Agreement, or in the Loan Documents, Bank may, without notice, by
agent or by a receiver appointed by a court, and without regard to the adequacy
of any security for the Obligations, revoke and cancel the license and authority
of Mortgagor to collect Rents, and (i) enter upon and take possession of the
Property, (ii) notify tenants, subtenants and any property manager to pay Rents
to Bank or its designee, and upon receipt of such notice such persons are
authorized and directed to make payment as specified in the notice and disregard
any contrary direction or instruction by Mortgagor, and (iii) in its own name,
sue for or otherwise collect Rents, including those past due, and apply Rents,
less costs and expenses of operation and collection, including attorneys' fees,
to the Obligations in such order and manner as Bank may determine. The
collection of Rents, the entering upon and taking possession of the Property, or
the application of Rents as aforesaid, shall not cure or waive any Event of
Default or notice of Event of Default hereunder.
17. Due on Sale or Further Encumbrance. The direct or indirect sale,
assignment, or conveyance of the Property, or any interest therein, or the
further encumbrance of the Property without Bank's written consent shall, at
Bank's option, constitute an Event of Default under this Mortgage.
18. Remedies of Bank on Default. Failure of Mortgagor or Piemonte Foods,
Inc. to timely pay or perform any of the Obligations is an event of default
("Default") under this Mortgage. Additionally, if Bank reasonably believes that
the prospect of Mortgagor's or Piemonte Foods, Inc.'s payment or performance of
any of the Obligations or Bank's realization of collateral is impaired, Bank may
declare the Obligations in default (also "Default"). Upon the occurrence of
Default the following remedies are available, without limitation, to Bank: (i)
Bank may exercise all of Bank's remedies under this Mortgage, the Loan
Agreement, or other Loan Documents including, without limitation, acceleration
of maturity of all payments and Obligations; (ii) Bank may take immediate
possession of the Property or any part thereof (which Mortgagor agrees to
surrender to Bank) and manage, control or lease the same to such persons and at
such rental as it may deem proper (the "Rents") and collect and apply Rents as
provided herein. The taking of possession shall not prevent concurrent or later
proceedings for the foreclosure sale of the Property; (iii) Bank may apply to
any court of competent jurisdiction for the appointment of a receiver for all
purposes including, without limitation, to manage and operate the Property or
any part thereof, and to apply the net Rents therefrom to the payment of any of
the Obligations. If the Rents are not sufficient to meet the costs of taking
control of and managing the Property, Bank, at its sole option, may advance
monies to meet the costs and any funds so advanced shall become additional
Obligations secured by this Mortgage and shall bear interest from the date of
payment at the rate set forth in the Notes. In event of such application,
Mortgagor consents to the appointment of a receiver, and agrees that a receiver
may be appointed without notice to Mortgagor, without regard to the adequacy of
any security for the Obligations, and without regard to the solvency of
Mortgagor or any other person, firm or corporation who or which may be liable
for the payment of the Obligations; (iv) all the remedies of a Mortgagee and a
secured party as provided by law and in equity including, without limitation,
foreclosure upon this Mortgage and sale of the Property, or any part of the
Property, at public sale conducted according to applicable law (referred to as
"Sale") and conduct additional Sales as may be
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<PAGE>
required until all of the Property is sold or the Obligations are satisfied; (v)
Bank may bid at Sale and may accept, as successful bidder, credit of the bid
amount against the Obligations as payment of any portion of the purchase price;
and (vi) Bank shall apply the proceeds of Sale, first to any fees or attorney
fees permitted Bank by law in connection with Sale, second to expenses of
foreclosure, publication, and sale permitted Bank by law in connection with
Sale, third to the Obligations, and any remaining proceeds as required by law.
19. Miscellaneous Provisions. Mortgagor agrees to the following: (i) All
remedies available to Bank with respect to this Mortgage or available at law or
in equity shall be cumulative and may be pursued concurrently or successively.
No delay by Bank in exercising any remedy shall operate as a waiver of that
remedy or of any Event of Default. Any payment by Bank or acceptance by Bank of
any partial payment shall not constitute a waiver by Bank of any Event of
Default; (ii) the provisions hereof shall be binding upon and inure to the
benefit of Mortgagor, its successors and assigns including, without limitation,
subsequent owners of the Property or any part thereof, and shall be binding upon
and inure to the benefit of Bank, its successors and assigns and any future
holder of the Notes or other Obligations; (iii) any notices, demands or requests
shall be sufficiently given Mortgagor if in writing and mailed or delivered to
the address of Mortgagor shown above or to another address as provided herein
and to Bank if in writing and mailed or delivered to Bank's office address shown
above, or such other address as Bank may specify from time to time and in the
event that either party hereto changes address at any time prior to the date the
Obligations are paid in full, that party shall promptly give written notice of
such change of address by registered or certified mail, return receipt
requested, all charges prepaid; (iv) this Mortgage may not be changed,
terminated or modified orally or in any manner other than by an instrument in
writing signed by the parties hereto; (v) the captions or headings at the
beginning of each paragraph hereof are for the convenience of the parties and
are not a part of this Mortgage; (vii) if the lien of this Mortgage is invalid
or unenforceable as to any part of the Obligations, the unsecured portion of the
Obligations shall be completely paid (and all payments made shall be deemed to
have first been applied to payment of the unsecured portion of the Obligations)
prior to payment of the secured portion of the Obligations; (viii) this Mortgage
shall be governed by and construed under the laws of the jurisdiction where this
Mortgage is recorded; (ix) Mortgagor by execution and Bank by acceptance of this
Mortgage agree to be bound by the terms and provisions hereof.
20. Remedies. In addition to any other remedies available at law or in
equity Bank and Mortgagor shall have the following remedies: (i) all rights to
foreclose against any real or personal property or other security by exercising
a power of sale granted herein or under applicable law or by judicial
foreclosure and sale, including a proceeding to confirm the sale; (ii) all
rights of self-help including peaceful occupation of real property and
collection of rents, set-off, and peaceful possession of personal property;
(iii) obtaining provisional or ancillary remedies including injunctive relief,
sequestration, garnishment, attachment, appointment of receiver and filing an
involuntary bankruptcy proceeding; and (iv) when applicable, a judgment by
confession of judgment.
Mortgagor and Bank agree that they shall not have a remedy of punitive
or exemplary damages against the other in any dispute, claim, or controversy
arising out of, connected with or
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<PAGE>
relating to this Mortgage ("Disputes") and hereby waive any right or claim to
punitive or exemplary damages they have now or which may arise in the future in
connection with any Dispute.
IN WITNESS WHEREOF, Mortgagor has signed and sealed this instrument as of
the day and year first above written.
Mortgagor:
Piemonte Foods of Indiana, Inc.
Attest:
By: Virgil L. Clark
Secretary - David Ward Its: President/Chief Executive Officer
STATE OF SOUTH CAROLINA, COUNTY OF GREENVILLE, SS:
Before me, the undersigned, a Notary Public in and for said County and
State, this day of , 1996, personally appeared
and to me personally well known, who, being first by
me duly sworn, did say that they are the and Secretary, respectively,
of PIEMONTE FOODS OF INDIANA, INC., and that said instrument was executed,
signed and sealed on behalf of said corporation by authority of its Board of
Directors, and and as and Secretary of said
corporation, acknowledged said instrument to be the free act of said
corporation and acknowledged the execution of the said mortgage for and on
behalf of said corporation.
Witness my hand and Notarial Seal.
Notary Public
(printed)
My Commission Expires:
My County of Residence is:
This instrument prepared by Elizabeth A. Holley, Attorney, NEXSEN PRUET
JACOBS & POLLARD, LLP, 1000 East North Street, Greenville, South
Carolina.
- 9 -
<PAGE>
EXHIBIT A
The following described real estate is located in Clinton County,
Indiana, to wit:
Tract I:
Lots Numbered 1 through 20, inclusive, of Irwin Park Addition to the
City of Frankfort, as the same is recorded in Plat Record 2 (new) page
31 and all of the vacated north-south and east-west alleys adjoining
said lots.
ALSO, a part of the Northwest quarter of Section 11, Township 21 North,
Range 1 West of the 2nd Principal Meridian, more particularly described
as follows:
From the northeast corner of Lot Number 11 of Irwin Park Addition to the
City of Frankfort, proceed thence North 84 degrees 27 minutes 40 seconds
East a distance of 8.16 feet; thence North O degrees 37 minutes 11
seconds East a distance of 12.07 feet to the point of beginning; thence
(l) South 84 degrees 28 minutes 40 seconds West a distance of 481.32
feet; thence (2) North O degrees 07 minutes 39 seconds East a distance
of 68.68 feet to the southeasterly right-of-way of the Railroad; thence
(3) northeasterly along said right-of-way curve a distance of 125.33
feet, having an approximate radius of 2149 feet and whose chord bears
North 43 degrees 15 minutes 13 seconds East a distance of 125.31 feet to
an iron bar; thence (4) North 42 degrees 55 minutes 42 seconds East a
distance of 286.06 feet along said right-of-way to the approximate
centerline of an open drainage ditch in the Hannah Kessler Watershed;
thence (5) South 31 degrees 31 minutes 54 seconds East a distance of
379.05 feet along said centerline projected southeasterly to the point
of beginning, and being the tract shown on the survey of Franklin C.
Moses dated May 23, 1983, and filed in Surveyor's Record 6 pages 588 &
589 in the office of the Surveyor of Clinton County, Indiana.
Tract II:
An easement over that portion of Vermont Street described as follows:
A portion of the northern right-of-way of Vermont Street, between the
West boundary of Lot and the East boundary of Lot 12 in the Irwin Park
Addition, to the extent that buildings improvements have been previously
located thereon.
-10-
<PAGE>
EXHIBIT B
Those certain encumbrances as set forth in Schedule B of that certain
TICOR Title Insurance Commitment No. CN-6166-M having an effective dated of
December 1, 1995, at 4:00 P.M.
-11-
<PAGE>
(First Union logo)
July 18, 1996
Piemonte Foods, Inc.
Piemonte Foods of Indiana, Inc.
Origena, Inc.
Re: First Amendment to Loan and Security Agreement dated as of January 4,
1996, by and among First Union National Bank of South Carolina (the
"Lender"), Piemonte Foods, Inc. ("Borrower"), Piemonte Foods of Indiana,
Inc. ("Piemonte of Indiana") and Origena, Inc. ("Origena").
Dear Sirs,
This responds to your request to amend certain provisions of the Loan
Agreement (as defined above).
The Loan Agreement shall be amended as follows (with capitalized terms
having the same definitions as set forth in the Loan Agreement):
(a) Section 4.2 Negative Covenants (g) is hereby deleted and the following
is substituted therefor:
"Provide funding to the Piemonte/Sabatasso European Project Joint
Venture in excess of $1,400,000.00 (whether in the form of debt or
equity or both)."
(b) Section 4.2 Negative Covenants (h) is hereby deleted and the
following is substituted therefor:
"Incur any additional debt for borrowed money, whether secured or
unsecured, or enter into any capitalized leases, or incur any
contingent liability (the execution of any guaranty agreement or
letter of credit agreement constituting the incurrence of a
contingent liability), except for the indebtedness and/or guaranty of
Borrower to Internationale Nederlanden Bank N.V. (a/k/a ING Bank) in
the amount of Six Million Seven Hundred Fifty Thousand (6,750,000)
Guilders
<PAGE>
Piemonte Foods, Inc.
Piemonte Foods of Indiana, Inc.
Origena, Inc.
July 18, 1996
Page 2
outstanding as of June 1, 1996 plus additional amounts from ING Bank
not to exceed Three Hundred Thousand (300,000) Guilders in the
aggregate, in future borrowings."
(c) Section 4.1 Affirmative Covenants is hereby amended by adding the
following:
"(l) Capital Expenditures - Piemonte/Sabatasso Joint Venture.
Borrower shall require its approval of all capital expenditures
incurred in connection with the Piemonte/Sabatasso European Project
Joint Venture, and shall provide immediate notice to Lender of any
such approvals issued."
"(m) Financial Reports - Piemonte/Sabatasso Project. Borrower shall
require to be furnished with English translated monthly financial
statements for the Piemonte/Sabatasso European Project Joint Venture
produced by Deloitte Touche Tohmatsu International - Netherlands with
such copies to be provided to Lender within five (5) days of
Borrower's receipt thereof, but no later than thirty (30) days after
the preceding month end."
The foregoing amendments shall become effective, as of March 1, 1996, upon
our receipt of a fully executed acknowledgement of this letter. By executing the
acknowledgements indicated below, the parties ratify and confirm all terms and
conditions of the Loan Agreement except as amended hereby.
<PAGE>
Piemonte Foods, Inc.
Piemonte Foods of Indiana, Inc.
Origena, Inc.
July 18, 1996
Page 3
We are pleased to be of continuing service to Piemonte Foods.
Sincerely,
FIRST UNION NATIONAL BANK OF SOUTH
CAROLINA
(Signature of William A. Litchfield)
William A. Litchfield
Sr. Vice President
Acknowledged and agreed to by:
BORROWER:
PIEMONTE FOODS, INC.
By: s/ Virgil Clark
Its: President
GUARANTORS:
PIEMONTE FOODS OF INDIANA, INC.
By: s/ Virgil Clark
Its: President
ORIGENA, INC.
By: s/ Virgil Clark
Its: President
<PAGE>
First Union National Bank
of South Carolina
Post Office Box 1329
Greenville, South Carolina 29602
(First Union logo)
August 23, 1996
Piemonte Foods, Inc.
Piemonte Foods of Indiana, Inc.
Origena, Inc.
Re: Second Amendment to Loan and Security Agreement dated as of January 4, 1996
(the "Loan Agreement"), by and among First Union National Bank of South
Carolina (the "Lender"), Piemonte Foods, Inc. ("Borrower"), Piemonte Foods
of Indiana, Inc. ("Piemonte of Indiana") and Origena, Inc. ("Origena").
Dear Sirs:
The Loan Agreement shall be amended as follows (with capitalized terms
having the same definitions as set forth in the Loan Agreement):
(a) Section 4.3(a) Debt Coverage Ratio is hereby deleted and the following
is substituted therefor:
(a) Debt Coverage Ratio. A Debt Coverage Ratio of not less than the
following levels for the periods indicated:
(i) 1.0 to 1.0 for each quarter through and including the next to
the last day of the quarter ending on November 30, 1996;
(ii) 1.05 to 1.0 for each quarter from November 30, 1996 through
May 30, 1997;
(iii) 1.10 to 1.0 for each quarter from May 31, 1997 through
November 29, 1997;
(iv) 1.20 to 1.0 for each quarter from November 30, 1997 through
May 30, 1998;
(v) 1.30 to 1.0 for each quarter from May 31, 1998 through
November 29, 1998;
(vi) 1.40 to 1.0 for each quarter from November 30, 1998 through
May 30, 1999; and
<PAGE>
Piemonte Foods, Inc.
Piemonte Foods of Indiana, Inc.
Origena, Inc.
August 23, 1996
Page 2
(vii) 1.50 to 1.0 for each quarter thereafter.
The measurement to determine Debt Coverage Ratio shall be
calculated on a rolling four (4) quarter basis and shall be adjusted to exclude
the following one time reductions in earnings: (i) $206,000 for the quarter
ending February 28, 1996, and (ii) $344,000 for the quarter ending May 31, 1996.
(b) Section 4.3(c) Minimum Net Worth is hereby deleted and the following is
substituted therefor:
(c) Minimum Net Worth. A Minimum Net Worth of not less than: (i)
$6,000,000.00 by the quarter ending on May 31, 1996, and for the
six (6) months following; (ii) $6,200,000.00 by the quarter ending
on November 30, 1996, and for the six (6) months following; (iii)
$6,400,000.00 by the quarter ending May 31, 1997, and for the six
(6) months following; (iv) $6,600,000.00 by the quarter ending
November 30, 1997, and for the six (6) months following; (v)
$6,800,000.00 by the quarter ending May 31, 1998, and for the six
(6) months following; (vi) $6,900,000.00 by the quarter ending
November 30, 1998, and (vii) $7,000,000.00 by May 31, 1999 and
continuing thereafter. For the purpose of this Section, "Minimum
Net Worth" shall mean the excess of all assets of Borrower and its
subsidiaries over all liabilities of Borrower and its subsidiaries,
on a consolidated basis, all determined in accordance with GAAP,
provided, however, that the foregoing calculation shall not include
Borrower's gains or losses resulting from its participation in the
Piemonte/Sabatasso European Project.
The foregoing amendments shall become effective upon our receipt of a
fully executed acknowledgement of this letter. By executing the acknowledgements
indicated below, the parties ratify and confirm all terms and conditions of the
Loan Agreement except as amended hereby.
By its execution hereof, Lender waives Borrower's non-compliance with
Section 4.3(a) of the Loan Agreement for the fiscal year ending May 31, 1996.
<PAGE>
Piemonte Foods, Inc.
Piemonte Foods of Indiana, Inc.
Origena, Inc.
August 23, 1996
Page 3
We are pleased to be of continuing service to Piemonte Foods.
Sincerely,
FIRST UNION NATIONAL BANK OF SOUTH
CAROLINA
(Signature of William A. Litchfield)
William A. Litchfield
Sr. Vice President
Acknowledged and agreed to by:
BORROWER:
PIEMONTE FOODS, INC.
By: s/ Virgil Clark
Its: President
GUARANTORS:
PIEMONTE FOODS OF INDIANA, INC.
By: s/ Virgil Clark
Its: President
ORIGENA, INC.
By: s/ Virgil Clark
Its: President
<PAGE>
LEASE AGREEMENT
BETWEEN
PIEMONTE FOODS, INC.
AND THE
METROPOLITAN NASHVILLE AIRPORT AUTHORITY
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CONTENTS
ARTICLE PAGE NO.
I. Definitions.............................. 2
II. Assigned Area............................ 3
III. Term..................................... 3
IV. Rentals, Fees and Charges ............... 3
V. Privileges and Obligations of Lessee .... 6
VI. Improvements by Authority ............... 7
VII. Improvements by Lessee .................. 7
VIII. Operational Standards ................... 11
IX. Maintenance ............................. 11
X. Compliance .............................. 14
XI. Assignment and Subleasing ............... 14
XII. Indemnification ......................... 15
XIII. Insurance and Bonds ..................... 16
XIV. Termination by Lessee ................... 20
XV. Termination by Authority ................ 22
XVI. Condemnation ............................ 28
XVII. Security ................................ 30
XVIII. Holding Over ......................... 31
XIX. Attorney's Fees ......................... 32
XX. Amendment ............................... 32
XXI. Relationship of Parties ................. 32
XXII. Approvals By Authority .................. 33
XXIII. Environmental Protection................. 33
XXIV. Environmental Compliance................. 33
XXV. Taxes ................................... 37
XXVI. General Provisions ...................... 38
XXVII. DOT Title VI Assurances.................. 43
XXVIII. Entire Agreement......................... 46
(i)
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LEASE AGREEMENT
THIS LEASE AGREEMENT, effective this 26th day of March, 1996, by and
between the METROPOLITAN NASHVILLE AIRPORT AUTHORITY, a public corporation
existing under the laws of the State of Tennessee, hereinafter referred to as
the "Authority", and PIEMONTE FOODS, INC., hereinafter referred to as "Lessee".
W I T N E S E T H :
WHEREAS, Authority is the owner and operator of the Nashville International
Airport, Nashville, Tennessee, together with certain air navigational
facilities, hereinafter referred to as the "Airport"; and,
WHEREAS, Lessee is a corporation engaged in the operation of a food service
distribution center at the Nashville International Airport; and,
WHEREAS, it is the intent of the Authority to grant, demise and let unto
Lessee, and Lessee intends to lease, accept and rent from Authority, certain
improved real property, at the Nashville International Airport, Nashville,
Tennessee (the "Airport"), as more fully described on Exhibits "A" and "B",
attached hereto and made a part hereof, for use as a food service distribution
center.
NOW, THEREFORE, for and in consideration of the premises, mutual covenants
and agreements and other valuable consideration, Authority hereby grants the
following privileges, facilities, rights, licenses and services in connection
with and on the Airport as follows:
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ARTICLE I.
DEFINITIONS
1.1 "Agreement" as used herein contemplates and includes the lease of
Authority-owned property (referred to henceforth as Assigned Areas)
and permission for Lessee to use such Authority-owned property for
the operation of a food service distribution center.
1.2 "Airport", "Airport Terminal" and "Terminal" shall mean the Passenger
Terminal Building at Nashville International Airport and the airfield
operating area.
1.3 "Assigned Area" is the area or areas of Airport designated by this
Agreement and Exhibits "A" and "B" attached hereto.
1.4 "Authority" shall mean the Metropolitan Nashville Airport Authority and
shall include such public officials and public bodies as may, by operation
of law, succeed to any or all of the rights, powers or duties which
lawfully reside in the Metropolitan Nashville Airport Authority.
1.5 "President" shall mean the President or Acting President of the
Metropolitan Nashville Airport Authority or that person designated by the
President to act for him with respect to any or all matters pertaining to
this Agreement.
ARTICLE II.
ASSIGNED AREA
2.1 Authority hereby grants, demises and lets unto Lessee, and Lessee accepts
and leases the same from Authority that improved real property described
on Exhibits "A" and "B" attached hereto, subject to all the intents,
terms, and conditions contained herein.
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ARTICLE III.
TERM
3.1 This Agreement shall become effective upon execution by all parties hereto.
The term of this Agreement shall be for five years, commencing April 1,
1996, with three (3) five-year renewal options, which options shall be
exercised by written notice to Authority's President not less than One
Hundred Eighty (180) days prior to the expiration of the basic term or
renewal option, if any.
ARTICLE IV.
RENTALS, FEES AND CHARGES
4.1 Beginning April 1, 1996, Lessee covenants to pay to Authority,
over and above other additional charges and payments to be made by
Lessee, as hereinafter provided, an annual rental of Sixty-eight Thousand,
Five Hundred Forty and 00/100 Dollars ($68,540.00) payable in equal
monthly installments of Five Thousand, Seven Hundred Eleven and 67/100
($5,711.67),as shown on Exhibit "C" attached hereto and made a part hereof.
4.2 Commencing April 1, 1997 and continuing thereafter on each anniversary date
during the term hereof, and any renewals , the rental shall be adjusted in
accordance with the percentage of increase in the Cost of Living Index, All
Urban Consumers, "All Items", compiled and published by the United States
Department of Labor, Bureau of Labor Statistics, such percentage
being based upon a comparison of the index figure in effect three (3)
months prior to the calendar month in which the term commenced with the
index figure in effect three (3) months prior to the date of each
adjustment period. In no event shall the rental be less than Sixty-Eight
Thousand Five Hundred Forty and 00/100 Dollars ($68,540.00) per annum. It
is understood and agreed that the Cost of Living Index used
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for the calendar month in which the term commenced is that Index for
January, 1996, which is three (3) months prior to the calendar month in
which the term commenced and is established at 154.4 based upon the
Cost of Living Index of 1982-84=100.
If publication of the Cost of Living Index, All Urban Consumers,
shall be discontinued, or if the manner of calculation of said Index
should become no longer comparable to the manner in which said Index is
calculated as of the date hereof, the parties hereto shall thereafter
accept comparable statistics on such prices for the United States, as they
shall be computed and published by an agent of the United States or by a
responsible financial periodical of recognized authority then to be
selected by the parties hereto, or, if the parties cannot agree upon a
selection, by arbitration. In the event of (l) use of comparable
statistics in place of the Cost of Living Index, All Urban Consumers, as
above mentioned, or (2) publication of the Index figure at other than
monthly intervals, there shall be made in the method of computation herein
provided for such revision as circumstances may require to carry out the
intent of this article, and any dispute between the parties as to the
making of such adjustments shall be determined by arbitration.
4.3 Authority hereby affirms the receipt of prepaid rental in the aggregate
amount of $66,081.94, which shall be credited to Lessee's rental payments
on a monthly basis during the first three (3) contract years of this
Agreement:
Contract Year 1 $22,027.31
Contract Year 2 $22,027.31
Contract Year 3 $22,027.31
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Pursuant to paragraph 14.6 herein, in the event this Agreement is
terminated for any reason during the first three (3) contract years
hereof, any prepaid rental not yet credited against Lessee's rental
obligations hereunder shall become the property of Authority, free and
clear of any claims by Lessee.
4.4 Lessee further agrees and covenants that, in addition to the rentals and
fees specified in Section 4.3 above, Lessee shall, at its sole cost, risk
and expense, construct or cause to be constructed on the Assigned Area,
permanent capital improvements which are general in nature and not
specifically for the food service business, at a total cost of Ninety-two
Thousand and 00/100 Dollars ($92,000.00). All such improvements
shall be completed according to the requirements set forth in ARTICLE VII.
IMPROVEMENTS BY LESSEE, provided for in this Agreement. Upon the
completion of the permanent capital improvements and Lessee's certification
of the costs thereof as set forth in ARTICLE VII. IMPROVEMENT BY LESSEE,
Lessee shall be granted a monthly rental credit which shall be amortized
over the remaining initial five (5) year term of this Agreement utilizing
straight-line amortization from the date of completion of the permanent
capital improvements. In the event Lessee shall terminate this Agreement
prior to the expiration of the initial five (5) year term, Lessee hereby
agrees to pay to Authority the total amount of this unamortized rental
credit due from the date of termination to March 31, 2001.
4.5 All rental due herein shall be payable to Authority, in advance and
without notice or demand on or before the first day of each month.
If the term of this Agreement commences on a day other than the
first day of a month, then the rental due herein shall be pro-rated
for such partial month.
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4.6 Lessee shall pay for all utilities consumed within the Assigned Area.
4.7 Without waiving any other right of action available to Authority in
the event of default in payment of any and all fees, charges or taxes
hereunder, in the event that Lessee is delinquent for a period of ten (10)
days or more in paying to Authority any fees payable to Authority pursuant
to this Agreement, Lessee shall pay to Authority interest thereon at the
maximum rate allowable by law per annum from the date such debt was due and
payable until paid. Such interest shall not accrue with respect to
disputed items being contested in good faith by Lessee.
ARTICLE V.
PRIVILEGES AND OBLIGATIONS OF LESSEE
5.1 Lessee shall use the Assigned Area as a food service distribution
center.
5.2 Lessee shall conform with all of Authority's signage standards and shall
not display, install, inscribe, paint or affix any signs, advertisements
or notices upon the Assigned Area without prior written consent of
Authority. Upon termination of this Agreement, Lessee shall remove any and
all signs, advertisements and notices at the request of Authority and shall
restore the Assigned Area to its prior condition.
5.3 Lessee is herein granted the rights of ingress to and egress from the
Assigned Area. Such rights of ingress and egress shall apply to Lessee's
employees, guests, patrons, invitees, suppliers and other authorized
individuals.
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5.4 Lessee shall not use the Assigned Area for any other purpose without the
prior written approval of Authority's President, or his representative.
ARTICLE VI.
IMPROVEMENTS BY AUTHORITY
6.1 Lessee represents that Lessee has inspected and examined the Assigned
Area and accepts it in its present condition and agrees that Authority,
with the exception of the replacement of the roof, shall not be
required to make any other improvements, repairs or modifications
whatsoever in or upon the Assigned Area hereby leased or any part
thereof.
6.2 All leasehold improvements, as defined by Tennessee law, will be considered
an integral part of the Assigned Area and title to such leasehold
improvements will vest in Authority upon termination or expiration of this
Agreement, free and clear of any liens or encumbrances whatsoever.
ARTICLE VII.
IMPROVEMENTS BY LESSEE
7.1 Lessee shall, without cost to Authority, provide the Assigned Area
with all improvements necessary for its operation.
7.2 All improvements and equipment constructed or installed by Lessee,
its agents, or contractors, including the plans and specifications
shall conform to all applicable statutes, ordinances, building codes,
and rules and regulations.
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7.3 Two sets of plans and specifications for any improvements to the Assigned
Area shall be submitted to the Executive Vice President for review and
approval. No work or construction shall commence until written approval
from the Executive Vice President is received and the plans are stamped
"Approved".
7.4 The Executive Vice President shall either approve or disapprove the
plans and/or specifications submitted by Lessee. The approval by the
Executive Vice President of any plans and specifications refers only to the
conformity of such plans and specifications for Assigned Area to
existing improvements at Airport and such approval shall not be
unreasonably withheld. Such plans and specifications are not approved for
architectural or engineering design or compliance with applicable laws or
codes and Authority, acting through its Executive Vice President, by
approving such plans and specifications, assumes no liability or
responsibility herefor or for any defect in any structure or improvement
constructed according to such plans and specifications. The Executive
Vice President reserves the right to reject any designs submitted, and
shall state the reasons for such action.
7.5 In the event of rejection by the Executive Vice President, Lessee shall
submit necessary modifications and revisions.
7.6 No changes or alterations shall be made to said plans and specifications
after approval by the Executive Vice President. No structural alterations
or improvements shall be made to or upon Assigned Area without the prior
written approval of the Executive Vice President. One reproducible final
copy of the plans for all improvements or subsequent changes therein or
alterations thereof to Assigned Area shall be signed by Lessee and
submitted to the Executive Vice President within thirty (30) days following
completion of the project.
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7.7 Lessee covenants and agrees that it shall, at its sole cost and expense,
construct or cause to be constructed on Assigned Area all improvements
required to be used for the purposes specified in Article V hereof,
including all utility services. All improvements made by Lessee to Assigned
Area shall be of high quality. Furthermore, they shall be safe, fire
resistant, attractive in appearance, and shall require written approval of
the Executive Vice President prior to installation. All charges
including installation cost, meter deposits and all service charges for
water, electricity and other utility services to and within Assigned Area
shall be paid by Lessee.
7.8 All improvements made to the Assigned Area and additions and alterations
thereto made by Lessee shall be and remain the property of Lessee until the
expiration of the term of this Agreement, as set forth in Article III, or
upon termination of this Agreement (whether by expiration of the
term, termination, forfeiture, or otherwise), whichever first occurs;
at which time the said improvements shall become the property of Authority,
provided, however, that any trade fixtures, signs and other personal
property of Lessee not permanently affixed to Assigned Area shall remain
the property of Lessee and shall so remain unless Lessee shall fail within
ten (10) days following the termination of this Agreement to remove its
trade fixtures, signs and other personal property of Lessee not permanently
affixed to Assigned Area in which event, at the option of Authority, title
to same shall vest in Authority, at no cost to Authority, or Authority may
elect to exercise its rights set forth in Paragraph 15.6 of this Agreement.
Upon expiration, or earlier termination, of this
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Agreement, Authority reserves the right, at its sole discretion, to
require that Lessee remove, at its sole cost and expense, any and all
improvements Lessee has made to Assigned Area.
7.9 Upon completion of improvements to the Assigned Area outlined
hereinabove, Lessee shall have the right to install or erect
additional improvements in the Assigned Area provided,
however, that all such alterations be commenced only after
plans and specifications thereof have been submitted to and
approved in writing by the Executive Vice President. Any such
alterations and/or repairs shall be without cost to Authority
within the time specified in the written approval and with the
least disturbance possible to Lessee's operation and to the
public.
7.10 The ultimate control over the quality and acceptability of the
improvements in the Assigned Area will be retained by
Authority, and all improvements and finishes shall require the
written approval of the Executive Vice President prior to
installation.
7.11 Upon completion of any improvements, a duly authorized officer of Lessee
must prove to the satisfaction of Authority by certified written statement,
and any other means or devices deemed necessary by Authority: (l) the
amount of total construction costs; (2) that the improvements have
been constructed in accordance with plans and specifications previously
approved by Authority and in strict compliance with all applicable building
codes, laws, rules, ordinances and regulations; and (3) that no liens exist
on any or all of the construction and that all contractors and
subcontractors have been paid all amounts due and owing to them.
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7.12 Lessee shall not remove or demolish, in whole or in part, any improvements
upon the Assigned Area without the prior written consent of the Executive
Vice President, which may be conditioned upon the obligation of Lessee to
replace the same by an improvement specified in such consent.
7.13 Lessee shall be responsible for making repairs at its sole expense for any
damage resulting from the removal by Lessee of its furniture, trade
fixtures, etc.
ARTICLE VIII.
OPERATIONAL STANDARDS
8.1 Lessee agrees to operate and maintain the Assigned Area in a
safe, clear, orderly and inviting condition.
8.2 The management, maintenance and operation of the Assigned Area shall at all
times be under the supervision and direction of an active, clarified,
competent manager who shall at all times be subject to the direction and
control of Lessee.
8.3 The operations of Lessee, its employees, invitees, suppliers, and
contractors shall be conducted in an orderly and proper manner so as not to
annoy, disturb or be offensive to others. All employees of Lessee must
conduct themselves at all times in a courteous manner toward the public and
in accordance with the rules, regulations and policies developed by Lessee.
ARTICLE IX.
MAINTENANCE
9.1 Lessee shall keep the Assigned Area at all times in good and substantial
repair, and will be responsible for keeping the Assigned Area in a good,
clean, sightly and healthy condition
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commensurate with housekeeping standards of other tenants at the Airport.
9.2 If Lessee shall at any time fail to keep the Assigned Area in good and
substantial repair as aforesaid, or in a clean and healthy condition, then
Authority, after giving Lessee ten (10) days written notice of such failure
to comply, may do all things necessary to effect compliance with this
Article, and all monies expended by it for that purpose shall be repayable
by Lessee as additional rental in the month or months said work is
performed. Authority's determination shall be final and conclusive.
9.3 Lessee shall maintain and make necessary repairs, structural and otherwise,
to the Assigned Area and the fixtures and equipment therein and
appurtenances thereto. Lessee shall keep and maintain in good
condition the electrical, mechanical, HVAC, and other systems located on
the Assigned Area.
9.4 Prior to making any structural repairs, Lessee shall submit plans to and
obtain the written approval of Authority's Executive Vice President. All
such work performed by Lessee must be inspected and approved by Authority's
Executive Vice President or his representative.
9.5 All repairs done by Lessee or on its behalf shall be of first class quality
in both materials and workmanship. All repairs shall be made in conformity
with the rules and regulations prescribed from time to time by federal,
state or local authority having jurisdiction over the work in Lessee's
Assigned Area.
9.6 The President or his duly appointed representatives shall have the right
to enter Lessee's Assigned Area to:
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a. Inspect the Assigned Area at reasonable intervals during Lessee's
regular business hours, or at any time in case of emergency, to
determine whether Lessee has complied with and is complying with the
terms and conditions of this Agreement. The President may, at his
discretion, require the Lessee to effect repairs required of
Lessee at Lessee's own cost.
b. Perform any and all things which Lessee is obligated to do, but has
failed to do after reasonable notice, including but not limited
to: maintenance, repairs and replacements to Lessee's Assigned Area.
The cost of all labor and materials required to complete the work will
be paid by Lessee to Authority within ten (10) days following
demand by the President for said payment. Authority's receipts and
invoices shall be conclusive and binding on Lessee as to the cost of
performance of such obligations by Authority.
9.7 Lessee shall, in a timely manner, provide for the adequate sanitary
handling and removal of all trash, garbage and other refuse caused as a
result of Lessee's operations. Lessee agrees to provide and use
suitable covered or sealed receptacles for all garbage, trash and other
refuse in the Assigned Area. Piling of boxes, cartons, barrels or similar
items shall not be permitted.
9.8 Lessee shall have the right, but shall not be obligated, to provide
security protection as it may desire at its own cost. Such right, whether
or not exercised by Lessee, shall not in any way be construed to limit or
reduce the obligations of Lessee hereunder. Any extra security protection
shall be subject to the authority granted to Airport's police force and
shall in no way hinder or interfere with their duties.
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ARTICLE X.
COMPLIANCE
10.1 Lessee, its officers, agents, servants, employees, contractor, licensees
and any other person whom Lessee controls or has the right to control shall
comply with all present and future laws, ordinances, orders, directives,
rules, and regulations of the United States of America, the State of
Tennessee, the Metropolitan Government of Nashville and Davidson County and
their respective agencies, departments, authorities or commissions
which may either directly or indirectly affect Lessee or its operations on
or in connection with the Assigned Area or Airport. If the Authority
incurs any fines or penalties due to Lessee's violation of any such present
or future laws, ordinances, orders, directives, rules and
regulations, it is mutually agreed by both parties that any such fine or
penalty shall be directly passed on to Lessee by Authority and same shall
become the sole responsibility of Lessee.
10.2 Lessee shall pay wages that are not less than the minimum wages required by
federal and state statutes ordinances to persons employed in its operations
hereunder.
10.3 This Agreement is governed by the laws of Tennessee. Any disputes
relating to this Agreement must be resolved in accordance with the laws of
Tennessee.
ARTICLE XI.
ASSIGNMENT AND SUBLEASING
11.1 Lessee shall not assign this Agreement or allow the same to be assigned by
operation of law or otherwise, or sublet the Assigned Area or any part
thereof without the prior written consent of Authority. Authority reserves
the right to deny
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any assignment or subletting by Lessee for any reason it deems in the best
interest of Authority. Any purported assignment or sublease in violation
hereof shall be void.
11.2 In no case may the activities, uses, privileges and obligations
authorized herein on the Assigned Area or any portion thereof be assigned,
for any period or periods after a default of any of the terms, covenants,
and conditions herein contained to be performed, kept and observed by
Lessee.
11.3 In the event Authority consents to any assignment or subletting on
the part of Lessee for any rights or privileges granted in this
Agreement, Lessee shall be and remain responsible for any and all
payments due Authority as a result of operations from the assignment or
subletting and for the performance of any and all of Lessee's obligations
hereunder.
ARTICLE XII.
INDEMNIFICATION
12.1 Lessee shall protect, defend, indemnify and hold Authority and its Board of
Commissioners, officers, and employees harmless from and against any and
all liabilities, demands, suits, claims, losses, fines, or judgments
arising by reason of the injury or death of any person or damage to any
property, including all reasonable costs for investigation and defense
thereof (including but not limited to attorney fees, court costs and
expert fees), of any nature whatsoever arising from or incident to Lessee's
performance of this Agreement, its operations on the Assigned Area or the
acts or omissions of Lessee's officers, employees, agents, contractors,
subcontractors, licensees or invitees regardless of where the injury, death
or damage may occur; unless such injury, death or damage is caused by the
sole negligence of Authority.
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Authority shall give Lessee reasonable notice of any such claims or
actions. Lessee, in carrying out its obligations herein shall use counsel
reasonably acceptable to Authority. The provisions of this section shall
survive the expiration or earlier termination of this Agreement.
ARTICLE XIII.
INSURANCE AND BONDS
13.1 Lessee agrees to maintain, relative to the Assigned Area, comprehensive
public liability and property damage insurance in the amounts of:
A. Personal Injury - Two Million Dollars ($2,000,000) per accident; Five
Hundred Thousand Dollars ($500,000) per person.
B. Property Damage - One Million Dollars ($1,000,000) per accident.
C. Products Liability included as part of Personal Injury and Property
Damage.
D. Comprehensive Automobile Liability - One Million Dollars ($1,000,000)
combined single limit.
Such insurance policies shall name the Authority, its Board of
Commissioners, its officers, and its employees as additional insured and
joint payee to the full extent of Lessee's insurance coverage but in
no event less than the required minimum coverage limit. Such insurance
shall include contractual liability insurance to insure Lessee's
obligation to indemnify and hold Authority, its Board of Commissioners,
its officers and its employees harmless in accordance with the
indemnification provisions of this Agreement.
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13.2 All insurance policies shall contain a severability of interest or
cross-liability provision endorsement which shall read generally as
follows:
"In the event of one of the assureds incurring liability to any other of
the assureds, this policy shall cover the assured against whom claim is
or may be made in the same manner as if separate policies had been
issued to each assured. Nothing contained herein shall operate to
increase the limits of liability."
13.3 All insurance policies shall provide that they will not be altered or
cancelled without thirty (30) days advance written notice to Authority.
Such insurance shall provide that it will be considered primary insurance
with respect to any other valid and collectible insurance, or self-insured
retention, or deductible Authority may possess. Any other insurance or
self insured retention of Authority shall be considered excess insurance
only.
13.4 Authority shall have the right to change the insurance coverages
and the insurance limits required of Lessee, without any adjustment of the
rental fees paid by Lessee or any cost to Authority, if such changes are
recommended or imposed by Authority's insurers.
13.5 All insurance required under this Agreement shall be obtained from an
insurance company or companies authorized to do business in the State of
Tennessee. The insurance company must be acceptable to Authority;
approval may be denied a company based on its Best rating or other
indication of financial inadequacy.
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13.6 Lessee shall provide to Authority such evidence of compliance with
Authority's insurance requirements as Authority may from time to request.
At a minimum Lessee shall provide, at the commencement of this Agreement, a
certificate of insurance, and copies of all policies and endorsements.
All such certificates shall be completed to show compliance with Lessee's
obligations hereunder, specifically as to the indemnification and
notice provisions.
13.7 If Lessee or its insurance company fails to promptly respond to Authority's
request for adequate evidence of compliance with the insurance provisions
Authority may, in addition to all its other remedies, charge Lessee an
additional rental in an amount equal to ten percent (10%) of the rental
required hereunder until such evidence is provided.
13.8 If Lessee shall at any time fail to insure or keep insured as aforesaid,
Authority may do all things necessary to effect or maintain such insurance
and all monies expended by it for that purpose shall be repayable by Lessee
as additional rental in the month or months the premium or premiums are
paid by Authority. If any insurance policies required hereunder can not be
obtained for any reason Authority may require Lessee to cease any and all
operations until coverage is obtained. If such insurance coverage is not
obtained within a reasonable period of time, to be determined solely
by Authority, Authority may terminate this Agreement.
13.9 Lessee agrees to maintain Fire and extended insurance coverage on all
buildings and permanent improvements existing or to be constructed on the
Assigned Area in an amount not less than ninety percent (90%) of the full
insurable value thereof. If any building or improvements located on the
Assigned Area shall be damaged by fire, casualty or any other causes,
Lessee shall, within ninety (90) days after such damage, commence
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restoration or reconstruction of the Assigned Area to a condition
generally equivalent to that preceding the damage or destruction. During
the period of such reconstruction, the rental provided for herein shall be
reduced in proportion to the area of the Assigned Area which have been
rendered unusable. Lessee may elect, during such ninety (90) day
period, not to reconstruct or rebuild the damaged or destroyed building or
buildings erected on the land, in which event the insurance proceeds shall
become the property of Authority. In any event, Lessee's repair or
reconstruction to the Assigned Area, or payment of the insurance proceeds
to Authority if the Assigned Area is not restored, must be commenced in the
case of repair or in the case of payment of proceeds made within ninety
(90) days after such damage. As to permanent improvements
constructed on the Assigned Area by Lessee, the formula for determining
division of insurance proceeds when the permanent improvements are not
reconstructed shall be based upon the unamortized cost to be determined by
amortizing the cost of the permanent improvements on a straight-line basis
over the portion of the term of the lease remaining from the time of
completion of the improvements. Should Lessee later elect to rebuild or
reconstruct, then Authority will pay over to Lessee upon receipt of
itemized bills of cost as expended, that portion of the insurance proceeds
necessary to complete said rebuilding or reconstruction, but in no event an
amount greater than the insurance proceeds.
13.10 Lessee shall for insurance purposes appraise the property and improvements
at the inception of the Agreement by an appraiser to be approved in
advance by Authority. The ninety percent (90%) full insurable value
provided for above shall be based upon said appraisal. Thereafter,
the full insurable value of the Assigned Area shall be adjusted every
five (5) years by the same percentage by which the rental is adjusted,
as set forth in Article IV.
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13.11 If Lessee makes or causes to be made additional improvements to the
Assigned Area, the agreed upon insurance limits of the Assigned Area shall
be ninety percent (90%) of the full insurable value of those
improvements.
13.12 Prior to commencing any work or construction on the Assigned Area, Lessee
agrees to provide Authority with a Construction Bond and Labor and
Materials Bonds, for any construction or capital improvements undertaken
by Lessee during the term of this Agreement in a sum equal to the full
amount of the construction contract award.
ARTICLE XIV.
TERMINATION BY LESSEE
14.1 In addition to all other remedies available to Lessee, this
Agreement shall be subject to termination by Lessee should
Authority breach any of the material terms, covenants, or
conditions of this Agreement to be kept, performed, and
observed by Authority, and the failure of Authority to remedy
such breach, subject to Authority's right to litigate the
issue, which litigation shall stay this time period, for a
period of sixty (60) days after written notice from Lessee of
the existence of such breach or if more than sixty (60) days
shall be required because of the nature of such breach, if
Authority shall fail within said sixty (60) day period to
commence and thereafter diligently proceed to cure such
default.
14.2 In the event of any occurrence or condition of default by default
by Authority, Lessee shall be eligible for an abatement in its
rental, fees and charges as identified in Article IV from the time
of default until the cessation of such condition of default, or the
termination of this Agreement by Lessee. In the event of any litigation
to determine if a condition of
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default has occurred, Lessee may elect to pay its rentals, fees and
charges into the court having jurisdiction over such litigation, or to
Authority, but shall not be relieved from such obligation unless and until
a final determination on such litigation is made in Lessee's favor.
14.3 In the event any condition of default shall occur (notwithstanding
any waiver, license or indulgence granted to Authority with respect
to any condition of default in any form or instance), while such
condition of default is continuing, Lessee shall have the right, at its
election, to terminate this Agreement by giving at least ten (10) days
written notice to Authority at which time Lessee will then quit and
surrender the Assigned Area to Authority, and this Agreement will cease
and terminate, but Lessee shall remain liable for rents and obligations
incurred prior to termination as herein provided.
14.4 This Agreement shall be subject to suspension by Lessee in the event any
one or more of the following occur:
a. The issuance by any court of competent jurisdiction of any injunction
preventing or restraining the use of Airport in such a manner as to
substantially restrict Lessee's use of the Assigned Area, not caused
by any act or omission of Lessee, and the remaining in force of such
injunction for at least sixty (60) days; or
b. The assumption by the United States Government, or any authorized
agency thereof, of the operation, control or use of Airport and its
facilities in such a manner as to substantially restrict Lessee's use
of the Assigned Area if such restriction be continued for a period of
three (3) months or more.
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14.5 In the event of any occurrence provided for in Section 14.4, this
Agreement may be suspended by Lessee, until any such occurrence is totally
rectified, and Lessee shall be released from its obligation to pay the
rental, fees and charges as identified in Article IV, until the cessation
of said suspension, at which time this Agreement will resume and continue
under the existing terms and conditions.
14.6 Lessee may terminate this Agreement during the initial five (5) year term,
at any time for any reason, with ninety (90) days advance written notice
to Authority.
ARTICLE XV.
TERMINATION BY AUTHORITY
15.1 This Agreement shall be subject to termination by Authority should any one
or more of the following conditions occur:
a. If Lessee shall neglect or fail to perform or observe any of the
terms, provisions, conditions or covenants herein contained and on
Lessee's part to be performed and observed and if such neglect or
failure should continue for a period of thirty (30) days after receipt
by Lessee of written notice of such neglect or failure (except for the
failure or neglect to pay any installment of monthly rental or
additional rental wherein such neglect or failure must be cured within
ten (10) days after receipt by Lessee of written notice of such
neglect or failure) or, if more than thirty (30) days shall be
required because of the nature of the default, if Lessee shall fail
within said thirty (30) day period to commence and therafter
diligently proceed to cure such default; or
b. If the estate hereby created shall be taken by execution or by other
process of law; or
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c. The taking by a court of jurisdiction of Lessee and its assets
pursuant to proceedings under the provisions of any federal or state
reorganization code or act, insofar as the following enumerated
remedies for default are provided for or permitted in such code or
act; or
d. If any court shall enter a final order with respect to Lessee,
providing for modification or alteration of the rights of creditors;
or
e. If Lessee shall fail to abide by all applicable laws, ordinances,
rules and regulations of the United States, State of Tennessee, the
Metropolitan Government of Nashville and Davidson County; or
f. If Lessee shall fail to take possession of the Assigned Area; or
g. If Lessee shall abandon all or any part of the Assigned Area or shall
discontinue the conduct of its operations in all or any part of the
Assigned Area for a period in excess of forty-eight (48) hours; or
h. If Lessee shall commit any act of default under the terms or
conditions of any other agreement between the parties hereto, with
such default remaining uncured and resulting in the termination of
the applicable Agreement.
i. Authority hereby gives Lessee notice that during the term of this
Agreement, it may become necessary for Authority to terminate some
part or all of this Agreement for Airport modification and/or
expansion in order to adequately provide airport facilities and air
service. Authority shall have the right to terminate this Agreement at
any time in the event the Board of
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Commissioners of Authority shall determine, by resolution adopted in
an open meeting at which Lessee shall be afforded an opportunity to be
heard, that the Assigned Area, or portion thereof, are necessary for
Airport modification or expansion. Authority shall give Lessee six
(6) months notice to vacate the Assigned Area in the event of such
termination, and thereafter Lessee shall have no liability for the
payment of rent for the remainder of the term of this Agreement
nor shall Lessee have any claim for actual or future losses against
Authority because of such termination. Lessee shall yield up the
Assigned Area and any improvements constructed thereon at the
expiration of said six (6) months notice. If, in the sole opinion of
Lessee, any portion of the Assigned Area not terminated by Authority
as described above, is no longer useful to Lessee for the purposes
described in this Agreement, Lessee shall have the right to terminate
this Agreement. A resolution duly enacted by the Board of
Commissioners of Authority shall be conclusive evidence that said
property or properties are needed for airport modification or
expansion.
15.2 In the event any condition of default shall occur (notwithstanding
any waiver, license, or indulgence granted by Authority with respect to
any condition of default in any form or instance), while such breach is
continuing, Authority shall have the right, at its election, either to
terminate this Agreement by giving at least ten (10) days written notice
to Lessee at which time Lessee will then quit and surrender the Assigned
Area to Authority, but Lessee shall remain liable as hereinafter provided,
or, to enter upon and take possession of the Assigned Area (or any part
thereof in the name of the whole), without demand or notice, and repossess
the same as of the Authority's former estate, expelling Lessee and those
claiming under Lessee, forcibly,
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if necessary, without prejudice to any remedy for arrears of rent or
preceding breach of covenant and without any liability to Lessee or those
claiming under Lessee for such repossession.
15.3 Authority's repossession of the Assigned Area shall not be construed as an
election to terminate this Agreement nor shall it cause a forfeiture of
rents or other charges remaining to be paid during the balance of the
term hereof, unless a written notice of such intention is given to Lessee,
or unless such termination is decreed by a court of competent
jurisdiction. Notwithstanding any reletting without termination by
Authority because of any default by Lessee, Authority may at anytime after
such reletting elect to terminate this Agreement for any such default.
15.4 Upon repossession, Authority shall in good faith attempt to relet the
Assigned Area or any part thereof for such period or periods (which may
extend beyond the term of this Agreement) at such rent or rents and
upon such other terms and conditions as Authority may, in good faith,
deem advisable. Authority shall in no event be liable and Lessee's
liability shall not be affected or diminished in any way whatsoever for
failure to relet the Assigned Area, or in the event same are relet, for
failure to collect any rental or other sums due under such reletting.
15.5 In the event that Authority shall elect to relet, then rentals received
by Authority from such reletting shall be applied: first, to the payment
of any indebtedness other than rent due hereunder from Lessee to
Authority; second, to the payment of any cost of such reletting; and the
residue, if any, shall be held by Authority and applied in payment of
future rent as the same may become due and payable hereunder.
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Should that portion of such rentals received from such reletting during
any month, which is applied to the payment of rent hereunder, be less than
the rent payable during that month by Lessee hereunder, then Lessee
shall pay such deficiency to Authority. Such deficiency shall be
calculated and paid monthly. Lessee shall also pay to Authority, as soon
as ascertained, any costs and expenses incurred by Authority in such
reletting not covered by the rentals received from such reletting of the
Assigned Area.
15.6 If Authority shall terminate this Agreement or take possession of
the Assigned Area by reason of a condition of default, Lessee, and those
holding under Lessee, shall forthwith remove their personal property
from the Assigned Area. If Lessee or any such claimant shall fail to
effect such removal forthwith, Authority may, at its option,
exercise the right set forth in paragraph 15.1 herein or may without
liability to Lessee or those claiming under Lessee remove such goods and
effects and may store the same for the account of Lessee or of the owner
thereof at any place selected by Authority, or, at Authority's election,
and upon given fifteen (15) days written notice to Lessee of date, time
and location of sale, Authority may sell the same at public auction or
private sale on such terms and conditions as to price, payment and
otherwise as Authority may in good faith deem advisable. If, in
Authority's judgment, the cost of removing and storing or the cost of
removing and selling any such goods and effects exceeds the value thereof
or the probable sale price thereof, as the case may be, Authority shall
have the right to dispose of such goods in any manner Authority may deem
advisable.
15.7 Lessee shall be responsible for all costs of removal, storage and sale,
and Authority shall have the right to reimburse itself from the proceeds
of any sale for all such costs paid
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or incurred by Authority. If any surplus sale proceeds shall remain after
such reimbursement Authority may deduct from such surplus any other sum
due to Authority hereunder and the residue, if any, shall be held by
Authority and applied in payment of future rent as the same may become due
and payable hereunder.
15.8 If Authority shall enter into and repossess the Assigned Area for reason
of default by Lessee in the performance of any of the terms, covenants or
conditions herein contained, Lessee hereby covenants and agrees that
Lessee will not claim the right to redeem or reenter the Assigned Area to
restore its operations hereunder. Lessee further waives the right to
such redemption and re-entrance under any present or future law, and for
any party claiming through or under Lessee, expressly waives its right, if
any, to make payment of any sum or sums of rent, or otherwise, of which
Lessee shall have made default under any of the covenants of this
Agreement and to claim any subrogation of the rights of Lessee under these
presents, or any of the covenants thereof, by reason of such payment.
15.9 All rights and remedies of Authority herein created or otherwise
existing at law are cumulative, and the exercise of one or more rights
or remedies shall not be taken to exclude or waive the right to the
exercise of any other. All such rights and remedies may be exercised
and enforced concurrently and whenever and as often as deemed advisable.
15.10 If proceedings shall at any time be commenced for recovery of possession
as aforesaid and compromise or settlement shall be effected either before
or after judgment whereby Lessee shall be permitted to retain possession
of the Assigned Area, then such proceeding shall not constitute a
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waiver of any condition or agreement contained herein or of any subsequent
breach thereof.
15.11 Any amount paid or expense or liability incurred by Authority for
the account of Lessee may be deemed to be additional rental and the
same may, at the option of Authority, be added to any rent then due or
there after falling due hereunder.
15.12 Lessee hereby expressly waives any and all rights of redemption
granted by or under any present or future laws in the event of Lessee
being evicted or dispossessed for any cause, or in the event of Authority
obtaining possession of the Assigned Area by reason of the violation by
Lessee of any of the covenants and conditions of this Agreement or
otherwise. The rights given to Authority herein are in addition to any
rights that may be given to Authority by any statute or otherwise.
15.13 Lessee agrees that title to all permanent improvements constructed on
the Assigned Area by Lessee shall vest in Authority, free and clear,
without further process of law, upon expiration or termination of this
Agreement.
15.14 Lessee agrees to keep all insurance policies in effect through surrender
of the Assigned Area.
ARTICLE XVI.
CONDEMNATION
16.1 In the event of a total taking due to sale under or because of the right
of eminent domain, or condemnation, of all the Assigned Area during the
term of this Lease, this Lease shall terminate as of the date of such
taking, or sale, and all of Lessee's rights and interests in said Assigned
Area,
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and any and all rights or interests in this Lease, shall cease to exist
hereunder. Lessee shall be entitled to recover from the condemning
authority only that portion of the condemnation award or settlement
allocated to the remaining unamortized cost of the permanent
improvements constructed by Lessee on the Assigned Area, if any,
determined by amortizing the cost of the permanent improvements on
a straight line basis over the portion of the initial term of the Lease
remaining from the time of completion of the permanent improvements.
Lessee shall retain its rights to compensation for moving and relocation
expenses in accordance with applicable federal or state regulations.
Authority shall be entitled to the remaining portion of the award or
settlement allocated to the buildings and permanent improvements
constructed by Lessee and all of the award allocated to the land and
permanent improvements constructed by Authority. In no event will
Lessee's right to compensation exceed that portion of the condemnation
award or settlement properly allocated to the condemned permanent
improvements constructed by Lessee as unamortized above, along with
moving and relocation expenses.
16.2 In the event of a taking or sale, under or due to the right of eminent
domain or by condemnation, of any part of the unimproved or improved
portions of the Assigned Area during the term of this Lease, which by
agreement of Authority and Lessee renders the Assigned Area useless, or
materially affects the purposes for which this Lease has been executed,
Authority or Lessee may elect to terminate this Lease; provided, that if
Lessee elects to terminate, all of its rights and interest in the Assigned
Area shall terminate as of the date of taking; however, Lessee shall be
entitled to receive that portion of the condemnation award or settlement
allocated to the unamortized cost of the permanent
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improvements constructed by Lessee on the Assigned Area, if any, determined
by amortizing the cost of the permanent improvements on a straight line
basis over the portion of the initial term of the Lease remaining from the
time of completion of the permanent improvements. Lessee shall retain its
right to compensation for moving and relocation expenses, as provided
hereinabove. Authority shall be entitled to the remaining portion of the
award or settlement allocated to buildings and permanent
improvements constructed by Lessee and all of the award allocated to the
land and permanent improvements constructed by Authority. In no event
shall Lessee's right to compensation exceed that portion of the
condemnation award or settlement properly allocated to the condemned
permanent improvements constructed by Lessee as unamortized above. Should
the parties not be able to agree whether the portion of the Assigned Area
taken are rendered useless, they shall select an arbitrator from a list
of all A.A.A. certified arbitrators in Davidson County, Tennessee, with
the costs to be shared equally by the parties. If Lessee elects to remain
in possession, the rental provided for herein shall be reduced in
proportion to the areas of the Assigned Area so taken or rendered unusable.
ARTICLE XVII.
SECURITY
17.1 Lessee agrees to observe all security requirements of Federal
Aviation Regulations Part 107, and the Airport Security Program, and as
they may be amended hereafter, applicable parts of which will be furnished
to Lessee, as approved by the Federal Aviation Administration, and to take
such steps as may be necessary or directed by Authority to insure that
sublessees, employees, invitees, and guests observe these requirements.
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17.2 If Authority incurs any fines and/or penalties imposed by the Federal
Aviation Administration or any expense in enforcing the regulations
of Federal Aviation Regulations Part 107 and/or the Airport Security
Program, as a result of the acts or omissions of Lessee, Lessee agrees
to pay and/or reimburse all such costs and expense. Lessee further
agrees to rectify any security deficiency as may be determined as
such by Authority or the Federal Aviation Administration. Authority
reserves the right to take whatever action necessary to rectify any
security deficiency as may be determined as such by Authority or the
Federal Aviation Administration. Authority reserves the right to take
whatever action necessary to rectify any security deficiency, in the
event Lessee fails to remedy the security deficiency.
ARTICLE XVIII.
HOLDING OVER
18.1 Any holding over by Lessee after the expiration or termination of
this Agreement, without the written consent of Authority, except for the
period provided for herein for removal of property, shall not be deemed
to operate as an extension or renewal of this Agreement, but shall only
create a tenancy from month to month which may be terminated by Authority
at any time. In the event of such holding over, Authority shall be
entitled to collect from Lessee, as liquidated damages for such holding
over, double the amount of the monthly rental in effect immediately prior
to the commencement of such holding over.
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ARTICLE XIX.
ATTORNEY'S FEES
19.1 In the event that Authority or Lessee brings any action under this
Agreement, and prevails in said action, then prevailing party shall be
entitled to recover from the other party its reasonable fees incurred as
a result of said action. Such fees shall include, but not be limited to,
expert witness fees, court reporter fees, court costs, and attorney fees.
ARTICLE XX.
AMENDMENT
20.1 This Agreement constitutes the entire agreement between the parties. No
amendment, modification, or alteration of the terms of this Agreement
shall be binding unless the same be in writing, dated subsequent to the
date hereof and duly executed by the parties hereto.
ARTICLE XXI.
RELATIONSHIP OF PARTIES
21.1 Nothing contained herein shall be deemed or construed by the parties
hereto, or by any third party, as creating the relationship of
principal and agent, partners, joint venturers, or any other similar
such relationship, between the parties hereto. The parties understand
and agree that neither the method of computation of rent, nor any other
provision contained herein, nor any acts of the parties hereto creates a
relationship other than the relationship of Landlord and Tenant.
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ARTICLE XXII.
APPROVALS BY AUTHORITY
22.1 Whenever this Agreement calls for approval by the Authority, such
approval shall be evidenced by the written approval of the President of
the Metropolitan Nashville Airport Authority or his designee.
ARTICLE XXIII.
ENVIRONMENTAL PROTECTION
23.1 Lessee agrees to comply with all laws, and to obey all rules,
regulations, or administrative orders of agencies of The Metropolitan
Government of Nashville and Davidson County, the State of Tennessee,
The United States and Authority as these laws, rules, regulations
and administrative orders may now exist and as they may be hereafter
adopted relating to protection of the environment.
ARTICLE XXIV.
ENVIRONMENTAL COMPLIANCE
24.1 Lessee shall not cause or permit any "Hazardous Substance" as defined in
Paragraph 23.4 of the Agreement to be used, stored or generated on the
Assigned Area, except for Hazardous Substances of types and quantities
customarily used or found in Lessee's business so long as said Hazardous
Substances are used, stored and/or generated in full compliance
with all laws. Lessee shall not cause or permit the release [as
"Release" is defined in 42 U.S.C. Section 9601(22) (as amended)] of any
Hazardous Substance, contaminant, pollutant, or petroleum product in, on
or under the Assigned Area or into any ditch, conduit, stream, storm
sewer, or sanitary sewer connected thereto or located thereon. Lessee
shall fully and timely comply with all
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applicable federal, state, and local statutes and regulations
relating to protection of the environment, including, without limitation,
42 U.S.C. Sections 6991-6991i.
24.2 Compliance Upon Termination - Upon the termination of this Agreement or
vacation of the Assigned Area, Lessee shall, at Lessee's sole expense,
remove or permanently clean all Hazardous Substances that Lessee, or
anyone for whom Lessee is responsible, including, but not limited to, a
customer, invitee, employee, agent, or person having a contractual
relationship with the Lessee, caused to be situated on, at, in or under
the Assigned Area. This shall be done in compliance with all applicable
federal, state and local laws, regulations and ordinances and shall
include the performance of any necessary cleanup or remedial action.
Lessee shall provide Authority with copies of all records related to any
Hazardous Substances that are required to be maintained by any applicable
federal, state, or local laws or regulations.
Lessee shall, at Lessee's sole expense, clean up, remove and remediate
(l) any Hazardous Substances in, on, or under the Assigned Area in excess
of allowable levels established by all applicable federal, state and
local laws and regulations and (2) all contaminants and pollutants, in,
on, or under the Assigned Area that create or threaten to create a
substantial threat to human health or the environment and that are
required to be removed, cleaned up, or remediated by any applicable
federal, state, or local law, regulation, standard or order. This
obligation does not apply to a Release of Hazardous Substances,
pollutants, contaminants or petroleum products that existed on the
Assigned Area prior to the execution of the Agreement or caused solely by
the act or omission of Authority or a third party for whom the
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Lessee is not responsible, e.g., not a customer, invitee, employee, agent,
or person having a contractual relationship with the Lessee.
24.3 Indemnity for Non-Compliance - Lessee shall defend, indemnify and
hold harmless the Authority and its consultants, agents, officers,
directors and employees from and against all claims, damages, losses
and expenses, whether direct, indirect or consequential, including but
not limited to attorneys fees, arising out of or resulting from the
Lessee's use of the Assigned Area or acts or omissions of others on the
Assigned Area for whom Lessee is responsible. Without limiting the
generality of the foregoing, the above indemnification provision
extends to liabilities, damages, suits, penalties, judgments, and
environmental cleanup, removal, response, assessment, or remediation
costs, arising from actual, threatened or alleged contamination of
the Assigned Area or actual, threatened or alleged release of any
Hazardous Substances, pollutant, contaminant or petroleum in, on or under
the Assigned Area or the Building, provided that said actual, threatened
or alleged contamination or release occurs after execution of the
Agreement and is not caused by contamination that existed at the
Assigned Area prior to execution of the Agreement. Lessee's obligations
under this paragraph shall survive termination or expiration of the
Agreement.
24.4 Definition of Hazardous Substances - As used herein, the term "Hazardous
Substances" means and includes any and all substances, chemicals, wastes,
sewage or other materials which are now or hereafter regulated,
controlled or prohibited by any local, state or federal law or regulation
requiring removal, warning or restrictions on the use, generation,
disposal or transportation thereof including,
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without limitation, (a) any substance defined as a "hazardous substance",
"hazardous material", "hazardous waste", " toxic substance", or "air
pollutant" in the Comprehensive Environmental Response Compensation and
Liability Act(CERCLA), 42 U.S.C. Section 9601, et seq., the Hazardous
Materials Transportation Act (HMTA), 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act (RCRA), 42 U.S.C. Section
6901, et seq., the Federal Water Pollution Control Act (FWPCA), 33 U.S.C.
Section 1251, et seq., or the Clean Air Act (CAA), 42 U.S.C. Section
7401, et seq., all as amended and amended hereafter; (b) any substance
defined as a "hazardous substance", "hazardous waste", "toxic substance",
"extremely hazardous waste", "RCRA hazardous waste", "waste" or
"hazardous material" in Sections 25115,25117, 25122.7, 25120.2, 25124,
25281, 25316, 25501 of the California Health and Safety Code, or listed
pursuant to Section 25140 of the California Health and Safety Code; (c)
any hazardous substance, hazardous waste, toxic substance, toxic waste,
hazardous material, waste, chemical, or compound described in any other
federal, state, or local statute, ordinance, code, rule, regulation,
order, decree or other law now or at any time hereafter in effect
regulating, relating to or imposing liability or standards of conduct
concerning any hazardous, toxic, or dangerous substance, chemical,
material, compound, or waste. As used herein, the term "Hazardous
Substances" also means and includes, without limitation, asbestos;
flammable, explosive or radioactive materials; gasoline, oil; motor oil;
waste oil; petroleum (including without limitation, crude oil or any
fraction thereof); petroleum-based products; paints and solvents; lead;
cyanide; DDT; printing inks; acids; pesticides; ammonium compounds;
polychlorinated biphenyls; and other regulated chemical products.
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24.5 Authority's Representation - To the best of Authority's current actual
knowledge and belief as of the date of Agreement execution, Authority is
not aware of any disposal of any Hazardous Substances in the Assigned
Area prior to the date of execution of this Agreement. Authority has
provided Lessee with an opportunity to inspect the Assigned Area prior to
the execution of this Agreement and date of possession.
ARTICLE XXV.
TAXES
25.1 In addition to the net monthly rental provided in Section 5 of the
Lease, Lessee shall pay to the Metropolitan Government of Nashville
and Davidson County, Tennessee upon billing therefor, within the time
period provided therein during each year of the term hereof, a tax
equivalent equal to the real estate taxes which would be assessed on the
amount by which the fair market rental on the Assigned Area exceeds the
rent which is paid by Lessee to Authority, hereunder. The amount of
such tax equivalent shall be subject to all administrative and judicial
review available with respect to the tax assessments imposed on
non-exempt properties. Lessee shall also pay, on or before their
respective due dates, to the appropriate collecting authority, all
federal, state and local taxes and fees, which are now or may hereafter
by levied upon the Assigned Area, or upon Lessee, or upon the business
conducted on the Assigned Area or upon any of Lessee's property used in
connection therewith; and shall maintain in current status all federal,
state, and local licenses and permit required for the operation of the
business conducted by Lessee.
25.2 Lessee has the right to legally protest to any proper taxing authority,
at its own expense, by whatever legal means, any
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tax, levy, assessment or other governmental or similar charge it
deems inappropriate or unlawful.
25.3 Lessee covenants to furnish to Authority, promptly upon request, proof of
the payment of any tax, assessment, and other governmental or similar
charge, which is payable by as provided herein unless Lessee is
properly protesting the same as permitted above.
ARTICLE XXVI.
GENERAL PROVISIONS
26.1 Nondiscrimination - Lessee shall undertake an affirmative action program
as required by 14 CFR Part 152, Subpart E, to insure that no person shall
on the grounds of race, creed, color, national origin, or sex be
excluded from participating in any employment activities covered in 14
CFR Part 152, Subpart E. Lessee warrants that no person shall be
excluded on these grounds from participating or receiving the services or
benefits of any program or activity covered by this subpart. Lessee
shall require that its covered suborganizations provide assurances to
Lessee that they similarly will undertake affirmative action programs and
that they will require assurances from their suborganizations
as required by 14 CFR Part 152, Subpart E, to the same effect.
26.2 Federal Aviation Act, Section 308 - Nothing herein contained shall be
deemed to grant Lessee any exclusive right or privilege within the
meaning of Section 308 of the Federal Aviation Act or the conduct of any
activity on Airport, except that, subject to the terms and provisions
hereof, Lessee shall have the right to possess the Assigned Area under
the provisions of this Agreement.
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26.3 Subordination to Agreements With the United States Government -
This Agreement is subject and subordinate to the provisions of any
agreement heretofore or hereafter made between Authority and the United
States Government relative to the operation or maintenance of Airport,
the execution of which has been required as a condition precedent to the
transfer of federal rights or property to Authority for Airport purposes,
or the expenditure of federal funds for the improvement or development of
Airport, including the expenditure of federal funds for the development
of Airport in accordance with provisions of the Federal Aviation Act of
1958, as it has been amended from time to time. Authority covenants that
it has no existing agreements with the United States Government in
conflict with the express provisions hereof.
26.4 Nonwaiver of Rights - No waiver of default by either party of any of the
terms, covenants, and conditions hereof to be performed, kept, and
observed by the other party shall be construed as, or shall operate
as, a waiver of any subsequent default of any of the terms,
covenants, or conditions herein contained, to be performed, kept, and
observed by the other party.
26.5 Notices - All notices to Authority required by this Agreement
shall be in writing addressed to:
President
Metropolitan Nashville Airport Authority
Nashville International Airport
One Terminal Drive, Suite 501
Nashville, Tennessee, 37214
and all notices to Lessee so required shall be addressed to:
Piemonte Foods, Inc.
400 Augusta Street
P. O. Box 9239
Greenville, SC 29605-9239
or any other address furnished to the Authority, in writing, by
Lessee. Any notice required or desired to be given under this
Agreement may be personally served or given by mail.
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Any notice given by mail shall be sent certified mail with return
receipt requested, postage prepaid, addressed to the party to be served
at the last address filed by such party with the other party and shall
be deemed served on the date that such notice shall be deposited in the
United States mail in the manner described herein.
26.6 Captions - The headings of the several articles of this Agreement are
inserted only as a matter of convenience and for reference and in no way
define, limit, or describe the scope or intent of any provisions of this
Agreement and shall not be construed to affect in any manner the terms
and provisions hereof or the interpretation or construction thereof.
26.7 Severability - If one or more clauses, sections, or provisions of
this Agreement shall be held to be unlawful, invalid, or unenforceable,
the parties hereto agree that the material rights of either party shall
not be effected thereby.
26.8 Agent for Service or Process - The parties hereto expressly understand
and agree that if Lessee is not a resident of the State of Tennessee, or
is an association or partnership without a member or partner resident of
said State, or is a foreign corporation, then in any such event the Lesee
does designate it Tennessee registered agent as its agent for the purpose
of service of process in any court action between it and Authority
arising out of or based upon this Agreement, and the service shall be
made as provided by the laws of the State of Tennessee by serving also
the Lessee's registered agent. The parties hereto expressly agree,
covenant, and stipulate that Lessee shall also personally be served with
such process out of this State by the registered mailing of such
complaint and process to the Lessee at the
40
<PAGE>
address set forth herein. Any such service out of this State shall
constitute valid service upon Lessee as of the date of receipt thereof.
The parties hereto further expressly agree that the Lessee is amenable
to and hereby agrees to the process so served, submits to the
jurisdiction, and waives any and all obligations and protect thereto, any
laws to the contrary notwithstanding.
26.9 Waiver of Claims - Lessee hereby waives any claim against Authority and
the State of Tennessee and its officers, or employees for loss of
anticipated profits caused by any suit or proceedings directly or
indirectly attacking the validity of this Agreement or any part thereof,
or by any judgment or award in any suit proceeding declaring this
Agreement null, void or voidable, or delaying the same or any part
thereof, from being carried out.
26.10 Right to Develop Airport - The parties hereto further covenant and
agree that Authority reserves the right to further develop or improve
Airport Terminal and all landing areas and taxiways as it may see fit,
regardless of the desires or view of Lessee and without interference or
hindrance. In such instances, the costs of development and financial
impact, as they impact Lessee, shall be borne by Authority and Lessee
according to mutually agreed upon terms and conditions.
26.11 Incorporation of Exhibits - All exhibits referred to in this Agreement
are intended to be and hereby are specifically made a part of this
Agreement.
26.12 Incorporation of Required Provisions - The parties incorporate herein by
reference all provisions lawfully required to be contained herein by any
governmental body or agency.
41
<PAGE>
26.13 Nonliability of Agents and Employees - No member, officer, agent,
President, or employee of the Authority or the Lessee shall be charged
personally or held contractually liable by or to the other party under
this Agreement or because of any breach thereof or because of its or
their execution.
26.14 Successors and Assigns Bound - This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the parties hereto
where permitted by this Agreement.
26.15 Right to Amend - In the event that the Federal Aviation Administration or
its successor requires modifications or changes in this Agreement as a
condition precedent to the granting of funds for the improvement of the
Airport, or otherwise, Lessee shall make such amendments, modifications,
revisions, supplements, or deletions of any of the terms, conditions, or
requirements of this Agreement as may be reasonably required and any
expenses resulting from such amendments, modifications, revisions,
supplements or deletions, shall be borne solely by Lessee.
26.16 Time of Essence - Time is of the essence in the performance and/or
satisfaction of the duties and/or conditions of this Agreement.
26.17 Gender - Words of any gender used in this Agreement shall be held and
construed to include any other gender, and words in the singular number
shall be held to include the plural, unless the context otherwise
requires.
26.18 Force Majeure - Neither Authority nor Lessee shall be deemed in
violation of this Agreement if it is prevented from performing any of
the obligations hereunder by reason of strikes, boycotts, labor
disputes, embargoes, shortage of
42
<PAGE>
material, acts of God, acts to the public enemy, acts of superior
governmental authority, weather conditions, riots, rebellion, sabotage,
or any other circumstances for which it is not responsible or which are
not within its control.
26.19 Disadvantaged Business Enterprise - Lessee agrees that it will comply
with Authority's Disadvantaged Business Enterprise Program and
applicable laws and regulations, as they now exist and as they may be
hereafter modified.
ARTICLE XXVII.
DOT TITLE VI ASSURANCES
27.1 Compliance with Regulations: Lessee shall comply with the regulations
relative to nondiscrimination in Federally-assisted programs of the
Department of Transportation (hereinafter "DOT") Title 49, Code of
Federal Regulations, Part 21, as they may be amended from time to
time (hereinafter referred to as the "Regulations"), which are herein
incorporated by reference and made a part of this Agreement.
27.2 Nondiscrimination: Lessee, with regard to the services provided by it
during the term of this Agreement, shall not discriminate on the grounds
of age, sex, race, creed, color, handicap, or national origin in the
selection and retention of sublessees or subcontractors, including
procurement of materials and leases of equipment. Lessee shall not
participate either directly or indirectly in the discrimination
prohibited by Section 21.5 of Regulations.
27.3 Solicitations for Sublessees and Subcontractors, Including Procurement
of Materials and Equipment: In all solicitations involving either
competitive bidding or negotiation by Lessee for services or work to
be performed
43
<PAGE>
under a sublease or subcontract, including procurement of materials and
leases of equipment, each potential sublessee, subcontractor or supplier
shall be notified by Lessee of obligations under this Agreement and
Regulations relative to nondiscrimination on the grounds of age, sex,
race, creed, color, handicap, or national origin.
27.4 Information and Reports: Lessee shall provide all information and
reports required by Regulations or directives issued pursuant thereto,
and shall permit access to its books, records, accounts, other
sources of information, and its facilities as may be determined by
Authority or the Federal Aviation Administration to be pertinent to
ascertain compliance with such regulations, orders, and instructions.
Where any information required of a Lessee is in the exclusive possession
of another who fails or refuses to furnish this information, Lessee shall
so certify to Authority or the Federal Aviation Administration, as
appropriate, and shall set forth what efforts it has made to obtain the
information.
27.5 Sanctions for Noncompliance: In the event of breach of any of the
nondiscrimination provisions of this Agreement, Authority shall have the
right, in addition to imposing sanctions deemed appropriate by Authority
and the Federal Aviation Administration, to immediately terminate this
Agreement and to re-enter and repossess Assigned Area and any permanent
improvements thereon, and hold same as if this Agreement had never been
made or issued.
27.6 Equal Employment Opportunity: In the performance of services under this
Agreement, Lessee shall not discriminate against any employee or
applicant for employment because of race, creed, color, sex, age,
handicap, or national origin. Lessee shall take affirmative action to
ensure that
44
<PAGE>
applicants are employed and that employees are treated during employment,
without regard to their race, creed, color, sex, age, handicap, or
national origin. Such action shall include, but not be limited to,
the following: employment, upgrading, demotion, or transfer; recruitment
or other forms of compensation; and selection for training, including
apprenticeship. Lessee agrees to post in conspicuous places,
available to employees and applicants for employment, notices to be
provided by the government setting forth the provisions of this
nondiscrimination clause. Lessee shall, in all solicitations or
advertisements for employees placed by or on behalf of Lessee, state that
all qualified applicants shall receive consideration for employment
without regard to race, creed, color, sex, age, handicap, or national
origin. Lessee shall incorporate the foregoing requirements of this
paragraph in all subleases and subcontracts for services covered by this
Agreement.
27.7 Incorporation of Provisions: Lessee shall include the provisions of
these sections 26.1 through 26.7 in every sublease and subcontract,
including procurement of materials and leases of equipment, unless
exempted by Regulations or directives issued pursuant thereto. Lessee
shall take such action, with respect to any sublease, subcontract or
procurement, as Authority or the Federal Aviation Administration
may direct as a means of enforcing such provisions including sanctions for
noncompliance; provided, however, that in the event Lessee becomes
involved in or is threatened with litigation with a sublessee,
subcontractor or supplier as a result of such directions, Lessee may
request Authority to enter into such litigation to protect the interest
of Authority, and, in addition, Lessee may request the United States
to enter into such litigation to protect the interests of the United
States.
45
<PAGE>
ARTICLE XXVIII.
ENTIRE AGREEMENT
28.1 The parties hereto understand and agree that this instrument contains the
entire agreement between them. The parties hereto further understand
and agree that the other party and its agents have made no
representations or promises with respect to this Agreement, except as in
this Agreement expressly set forth, and that no claim or liability for
cause for termination shall be asserted by either party against the
other, and such party shall not be liable by reason of the making of any
representations or promise not expressly stated in this Agreement, any
other written or oral agreement with the other party being expressly
waived.
The individuals executing this Agreement warrant that they have full
authority to execute this Agreement on behalf of the entity for whom they
are acting herein.
The parties hereto acknowledge that they thoroughly read this Agreement,
including any exhibits or attachments hereto, and have sought and
received competent advice and counsel which was necessary for them to
form a full and complete understanding of all rights and obligations
herein.
46
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and date first written above.
AUTHORITY
ATTEST: METROPOLITAN NASHVILLE
AIRPORT AUTHORITY:
BY (Signature of ????) BY: (Signature of William G. Moore, Jr.)
Board Secretary William G.Moore, Jr.
President
APPROVED AS TO
FORM AND LEGALITY: RECOMMENDED:
BY: (Signature of ????) BY: (Signature of Glenda C. McClellan)
Legal Counsel Glenda C. McClellan
Director of Properties
Stokes & Bartholomew, P.A.
Third National Financial Center
Nashville, Tennessee 37219
DATE: 01-11-96 DATE: 3-26-96
LESSEE:
PIEMONTE FOODS, INC.
BY: (Signature of ????)
TITLE: President
DATE: March 25, 1996
47
<PAGE>
CERTIFICATE OF ACKNOWLEDGEMENT
STATE OF
COUNTY OF
Before me, , of the state and county
aforesaid, personally appeared , with whom
I am personally acquainted, and who upon oath, acknowledged (himself)(herself)
to be the of the within
bargainor, a corporation, and that (he)(she) as such being
authorized so to do, executed the foregoing instrument for the purpose
therein contained, by signing the name of the corporation by
(himself)(herself) as .
Witness my hand and seal, at office in this day
of , 19 .
Notary Public
My Commission Expires:
48
<PAGE>
(Map depicting the Metropolitan Nashville Airport Authority and the
Nashville International Airport appears here.)
EXHIBIT A
<PAGE>
(Map of Building #4113 appears here depicting the 26,000 square foot
area under lease and the 72,000 square foot land under lease.)
EXHIBIT B
<PAGE>
RENT SCHEDULE
PIEMONTE, INC.
BUILDING 4113
CONTRACT YEAR 1
SQUARE RATE ANNUAL MONTHLY
DESCRIPTION FOOTAGE PSF RENTAL RENTAL
BLDG 4113 26,000 $1.43 $37,180.00 $3,098.33
LAND 98,000 $0.32 $31,360.00 $2,613.33
SUB-TOTALS: 124,000 $1.75 $68,540.00 $5,711.67
PREPAID RENTAL (CONTRACT YEAR 1): $22,027.31 $1,835.61
RENTAL CREDIT: TO BE DETERMINED $0.00 $0.00
GRAND TOTAL: $46,512.69 $3,876.06
EXHIBIT C
<PAGE>
EXHIBIT NO. 21
SUBSIDIARIES OF THE REGISTRANT
Piemonte Foods of Indiana, Inc.
Frankfort, Indiana
Carolina Pizza Products, Inc.
Greenville, South Carolina
(Inactive)
Origena, Inc.
Chicago, Illinois
<PAGE>
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