<PAGE>
- -------------------------------------------------------------------------------
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number: 33-15962
WHITEFORD PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 76-0222842
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
770 NORTH CENTER STREET, VERSAILLES, OHIO 45380
- ----------------------------------------- ---------
Address of principal executive offices) (Zip Code)
1-800-225-6328
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
LIMITED PARTNERSHIP UNITS
1,306,890 Units Outstanding
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No ____
* Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or informatin
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes X No
----- -----
At March 31, 1997, 1,306,890 Class A units had been subscribed for and
issued.
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<PAGE>
INDEX
ITEM
NO. DESCRIPTION PAGE
---- ---------------------------------------------------------- ----
PART I
1. Business 3
2. Properties 5
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security Holders 5
PART II
5. Market for Registrant's Common Equity and Related
Stockholder Matters 6
6. Selected Financial Data 7
7. Management's Discussion and Analysis of Results of
Operations and Financial Condition 8
8. Financial Statements and Supplementary Data 10
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 10
PART III
10. Directors and Executive Officers of the Partnership 10
11. Executive Compensation 11
12. Security Ownership of Certain Beneficial Owners and
Management 12
13. Certain Relationships and Related Transactions 12
PART IV
14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K 12
<PAGE>
PART I
ITEM 1. BUSINESS
A. GENERAL DEVELOPMENT OF BUSINESS
Whiteford Partners, L.P. (the ``Partnership'') was formed on June
30, 1987, as a Delaware limited partnership. The Partnership consists of a
General Partner ,Gannon Group, Inc., and Limited Partners. The offering
period of the Partnership terminated on November 10, 1989, with $13,557,550
of Limited Partner gross subscriptions received in the form of Class A Units.
Pursuant to the terms of the Prospectus, offering proceeds in the amount of
$140,365 were returned to certain Ohio residents when the Partnership's
business acquisition program was not substantially completed by December,
1989. The Partnership was organized principally to form, acquire, own and
operate businesses engaged in the development, production, processing,
marketing, distribution and sale of food and related products (the ``Food
Businesses'').
In the first quarter of 1990, the Partnership entered into a limited
partnership, Whiteford Foods Venture, L.P. ("Whiteford's") which was formerly
named Granada/Whiteford Foods Venture, L.P., with a wholly-owned subsidiary of
the former General Partner, G/W Foods, Inc., for the purpose of acquiring the
assets, certain liabilities and the operations of Whiteford's Inc., a further
processor and distributor of beef products to major fast food restaurants and
regional chains, which was located in Versailles, Ohio. The acquisition, which
was made with Partnership funds, was closed March 26, 1990, with the
Partnership's resultant equity interest in Whiteford's being in excess of 99%.
On April 23, 1990, all outstanding and contingent items were resolved and
completed, and the acquisition of the assets was funded on April 24, 1990.
Effective July 1, 1990, the Partnership, acting through Whiteford's and
North American Agrisystems, Inc. (``NAAS''), an affiliate of the former General
Partner of the Partnership, ("Granada") entered into a Texas Joint venture named
CMF. The principal activity of CMF was the operation of a beef and chicken
further processing facility specializing in cooked products, which was owned by
NAAS and located in Cincinnati, Ohio. Whiteford's contributed cash to permit
CMF to place cash on deposit for facilities usage and provide working capital
and capital expenditure funding for CMF. Whiteford's sharing ratio throughout
the venture's operation was 50%. In September of 1991, Granada Management
Corporation determined that the continued operation of CMF would no longer be in
the best interest of the Partnership due to insufficient sales to cover
operating costs. A wind down of the operation of CMF began in October 1991 and
was completed in April 1992. Operations subsequent to September 30, 1991, were
allocated to Whiteford's under the plan of CMF dissolution. Subsequent to
September 30, 1991, Granada Management Corporation advised the Partnership that
NAAS and its affiliates would be unable to contribute cash to fully satisfy
NAAS's negative capital account in the CMF joint venture and other receivables.
Effective October 1, 1991, NAAS assigned its economic interest in the CMF plant
and equipment, subject to an existing first mortgage encumbrance of
approximately $150,000, to the Partnership. On December 30, 1992, the
partnership sold the CMF Plant and remaining equipment for $162,975. All net
proceeds realizable from these sales were assigned to Whiteford's and the
Partnership.
On May 4, 1992, the outstanding shares of G/W Foods, Inc. were
assigned by the former General Partner to Gannon Group, Inc., a corporation
owned by Kevin T. Gannon, a Director and Vice President of G/W Foods, Inc.
At that time, Mr. Gannon was also a former Vice President of Granada
Corporation and certain of its affiliates. Also on May 4, 1992, Granada
Management Corporation assigned its sole general partnership interest in the
Partnership to Gannon Group, Inc. The effect of these assignments is for
Gannon Group, Inc. to have general partnership authority and responsibility
with respect to the Partnership and, through G/W Foods, Inc., of Whiteford's.
Subject to the availability of capital resources and/or financing, the
Partnership Agreement permits the acquisition of additional Food Businesses that
produce, process or distribute specialty food products including businesses that
possess technology or special processes which could increase the productivity or
processing capability of the Partnership's current Food Business or which
enhance the marketability or resale value of the Partnership's Food Business
products. At the present time, no acquisitions are contemplated.
3
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B. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Partnership operates principally in the food processing and
distribution business.
C. DESCRIPTION OF BUSINESS
The Partnership was organized to form, acquire, own and operate
businesses engaged in the development, production, processing, marketing,
distribution and sale of food and related products. The Partnership
presently operates further processing and meat production operations at one
location--Versailles, Ohio.
VERSAILLES, OHIO PLANT OPERATION
Whiteford's is a further processor and distributor of meat products to
major fast food restaurants and regional chains. It serves major metropolitan
areas such as Chicago, Cincinnati, Cleveland, Columbus, Detroit, Indianapolis,
Louisville and St. Louis. Whiteford's principal products are fresh frozen
hamburger patties; precooked and uncooked ground beef, taco meat and roast beef;
marinated beef entrees; and other items processed to customers' specifications.
Major food chains served include Burger King, Rally's and Crackerbarrel.
Whiteford's purchases products principally from major domestic
packers and regional distributors. However, it also utilizes imported beef.
The General Partner believes its sources of supply are adequate for the
foreseeable future.
For the years ended December 31, 1996, 1995 and 1994, Whiteford's
processed and sold 64.8 million pounds of products ($59.0 million), 59.8
million pounds of products ($57.6 million) and 58.9 million pounds of
products ($64.1 million) respectfully, through its further processing and
distribution operations.
MARKETING AND SALES
Whiteford's customers consist primarily of major national and
regional fast food retail chains in addition to HRI (Hotel, Restaurant,
Institutional) customers and food products distributors. Sales operations
are conducted locally by sales representatives from the Versailles location
and through unaffiliated food products distributors and food brokers.
The following customers contributed more than 10% of Whiteford's
revenues for the fiscal year ended December 31, 1996: Gordon Food Service,
20.69%; Prosource Distribution Service, 18.80%; Maines Paper and Food
Service, 15.38%; Sygma Network of Ohio, Inc., 14.00%; and I Supply, 13.71%.
Historically, a significant portion of Whiteford's business has been
lodged with relatively few major national and regional accounts. Whiteford's
believes that its relationships with its current significant customers are
satisfactory. In the past, Whiteford's has been able to obtain additional
orders for products from existing accounts or obtain orders for products from
new accounts when a significant account diminishes or terminates its
purchases with Whiteford's.
All of Whiteford's sales are to customers in the United States and
Canada.
REGULATORY MATTERS
All of Whiteford's meat production operations are subject to ongoing
inspection and regulation by the United States Department of Agriculture
(``USDA''). Whiteford's plant and facilities are subject to periodic or
continuous inspection, without advance notice, by USDA employees to ensure
compliance with USDA standards of sanitation, product composition, packaging
and labeling. All producers of meat and other food products must comply with
substantially similar standards. Compliance with these standards is not
expected to have a significant effect on Whiteford's competitive position.
4
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Whiteford's is subject to federal, state and local laws and
regulations governing environmental protection, compliance with which has
required capital and operating expenditures. The General Partner believes
Whiteford's is in substantial compliance with such laws and regulations and
does not anticipate making additional capital expenditures for such
compliance in 1997. The General Partner is not aware of any violations of,
or pending changes in such laws and regulations that are likely to result in
material penalties or material increases in compliance costs. Changes in the
requirements or mode of enforcement of certain of these laws and regulations,
however, could impose additional costs upon Whiteford's which could
materially and adversely affect its cost of doing business.
Whiteford's is subject to various other federal, state and local
regulations, none of which imposes material restrictions on its operations.
EMPLOYEES
The Partnership's operations have been managed by its general
partner, Gannon Group, Inc. since May 4, 1992, and Granada Management
Corporation from inception to May 4, 1992. Directly, the Partnership has no
employees. The Partnership has utilized the services of employees of the
General Partner and the former General Partner as needed for certain
administrative services.
The Whiteford's operation at Versailles, Ohio employed 252 personnel
at December 31, 1996. The General Partner believes there will be sufficient
personnel available to adequately manage the Partnership's business affairs.
ITEM 2. PROPERTIES
PROPERTIES UTILIZED BY THE PARTNERSHIP
The Partnership's executive offices are those of the General
Partner, located at 770 North Center Street, Versailles, Ohio 45380.
The following table sets forth Whiteford's operational facilities
and approximate capacities as of December 31, 1996.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL
TONS OF PRODUCTION
--------------------
GENERAL 1996
LOCATION CHARACTER SIZE CAPACITY ACTUAL
- --------------------- ---------- -------------------------------- --------- --------
<S> <C> <C> <C> <C>
Versailles, Ohio Meat Two separate facilities 40,000 32,400
Processing (1) 70,000 and (1) 33,000
Plant square feet on 20 acres
of land, (8)
hamburger/specialty
lines, (2) grinding
lines, (1) precooked
line, (3) smoke houses,
freezers, coolers, dry
storage and office space.
</TABLE>
All Whiteford's facilities are subject to a mortgage with two banks and
subordinated mortgage with Greenaway Consultant, Inc.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending or threatened legal proceedings
involving the Partnership, known to either the Partnership or the General
Partner.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of the Limited Partners of the
Partnership during 1996.
5
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
There is no established public trading market for the Partnership's
Limited Partnership Units.
The following table sets forth the amounts and dates of
distributions to holders of Limited Partnership Units in 1994 and 1995.
There were no distributions during 1996.
Amount Per Limited
Date Aggregate Amount Partnership Unit
---- ----------------- ------------------
March 15, 1994 $ 26,137.80 $ 0.02
June 15, 1994 26,137.80 0.02
September 15, 1994 26,137.80 0.02
December 15, 1994 52,275.60 0.04
March 15, 1995 52,275.60 0.04
June 15, 1995 52,275.60 0.04
Certain of the Partnership's loans with its lender contain
restrictive covenants. One of the covenants restricts the Partnership from
declaring or paying any distributions to its partners without the prior
written consent of the bank, except for amounts already classified as
reinvested distributions in the balance sheet.
The following table sets forth the approximate number of holders of
record of the equity securities of the Partnership as of December 31, 1996:
Title of Class Number of Record Holders
-------------- ------------------------
Limited Partnership Units 1,564
6
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ITEM 6. SELECTED FINANCIAL DATA
The selected financial data set forth below should be read in
conjunction with the consolidated financial statements, the notes thereto and
other financial information included elsewhere herein, including
"Management's Discussion and Analysis of Results of Operations and Financial
Condition." The table following reflects the results of operations of
acquired businesses for periods subsequent to their respective acquisition
dates.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
----------------- -------------- ---------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Sale of meat products $ 59,026,632 $ 57,667,240 $ 64,108,391 $ 63,182,785 $49,859,114
Interest and other 339,931 159,531 236,930 156,012 125,016
------------- ------------ ------------ ------------ -----------
Total revenues 59,366,563 57,826,771 64,345,321 63,338,797 49,984,130
------------- ------------ ------------ ------------ -----------
Cost of sales 54,188,228 53,757,014 60,428,954 60,119,285 47,245,087
------------- ------------ ------------ ------------ -----------
Gross Profit
Meat products 4,838,404 3,910,226 3,679,437 3,063,500 2,614,027
Other 339,931 159,531 236,930 156,012 125,016
------------- ------------ ------------ ------------ -----------
Total gross profit 5,178,335 4,069,757 3,916,367 3,219,512 2,739,043
------------- ------------ ------------ ------------ -----------
Selling and admin expenses 2,211,351 2,197,506 1,963,623 1,622,827 1,572,973
Depreciation, amortization
and interest 1,986,149 1,851,707 1,121,232 1,072,817 918,410
Other expense 163,157 -- -- -- --
------------- ------------ ------------ ------------ -----------
4,360,657 4,049,213 3,084,855 2,695,644 2,491,383
------------- ------------ ------------ ------------ -----------
Income before joint
venture operations 817,678 20,544 831,512 523,868 247,660
Equity in operations and
liquidation of unconsolidated
joint venture -- -- -- -- (573,171)
------------- ------------ ------------ ------------ -----------
Net Income (loss) $ 817,678 $ 20,544 $ 831,512 $ 523,868 $ (325,511)
------------- ------------ ------------ ------------ -----------
------------- ------------ ------------ ------------ -----------
Income (loss) per unit of
Limited Partners' Capital $ 0.63 $ 0.02 $ 0.64 $ 0.40 $ (0.24)
------------- ------------ ------------ ------------ -----------
------------- ------------ ------------ ------------ -----------
Weighted average units
outstanding 1,306,890 1,306,890 1,306,890 1,323,473 1,340,055
------------- ------------ ------------ ------------ -----------
------------- ------------ ------------ ------------ -----------
BALANCE SHEET DATA (DECEMBER 31):
Working capital (deficit) $ 156,933 $ (525,037) $ 154,050 $ 890,360 $ 307,403
Total assets $21,566,960 $ 22,280,444 $ 19,339,095 $ 15,970,758 $16,070,647
Long-term debt, less current
maturities $ 5,704,645 $ 6,754,525 $ 5,245,342 $ 3,578,836 $ 2,995,969
Total partners' capital $ 9,610,163 $ 8,792,485 $ 8,877,538 $ 8,178,022 $ 7,898,758
</TABLE>
7
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
Management's discussion and analysis set forth below should be read
in conjunction with the Consolidated Financial Statements and the notes
thereto included elsewhere herein.
The Partnership was organized as a Limited Partnership with a
maximum operating life of twenty years ending 2007. The source of its
capital has been from the sale of Class A, $10 Limited Partnership units in a
public offering that terminated on November 10, 1989.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996, COMPARED TO YEAR ENDED DECEMBER 31, 1995
Revenues for the year ended December 31, 1996 were $59,366,563
versus $57,826,771 for the year ended December 31, 1995, an increase of 2.7%.
During the 1996 period, 64,788,156 pounds of meat products were sold versus
59,776,527 pounds during the 1995 period, an increase of 5,011,629 pounds or
8.4%. The increase in pounds of meat products sold is primarily attributable
to the increased sales effort and production capabilities at the Versailles
plant. Sales revenues did not increase commensurately due to declining
commodity prices during 1996. The average sales price per pound for 1996 was
$.911 versus the average sales price per pound for 1995 of $.965.
Costs of meat products sold for the year ended December 31, 1996
were $54,188,228 versus $53,757,014 for the year ended December 31, 1995, an
increase of 0.8% During the 1996 period, 64,788,156 pounds of meat products
were sold versus 59,776,527 pounds during the 1995 period, an increase of
8.4%. The average cost of meat products sold for 1996 was $.836 versus $.899
in the 1995 period, a decrease of 7.0%. The decline in the cost per pound is
primarily attributable to general commodity price declines. The General
Partner expects general commodity prices to decline slightly during 1997.
Gross margins on meat sales were 8.2% for the year ended December
31, 1996 and 6.8% for the 1995 period. This increase is gross margins is
primarily attributable to: i) decline in raw material costs associated with
the general decline in meat prices during the 1996 period versus the 1995
period; ii) the semi-variable nature of certain costs in the costs of meat
products sold such as labor, packaging, and utilities and iii) the increased
efficiencies associated with the recently renovated Versailles plant whereby
lower labor and utilities costs are realized in the manufacture and
warehousing of products.
Selling and administrative expenses increased to $2,211,351 during
the year ended December 31, 1996 versus $2,197,506 for the same period in
1995, an increase of 0.6%.
Depreciation and amortization expense for the year ended December
31, 1996 was $1,146,951 versus $1,052,213 for the same period in 1995, an
increase of 9.0%. Such increase is primarily due to the expansion of the
freezer space at the Versailles plant. Such construction project was
completed during 1995 and the property was put into service in March 1995.
Interest expense for the year ended December 31, 1996 was $839,198
versus interest expense of $799,494 for the same period in 1995. This
increase of $39,704 primarily relates to the increase in the average debt
outstanding during 1996 due primarily to the $3.8 million expansion of the
Versailles plant.
The Partnership reported net income of $817,678 for the year ended
December 31, 1996 versus $20,544 for the 1995 period. This increase in
operating profit is primarily attributable to the renovation of the fixed
plant including the construction of freezer space and the installation of new
equipment during 1995. The construction and installation disrupted the normal
operations of the plant resulting in an inefficient production process during
the first six months of 1995. Management estimates the loss due to their
inefficiency amounted to $400,000.
YEAR ENDED DECEMBER 31, 1995, COMPARED TO YEAR ENDED DECEMBER 31, 1994
Revenues for the year ended December 31, 1995 were $57,826,771
versus $64,345,321 for 1994, a decrease of 10.1% over the revenues for the
prior period. This decrease was primarily attributable to the general
commodity price decline.
Gross profit from the sale of meat products increased to $3,910,226
in 1995 from $3,679,437 in 1994, reflecting an increase of pounds sold.
Gross margins for 1995 were 6.8% versus 5.7% in 1994.
8
<PAGE>
Selling and administrative expenses increased to $2,197,506 in 1995
from $1,963,623 in 1994, a total increase of $233,883 or 11.9% over 1994
amounts. This increase was primarily attributable to increased poundage.
Selling and administrative expenses represented 3.8% of sales in 1995 versus
3.1% of revenue during 1994.
Depreciation and amortization increased to $1,052,213 in 1995 from
$831,116 in 1994, a total increase of $221,097, due primarily to the
expansion of the Versailles, Ohio facility and equipment used therein.
Interest expense increased to $799,494 in 1995 from $290,116 in
1994. The increase was primarily attributable to an increase in the average
debt outstanding during 1995 due primarily to the $3.8 million expansion of
the Versailles plant.
The Partnership reported a net income of $20,544 for 1995 versus a
net income of $831,512 for 1994.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1996, the Partnership had a positive working capital
position of $156,933, versus a negative working capital of $525,037 at
December 31, 1995. The increase in the working capital position is primarily
attributable to the retention of profits for 1996.
Cash provided by operating activities was $1,289,705 for the year
ended December 31, 1996 reflecting net income of $817,678, depreciation and
amortization of $1,146,951, offset by net decreases in other net operating
assets of $674,924. Cash provided by operating activities for the year ended
December 31, 1995 was $849,003, with a net income of $20,544, depreciation
and amortization of $1,052,213, offset by net decreases in other net
operating assets of $223,754.
Cash used in investing activities was $335,936 for 1996 versus
$3,155,430 for 1995. The decrease in cash used in investing activities is
primarily attributable to the completion of the freezer expansion at the
Versailles plant.
The Limited Partnership Agreement provides for the General Partner
to receive an annual administrative fee. The fee is equal to 2% (adjusted
for changes in the Consumer Price Index after 1989) of net business
investment (defined as $8.50 multiplied by Partnership units outstanding).
However, such amounts payable to the General Partner are limited to 10% of
aggregate distributions to all Partners from "Cash Available for
Distributions." As defined in the Limited Partnership Agreement, that
portion of the management fee in excess of such 10% limitation is suspended,
and future payment is contingent.
The Administrative Management Fees paid to the General Partner and
recorded by the Partnership were -0- in 1996, $10,455 in 1995, $13,069 in
1994, $2,614 in 1993, and -0- in 1992. Suspended fees during 1996, 1995,
1994, 1993 and 1992 respectively, are $300,000, $290,000, $222,000, $229,000,
and $228,000.
Cash provided by financing activities for 1996 consisted of net
decreases in bank debt of $1,320,853.
Whiteford's working capital and equipment requirements are primarily
met by (a) a revolving credit agreement with Whiteford's principal lender in
the maximum amount of $2,600,000 (with $2,053,347 outstanding at December 31,
1996), (the "Principal Revolver"); (b) a five year term credit facility of
$2,200,000 (the "Principal Term Loan"); (c) a five year credit facility of
$4,165,000 (the "Principal Mortgage Loan"); (d) a two year credit facility of
$700,000, (the "Second Term Loan"); (e) a five year credit facility of
$500,000, (the "Third Term Loan") and (f) a credit facility with Greenaway
Consultant, Inc. for $420,000, with $105,000 outstanding as of December 31,
1996 (the "GCI Loan"),(collectively, the "Loans").
The Principal Revolver bears interest at prime plus 1/2%. The
Principal Term Loan bears an interest rate of 8.717%. The Principal Mortgage
Loan bears an interest rate of 9.89%. The Second Term Loan bears an interest
rate of prime plus 1.00%. The Third Term Loan bears an interest rate of
9.42%. The Loans require the Partnership to meet certain financial covenants
and restrict the ability of the Partnership to make distributions to Limited
Partners without the consent of the principal lender. The Principal Revolver
and the Principal Term Loan (together with the Principal Mortgage Loan
provided by the principal lender) are secured by real property, fixed assets,
equipment, inventory, receivables and intangibles of Whiteford's.
The GCI Loan bears interest at a rate equal to 1-1/2% above the
prime rate established from time to time by the Company's financial
institution lender having the highest outstanding credit balance. The GCI
Loan is secured by real property, fixed assets, equipment, inventory and
intangibles and is subordinated to the Principal Revolver, the Principal Term
Loan, and the Principal Mortgage Loan.
9
<PAGE>
The Partnership's 1997 capital budget calls for the expenditure of
approximately $800,000 for building, plant, and equipment modifications and
additions. The General Partner believes Whiteford's is in compliance with
environmental protection laws and regulations, and does not anticipate making
additional capital expenditures for such compliance in 1997. Such amounts
are expected to be funded by internally generated cash flow. The General
Partner believes that the above credit facilities along with cash flow from
operations will be sufficient to meet the Partnerships' working capital and
credit requirements for 1997.
The nature of the Partnership's business activities (primarily meat
processing) are such that should annual inflation rates increase materially
in the foreseeable future, the Partnership would experience increased costs
for personnel and raw materials; however, it is believed that increased costs
could substantially be passed on in the sales prices of its products.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and supplementary data of the Partnership
are included in this report after the signature page.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARTNERSHIP
MANAGEMENT
The Partnership has no officers or directors. The affairs of the
Partnership are managed by the Gannon Group, Inc., the General Partner. The
directors, executive officers and key employees of the General Partner as of
December 31, 1996, are as follows:
KEVIN T. GANNON, age 40, sole director, President and sole
stockholder of Gannon Group, Inc.
Mr. Gannon is a Managing Director of Robert A. Stanger & Co., Inc.,
a New Jersey based investment banking, investment research and consulting
firm. Mr. Gannon was formerly a Vice President - Corporate Development of
Granada Corporation and Director and Vice President of Granada BioSciences,
Inc. and Granada Foods Corporation, former affiliate of the Partnership.
From August 1983 to April 1988, Mr. Gannon was employed by Robert A. Stanger
& Co. Ltd. Mr. Gannon is a Certified Public Accountant.
No director or officer of the General Partner was, during the last
five (5) years, the subject (directly, or indirectly as a general partner of
a partnership or as an executive officer of a corporation) of a bankruptcy or
insolvency petition, of any criminal proceeding (excluding traffic violations
and other minor offenses), or restrictive orders, judgments or decrees
enjoining him from or otherwise limiting him from acting as a futures
commission merchant, introducing broker, commodity trading advisor, commodity
pool operator, floor broker, leverage transaction merchant, any other person
regulated by the Commodity Futures Trading Commission, or an associated
person of any of the foregoing, or as an investment adviser, underwriter,
broker or dealer in securities, or as an affiliated person, director or
employee of any investment company, bank, savings and loan association or
insurance company, or engaging in or continuing any conduct or practice in
connection with such activity, engaging in any business activity, or engaging
in any activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of Federal or State securities
laws or Federal commodities laws, or was the subject of any existing order of
a federal or state authority barring or suspending for more than sixty (60)
days the right of such person to be engaged in such activity.
10
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
CURRENT YEAR REMUNERATION
The Partnership has no officers or directors. Accordingly, no
direct remuneration was paid to officers and directors of the Partnership for
the year ended December 31, 1996. Remuneration to the General Partner is
pursuant to Articles VI of the LIMITED PARTNERSHIP AGREEMENT (filed as
Exhibit A to the Prospectus included in the Partnership's Registration
Statement on Form S-1 [File No. 2-98273]) and incorporated herein by
reference.
Pursuant to Section 6.4(c) of the Limited Partnership Agreement, the
general partner is entitled to receive a management fee of approximately
$300,000 for the calendar year 1996. However, Section 6.4(c)(v) limits all
amounts payable to the General Partner pursuant to Section 6.4(c) to an
amount which does not exceed 10% of aggregate distributions to Partners from
"Cash Available for Distributions". Under the Limited Partnership Agreement,
Cash Available for Distributions is comprised of cash funds from operations
(after all expenses, debt repayments, capital improvements and replacements,
but before depreciation) less amounts set aside for restoration or reserves.
That portion of the management fee in excess of such 10% limitation is
suspended, and future payment is delayed until such payment may be made
without exceeding such limit.
On dissolution of the Partnership, Section 15.3(a)(ii) of the
Limited Partnership Agreement generally provides for the payment of
creditors, and then pro rata payment to record holders for loans or other
amounts owed to them by the Partnership, including without limitation any
amounts owed to the General Partner pursuant to Section 6.4. Any amounts
payable to the General Partner under Section 15.3(a)(ii) will be dependent
upon the funds available for distribution on the dissolution of the
partnership.
Section 6.4(e) of the Limited Partnership Agreement also provides
the General Partner a subordinated special allocation equal to 15% of any
gain on the sale of partnership assets or food businesses. Among other
things, this special allocation is subordinated to payments to the limited
partners for certain distributions. any payment pursuant to Section 6.4(e)
will be dependent upon the ultimate sale price of such partnership assets or
food businesses.
During calendar year 1996, the Partnership made no distributions to
the Partners. During calendar year 1995 and 1994, the Partnership made
aggregate distributions to Partners from Cash Available for Distribution in
the amounts of $104,551 and $130,689. As a result in 1995, the Partnership
paid the General Partner 10% of such amount or $10,455, and suspended payment
of approximately $290,000 of such management fee. The cumulative amount of
annual management fees that have been suspended is $1,269,000. Suspended
fees during 1996, 1995, 1994, 1993, and 1992, respectively, are $300,000,
$290,000, $222,000, $229,000, and $228,000.
OTHER COMPENSATION ARRANGEMENTS
There is no plan provided for or contributed to by the Partnership
or the General Partner which provides annuity, pension or retirement benefits
for the General Partner or the officers and directors of the General Partner.
There is no existing plan provided for or contributed to by the General
Partner which provides annuity, pension or benefits for its officers or
directors. There are no arrangements for remuneration covering services as a
director between the Partnership and any director of the General Partner. No
options to purchase any securities of the General Partner were granted or
exercised during its fiscal year ended December 31, 1996. No options were
held to purchase securities of the Partnership as of December 31, 1996, and
as of the date hereof.
After the Partnership acquired the assets of Whiteford's, Inc.,
Whiteford's entered into a Services Agreement with Greenaway Consultant, Inc.
("GCI") under which GCI managed Whiteford's. GCI is owned by one of
Whiteford's, Inc.'s former principal shareholders.
Subsequent to the Services Agreement, Whiteford's determined that it
was desirable to lessen the cash flow burden resulting from the Installment
Loan and the tax payment obligation. Whiteford's determined it was in a
position to refinance $250,000 of the Installment Loan on a more favorable
amortization basis and at a more favorable interest rate. As a result,
Whiteford's consulted with GCI about GCI's willingness to accept a partial
payment of the Installment Loan, extend the payments under the Installment
Loan and to accept a right to receive payments in the future in lieu of being
awarded part of the limited partnership units. As a result , Whiteford's and
GCI entered into a "1993 Services Agreement" which (i) rescinds the original
Services Agreement and the Letter Agreement, (ii) reaffirms the covenant not
to compete for GCI and its shareholder, (iii) provides for the remaining
principal balance of the Installment Loan ($420,000) to be payable over a
four year period with quarterly principal payments of $26,250 plus interest,
(the first quarterly payment beginning March 31, 1994), (iv) restricts GCI's
equity interest in the limited partnership units to 1.00% (all of which has
been delivered to GCI effective
11
<PAGE>
January 1, 1994), (v) provides for Whiteford's payment to GCI of
approximately $250,000 per year for its management services, and $500,000
upon a change of control or the sale of substantially all Whiteford's assets.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
PRINCIPAL SECURITY HOLDERS
The General Partner owns the entire general partnership interest,
which interest controls the Partnership. The General Partner does not
beneficially own, either directly or indirectly, any equity security in the
Partnership, other than the general partner interest.
CONTRACTUAL ARRANGEMENTS AFFECTING CONTROL
On May 4, 1992, the outstanding shares of G/W Foods, Inc. were
assigned by Granada Management Corporation to Gannon Group, Inc., a
corporation owned by Kevin T. Gannon, a Director and Vice President of G/W
Foods, Inc. and also a former Vice President of Granada Corporation and
certain of its affiliates. Also on May 4, 1992, Granada Management
Corporation assigned its sole general partnership interest in the Partnership
to Gannon Group, Inc. The effect of these assignments is for Gannon Group,
Inc. to have general partnership authority and responsibility with respect to
the Partnership and, through G/W Foods, Inc., of Whiteford's.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
None.
12
<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.
Whiteford Partners L.P.
-----------------------------
(Registrant)
By Gannon Group, Inc.
Its General Partner
Date: March 28, 1997 /s/ Kevin T. Gannon
-------------- -----------------------------
Chief Executive Officer
and President
Pursuant to the requirements of the Securities Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
- ---------------------- ---------------------------- --------------
/s/ Kevin T. Gannon Chief Executive Officer, March 28, 1997
- ------------------- President, Chairman of the Board
Kevin T. Gannon and Sole Director (Principal
Executive Officer), Chief
Financial Officer, and Chief
Accounting Officer
13
<PAGE>
ANNUAL REPORT ON FORM 10-K
ITEM 8, ITEM 14(a)(1) AND (2), (c) AND (d)
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CERTAIN EXHIBITS
YEAR ENDED DECEMBER 31, 1996
WHITEFORD PARTNERS, L.P.
14
<PAGE>
FORM 10-K -- ITEM 8, ITEM 14 (a) (1) AND (2), (c) AND (d)
The following financial statements and financial statement schedules
of the Partnership are included as part of this report at Item 8:
(a) 1. Financial Statements
CONSOLIDATED BALANCE SHEETS - December 31, 1996, and 1995.
CONSOLIDATED STATEMENTS OF OPERATIONS - for the years ended
December 31, 1996, 1995, and 1994.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL - for the
years ended December 31, 1996, 1995, and 1994.
CONSOLIDATED STATEMENTS OF CASH FLOWS - for the years ended
December 31, 1996, 1995, and 1994.
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a) 2. See Index to Exhibits immediately following the financial statement
schedules.
15
<PAGE>
WHITEFORD PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS
December 31,
-------------------------
1996 1995
---------- ----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 121,163 $ 488,247
Accounts receivable - trade 3,196,376 2,545,169
Inventories 2,612,515 2,419,466
Prepaid expenses 479,031 755,515
------------ -----------
TOTAL CURRENT ASSETS 6,409,085 6,208,397
PROPERTY AND EQUIPMENT:
Land and improvements 86,700 86,700
Buildings 7,169,342 7,029,646
Machinery and equipment 9,096,286 9,183,329
Accumulated depreciation (4,154,597) (3,315,265)
------------- -----------
TOTAL PROPERTY AND EQUIPMENT 12,197,731 12,984,410
OTHER ASSETS - NET OF AMORTIZATION 2,960,144 3,087,637
------------- -----------
TOTAL ASSETS $21,566,960 $22,280,444
------------- -----------
------------- -----------
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable - trade $ 2,685,099 $ 2,700,444
Notes payable and current maturities
on long-term debt 2,827,006 3,097,979
Accrued expenses and other liabilities 740,047 935,011
------------- -----------
TOTAL CURRENT LIABILITIES 6,252,152 6,733,434
LONG-TERM DEBT 5,704,645 6,754,525
PARTNERS' CAPITAL:
General Partner:
Capital contributions 132,931 132,931
Capital transfers to Limited Partners (117,800) (117,800)
Interest in Partnership net income 16,140 7,963
Distributions (32,943) (32,943)
------------- ----------
(1,672) (9,849)
Class A Limited Partners:
Capital contributions, net of
organization and offering costs
of $2,010,082 11,172,274 11,172,274
Capital transfers from the General Partner 116,554 116,554
Interest in Partnership net income 1,586,849 777,348
Distributions (3,263,842) (3,263,842)
------------ -----------
9,611,835 8,802,334
------------ -----------
TOTAL PARTNERS' CAPITAL 9,610,163 8,792,485
------------ -----------
TOTAL LIABILITIES & PARTNERS' CAPITAL $ 21,566,960 $22,280,444
------------ -----------
------------ -----------
See notes to consolidated financial statements.
F - 1
<PAGE>
WHITEFORD PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31
------------------------------------------------
1996 1995 1994
----------- -------------- -------------
<S> <C> <C> <C>
REVENUES
Sales of meat products $ 59,026,632 $ 57,667,240 64,108,391
Interest and other 339,931 159,531 236,930
------------- --------------- ------------
59,366,563 57,826,771 64,345,321
COST AND EXPENSES
Cost of meat products sold 54,188,228 53,757,014 60,428,954
Selling and administrative 2,211,351 2,187,051 1,950,554
Administrative fee -- General Partner -- 10,455 13,069
Depreciation and amortization 1,146,951 1,052,213 831,116
Interest 839,198 799,494 290,116
Other 163,157 -- --
-------------- --------------- ------------
58,548,885 57,806,227 63,513,809
-------------- --------------- ------------
NET INCOME $ 817,678 $ 20,544 $ 831,512
-------------- --------------- ------------
-------------- --------------- ------------
Summary of net income allocated to:
General Partner $ 8,177 $ 205 $ 8,315
Class A Limited Partners 809,501 20,339 823,197
-------------- --------------- ------------
$ 817,678 $ 20,544 $ 831,512
-------------- --------------- ------------
-------------- --------------- ------------
Net income per unit of Limited Partner Capital $ 0.63 $ 0.02 $ 0.64
-------------- --------------- ------------
-------------- --------------- ------------
Weighted average units issued and outstanding 1,306,890 1,306,890 1,306,890
-------------- --------------- ------------
-------------- --------------- ------------
</TABLE>
See notes to consolidated financial statements.
F - 2
<PAGE>
WHITEFORD PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
<TABLE>
<CAPTION>
GENERAL PARTNER LIMITED PARTNERS
------------------------------------- ------------------------------------------
CAPITAL CONTRIBUTIONS
---------------------
CAPITAL INTEREST
CAPITAL TRANSFERS INTEREST FROM FROM IN NET
CONTRI- TO LIMITED IN NET DISTRI- LIMITED GENERAL INCOME DISTRI-
BUTION PARTNERS INCOME BUTIONS PARTNERS PARTNER (LOSS) BUTIONS
---------- ---------- -------- --------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances, December 31, 1993 $ 132,931 $(117,800) $ (557) $(30,590) $11,172,274 $ 116,554 $ (66,188) $(3,028,602)
Net Income 8,315 823,197
Distributions (1,307) (130,689)
---------- ---------- ------- -------- ----------- --------- ----------- ------------
Balances, December 31, 1994 132,931 (117,800) 7,758 (31,897) 11,172,274 116,554 757,009 (3,159,291)
Net Income 205 20,339
Distributions (1,046) (104,551)
---------- ---------- ------- --------- ----------- --------- ---------- ------------
Balances, December 31, 1995 132,931 (117,800) 7,963 (32,943) 11,172,274 116,554 777,348 (3,263,842)
Net Income 8,177 809,501
---------- ---------- ------- --------- ----------- ---------- ---------- ------------
Balances, December 31, 1996 $ 132,931 $(117,800) $16,140 $(32,943) $11,172,274 $ 116,554 $1,586,849 $(3,263,842)
---------- ---------- ------- --------- ----------- ---------- ----------
$.10 and .10 weighted average outstanding units of Limited Capital in 1996 and 1995 respectively.
</TABLE>
See notes to consolidated financial statements.
F - 3
<PAGE>
WHITEFORD PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------
1996 1995 1994
------------ ------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 817,678 $ 20,544 $ 831,512
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,146,951 1,052,213 831,116
Loss (Gain) on sale of fixed assets 103,157 --- (914)
Increase (decrease) operating assets and liabilities:
Accounts receivable (651,207) (113,339) 601,736
Inventories (193,049) 9,887 (548,347)
Prepaid expenses 276,484 (675,890) (8,943)
Accounts payable (15,345) 246,603 497,701
Accrued expenses and other liabilities (194,964) 308,985 269,244
------------ ------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,289,705 849,003 2,473,105
INVESTING ACTIVITIES:
Purchase of property and equipment (443,036) (3,155,430) (3,937,035)
Proceeds from disposal of property and equipment 107,100 --- 4,500
------------ ------------ --------------
NET CASH USED IN INVESTING ACTIVITIES (335,936) (3,155,430) (3,932,535)
FINANCING ACTIVITIES:
Proceeds from notes payable and long-term debt 18,795,383 19,484,383 26,074,600
Payments on notes payable (20,116,236) (17,013,569) (24,172,725)
Distributions to Limited and General Partners --- (105,597) (131,996)
------------ ------------ --------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES (1,320,853) 2,365,217 1,769,879
------------ ------------ --------------
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (367,084) 58,790 310,449
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 488,247 429,457 119,008
------------ ------------ -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 121,163 $ 488,247 $ 429,457
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
See notes to consolidated financial statements.
F - 4
<PAGE>
WHITEFORD PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
- ------------------------------------------------------------------------------
NOTE A - ORGANIZATION, BUSINESS AND ACQUISITIONS
Whiteford Partners, L.P., (the Partnership), formerly Granada Foods,
L.P., was formed on June 30, 1987, as a Delaware limited partnership. Prior
to May 4, 1992, the Partnership consisted of a General Partner, Granada
Management Corporation, (Granada), and the Limited Partners. On May 4, 1992,
Granada assigned its sole general partner interest in the Partnership to
Gannon Group, Inc. and the Partnership was renamed Whiteford Partners, L.P.
The operational objectives of the Partnership are to own and operate
businesses engaged in the development, production, processing, marketing,
distribution and sale of food and related products (Food Businesses) for the
purpose of providing quarterly cash distributions to the partners while
providing capital appreciation through the potential appreciation of the
Partnership's Food Businesses. The Partnership expects to operate for twenty
years from inception, or for such shorter period as the General Partner may
determine is in the best interest of the Partnership, or for such shorter
period as determined by the majority of the Limited Partners.
The Partnership Agreement provides that a maximum of 7,500,000 Class
A, $10 partnership units can be issued to Limited Partners. Generally, Class
A units have a preference as to cumulative quarterly cash distributions of
$.25 per unit. The sharing of income and loss from the Partnership
operations is 99% to the Class A and 1% to the General Partner. Amounts and
frequency of distributions are determinable by the General Partner.
On March 26, 1990, the Partnership, through Whiteford Foods Venture,
(Whiteford's) L.P. (formerly Granada/Whiteford Foods Venture, L.P.), a joint
venture with an affiliate of the then General Partner, acquired the business
assets of Whiteford's Inc., a meat processing and distribution company. The
Partnership's interest in the operations and equity of Whiteford's is greater
than 99.9%. The cash purchase price of the assets was $8,275,000 with
liabilities of $3,776,806 assumed. The excess of the purchase price over the
estimated fair value of the net tangible assets acquired of approximately
$3,825,000 was recorded as goodwill. The acquisition was accounted for using
the purchase method of accounting and, accordingly, the financial statements
include the operations of Whiteford's from the date of acquisition.
In 1993, the Partnership entered into a settlement agreement with
certain participants in the Partnership's Distribution Reinvestment and Unit
Acquisition Plan under which the Partnership repurchased 33,165 class A Units
for a total purchase price of $218,194 payable over a five year period. The
first installment in the amount of $62,049 was paid in 1993 with four
subsequent annual installments of $39,036.25.
At December 31, 1996 and at December 31, 1995, the Partnership had
1,306,890 Class A limited partnership units issued and outstanding.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements
include the Partnership and Whiteford's, from the date of acquisition (March
26, 1990). Significant intercompany account balances and transactions have
been eliminated in consolidation.
INVENTORIES. Inventories of meat, meat products and packaging
supplies are stated at the lower of first-in, first-out (FIFO) cost or
market. The major components of inventories are as follows at December 31:
1996 1995
------------- ------------
Finished products $ 721,949 $ 920,800
Raw materials 793,511 621,548
Packaging supplies and other 1,097,055 877,118
---------- -----------
$2,612,515 $2,419,466
---------- -----------
---------- -----------
F - 5
<PAGE>
PROPERTY AND EQUIPMENT. Property and equipment is stated at cost.
Depreciation, computed using the straight-line method on the basis of the
estimated useful lives of the depreciable assets, was $1,019,458, $924,719
and $703,623 in years 1996, 1995 and 1994, respectively. The costs of
ordinary repairs and maintenance are charged to expense, while betterment and
major replacements are capitalized.
The carrying value of property and equipment and other long lived
assets is reviewed if the facts and circumstances suggest it may be impaired.
If this review indicates the carrying value of the assets may not be
recoverable, based on estimates of their undiscounted cash flows, the
carrying value will be reduced to the asset's fair market value.
OTHER ASSETS. Goodwill associated with the acquisition of
Whiteford's Inc. is being amortized on a straight-line basis over a
thirty-year period. Accumulated amortization at December 31, 1996, 1995, and
1994, was $839,345, $718,476 and $597,606, respectively.
DISTRIBUTIONS. The Partnership records distributions of income
and/or return of capital to the General Partner and Limited Partners when
paid. Special transfers of equity, as determined by the General Partner, from
the General Partner to the Limited Partners are recorded in the period of
determination. Distributions of $104,551 and $130,869 to Limited Partners
were recorded in 1995 and 1994 respectively.
INCOME TAXES. The Partnership files an information tax return. The
items of income and expense are allocated to the partners pursuant to the
terms of the Partnership Agreement. Income taxes applicable to the
Partnership's results of operations are the responsibility of the individual
partners and have not been provided for in the accounts of the Partnership.
At December 31, 1996, the book basis of assets exceeds the tax basis of such
assets by approximately $235,185 primarily due to the use of accelerated
depreciation methods utilized for tax reporting purposes.
CASH, CASH EQUIVALENTS AND CASH FLOWS. For the purpose of the
statement of cash flows, the Partnership considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents. Total interest paid was $859,393, $747,059 and $394,766 for
1996, 1995 and 1994, respectively.
NET INCOME PER UNIT OF LIMITED PARTNERS CAPITAL. The net income per
unit of limited partners capital is calculated by dividing the net income
allocated to limited partners by the weighted average units outstanding.
USE OF ESTIMATES. The preparation of the financial statements in
accordance with generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ
from those results.
NOTE C - RELATED PARTY TRANSACTIONS
The Limited Partnership Agreement provides for the General Partner
to receive an annual administrative fee. The fee is equal to 2% (adjusted
for changes in the consumer price index after 1989) of net business
investment (defined as $8.50 multiplied by Partnership units outstanding).
However, such amounts payable to the General Partner are limited to 10% of
aggregate distributions to all Partners from "Cash Available for
Distributions". As defined in the Limited Partnership Agreement, that
portion of the management fee in excess of such 10% limitation is suspended,
and future payment is contingent.
The Administrative Management Fees paid to the General Partner and
recorded by the Partnership were $10,455 in 1995, $13,069 in 1994 and $2,614
in 1993. There were no adminstrative fees paid to the General Partner in
1996. Suspended fees during 1996, 1995, 1994 and 1993 respectively are
$300,000, $290,000, $222,000 and $229,000. The Partnership also has a
service agreement with Greenaway Consultant, Inc. (GCI), which provides for
the former principal owner of Whiteford's to provide consulting services to
the Partnership. The agreement is for approximately five years expiring
December 31, 1997, and provides minimum consulting fees of approximately
$250,000 per annum. During 1996, 1995, 1994 and 1993 the minimum was paid.
In addition, GCI will receive limited partnership units ultimately
representing 1.0%, (all of which was received as of December 31, 1994) of all
outstanding limited partnership units of Whiteford's. GCI will receive
payment of $500,000 upon a change of control or sale of substantially all of
the assets of the Partnership.
F - 6
<PAGE>
NOTE D - LONG TERM DEBT
The following schedule summarizes long-term debt at December 31:
<TABLE>
<CAPTION>
1996 1995
------------- ---------------
<S> <C> <C>
Notes payable to bank due March, 2000
interest at 8.99% at December 31, 1996 $ 3,887,105 $ 4,046,215
Notes payable to bank due July, 1999,
interest at 8.717% at December 31, 1996 1,590,087 1,853,018
Revolving credit agreement with a bank, due
July 1997, interest at prime 1/2% at December 31, 1996 2,053,347 2,312,289
Note payable to Greenaway Consultant, Inc.,
due December 31, 1997, interest at prime plus 1.5% at December 31, 1996 105,000 262,500
Note payable to bank due April, 1998,
interest at prime plus 1.25% at December 31, 1996 450,000 700,000
Note payable to bank due May, 2000
interest at 9.42% at December 31, 1996 368,923 454,732
Other 77,189 223,750
------------ ------------
$ 8,531,651 $ 9,852,504
Less portion classified as current 2,827,006 3,097,979
------------ ------------
$ 5,704,645 $ 6,754,525
------------ ------------
------------ ------------
</TABLE>
The Note payable to Greenaway Consultant, Inc. represents amounts
due to a consulting company owned by a former owner of Whiteford's Inc., (see
Note C). This debt is subordinated to the bank notes.
The notes payable and the revolving credit agreement with the bank
contain restrictive covenants. The covenants restrict the Partnership from
declaring or paying any distributions to its partners without the prior
written consent of the bank, except for amounts already classified as
reinvested distributions in the balance sheet; limit the level of capital
expenditures the Partnership may make in any fiscal year and require the
Partnership to maintain certain financial ratios. In addition, the
Partnership must maintain a monthly average of $100,000 on deposit with the
bank as a compensating balance.
The revolving credit agreement permits borrowing of up to $2,600,000
of which $546,653 was available at December 31, 1996. Long-term debt and
borrowing under the revolving credit agreement are collateralized by
substantially all of the Partnership's property and equipment, inventory and
accounts receivable.
The aggregate annual maturities on the long-term debt for the
Partnership for the four years subsequent to 1997 are: $625,288, $683,430,
$675,756, and $3,720,171.
During 1996, 1995 and 1994, the weighted average interest rate on
short-term borrowing was 9.1%, 9.4% and 8.3% respectively, while the weighted
average month end amount outstanding was $3,145,390, $2,812,838 and
$1,541,883 respectively. The largest outstanding month end balance was
$3,285,690 in 1996, $3,245,938 during 1995 and $2,294,073 during 1994.
F - 7
<PAGE>
NOTE E - LEASES
LEASE COMMITMENTS. The Partnership's leases, buildings and
equipment, are under various noncancelable operating lease agreements. Lease
rental expense for 1996, 1995 and 1994 was $749,132, $375,963 and $215,574,
respectively. The future minimum lease payments under the leases are as
follows:
1997 $ 784,443
1998 754,474
1999 719,196
2000 688,775
2001 519,406
Thereafter 136,349
-----------
$ 3,602,643
-----------
-----------
NOTE F - EMPLOYEE BENEFIT PLAN
The Partnership has a 401K Plan which covers substantially all
employees who have completed one year of service. The Partnership matches a
percentage up to 25% of the participant's contributions up to 6% of employee
eligible compensation. Contributions to the Plan were $12,152 in 1996,
$10,900 in 1995, and $8,200 in 1994.
NOTE G - MAJOR CUSTOMERS
Whiteford's facility, located in Versailles, Ohio, operates as
a further processor and distributor of beef products to major fast food
restaurants and regional chains. Whiteford's principal products are fresh
frozen hamburger patties; precooked and uncooked ground beef taco meat and
roast beef, marinated beef entrees; and other items processed to the
customers' specifications. Major food chains served include Burger King,
Rally's and Cracker Barrel.
Sales of meat products to major customers are summarized as follows
for the fiscal years ended December 31, 1996, and 1995.
CUSTOMER 1996 1995
-------- ----------- ------------
A $12,280,924 $11,621,477
B 11,163,393 9,803,698
C 9,133,022 7,345,095
D 8,307,416 7,233,692
E 8,140,374 5,836,108
F 1,893,490 5,140,614
----------- -----------
$50,918,619 $46,980,684
----------- -----------
----------- -----------
The total amounts receivable from these customers on December 31,
1996, and 1995, were $2,460,866 and $2,008,659, respectively.
F - 8
<PAGE>
[LETTERHEAD]
REPORT OF INDEPENDENT AUDITORS
Limited and General Partners
Whiteford Partners, L.P.
We have audited the accompanying consolidated balance sheets of Whiteford
Partners, L.P. (a Delaware limited partnership) and subsidiary as of December
31, 1996 and 1995, and the related consolidated statements of operations,
changes in partners' capital, and cash flows for each of the three years in
the period ended December 31, 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 consolidated financial position
of Whiteford Partners, L.P. and subsidiary at December 31, 1996 and 1995, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
January 31, 1997
F - 9
<PAGE>
INDEX TO ATTACHED EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
- ------- ---------------------------------------------------------------------
<C> <S>
3. & 4. Limited Partnership Agreement of the Partnership incorporated by
reference to Exhibit "A" to Prospectus (pages A 1 - A 40)
included in the Partnership's Registration Statement on Form S-1
(File No. 33-15962).
10.1 Consulting Agreement between the Partnership and Granada Acquisitions,
Inc. incorporated by reference to Exhibit 10.2 to the Partnership's
Registration Statement on Form S-1 (File No. 33-15962).
10.2 Asset Purchase Agreement between Granada/Whiteford Foods Venture,
L.P., Whiteford's Inc. and Albert D. Greenaway, incorporated by
reference to Exhibit 2 to the Partnership's Form 8-K filing dated May
10, 1990, as amended (File No. 33-15962).
10.3 Services Agreement between Granada/Whiteford Foods Venture, L.P.,
Granada Cincinnati Multifoods, Inc. and Greenaway Consultants, Inc. to
engage Greenaway Consultants, Inc. to perform management services for
the operations of Granada/Whiteford Foods Venture, L.P. and CMF, a
joint venture, incorporated by reference to Exhibit 10.3 to the
Partnership's Annual Report on Form 10K for the year ended December
31, 1990.
10.4 Agreement of Limited Partnership dated March 27, 1990, between the
Registrant as limited partner, and G/W Foods, Inc. as General Partner,
to acquire the assets, certain liabilities, and meat purveying
operations of Whiteford's Inc., incorporated by reference to Exhibit
10.4 to the Partnership's Annual Report on Form 10K for the year ended
December 31, 1990.
10.5 Joint Venture Agreement dated July 1, 1990, between Granada/Whiteford
Foods Venture, L.P., North American Agrisystems, Inc. and Cincinnati
Multifoods, Inc. for the formation of a joint venture for
Granada/Whiteford Foods Venture, L.P. to operate meat production
facilities of North American Agrisystems, Inc., incorporated by
reference to Exhibit 10.5 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1990.
10.6 Promissory Note payable by Granada/Whiteford Foods Venture to Fifth
Third Bank of Miami Valley, N.A. in the face amount of $3,000,000,
dated July 19, 1991, together with Hypothecation Agreement,
incorporated by reference to Exhibit 10.6 to the Partnership's Annual
Report on Form 10K for the year ended December 31, 1990.
10.7 Promissory Note payable by Granada/Whiteford Foods Venture to Fifth
Third Bank of Miami Valley, N.A. in the face amount of $280,000 dated
June 21, 1991, together with Hypothecation Agreement, incorporated by
reference to Exhibit 10.7 to the Partnership's Annual Report on form
10K for the year ended December 31, 1990.
10.8 Agreement dated November 6, 1991, between G/W Foods, Inc. and Fifth
Third Bank of Miami Valley, N.A. amending terms of Promissory Note
dated July 19, 1991, incorporated by reference to Exhibit 10.8 to the
Partnership's Annual Report on Form 10K for the year ended December
31, 1990.
F - 10
<PAGE>
INDEX TO ATTACHED EXHIBITS (CONT.)
10.9 Memorandum of Agreement -- Dissolution of CMF (a Texas joint venture)
effective October 1, 1991, stipulating terms and conditions of
dissolution and wind-up of operations of CMF., incorporated by
reference to Exhibit 10.9 to the Partnership's Annual Report on Form
10K for the year ended December 31, 1990.
10.10 Amendment to Certificate of Limited Partnership of
Granada/Whiteford Foods Venture, L.P., State of Ohio Certificate
of Amendment of Foreign Limited Partnership and Trade Name
Registration, all dated April 30, 1992, and amending Name of
Granada/Whiteford Foods Venture, L.P. to Whiteford Foods Venture,
L.P., incorporated by reference to Exhibit 10.10 to the
Partnership's Annual Report on Form 10K for the year ended
December 31, 1990.
10.11 Loan Agreement dated May 5, 1992, between Greenaway Consultant,
Inc. and Whiteford Foods Venture, L.P., providing for $750,000
revolving credit facility, incorporated by reference to Exhibit
10.11 to the Partnership's Annual Report on Form 10K for the year
ended December 31, 1990.
10.12 Stock Purchase Agreement and Assignment of Partnership Interest
dated May 4, 1992, by and between Granada Management Corporation
and Gannon Group, Inc., incorporated by reference to Exhibit
10.12 to the Partnership's Annual Report on Form 10K for the year
ended December 31, 1990.
10.13 Loan Agreement dated December 23, 1992 between Whiteford Foods
Venture, L.P. and The Fifth Third Bank of Western Ohio, N.A. for
a credit facility of $2,300,000, incorporated by reference to
Exhibit 10.13 to the Partnership's Annual Report on Form 10K for
the year ended December 31, 1992.
10.14 Letter of Agreement dated February 23, 1993 by and between
Greenaway Consultants, Inc. and Whiteford Foods Venture, L.P.,
proceeding for (i) the termination of the revolving credit
facility, (ii) the issuance of a term promissory note in the
amount of $750,000, (iii) the termination of the Services
Agreement between Whiteford Partners, L.P. and Greenaway
Consultants, Inc., and (iv) an agreement regarding a new Services
Agreement, incorporated by reference to Exhibit 10.14 to the
Partnership's Annual Report on Form 10K for the year ended
December 31, 1993.
10.15 Loan Agreement dated August 27, 1993 between Whiteford Foods
Venture, L.P. and PNC Bank, Ohio, N.A., incorporated by reference
to Exhibit 10.15 to the Partnership's Annual Report on Form 10K
for the year ended December 31, 1993.
10.16 Services Agreement dated October 1, 1993 between Whiteford Foods
Venture, L.P., Greenaway Consultant, Inc. and Albert D. Greenaway
to engage Greenaway Consultant, Inc., to perform management
services for the operation of Whiteford Foods Venture, L.P.,
incorporated by reference to Exhibit 10.16 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1993.
10.17 Loan Agreement dated October 1, 1993 between Whiteford Foods
Venture, L.P. and Greenaway Consultant, Inc. authorizing November
8, 1993 promissory note and certain security therefor,
incorporated by reference to Exhibit 10.17 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1993.
F - 11
<PAGE>
INDEX TO ATTACHED EXHIBITS (CONT.)
10.18 Promissory note dated November 8, 1993 between Greenaway
Consultant, Inc. and Whiteford Foods Venture, L.P., incorporated
by reference to Exhibit 10.18 to the Partnership's Annual Report
on Form 10K for the year ended December 31, 1993.
10.19 Credit agreement dated June 13, 1994 between Whiteford Foods
Venture, L.P. and PNC Bank, Ohio, National Association and Fifth
Third Bank of Western Ohio, incorporated by reference to Exhibit
10.19 to the Partnership's Annual Report on Form 10K for the year
ended December 31, 1994.
10.20 Construction loan agreement dated June 13, 1994 between Whiteford
Foods Venture, L.P. and PNC Bank, Ohio, National Association,
incorporated by reference to Exhibit 10.20 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1994.
10.21 Lease agreement dated December 15, 1994 between Whiteford Foods
Venture, L.P. and Star Bank, National Association, incorporated
by reference to Exhibit 10.21 to the Partnership's Annual Report
on Form 10K for the year ended December 31, 1994.
10.22 Term note B dated April 14, 1995, between Whiteford Foods
Venture, L.P. and PNC Bank, Ohio, National Association,
incorporated by reference to Exhibit 10.22 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.23 Note payable dated September 18, 1995, between Whiteford Foods
Venture, L.P. and PNC Bank, Ohio, National Association,
incorporated by reference to Exhibit 10.23 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.24 Second amendment to Revolving Note dated July 11, 1995,
incorporated by reference to Exhibit 10.24 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.25 Second amendment to Credit agreement dated July 11, 1995,
incorporated by reference to Exhibit 10.25 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.26 Third amendment to Credit agreement dated July 11, 1995,
incorporated by reference to Exhibit 10.26 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.27 Guarantee Compensation agreement dated September 18, 1995 between
Whiteford Foods Venture, L.P. and Albert D. Greenaway,
incorporated by reference to Exhibit 10.27 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.28 Mortgage granted to Albert D. Greenaway by Whiteford Foods
Venture, L.P., incorporated by reference to Exhibit 10.28 to the
Partnership's Annual Report on Form 10K for the year ended
December 31, 1995.
F - 12
<PAGE>
INDEX TO ATTACHED EXHIBITS (CONT.)
10.29 Mortgage granted to Albert D. Greenaway by Whiteford Foods
Venture, L.P., incorporated by reference to Exhibit 10.29 to the
Partnership's Annual Report on Form 10K for the year ended
December 31, 1995.
10.30 Security agreement dated September 18, 1995 between Whiteford
Foods Venture, L.P. and Albert D. Greenaway, incorporated by
reference to Exhibit 10.30 to the Partnership's Annual Report on
Form 10K for the year ended December 31, 1995.
10.31 Fifth Amendment to Credit Agreement dated May 9, 1996.
10.32 Lease agreement dated October 8, 1996 between Whiteford Foods
Venture, L.P. and Fifth Third Leasing.
10.33 Lease agreement dated November 1, 1996 between Whiteford Foods
Venture, L.P. and PNC Leasing Corporation.
13. 1990 Annual Report to Limited Partners, incorporated by reference to
Exhibit 13 to the Partnership's Annual Report on Form 10K for the year
ended December 31, 1990.
</TABLE>
F - 13
<PAGE>
Exhibit 10.31
FIFTH AMENDMENT AND WAIVER AGREEMENT
------------------------------------
WHITEFORD FOODS VENTURE, L.P., a Texas limited partnership with an address
at 770 N. Center Street, Versailles, Ohio 45380 (the "Borrower"), PNC BANK,
OHIO, NATIONAL ASSOCIATION, a national banking association (the "Agent"), THE
FIFTH THIRD BANK OF WESTERN OHIO, an Ohio state banking corporation (previously
incorrectly identified as a national banking association) with offices located
at 123 Market Street, Piqua, Ohio 45356, and PNC BANK, OHIO, NATIONAL
ASSOCIATION, a national banking association with offices located at 201 East
Fifth Street, Cincinnati, Ohio 45202 (each individually a "Lender" and
collectively "Lenders"), agree as follows, as of May 9, 1996 (the "Effective
Date"):
1. RECITALS.
1.1 The Borrower, the Agent and the Lenders entered into a Credit
Agreement dated June 13, 1994, which was amended by an Amendment to Credit
Agreement dated March 31, 1995, a Second Amendment to Credit Agreement dated
April 20, 1995, a Third Amendment to Credit Agreement dated July 11, 1995 and a
Fourth Amendment to Credit Agreement dated November 7, 1995 (collectively, the
"Credit Agreement"). Capitalized terms used herein shall have the meanings
given such terms in the Credit Agreement.
1.2 The Borrower, the Agent and the Lenders desire to amend the
Credit Agreement.
2. AMENDMENT.
2.1 Section 2.1(c) shall be amended to delete the first sentence
thereof and to insert the following in its place:
"All Revolving Loans outstanding from time to time shall bear
interest per annum, at a rate equal to Prime Rate of Agent in
effect from time to time plus a margin, as set forth below, based
upon the Borrower's Indebtedness to Tangible Net Worth Ratio, as
calculated on a monthly basis as of the first of each month, as
follows:
LEVERAGE RATIO INTEREST RATIO
-------------- --------------
greater than 2:25 to 1:00 1.0% plus the Prime Rate
2:00 to 1:00 but not greater than .75% plus the Prime Rate
2:25 to 1:00
less than 2:00 to 1:00 .50% plus the Prime Rate
<PAGE>
Adjustments to the interest rate shall be made by Agent on the first
of each month following receipt by Agent of the Borrower's monthly
financial statements required to be provided by Section 4.11 hereof."
2.2 Section 2.1(e) shall be amended to delete "May 1, 1996" from the
first sentence thereof and to insert "July 1, 1997" in its place.
2.3 Section 4.12 is deleted in its entirety and the following
language inserted in its place:
"4.12. CASH FLOW COVERAGE RATIO. At the end of each fiscal quarter,
the ratio of the Borrower's Cash Flow to Borrower's Current Maturities of Long
Term Debt plus interest expense plus dividends paid shall at all times exceed
1.25:1 (as calculated on a twelve month moving averaging basis, first tested on
December 31, 1994, and thereafter tested monthly on a trailing twelve month
basis)."
2.4 Section 4.13, Current Ratio, is amended to delete the Time
Periods and Minimum Ratios as stated therein and the following is inserted in
their place:
"TIME PERIOD MINIMUM RATIO
------------ -------------
January 1, 1996 through 0.80:1
and including June 30, 1996
July 1, 1996 through and 0.85:1
including September 30, 1996
October 1, 1996 through and 0.90:1
including December 31, 1996
January 1, 1997 through and 1.00:1
including December 31, 1997
January 1, 1998 and thereafter 1.10:1"
2.5 Section 4.14 is hereby deleted in its entirety and the following
inserted in its place:
"4.14 INDEBTEDNESS TO TANGIBLE NET WORTH. At the end of each fiscal month
of Borrower during the following time periods, the ratios of Borrower's
outstanding Indebtedness minus Subordinated Indebtedness to the Borrower's
Tangible Net Worth plus Subordinated Indebtedness minus intangible assets,
all calculated on a consolidated basis, shall not exceed the following:
2
<PAGE>
TIME PERIOD MAXIMUM RATIO
----------- -------------
January 1, 1996 through and including 2.4:1
December 31, 1996
January 1, 1997 through and including 2.1:1
December 31, 1997
January 1, 1998 and thereafter 1.9:1"
2.6 Section 4.15 is hereby deleted in its entirety and the following
inserted in its place:
"4.15 MINIMUM TANGIBLE NET WORTH. At the end of each fiscal month of
Borrower during the following time periods, Borrower shall maintain a
minimum Tangible Net Worth plus Subordinated Indebtedness of at least
the following amounts:
TIME PERIOD MINIMUM AMOUNT
----------- --------------
January 1, 1996 through and including $5,700,000.00
June 30, 1996
July 1, 1996 through and including $6,000,000.00
December 31, 1996
January 1, 1997 through and including $6,400,000.00
December 31, 1997
January 1, 1998 and thereafter $6,800,000.00"
2.7 Section 4.23 is amended to delete "$900,000.00" from the fifth
line thereof and to insert "$750,000.00" in its place.
3. WAIVERS.
3.1 The Lender waives any defaults under Sections 4.12, 4.13, 4.14
and 4.15 occurring prior to the Effective Date.
3.2 The waivers set forth in Section 3.1 above will relate only to
the specific matters covered by such Sections and in no event will the Lender be
under any obligation to provide additional waivers with regard to those items or
any other provisions of this Credit Agreement or the other Loan Documents.
3
<PAGE>
4. REPRESENTATIONS AND WARRANTIES. To induce the Lender to enter into
this Amendment to Credit Agreement (this "Amendment"), the Borrower represents
and warrants as follows:
4.1 The representations and warranties of the Borrower contained in
Section 3 of the Credit Agreement are deemed to have been made again on and as
of the date of execution of this Amendment and will apply to this Amendment and
the Amendments to Term and Cognovit Notes (the "Note Amendments") between the
Borrower and the Lenders of even date herewith.
4.2 No Event of Default (as such term is defined in Section 8 of the
Credit Agreement) or event or condition which with the lapse of time or giving
of notice or both would constitute an Event of Default exists on the date
hereof.
4.3 The person executing this Amendment and Note Amendments is a duly
elected and acting officer of the Borrower and is duly authorized by the Board
of Directors of the Borrower to execute and deliver this Amendment and the Note
Amendments on behalf of the Borrower.
5. CONDITIONS. The Agent's and Lenders' consent to this Amendment is
subject to the following conditions.
5.1 The Borrower shall have executed and delivered to the Lenders the
Note Amendments.
5.2 The Lender shall have been furnished copies, certified by the
Secretary or Assistant Secretary of the Borrower, of resolutions of the Board of
Directors of the Borrower authorizing the execution of this Amendment, the
Exhibits hereto and all other documents executed in connection herewith.
5.3 The representations and warranties of the Borrower in Section 4
herein shall be true.
6. CLAIMS AND RELEASE OF CLAIMS BY THE BORROWER AND THE GUARANTORS. The
Borrower and each of the Guarantors represent and warrant that neither the
Borrower nor any of the Guarantors has any claims, counterclaims, setoffs,
actions or causes of actions, damages or liabilities of any kind or nature
whatsoever whether at law or in equity, in contract or in tort, whether now
accrued or hereafter maturing (collectively, "Claims") against the Lender, its
direct or indirect parent corporation or any direct or indirect affiliates of
such parent corporation, or any of the forgeoing's respective directors,
officers, employees, agents, attorneys and legal representatives, or the heirs,
administrators, successors or assigns of any of them (collectively, "Lender
Parties") that directly or indirectly arise out of, are based upon or are in any
manner connected with any Prior Related Event. As an inducement to the Lender
4
<PAGE>
to enter into this Agreement, the Borrower and each of the Guarantors jointly
and severally, on behalf of themselves, and all of their respective heirs,
administrators, successors and assigns hereby knowingly and voluntarily release
and discharge all Lender Parties from any and all Claims, whether known or
unknown, that directly or indirectly arise out of, are based upon or are in any
manner connected with any Prior Related Event. As used herein, the term "Prior
Related Event" means any transaction, event, circumstance, action, failure to
act, occurrence of any sort or type, whether known or unknown, which occurred,
existed, was taken, permitted or begun at any time prior to the Effective Date
or occurred, existed, was taken, was permitted or begun in accordance with,
pursuant to or by virtue of any of the terms of the Loan Agreement, the Note or
any documents executed in connection with the Loan Agreement or which was
related to or connected in any manner, directly or indirectly to the Loan.
7. GENERAL.
7.1 Except as expressly modified herein, the Credit Agreement, as
amended, is and remains in full force and effect.
7.2 Except as provided for in Section 3 above, nothing contained
herein will be construed as waiving any default or Event of Default under the
Credit Agreement or will affect or impair any right, power or remedy of the
Lender under or with respect to the Loan, the Credit Agreement, as amended, the
Term and Cognovit Notes, as amended or any agreement or instrument guaranteeing,
securing or otherwise relating to any of the Loan.
7.3 This Amendment will be binding upon and inure to the benefit of
the Borrower and the Lenders and their respective successors and assigns.
7.4 All representations, warranties and covenants made by the
Borrower herein will survive the execution and delivery of this Amendment.
7.5 This Amendment will in all respects be governed and construed in
accordance with the laws of the State of Ohio.
5
<PAGE>
Signed at Versailles, OH as of the Effective Date.
WHITEFORD FOODS VENTURE, L.P.
a Texas limited partnership
By: G/W FOODS, INC., general partner,
a Texas corporation
By: /s/ Albert D. Greenaway
----------------------------
Print Name: Albert D. Greenaway
Title: President
PNC BANK, OHIO, NATIONAL ASSOCIATION
a national banking association
By: /s/ Timothy E. Reilly
- ---------------------------------
Print Name: Timothy E. Reilly
Title: Vice President
THE FIFTH THIRD BANK OF WESTERN OHIO
an Ohio state banking corporation
By: /s/ Ronald T. Senci
- ----------------------------------
Print Name: Ronald T. Senci
Title: Senior Vice President
PNC BANK, OHIO, NATIONAL ASSOCIATION
a national banking association
By: /s/ Timothy E. Reilly
- ------------------------------------
Print Name: Timothy E. Reilly
Title: Vice President
6
<PAGE>
STATE OF OHIO )
)SS:
COUNTY OF DARKE)
The foregoing instrument was acknowledged before me this 9th day of May,
1996 by Albert D. Greenaway, President of G/W Foods, Inc., a Texas corporation,
on behalf of the corporation as general partner of Whiteford Foods Venture,
L.P., a Texas limited partnership.
/s/ Sharon K. Henry
-----------------------------
Notary Public Sharon K. Henry
NOTARY PUBLIC, STATE OF OHIO
My Commission Expires May 4, 2000
Recorded in Darke County
STATE OF OHIO )
)SS:
COUNTY OF DARKE)
The foregoing instrument was acknowledged before me this 9th day of May,
1996 by Ronald T. Senci, Senior Vice President of The Fifth Third Bank of
Western Ohio, an Ohio state banking corporation, on behalf of the banking
corporation.
/s/ Sharon K. Henry
-----------------------------
Notary Public Sharon K. Henry
NOTARY PUBLIC, STATE OF OHIO
My Commission Expires May 4, 2000
Recorded in Darke County
STATE OF OHIO )
)SS:
COUNTY OF DARKE)
The foregoing instrument was acknowledged before me this 9th day of May,
1996 by Timothy Reilly, Vice President of PNC Bank, Ohio, National Association,
a national banking association, on behalf of the association.
/s/ Sharon K. Henry
-----------------------------
Notary Public Sharon K. Henry
NOTARY PUBLIC, STATE OF OHIO
My Commission Expires May 4, 2000
Recorded in Darke County
7
<PAGE>
STATE OF OHIO )
)SS:
COUNTY OF DARKE)
The foregoing instrument was acknowledged before me this 9th day of May,
1996 by Timothy Reilly, Vice President of PNC Bank, Ohio, National Association,
a national banking association, on behalf of the association as Agent.
/s/ Sharon K. Henry
-----------------------------
Notary Public Sharon K. Henry
NOTARY PUBLIC, STATE OF OHIO
My Commission Expires May 4, 2000
Recorded in Darke County
8
<PAGE>
Exhibit 10.32
SCHEDULE A
Schedule forming part of a Lease between The Fifth Third Bank of Western Ohio,
Lessor, and Whiteford Foods Venture, L.P., Lessee, dated April 10, 1995.
A. EQUIPMENT LEASED:
1 - Metal Detector S/N 89330 15313 4849
1 - Panasonic DBS 96 Phone System
1 - Formax 26 Machine S/N 24C---58
EQUIPMENT COST: $157,815.33 + tax
B. TERM: Unless sooner terminated as set forth in the Lease, the term of the
Lease respecting each item of equipment listed on this Schedule shall
commence on October 8, 1996 and shall expire on September 8, 2001.
C. RENT: As rent for the equipment, Lessee shall pay Lessor the total rentals
payable of $171,586.20 except as otherwise provided in the Lease or in this
Schedule. Rent shall be payable in 60 installments as follows: 60 rentals
in the amount of $2,859.77 per month plus sales/use tax, if applicable,
with first payment commencing on October 8, 1996 and the final rental due
and payable on or before the expiration or sooner termination of this
Lease.
D. LOCATION: The above described equipment shall be located at 770 North
Center Street, Versailles, Ohio 45380.
E. DEPRECIABLE LIFE: The Lessor has assumed a depreciable life of five (5)
years in computing the rents listed above.
F. SPECIAL TERMS AND CONDITIONS: Addendum I, Addendum II and Equipment Lease
Rider Return Provisions.
WHITEFORD FOODS VENTURE, L.P. THE FIFTH THIRD BANK OF WESTERN OHIO
Lessee Lessor
By: /s/ A. Greenaway By: /s/ Ronald T. Senci
---------------------------- ------------------------------
Title: President Title: Senior Vice President
Date: October 8, 1996
<PAGE>
ADDENDUM I
THIS ADDENDUM is intended to be attached to and the terms hereof are
incorporated into that certain Lease Agreement dated April 10, 1995, and
Schedule A thereto, dated October 8, 1996 (the "Schedule"), between Whiteford
Foods Venture, L.P. ("Lessee") and The Fifth Third Bank of Western Ohio
("Lessor").
END OF BASIC TERM OPTIONS: At the end of the initial term of the Schedule (the
"Basic Term Expiration Date"), so long as no Event of Default has occurred and
the Lease has not been earlier terminated, Lessee shall exercise one of the
following options:
(a) Extension Option. Lessee may extend the term of the Lease beyond the
Basic Term Expiration Date with respect to all, but not less than all, of the
Equipment covered by this Addendum for eight months ("Secondary Term") and
Lessee shall pay rent of $2,988.77 per month of the Secondary Term ("Secondary
Term Rent") in the same manner as the initial term.
(b) Purchase Option. Upon receipt of written notice to Lessor at least
ninety (90) but no more than one hundred eighty (180) days prior to the Basic
Term Expiration Date, Lessee may purchase all, but not less than all, of the
Equipment covered by the Schedule on an "AS IS WHERE IS BASIS" for a purchase
price (the "Purchase Price") to be paid to Lessor in an amount equal to the
greater of (i) fifteen percent (15%) of the Invoice Cost (plus all applicable
taxes) or (ii) the then Fair Market Value of the Equipment (plus all applicable
taxes). On the Basic Term Expiration Date, Lessor shall receive in cash the
full Purchase Price (plus all applicable taxes) together with any Rent or other
sums then due under the Lease on such date. Lessee shall be deemed to have
waived this option if it fails to timely provide Lessor with the required
written notice of its election to exercise the same within fifteen (15) days
after Fair Market Value is determined (by agreement or appraisal). If Lessee
does not elect to purchase the Equipment then it shall be deemed to elect to
extend the Extension Option.
END OF SECONDARY TERM OPTIONS: At the end of the Secondary Term, so long as no
Event of Default has occurred, Lessee shall exercise one of the following
options:
(a) So long as no Event of Default has occurred and the Lease has not been
earlier terminated, Lessee may, at the expiration of the Secondary Term,
provided written notice has been given to Lessor at least ninety (90) days but
not more than one hundred eighty (180) days prior to the end of the Secondary
Term, purchase all, but not less than all, of the Equipment in this Schedule on
an "AS IS WHERE IS BASIS" for a purchase price (the "Purchase Price") to be paid
in cash in an amount equal to the then Fair Market Value (plus all applicable
taxes); or
(b) Lessee may return the Equipment in accordance with Section of the Lease
entitled "Return of Equipment"; or
(c) Lessee may renew the Lease at a term and rate to be negotiated by the
parties based on the Fair Market Value of the Equipment.
Notwithstanding any election of Lessee to purchase, the provisions of this Lease
shall continue in full force and until the passage of ownership of the Equipment
upon the date of purchase. On the date of purchase, Lessor shall deliver to
Lessee a bill of sale transferring and assigning to Lessee without recourse or
warranty, except (with respect to the status of title conveyed) in respect of
Lessor's acts, all of Lessor's rights, title and interest in and to the
Equipment. Lessor shall not be required to make and may specifically disclaim
any representation or warranty as to the condition of the Equipment or any other
matters.
WHITEFORD FOODS VENTURE, L.P. THE FIFTH THIRD BANK OF WESTERN OHIO
Lessee Lessor
By: /s/ A. Greenaway By: /s/ Ronald T. Senci
-------------------------- --------------------------------
Title: President Title: Senior Vice President
Date: 10/9/96
<PAGE>
ADDENDUM II
TO SCHEDULE A DATED October 8, 1996
BETWEEN THE FIFTH THIRD BANK OF WESTERN OHIO, LESSOR and
Whiteford Foods Venture, L.P., LESSEE
For good and valuable consideration, the parties hereto agree to modify and
amend the above referenced Master Lease Agreement as follows:
The Lessee shall have the option to choose the final appraiser for equipment
evaluation at Lease expiration.
WHITEFORD FOODS VENTURE, L.P. THE FIFTH THIRD BANK OF WESTERN OHIO
Lessee Lessor
By: /s/ A. Greenaway By: /s/ Ronald T. Senci
------------------------ ------------------------------
Title: President Title: Senior Vice President
<PAGE>
EQUIPMENT LEASE RIDER
RETURN PROVISIONS
This Equipment Lease Rider shall be attached to and the provisions herein shall
be incorporated into the terms and provisions of the Equipment Lease dated April
10, 1995, between The Fifth Third Bank of Western Ohio and WHITEFORD FOODS
VENTURE, L.P. and shall be specifically applicable to Equipment described on
Schedule A attached thereto.
Lessee and Lessor hereby agree as follows:
1. MAINTENANCE. During the term of the Lease, the Equipment must be
operated in accordance with the manufacturer's specifications and in a manner
which would not limit any manufacturer's warranty thereon. All components,
fuels and fluids installed on or used in connection with the Equipment must meet
the manufacturer's minimum standards.
2. NOTIFICATION OF RETURN.
(a) At the expiration of the term of the Lease or any renewal term
thereof, or earlier termination thereof, Lessee shall return all, but not less
than all, of the Equipment.
(b) Lessee shall provide Lessor with at least 180 days prior written
notice of its intent to return the Equipment ("Notice of Return").
(c) Such Notice of Return will contain a detailed inventory of the
Equipment and all components thereof, including a listing of model and serial
number of all components comprising the Equipment.
3. INSPECTION. At any time after receipt of the Notice of Return, Lessor
shall have the right during normal business hours to inspect the Equipment.
Lessee shall cooperate with Lessor in scheduling such inspection and in making
the Equipment available for inspection by Lessor or its agents.
4. LOCATION. On or before the expiration date of the Lease, or any
renewal term thereof, Lessee shall return the Equipment, at Lessee's cost and
expense, to any location designated by Lessor.
5. RECORDS. Upon delivery of each item of Equipment, Lessee shall
deliver to Lessor all maintenance records and all other similar documents
pertaining to the Equipment.
6. TRANSPORTATION. The Equipment will be transported in accordance with
the manufacturer's recommendations and applicable government laws, rules and
regulations.
7. PACKING. The Equipment shall be deinstalled and packed by or under
the supervision of the manufacturer or such other person(s) designated by
Lessor, all in accordance with the manufacturer's recommendations.
8. REPORT. At least sixty (60) days prior to the scheduled date of
return and redelivery, Lessee shall, at its own cost and expense, provide Lessor
with the report of a certified dealer or manufacturer of the Equipment, or such
other qualified party reasonably acceptable to Lessor, stating that such person
has performed an inspection and testing of the Equipment and that such Equipment
is in the condition required by the Lease.
9. CONDITION OF THE EQUIPMENT. Upon delivery of each item of Equipment,
the Equipment shall be:
(a) cleaned and treated with respect to rust, corrosion and
appearance in accordance with manufacturer's recommendations and consistent
with the best practices of dealers in used Equipment similar to the
Equipment and shall be free of all advertising and insignia placed thereon
by Lessee;
(b) mechanically and structurally sound, capable of performing the
functions for which it was originally designed and able to operate, lift,
transport or otherwise move in all directions as designed with no loss of power
and no excessive emission of exhaust at ignition or starting of the machinery.
(c) accompanied by a detailed inventory of the Equipment (including
the model and serial number of each major component thereof), including,
without limitation, all internal circuit boards and software features;
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<PAGE>
(d) complete with a current set of all manuals, blue prints, process flow
diagrams, Equipment configuration diagrams, maintenance records and other data
reasonably requested by Lessor concerning the configuration and operation of the
Equipment.
(e) accompanied by a certification of the manufacturer or of a maintenance
provider acceptable to Lessor that the Equipment (a) has been tested and is
operational in accordance with manufacturer's specifications (together with a
report detailing the condition of the Equipment, the results of such test(s) and
inspection(s) and (b) that the Equipment qualifies for the manufacture's used
Equipment maintenance program, if applicable.
Lessor and Lessee have executed this Rider to Lease on the 8th day of October,
1996.
LESSEE: WHITEFORD FOODS VENTURE, L.P. LESSOR: THE FIFTH THIRD BANK
OF WESTERN OHIO
By: /s/ A. Greenaway By: /s/ Ronald T. Senci
--------------------------- ------------------------
Its: President Its: Senior Vice President
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<PAGE>
BILL OF SALE
In consideration of the sum of one hundred and fifty-seven thousand, eight
hundred and fifteen dollars and thirty-three cents ($157,815.33), Whiteford
Foods Venture, L.P., Lessee, has bargained and sold, and by these presents does
hereby grant and convey unto The Fifth Third Bank of Western Ohio, its
successors and assigns, the personal property described as follows:
1 - Metal Detector S/N 89330 15313 4849
1 - Panasonic DBS 96 Phone System
1 - Formax 26 Machine S/N 24C---58
EQUIPMENT COST: $157,815.33
To have and to hold the same forever. Whiteford Foods Venture, L.P. covenants
and agrees to warrant and defend the sale of the personal property hereby sold
against all and every person and persons whomsoever.
WITNESS: WHITEFORD FOODS VENTURE, L.P.
Lessee
/s/ David L. Penfield By: /s/ A. Greenaway
- ------------------------ -------------------------
Title: President
<PAGE>
CERTIFICATE OF ACCEPTANCE
The undersigned being duly authorized by Whiteford Foods Venture, L.P., located
at 770 North Center Street, Versailles, Ohio 45380 (hereinafter referred to as
"Lessee"), does hereby state that he has inspected the Equipment delivered
pursuant to a certain Equipment Lease between Lessee and The Fifth Third Bank of
Western Ohio, 123 Market Street, Piqua, Ohio 45356 (hereinafter referred to as
"Lessor"), dated April 10, 1995, and Schedule A thereto dated October 8, 1996,
and that the Equipment specified in the Equipment Lease has been delivered and
installed and is in good working order and complies with the specifications of
the Purchase Order.
Nothing herein shall affect the rights which Lessor or Lessee may have against
the seller of said Equipment arising out of the sale, delivery, installation, or
use thereof.
This Certificate of Acceptance covers the following items of Equipment:
1 - Metal Detector S/N 89330 15313 4849
1 - Panasonic DBS 96 Phone System
1 - Formax 26 Machine S/N 24C --- 58
WHITEFORD FOODS VENTURE, L.P.
Lessee
By: /s/ A. Greenaway
- -------------------------
Title: President
Date: 10/7/96
<PAGE>
Exhibit 10.33
PNC LEASING CORP PNCBANK
MASTER LEASE AGREEMENT LEASE NO. 931
This Master Lease Agreement ("Lease") is made this 11th day of OCTOBER, 1996, by
and between PNC LEASING CORP (the "Lessor"), a subsidiary of PNC Bank, National
Association (the "Bank"), with an address at Two PNC Plaza, 13th Floor, 620
Liberty Avenue, Pittsburgh, Pennsylvania 15265, and WHITEFORD FOODS VENTURE,
L.P. (the "Lessee") with its address at 770 NORTH CENTER STREET, VERSAILLES,
OHIO 45380.
1. LEASE AGREEMENT. Lessor hereby leases to Lessee, and Lessee hereby rents
from Lessor, all the machinery, equipment and other personal property
(individually an "Item of Equipment" and collectively the "Equipment") described
in Schedules of Leased Equipment which are or may from time to time hereafter be
executed by Lessor and Lessee and attached hereto or incorporated herein by
reference ("Schedules") upon the terms and conditions set forth in this Lease.
When used herein the term "Equipment" shall be deemed to refer to the Equipment
described in a specific Schedule, unless the context clearly indicates
otherwise. The invalidation, fulfillment, waiver, termination, or other
disposition of any rights or obligations of either the Lessee or Lessor, or both
of them, arising from the execution of this Lease in conjunction with any
Schedule shall not affect the status of the rights and/or obligations with
either or both of the parties arising from the execution of this Lease in
conjunction with any other Schedule, so long as the Lessee has not defaulted
under the terms and conditions of this Lease or any Schedule. In the event of
any such default by Lessee, Lessor may declare this Lease and any Schedule to be
in default hereunder and the Lessor may proceed with its remedies against the
Lessee in accordance with paragraph 23 herein, with respect to any particular
Schedule or all Schedules. An executed counterpart of this Lease (including any
Schedules, supplements, amendments, addenda or riders thereto) or a photocopy
thereof, together with an executed original of any numbered Schedule marked
"Lessor", shall be the original "lease" for the Equipment described in such
Schedule and together they shall constitute a separate and enforceable lease.
All other executed counterparts of such numbered Schedule shall be marked and
considered a "Duplicate". To the extent this Lease constitutes chattel paper,
as that term is defined in the Uniform Commercial Code as adopted and in effect
in the Commonwealth of Pennsylvania ("UCC"), no security interest in the Lease
may be created through the transfer of possession of any counterpart other than
the Lessor copy of the numbered Schedule.
2. TERM. The obligations of the parties under this Lease commence upon the
written acceptance hereof by Lessor and shall end upon full performance and
observance of each and every term, condition and covenant set forth in this
Lease and any extensions hereof. The rental term for Equipment listed in each
Schedule shall commence on the date indicated on such Schedule and shall
terminate on the last day of the term in such Schedule. Any interim rental term
shall also be set forth in any such Schedule as appropriate.
3. RENT. The rent, including interim rental payments, for the Equipment
described in each Schedule shall be the amount stated in such Schedule. RENT IS
AN ABSOLUTE OBLIGATION OF LESSEE DUE UPON THE INCEPTION OF EACH BASE OR INTERIM
RENTAL TERM AND PAYABLE AS SPECIFIED IN EACH APPLICABLE SCHEDULE IRRESPECTIVE OF
ANY CLAIMS, DEMANDS, SET-OFFS, ACTIONS, SUITS OR PROCEEDINGS THAT LESSEE MAY
HAVE OR ASSERT AGAINST LESSOR OR ANY VENDOR OF EQUIPMENT. Rent and interim rent
shall be payable to Lessor at P.O. Box 640306, Pittsburgh, PA 15264-0306, or at
such other place as Lessor or its assigns may designate in writing to Lessee
from time to time.
4. DELINQUENT RENT PENALTY. Each rent or interim rent installment or other
amount due hereunder not paid when due shall bear interest from such due date
until paid at the highest contractual rate enforceable against Lessee under
applicable law but never at a rate higher than five percent (5%) of the amount
due. Such delinquent interest shall be payable upon demand. Interest shall
accrue at said rate whether or not judgment hereon has been entered.
5. DELIVERY AND INSTALLATION. Lessee will select the type, quantity and
supplier of the Equipment, and in reliance thereon, the Equipment will then be
ordered by Lessor from such supplier, or Lessor may at its option elect to
accept from Lessee an assignment of any existing purchase order. Lessor shall
not be liable for loss or damage occasioned by any cause, circumstance or event
of whatsoever nature, including, but not limited to, failure of or delay in
delivery, delivery to wrong location, delivery of improper equipment or property
other than the Equipment, defects in or damage to the Equipment, governmental
regulations, strikes, embargoes or other causes, circumstances or events whether
of a like or unlike nature. In the event that the cost of any Item the
Equipment differs from the price set forth in the purchase order therefor, the
monthly rental shall be changed accordingly to fully reflect any such
difference.
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<PAGE>
6. WARRANTY OF LESSEE'S QUIET POSSESSION. Lessor warrants and covenants that
so long as Lessee faithfully performs this Lease, Lessee, subject to the
disclaimer of warranties set forth immediately below, may quietly possess and
use the Equipment without interference by the Lessor, or by any party claiming
by or through the Lessor.
7. DISCLAIMER OF WARRANTIES. THE LESSEE ACKNOWLEDGES AND AGREES THAT (i)
THE EQUIPMENT AND EACH PART THEREOF IS OF A SIZE, DESIGN, CAPACITY, AND
MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE LESSEE, (ii) THE LESSEE IS
SATISFIED THAT THE EQUIPMENT AND EACH PART THEREOF IS SUITABLE FOR ITS
RESPECTIVE PURPOSE, (iii) THE LESSOR IS NOT A MERCHANT, MANUFACTURER OR A
DEALER IN PROPERTY OF SUCH KIND, (iv) THE EQUIPMENT AND EACH PART THEREOF IS
LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND GOVERNMENTAL REGULATIONS
NOW IN EFFECT OR HEREAFTER ADOPTED AND IN THE STATE AND CONDITION WHEN THE
SAME FIRST BECAME SUBJECT TO THIS LEASE, WITHOUT REPRESENTATION OR WARRANTY
OF ANY KIND BY THE LESSOR, AND (v) THE LESSOR LEASES THE EQUIPMENT, AS IS,
WITHOUT WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED, AS TO (A) THE
CONDITION, FITNESS, DESIGN, QUALITY, CAPACITY, WORKMANSHIP, OPERATION, AND
MERCHANTABILITY OF THE EQUIPMENT, (B) THE LESSOR'S TITLE THERETO, OR (C) ANY
OTHER MATTER WHATSOEVER, IT BEING AGREED THAT ALL SUCH RISKS, AS AMONG THE
LESSOR AND THE LESSEE, ARE TO BE BORNE BY THE LESSEE, AND THE BENEFITS OF ANY
AND ALL IMPLIED WARRANTIES AND REPRESENTATIONS OF LESSOR ARE HEREBY WAIVED BY
LESSEE. Lessor is not responsible or liable for any direct, indirect,
incidental, or consequential damage to, or loss resulting from, the
installation, operation, or use of the Equipment or any product manufactured
thereby. The Lessee's recourse for breach of any representation or warranty
of the vendor or supplier is limited to such vendor or supplier. Lessee will
be subrogated to Lessor's claims, if any, against the manufacturer or
supplier of the Equipment for breach of any warranty or representation and,
upon written request from Lessee, Lessor shall take all reasonable action
requested by Lessee to enforce any such warranty, express or implied, issued
on or applicable to any of the Equipment, which is enforceable by Lessor in
its own name, provided, however, that (a) Lessee is not in default under this
Lease and (b) Lessor shall not be obligated to resort to litigation to
enforce any such warranty unless Lessee shall pay all expenses in connection
therewith. NOTWITHSTANDING THE FOREGOING, LESSEE'S OBLIGATIONS TO PAY THE
RENTALS OR OTHERWISE UNDER THIS LEASE SHALL BE AND ARE ABSOLUTE AND
UNCONDITIONAL. All proceeds of any such warranty recovery from the
manufacturer or supplier of the Equipment shall first be used to repair the
affected Equipment.
8. NATURE OF EQUIPMENT. The Equipment shall remain personal property,
notwithstanding the manner in which it may be affixed to any real property.
Lessee shall obtain and cause to be recorded, where appropriate, at its own
expense, from each landlord, owner, mortgagee or any person having an
encumbrance or lien upon the real property where the Equipment is located, a
waiver of any lien, encumbrance or interest which such person might have or
hereafter obtain or claim with respect to the Equipment. Lessee, at its
expense, will protect and defend Lessor's title to the Equipment and will
otherwise take all action required to keep the Equipment free and clear of all
claims, levies, liens and encumbrances. Lessor assumes no liability and makes
no representation as to the treatment by Lessee of this Lease, the Equipment, or
the rental payments for financial accounting or tax purposes.
9. LESSOR'S RIGHT OF INSPECTION. Lessor, or its authorized agents, shall have
the right during normal business hours to enter upon the premises where the
Equipment is located (to the extent Lessee can permit) for the purpose of
inspection. Provided no Event of Default has occurred and is continuing, Lessor
shall provide Lessee prior notice of such inspection.
10. USE OF EQUIPMENT. Lessee represents that it is leasing the Equipment for a
business or commercial purpose and not for personal, family or household use.
Lessee must use the Equipment in a careful and proper manner in conformity with
(i) all statutes and regulations of each governmental authority having
jurisdiction over the Lessee and/or the Equipment and its use, and (ii) all
policies of insurance relating to the Equipment and/or its use. In addition,
Lessee shall not (i) use the Equipment in any manner that would impair the
applicability of manufacturer's warranties or render the Equipment unfit for its
originally intended use; nor (ii) permit anyone other than authorized and
competent personnel to operate the Equipment.
11. ALTERATIONS. Without the prior written consent of Lessor, Lessee shall
make no alterations, modifications or attachments to the Equipment which impair
the economic value, economic and useful life, or functional utility of the
Equipment. All alterations, modifications and attachments of whatsoever kind or
nature made to the Equipment must be removed without damaging the functional
capabilities or economic value of the affected Equipment upon the termination of
the Lease. Under no circumstances shall any such alteration, modification or
attachment be encumbered by Lessee or result in the creation of a mechanic's or
materialman's lien, excepting as may arise by operation of law pending payment
within ordinary business terms.
12. MAINTENANCE AND REPAIRS. At its expense Lessee shall maintain, operate,
repair and make all modifications to the Equipment in a manner consistent with
Lessee's general practice and in accordance with good industry practice,
manufacturer's
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<PAGE>
warranty requirements and specifications and Lessee's established operation,
maintenance and repair programs, without discrimination as to leased
equipment, so as to keep the Equipment in good working order, and so as to
comply with all applicable laws or applicable governmental actions and so as
not to incur liability (whether or not there is a lack of compliance) under
any environmental law or otherwise account for any release of, or exposure
to, any hazardous material. Lessor shall not be required to maintain, repair
or replace the Equipment or part thereto and Lessee hereby waives the right,
however arising, to (i) require Lessor to maintain, repair or replace any of
the Equipment or part thereto, or (ii) make repairs at the expense of the
Lessor pursuant to any applicable law at any time in effect. Lessor may
review Lessee's established operating procedures and maintenance records to
assure compliance with this section. Upon installation, title to replacement
parts shall pass to Lessor, and be deemed part of the Equipment.
13. RISK OF LOSS, DAMAGE AND THEFT.
(a) All risk of loss, damage, theft or destruction, partial or complete,
to the Equipment incurred or occasioned by any cause, circumstance or event of
whatever nature will be borne by Lessee from and after delivery of the Equipment
to a carrier FOB point of origin, whether the terms of shipment require or
authorize the Equipment to be shipped by carrier, to be delivered to Lessee's
place or places of business, or provide that Lessee accept possession of or
title to the Equipment at any other location. Lessee shall promptly notify
Lessor of any theft of or loss or damage to the Equipment.
(b) Neither total nor partial loss of use or possession of the Equipment
shall abate the rent.
(c) The Equipment shall be deemed subjected to total loss (i) if it has
disappeared regardless of the reason for disappearance or (ii) if it has
sustained physical damage and the estimated cost of repair exceeds 75% of its
fair market value on the date of damage. Lessee's duty to pay rent for the
Equipment subjected to total loss shall be discharged by paying to Lessor, on
demand, all accrued but unpaid rent for such Equipment as of the date of
disappearance or damage, plus the greater of: (i) Lessor's book value of the
Equipment, which shall be deemed to be the Equipment's cost as set forth in the
applicable Schedule minus straight-line depreciation based on recognized
physical life prorated to the date of disappearance or damage, or (ii) the fair
market value of the Equipment as of the date of disappearance or damage. The
amount of applicable insurance proceeds, if any, actually received by Lessor
shall be subtracted from the amount for which Lessee is liable under this
paragraph 13.
(d) Lessee shall cause the Equipment subjected to partial loss to be
restored to original capability. Lessor shall, upon receiving satisfactory
evidence of restoration, promptly pay to Lessee, or such other party as Lessee
shall direct, the proceeds of any insurance or compensation received by Lessor,
by reason of such partial loss.
(e) Lessor shall not be obligated to undertake the collection of any claim
against any person for either total or partial loss of the Equipment. After
Lessee discharges its obligations to Lessor under either paragraph 13(c) or
13(d) above, Lessee may, for Lessee's own account, proceed to recover from third
parties and shall be entitled to retain any amount recovered. Lessor shall
supply Lessee with any necessary assignment of claim.
14. INDEMNIFICATION
(a) NON-TAX LIABILITY. Lessee assumes liability for, and hereby agrees to
indemnify, protect and hold harmless, Lessor, its agents, servants, employees,
officers, successors and assigns (an "Indemnified Party") from and against any
and all liabilities, obligations, losses, damages, injuries, claims, demands,
penalties, actions, environmental hazards, incidence or risks, costs and
expenses, including reasonable attorney's fees, of whatsoever kind and nature,
arising out of (i) the manufacture, installation, use, condition (including, but
not limited to, latent and other defects and whether or not discoverable by
Lessee or Lessor), operation, ownership, selection, delivery, leasing, removal
or return of the Equipment, regardless of where, how and by whom operated, or
(ii) any failure on the part of Lessee to perform or comply with any covenant or
condition of this Lease.
(b) DIRECT TAX COSTS. Lessee agrees to indemnify, protect, and hold
harmless each Indemnified Party, from and against any and all taxes, license
fees, assessments and other governmental charges, fees, fines or penalties of
whatsoever kind or character and by whomsoever payable, which are levied,
assessed, imposed or incurred during the lease term, (i) on or relating to the
Equipment, including any tax on the sale, ownership, use, leasing, shipment,
transportation, delivery or operation thereof, (ii) on the exercise of any
option, election or performance of any obligation by the Lessee hereunder, (iii)
of the kind generally referred to in items (i) and (ii) above which may remain
unpaid as of the date of delivery of the Equipment to the Lessee irrespective of
when the same may have been levied, assessed, imposed or incurred, and (iv) by
reason of all gross receipts and like taxes on or measured by rents payable
hereunder levied by any state or local taxing authority having jurisdiction
where the Equipment is located. The Lessee agrees to comply with all state and
local laws requiring the filing of ad valorem tax returns relating to the
Equipment. Any statements for such taxes received by the Lessor shall be
promptly forwarded to the Lessee. This subparagraph shall not be deemed to
obligate the Lessee to pay (i) any taxes, fees, assessments and charges which
may have been included in the Lessor's cost of the Equipment as set forth in
Schedule(s) hereto, or (ii) any income or like taxes against the Lessor on or
measured by the net income from the rents payable hereunder. The Lessee shall
not be obligated to pay any amount under this subparagraph so long as it shall,
at its expense and in good faith and by appropriate proceedings, contest the
validity or the amount thereof unless such contest would adversely affect the
title of the Lessor to the Equipment or would subject the Equipment to
forfeiture or sale. The Lessee agrees to indemnify each Indemnified Party
against any loss, claim, demand and expense including legal expense resulting
from such nonpayment or contest.
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<PAGE>
(c) INDEMNITY PAYMENT. The amount payable pursuant to subparagraphs 14(a)
and 14(b) shall be payable upon demand of the Lessor accompanied by a statement
describing in reasonable detail such loss, liability, injury, claim, expense or
tax and setting forth the computation of the amount so payable.
(d) SURVIVAL. The indemnities and assumptions of liabilities and
obligations provided for in this paragraph 14 shall continue in full force and
effect notwithstanding the expiration or other termination of this Lease.
15. LESSEE'S ASSIGNMENT. Without the prior written consent of the Lessor,
Lessee shall not assign, bail, sublease, hypothecate, transfer or dispose of the
Equipment or any interest in this Lease nor impair the Lessor's title to the
Equipment. Lessee shall not assign this Lease, nor shall this Lease or any
rights under this Lease or in the Equipment inure to the benefit of any trustee
in bankruptcy, receiver, creditor, or other successor of Lessee whether by
operation of law or otherwise.
16. LESSOR'S ASSIGNMENT. All rights of Lessor hereunder, in the rent and in
the Equipment may be assigned, pledged, mortgaged, transferred, or otherwise
disposed of, either in whole or in part, without notice to Lessee. No such
assignee shall be obligated to perform any duty, covenant, or condition required
to be performed by Lessor under the terms of this Lease unless such assignee
expressly assumes such obligations. Lessor shall remain liable to Lessee
hereunder to perform such duty, covenant, and condition unless such assignee
expressly assumes Lessor's obligations, in which event Lessee hereby releases
Lessor from such obligations. Such assignee shall have all rights, powers and
remedies given to Lessor by this Lease, and shall be named as lender loss payee
or co-insured under all policies of insurance maintained pursuant to paragraph
17 hereof. If Lessor assigns this Lease or the monies due or to become due
hereunder or any other interest herein, Lessee agrees not to assert against
Lessor's assignee any defense, set-off, recoupment, claim or counterclaim which
Lessee may have against Lessor, whether arising under this Lease or any other
transaction between Lessor and Lessee. Subject to paragraph 15 hereof and this
paragraph 16, this Lease inures to the benefit of, and is binding upon, the
heirs, legatees, personal representatives, successors and assigns of the parties
hereto.
17. INSURANCE. Lessee will at its own expense insure the Equipment in
compliance with the terms and conditions of the Schedule, in form and in an
amount satisfactory to Lessor with insurance carriers approved by Lessor. The
proceeds of any insurance claim due to the theft or loss of or damage to the
Equipment shall be applied as provided in paragraph 13 hereof. In addition to
the compliance with the terms and conditions of the Schedule and the other
terms and conditions of this paragraph 17, the Lessee shall comply with the
following conditions:
(a) Lessee, prior to the inception of the term, shall deliver to Lessor
all required policies of insurance or, in the alternative, other proper evidence
of insurance, which shall be sufficiently detailed to advise Lessor of all types
of coverage and inclusions;
(b) Lessee shall cause each insurer to agree by endorsement to the
policies that each insurer will give at minimum thirty (30) days' written notice
to Lessor before any policy will be altered or cancelled for any reason,
including, without limitation, failure of the Lessee to pay premiums;
(c) All coverage must be in effect upon delivery, or when Lessee assumes
the risk of loss, whichever is earlier, and will provide coverage without
geographic limitation;
(d) All policies must provide that the Lessor is an additional insured for
all aspects of general liability insurance, and is lender loss payee for all
aspects of insurance relating to the theft or loss of or damage to the
Equipment;
(e) Lessee will furnish renewal policies or renewal evidence of insurance
listing Lessor as an additional insured and lender loss payee, as required by
this Lease, no later than thirty (30) days prior to the expiration of any
insurance required hereby.
18. ADDITIONAL DOCUMENTS. If Lessor shall so request, Lessee shall execute and
deliver to Lessor such documents, including UCC financing and continuation
statements, as Lessor shall deem necessary or desirable for purposes of
continuing this Lease or recording or filing to protect the interest of Lessor
in the Equipment. Any such filing or recording shall not be deemed evidence of
any intent to create a security interest. All filing fees and expenses shall
be borne by the Lessee.
19. FURNISHING FINANCIAL INFORMATION. During the term of this Lease and any
extension or renewals hereof, Lessee will furnish to Lessor:
(a) Within 30 days after the end of each of the first three quarterly
periods of Lessee's fiscal year, a balance sheet, statement of cash flows and a
statement of income of Lessee as of the close of such quarterly period from the
beginning of the fiscal year to the date of such statement, prepared in
accordance with generally accepted accounting principles, consistently applied,
and in such reasonable detail as Lessor may request, certified as true, complete
and correct by an authorized officer of the Lessee.
(b) As soon as practicable, but in any event within 90 days after the end
of each fiscal year, a copy of its annual audit certified without qualification
by a certified public accountant selected by Lessee and satisfactory to Lessor.
(c) In a timely manner such financial statements, reports and other
information as the Lessee shall send from time to time to its stockholders
and/or file with the Securities and Exchange Commission and/or other materials
which Lessor shall reasonably request.
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20. INCORPORATION OF COVENANTS BY REFERENCE. Any and all affirmative, negative
and financial covenants which may be set forth in any credit agreement, loan
agreement, promissory note, guaranty or other agreement, instrument or document
entered into between Lessee (or any of its affiliates) as borrower and any
affiliate of Lessor, as lender (the "Loan Documents"), are hereby incorporated
herein by this reference as if set forth herein at length, as any of the
foregoing may be amended or supplemented from time to time (the "Incorporated
Provisions"). Any amendments, modifications, waivers or other changes in the
terms of any of the Incorporated Provisions shall automatically constitute an
amendment to this Lease without any need for further action or documentation.
If any Loan Document terminates or otherwise ceases to be in full force and
effect (a "Termination"), all of the Incorporated Provisions of such Loan
Document shall survive the Termination and shall continue in full force and
effect as a part of this Lease. At any time after a Termination, Lessee shall
promptly upon Lessor's request execute and deliver to Lessor an amendment to
this Lease, which amendment will expressly incorporate into this Lease all or
any number of the Incorporated Provisions of the terminated Loan Document as
Lessor in its sole discretion shall select, as such Incorporated Provisions are
in effect immediately prior to the date of Termination.
21. PERFORMANCE OF OBLIGATIONS OF LESSEE BY LESSOR. If Lessee fails to
promptly perform any of its obligations under this Lease, Lessor may perform the
same for the account of Lessee without waiving Lessee's failure as a default.
All sums paid or expense or liability incurred by Lessor in such performance
(including reasonable legal fees) together with interest thereon at the highest
contract rate enforceable against Lessee, but never at a higher rate than
fifteen percent (15%) per annum simple interest, shall be payable by the Lessee
upon demand as additional rent.
22. EVENTS OF DEFAULT. Any of the following events or conditions shall
constitute an event of default ("Event of Default") hereunder and entitle the
Lessor, at its option, to avail itself of the remedies more fully set forth in
paragraph 23 hereof:
(a) Non-payment by Lessee of any rent or other amount provided for in this
Lease;
(b) Failure of the Lessee to perform any of the non-monetary covenants,
obligations, terms or conditions of this Lease;
(c) Death or judicial declaration of incompetency of Lessee, if an
individual, or death or judicial declaration of incompetency of an individual
partner, if Lessee is a partnership;
(d) The Lessee shall commence a voluntary case or other proceeding seeking
liquidation, reorganization, or other relief with respect to itself or its debts
under any bankruptcy, insolvency, or other similar law now or hereafter in
effect, or seeking the appointment of a trustee, receiver, liquidator,
custodian, or other similar official of it or any substantial part of its
property, or shall consent to any such relief or to the appointment of or the
taking possession by any official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for the benefit of its
creditors, or shall fail to pay its debts as they become due, or shall take any
corporate action authorizing any of the foregoing;
(e) An involuntary case or other proceeding should be commenced against
Lessee seeking liquidation, reorganization, or other relief with respect to it
or its debts under any bankruptcy, insolvency, or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or any substantial part
of its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of thirty (30) days;
(f) A final judgment for the payment of money in excess of $25,000 is
rendered against the Lessee, or any attachment proceedings is instituted with
respect to any significant portion of the Lessee's assets or property, and the
same shall remain undischarged for a period of thirty (30) days during which
execution shall not be effectively stayed;
(g) The Lessee, or any guarantor of the Lease, or any affiliate of the
Lessee, shall default in the payment of principal and/or interest when due
(whether by acceleration or otherwise) or shall default in the performance of
any obligation or indebtedness owed to the Bank or to any subsidiary or
affiliate of the Bank, which obligation shall remain in default for lack of
performance or which indebtedness shall remain unpaid and unsatisfied following
the conclusion of any applicable grace period in respect to such obligation or
indebtedness;
(h) Any event described in subparagraphs 22(c) through 22(g) hereof shall
occur with respect to any guarantor or any other party liable for payment or
performance of this Lease;
(i) Any certificate, statement, representation, warranty or financial
statement heretofore or hereafter furnished pursuant to or in connection with
this Lease by or on behalf of Lessee or any guarantor or other party liable for
payment or performance of this Lease is false in any material respect at the
time as of which the facts therein set forth were stated or certified, or omits
any substantial contingent or unliquidated liability or claim against Lessee or
any such guarantor or other party, or, upon the date of execution of this
document or any Schedule, there shall have been any materially adverse change in
any of the facts disclosed by any such certificate, statement, representation or
warranty, which shall not have been disclosed in writing to Lessor at or prior
to the time of execution of this document or such Schedule;
(j) An event of default shall have occurred under any other lease
agreement wherein Lessor is, at the time of such default, the "lessor" and
Lessee is the "lessee".
23. REMEDIES. Upon the happening of any Event of Default hereunder, the rights
and duties of the parties shall be as set forth in this paragraph. Lessor may
elect, in its sole discretion, to do one or more of the following upon the
occurrence of an Event of Default, and at any time thereafter:
Page 5 of 8
<PAGE>
(a) Upon written notice to the Lessee terminate this Lease as to any or
all of the Schedules then in effect;
(b) Demand that Lessee return the Equipment to the Lessor whereupon Lessee
shall promptly deliver the Equipment to Lessor at that place or those places
designated by Lessor. If Lessee does not so deliver the Equipment, Lessee shall
make the Equipment available for retaking and authorizes Lessor, its employees
and agents to enter the premises of the Lessee and any other premises (insofar
as Lessee can permit) for the purpose of retaking. In the event of retaking,
Lessee expressly waives all rights to possession and all claims for injuries to
persons or property suffered through or loss caused by retaking. Any
repossession accomplished under this paragraph 23(b) shall not release Lessee
from liability for damages of Lessor sustained by reason of Lessee's default
hereunder.
(c) Lessor may revoke Lessee's privilege of paying rent in installments
causing acceleration of all remaining rents through the remaining term of the
Lease, and, upon Lessor's demand, as liquidated damages, and not as a penalty,
the Lessee shall promptly pay to the Lessor the aggregate of (i) all rent
accrued and unpaid prior to the date of such Event of Default, (ii) all future
rent due through the end of the basic term or through the end of the current
renewal term, as the case may be, (iii) all costs and expenses incurred by
Lessor in the repossession, recovery, storage, repair, inspection, appraisal,
refurbishing, sale, release or other disposition of the Equipment, (iv)
reasonable attorney's fees and costs, including any fees or costs incurred by
Lessor in defending any action relating to this Lease or participating in any
bankruptcy or insolvency proceeding to which Lessee is a party, or otherwise
incurred due to Lessee's default, (v) the estimated residual value of the
Equipment as of the end of the current term of the Lease, and (vi) any claim for
indemnity, if any, in favor of Lessor hereunder. In the event that any court
having jurisdiction shall determine that in calculating damages hereunder as a
result of a default by Lessee that sums payable in the future under the Lease
must be discounted to present value, the discount rate to be applied in such
case shall equal the discount rate of the Federal Reserve Bank of Cleveland then
in effect on the earlier of the date of entry of judgement on such claim or the
date of payment of such sum by Lessee.
(d) In its sole discretion, Lessor may sell or release the Equipment or
any part thereof, at public auction or by private sale or lease at such time or
times and upon such terms as Lessor may determine, free and clear of any rights
of Lessee and, if notice thereof is required by law, any notice in writing of
such sale or lease by Lessor to Lessee given not less than ten (10) days prior
to the date thereof shall constitute reasonable notice thereof to Lessee. All
proceeds of the sale or releasing, or both, less (i) all expenses incurred in
retaking the Equipment, making necessary repairs to the Equipment and enforcing
this Lease, (ii) all damages that Lessor shall have sustained by reason of
Lessee's default, and (iii) reasonable attorney's fees and expenses shall be
credited against Lessee's liability hereunder as and when received by Lessor.
Sums in excess of Lessee's liability shall belong to Lessor. The Lessee shall
be liable for any deficiency.
(e) The provisions of this paragraph 23 shall not prejudice Lessor's right
to recover or prove damages for unpaid rent accrued prior to default, or bar an
action for a deficiency as herein provided, and the bringing of an action with
an entry of judgment against Lessee shall not bar the Lessor's right to
repossess any or all of the Equipment.
(f) Lessor's remedies shall be available to Lessor's successors and
assigns, shall be in addition to all other remedies provided to it under the UCC
(specifically, the remedies set forth in 13 Pa. C.S. Sections 2A523(a), (b) and
(c) or by any other applicable law, and may be exercised concurrently or
consecutively. LESSEE WAIVES ANY AND ALL RIGHTS TO NOTICE AND TO JUDICIAL
HEARING WITH RESPECT TO THE REPOSSESSION OF THE EQUIPMENT BY LESSOR IN THE EVENT
OF A DEFAULT HEREUNDER BY LESSEE. LESSEE HEREBY WAIVES ANY RIGHT TO DEMAND A
JURY TRIAL WITH RESPECT TO ANY ACTION OR PROCEEDING INSTITUTED BY THE LESSOR OR
THE LESSEE IN CONNECTION WITH THIS LEASE.
(g) No express or implied waiver by Lessor of any default(s) by Lessee
shall constitute a waiver of any other default(s) by Lessee or waiver of any of
Lessor's rights.
24. LESSEE REPRESENTATIONS AND WARRANTIES. In order to induce Lessor to enter
into this Lease and to lease the Equipment to Lessee, Lessee represents and
warrants, as of the date hereof, and as of the date of execution of each
Schedule hereunder, that:
(a) The Lessee is a corporation duly incorporated, validly existing and in
good standing under the laws of the jurisdiction of its incorporation with
corporate power and authority to conduct its business as such business is
presently being conducted, to own or hold property under lease and to enter into
and perform its obligations under this Lease. The Lessee is duly qualified to
do business and is in good standing as a foreign corporation in all states where
its failure to so qualify would have a material adverse effect on its ability to
perform its obligations under this Lease.
(b) The execution, delivery, and performance by the Lessee of this Lease
and all related instruments and the consummation by the Lessee of the
transactions contemplated hereby: (i) have been duly authorized by all necessary
corporate action on the part of the Lessee, (ii) do not require any stockholder
approval or the consent of any trustee or holder of any indebtedness or
obligation of the Lessee (or, if so required, such approval or consent has been
obtained), (iii) do not and will not result in any material violation of any
term of any agreement, instrument, judgment, decree, franchise, permit, order,
law, statute, rule, or governmental regulation presently applicable to it, (iv)
is not in conflict with and does not constitute a default under any of the terms
or provisions of, or subject the leased Equipment or any part thereof to any
lien of, any indenture, mortgage, lease,
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<PAGE>
contract, or other agreement or instrument (other than this Lease) to which the
Lessee is a party or by which it or its property is bound or affected, and (v)
does not and will not contravene Lessee's articles of incorporation and by-laws.
(c) The execution, delivery, and performance by the Lessee of this Lease
and all related instruments and documents does not require any consent,
authorization, or approval of, any filing of or registration with, or other
action in respect to any federal, state, governmental authority or agency, or,
if so required, the same have been obtained.
(d) This Lease and all related instruments and documents have been duly
executed and delivered by the Lessee, and assuming the due authorization,
execution, and delivery by the other party thereto, constitute legal, valid, and
binding agreements of the Lessee enforceable against the Lessee in accordance
with their terms.
(e) There are no pending actions or proceedings to which Lessee is a
party, and there are no other pending or threatened actions or proceedings of
which Lessee has knowledge, before any court, arbitrator, or administrative
agency, which either individually or in the aggregate, would materially
adversely affect the financial condition of Lessee, or the ability of Lessee to
perform its obligation hereunder. Further, Lessee is not in default under any
material obligations for the payment of borrowed money, for the deferred
purchase price of property or for the payment of any rent which, either
individually or in the aggregate, would have the same such effect.
(f) Under the laws of the state(s) in which the Equipment is to be
located, the Equipment consists solely of personal property.
(g) The financial statements of Lessee (copies of which have been
furnished to Lessor) have been prepared in accordance with generally accepted
accounting principles consistently applied, and accurately and completely
present Lessee's financial condition and the results of its operation as of the
date of and for the period covered by such statements, and since the date of
such statements there has been no material adverse change in such conditions or
operations.
(h) The address stated on page one of this Lease is the chief place of
business and chief executive office of Lessee; and the Lessee does not conduct
business under a trade, assumed, or fictitious name.
25. FINANCE LEASE.
(a) ACKNOWLEDGMENT. The Lease is intended as a "Finance Lease" as that
term is defined in Section 2A103 of the UCC. Lessee acknowledges that Lessor
has not selected, manufactured or supplied the Equipment; that Lessor has
acquired the Equipment at the direction of the Lessee and solely for the purpose
of leasing the Equipment to the Lessee; and that (i) Lessee has selected the
supplier or vendor of the Equipment, (ii) as provided in paragraph 7, Lessee is
entitled to directly enforce against the supplier or vendor of the Equipment,
any and all warranties and promises made to the Lessor by the supplier or
vendor, and (iii) Lessee may communicate directly with the vendor or supplier to
obtain a complete and accurate statement of all such warranties or promises,
including any disclaimers or limitations thereof.
(b) WAIVER OF CERTAIN OF LESSEE'S REMEDIES. In recognition that this is a
Finance Lease and that the Lessor has not sold, selected or delivered the
Equipment to the Lessee and has made no warranties or representations in respect
thereto, to the extent permitted by applicable law, Lessee, for itself and for
its successors and assigns, hereby waives any and all rights or remedies
afforded a lessee by Sections 2A503 through 2A522 inclusive, of the UCC,
including, without limitation, Lessee's right to (i) cancel, terminate or
repudiate this Lease or any Schedules hereto; (ii) reject or revoke acceptance
of the Equipment; (iii) recover damages from Lessor for any breach of warranty
or representation in respect to the Equipment; (iv) assert any security interest
in the Equipment in Lessee's possession or control; (v) deduct, recoup or offset
of any claimed damages due to Lessor's default; (vi) accept partial delivery of
the Equipment or to "cover" by purchasing or leasing replacement equipment;
(vii) recover any general, incidental or consequential damages (including
without limitation, expenses and commissions in connection with the inspection,
receipt, caring for, storing, repair or disposal of any Equipment; or (viii)
assert a claim by way of replevin, detinue, sequestration, claim, delivery, or
the like, for any Equipment.
26. GOVERNING LAW AND CONSENT OF JURISDICTION. This Lease has been delivered
and accepted in the Commonwealth of Pennsylvania. The laws and decisions of
said Commonwealth (including, without limitation, as to the statute of
limitations) will govern and control the construction, enforceability, validity
and interpretation of this Lease, and of all agreements, instruments and
documents, heretofore, now or hereafter executed by Lessee and delivered to
Lessor pertaining or relating to this Lease or the transactions contemplated
herein. The parties agree that any action or proceeding arising out of or
relating to this Lease may be commenced in the Court of Common Pleas of
Allegheny County, Pennsylvania, or in the United States District Court for the
Western District of Pennsylvania and Lessee agrees that, in addition to any
other manner of service prescribed by law or rule of court, a summons and
complaint commencing an action or proceeding in either such Court shall be
properly served upon Lessee and shall confer personal jurisdiction if served
personally or by United States registered mail, return receipt requested, to the
Lessee at the address indicated on the first page of the Lease.
27. CONFLICT OF PROVISIONS. In the event of any conflict of provisions between
any Schedule and this document or between any Schedule and any other document,
the provisions of the Schedule shall control.
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<PAGE>
28. AMENDMENTS AND WAIVERS. This document, the Schedule(s), the Addendum(s)
and the Acceptance(s) executed by Lessor and Lessee constitute the entire
agreement between Lessor and Lessee with respect to the Equipment and the
subject matter of this Lease. No term or provision of this Lease may be
changed, waived, amended or terminated except by a written agreement signed by
both Lessor and Lessee, except that Lessor may insert on the appropriate
Schedule the serial numbers of the Equipment after delivery thereof. No express
or implied waiver by Lessor of any Event of Default hereunder shall in any way
be, or be construed to be, a waiver of any future and/or subsequent Event of
Default whether similar in kind or otherwise.
29. NOTICES. Except as otherwise provided in paragraph 26 above, service of
all notices under this Lease shall be sufficient if given personally, sent via
facsimile with confirmation of receipt, sent via overnight courier, or sent
certified mail, return receipt requested, to the party involved at its
respective address set forth in the most recent Schedule relating hereto, or at
such address as such party may otherwise provide in writing from time to time.
Any such notice mailed to such address shall be effective when deposited in the
United States mail, duly addressed with first-class postage prepaid.
30. MISCELLANEOUS.
(a) Whenever the context of this Lease requires, the neuter gender
includes the masculine and feminine, and the singular number includes the
plural. Whenever the word Lessor is used herein, it shall include all assignees
of Lessor. If there is more than one Lessee named in this Lease, the liability
of each shall be joint and several.
(b) The titles to the paragraphs of this Lease are solely for the
convenience of the parties, shall not be deemed to constitute a part hereof, and
are not an aid in the interpretation of the documents.
(c) Time is of the essence in the performance of this Lease and each and
all of its provisions.
(d) If any provisions of this Lease is held invalid or unenforceable, the
remaining provisions will not be affected thereby, and to this end, the
provisions of this Lease are declared severable.
(e) As used herein "Lessee," if there be more than one, shall mean all
Lessees, or each of them, and in such case they are jointly and severally bound.
31. SECURITY INTEREST. If the Lease is deemed at any time to be a lease
intended as security, Lessee hereby grants to the Lessor a security interest in
the Equipment to secure all sums due hereunder, as well as any other obligations
or sums due by Lessee to Lessor, whether now existing or hereafter contracted
for or hereafter arising.
WITNESS the due execution hereof with the intent to be legally bound.
ATTEST/WITNESS:
WHITEFORD FOODS VENTURE, L.P. - LESSEE
by: G/W FOODS, INC., ITS GENERAL PARTNER
By: /s/ Margaret M. Goeke By: /s/ A. Greenaway
------------------------ -----------------------------
Title: Financial Mgr. Title: President
ACCEPTED AT PITTSBURGH, PENNSYLVANIA BY:
PNC LEASING CORP - LESSOR
By: /s/ Linda M. Graner
------------------------------
Title: Lease Officer
Page 8 of 8
<PAGE>
PNC LEASING CORP PNCBANK
PROGRESS PAYMENT ADDENDUM
This Progress Payment Addendum ("Addendum") by and between PNC Leasing
Corp ("Lessor") and WHITEFORD FOODS VENTURE, L.P. ("Lessee") is made to that
certain Master Lease Agreement No. 931 dated October 11, 1996 ("Lease") between
Lessor and Lessee.
PRELIMINARY STATEMENT. Lessor and Lessee have entered into the Lease
pursuant to which the Lessor shall purchase certain machinery and equipment (the
"Equipment") at the request of the Lessee and lease such Equipment to Lessee
under the terms and conditions set forth in the Lease. As a condition to the
Lease, upon the commencement of the base lease term, Lessee is required to
execute and deliver to the Lessor a Lessee Acceptance Certificate by which the
Lessee shall acknowledge the receipt and unconditional acceptance of the
Equipment and confirm that the Lessee unconditionally agrees to be bound to pay
to the Lessor the full rent as set forth in the Lease and in each Schedule of
Leased Equipment that is attached to and made a part of the Lease. However,
prior to Lessee's delivery of the final acceptance certificate and the
commencement of the base lease term, Lessee has requested that Lessor make
certain progress payments to the vendor or supplier of the Equipment (the
"Vendor") (or to reimburse the Lessee for progress payments paid to the Vendor
by the Lessee), as called for under the terms of existing invoices, purchase
orders or purchase agreements (true and complete copies of which have been
delivered to the Lessor) between the Lessee and the Vendor ("Purchase Orders").
The Lessor has agreed to advance the progress payments to the Vendor, or
reimburse the Lessee, upon the terms hereafter set forth:
1. PAYMENT OF INSTALLMENT PURCHASE PRICE OF THE EQUIPMENT BY THE LESSOR.
Lessor shall pay to the Vendor, or reimburse the Lessee, the purchase price of
the Equipment in accordance with a schedule of payments agreed to between Lessee
and Vendor or as set forth in the Purchase Orders, which purchase price shall
not exceed $300,000 in the aggregate. From time to time, Lessee shall provide
written confirmation to Lessor as Lessor may request, approving payments as
called for, as well as confirming the receipt of the Equipment by the Lessee as
it is delivered to the Lessee by the Vendor. All risk of loss or destruction of
the Equipment shall be the sole responsibility of the Lessee. All payments made
by Lessor to the Vendor or to the Lessee hereunder shall bear interest from the
date advanced at an annual interest rate equal to PNC Bank, National
Association's Prime Rate plus 1%, and the accrued interest shall become due and
payable monthly by Lessee from the date of the first advance of funds to the
basic term commencement date of the Lease.
2. REIMBURSEMENT OF LESSOR BY LESSEE UNDER CERTAIN CONDITIONS. In the
event that an event of default shall occur under the Lease, or if the Lessee has
not given its final acceptance of the Equipment and the base term of the Lease
commenced by DECEMBER 31, 1996, then upon demand by Lessor, Lessee shall repay
to the Lessor in full all amounts theretofore paid by the Lessor to the Vendor
and/or the Lessee in payment of the purchase price of the Equipment together
with interest on all overdue sums calculated at an annual rate of interest equal
to 2.00% over the fully floating "Prime" rate of interest of PNC Bank, National
Association, in effect from time to time. Upon the receipt of such payment,
Lessor shall assign to the Lessee all of Lessor's right, title and interest in
the Equipment, any open Purchase Orders and in all claims against the Vendor,
all without representation or warranty.
3. MISCELLANEOUS. Any capitalized terms as used in this Addendum which
are not defined herein, shall have the meanings set forth in the Lease.
IN WITNESS WHEREOF, this Addendum is executed this 11th day of OCTOBER, 1996.
LESSOR: PNC LEASING CORP LESSEE: WHITEFORD FOODS VENTURE, L.P.
By: G/W FOODS, INC.,
ITS GENERAL PARTNER
By: /s/ Linda M. Graner By: /s/ Albert D. Greenaway
--------------------------- -----------------------------
Title: Lease Officer Title: President
<PAGE>
PNC LEASING CORP PNCBANK
RESOLUTIONS FOR EXTENSIONS OF CREDIT
AND INCUMBENCY CERTIFICATE
(CORPORATION)
The undersigned certifies as follows to PNC Leasing Corp ("Lessor"):
1. NAME OF CORPORATION: G/W FOODS, INC. ("CORPORATION")
2. ADDRESS: 770 N. Center St., Versailles, OH 45380
3. TAXPAYER I.D. NUMBER: 76-0305533
4. ADOPTION OF RESOLUTIONS: The Corporation is a corporation formed under the
laws of Texas; the undersigned is the duly elected and qualified Secretary or
Assistant Secretary of the Corporation and the following is a true copy of
resolutions adopted by the Board of Directors of the Corporation pursuant to a
notice and its articles or certificate of incorporation and its regulations or
by-laws, and at which a quorum was present, or adopted without a meeting by the
written approval of all of the directors of the Corporation, which adoption
occurred on November 1, 1996.
5. RESOLUTIONS:
5.1 LEASES AND EXTENSIONS OF CREDIT. Resolved that any one of the
following:
NAME TITLE ACTUAL SIGNATURE
---- ----- ----------------
Albert D. Greenaway President /s/ Albert D. Greenaway
Kevin T. Gannon CEO /s/ Kevin T. Gannon
are hereby authorized: (i) to effect leases, advances, extensions of credit
and renewals at any time for the Corporation from the Lessor; (ii) to sign
and deliver any leases, schedules, agreements, instruments, documents, or
evidence of indebtedness of the Corporation (any of which may contain a
warrant of attorney authorizing the Lessor to confess judgment against the
Corporation for all sums due or to become due by the Corporation to the
Lessor); (iii) to sign and deliver any amendments, modifications,
renewals, or supplements to any of the foregoing documents, (iv) to sign
and deliver any instruments or documents on behalf of the Corporation
guaranteeing, endorsing or securing the payments of any debts or
obligations of any person, firm or corporation to the Lessor; (v) to
pledge, assign, transfer, mortgage, grant a security interest in or
otherwise hypothecate to the Lessor any stock, securities, commercial
paper, warehouse receipts and other documents of title, bills, accounts
receivable, contract rights, inventory, equipment, real property, and any
other investments or property of the Corporation real or personal, tangible
or intangible, as security for the payment of any and all indebtedness and
other obligations of the Corporation to the Lessor of every kind and
description, direct or indirect, absolute and contingent, joint and
several, whether as drawer, maker, endorser, guarantor, surety or
otherwise, and to execute on behalf of the Corporation mortgages, pledges,
security agreements, financing statements and other instruments or
documents in connection therewith.
/ / IF THE PRECEDING BOX IS CHECKED, THE CORPORATION ADOPTS THESE
RESOLUTIONS FOR THE SOLE PURPOSE OF AUTHORIZING THE PERSONS NAMED ABOVE TO
TAKE THE ACTIONS DESCRIBED ABOVE ON BEHALF OF THE CORPORATION IN ITS
CAPACITY AS A CORPORATE GENERAL PARTNER OF WHITEFORD FOODS VENTURE, L.P., A
LIMITED PARTNERSHIP ORGANIZED UNDER THE LAWS OF THE STATE OF TEXAS.
<PAGE>
5.2 TELEPHONIC AND FACSIMILE REQUESTS. Resolved, that the Lessor is
authorized to take any action authorized hereunder based upon: (i) the
telephonic request of any person purporting to be a person authorized to
act hereunder, (ii) the signature of any person authorized to act hereunder
that is delivered to the Lessor by facsimile transmission, or (iii) the
telex originated by any such persons, tested in accordance with such
testing procedures as may be established between the Corporation and the
Lessor from time to time.
5.3 GENERAL. Resolved, that a certified copy of these resolutions be
delivered to the Lessor and that they and the authority vested in the
persons specified herein will remain in full force and effect until a
certified copy of a resolution of the Lessee revoking or modifying these
resolutions and such authority has been filed with the Lessor.
6. INCUMBENCY: Each of the above-named persons holds the office, title or
status with the Corporation specified above and that following each person's
name, his or her actual signature appears.
7. ORGANIZATIONAL DOCUMENTS: If the undersigned has attached any Exhibits
hereto, such documents include a true, complete and correct copy of the articles
or certificate of incorporation, the by-laws or regulations, or other
organizational document, with all amendments thereto as in effect on the date
hereof. The foregoing Resolutions now stand of record on the books of the
Corporation, are in full force and effect and have not been modified or revoked
in any manner whatsoever.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the undersigned
have hereunto set their hands and seals this 1st day of NOVEMBER, 1996.
G/W FOODS, INC.
(Name of Corporation)
By: /s/ Beverly F. Shillito (SEAL)
----------------------------------
Print Name: Beverly F. Shillito, Secretary
Title: Secretary/Assistant Secretary
<PAGE>
PNC LEASING CORP PNCBANK
Pittsburgh, Pennsylvania
SCHEDULE OF LEASED EQUIPMENT Schedule Number: 00931-001
(First Amendment Tax Lease) Master Lease Agreement No.: 931
Master Lease Agreement Date: October 11, 1996
LESSEE: WHITEFORD FOODS VENTURE, L.P. SUPPLIER: Various please refer
770 North Center to Supplement
Versailles, OH 45380 to Schedule attached
hereto and made a
part hereof.
1. SCHEDULE. This Schedule of Lease Equipment ("Schedule") is hereby made a
part of the Lease referenced above between the undersigned Lessor and the
undersigned Lessee. All terms and conditions of said Lease are
incorporated herein by reference.
2. EQUIPMENT. The Equipment which is subject to the Lease is described on the
supplement attached hereto and incorporated herein ("Supplement"), and
includes all cash and non-cash proceeds and products (including without
limitation insurance proceeds) of the Equipment, and all additions and
accessions thereto, substitutions therefor and replacements thereto.
3. TITLE OF EQUIPMENT. At Lessee's request, Lessor has purchased the
Equipment as a buyer in the ordinary course of business for value. Title
to the Equipment leased hereunder shall remain with the Lessor at all
times. Lessee shall have no right, title or interest in or to the
Equipment except as expressly set forth in the Lease.
4. EQUIPMENT LOCATION: The Equipment shall be located at the address stated
in Supplement and shall not be removed without Lessor's prior written
consent.
5. INTERIM RENTAL TERM. The interim rental term of the Lease as respects the
Equipment described herein shall commence on the date of Lessor's first
advance of funds for the purchase of the Equipment and shall terminate on
the day before the commencement of the base lease term.
6. INTERIM RENT. Interim rent shall be calculated at the Bank's Prime Rate of
interest plus one percent (1%) on the amount funded by Lessor from time to
time, for the number of days outstanding from each funding date until the
lease commencement date ("Interim Rent"), plus applicable taxes, if any.
Interim Rent shall be due and payable monthly during the interim rental
term, upon receipt by Lessee of Lessor's invoice therefor.
7. LEASE TERM. The base term of the Lease as respects the Equipment is set
forth in the Supplement.
8. RENT. The Lessee agrees to pay basic rent for the Equipment in the amount
and on the dates set forth in Supplement, plus applicable taxes, if any.
9. DEPRECIATION RECOVERY PERIOD. For purposes of Section 168(e)(3) and 168(c)
of the Code (as defined hereafter), the Equipment constitutes five (5) year
recovery property.
10. TAX INDEMNIFICATION.
(a) TAX ASSUMPTIONS. This Lease has been entered into on the basis that
Lessor is entitled to such federal, state and local income tax deductions,
credits and other benefits (the "Tax Benefits") as are provided to an owner
of property including, without limitation: (A) the Recovery Deductions (as
defined herein); and (B) the interest deduction under the Internal Revenue
Code of 1986, as amended (the "Code") in the full amount of any interest
paid or accrued by Lessor, using Lessor's method of tax accounting, for any
indebtedness incurred by Lessor in financing its purchase of the Equipment
(the "Interest Deductions").
(b) TAX REPRESENTATIONS. Lessee represents and warrants to Lessor (the
"Tax Representations") that: (A) for purposes of Sections 168(e)(3) and
168(c) of the Code, each Item of Equipment constitutes an asset described
in the "property class" and "applicable recovery period" as designated
herein in paragraph 9; (B) the Lessor shall be entitled to claim federal,
state and local depreciation deductions (the "Recovery Deductions") which
are based upon, and will fully recover, the total cost of each Item of
Equipment, including, for federal income tax purposes, modified accelerated
cost recovery system
Page 1 of 4
<PAGE>
deductions computed pursuant to Code Section 168(b)(1)(A) and (B) and
168(e)(3) based upon 100% of Lessor's original cost of each Item of
Equipment; (C) each Item of Equipment is not "limited use property" within
the meaning of Revenue Procedure 76-30 (1976-2 Cum. Bull. 647), and no
improvements, changes, additions, or alterations made by or at the request
of Lessee will cause such Item of Equipment to be "limited use property";
(D) this Lease, including any and all Schedules, constitutes a "true lease"
for federal, state and local income tax purposes and Lessor will be the
"true owner" of each Item of Equipment entitled to claim the Recovery
Deductions and other Tax Benefits anticipated by Lessor hereunder; (E) each
item of Equipment is reasonably estimated to have an economic useful life
of at least 125% of the initial term of the Lease and have an economic
value of at least 20% of Lessor's original cost of the Item of Equipment at
the expiration of the lease term; (F) each Item of Equipment does not and
will not require any improvements, modifications, alterations or additions
in order to render it complete for its intended use by Lessee; (G) Lessor
will not realize any taxable income as a result of any improvements,
modifications, alterations or additions to the Equipment or any Item of
Equipment made by anyone other than Lessor; (H) all amounts includable in
the gross income of Lessor with respect to each Item of Equipment and all
deductions allowable to Lessor with respect to each Item of Equipment will
be treated as derived from, or allocable to, sources within the United
States; and (I) Lessee will maintain sufficient records to verify such use
which records will be furnished to Lessor within 30 days after receipt of a
demand therefor.
TAX INDEMNITY. If for any reason whatsoever, including, without
limitation, the falsehood or inaccuracy of any Tax Representation
(excluding only a failure of Lessor to claim properly or timely the
Recovery Deductions or Interest Deductions for the appropriate year, or the
failure of Lessor to have sufficient taxable income to benefit from the
Recovery Deductions or Interest Deductions): (A) Lessor shall lose, shall
not have or shall lose the right to claim or there shall be disallowed,
eliminated, reduced, or recaptured with respect to Lessor, for federal,
state or local income tax purposes, all or any portion of the Tax Benefits
with respect to an Item of Equipment; or (B) the Lessor's anticipated net
after-tax economic and accounting yields and periodic net after-tax cash
flows over the term of the applicable Schedule (based upon the same
assumptions used by Lessor in originally evaluating the Lease and
applicable Schedule at the commencement of the term of the applicable
Schedule) (the Lessor's "Anticipated Economics") is adversely affected due
to (i) any income or deductions with respect to any Item of Equipment being
treated as derived from, or allocable to, sources without the United
States, or (ii) enactments of new income tax legislation or amendments and
other changes to the Code or any other state or local income tax law,
including the promulgation of regulations and judicial or administrative
rulings with respect thereto; or (C) the Lessor shall be required to include
any amount in its taxable income as a result of any improvements,
modifications, alterations or additions to any Item of Equipment made by
anyone other than Lessor (an occurrence of an event under (A), (B) and/or
(C) being referred to individually or collectively as a "Loss"); then, at
the option of the Lessor, (x) the rent over the remainder of the term of
the applicable Schedule shall, on and after the next succeeding rent payment
date, after written notice to Lessee by Lessor that a Loss has occurred, be
increased by such amount which, in the sole opinion of Lessor, after
deduction of all taxes owed by Lessor to any governmental or taxing
authority as a result of such increase in rent, will cause Lessor's actual
net after-tax economic and accounting yields and periodic net after-tax
cash flows over the term of the applicable Schedule (the Lessor's "Actual
Economics") to equal the Lessor's Anticipated Economics that would have
been available if such Loss had not occurred, and Lessee shall forthwith
pay to Lessor, on demand, an amount which, after deduction of all taxes
owed by Lessor to any governmental or taxing authority as a result of the
receipt of such amount, shall be equal to the amount of any penalties,
interest or additions to tax which may be assessed by any governmental or
taxing authority against Lessor attributable to the Loss, or (y) after
written notice to Lessee by Lessor that a Loss has occurred, Lessee shall
pay to Lessor, upon demand, in a lump sum, an amount which, after deduction
of all taxes owed to any governmental or taxing authority by Lessor as a
result of the receipt of such lump sum payment, will cause Lessor's Actual
Economics to be equal to the Lessor's Anticipated Economics that would have
been available if such Loss had not occurred plus an amount which, after
deduction of all taxes owed by Lessor to any governmental or taxing
authority as a result of the receipt of such amount, shall be equal to the
amount of any penalties, interest, or additions to tax which may be assessed
by any governmental or taxing authority against Lessor attributable to the
Loss.
(d) CALCULATIONS. All calculations of Lessor's Actual Economics with
respect to a Loss shall be determined on the basis of the assumption that
Lessor will be subject to federal, state and local corporate income tax
rates at the maximum statutory rate. Any written notice that any Loss has
occurred pursuant to this paragraph 10 shall be accompanied by a written
statement from Lessor describing in reasonable detail such Loss and the
computation of the amounts payable, either in a lump sum or revised rent
payments as set forth above, which computation shall be binding and
conclusive upon Lessee, absent manifest error.
(e) INTEREST. Upon failure to pay any indemnification amount when due, by
demand or otherwise, such unpaid obligation shall bear interest at a per
annum rate equal to the prime rate of interest as announced, from time to
time, by the Bank.
Page 2 of 4
<PAGE>
(f) CONSOLIDATED RETURN. As used in this paragraph 10, the term "Lessor"
shall include any successor or assign of Lessor and any member of an
affiliated group of which lessor is, or may become, a member if
consolidated, joint or combined returns are filed for such affiliated group
for federal, state or local income tax purposes.
(g) SURVIVAL. The indemnities and assumptions of liabilities and
obligations provided for in this paragraph 10 shall continue in full force
and effect notwithstanding the expiration or other termination of this
Lease.
11. END OF TERM OPTIONS.
(a) Provided that no Event of Default will have occurred and is
continuing, on the expiration of the base lease term, at its option, Lessee
may purchase all of the Lessor's right, title and interest in and to all,
but not less than all of the Equipment described in this Schedule. On the
last day of the base lease term, the Lessee shall pay to the Lessor an
amount equal to the greater of (i) the fair market value of the Equipment
determined in accordance with the provisions of paragraph 11(b), or (ii)
the percent of the Equipment Cost stated in the Supplement hereto. In
order to exercise its option, Lessee shall notify Lessor in writing of its
intention to exercise such options at least 180 days prior to the
expiration of the base lease term. Lessee will deliver to the Lessor, on
or before the expiration of the base lease term, an appraisal of the
Equipment as described in subparagraph 11(b), together with the payment of
the purchase price in immediately available funds. Thereupon, the Lessor
shall convey the Equipment to the Lessee on an as-is, where-is basis
without representation or warranty whatsoever, except that the Equipment
shall be conveyed free and clear of any liens or encumbrances created due
to or through the acts or omissions of the Lessor.
(b) As used in paragraph 11(a), "fair market value" of the Equipment shall
be the value of the Equipment as of the last day of the base term of the
Lease, as determined by an independent appraiser selected by the Lessee and
retained at Lessee's expense. The report of the appraiser shall be in
writing and delivered to the Lessor on or before the expiration of the base
lease term.
(c) In the event that the Lease does not purchase the Equipment in
accordance with paragraph 11(a) above, then (i) Lessee shall continue to
pay rent for the remainder of the base lease term in the amount set forth
in the Supplement hereto, and (ii) this Schedule shall automatically be
extended for an additional term (the "Renewal Term") as stated in the
Supplement hereto, without further action on the part of the Lessor or the
Lessee. At the expiration of the Renewal Term and conditioned that no
Event of Default shall have occurred and be continuing, the Lessee may
either (i) purchase the Equipment at the fair market value as of the last
day of the Renewal Term as determined in accordance with paragraph 13
herein, or (ii) return the Equipment to the Lessor in accordance with
paragraph 12 herein.
12. RETURN OF EQUIPMENT. Lessee shall give Lessor written notice a minimum of
six (6) months prior to the expiration of this Lease of its intent to
return the Equipment. Upon the expiration or earlier termination of this
Lease, Lessee shall return each Item of Equipment, freight and insurance
prepaid, to Lessor (or Lessor's nominee) at a location designated by
Lessor. If requested by Lessor, Lessee will provide 180 days free storage
at the Equipment's location at the expiration of the term. During the
storage period, Lessee shall maintain the Equipment in operating condition
for the purpose of on-site inspections by prospective buyers and shall keep
the Equipment insured in accordance with paragraph 17 of the Lease. The
Equipment and all parts thereto shall be free and clear of all liens (other
than Lessor liens), and shall be free of all advertising or insignia and
residual materials, cleaned, painted, complete with no missing components
or attachments, and fully operational and able to perform its described
task effectively, without repair or overhaul, within the original
tolerances and specifications set by the manufacturer. Any and all costs
of dismantling, packing, and removing of the Equipment shall also be paid
by Lessee. If the Equipment is returned in a condition other than that
described, Lessor may commission an independent appraiser, licensed
professional engineer, or manufacturer technical representative, obtained
by Lessor at Lessee's cost and expense, to determine the extent of costs to
return the Equipment to the condition required herein. Lessee shall
promptly advance payment for all necessary repairs. Lessee's obligations
to pay for repairs shall be reduced by any proceeds of insurance which
Lessor has received due to the damage to the Equipment. If Lessee fails to
provide timely notice of return or fails to return the Equipment at the end
of the base lease term or any renewal thereof to the designated location,
and does not exercise the renewal or purchase options provided for herein
(if any), then this Lease, at Lessor's option, will be deemed extended on a
month-to-month basis for a minimum renewal term of three (3) months, with
rent due on the first of each month at the rate applicable during the base
lease or renewal term just ended.
13. FAIR MARKET VALUE AND ESTIMATED USEFUL LIFE. In all circumstances, except
where Lessee has elected to purchase the Equipment pursuant to paragraph
11(a), fair market value, fair market rental value and estimated useful
life of the Equipment shall be determined by an appraiser of recognized
standing selected by mutual agreement of the Lessor and Lessee. The
appraiser shall determine the fair market value of the Equipment on its in
place value without reduction or consideration of the cost of dismantling,
preparation for shipping or transportation of the Equipment. The
Page 3 of 4
<PAGE>
appraiser's decision shall be binding on the parties. If the Lessor and
Lessee are not able to agree on an appraiser, then each party shall select
an appraiser, and the two appraisers shall select a third appraiser. The
two appraisals which are closest in dollar amount and/or estimated life, as
the case may be, shall be averaged to determine the fair market value or
rental or the estimated useful life, as the case may be, which
determination shall be binding upon the parties. If Lessee has given
Lessor notice of Lessee's intentions to exercise its purchase or renewal
option, and the parties have obtained an appraisal of the Equipment as
provided for herein, Lessee shall be bound by the appraisal and shall
purchase the Equipment, or renew the Lease, as the case may be, at the
value determined by the appraisal. If Lessee fails or refuses to
cooperate in the appointment of an appraiser, the value determined by the
appraiser chosen by the Lessor shall be final and binding. The cost of the
appraisal(s) shall be borne by the Lessee.
14. MARKING OF EQUIPMENT. At Lessor's request, Lessee shall mark the Equipment
in a distinct and conspicuous manner with the name of the Lessor followed
by the words "Owner and Lessor" or other appropriate words designated by
Lessor. Lessee shall not alter, deface or remove any of Lessor's ownership
identification plates or markings on the Equipment and, upon Lessor's
request, Lessee shall affix or re-affix such identification.
15. INSURANCE. In addition to the requirements contained in paragraph 17 of
the Lease, the following insurance requirements shall apply:
LIABILITY COVERAGE:
(a) General liability including/comprehensive form:
premises/operations; products/completed operations; contractual
liability; independent contractors; broad form property damage;
personal injury; and collapse hazard.
(b) Bodily Injury and Property Damage Combined Single Limit Per
Occurrence: $1,000,000
(c) Fire-legal liability-custody, care or control, each occurrence:
$100,000
PROPERTY COVERAGE:
(a) All risk of physical loss; Equipment must be insured for at least
the total original cost.
16. COVENANTS. By executing and delivering to Lessor, the Lessee Acceptance
Certificate, Lessee warrants, covenants and agrees that (a) Lessee has
received all of the Equipment described in this Schedule at the location
described in paragraph 4 hereof; (b) Lessee has duly inspected and accepts
such Equipment without reservation; (c) Lessee is unconditionally bound to
pay to Lessor the total rent and other payments due under the Lease,
whether or not the Equipment described herein may now or hereafter become
unsatisfactory in any respect; and (d) notwithstanding anything contained
herein, Lessor and Lessee shall continue to have all rights which either of
them might otherwise have with respect to the Equipment described herein
against any manufacturer or seller of the Equipment or any part thereof.
17. ADDITIONAL PROVISIONS. (a) This Supplement is incorporated herein by
reference; (b) Lessee grants Lessor the right to insert the Equipment
description and payment dates, amounts, and terms in the Supplement at the
time of commencement of the basic lease term.
WITNESS the due execution hereof with the intent to be legally bound this 13th
day of November, 1996.
LESSOR: PNC LEASING CORP LESSEE: WHITEFORD FOODS VENTURE, L.P.
By: G/W FOODS, INC., ITS GENERAL PARTNER
By: /s/ Linda M. Graner By: /s/ A. Greenaway
--------------------------- -------------------------------
Title: Lease Officer Title: President
Page 4 of 4
<PAGE>
PNC LEASING CORP PNCBANK
SUPPLEMENT TO SCHEDULE OF LEASED EQUIPMENT NO. 00931-001, DATED NOVEMBER 13,
1996
(First Amendment Tax Lease)
1. SUPPLEMENT: This Supplement is attached to and made a part of that certain
Schedule of Leased Equipment as described above between PNC LEASING CORP as
Lessor and WHITEFORD FOODS VENTURE, L.P. as Lessee, which Schedule is
incorporated in and made a part of the Master Lease Agreement between the
Lessor and Lessee, which is herein referred to as the "Lease."
2. EQUIPMENT DESCRIPTION:
QUANTITY EQUIPMENT DESCRIPTION COST
-------- --------------------- ----
Various Refer to those specific Lessee Acceptance $264,579.47
Certificates dated November 13, 1996 and
February 24, 1997
3. EQUIPMENT LOCATION: 770 North Center Street Versailles Darke OH 45380
------------------------------------------------------
Street City County State Zip Code
4. BASE LEASE TERM: The base term of the Lease as to the Equipment described
in this Supplement is Sixty (60) months, commencing on 02/24/97 and
terminating on 02/24/02, unless sooner terminated under the terms of the
Lease.
5. RENT: Total rent of $289,508.40, plus applicable taxes, if any, is due and
payable as follows:
NUMBER AND TYPE DATE PAYMENTS AMOUNT OF TAX ON TOTAL DATE PAYMENTS
OF PAYMENTS COMMENCE PAYMENT PAYMENT PAYMENT TERMINATE
- -------------------------------------------------------------------------------
SIXTY (60) 02/24/97 $4,825.14 EXEMPT $4,825.14 01/24/02
MONTHLY PAYMENTS
- -------------------------------------------------------------------------------
6. PURCHASE OPTION: In accordance with subparagraph 11(a) of the Schedule,
Lessee may purchase all, but not less than all, of the Equipment described
herein, by paying to Lessor on the last day of the base term of the Lease,
an amount equal to the greater of (i) the fair market value of the
Equipment determined as provided in subparagraph 11(b) of the Schedule, or
(ii) FIFTEEN percent (15%) of the Equipment cost.
7. RENEWAL TERM: In accordance with subparagraph 11(c) of the Schedule,
Lessee may extend the Lease for a Renewal Term of eight (8) months with a
monthly rent equal to 1.90881 percent of the Equipment cost, plus
applicable taxes, with the first such rent being due and payable by Lessee
on 02/24/02.
WITNESS the due execution hereof with the intent to be legally bound this 20
day of February, 1997.
PNC LEASING CORP., LESSOR WHITEFORD FOODS VENTURE, L.P., LESSEE
By: G/W FOODS, INC., ITS GENERAL PARTNER
By: /s/ Linda M. Graner By: /s/ A. Greenaway
- --------------------------------- -----------------------------
Title: Assistant Vice President Title: President
<PAGE>
PNC LEASING CERTIFICATE PNCBANK
LESSEE ACCEPTANCE CERTIFICATE
LESSEE: WHITEFORD FOODS VENTURE, L.P. SUPPLIER: REFER TO EXHIBIT B ATTACHED
770 NORTH CENTER STREET HERETO AND MADE A PART HEREOF
VERSAILLES, OH 45380 FOR A DETAILED LIST OF
SUPPLIERS.
1. LESSEE ACCEPTANCE CERTIFICATE. This Lessee Acceptance Certificate
("Acceptance") is hereby made a part of that certain Master Lease
Agreement dated October 11, 1996, and that certain Schedule of Leased
Equipment dated November 13, 1996, both between Lessor and the
undersigned Lessee. All terms and conditions of said Lease and Schedule
are incorporated herein by reference.
2. ACCEPTANCE DATE: Lessee hereby agrees that if the base term of the
Lease has not commenced by the Lessee on or before April 30, 1997 for
any reason whatsoever, then upon written demand by the Lessor, the
Lessee will immediately reimburse Lessor for the total amount set forth
in this Acceptance Certificate ("Cost"), plus interest thereon at PNC
Bank, National Association's Prime Rate, in effect as of the date of
funding, plus two percent (2%) per annum, for the period from the date
of funding by Lessor of said Cost to the payment date to Lessor said
Cost.
3. EQUIPMENT. The Equipment subject to the Lease is described below
and includes all cash and non-cash proceeds and products (including
without limitation insurance proceeds) of the foregoing, and all
additions and accessions thereto, substitutions therefor and replacement
thereto:
- ---------------------------------------------------------------------------
QUANTITY EQUIPMENT DESCRIPTION COST
- ---------------------------------------------------------------------------
Various PLEASE REFER TO EXHIBIT B ATTACHED HERETO AND $168,746.90
MADE A PART HEREOF FOR A DETAILED EQUIPMENT
DESCRIPTION.
- ---------------------------------------------------------------------------
THE TOTAL EQUIPMENT COST INCLUDING TAXES LEVIED AT THE TIME OF
SALE, IF ANY, IS: $168,746.90.
4. EQUIPMENT LOCATION. The Equipment shall be located at the
following address and shall not be removed without Lessor's prior
written consent, which consent shall not be unreasonably withheld.
770 North Center Street Versailles Darke OH 45380
------------------------------------------------------------------
Street City County State Zip Code
- -----------------------------------------------------------------------
PNC LEASING CORP Date: February 24, 1997
Pittsburgh, PA
Gentlemen:
All of the Equipment listed above was received by us and is in good
order and condition, installed to our satisfaction and acceptable to us.
We approve the payment of the invoice(s) covering the Equipment for the
amount(s) shown thereon.
Lessee represents and warrants (a) that the representations and
warranties as set forth in paragraph 24 of the Lease are true and correct as
of the date hereof; (b) that Lessee has satisfied or complied with all
requirements set forth in the Lease to be satisfied or complied with on or
prior to the date hereof; and (c) that no Event of Default under the Lease
has occurred and is continuing on the date hereof.
Date Equipment was first placed in service: 11-01-96
LESSEE: WHITEFORD FOODS VENTURE, L.P.
By: G/W FOODS, INC., ITS GENERAL PARTNER
By: /s/ A. Greenaway
---------------------------------
Title: President
<PAGE>
Page 1 of 5
EXHIBIT B
This Exhibit B is attached to and made a part of that certain Lessee
Acceptance Certificate between Whiteford Foods Ventures, L.P., as Lessee, and
PNC Leasing Corp, as Lessor.
LESSOR: PNC Leasing Corp
Two PNC Plaza, 13th Floor
620 Liberty Avenue
Pittsburgh, PA 15265
LESSEE: Whiteford Foods Venture, L.P.
770 North Center Street
Versailles, OH 45380
SCHEDULE NUMBER: 00931-001
EQUIPMENT LOCATION: 770 North Center Street
Versailles, OH 45380
(Darke County, OH)
EQUIPMENT VENDOR: PERSTORP ANALYTICAL
12101 Tech Road
Silver Springs, MD 20904
EQUIPMENT COST: $46,206.80
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------------
1 INFRATEC ANALYZER, MEAT - S/N: 731001 $46,000.00
1 SURGE SUPPRESSOR ISOBLO 0.00
1 SHIPPING CHARGES 206.80
- ------------------------------------------------------------------------------
GRAND TOTAL $46,206.80
- ------------------------------------------------------------------------------
EQUIPMENT VENDOR: WILEY WATER SYSTEMS, INC.
7752 E. State Road 32
Union City, IN 47390
EQUIPMENT COST: $12,057.50
EQUIPMENT DESCRIPTION:
- -----------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- -----------------------------------------------------------------------------
1 COMMERCIAL WATER SOFTENER W/INSTALLATION $11,695.00
1 3" METER & FREIGHT 362.50
- -----------------------------------------------------------------------------
GRAND TOTAL $12,057.50
- -----------------------------------------------------------------------------
EQUIPMENT VENDOR: KREMER ROOFING, INC.
9313 Murphy Road P.O. Box 823
Versailles, OH 45380
EQUIPMENT COST: $3,023.50
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------------
1 MATERIAL & LABOR ON FLASHING WATER HEATER
CONNECTIONS ON ROOF OF BLDG. A $1,606.50
1 MATERIAL & LABOR ON ROOF REPAIR 1,417.00
- ------------------------------------------------------------------------------
GRAND TOTAL $3,023.50
- ------------------------------------------------------------------------------
<PAGE>
Page 2 of 5
EQUIPMENT VENDOR: HIGH PRESSURE SANITATION, INC.
P.O. Box 459
Slidell, LA 70459
EQUIPMENT COST: $13,391.11
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------------
1 SAIA PPD HOT TAILGATE RUSH $896.11
1 ROTO JET SYSTEM DUAL PUMP SKID ONLY, FOR ROTO $12,495.00
JET RGB 2X2 PUMP W/50HP 324T FRAME MOTORS, TO
BE SUPPLIED TO CUSTOMER DUAL SLIDING MOTOR BASES
FOR 324T FRAME, BELT GUARDS, BELT DRIVE PACKAGES
FOR SINGLE POINT CONNECTION DUAL PUMP PROTECTION
PACKAGES W/DIFFUSER, GAUGES, CHECK VALVES, HOSES,
ETC. A DUPLEX CONTROL PANEL 50HP - 460V - 3HP -
ACROSS LINE STARTER WITH ALL NECESSARY SAFETIES,
CONTROLS, RELAYS, RESETS AND METERS.
- -----------------------------------------------------------------------------
GRAND TOTAL $13,391.11
- -----------------------------------------------------------------------------
EQUIPMENT VENDOR: SCOTT'S ELECTRIC
P.O. Box 322
Versailles, OH 45380
EQUIPMENT COST: $5,762.22
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------------
53 LABOR HOURS $1,192.50
1 PANEL 200-AMP4-WIRE 208-VOLT PANEL W/MAIN BREAKER $291.84
1 PANEL 200-AMP 480-VOLT 277/480 VOLT PANELBOARD MAIN LUG ONLY $1,121.92
6 2" CONNECTORS $13.08
6 2" BUSHINGS $3.24
1 2" EMT COUPLING $2.12
20 EMT FT. 2" EMT $16.20
120 EMT FT. 3/0 EMT $144.00
30 FT. #6 THHN WIRE $6.90
3 2" UNISTRUT STRAPS $4.89
10 FT. 1-5/8" UNISTRUT $14.10
2 GROUND BAR KITS $16.06
2 EHB 3-POLE 30-AMP BREAKERS $407.96
1 EHB 3-POLE 20-AMP BREAKER $203.98
10 BAB1020 BREAKER $141.30
6 175-WATT METAL HALIDE FIXTURES $825.00
1 EXIT & EMERGENCY FIXTURE $97.31
1 70-WATT HPS FIXTURE $123.48
1 70-WATT HPS LAMP $21.88
1 8' H.O. FIXTURE $51.21
2 8' H.O. LAMPS $9.50
15 4x4x2-1/8 BOXES $23.40
11 4X4 BLANK COVERS $6.05
3 4X4 RAISED OUTLET COVERS $5.13
1 4X4 RAISED SWITCH COVER $1.71
2 20-AMP RECEPTACLES $8.00
1 15-AMP SWITCHES $1.00
6 3/4" EMT CONNECTORS $3.00
2 3/4" EMT CONNECTORS $1.00
6 3/4" MINIS $2.40
1 3/4" UNISTRUT STRAP $0.67
45 1/2" EMPT CONNECTORS $15.75
6 1/2" EMT COUPLINGS $2.10
1 1/2" UNISTRUT STRAP $0.53
43 1/2" MINIS $15.05
2 1" EMT CONNECTORS $1.50
<PAGE>
Page 3 of 5
25 SEALTITE $17.75
2 RAIN-TIGHT BOXES $32.62
4 EMT CONNECTORS $3.64
4 BUSHINGS $2.68
3 UNISTRUT STRAPS $4.11
5 UNISTRUT $7.05
2 EMT CONNECTORS $0.70
3 MINIS $1.05
1 REDUCING BUSHING $1.31
1 REDUCING BUSHING $1.91
2 SEALTITE CONNECTORS $10.42
1 MINI $0.65
10 SEALTITE $10.90
8 SEALTITE CONNECTORS $25.68
2 EMT CONNECTORS $4.36
1 BOX $1.56
3 BLANK COVERS $1.65
7 BLUE WIRE NUTS $1.40
25 WIRE TIES $2.50
15 LEAD ANCHORS $7.50
8 WASHERS $0.80
16 BOLTS $1.60
6 STA-CONS $1.08
110 #4 THHN WIRE $47.30
30 #8 THHN WIRE $3.90
250 #14 THHN WIRE $12.50
10 LABOR $260.00
2 1" EMT COUPLINGS $1.50
4 1" MINIS $2.20
1 1" UNISTRUT STRAP $0.74
40 FT. 1" EMT $18.80
30 FT. 3/4" EMT $9.00
150 FT. 1/2" EMT $30.00
4 TAP-CON $1.60
50 FENDER WASHERS $5.00
20 LEAD ANCHORS $10.00
20 1/4" X 20 X 1 BOLTS $2.00
1 1" MYERS HUB $7.31
70 WIRE TIES $7.00
300 FT. #10 THHN WIRE $30.00
650 FT. #12 THHN WIRE $45.50
7 MC CONNECTORS $2.45
30 FT. 12-2 MC CABLE $13.50
1 3-POLE 480 VOLT 100-AMP BREAKER $313.24
- ----------------------------------------------------------------------------
GRAND TOTAL $5,762.22
- ----------------------------------------------------------------------------
EQUIPMENT VENDOR: ASHLAND MUNICIPAL SUPPLIES CO.
P.O. Box 931404
Cleveland, OH 44193-0497
EQUIPMENT COST: $4,522.00
EQUIPMENT DESCRIPTION:
- ---------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ---------------------------------------------------------------------------
1 FEBCO 825 YD 4" RED. PRESS. NRS 5BF1 $1,779.00
1 4" COMPOUND GEN 100SF 2,743.00
- ---------------------------------------------------------------------------
GRAND TOTAL $4,522.00
- ---------------------------------------------------------------------------
EQUIPMENT VENDOR: ACE HARDWARE
337 Marker Road
Versailles, OH 45380
EQUIPMENT COST: $57.77
<PAGE>
Page 4 of 5
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------------
2 COUPLING REDUCTOR $14.98
2 PIPE CLEANER 8.58
1 CEMENT 7.79
1 PVC 3" Y 4.89
1 PVC PLUG CAP 4.29
4 PVC 3" ELL 9.96
1 PVC REDUCER 3.29
1 PVC 3" TEE 3.99
- ------------------------------------------------------------------------------
GRAND TOTAL $57.77
- ------------------------------------------------------------------------------
EQUIPMENT VENDOR: K & M
4110 St., Rt. 47 West
Ansonia, OH 45303
EQUIPMENT COST: $125.00
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------------
1 SKID LOAD RENTAL $125.00
- ------------------------------------------------------------------------------
GRAND TOTAL $125.00
- ------------------------------------------------------------------------------
EQUIPMENT VENDOR: The Ansonia Lumber Company
300 South Main Street
Ansonia, OH 45303
EQUIPMENT COST: $1,470.36
EQUIPMENT DESCRIPTION:
- -----------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- -----------------------------------------------------------------------------
1 2/8 x 8' INSWING 4 9/16 JAM IN LH E801 DOOR $280.67
25 2 X 4 X 8 CONSTRUCTION GRADE 71.25
6 2 X 4 X 10 CONSTRUCTION GRADE 23.70
16 2 X 4 X 12 CONSTRUCTION GRADE 127.20
9 2 X 6 X 10 TREATED 64.35
8 2 X 6 X 14 TREATED 91.60
4 2 X 4 X 10 TREATED 20.40
14 4 X 8 X 1/2 CDX PLYWOOD 169.40
5 12' WHITE CD 103.75
12 8' WHITE CD 165.96
10 J CHANNEL WHITE CD 38.00
400 1" WHITE CD SCREWS 22.00
3 ROLLS 24" WHITE ALUM COIL 157.50
6 ROLLS 3-1/2 X 24 INSULATION 134.58
- ----------------------------------------------------------------------------
GRAND TOTAL $1,470.36
- ----------------------------------------------------------------------------
EQUIPMENT VENDOR: GREENVILLE DOOR SALES, INC.
320 Chesnut Street
Greenville, OH 45331
EQUIPMENT COST: $474.00
EQUIPMENT DESCRIPTION:
- ---------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ---------------------------------------------------------------------------
1 8' TUBE $8.50
1 SET 8' HORZ & VERT TRACKS 69.00
1 SET 8' CABLES 8.00
1 PR. DRUMS 16.00
<PAGE>
Page 5 of 5
6 SIDE LOCKS 36.00
1 CENTER PAD WITH BEARING 7.80
1 PR. END BEARING BRACKET 18.50
1 ROLL BOTTOM RUBBER 250.00
1 #2 GREEN SPRING 45.00
4 3" SHEAVES 15.20
- -------------------------------------------------------------------------
GRAND TOTAL $474.00
- -------------------------------------------------------------------------
EQUIPMENT VENDOR: LEFELD SUPPLIES & RENTAL
512 North Second Street
Coldwater, OH 45828
EQUIPMENT COST: $365.48
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------
1 14" CONCRETE FLOOR SAW - 072-214 $120.00
1 12" CHOP SAW - 072-412 95.00
1 BRUTE HAMMER 78.00
4 14" BLADE 50.16
4 12" BLADE 22.32
- ------------------------------------------------------------------------
GRAND TOTAL $365.48
- ------------------------------------------------------------------------
EQUIPMENT VENDOR: MICRODRY, INC.
7450 Highway 329
Crestwood, Kentucky 40014
EQUIPMENT COST: $54,408.16
EQUIPMENT DESCRIPTION:
- -----------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- -----------------------------------------------------------------------
1 MODEL IV 75 POWER GENERATOR $45,000.00
1 ALLEN/BRADLEY SIZE 4 CONTACTOR, 9,408.16
MARELCO 75 KW HV TRANSFORMER
- -----------------------------------------------------------------------
GRAND TOTAL $54,408.16
- -----------------------------------------------------------------------
EQUIPMENT VENDOR: SLAGLE MECHANICAL CONTRACTORS
P.O. Box 823, 877 W. Russell Road
Sidney, OH 45365
EQUIPMENT COST: $26,883.00
EQUIPMENT DESCRIPTION:
- ----------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ----------------------------------------------------------------------
1 LABOR AND MATERIAL TO RUN WATER LINE FOR $12,683.00
BOILER, INSTALLED 4" BACKFLOW PREVENTER
AND METER, RELOCATE 2" BACKFLOW PREVENTER
FOR BYPASS.
1 LABOR AND MATERIAL TO FURNISH KEMCO ROOM 10,700.00
WITH GAS PIPING, HIGH PRESSURE WASH PIPING
AND 3" WATER LINE.
1 LABOR AND MATERIAL AND EQUIPMENT TO INSTALL 3,500.00
ONE (1) 2" GAS METER SETTING PER DP&L'S
SPECIFICATIONS.
- ----------------------------------------------------------------------
GRAND TOTAL $26,883.00
- ----------------------------------------------------------------------
The Equipment described herein includes all cash and non-cash proceeds
(including, without limitation, insurance proceeds of the foregoing,) and all
present and future additions, accessions, substitutions and replacements
thereto.
LESSEE: WHITEFORD FOODS VENTURE, L.P.
By: G/W FOODS, INC., ITS GENERAL PARTNER
BY: /s/ A. Greenaway
-------------------------
TITLE: President
<PAGE>
PNC LEASING CORP PNCBANK
LESSEE ACCEPTANCE CERTIFICATE
LESSEE: WHITEFORD FOODS VENTURE, L.P. SUPPLIER: PREFERRED RESOURCES, INC.
770 NORTH CENTER STREET 131 MARTIN LANE
VERSAILLES, OH 45380 ELK GROVE, IL 60007
1. LESSEE ACCEPTANCE CERTIFICATE. This Lessee Acceptance Certificate
("Acceptance") is hereby made a part of that certain Master Lease Agreement
dated October 11, 1996, and that certain Schedule of Leased Equipment dated
11/13/96, both between Lessor and the undersigned Lessee. All terms and
conditions of said Lease and Schedule are incorporated herein by reference.
2. ACCEPTANCE DATE: Lessee hereby agrees that if the base term of the
Lease has not commenced by the Lessee on or before April 30, 1997 for
any reason whatsoever, then upon written demand by the Lessor, the
Lessee will immediately reimburse Lessor for the total amount set forth
in this Acceptance Certificate ("Cost"), plus interest thereon at PNC
Bank, National Association's Prime Rate, in effect as of the date of
funding, plus two percent (2%) per annum, for the period from the date
of funding by Lessor of said Cost to the payment date to Lessor of said
Cost.
3. EQUIPMENT. The Equipment subject to the Lease is described below
and includes all cash and non-cash proceeds and products (including
without limitation insurance proceeds) of the foregoing, and all
additions and accessions thereto, substitutions therefor and
replacements thereto:
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
QUANTITY EQUIPMENT DESCRIPTION COST
- -----------------------------------------------------------------------------
VARIOUS PLEASE REFER TO EXHIBIT A ATTACHED HERETO AND $95,832.57
MADE A PART HEREOF FOR A DETAILED EQUIPMENT
DESCRIPTION.
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
THE TOTAL EQUIPMENT COST INCLUDING TAXES LEVIED AT THE TIME OF SALE,
IF ANY, IS: $95,832.57.
4. EQUIPMENT LOCATION. The Equipment shall be located at the
following address and shall not be removed without Lessor's prior
written consent, which consent shall not be unreasonably withheld.
770 North Center Street Versailles Darke OH 45380
------------------------------------------------------------------
Street City County State Zip Code
- ----------------------------------------------------------------------------
PNC LEASING CORP Date: February 24, 1997
Pittsburgh, PA
Gentlemen:
All of the Equipment listed above was received by us and is in good
order and condition, installed to our satisfaction and acceptable to us.
We approve the payment of the invoice(s) covering the Equipment for
the amount(s) shown thereon.
Lessee represents and warrants (a) that the representations and
warranties as set forth in paragraph 24 of the Lease are true and
correct as of the date hereof; (b) that Lessee has satisfied or complied
with all requirements set forth in the Lease to be satisfied or complied
with on or prior to the date hereof; and (c) that no Event of Default
under the Lease has occurred and is continuing on the date hereof.
Date Equipment was first placed in service: 10/26/96
LESSEE: WHITEFORD FOODS VENTURE, L.P.
By: G/W FOODS, INC., ITS GENERAL PARTNER
By: /s/ A. Greenaway
---------------------------------
Title: President
<PAGE>
EXHIBIT A
This Exhibit A is attached to and made a part of that certain Lessee
Acceptance Certificate between Whiteford Foods Venture, L.P., as Lessee,
and PNC Leasing Corp, as Lessor.
LESSOR: PNC Leasing Corp
Two PNC Plaza, 13th Floor
620 Liberty Avenue
Pittsburgh, PA 15265
LESSEE: Whiteford Foods Venture, L.P.
7700 North Center Street
Versailles, OH 45380
SCHEDULE NUMBER: 00931-001
EQUIPMENT LOCATION: WHITEFORD FOODS VENTURE, L.P.
770 NORTH CENTER STREET
VERSAILLES, OH 45380 (DARKE COUNTY, OH)
EQUIPMENT VENDOR: Preffered Resources, Inc.
131 Martin Lane
Elk Grove, IL 60007
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------------
QUANTITY DESCRIPTION
- ------------------------------------------------------------------------------
1 KEMCO GAS FIRED THERMEFFICIENT - 100 PATENTED OXYGEN STRIPPING
DIRECT CONTACT WATER HEATER RATED AT 7.0 MILLION BTU PER HOUR
1 STAINLESS STEEL HOT WATER TRANSFER TANK, SIZED TO ALLOW RIGGING
INTO ROOM, WITH THE ABILITY TO SUPPORT THE GRAVITY DRAIN
HEATER, TANK WILL BE COMPLETE WITH THE NECESSARY NOZZLES AND
OPENINGS FOR USE WITH THE KEMCO SYSTEM.
1 WATER MAKE-UP WATER CONTROL SYSTEM TO REGULATE FLOW OF WATER
TO STORAGE SYSTEM INCLUDING:
2 AUTOMATIC SOLENOID OPERATED VALVES WITH RATED CAPACITY 22 - 38
GALLONS PER MINUTE
3 LEVEL SENSING DEVICES, ELECTRICALLY SIGNALING
1 FLOW CONTROL STATION
2 HIGH CAPACITY CENTRIFUGAL TYPE WATER PUMPS CAPABLE OF PUMPING
200 GALLONS PER MINUTE. PUMPS SHALL HAVE CAST IRON CASE, BRONZE
FITTED WITH MECHANICAL SEALS AND SHALL BE BUILT TOGETHER TYPE
OPERATING AT 3500 RPM. THE PUMP SHALL BE COMPLETE WITH: A. BASE
OR FRAME, B. TOTALLY ENCLOSED FAN COOLED MOTOR.
2 MAGNETIC STARTERS, LINE VOLTAGE TYPE WITH BIMETAL TYPE OVERLOAD
PROTECTION.
2 SELECTOR SWITCHED MOUNTED INTEGRALLY WITH STARTERS
1 PRESSURE ACTUATED ELECTRICAL SWITCH TO ACTUATE PUMP #2 ON
HIGH WATER DEMAND
1 TIME DELAY SWITCH TO FUNCTION WITH ABOVE TO ELIMINATE PUMP
CYCLING
1 RE-CIRCULATING CONTROL VALVE, PRESSURE ACTUATED
1 SET OF GAUGE COCKS WITH PLASTIC SIGHT GLASS
2 PRESSURE GAUGES, 3 1/2 INCH DIAL, RANGE 0-100 PSI
1 DIAL THERMOMETER, 3 INCH DIAL, BIMETAL TYPE, 20-240 DEGREE F
2 CHECK VALVES WITH ANTI-SLAM CHARACTERISTICS INCLUDING ANY
AND ALL AUXILARY EQUIPMENT AND INSTALLATION
- ------------------------------------------------------------------------------
$95,832.57
- ------------------------------------------------------------------------------
The Equipment described herein includes all cash and non-cash proceeds
(including, without limitation, insurance proceeds of the foregoing,)
and all present and future additions, accessions, substitutions and
replacements thereto.
DEBTOR: WHITEFORD FOODS VENTURE, L.P.
By: G/W FOODS, INC., ITS GENERAL PARTNER
BY: /s/ A. Greenaway
--------------------------------
TITLE: President
<PAGE>
PNC LEASING CORP PNCBANK
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS THAT Whiteford Foods Venture, L.P.,
(hereinafter referred to as "Seller"), with its principal place of business
at 770 North Center Street, Versailles, OH 45380 for and in consideration of
the sum of One Hundred Sixty-eight Thousand Seven Hundred Forty-six Dollars
and 90/100 ($168,746.90) paid to it by PNC Leasing Corp (hereinafter referred
to as "Purchaser") with an address at Pittsburgh, Pennsylvania 15265, has
granted, bargained, sold, conveyed, transferred, assigned and delivered, and
by these presents does grant, bargain, sell, convey, transfer, assign and
deliver unto Purchaser, its successors and assigns, all of its right, title
and interest in certain equipment (herein called "the Equipment"), which is
described on Exhibit A attached hereto and made a part hereof.
TO HAVE AND TO HOLD all singular the Equipment by these presents
bargained, sold and confirmed unto the Purchaser, its successors and assigns,
forever.
AND, Seller, for itself, its successors and assigns, does hereby
covenant with Purchaser that at the time of this sale, Seller had legal title
to the Equipment, and at the time of delivery of the Equipment to the
Purchaser, the Seller's title to the Equipment was free and clear of all
liens, claims and encumbrances of any nature whatsoever.
IN WITNESS WHEREOF, Seller has caused this instrument to be executed in
its name by an authorized officer as of this 20 day of February, 1997.
SELLER:
ATTEST: WHITEFORD FOODS VENTURE, L.P.
BY: G/W FOODS, INC., ITS GENERAL PARTNER
/s/ Margaret M. Goecke By: /s/ A. Greenaway
- ------------------------ --------------------------
Title: President
<PAGE>
Page 1 of 5
EXHIBIT B
This Exhibit B is attached to and made a part of that certain Bill of Sale
between Whiteford Foods Ventures, L.P., as Lessee, and PNC Leasing Corp,
as Lessor.
LESSOR: PNC Leasing Corp
Two PNC Plaza, 13th Floor
620 Liberty Avenue
Pittsburgh, PA 15265
LESSEE: Whiteford Foods Venture, L.P.
770 North Center Street
Versailles, OH 45380
SCHEDULE NUMBER: 00931-001
EQUIPMENT LOCATION: 770 North Center Street
Versailles, OH 45380
(Darke County, OH)
EQUIPMENT VENDOR: PERSTORP ANALYTICAL
12101 Tech Road
Silver Springs, MD 20904
EQUIPMENT COST: $46,206.80
EQUIPMENT DESCRIPTION:
- -----------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- -----------------------------------------------------------------------------
1 INFRATEC ANALYZER, MEAT - S/N: 731001 $46,000.00
1 SURGE SUPPRESSOR ISOBLO 0.00
1 SHIPPING CHARGES 206.80
- -----------------------------------------------------------------------------
GRAND TOTAL $46,206.80
- -----------------------------------------------------------------------------
EQUIPMENT VENDOR: WILEY WATER SYSTEMS, INC.
7752 E. State Road 32
Union City, IN 47390
EQUIPMENT COST: $12,057.50
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------------
1 COMMERCIAL WATER SOFTENER W/INSTALLATION $11,695.00
1 3" METER & FREIGHT 362.50
- ------------------------------------------------------------------------------
GRAND TOTAL $12,057.50
- ------------------------------------------------------------------------------
EQUIPMENT VENDOR: KREMER ROOFING, INC.
9313 Murphy Road P.O. Box 823
Versailles, OH 45380
EQUIPMENT COST: $3,023.50
EQUIPMENT DESCRIPTION:
- -----------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- -----------------------------------------------------------------------------
1 MATERIAL & LABOR ON FLASHING WATER HEATER $1,606.50
CONNECTIONS ON ROOF OF BLDG. A
1 MATERIAL & LABOR ON ROOF REPAIR 1,417.00
- -----------------------------------------------------------------------------
GRAND TOTAL $3,023.50
- -----------------------------------------------------------------------------
<PAGE>
Page 2 of 5
EQUIPMENT VENDOR: HIGH PRESSURE SANITATION, INC.
P.O. Box 459
Slidell, LA 70459
EQUIPMENT COST: $13,391.11
EQUIPMENT DESCRIPTION:
- -----------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- -----------------------------------------------------------------------------
1 SAIA PPD HOT TAILGATE RUSH $896.11
1 ROTO JET SYSTEM DUAL PUMP SKID ONLY. FOR 12,495.00
ROTO JET RGB 2X2 PUMP W/50HP
324T FRAME MOTORS, TO BE SUPPLIED TO CUSTOMER
DUAL SLIDING MOTOR BASES FOR 324T FRAME, BELT
GUARDS, BELT DRIVE PACKAGES FOR SINGLE POINT
CONNECTION DUAL PUMP PROTECTION PACKAGES
W/DIFFUSER, GAUGES, CHECK VALVES, HOSES, ETC.
A DUPLEX CONTROL PANEL 50HP - 460V - 3HP -
ACROSS LINE STARTER WITH ALL NECESSARY SAFETIES,
CONTROLS, RELAYS, RESETS AND METERS.
- -----------------------------------------------------------------------------
GRAND TOTAL $13,391.11
- -----------------------------------------------------------------------------
EQUIPMENT VENDOR: SCOTT'S ELECTRIC
P.O. Box 322
Versailles, OH 45380
EQUIPMENT COST: $5,762.22
EQUIPMENT DESCRIPTION:
- -----------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- -----------------------------------------------------------------------------
53 LABOR HOURS $1,192.50
1 PANEL 200-AMP4-WIRE 208-VOLT PANEL W/MAIN $291.84
BREAKER
1 PANEL 200-AMP 480-VOLT 277/480 VOLT $1,121.92
PANELBOARD MAIN LUG ONLY
6 2" CONNECTORS $13.08
6 2" BUSHINGS $3.24
1 2" EMT COUPLING $2.12
20 EMT FT. 2" EMT $16.20
120 EMT FT. 3/0 EMT $144.00
30 FT. #6 THHN WIRE $6.90
3 2" UNISTRUT STRAPS $4.89
10 FT. 1-5/8" UNISTRUT $14.10
2 GROUND BAR KITS $16.06
2 EHB 3-POLE 30-AMP BREAKERS $407.96
1 EHB 3-POLE 20-AMP BREAKER $203.98
10 BAB1020 BREAKER $141.30
6 175-WATT METAL HALIDE FIXTURES $825.00
1 EXIT & EMERGENCY FIXTURE $97.31
1 70-WATT HPS FIXTURE $123.48
1 70-WATT HPS LAMP $21.88
1 8' H.O. FIXTURE $51.21
2 8' H.O. LAMPS $9.50
15 4x4x2-1/8 BOXES $23.40
11 4X4 BLANK COVERS $6.05
3 4X4 RAISED OUTLET COVERS $5.13
1 4X4 RAISED SWITCH COVER $1.71
2 20-AMP RECEPTACLES $8.00
1 15-AMP SWITCHES $1.00
6 3/4" EMT CONNECTORS $3.00
2 3/4" EMPT COUPLINGS $1.00
6 3/4" MINI'S $2.40
1 3/4" UNISTRUT STRAP $0.67
45 1/2" EMPT CONNECTORS $15.75
6 1/2" EMT COUPLINGS $2.10
1 1/2" UNISTRUT STRAP $0.53
43 1/2" MINIS $15.05
2 1" EMT CONNECTORS $1.50
<PAGE>
Page 3 of 5
25 SEALTITE $17.75
2 RAIN-TIGHT BOXES $32.62
4 EMT CONNECTORS $3.64
4 BUSHINGS $2.68
3 UNISTRUT STRAPS $4.11
5 UNISTRUT $7.05
2 EMT CONNECTORS $0.70
3 MINIS $1.05
1 REDUCING BUSHING $1.31
1 REDUCING BUSHING $1.91
2 SEALTITE CONNECTORS $10.42
1 MINI $0.65
10 SEALTITE $10.90
8 SEALTITE CONNECTORS $25.68
2 EMT CONNECTORS $4.36
1 BOX $1.56
3 BLANK COVERS $1.65
7 BLUE WIRE NUTS $1.40
25 WIRE TIES $2.50
15 LEAD ANCHORS $7.50
8 WASHERS $0.80
16 BOLTS $1.60
6 STA-CONS $1.08
110 #4 THHN WIRE $47.30
30 #8 THHN WIRE $3.90
250 #14 THHN WIRE $12.50
10 LABOR $260.00
2 1" EMT COUPLINGS $1.50
4 1" MINIS $2.20
1 1" UNISTRUT STRAP $0.74
40 FT. 1" EMT $18.80
30 FT. 3/4" EMT $9.00
150 FT. 1/2" EMT $30.00
4 TAP-CON $1.60
50 FENDER WASHERS $5.00
20 LEAD ANCHORS $10.00
20 1/4" X 20 X 1 BOLTS $2.00
1 1" MYERS HUB $7.31
70 WIRE TIES $7.00
300 FT. #10 THHN WIRE $30.00
650 FT. #12 THHN WIRE $45.50
7 MC CONNECTORS $2.45
30 FT. 12-2 MC CABLE $13.50
1 3-POLE 480 VOLT 100-AMP BREAKER $313.24
- ------------------------------------------------------------------------------
GRAND TOTAL $5,762.22
- ------------------------------------------------------------------------------
EQUIPMENT VENDOR: ASHLAND MUNICIPAL SUPPLIES CO.
P.O. Box 931404
Cleveland, OH 44193-0497
EQUIPMENT COST: $4,522.00
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------
1 FEBCO 825 YD 4" RED. PRESS. NRS 5BF1 $1,779.00
1 4" COMPOUND GEN 100SF 2,743.00
- ------------------------------------------------------------------------
GRAND TOTAL $4,522.00
- ------------------------------------------------------------------------
EQUIPMENT VENDOR: ACE HARDWARE
337 Marker Road
Versailles, OH 45380
EQUIPMENT COST: $57.77
<PAGE>
Page 4 of 5
EQUIPMENT DESCRIPTION:
- --------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- --------------------------------------------------------------------------
2 COUPLING REDUCTOR $14.98
2 PIPE CLEANER 8.58
1 CEMENT 7.79
1 PVC 3" Y 4.89
1 PVC PLUG CAP 4.29
4 PVC 3' ELL 9.96
1 PVC REDUCER 3.29
1 PVC 3" TEE 3.99
- --------------------------------------------------------------------------
GRAND TOTAL $57.77
- --------------------------------------------------------------------------
EQUIPMENT VENDOR: K & M
4110 St., Rt. 47 West
Ansonia, OH 45303
EQUIPMENT COST: $125.00
EQUIPMENT DESCRIPTION:
- -------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- -------------------------------------------------------------------------
1 SKID LOAD RENTAL $125.00
- -------------------------------------------------------------------------
GRAND TOTAL $125.00
- -------------------------------------------------------------------------
EQUIPMENT VENDOR: The Ansonia Lumber Company
300 South Main Street
Ansonia, OH 45303
EQUIPMENT COST: $1,470.36
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------
1 2/8 x 8' INSWING 4 9/16 JAM IN LH E801 DOOR $280.67
25 2 X 4 X 8 CONSTRUCTION GRADE 71.25
6 2 X 4 X 10 CONSTRUCTION GRADE 23.70
16 2 X 4 X 12 CONSTRUCTION GRADE 127.20
9 2 X 6 X 10 TREATED 64.35
8 2 X 6 X 14 TREATED 91.60
4 2 X 4 X 10 TREATED 20.40
14 4 X 8 X 1/2 CDX PLYWOOD 169.40
5 12' WHITE CD 103.75
12 8' WHITE CD 165.96
10 J CHANNEL WHITE CD 38.00
400 1" WHITE CD SCREWS 22.00
3 ROLLS 24" WHITE ALUM COIL 157.50
6 ROLLS 3-1/2 X 24 INSULATION 134.58
- ------------------------------------------------------------------------
GRAND TOTAL $1,470.36
- ------------------------------------------------------------------------
EQUIPMENT VENDOR: GREENVILLE DOOR SALES, INC.
320 Chesnut Street
Greenville, OH 45331
EQUIPMENT COST: $474.00
EQUIPMENT DESCRIPTION:
- ------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ------------------------------------------------------------------------
1 8' TUBE $8.50
1 SET 8' HORZ & VERT TRACKS 69.00
1 SET 8' CABLES 8.00
1 PR. DRUMS 16.00
<PAGE>
Page 5 of 5
6 SIDE LOCKS 36.00
1 CENTER PAD WITH BEARING 7.80
1 PR. END BEARING BRACKET 18.50
1 ROLL BOTTOM RUBBER 250.00
1 #2 GREEN SPRING 45.00
4 3" SHEAVES 15.20
- ------------------------------------------------------------------------
GRAND TOTAL $474.00
- ------------------------------------------------------------------------
EQUIPMENT VENDOR: LEFELD SUPPLIES & RENTAL
512 North Second Street
Coldwater, OH 45828
EQUIPMENT COST: $365.48
EQUIPMENT DESCRIPTION:
- ---------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- ---------------------------------------------------------------------------
1 14" CONCRETE FLOOR SAW - 072-214 $120.00
1 12" CHOP SAW - 072-412 95.00
1 BRUTE HAMMER 78.00
4 14" BLADE 50.16
4 12" BLADE 22.32
- ---------------------------------------------------------------------------
GRAND TOTAL $365.48
- ---------------------------------------------------------------------------
EQUIPMENT VENDOR: MICRODRY, INC.
7450 Highway 329
Crestwood, Kentucky 40014
EQUIPMENT COST: $54,408.16
EQUIPMENT DESCRIPTION:
- --------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- --------------------------------------------------------------------------
1 MODEL IV 75 POWER GENERATOR $45,000.00
1 ALLEN/BRADLEY SIZE 4 CONTACTOR, 9,408.16
MARELCO 75 KW HV TRANSFORMER
- --------------------------------------------------------------------------
GRAND TOTAL $54,408.16
- --------------------------------------------------------------------------
EQUIPMENT VENDOR: SLAGLE MECHANICAL CONTRACTORS
P.O. Box 823, 877 W. Russell Road
Sidney, OH 45365
EQUIPMENT COST: $26,883.00
EQUIPMENT DESCRIPTION:
- --------------------------------------------------------------------------
QUANTITY DESCRIPTION PRICE
- --------------------------------------------------------------------------
1 LABOR AND MATERIAL TO RUN WATER LINE FOR $12,683.00
BOILER, INSTALLED 4" BACKFLOW PREVENTER
AND METER, RELOCATE 2" BACKFLOW PREVENTER
FOR BYPASS
1 LABOR AND MATERIAL TO FURNISH KEMCO ROOM 10,700.00
WITH GAS PIPING, HIGH PRESSURE WASH
PIPING AND 3" WATER LINE
1 LABOR AND MATERIAL AND EQUIPMENT TO INSTALL 3,500.00
ONE (1) 2" GAS METER SETTING
PER DP&L'S SPECIFICATIONS
- --------------------------------------------------------------------------
GRAND TOTAL $26,883.00
- --------------------------------------------------------------------------
The Equipment described herein includes all cash and non-cash proceeds
(including, without limitation, insurance proceeds of the foregoing,) and all
present and future additions, accessions, substitutions and replacements
thereto.
LESSEE: WHITEFORD FOODS VENTURE, L.P.
By: G/W FOODS, INC., ITS GENERAL PARTNER
BY: /s/ A. Greenaway
-------------------------
TITLE: President
<PAGE>
PNC LEASING CORP PNCBANK
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS THAT Whiteford Foods Venture, L.P.,
(hereinafter referred to as "Seller"), with its principal place of business
at 770 North Center Street, Versailles, OH 45380 for anD in consideration of
the sum of Ninety-five Thousand Eight Hundred Thirty-Two Dollars and 57/100
($95,832.57) paid to it by PNC Leasing Corp (hereinafter referred to as
"Purchaser") with an address at Pittsburgh, Pennsylvania 15265, has granted,
bargained, sold, conveyed, transferred, assigned and delivered, and by these
presents does grant, bargain, sell, convey, transfer, assign and deliver
unto Purchaser, its successors and assigns, all of its right, title and
interest in certain equipment (herein called "the Equipment"), which is
described on Exhibit A attached hereto and made a part hereof.
TO HAVE AND TO HOLD all singular the Equipment by these presents
bargained, sold and confirmed unto the Purchaser, its successors and assigns,
forever.
AND, Seller, for itself, its successors and assigns, does hereby
covenant with Purchaser that at the time of this sale, Seller had legal title
to the Equipment, and at the time of delivery of the Equipment to the
Purchaser, the Seller's title to the Equipment was free and clear of all
liens, claims and encumbrances of any nature whatsoever.
IN WITNESS WHEREOF, Seller has caused this instrument to be executed in
its name by an authorized officer as of this 28 day of October, 1996.
SELLER:
ATTEST: WHITEFORD FOODS VENTURE, L.P.
BY: G/W FOODS, INC., ITS GENERAL PARTNER
/s/ Margaret M. Goecke BY: /s/ A. Greenaway
- ------------------------ --------------------------
Title: President
<PAGE>
EXHIBIT A
- ------------------------------------------------------------------------------
QUANTITY DESCRIPTION
- ------------------------------------------------------------------------------
1 KEMCO GAS FIRED THERMEFFICIENT - 100 PATENTED OXYGEN
STRIPPING DIRECT CONTACT WATER HEATER RATED AT 7.0 MILLION BTU
PER HOUR
1 STAINLESS STEEL HOT WATER TRANSFER TANK, SIZED TO ALLOW
RIGGING INTO ROOM, WITH THE ABILITY TO SUPPORT THE GRAVITY
DRAIN HEATER, TANK WILL BE COMPLETE WITH THE NECESSARY NOZZLES
AND OPENINGS FOR USE WITH THE KEMCO SYSTEM.
1 WATER MAKE-UP WATER CONTROL SYSTEM TO REGULATE FLOW OF
WATER TO STORAGE SYSTEM INCLUDING:
2 AUTOMATIC SOLENOID OPERATED VALVES WITH RATED CAPACITY 22
- 38 GALLONS PER MINUTE
3 LEVEL SENSING DEVICES, ELECTRICALLY SIGNALING
1 FLOW CONTROL STATION
2 HIGH CAPACITY CENTRIFUGAL TYPE WATER PUMPS CAPABLE OF
PUMPING 200 GALLONS PER MINUTE. PUMPS SHALL HAVE CAST IRON
CASE, BRONZE FITTED WITH MECHANICAL SEALS AND SHALL BE BUILT
TOGETHER TYPE OPERATING AT 3500 RPM. THE PUMP SHALL BE
COMPLETE WITH: A. BASE OR FRAME, B. TOTALLY ENCLOSED FAN
COOLED MOTOR.
2 MAGNETIC STARTERS, LINE VOLTAGE TYPE WITH BIMETAL TYPE
OVERLOAD PROTECTION.
2 SELECTOR SWITCHED MOUNTED INTEGRALLY WITH STARTERS
1 PRESSURE ACTUATED ELECTRICAL SWITCH TO ACTUATE PUMP #2 ON
HIGH WATER DEMAND
1 TIME DELAY SWITCH TO FUNCTION WITH ABOVE TO ELIMINATE
PUMP CYCLING
1 RE-CIRCULATING CONTROL VALVE, PRESSURE ACTUATED
1 SET OF GAUGE COCKS WITH PLASTIC SIGHT GLASS
2 PRESSURE GAUGES, 3 1/2 INCH DIAL. RANGE 0-100 PSI
1 DIAL THERMOMETER, 3 INCH DIAL. BIMETAL TYPE, 20-240
DEGREE F
2 CHECK VALVES WITH ANTI-SLAM CHARACTERISTICS INCLUDING ANY
AND ALL AUXILARY EQUIPMENT AND INSTALLATION
- ------------------------------------------------------------------------------
The Equipment described herein includes all cash and non-cash proceeds
(including, without limitation, insurance proceeds of the foregoing,) and all
present and future additions, accessions, substitutions and replacements
thereto.
<PAGE>
PNC LEASING CORP PNCBANK
ASSIGNMENT OF EQUIPMENT PURCHASE AGREEMENTS
THIS Assignment of Equipment Purchase Agreements (hereinafter called
"Assignment") is made this 11th day of October, 1996 by and between Whiteford
Foods Venture, L.P. ("Assignor"), and PNC Leasing Corp., a wholly owned
subsidiary of PNC Bank, National Association ("Assignee").
WITNESSETH:
WHEREAS, Assignor has entered into certain Equipment Purchase Agreements
("Purchase Agreements") with the suppliers or manufacturers ("Vendors") of
certain equipment, pursuant to which the Vendors agreed to sell to Assignor
the equipment described in the Purchase Agreements ("Equipment") upon the
terms and conditions set forth in the Purchase Agreements;
WHEREAS, Assignor and Assignee have agreed that Assignee will purchase the
Equipment directly from the Vendors and will thereupon lease the same to
Assignor pursuant to a certain Master Lease Agreement ("Lease") entered into
between Assignor and Assignee dated October 11, 1996; and
WHEREAS, in order for Assignee to purchase the Equipment from the Vendors, it
will be necessary for Assignor to assign its right, title and interest in and
to the Purchase Agreements to Assignee.
NOW, THEREFORE, in consideration of the foregoing, in consideration of the
promises and mutual covenants and agreements hereinafter set forth, and with
the intent to be legally bound hereby, Assignor and Assignee do hereby
mutually covenant and agree as follows:
1. Assignor hereby sells, assigns, transfers, and sets over unto
Assignee all of Assignor's right, title and interest under, in, to and
in respect to the Purchase Agreements, including (without limitation)
the right (i) to accept and (ii) to take title to the Equipment and be
named as "buyer" in any documents of title, bills of sale, invoices, or
similar documents to be delivered by Vendors in respect of the Equipment
under the respective Purchase Agreements.
2. In the event that any of the Vendors hereafter require the making
of any down payments, progress payments or otherwise advances, same
shall be made by Assignor, unless it is otherwise agreed to in writing
by Assignee and Assignor. Any such payments and/or advances shall be
reimbursed to Assignor when and if Assignee is required to make payment
of the Purchase Price therefore pursuant to the Lease including all
schedules and attachments thereto.
3. Assignee hereby accepts this Assignment of Assignor's right, title
and interest in and to the Purchase Agreements, and by this acceptance,
agrees to (a) purchase the Equipment directly from the Vendors and (b)
pay the balance of all payments due Vendors, at the time Assignee is
required to make payment of the Purchase Price to Vendors, pursuant to
the Purchase Agreements; provided, that there has been satisfactory
compliance with the terms and conditions contained in the Lease relating
to the purchase by Assignee of the Equipment; and provided further, that
the Lease is in full force and effect and no default thereunder has
occurred.
4. Notwithstanding the foregoing Assignment, Assignee hereby
designates Assignor to perform all obligations and duties of Assignee
under the Purchase Agreement except (i) the purchase of the Equipment
and (ii) the payment of monies due the Vendors under the Purchase
Agreements as of the time of the completion of delivery and acceptance
of the Equipment; provided, however, the Assignor may not enter into any
field orders, change orders, or other amendments, modifications or
supplements to any Purchase Agreement without the written consent or
countersignature of the Assignee, noted thereon if such field orders,
amendments or modifications would (i) change the number of items of
Equipment which the Assignee is obligated to purchase under any Purchase
Agreement; (ii) increase the aggregate purchase price of the Equipment
to an amount in excess of $300,000.00; (iii) postpone beyond June 30,
1997 the time for delivery of the Equipment and successful completion of
the initial tests prior to acceptance of the Equipment pursuant to the
Purchase Agreements; (iv) change or modify in any material way the
performance standards or other requirements for the Equipment referred
to in any Purchase Agreement or related documents; or (v) result in any
recision, cancellation or termination of any Purchase Agreement.
Assignor agrees to such designation and agrees to perform such
obligations. The obligations of Assignor assumed hereby shall continue
until termination of the Lease or until Assignee declares a default
thereunder.
5. It is expressly agreed that, anything herein contained to the
contrary notwithstanding (a) the Assignor shall at all times remain
liable to the Vendors under the Purchase Agreements to perform all of
the duties and obligations of Buyer thereunder to the same extent as if
this Assignment had not been executed; (b) the exercise by the Assignee
of any rights assigned hereunder shall not release the Assignor from any
of its duties or obligations to any Vendor under any Purchase Agreement
except to the extent that such exercise by the Assignee shall constitute
performance of such duties and obligations, and (c) Assignee shall have
no obligation or liability under any Purchase Agreement by reason of or
arising out of this Agreement or be obligated to perform any obligation
or duty of Assignor under the Purchase Agreements or to make any
payments (other than the obligation of Assignee to pay the purchase
price for the Equipment) or to make any inquiry as to the sufficiency of
any payment received by any Vendor or to present or file any claim or to
take any other action to collect or enforce any claims for any payment
assigned hereunder.
Page 1 of 2
<PAGE>
6. In the event the Assignor notifies Assignee that Assignor has determined
to not lease any of said Equipment from Assignee (whether because of
breach of contract on the part of the Vendor or otherwise), Assignee
hereby automatically reassigns to Assignor, without recourse and without
representation or warrant of any kind whatsoever, the appropriate
contract rights and Purchase Agreements and releases Assignee's
interests therein. Assignee shall thereupon have no further
obligations, responsibilities or liabilities in connection with said
contract rights, Purchase Agreements and/or Equipment and Assignor
hereby agrees to indemnify Assignee and hold Assignee harmless from and
against any and all claims, demands, actions or proceedings arising out
of or in any way relating to said contract rights, Purchase Agreements
and/or the Equipment, by whomsoever asserted, and any and all losses,
damage, obligations, liabilities, costs or expenses (including
attorneys' fees) suffered, paid or incurred by Assignee in connection
therewith.
7. Assignor does hereby constitute, effective as of the time Assignee has
declared the Lease to be in default, the Assignee, its successors and
assigns, the Assignor's true and lawful attorney, irrevocably, with full
power in the name of the Assignor or otherwise, to ask, require, demand,
receive, compound and give acquittance for any and all monies and claims
for money due and to become due under, or arise out of, any Purchase
Agreement, to endorse any checks or other instruments or orders in
connection therewith, or to file any claim or to take any action or
institute any proceedings which the Assignee may deem to be reasonably
necessary or advisable.
8. Assignor does hereby represent and warrant that the Purchase Agreements
are, or will be, in full force and effect and enforceable in accordance
with their terms, except as limited by bankruptcy, insolvency,
reorganization and other similar laws affecting the enforcement of
creditors' rights, and that the Assignor is not, or will not be, in
default thereunder. Assignor does hereby further represent and warrant
that the Assignor has not assigned or pledged any interest in any
Purchase Agreement to any entities or individuals other than the
Assignee, and hereby covenants that it will not assign or pledge, so
long as this Agreement shall remain in effect, the whole or any part of
the rights hereby assigned to any entity or individual other than the
Assignee.
9. Assignor agrees that at any time and from time to time, upon written
request of the Assignee, Assignor shall promptly and duly execute and
deliver any and all such further instruments and documents and take such
further action as the Assignee may reasonably request in order that
Assignee obtain the full benefits of this Agreement.
10. All notices, requests, demands or other communications to or upon the
Assignee and Assignor shall be deemed to have been given or made when
deposited in the mails, postage for certified airmail prepaid or in the
case of telegraphic notice, when delivered to the telegraph company,
addressed to respective addresses contained in the Lease.
11. Neither this Assignment nor any provision hereby may be changed, waived,
discharged or terminated orally, but only by an instrument in writing
signed by the party against whom enforcement of the change, waiver
discharge or termination is sought.
12. This Assignment shall be binding upon the Assignor and its successors
and assigns and shall be binding upon and inure to the benefit of the
Assignee and its successors and assigns.
13. This Assignment and the rights and obligations of the parties hereunder
shall be construed in accordance with and governed by the laws of the
Commonwealth of Pennsylvania.
IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be
duly executed with the intent to be legally bound.
ASSIGNEE: PNC LEASING CORP ASSIGNOR: WHITEFORD FOODS VENTURE, L.P.
BY: G/W FOODS, INC.,
ITS GENERAL PARTNER
By: /s/ Linda M. Graner BY: /s/ A. Greenaway
-------------------------- -------------------------
Title: Lease Officer Title: President
-------------------------- ----------------------
Page 2 of 2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> OCT-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 121,163
<SECURITIES> 0
<RECEIVABLES> 3,196,376
<ALLOWANCES> 0
<INVENTORY> 2,612,515
<CURRENT-ASSETS> 6,409,085
<PP&E> 16,352,328
<DEPRECIATION> (4,154,597)
<TOTAL-ASSETS> 21,566,960
<CURRENT-LIABILITIES> 6,252,152
<BONDS> 5,704,645
0
0
<COMMON> 0
<OTHER-SE> 9,610,163
<TOTAL-LIABILITY-AND-EQUITY> 21,566,960
<SALES> 59,026,632
<TOTAL-REVENUES> 59,366,563
<CGS> 54,188,228
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,360,657
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 839,198
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 817,678
<EPS-PRIMARY> .63
<EPS-DILUTED> 0
</TABLE>
