<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, 1995
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
of incorporation or organization) No.)
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
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]
At March 31, 1996, 1,306,890 Class A units had been subscribed for and
issued.
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<PAGE>
INDEX
<TABLE>
<CAPTION>
ITEM
NO. DESCRIPTION PAGE
_______________ _________________________________________________ ____
<S> <C> <C>
PART I
1. Business 3
2. Properties 5
3. Legal Proceedings 6
4. Submission of Matters to a Vote of Security Holders 6
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
</TABLE>
<PAGE>
PART I
ITEM 1. BUSINESS
A. GENERAL DEVELOPMENT OF BUSINESS
Whiteford Partners, L.P. (the "Partnership") (formerly Granada
Foods, L.P.) was formed on June 30, 1987, as a Delaware limited partnership.
The Partnership consists of a General Partner which was formerly Granada
Management Corp. and now 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
3
<PAGE>
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.
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. Operations at a Cincinnati, Ohio facility were
terminated in April 1992, and the plant was sold in December 1992.
VERSAILLES, OHIO PLANT OPERATION
The Partnership 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. The Partnership'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 fast food chains served include Burger
King, Rally's and Rax.
The Partnership 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, 1995, 1994 and 1993, Whiteford's
processed and sold 59.8 million pounds of products ($57.6 million), 58.9
million pounds of products ($64.1 million) and 51.4 million pounds of
products ($63.1 million) respectively, through its further processing and
distribution operations.
CINCINNATI, OHIO PLANT OPERATION
The Partnership's operations in Cincinnati, conducted through a joint
venture in CMF from July 1, 1990, to April 30, 1992, conducted beef and
chicken further processing operations in a 50,000-square foot facility under
the name of Cincinnati Multifoods. In September 1991, the decision was made
to wind down the CMF venture and sell this facility due to continuing
significant operating losses caused by insufficient sales volumes to cover
operating costs. The venture's operating activities were terminated in April
1992, with substantially all of the processing equipment relocated, to the
Versailles, Ohio plant for utilization and the CMF land, building and
unutilized equipment were placed on the market for sale. The CMF property
was sold on December 30, 1992.
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, 1995: Gordon Food Service,
20.09%; Prosource Distribution Service, 16.95%; I Supply, 12.70%; Sygma
Network of Ohio, Inc., 12.50%; and Maines Paper and Food Service, 10.09%.
4
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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.
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 1996. 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.
Through May 4, 1992, Granada and affiliates had substantially reduced the
scope of their respective operations as a result of cash flow limitations
which necessitated the sale of assets to retire secured and unsecured debt.
Accordingly, the availability of Granada personnel to provide administrative
services for the Partnership had been curtailed at December 31, 1991, and
eliminated as of May 4, 1992.
The Whiteford's operation at Versailles, Ohio employed 269 personnel
at December 31, 1995. 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.
5
<PAGE>
The following table sets forth Whiteford's operational facilities and
approximate capacities as of December 31, 1995.
<TABLE>
<CAPTION>
ESTIMATED ANNUAL
TONS OF PRODUCTION
--------------------------
GENERAL 1995
LOCATION CHARACTER SIZE CAPACITY ACTUAL
- ---------------- --------------- ------------------------- ------------ ----------
<S> <C> <C> <C> <C>
Versailles, Ohio Meat Processing Two separate facilities 40,000 29,500
Plant (1) 70,000 and (1) 33,000
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 1995.
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 each of the two most recently
completed years:
<TABLE>
<CAPTION>
Amount Per Limited
Date Aggregate Amount Partnership Unit
---- ---------------- ------------------
<S> <C> <C>
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
</TABLE>
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, 1995:
Title of Class Number of Record Holders
-------------- ------------------------
Limited Partnership Units 1,567
6
<PAGE>
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
----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Sale of meat products $ 57,667,240 $ 64,108,391 $ 63,182,785 $ 49,859,114 $43,298,510
Interest and other 159,531 236,930 156,012 125,016 151,058
------------ ------------ ------------ ------------ -----------
Total revenues 57,826,771 64,345,321 63,338,797 49,984,130 43,449,568
------------ ------------ ------------ ------------ -----------
Cost of sales 53,757,014 60,428,954 60,119,285 47,245,087 40,700,495
------------ ------------ ------------ ------------ -----------
Gross Profit
Meat products 3,910,226 3,679,437 3,063,500 2,614,027 2,598,015
Other 159,531 236,930 156,012 125,016 151,058
------------ ------------ ------------ ------------ -----------
Total gross profit 4,069,757 3,916,367 3,219,512 2,739,043 2,749,073
------------ ------------ ------------ ------------ -----------
Selling and admin expenses 2,197,506 1,963,623 1,622,827 1,572,973 1,749,778
Depreciation, amortization
and interest 1,851,707 1,121,232 1,072,817 918,410 615,422
------------ ------------ ------------ ------------ -----------
4,049,213 3,084,855 2,695,644 2,491,383 2,365,200
------------ ------------ ------------ ------------ -----------
Income before joint
venture operations 20,544 831,512 523,868 247,660 383,873
Equity in operations and
liquidation of unconsolidated
joint venture -- -- -- (573,171) (2,306,231)
------------ ------------ ------------ ------------ -----------
Net Income (loss) $ 20,544 $ 831,512 $ 523,868 $ (325,511) $(1,922,358)
------------ ------------ ------------ ------------ -----------
------------ ------------ ------------ ------------ -----------
Income (loss) per unit of
Limited Partners' Capital $ 0.02 $ 0.64 $ 0.40 $ (0.24) $ (1.43)
------------ ------------ ------------ ------------ -----------
------------ ------------ ------------ ------------ -----------
Weighted average units
outstanding 1,306,890 1,306,890 1,323,473 1,340,055 1,342,053
------------ ------------ ------------ ------------ -----------
------------ ------------ ------------ ------------ -----------
</TABLE>
BALANCE SHEET DATA (DECEMBER 31):
<TABLE>
<S> <C> <C> <C> <C> <C>
Working capital (deficit) $ (525,037) $ 154,050 $ 890,360 $ 307,403 $(1,127,114)
Total assets $ 22,280,444 $ 19,339,095 $ 15,970,758 $ 16,070,647 $13,322,989
Long-term debt, less current
maturities $ 6,754,525 $ 5,245,342 $ 3,578,836 $ 2,995,969 $ 253,547
Total partners' capital $ 8,792,485 $ 8,877,538 $ 8,178,022 $ 7,898,758 $ 8,224,259
</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, 1995, COMPARED TO YEAR ENDED DECEMBER 31, 1994
Revenues for the year ended December 31, 1995 were $57,826,711
versus $64,345,321 for the year ended December 31, 1994, a decrease of 10.1%.
During the 1995 period, 59,776,527 pounds of meat products were sold versus
58,941,688 pounds during the 1994 period, an increase of 834,839 pounds or
1.4%. 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 1995. The average sales price per pound for 1995 was
$.965 versus the average sales price per pound for 1994 of $1.088.
Costs of meat products sold for the year ended December 31, 1995
were $53,757,014 versus $60,428,954 for the year ended December 31, 1994, a
decrease of 11.0% During the 1995 period, 59,776,527 pounds of meat products
were sold versus 58,941,688 pounds during the 1994 period, an increase of
1.4%. The average cost of meat products sold for 1995 was $.899 versus
$1.025 in the 1994 period, a decrease of 12.2%. 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
1996.
Gross margins on meat sales were 6.8% for the year ended December
31, 1995 and 5.7% for the 1994 period. This increase is gross margins is
primarily attributable to: i) decline in revenues and raw material costs
associated with the general decline in meat prices during the 1995 period
versus the 1994 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 $2,197,506 during
the year ended December 31, 1995 versus $1,963,623 for the same period in
1994. Such increase is primarily attributable to inefficiencies associated
with the freezer completion and the installation of new equipment during the
first six months of 1995.
Depreciation and amortization expense for the year ended December
31, 1995 was $1,052,213 versus $831,116 for the same period in 1994, an
increase of 26.6%. 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, 1995 was $799,494
versus interest expense of $290,116 for the same period in 1994. This
increase of $509,378 primarily relates to the increase in the average debt
outstanding during 1995 due primarily to the $3.8 million expansion of the
Versailles plant.
The Partnership reported net income of $20,544 for the year ended
December 31, 1995 versus $831,512 for the 1994 period. This decline in
operating profit is primarily attributable to two factors. First, the
Partnership completed a 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. Second, the overall price of meat products underwent a
general decline during the 1995 period versus the 1994 period. Such general
declines in meat prices tend to lower net income from operation due to lower
inventory valuations and lower margins.
8
<PAGE>
YEAR ENDED DECEMBER 31, 1994, COMPARED TO YEAR ENDED DECEMBER 31, 1993
Revenues for the year ended December 31, 1994 were $64,345,321
versus $63,338,797 for 1993, an increase of $1,006,524 or 1.6% over the
revenues for the prior period. This increase was primarily attributable to
the increased sales efforts and production capability at the Versailles, Ohio
plant.
Gross profit from the sale of meat products increased to $3,679,437
in 1994 from $3,063,500 in 1993, reflecting increased sales activity. Gross
margins for 1994 were 5.7% versus 4.9% in 1993.
Selling and administrative expenses increased to $1,963,623 in 1994
from $1,622,827 in 1993, a total increase of $340,796 or 21.0% over 1993
amounts. This increase was primarily attributable to increased poundage.
Selling and administrative expenses represented 3.1% of sales in 1994 versus
2.6% of revenue during 1993.
Depreciation and amortization increased to $831,116 in 1994 from
$723,498 in 1993, a total increase of $107,618, due primarily to the
expansion of the Versailles, Ohio facility and equipment used therein.
Interest expense decreased to $290,116 in 1994 from $349,319 in
1993. The decrease was primarily attributable to capitalizing construction in
1994.
The Partnership reported a net income of $831,512 for 1994 versus a
net income of $523,868 for 1993.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, the Partnership had a negative working
capital position of $525,037, versus a working capital of $154,050 at
December 31, 1994. The decline in the working capital position is primarily
attributable to the expansion of the Versailles facility as described below.
Cash provided by operating activities was $849,003 for the year
ended December 31, 1995 reflecting 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 provided by operating activities for the year ended
December 31, 1994 was $2,473,105, with a net income of $831,512, depreciation
of $831,116, offset by net increases in other net operating assets of
$810,477.
Cash used in investing activities was $3,155,430 for 1995 versus
$3,932,535 for 1994. The decrease in cash used in investing activities is
primarily attributable to investment in new equipment and the expansion of
the freezer facility at the Versailles plant during 1995 as described below.
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, $2,614 in
1993, and $0.00 in 1992. Suspended fees during 1995, 1994, 1993 and 1992
respectively, are $290,000, $222,000, $229,000, and $228,000.
Cash provided by financing activities for 1995 consisted of net
increases in bank debt of $2,470,814 offset by distributions to limited and
general partners of $105,597.
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 $2,312,289 outstanding at
December 31, 1995), (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 $262,500 outstanding as of
December 31, 1995 (the "GCI Loan"),(collectively, the "Loans").
9
<PAGE>
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 1.25%. 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.
The Partnership's 1996 capital budget calls for the expenditure of
approximately $900,000 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 1996. Such amounts
are expected to be funded by internally generated cash flow. A lease
agreement has been secured to provide funding for two mechanical freeze
tunnel systems that will replace four liquid nitrogen freeze tunnels. The
installation of these units was completed in the third quarter of 1995 and
require monthly lease payments of $31,119. 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 1996.
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, 1995, are as follows:
KEVIN T. GANNON, age 39, 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.
10
<PAGE>
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.
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, 1995. 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 1995. 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 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 $969,000. Suspended fees
during 1995, 1994, 1993, and 1992, respectively, are $290,000, $222,000,
$229,000, and $228,000. In addition, the General Partner received a pro rata
distribution of partnership Cash Available for Distribution in the amount of
$1,046.
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, 1995. No options were
held to purchase securities of the Partnership as of December 31, 1995, and
as of the date hereof.
11
<PAGE>
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), restricts GCI's equity interest in the limited partnership
units to 1.00% (all of which has been delivered to GCI effective 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 29, 1996 /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 29, 1996
- -------------------------- 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, 1995
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, 1995, and 1994.
CONSOLIDATED STATEMENTS OF OPERATIONS - for the years ended
December 31, 1995, 1994, and 1993.
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL - for the
years ended December 31, 1995, 1994, and 1993.
CONSOLIDATED STATEMENTS OF CASH FLOWS - for the years ended
December 31, 1995, 1994, and 1993.
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
<TABLE>
<CAPTION>
December 31,
---------------------------
ASSETS 1995 1994
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 488,247 $ 429,457
Accounts receivable - trade 2,545,169 2,431,830
Inventories 2,419,466 2,429,353
Prepaid expenses 755,515 79,625
------------ ------------
TOTAL CURRENT ASSETS 6,208,397 5,370,265
PROPERTY AND EQUIPMENT:
Land and improvements 86,700 86,700
Buildings 7,029,646 2,789,210
Building under construction -- 2,042,924
Machinery and equipment 9,183,329 8,225,412
Accumulated depreciation (3,315,265) (2,390,546)
------------ ------------
TOTAL PROPERTY AND EQUIPMENT 12,984,410 10,753,700
OTHER ASSETS - NET OF AMORTIZATION 3,087,637 3,215,130
------------ ------------
TOTAL ASSETS $ 22,280,444 $ 19,339,095
------------ ------------
------------ ------------
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable - trade $ 2,700,444 $ 2,453,841
Notes payable and current maturities on long-term
debt 3,097,979 2,136,348
Accrued expenses and other liabilities 935,011 626,026
------------ ------------
TOTAL CURRENT LIABILITIES 6,733,434 5,216,215
LONG-TERM DEBT 6,754,525 5,245,342
PARTNERS' CAPITAL:
General Partner:
Capital contributions 132,931 132,931
Capital transfers to Limited Partners (117,800) (117,800)
Interest in Partnership net income 7,963 7,758
Distributions (32,943) (31,897)
------------ ------------
(9,849) (9,008)
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 777,348 757,009
Distributions (3,263,842) (3,159,291)
------------ ------------
8,802,334 8,886,546
------------ ------------
TOTAL PARTNERS' CAPITAL 8,792,485 8,877,538
------------ ------------
TOTAL LIABILITIES & PARTNERS'
CAPITAL $ 22,280,444 $ 19,339,095
------------ ------------
------------ ------------
</TABLE>
See notes to consolidated financial statements.
F-1
<PAGE>
WHITEFORD PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended December 31
--------------------------------------
1995 1994 1993
----------- ----------- ----------
<S> <C> <C> <C>
REVENUES
Sales of meat products $57,667,240 $64,108,391 63,182,785
Interest and other 159,531 236,930 156,012
----------- ----------- ----------
57,826,771 64,345,321 63,338,797
COST AND EXPENSES
Cost of meat products sold 53,757,014 60,428,954 60,119,285
Selling and administrative 2,187,051 1,950,554 1,620,213
Administrative fee -- General Partner 10,455 13,069 2,614
Depreciation and amortization 1,052,213 831,116 723,498
Interest 799,494 290,116 349,319
----------- ----------- ----------
57,806,227 63,513,809 62,814,929
NET INCOME $ 20,544 $ 831,512 $ 523,868
----------- ----------- ----------
----------- ----------- ----------
Summary of net income allocated to:
General Partner $ 205 $ 8,315 $ 5,239
Class A Limited Partners 20,339 823,197 518,629
----------- ----------- ----------
$ 20,544 $ 831,512 $ 523,868
----------- ----------- ----------
----------- ----------- ----------
Net income per unit of Limited Partner Capital $ 0.02 $ 0.64 $ 0.40
----------- ----------- ----------
----------- ----------- ----------
Weighted average units issued and outstanding 1,306,890 1,306,890 1,323,473
----------- ----------- ----------
----------- ----------- ----------
</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
----------------------------------------
CAPITAL
CAPITAL TRANSFERS INTEREST
CONTRI- TO LIMITED IN NET DISTRI-
BUTION PARTNERS INCOME BUTIONS
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Balances, December 31, 1992 $132,931 $(117,800) $(5,796) $(30,328)
Repurchase of Units
Net Income 5,239
Distributions (262)
-------- --------- -------- --------
Balances, December 31, 1993 132,931 (117,800) (557) (30,590)
Net Income 8,315
Distributions (1,307)
-------- --------- -------- --------
Balances, December 31, 1994 132,931 (117,800) 7,758 (31,897)
Net Income 205
Distributions (1,046)
-------- --------- -------- --------
Balances, December 31, 1995 $132,931 $(117,800) $ 7,963 $(32,943)
-------- --------- -------- --------
-------- --------- -------- --------
<CAPTION>
LIMITED PARTNERS
-------------------------------------------------
CAPITAL CONTRIBUTIONS
---------------------
INTEREST
FROM FROM IN NET
LIMITED GENERAL INCOME DISTRI-
PARTNERS PARTNER (LOSS) BUTIONS
----------- --------- --------- -----------
<S> <C>
Balances, December 31, 1992 $11,390,468 $116,554 $(584,817) $(3,002,464)
Repurchase of Units (218,194)
Net Income 518,629
Distributions (26,138)
----------- --------- --------- -----------
Balances, December 31, 1993 11,172,274 116,554 (66,188) (3,028,602)
Net Income 823,197
Distributions (130,689)
----------- --------- --------- -----------
Balances, December 31, 1994 11,172,274 116,554 757,009 (3,159,291)
Net Income 20,339
Distributions (104,551)
----------- --------- --------- -----------
Balances, December 31, 1995 $11,172,274 $ 116,554 $ 777,348 $(3,263,842)
----------- --------- --------- -----------
----------- --------- --------- -----------
</TABLE>
$.10 and .10 weighted average outstanding units of Limited Capital in 1995
and 1994 respectively.
See notes to consolidated financial statements.
F-3
<PAGE>
WHITEFORD PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income $ 20,544 $ 831,512 $ 523,868
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,052,213 831,116 723,498
(Gain) Loss on sale of fixed assets --- (914) 1,826
Increase (decrease) operating assets and liabilities:
Accounts receivable (113,339) 601,736 224,918
Inventories 9,887 (548,347) 220,707
Prepaid expenses (675,890) (8,943) (26,543)
Accounts payable 246,603 497,701 (1,241,209)
Accrued expenses and other liabilities 308,985 269,244 29,504
----------- ----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 849,003 2,473,105 456,569
INVESTING ACTIVITIES:
Purchase of property and equipment (3,155,430) (3,937,035) (1,014,726)
Proceeds from disposal of property and equipment --- 4,500 10,217
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (3,155,430) (3,932,535) (1,004,509)
FINANCING ACTIVITIES:
Proceeds from notes payable and long-term debt 19,484,383 26,074,600 22,740,150
Payments on notes payable (17,013,569) (24,172,725) (21,678,228)
Distributions to Limited and General Partners (105,597) (131,996) (26,400)
Repayment of reinvested distributions --- --- (229,378)
Repurchase of Units --- --- (218,194)
----------- ----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 2,365,217 1,769,879 587,950
----------- ----------- -----------
INCREASE IN CASH AND CASH
EQUIVALENTS 58,790 310,449 40,010
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 429,457 119,008 78,998
----------- ----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $488,247 $429,457 $119,008
----------- ----------- -----------
----------- ----------- -----------
</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, 1995 and at December 31, 1994, 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:
<TABLE>
<CAPTION>
1994 1995
---- ----
<S> <C> <C>
Finished products $ 920,800 $ 675,653
Raw materials 621,548 940,050
Packaging supplies and other 877,118 813,650
---------- ----------
$2,419,466 $2,429,353
---------- ----------
---------- ----------
</TABLE>
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 $924,719, $703,623 and
$596,004 in years 1995, 1994 and 1993, respectively. The costs of ordinary
repairs and maintenance are charged to expense, while betterment and major
replacements are capitalized.
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, 1995, 1994, and 1993, was $718,476,
$597,606 and $476,737, 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, 1995, the book basis of assets exceeds the tax basis of such assets
by approximately $2,692,000 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 $747,959, $394,766 and $325,725 for 1995, 1994 and 1993,
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.
RECENTLY ISSUED ACCOUNTING STANDARDS. In March 1995, the FASB issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", which requires impairment losses to be
recorded on long-lived assets used in operation when indicators of impairment
are present and the undiscounted cash flows estimated to be generated by those
assets are less than the assets' carrying amount. Statement 121 also addresses
the accounting for long-lived assets that are expected to be disposed of. The
Company will adopt Statement 121 in the first quarter of 1996 and. based on
current circumstances, does not believe the effect of adoption will be material.
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.
Suspended fees during 1995, 1994 and 1993 respectively are $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 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>
1995 1994
---- ----
<S> <C> <C>
Notes payable to bank due March, 2000
interest at 9.89% at December 31, 1995 $4,046,215 $1,145,500
Notes payable to bank due July, 1999,
interest at 8.717% at December 31, 1995 1,853,018 2,103,992
Revolving credit agreement with a bank, due
May 1996, interest at prime 1/2% at
December 31, 1995 2,312,289 1,617,834
Note payable to Greenaway Consultant, Inc.,
due December 31, 1997, interest at prime
plus 1.5% at December 31, 1995 262,500 315,000
Construction note payable to bank, due March 2000,
interest at prime plus 3/4% at December 31,
1994 - Refinanced in 1995 2,042,924
Note payable to bank due April, 1998,
interest at prime plus 1.25% at
December 31, 1995 700,000
Note payable to bank due May, 2000
interest at 9.42% at December 31, 1995 454,732
Other 223,750 156,440
---------- ---------
$9,852,504 $7,381,690
Less portion classified as current 3,097,979 2,136,348
---------- ----------
$6,754,525 $5,245,342
---------- ----------
---------- ----------
</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 $287,711 was available at December 31, 1995. 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 three years subsequent to 1996 are: $932,069, $583,351, $296,115.
During 1995, 1994 and 1993, the weighted average interest rate on short-
term borrowing was 9.4%, 8.3% and 7.6% respectively, while the weighted average
month end amount outstanding was $2,812,838, $1,541,883 and $1,236,036
respectively. The largest outstanding month end balance was $3,245,938 in 1995,
$2,294,073 during 1994 and $1,861,943 during 1993.
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 1995, 1994 and 1993 was $375,963, $215,574 and $206,095,
respectively. The future minimum lease payments under the leases are as
follows:
<TABLE>
<CAPTION>
<S> <C>
1996 $ 622,114
1997 603,103
1998 531,385
1999 479,062
2000 435,999
Thereafter 529,009
----------
$3,200,672
----------
----------
</TABLE>
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 10%
of the participant's contributions up to 6% of employee eligible compensation.
Contributions to the Plan were $10,900 in 1995, $8,200 in 1994, and $4,600 in
1993.
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 fast food chains served include Burger King, Rally's and
Rax.
Sales of meat products to major customers are summarized as follows for
the fiscal years ended December 31, 1995, and 1994.
<TABLE>
<CAPTION>
CUSTOMER 1995 1994
-------- ---- ----
<S> <C> <C>
A $11,621,477 $18,804,507
B 9,803,698 15,552,790
C 7,345,095 5,689,721
D 7,233,692 5,524,195
E 5,836,108 5,391,612
F 5,140,614 2,912,278
----------- -----------
$46,980,684 $53,875,103
----------- -----------
----------- -----------
</TABLE>
The total amounts receivable from these customers on December 31, 1995,
and 1994, were $2,008,659 and $1,809,526, respectively.
F-8
<PAGE>
INDEPENDENT AUDITOR'S REPORT
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, 1995 and 1994, 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, 1995. 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, 1995 and 1994, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles.
Ernst & Young LLP
February 19, 1996
F-9
<PAGE>
INDEX TO ATTACHED EXHIBITS
<TABLE>
<CAPTION>
PAGE
EXHIBIT NUMBER
- ------- -----
<S> <C> <C>
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.
</TABLE>
F-10
<PAGE>
INDEX TO ATTACHED EXHIBITS (CONT.)
<TABLE>
<CAPTION>
PAGE
EXHIBIT NUMBER
- ------- -----
<S> <C> <C>
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.
</TABLE>
F-11
<PAGE>
INDEX TO ATTACHED EXHIBITS (CONT.)
<TABLE>
<CAPTION>
PAGE
EXHIBIT NUMBER
- ------- -----
<S> <C> <C>
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.
10.23 Note payable dated September 18, 1995,
between Whiteford Foods Venture, L.P.
and PNC Bank, Ohio, National
Association.
10.24 Second amendment to Revolving Note dated
July 11, 1995.
10.25 Second amendment to Credit agreement
dated July 11, 1995.
10.26 Third amendment to Credit agreement
dated July 11, 1995.
10.27 Guarantee Compensation agreement dated
September 18, 1995 between Whiteford
Foods Venture, L.P. and Albert D.
Greenaway.
10.28 Mortgage granted to Albert D. Greenaway
by Whiteford Foods Venture, L.P.
10.29 Mortgage granted to Albert D. Greenaway
by Whiteford Foods Venture, L.P.
10.30 Security agreement dated September 18,
1995 between Whiteford Foods Venture,
L.P. and Albert D. Greenaway.
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.
27. Financial Data Schedule
</TABLE>
F-12
<PAGE>
TERM NOTE B
$275,000.00 Dayton, Ohio
April _, 1995
For value received, the undersigned WHITEFORD FOOD VENTURES,
L.P., a Texas limited partnership, with an address at 770 N. Center
Street, Versailles, Ohio 45380 (the "Borrower"), promises to pay
to the order of PNC BANK, OHIO, NATIONAL ASSOCIATION, a
national banking association (the "Lender"), at its offices located
at 112 West Second Street, Dayton, Ohio 45402, or such other location as
the Lender may from time to time designate, in immediately available
funds the sum of TWO HUNDRED SEVENTY-FIVE THOUSAND DOLLARS
($275,000.00) payable with interest from the date hereof and
subject to the following terms and conditions:
1. RATE OF INTEREST. The rate of interest on this Note will be nine and
42/100 percent (9.42%) per annum, calculated on a year of 360 days for the
actual number of days in each interest period.
2. PAYMENT TERMS. Monthly payments consisting of principal together
with interest in the amount of $5,765.00 shall be due and payable
commencing on June 1, 1995 and will then be due and payable on the
first day of each month thereafter until this Note has been paid in full.
Any outstanding but unpaid principal balance and any accrued but unpaid
interest shall be paid in full on May 1, 2000. Any payment of principal
or interest under this Note must be received by the Lender by 2:00 p.m.
E.S.T. on a business day in order to be credited on such date. If the
Borrower fails to make any payment of principal, interest or other
amount becoming due pursuant to the provisions of this Note within 15
calendar days of the date due and payable, the Borrower also shall pay to
the Lender a late charge equal to the lesser of five percent (5%) of the
amount of such payment or $50. Such 15-day period shall not be construed
in any way to extend the due date of any such payment. The late
charge is imposed for the purpose of defraying the Lender's expenses
incident to the handling of delinquent payments and is in addition
to, and not in lieu of, the exercise by the Lender of any rights and remedies
hereunder or under applicable laws and any fees and expenses of any agents
or attorneys which the Lender may employ upon default. Upon maturity,
whether by acceleration, demand or otherwise, and at the option of the
Lender upon the occurrence of any Event of Default (as hereinafter defined)
and during the continuance thereof, this Note shall bear interest at a rate
per annum (based on a year of 360 days and actual days elapsed) which shall
be six percent (6%) per annum above the then current interest rate in
effect under this Note, but not more than the highest rate permitted by
applicable law (the "Default Rate"). The above interest rates shall
continue to apply whether or not judgment shall be entered on this Note.
Payments received will be applied in the following order: (1) to
charges, fees and expenses (including attorneys fees), (2) to accrued
interest and (3) to principal.
<PAGE>
3. PREPAYMENT PREMIUM. This Note may be prepaid in whole or in part without
penalty.
4. SECURITY FOR NOTE. This Note is issued in connection with (i) a Credit
Agreement dated June 13, 1994 and subsequently amended on March 31, 1995
and again of even date herewith, by and among the Borrower, the
Lender, PNC Bank, Ohio, National Association ("PNC"), and PNC as
Agent (the "Credit Agreement"); and (ii) the Loan Documents, as that term
is defined in the Credit Agreement (collectively, the "Loan
Documents"), and is secured by the property described in the Loan
Documents and by such other collateral as previously may have been
or may in the future be granted to the Lender to secure this Note. This
Note is one of two Term Notes B referred to in the Credit Agreement, and
is entitled to the benefits, and is subject to the terms, of the Credit
Agreement and other Loan Documents, as defined above. Reference is
hereby made to the Loan Documents for a description of the security
and the rights of the Lender and the obligations of the Borrower in
respect thereto, but neither this reference to the Loan Documents nor any
provisions thereof shall affect or impair the obligation of the Borrower
to pay the principal and interest of this Note and all other sums or
charges hereunder when due and payable in accordance with the terms and
conditions hereof.
5. EVENT(S) CAUSING NOTE TO BECOME DUE. Upon the occurrence of an
Event of Default (as that term is defined in the Credit Agreement), the
Lender shall have such rights and remedies as are provided for in
the Credit Agreement. The Borrower waives presentment, demand,
protest and notice of demand, protest and dishonor.
6. PROCEEDS. The Borrower acknowledges that the proceeds of this
Note will be used exclusively for business or commercial purposes and
no portion of such proceeds will be used for personal, family,
educational, or household purposes. Specifically, the proceeds of this
Note will be used for the purchase of fixed assets.
7. COGNOVIT NOTE. The Borrower hereby irrevocably authorizes any
attorney-at-law to appear in any court of record in or of the State of Ohio,
or in any other state or territory of the United States, at any time after
the indebtedness evidenced by this Note becomes due, whether by
acceleration or otherwise, to waive the issuing and service of process and
to confess a judgment against the undersigned in favor of the Lender,
and/or any assignee or holder hereof for the amount of principal and
interest and expenses then appearing due from the undersigned under
this Note, together with costs of suit and thereupon to release all errors
and waive all right of appeal or stays of execution in any court of record.
8. MISCELLANEOUS. No delay or omission of the holder of this Note to
exercise any right or power arising from any default shall impair any such
right or power or be considered to be a waiver of any such default or
any acquiescence therein nor shall the action or non-action of the holder
of this Note in case of default on the part of the undersigned impair any
right or power resulting therefrom. The Borrower agrees to pay, to the
extent permitted by law, all attorneys' fees and costs incurred by the
Lender in the enforcement of its rights in this Note and any
security therefor. If any provision of this Note is found to be invalid by a
court, all the other provisions of this Note will remain in full force and
effect.
<PAGE>
If this Note is executed by more than one Borrower, the obligations of
such persons or entities hereunder will be joint and several. This Note
shall bind the Borrower and the heirs, administrators, successors and
assigns of the Borrower, and the benefits hereof shall inure to the benefit
of Lender and its successors and assigns. All references herein to the
"Borrower" and "Lender" shall be deemed to apply to the Borrower
and Lender and their respective heirs, administrators, successors and
assigns.
THIS NOTE HAS BEEN EXECUTED, DELIVERED AND ACCEPTED AT AND WILL BE
DEEMED TO HAVE BEEN MADE AT DAYTON, OHIO AND WILL BE INTERPRETED AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF OHIO, AND THE BORROWER HEREBY AGREES TO
THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN
MONTGOMERY COUNTY, OHIO AND CONSENTS THAT ALL SERVICE OF PROCESS BE
MADE BY CERTIFIED MAIL DIRECTED TO BORROWER AT ITS ADDRESS SET FORTH HEREIN
FOR NOTICES AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED FIVE (5)
BUSINESS DAYS AFTER THE SAME HAS BEEN DEPOSITED IN U.S. MAILS,
POSTAGE PREPAID; PROVIDED THAT NOTHING CONTAINED HEREIN WILL PREVENT
THE LENDER FROM BRINGING ANY ACTION OR EXERCISING ANY RIGHTS AGAINST ANY
SECURITY OR AGAINST THE BORROWER INDIVIDUALLY, OR AGAINST ANY PROPERTY OF
THE BORROWER WITHIN ANY OTHER STATE OR NATION TO ENFORCE ANY AWARD
OR JUDGMENT OBTAINED IN THE FEDERAL OR STATE COURT LOCATED WITHIN
MONTGOMERY COUNTY, OHIO. THE BORROWER WAIVES ANY OBJECTION BASED ON
FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE IN ANY ACTION INSTITUTED
HEREUNDER. THE BORROWER AND THE LENDER EACH WAIVE ANY RIGHT TO TRIAL
BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE, THE
LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH
AGREEMENTS.
<PAGE>
WARNING-BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN
AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE
USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE
CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO
COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE.
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
STATE OF OHIO )
) SS:
COUNTY OF MONTGOMERY )
The foregoing instrument was acknowledged before me this 14th day of
April, 1995 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/ BARBARA BORDEWISCH BEAM
----------------------------
Notary Public
BARBARA BORDEWISCH BEAM, Notary Public
in and for the State of Ohio
My Commission Expires March 21, 1999
<PAGE>
TERM NOTE B
$225,000.00 Dayton, Ohio
April _, 1995
For value received, the undersigned WHITEFORD FOOD VENTURES,
L.P., a Texas limited partnership, with an address at 770 N. Center
Street, Versailles, Ohio 45380 (the "Borrower"), promises to pay to the
order of THE FIFTH THIRD BANK OF WESTERN OHIO, N.A., a national banking
association (the "Lender"), at its offices located at 123 Market Street, Piqua,
Ohio 45236, or such other location as the Lender may from time to time
designate, in immediately available funds the sum of TWO HUNDRED TWENTY-FIVE
THOUSAND DOLLARS ($225,000.00) payable with interest from the date hereof and
subject to the following terms and conditions:
1. RATE OF INTEREST. The rate of interest on this Note will be nine and
42/100 percent (9.42%) per annum, calculated on a year of 360 days for the
actual number of days in each interest period.
2. PAYMENT TERMS. Monthly payments consisting of principal together
with interest in the amount of $4,717.00 shall be due and payable
commencing on June 1, 1995 and will then be due and payable on the
first day of each month thereafter until this Note has been paid in full.
Any outstanding but unpaid principal balance and any accrued but unpaid
interest shall be paid in full on May 1, 2000. Any payment of principal
or interest under this Note must be received by the Lender by 2:00 p.m.
E.S.T. on a business day in order to be credited on such date. If the
Borrower fails to make any payment of principal, interest or other
amount becoming due pursuant to the provisions of this Note within 15
calendar days of the date due and payable, the Borrower also shall pay to
the Lender a late charge equal to the lesser of five percent (5%) of the
amount of such payment or $50. Such 15-day period shall not be construed
in any way to extend the due date of any such payment. The late
charge is imposed for the purpose of defraying the Lender's
expenses incident to the handling of delinquent payments and is in
addition to, and not in lieu of, the exercise by the Lender of any rights and
remedies hereunder or under applicable laws and any fees and expenses of any
agents or attorneys which the Lender may employ upon default. Upon
maturity, whether by acceleration, demand or otherwise, and at the
option of the Lender upon the occurrence of any Event of Default (as
hereinafter defined) and during the continuance thereof, this Note shall
bear interest at a rate per annum (based on a year of 360 days and actual
days elapsed) which shall be six percent (6%) per annum above the then
current interest rate in effect under this Note, but not more than the
highest rate permitted by applicable law (the "Default Rate"). The above
interest rates shall continue to apply whether or not judgment shall be
entered on this Note.
Payments received will be applied in the following order: (1) to
charges, fees and expenses (including attorneys fees), (2) to accrued
interest and (3) to principal.
<PAGE>
3. PREPAYMENT PREMIUM. This Note may be prepaid in whole or in part without
penalty.
4. SECURITY FOR NOTE. This Note is issued in connection with (i) a Credit
Agreement dated June 13, 1994 and subsequently amended on March 31, 1995
and again of even date herewith, by and among the Borrower, the
Lender, The Fifth Third Bank of Western Ohio, N.A., and the Lender
as Agent (the "Credit Agreement"); and (ii) the Loan Documents, as that
term is defined in the Credit Agreement (collectively, the "Loan
Documents"), and is secured by the property described in the Loan
Documents and by such other collateral as previously may have been
or may in the future be granted to the Lender to secure this Note. This
Note is one of two Term Notes B referred to in the Credit Agreement, and
is entitled to the benefits, and is subject to the terms, of the Credit
Agreement and other Loan Documents, as defined above. Reference is
hereby made to the Loan Documents for a description of the security
and the rights of the Lender and the obligations of the Borrower in
respect thereto, but neither this reference to the Loan Documents nor any
provisions thereof shall affect or impair the obligation of the Borrower
to pay the principal and interest of this Note and all other sums or
charges hereunder when due and payable in accordance with the terms and
conditions hereof.
5. EVENT(S) CAUSING NOTE TO BECOME DUE. Upon the occurrence of an
Event of Default (as that term is defined in the Credit Agreement), the
Lender shall have such rights and remedies as are provided for in
the Credit Agreement. The Borrower waives presentment, demand,
protest and notice of demand, protest and dishonor.
6. PROCEEDS. The Borrower acknowledges that the proceeds of this
Note will be used exclusively for business or commercial purposes and
no portion of such proceeds will be used for personal, family,
educational, or household purposes. Specifically, the proceeds of this
Note will be used for the purchase of fixed assets.
7. COGNOVIT NOTE. The Borrower hereby irrevocably authorizes any
attorney-at-law to appear in any court of record in or of the State of Ohio,
or in any other state or territory of the United States, at any time after
the indebtedness evidenced by this Note becomes due, whether by
acceleration or otherwise, to waive the issuing and service of process and
to confess a judgment against the undersigned in favor of the Lender,
and/or any assignee or holder hereof for the amount of principal and
interest and expenses then appearing due from the undersigned under
this Note, together with costs of suit and thereupon to release all errors
and waive all right of appeal or stays of execution in any court of record.
8. MISCELLANEOUS. No delay or omission of the holder of this Note to
exercise any right or power arising from any default shall impair any such
right or power or be considered to be a waiver of any such default or
any acquiescence therein nor shall the action or non-action of the holder
of this Note in case of default on the part of the undersigned impair any
right or power resulting therefrom. The Borrower agrees to pay, to the
extent permitted by law, all attorneys' fees and costs incurred by the
Lender in the enforcement of its rights in this Note and any
security therefor. If any provision of this Note is found to be invalid by a
court, all the other provisions of this Note will remain in full force and
effect.
<PAGE>
If this Note is executed by more than one Borrower, the obligations of
such persons or entities hereunder will be joint and several. This Note shall
bind the Borrower and the heirs, administrators, successors and assigns of the
Borrower, and the benefits hereof shall inure to the benefit of Lender and its
successors and assigns. All references herein to the "Borrower" and "Lender"
shall be deemed to apply to the Borrower and Lender and their respective heirs,
administrators, successors and assigns.
THIS NOTE HAS BEEN EXECUTED, DELIVERED AND ACCEPTED AT AND WILL BE
DEEMED TO HAVE BEEN MADE AT DAYTON, OHIO AND WILL BE INTERPRETED AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF OHIO, AND THE BORROWER HEREBY AGREES TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN MONTGOMERY COUNTY,
OHIO AND CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL
DIRECTED TO BORROWER AT ITS ADDRESS SET FORTH HEREIN FOR NOTICES AND SERVICE
SO MADE WILL BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER THE SAME
HAS BEEN DEPOSITED IN U.S. MAILS, POSTAGE PREPAID; PROVIDED THAT NOTHING
CONTAINED HEREIN WILL PREVENT THE LENDER FROM BRINGING ANY ACTION OR
EXERCISING ANY RIGHTS AGAINST ANY SECURITY OR AGAINST THE BORROWER
INDIVIDUALLY, OR AGAINST ANY PROPERTY OF THE BORROWER WITHIN ANY OTHER STATE
OR NATION TO ENFORCE ANY AWARD OR JUDGMENT OBTAINED IN THE FEDERAL OR STATE
COURT LOCATED WITHIN MONTGOMERY COUNTY, OHIO. THE BORROWER WAIVES ANY
OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE IN ANY
ACTION INSTITUTED HEREUNDER. THE BORROWER AND THE LENDER EACH WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS NOTE, THE
LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH AGREEMENTS.
<PAGE>
WARNING-BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
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
STATE OF OHIO )
) SS:
COUNTY OF MONTGOMERY )
The foregoing instrument was acknowledged before me this 14th day of
April, 1995 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/ Barbara Bordewisch Beam
--------------------------
Notary Public
BARBARA BORDEWISCH BEAM, Notary Public
In and for the State of Ohio
My Commission Expires March 21, 1999
<PAGE>
TERM NOTE
COGNOVIT
$385,000 Cincinnati, Ohio
September 18, 1995
WHITEFORD FOODS VENTURE, L.P., a Texas limited partnership (the
"Borrower"), for value received, hereby promises to pay to the order of PNC
BANK, OHIO, NATIONAL ASSOCIATION (the "Bank") at its offices, 201 East Fifth
Street, Cincinnati, Ohio 45202-4117, in lawful money of the United States of
America, the principal sum of THREE HUNDRED EIGHTY-FIVE THOUSAND DOLLARS
together with interest as set forth herein. Interest on the outstanding
principal balance of this Note will accrue at a rate per annum equal to the
Variable Rate (as defined below). Interest shall be calculated on the basis of
a year of 360 days and charged for the actual number of days elapsed. Principal
and interest shall be payable in immediately available funds at the principal
office of the Bank. After the occurrence of any "Event of Default," as
defined in the "Agreement" (as defined below) this Note shall bear interest
(computed and adjusted in the same manner, and with the same effect, as interest
thereon prior to an Event of Default), payable on demand, at a rate per annum
equal to six percent (6%) above the rate that would otherwise be in effect,
until paid, and whether before or after the entry of judgment hereon or in the
alternative the Bank may impose a fixed charge of $25.00; this provision does
not constitute a waiver of any Event of Default or an agreement by the Bank to
permit any late payments whatsoever.
The principal and interest due hereunder will be payable as follows:
accrued interest will be due and payable monthly, commencing on October 1, 1995
and on the first day of each month thereafter until December 31, 1995, on which
date the entire outstanding principal balance hereunder and all accrued and
unpaid interest will be due and payable.
This Note is issued in connection with the Credit Agreement between
Borrower, Bank, The Fifth Third Bank of Western Ohio, N.A. and PNC Bank, Ohio,
National Association, as Agent, dated June 13, 1994, as it may be amended from
time to time (the "Agreement"), and is entitled to the benefits, and is
subject to the terms, of the Agreement. This Note is an "Additional Note" as
that term is defined in the Agreement. The principal of this Note is prepayable
in the amounts and under the circumstances, and its maturity is subject to
acceleration upon the terms, set forth in the Agreement. Reference is hereby
made to the "Loan Documents", as defined in the Agreement, for a description
of the security and the rights of the Bank and the obligations of the Borrower
in respect thereto, but neither this reference to the Loan Documents nor any
provisions thereof shall affect or impair the obligation of the Borrower to pay
the principal and interest of this Note and all other sums or charges hereunder
when due and payable in accordance with the terms and conditions hereof. Except
as otherwise expressly provided in the Agreement, if any payment on this Note
becomes due and payable on a day other than one on which Bank is open for
business (a "Business Day"), on a day other than one on which Bank is open for
business (a "Business Day"), the maturity thereof shall be extended to the
next Business Day, and interest shall be payable at the rate specified herein
during, such extension period.
<PAGE>
In no event shall the interest rate on this Note exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that a court
determines that the Bank has received interest and other charges under this
Note in excess of the highest permissible rate applicable hereto, such excess
shall be deemed received on account of, and shall automatically be applied to
reduce the amounts due to Bank from the Borrower under this Note or the other
Loan Documents, other than interest and discount charges, in the inverse order
of maturity, and the provisions hereof shall be deemed amended to provide for
the highest permissible rate. If there are no such amounts outstanding, the Bank
shall refund to Borrower such excess.
Borrower and all endorsers, sureties, guarantors and other persons liable
on this Note hereby waive presentment for payment, demand, notice of dishonor,
protest, notice of protest and all other demands and notices in connection with
the delivery, performance and enforcement of this Note, and one or more
extensions and renewals of this Note.
This Note may not be changed orally, but only by an instrument in writing.
For purposes of this Note, the following term shall have the following
meaning:
"VARIABLE RATE" means the rate of interest per annum equal to the sum of
one percent (1%) per annum plus the Prime Rate (as hereinafter defined). As
used herein, "PRIME RATE" shall mean the lower of (i) the rate of interest per
annum announced to be its prime rate from time to time by the Bank based on its
consideration of various factors, including money-market, business and
competitive factors, whether or not the Bank shall at times lend to Borrowers at
lower rates of interest, or there is no such prime rate, then its base rate or
such other rate as may be substituted by the bank for the prime rate, (ii) the
prime rate as published in the Wall Street Journal.
This Note is being delivered in, is intended to be performed in, shall be
construed and enforceable in accordance with, and be governed by the internal
laws of, the State of Ohio without regard to principles of conflict of laws.
THE BANK AND THE BORROWER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS
ARISING OUT OF THIS NOTE OR THE LOAN DOCUMENTS.
THE BORROWER HEREBY SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF OHIO
FOR THE ENFORCEMENT OF THIS NOTE AND WAIVES ANY AND ALL PERSONAL RIGHTS TO
OBJECT TO SUCH JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE THIS NOTE.
THE BORROWER HEREBY CONSENTS TO THE JURISDICTION OF THE COURT OF COMMON PLEAS OR
THE COURT OF APPEALS OF ANY COUNTY IN OHIO, AND ANY FEDERAL COURT IN THE STATE
OF OHIO, IN ANY ACTION, SUIT, OR PROCEEDING WHICH THE BANK MAY AT ANY TIME WISH
TO FILE IN CONNECTION WITH THIS NOTE OR ANY RELATED MATTER. THE BORROWER HEREBY
AGREES THAT AN ACTION, SUIT, OR
-2-
<PAGE>
PROCEEDING TO ENFORCE THIS NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN
THE STATE OF OHIO, AND HEREBY WAIVES ANY OBJECTION WHICH THE BORROWER HAS TO THE
LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT, OR PROCEEDING IN ANY SUCH COURT;
PROVIDED, HOWEVER, THAT THE PROVISIONS OF THIS PARAGRAPH SHALL NOT BE DEEMED TO
PRECLUDE THE BANK FROM FILING ANY SUCH ACTION, SUIT, OR PROCEEDING IN ANY OTHER
APPROPRIATE FORUM.
The Borrower hereby authorizes any attorney at law to appear in any court
of record in the State of Ohio, or any other State or Territory of the United
States, after this Note becomes due, and waive the issuance and service of
process, enter appearance and confess a judgment against Borrower, in favor of
the holder of this Note, for the amount then appearing due, and/or for the sale
of all or any part of the property securing the payment of this Note, and
thereupon to release all errors and waive all rights of appeal and stay of
execution. This warrant of attorney to confess judgment shall remain in full
force and effect so long as any portion of the indebtedness evidenced hereby
remains unpaid, notwithstanding any judicial determination of the amount due,
and any confession of judgment and subsequent vacation thereof shall not
constitute termination of this warrant of attorney to confess judgment. Borrower
hereby expressly (i) waives a conflict of interest of an attorney retained by
the Bank to confess judgment against the Borrower upon this Note, and
(ii) consents to the receipt by the attorney retained by the Bank of a legal fee
from the Bank for legal services rendered for confessing judgment against the
Borrower upon this Note. A copy of this Note, certified by the Bank, may be
filed in each such proceeding in place of filing the original as a warrant of
attorney.
*******************************************************************************
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
*******************************************************************************
WHITEFORD FOODS VENTURE, L.P.
By: G/W Foods, Inc., general partner
By /s/ Albert D. Greenaway
----------------------------
Print Name: Albert D. Greenaway
Title: President
-3-
<PAGE>
STATE OF OHIO )
) SS.
COUNTY OF MONTGOMERY )
The foregoing instrument was acknowledged before me this 18th day of
September, 1995 by Albert D. Greenaway, President of G/W FOODS, INC., a Texas
corporation, on behalf of the corporation as general partner on behalf 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
-4-
<PAGE>
TERM NOTE
COGNOVIT
$315,000 Cincinnati, Ohio
September 18, 1995
WHITEFORD FOODS VENTURE, L.P., a Texas limited partnership (the
"Borrower"), for value received, hereby promises to pay to the order of THE
FIFTH THIRD BANK OF WESTERN OHIO, N.A. (the "Bank") at its offices, 123 Market
Street, Piqua, Ohio 45356, in lawful money of the United States of America, the
principal sum of THREE HUNDRED FIFTEEN THOUSAND DOLLARS together with interest
as set forth herein. Interest on the outstanding principal balance of this Note
will accrue at a rate per annum equal to the Variable Rate (as defined below).
Interest shall be calculated on the basis of a year of 360 days and charged for
the actual number of days elapsed. Principal and interest shall be payable in
immediately available funds at the principal office of the Bank. After the
occurrence of any "Event of Default," as defined in the "Agreement" (as defined
below) this Note shall bear interest (computed and adjusted in the same manner,
and with the same effect, as interest hereon prior to an Event of Default),
payable on demand, at a rate per annum equal to six percent (6%) above the rate
that would otherwise be in effect, until paid, and whether before or after the
entry of judgment hereon or in the alternative the Bank may impose a fixed
charge of $25.00; this provision does not constitute a waiver of any Event of
Default or an agreement by the Bank to permit any late payments whatsoever.
The principal and interest due hereunder will be payable as follows:
accrued interest will be due and payable monthly, commencing on October 1, 1995
and on the first day of each month thereafter until December 31, 1995, on which
date the entire outstanding principal balance hereunder and all accrued and
unpaid interest will be due and payable.
This Note is issued in connection with the Credit Agreement between
Borrower, PNC Bank, Ohio, National Association, Bank and PNC Bank, Ohio,
National Association, as Agent, dated June 13, 1994, as it may be amended from
time to time (the "Agreement"), and is entitled to the benefits, and is subject
to the terms, of the Agreement. This Note is an "Additional Note" as that term
is defined in the Agreement. The principal of this Note is prepayable in the
amounts and under the circumstances, and its maturity is subject to acceleration
upon the terms, set forth in the Agreement. Reference is hereby made to the
"Loan Documents", as defined in the Agreement, for a description of the security
and the rights of the Bank and the obligations of the Borrower in respect
thereto, but neither this reference to the Loan Documents nor any provisions
thereof shall affect or impair the obligation of the Borrower to pay the
principal and interest of this Note and all other sums or charges hereunder
when due and payable in accordance with the terms and conditions hereof. Except
as otherwise expressly provided in the Agreement, if any payment on this Note
becomes due and payable on a day other than one on which Bank is open for
business (a "Business Day"), on a day other than one on which Bank is open for
business (a "Business Day"), the maturity thereof shall be extended to the next
Business Day, and interest shall be payable at the rate specified herein during
such extension period.
<PAGE>
In no event shall the interest rate on this Note exceed the highest rate
permissible under any law which a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that a court
determines that the Bank has received interest and other charges under this Note
in excess of the highest permissible rate applicable hereto, such excess shall
be deemed received on account of, and shall automatically be applied to reduce
the amounts due to Bank from the Borrower under this Note or the other Loan
Documents, other than interest and discount charges, in the inverse order of
maturity, and the provisions hereof shall be deemed amended to provide for the
highest permissible rate. If there are no such amounts outstanding, the Bank
shall refund to Borrower such excess.
Borrower and all endorsers, sureties, guarantors and other persons liable
on this Note hereby waive presentment for payment, demand, notice of dishonor,
protest, notice of protest an all other demands and notices in connection with
the delivery, performance and enforcement of this Note, and one or more
extensions and renewals of this Note.
This Note may not be changed orally, but only by an instrument in writing,
For purposes of this Note, the following term shall have the following meaning:
"VARIABLE RATE" means the rate of interest per annum equal to the sum of
one percent (1%) per annum plus the Prime Rate (as hereinafter defined). As
used herein, "PRIME RATE" shall mean the lower of (i) the rate of interest
per annum announced to be its prime rate from time to time by the Bank based
on its consideration of various factors, including money-market, business and
competitive factors, whether or not the Bank shall at times lend to Borrowers
at lower rates of interest, or there is no such prime rate, then its base
rate or such other rate as may be substituted by the bank for the prime rate,
(ii) the prime rate as published in the Wall Street Journal.
This Note is being delivered in, is intended to be performed in, shall be
construed and enforceable in accordance with, and be governed by the internal
laws of, the State of Ohio without regard to principles of conflict of laws. THE
BANK AND THE BORROWER HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS
ARISING OUT OF THIS NOTE OR THE LOAN DOCUMENTS.
THE BORROWER HEREBY SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF OHIO
FOR THE ENFORCEMENT OF THIS NOTE AND WAIVES ANY AND ALL PERSONAL RIGHTS TO
OBJECT TO SUCH JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE THIS NOTE.
THE BORROWER HEREBY CONSENTS TO THE JURISDICTION OF THE COURT OF COMMON PLEAS OR
THE COURT OF APPEALS OF ANY COUNTY IN OHIO, AND ANY FEDERAL COURT IN THE STATE
OF OHIO, IN ANY ACTION, SUIT, OR PROCEEDING WHICH THE BANK MAY AT ANY TIME WISH
TO FILE IN CONNECTION WITH THIS NOTE OR ANY RELATED MATTER. THE BORROWER HEREBY
AGREES THAT AN ACTION, SUIT, OR
-2-
<PAGE>
PROCEEDING TO ENFORCE THIS NOTE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN
THE STATE OF OHIO, AND HEREBY WAIVES ANY OBJECTION WHICH THE BORROWER HAS TO THE
LAYING OF THE VENUE OF ANY SUCH ACTION, SUIT, OR PROCEEDING IN ANY SUCH COURT;
PROVIDED, HOWEVER, THAT THE PROVISIONS OF THIS PARAGRAPH SHALL NOT BE DEEMED TO
PRECLUDE THE BANK FROM FILING ANY SUCH ACTION, SUIT, OR PROCEEDING IN ANY OTHER
APPROPRIATE FORUM.
The Borrower hereby authorizes any attorney at law to appear in any court
of record in the State of Ohio, or any other State or Territory of the United
States, after this Note becomes due, and waive the issuance and service of
process, enter appearance and confess a judgment against Borrower, in favor of
the holder of this Note, for the amount then appearing due, and/or for the sale
of all or any part of the property securing the payment of this Note, and
thereupon to release all errors and waive all rights of appeal and stay of
execution. This warrant of attorney to confess judgment shall remain in full
force and effect so long as any portion of the indebtedness evidenced hereby
remains unpaid, notwithstanding any judicial determination of the amount due,
and any confession of judgment and subsequent vacation thereof shall not
constitute termination of this warrant of attorney to confess judgment. Borrower
hereby expressly (i) waives a conflict of interest of an attorney retained by
the Bank to confess judgment against the Borrower upon this Note, and (ii)
consents to the receipt by the attorney retained by the Bank of a legal fee
from the Bank for legal services rendered for confessing judgment against the
Borrower upon this Note. A copy of this Note, certified by the Bank, may be
filed in each such proceeding in place of filing the original as a warrant of
attorney.
*******************************************************************************
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
*******************************************************************************
WHITEFORD FOODS VENTURE, L.P.
By: G/W Foods, Inc., general partner
By /s/ Albert D. Greenaway
----------------------------
Print Name: Albert D. Greenaway
Title: President
-3-
<PAGE>
STATE OF OHIO )
) SS.
COUNTY OF MONTGOMERY )
The foregoing instrument was acknowledged before me this 18th day of
September, 1995 by Albert D. Greenaway, President of G/W FOODS, INC., a Texas
corporation, on behalf of the corporation as general partner on behalf 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
-4-
<PAGE>
LIMITED GUARANTEE
In consideration of and as an inducement to financial accommodations made
or to be made by PNC BANK, OHIO, NATIONAL ASSOCIATION and THE FIFTH THIRD BANK
OF WESTERN OHIO, N.A. (collectively, "Lenders") to WHITEFORD FOODS VENTURE,
L.P. ("Debtor"), and other good and valuable consideration the receipt of which
is acknowledged, ALBERT D. GREENAWAY ("Guarantor") hereby unconditionally
Guarantees PNC Bank, Ohio, National Association, as Agent for Lenders ("Agent"),
the prompt payment and performance of the following (hereinafter collectively
referred to as the ("$700,000 Obligations"): all loans, advances, debts,
liabilities, obligations, covenants and duties now or hereafter owing to Lenders
from Debtor, due or to become due, now existing or hereafter arising under the
Term Notes of even date herewith in the amount of $385,000 payable to PNC Bank,
Ohio, national Association and in the amount of $315,000 payable to The Fifth
Third Bank of Western Ohio, N.A. issued in connection with the Credit Agreement
between Debtor PNC Bank, Ohio, National Association, The Fifth Third Bank of
Western Ohio, N.A. and PNC Bank, Ohio, National Association, as Agent, dated
June 13, 1994 (as now or hereafter amended, extended, renewed, restated or
supplemented the "Credit Agreement"), and all principal, interest, charges,
expenses, fees (including attorneys' fees), indemnification obligations and
other sums of any kind thereunder or relating thereto.
The maximum aggregate amount recoverable from Guarantor hereunder will
be limited to THREE HUNDRED THOUSAND DOLLARS (the "Maximum Amount"); provided,
however, that (i) notwithstanding such Maximum Amount limitation the liability
of Guarantor hereunder will continue hereunder until Guarantor has paid the
Guaranteed Amount (as defined below) or until this Guarantee is terminated in
accordance with Section 2.1, below, and (ii) such Maximum Amount limitation will
not apply with respect to interest on the Maximum Amount calculated at the rate
in effect under the $700,000 Obligations, collection fees, costs and expenses
(including but not limited to attorney's fees) incurred or paid by Lenders or
Agent in connection with the collection of this Guarantee, all of which will be
additional liabilities of Guarantor under this Guarantee (the Maximum Amount
plus such additional liabilities are hereinafter referred to collectively as the
"Guaranteed Amount"), and (iii) Guarantor agrees and acknowledges that (a) the
amount of the $700,000 Obligations at any time and from time to time may exceed
such Maximum Amount without in any way affecting the continuing liability of
Guarantor hereunder, and (b) notwithstanding such Maximum Amount limitation,
Lenders may apply any payment or other item received in connection with the
$700,000 Obligations to such of the $700,000 Obligations and in such order as
Lenders elect in their sole discretion and without any obligation to credit the
amount applied against the amount of Guarantor's liability hereunder (unless and
except to the extent that such payment is made by Guarantor pursuant to this
Guarantee).
Capitalized terms used herein and not otherwise defined herein will have
the meanings given such terms in the Credit Agreement.
<PAGE>
1. NATURE OF GUARANTEE, WAIVERS.
1.1 This is a guarantee of payment and not of collection. This is an
absolute, unconditional, primary, and continuing obligation and will remain in
full force and effect until the first to occur of the following: (i) all of the
$700,000 Obligations have been indefeasibly paid in full, or Guarantor has
indefeasibly paid the Guaranteed Amount in full, whichever occurs first; (ii)
30 days after the date on which written notice of revocation is actually
received by Agent; or (iii) the date on which written notice of the death of
Guarantor is actually received by Agent. No revocation will affect (i) the then
existing liabilities of the revoking Guarantor under this Guarantee;
(ii) $700,000 Obligations created, contracted, assumed, acquired or incurred
prior to the effective date of such revocation; (iii) $700,000 Obligations
created, contracted, assumed, acquired or incurred after the effective date of
such revocation pursuant to any agreement entered into or commitment obtained
prior to the effective date of such revocation; (iv) renewals, extensions,
consolidations and refinancings of any of the foregoing; (v) principal,
interest, charges, fees, costs or expenses of any kind relating to any of the
foregoing then existing or thereafter arising, or (vi) any liabilities of any
other Guarantor.
1.2 This Guarantee will not be affected by any delay, failure or omission
of Agent in exercising any right, power or remedy with respect to any of the
$700,000 Obligations or any guarantee or other liability or any collateral held
by Lenders or Agent for any of the $700,000 Obligations, by any delay, failure,
or omission of Lenders or Agent to take any steps to perfect or maintain its
lien or security interest in or to preserve their rights to, or insure or
protect any collateral for any of the $700,000 Obligations or any guarantee or
other liability for any of the $700,000 Obligations, or by any irregularity,
unenforceability or invalidity of any of the $700,000 Obligations or any part
thereof or any security or other guarantee or liability therefor.
1.3 Notice of acceptance of this Guarantee, notice of extensions of credit
to Debtor from time to time, notice of default, diligence, presentment, protest,
demand for payment (except as set forth on Section 5.2 hereof), notice of demand
or protest, and any defense based upon a failure of Lenders or Agent to comply
with the notice requirements of the applicable version of Uniform Commercial
Code Section 9-504 are hereby waived. Lenders or Agent at any time and from time
to time, without the consent of or notice to Guarantor, and without impairing
or releasing, discharging or modifying the liabilities of Guarantor hereunder,
may in their sole discretion (i) change the manner, place or terms of payment or
performance of or interest rates on, or change or extend the time of payment or
performance of, or other terms relating to any of the $700,000 Obligations,
(ii) renew, increase, substitute, modify, amend or alter, or grant consents or
waivers relating to any of the $700,000 Obligations, any other guarantees or
other liabilities, or any collateral for any $700,000 Obligations or guarantees
or other liabilities, (iii) apply any and all payments from any source
whatsoever including any proceeds of any collateral, to any $700,000 Obligations
of Debtor in any order, manner and amount, (iv) deal or refrain from dealing
with any person or entity, in their sole discretion, with respect to any
$700,000 Obligations in such manner as Lenders or Agent deem appropriate, in
their sole discretion, and/or (v) accept, sell, substitute, exchange,
compromise, release,
-2-
<PAGE>
surrender, offset, realize upon or otherwise deal with in any manner and in
any order any of the $700,000 Obligations, any guarantee or other liability for
any of the $700,000 Obligations, or any collateral for any of the $700,000
Obligations or for any guarantee or other liability relating to any of the
$700,000 Obligations. Irrespective of the taking or refraining from taking of
any of the foregoing actions, the obligations of Guarantor will remain in full
force and effect and will not be affected, impaired, discharged or released
in any manner. Lenders or Agent in their sole discretion may determine the
reasonableness of the period which may elapse prior to the making of demand for
any payment upon Debtor and they need not pursue any of their remedies against
Debtor, any other guarantor or other person, or any collateral before having
recourse against any Guarantor under this Guarantee.
1.4 The books and records of Lenders will be PRIMA FACIE evidence of the
$700,000 Obligations and binding on Guarantor absent manifest error.
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. Guarantor hereby represents,
warrants and covenants as follows (all of which survive the execution and
delivery of this Guarantee):
2.1 This Guarantee is a legal, valid and binding obligation of Guarantor
enforceable in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws in effect from time to time affecting the rights of creditors
generally and except as such enforceability may be subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in law or in equity).
2.2 There does not now exist any default or violation by it of or under,
and neither the execution, delivery and performance of this Guarantee nor the
consummation of any of the transactions contemplated hereby or by any of the
other Loan Documents, will result in any default or violation, or in the
creation or any lien or encumbrance, or give rise to any right of termination,
amendment, cancellation or acceleration, of or under, any of the terms,
conditions or obligations of: (i) any note, bond, indenture, mortgage, deed of
trust, franchise, permit, lease or other agreement or instrument to which it is
a party of by which it or any of the its assets is bound; or (ii) any law,
regulation, ruling, order, injunction, decree, condition or other requirement
applicable to or imposed upon it by any law, court or governmental agency,
authority or other body.
2.3 Guarantor is fully aware of the financial condition of Debtor and is
executing and delivering this Guarantee based solely upon Guarantor's own
independent investigation of all matters pertinent hereto and is not relying in
any manner upon any representation or statement of Lenders or Agent.
2.4 Guarantor will give Agent prompt written notice of the occurrence of
any Default or Event of Default of which Guarantor has actual or constructive
notice.
-3-
<PAGE>
3. REPAYMENTS OR RECOVERY FROM LENDERS OR AGENT. If any demand is made at any
time upon Lenders or Agent for the repayment or recovery of any amount or
amounts received by them in payment or on account of any of the $700,000
Obligations and if Lenders or Agent repay all or any part of such amount or
amounts by reason of any judgment, decree or order of any court or
administrative body or by reason of any settlement or compromise of any such
demand with respect to which Guarantor received written notice (including the
terms thereof) at least five business days prior to the execution of such
settlement or compromise, Guarantor will be and remain liable hereunder for the
amount or amounts so repaid or recovered to the same extent as if such amount or
amounts had never been received originally by Lenders or Agent. The provisions
of this Section will be and remain effective notwithstanding any contrary action
which may have been taken by Guarantor in reliance upon such payment, and any
such contrary action so taken will be without prejudice to Lenders or Agent's
rights under this Guarantee and will be deemed to have been conditioned upon
such payment having become final and irrevocable. The provisions of this
Section will survive the termination or revocation of this Guarantee.
4. BANKRUPTCY, ETC. It is specifically understood that any modification,
limitation or discharge of the $700,000 Obligations arising out of or by virtue
of any bankruptcy, reorganization or similar proceeding for relief of debtors
under federal or state law will not affect, modify, limit or discharge the
liability of Guarantor in any manner whatsoever and this Guarantee will remain
and continue in full force and effect and will be enforceable against Guarantor
to the same extent and with the same force and effect as if any such proceeding
had not been instituted. Guarantor waives all rights and benefits which might
accrue to it by reason of any such proceeding and will be liable to the full
extent hereunder, irrespective of any modification, limitation or discharge of
the liability of Debtor that may result from any such proceeding.
5. EVENTS OF DEFAULT.
5.1 The occurrence of any of the following events will be deemed to be an
"Event of Default" under this Guarantee: (1) an Insolvency Event as defined in
the Credit Agreement; or (ii) any other Event of Default (as defined in the
Credit Agreement).
5.2 Immediately and automatically upon any Event of Default under
clause (i) of the immediately preceding paragraph, or, at the option of Agent,
immediately upon the occurrence of any other Event of Default and upon notice to
Guarantor by Agent, Guarantor will pay to Agent all amounts due and to become
due under the $700,000 Obligations, but in no event shall Guarantor pay, in the
aggregate, more than the Guaranteed Amount. For purposes of an Event of Default
under clause (i) of the immediately preceding paragraph, all of the $700,000
Obligations then existing will be accelerated and become immediately due and
payable in full from Guarantor, whether or not then due and payable by Debtor.
Such amounts will be paid by Guarantor without setoff, counterclaim,
presentment, demand, protest and notice of demand, protest and dishonor, which
hereby are expressly waived.
-4-
<PAGE>
5.3 The rights and remedies of Lenders or Agent, after the occurrence of
any such Event of Default, will include but not be limited to the right to
(i) set off against and apply to all or any part of the $700,000 Obligations,
without notice, the amount of any or all moneys, credits and other property of
any nature whatsoever of Guarantor now or at any time hereafter in the
possession of, in transit to or from, under the control or custody of, or on
deposit with (whether held by Guarantor individually or jointly with another
person or entity), Lenders or Agent or any Affiliate of Lenders or Agent, and
(ii) to exercise any one or more of the rights and remedies provided a secured
party under applicable law with respect to any Collateral. Guarantor waives any
requirement of marshalling of any collateral upon the occurrence of any Event of
Default. So long as Debtor is not the subject of an Event of Default as defined
in the Credit Agreement with respect to the $700,000 Obligations (as defined in
the Credit Agreement), Lenders shall apply payment to such $700,000 Obligations
as directed by Debtor.
6. SUBORDINATION. No setoff, counterclaim, reduction or diminution of the
$700,000 Obligations, or any defense of any kind or nature, that Guarantor has
or may have in the future against Debtor, or that Debtor has or may have in the
future against Lender, will be available hereunder to Guarantor against Lender.
Any indebtedness, liability or other obligation of Debtor now or hereafter owed
to Guarantor hereby is subordinated to the $700,000 Obligations and unless
otherwise agreed by Lender all payments or other transfers made under or on
account of any such indebtedness, liability or other obligation after the
occurrence of an Event of Default will be received by Guarantor as trustee for
Lender and immediately paid over to Lender on account of the $700,000
Obligations but without in any manner reducing or affecting the liability of
Guarantor under this Guarantee.
7. COSTS. To the extent that Lenders or Agent incurs any costs or expenses in
protecting or enforcing their rights under this Guarantee, including but not
limited to reasonable attorneys' fees and the costs and expenses of litigation,
such costs and expenses will be due on demand, will be a direct and primary
obligation of Guarantor, and will bear interest from the incurring or payment
thereof at the Default Rate.
8. GENERAL.
8.1 INDEMNITY. Guarantor agrees that if at any time all or any part of any
payment or transfer of any kind received by Lender with respect to all or any
part of the $700,000 Obligations or this Guarantee is repaid, set aside or
invalidated by reason of any judgment, decree or order of any court or
administrative body, or by reason of any agreement, settlement or compromise of
any claim of a preference or fraudulent conveyance made at any time with respect
to such payment or transfer, Guarantor's obligations under this Guarantee will
continue (and/or be reinstated) in full force and effect and Guarantor will be
liable for the amount or amounts so repaid, recovered, set aside or invalidated,
but in no event will such liability be in excess of the Guaranteed Amount. The
provisions of this Section will be and remain effective notwithstanding any
contrary action which may have been taken by Guarantor in reliance upon such
payment or transfer, and any such contrary action so taken will be without
prejudice to
-5-
<PAGE>
Lender's rights under this Guarantee and will be deemed to have been
conditioned upon such payment or transfer having become final and irrevocable.
The provisions of this Section will survive any revocation, termination,
cancellation or discharge of this Guarantee or the $700,000 Obligations.
8.2 NOTICES. All notices, demands, requests, consents or approvals and
other communications required or permitted hereunder will be in writing and will
be conclusively deemed to have been received by a party hereto and to be
effective if delivered personally to such party, or sent by telex, facsimile
(followed by written confirmation) or other telegraphic means, or by overnight
courier service, or by certified or registered mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth below or to
such other address as any party may give to the other in writing for such
purpose:
To Agent: PNC BANK, OHIO, NATIONAL ASSOCIATION
201 East Fifth Street
Cincinnati, Ohio 45202-4117
ATTN: Timothy E. Reilly
To Guarantor: 770 N. Center Street
Versailles, Ohio 45380
with a copy to: Sebally, Shillito & Dyer
l3OO Courthouse Plaza NE
P.O. Box 220
Dayton, Ohio 45402
ATTN: Beverly Shillito, Esq.
All such communications, if personally delivered, will be conclusively deemed
to have been received by a party hereto and to be effective when so delivered,
or if sent by telex, facsimile or telegraphic means, on the day on which
transmitted, or if sent by overnight courier service, on the day after
deposit thereof with such service, or if sent by certified or registered mail,
on the third business day after the day on which deposited in the mail.
8.3 REMEDIES CUMULATIVE, ETC. The terms of this Guarantee may be enforced
as to any one or more breaches either separately, successively, concurrently,
independently or cumulatively from time to time and as often and in such order
as Agent may deem expedient, and no single or partial exercise of any right or
remedy will preclude any further exercise thereof. No right or remedy herein
conferred upon or reserved to Lenders or Agent hereunder is intended to be
exclusive of any other available right or remedy, but each and every such right
or remedy will be cumulative and will be in addition to every other right or
remedy given under this Guarantee or now or hereafter existing at law or in
equity or by statute. No delay or omission to exercise any right, remedy or
power accruing upon any Event of Default or default,
-6-
<PAGE>
omission or failure of performance hereunder or under any of the $700,000
Obligations will impair any such right, remedy or power or will be construed
to be a waiver thereof or an acquiescence therein, nor will it affect any
subsequent Event of Default or default of the same or a different nature.
8.4 WAIVERS AND MODIFICATIONS. No delay or failure on the part of Lenders
or Agent to exercise any right, remedy or power hereunder, under any of the Loan
Documents, under any of the $700,000 Obligations or under applicable law will
impair or waive any such right, remedy or power (or any other right, remedy or
power), be considered a waiver of or an acquiescence in any breach, Default or
Event of Default or affect any other or subsequent breach, Default or Event of
Default of the same or a different nature. No waiver of any breach, Default or
Event of Default, nor any modification, waiver, discharge or termination of any
provision of this Guarantee or any of the Loan Documents, nor consent to any
departure by any Guarantor therefrom, will be established by conduct, custom or
course of dealing; and no modification, waiver, discharge, termination or
consent will in any event be effective unless the same is in writing, signed by
Agent and specifically refers to this Guarantee, and then such modification,
waiver, discharge, termination or consent will be effective only in the specific
instance and for the specific purpose for which given. No notice to or demand on
any Guarantor in any case will entitle any Guarantor to any other or further
notice or demand in the same or any similar or other circumstance.
8.5 BINDING EFFECT, ASSIGNABILITY. If this Guarantee is executed by more
than one Guarantor, the obligations of such persons or entities hereunder will
be joint and several. Any reference to "Guarantor" will mean each such person or
entity individually or collectively. This Guarantee will be binding upon
Guarantor and Guarantor's heirs, administrators, successors and assigns and
inure to the benefit of Lenders and Agent and their successors and assigns;
provided, however, that Guarantor may not assign this Guarantee in whole or in
part without the prior written consent of Agent, and Lender at any time may
assign this Guarantee in whole or in part. If any or all of the $700,000
Obligations are assigned by Lenders, this Guarantee will inure to the benefit
of Lenders' assignee, and to the benefit of any subsequent assignee, to the
extent of the assignment or assignments; provided that no assignment will
operate to relieve Guarantor from any duty to Lenders hereunder with respect to
any unassigned portion of the $700,000 Obligations.
8.6 GENDER, ETC. Whenever used herein, the singular number will include
the plural, the plural the singular and the use of the masculine, feminine or
neuter gender will include all genders.
8.7 HEADINGS. The headings in this Guarantee are for convenience only and
will not limit or otherwise affect any of the terms hereof.
8.8 COMPLETE AGREEMENT. This Guarantee constitutes the entire agreement of
the parties and supersede all prior oral and written negotiations, agreements
and understandings regarding the subject matter of this Guarantee.
-7-
<PAGE>
8.9 COUNTERPARTS. This Guarantee may be executed in one or more
counterparts, each of which will be deemed to be an original and all of which
together will constitute one and the same instrument; provided, however, that
failure of any Guarantor to sign any or all counterparts will not affect the
liability of any other Guarantor hereunder.
8.10 ILLEGALITY. If any provision of this Guarantee is prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision and without invalidating any other provision herein; provided,
however, that if the provision that is the subject of such prohibition or
invalidity pertains to payment, then, at the option of Agent, all of the
$700,000 Obligations will become immediately due and payable.
8.11 GOVERNING LAW. This Guarantee is being delivered in, is intended to
be performed in, shall be construed and enforceable in accordance with, and be
governed by the internal laws of, the State of Ohio without regard to principles
of conflict of laws. THE LENDERS, AGENT AND GUARANTOR HEREBY WAIVE THE RIGHT
TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS GUARANTEE OR THE LOAN
DOCUMENTS.
GUARANTOR HEREBY SUBMITS TO PERSONAL JURISDICTION IN THE STATE OF OHIO FOR
THE ENFORCEMENT OF THIS GUARANTEE AND WAIVES ANY AND ALL PERSONAL RIGHTS TO
OBJECT TO SUCH JURISDICTION FOR THE PURPOSES OF LITIGATION TO ENFORCE THIS
GUARANTEE. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF THE COURT OF
COMMON PLEAS OR THE COURT OF APPEALS OF ANY COUNTY IN OHIO, AND ANY FEDERAL
COURT IN THE STATE OF OHIO, IN ANY ACTION, SUIT, OR PROCEEDING WHICH LENDERS OR
AGENT MAY AT ANY TIME WISH TO FILE IN CONNECTION WITH THIS GUARANTEE OR ANY
RELATED MATTER. GUARANTOR HEREBY AGREES THAT AN ACTION, SUIT, OR PROCEEDING TO
ENFORCE THIS GUARANTEE MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN THE STATE
OF OHIO, AND HEREBY WAIVES ANY OBJECTION WHICH GUARANTOR HAS TO THE LAYING OF
THE VENUE OF ANY SUCH ACTION, SUIT, OR PROCEEDING IN ANY SUCH COURT; PROVIDED,
HOWEVER, THAT THE PROVISIONS OF THIS PARAGRAPH SHALL NOT BE DEEMED TO PRECLUDE
LENDERS OR AGENT FROM FILING ANY SUCH ACTION, SUIT, OR PROCEEDING IN ANY OTHER
APPROPRIATE FORUM.
Guarantor hereby authorizes any attorney at law to appear in any court of
record in the State of Ohio, or any other State or Territory of the United
States, after this Guarantee becomes due, and waive the issuance and service of
process, enter appearance and confess a judgment against Guarantor, in favor of
the holder of this Guarantee, for the amount then appearing due, and thereupon
to release all errors and waive all rights of appeal and stay of execution. This
warrant of attorney to confess judgment shall remain in full force and effect so
long as any portion of the indebtedness evidenced hereby remains unpaid,
notwithstanding any judicial determination of the amount due, and any
confession of judgment and subsequent vacation
-8-
<PAGE>
thereof shall not constitute termination of this warrant of attorney to
confess judgment. Guarantor hereby expressly (i) waives a conflict of
interest of an attorney retained by Lenders or Agent to confess judgment
against the Guarantor upon this Guarantee, and (ii) consents to the receipt
by the attorney retained by Lenders or Agent of a legal fee from Lenders or
Agent for legal services rendered for confessing judgment against the
Guarantor upon this Guarantee. A copy of this Guarantee, certified by Lenders
or Agent, may be filed in each such proceeding in place of filing the
original as a warrant of attorney.
*******************************************************************************
WARNING - BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
*******************************************************************************
/s/ Albert D. Greenaway
--------------------------------------
Albert D. Greenaway
Dated: September 18, 1995
STATE OF OHIO )
) SS.
COUNTY OF MONTGOMERY )
The foregoing instrument was acknowledged before me this 18th day of
September, 1995 by Albert D. Greenaway.
/s/ Sharon K. Henry
--------------------------------------
Notary Public
SHARON K. HENRY
NOTARY PUBLIC, STATE OF OHIO
My Commission Expires May 4, 2000
Recorded in Darke County
-9-
<PAGE>
SECOND AMENDMENT TO REVOLVING NOTE
Dayton, Ohio _____________, 1995
The undersigned, WHITEFORD FOODS VENTURE, L.P., a Texas
limited partnership ("Borrower"), executed and delivered a
Revolving Note to PNC BANK, OHIO, NATIONAL ASSOCIATION, a
national banking association ("Lender"), dated June 13, 1994 in
the original principal amount of $1,100,000.00, which note was
amended by an Amendment to Revolving Note dated March 31, 1995 (the
"Note").
1. By this Second Amendment to Revolving Note, the second
paragraph of the Note is amended effective as of July 1, 1995 by
deleting "0.50% above the Prime Rate" from the first sentence
thereof and inserting "one percent (1.0%) plus the Prime Rate" in its place.
2. Except as expressly modified hereby, all of the terms and conditions
of the Note remain in full force and effect.
3. Borrower hereby authorizes any attorney at law to appear in
any court of record in the State of Ohio, or any other State or
Territory of the United States, after the Note, as modified hereby,
becomes due, and waive the issuance and service of process, enter
appearance and confess a judgment against Borrower, in favor of the
holder of the Note, for the amount then appearing due, and/or for the
sale of all or any part of the property securing the payment of
the Note, and thereupon to release all errors and waive all rights
of appeal and stay of execution. This warrant of attorney to confess
judgment shall remain in full force and effect so long as any
portion of the indebtedness evidenced by the Note remains unpaid,
notwithstanding any judicial determination of the amount due, and any
confession of judgment and subsequent vacation thereof shall not
constitute termination of this warrant of attorney to confess
judgment. Borrower hereby expressly (i) waives a conflict of interest of
an attorney retained by the Bank to confess judgment against the
Borrower upon the Note, as modified hereby, and (ii) consents to the
receipt by the attorney retained by the Bank of a legal fee from the Bank
for legal services rendered for confessing judgment against the
Borrower upon the Note, as modified hereby. A copy of the Note,
as modified hereby, certified by the Bank, may be filed in each
such proceeding in place of filing the original as a warrant of attorney.
<PAGE>
WARNING-BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
WHITEFORD FOODS VENTURE, L.P.,
a Texas limited partnership
By: G/W FOODS, INC.,
a Texas corporation,
as general partner
By: ____________________________
Print Name: ____________________
Title: _________________________
ACCEPTED:
PNC BANK, OHIO, NATIONAL ASSOCIATION,
a national banking association
By: ______________________________
Timothy E. Reilly
Vice President
STATE OF OHIO )
) SS:
COUNTY OF DARKE )
The foregoing instrument was acknowledged before me this 11 day of July,
1995 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
2
<PAGE>
SECOND AMENDMENT TO REVOLVING NOTE
Dayton, Ohio _____________, 1995
The undersigned, WHITEFORD FOODS VENTURE, L.P., a Texas
limited partnership ("Borrower"), executed and delivered a
Revolving Note to THE FIFTH THIRD BANK OF WESTERN OHIO, N.A.,
a national banking association ("Lender"), dated June 13, 1994
in the original principal amount of $900,000.00, which note was
amended by an Amendment to Revolving Note dated March 31, 1995 (the
"Note").
1. By this Second Amendment to Revolving Note, the second
paragraph of the Note is amended effective as of July 1, 1995 by deleting
"0.50% above the Prime Rate" from the first sentence thereof and
inserting "one percent (1.0%)" in its place.
2. Except as expressly modified hereby, all of the terms and
conditions of the Note remain in full force and effect.
3. Borrower hereby authorizes any attorney at law to appear in any
court of record in the State of Ohio, or any other State or Territory of
the United States, after the Note, as modified hereby, becomes due, and
waive the issuance and service of process, enter appearance and
confess a judgment against Borrower, in favor of the holder of the
Note, for the amount then appearing due, and/or for the sale of all or any
part of the property securing the payment of the Note, and thereupon
to release all errors and waive all rights of appeal and stay of
execution. This warrant of attorney to confess judgment shall remain in full
force and effect so long as any portion of the indebtedness evidenced by
the Note remains unpaid, notwithstanding any judicial determination of
the amount due, and any confession of judgment and subsequent
vacation thereof shall not constitute termination of this warrant of attorney
to confess judgment. Borrower hereby expressly (i) waives a conflict of
interest of an attorney retained by the Bank to confess judgment against
the Borrower upon the Note, as modified hereby, and (ii) consents to
the receipt by the attorney retained by the Bank of a legal fee from the Bank
for legal services rendered for confessing judgment against the Borrower
upon the Note, as modified hereby. A copy of the Note, as modified
hereby, certified by the Bank, may be filed in each such proceeding
in place of filing the original as a warrant of attorney.
1
<PAGE>
WARNING-BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER
FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.
WHITEFORD FOODS VENTURE, L.P.,
a Texas limited partnership
By: G/W FOODS, INC.,
a Texas corporation,
as general partner
By: ____________________________
Print Name: ____________________
Title: _________________________
ACCEPTED:
THE FIFTH THIRD BANK OF WESTERN OHIO, N.A.
a national banking association
By: ____________________________
Print Name: ____________________
Title: _________________________
STATE OF OHIO )
) SS:
COUNTY OF DARKE )
The foregoing instrument was acknowledged before me this 11 day of July,
1995 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
2
<PAGE>
SECOND AMENDMENT TO CREDIT 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, N.A., 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 112 West Second Street, Dayton, Ohio 45402 (each individually
a "Lender" and collectively "Lenders"), agree as follows:
1. RECITALS.
1.1 The Borrower, the Agent and the Lenders entered into a Credit
Agreement dated June 13, 1994, and an Amendment to Credit Agreement dated
March 31, 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 further amend
the Credit Agreement.
2. AMENDMENT.
2.1 Section 2.2 shall be amended to change the title thereof to "Term
Loan A", and to change all references in Section 2.2 to the "Term Loan" to
"Term Loan A", and to change all references in Section 2.2 to the "Term Notes"
to "Term Notes A".
2.2. The following shall be added to the Credit Agreement as a new
Section 2.2.1:
"2.2.1 TERM LOAN B.
(a) Each of the Lenders severally agrees, on the terms and conditions
hereinafter set forth, to make a term loan (the "Term Loan B") to
Borrower in the aggregate principal sum of FIVE HUNDRED
THOUSAND DOLLARS ($500,000.00), in an amount equal to such
Lender's Ratable Portion. Borrower's obligation to repay the Term Loan
B shall be evidenced by its two promissory notes (the "Term Notes
B") in the form of the notes attached hereto as Exhibit 2.2.1,
executed and delivered to each of the Lenders, respectively, on, and
dated ________,1995. Principal and interest under the Term Notes B
will be payable in 60 monthly installments, due on the first day of each
calendar month, commencing June 1, 1995, with a final payment on
May 1, 2000.
(b) Interest shall accrue under the Term Loan B from the date of the
Term Notes B until maturity, and shall be calculated and charged, all
based upon the terms of the Term Notes B. After the occurrence of an
Event of Default, the Term Loan B shall bear interest until paid at the
Default Rate; this provision does not
<PAGE>
constitute a waiver of any Events of Default or an agreement by the
Agent, on behalf of Lenders, or by Lenders, to permit any late payments
whatsoever."
2.2 The following shall be added to the Credit Agreement as a new
Section 2.10:
"2.10 OTHER LOANS. Lenders may lend additional sums to Borrower,
and Borrower may borrow additional sums from Lender hereafter from time
to time (the "Additional Loans"), and upon such terms and conditions as
the parties may agree and any such additional loans shall be made
under, and shall be subject to the terms of this Credit Agreement,
where provided for in the notes evidencing such Additional Loans
("Additional Notes"), provided, however, that nothing herein shall be
construed as to obligate Lenders to make any additional loans to
Borrower."
2.3 Exhibit 1 is amended to delete the definition of "Loans" and to
insert the following as a substitute:
" 'Loans' means the Revolving Loans, the Term Loan A, the Term Loan B, the
Additional Loans, the Mortgage Loan and the Construction and Term Loan,
collectively, as any of them may be amended or supplemented from time to
time."
2.4 Exhibit 1 is amended to delete the definition of "Notes" and to
insert the following as a substitute:
" 'Notes' means the Revolving, Notes, the Term Notes A, the Term Notes B,
the Additional Notes, the Mortgage Notes, and the Construction and Term
Notes, collectively, as any of them may be amended or supplemented from
time to time."
3. REPRESENTATIONS AND WARRANTIES. To induce the Lender to enter into this
Second Amendment to Credit Agreement (this "Amendment"), the Borrower
represents and warrants as follows:
3.1 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 Term Notes B between the Borrower and the Lenders of even date herewith.
3.2 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.
3.3 The person executing this Amendment and the Term Notes B 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 Term
Notes B on behalf of the Borrower.
<PAGE>
4. CONDITIONS. The Agent's and Lenders' consent to this Second Amendment is
subject to the following conditions:
4.1 The Borrower shall have executed and delivered to the Lenders the Term
Notes B.
4.2 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
Term Notes B, the Exhibits hereto and all other documents executed in
connection herewith.
4.3 The representations and warranties of the Borrower in this Section 3
herein shall be true.
5. GENERAL.
5.1 Except as expressly modified herein, the Credit Agreement, as amended,
is and remains in full force and effect.
5.2 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 Loans, the Credit
Agreement, as amended, the Notes, as amended, the Security Documents, as
amended, or any agreement or instrument guaranteeing, securing or otherwise
relating to any of the Loans.
5.3 This Amendment will be binding upon and inure to the benefit of the
Borrower and the Lenders and their respective successors and assigns.
5.4 All representations, warranties and covenants made by the Borrower
herein will survive the execution and delivery of this Amendment.
5.5 This Amendment will in all respects be governed and construed in
accordance with the laws of the State of Ohio.
<PAGE>
Signed at __________________ this ______________ day of April, 1995.
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, as Agent
a national banking association
By:
---------------------------------
Print Name:
-------------------------
Title:
------------------------------
THE FIFTH THIRD BANK OF WESTERN OHIO, N.A.,
a national banking association
By:
---------------------------------
Print Name:
-------------------------
Title:
------------------------------
PNC BANK, OHIO, NATIONAL ASSOCIATION,
a national banking association
By:
---------------------------------
Print Name:
-------------------------
Title:
------------------------------
13
<PAGE>
STATE OF OHIO
------------------------- )
)SS:
COUNTY OF MONTGOMERY
------------------------- )
The foregoing instrument was acknowledged before me this 14th day of
April, 1995 by ALBERTO 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/ Barbara Bordewisch Beam
----------------------------
Notary Public
STATE OF
------------------------- )
)SS:
COUNTY OF
------------------------- )
The foregoing instrument was acknowledged before me this ___ day of
March, 1995 by __________________, ____________________ of The Fifth Third
Bank of Western Ohio, N.A., a national banking association, on behalf of the
association.
--------------------------
Notary Public
STATE OF
------------------------- )
)SS:
COUNTY OF
------------------------- )
The foregoing instrument was acknowledged before me this ___ day of
March, 1995 by __________________, ____________________ of PNC Bank, Ohio,
National Association, a national banking association, on behalf of the
association.
--------------------------
Notary Public
14
<PAGE>
THIRD AMENDMENT TO CREDIT 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 with offices located at 112 West
Second Street, Dayton, Ohio 45402, THE FIFTH THIRD BANK
OF WESTERN OHIO, N.A., a national banking association with offices
located at 123 Market Street, Piqua, Ohio 45356 (each individually a
"Lender" and collectively "Lenders") and PNC BANK, OHIO,
NATIONAL ASSOCIATION, a national banking association as agent for
the Lenders (the "Agent"), agree as follows:
1. RECITALS.
1.1 The Borrower, the Agent and the Lenders entered into a Credit
Agreement dated June 13, 1994, which Credit Agreement was subsequently amended
by an Amendment to Credit Agreement dated March 31, 1995 and a Second
Amendment to Credit Agreement dated April 20, 1995 (collectively, the "Credit
Agreement"). Unless otherwise defined herein, 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 further
amend the Credit Agreement.
2. AMENDMENTS.
2.1 Section 2.1(c) of the Credit Agreement is amended effective as
of July 1, 1995 by deleting "0.50% above the Prime Rate" from the first
sentence thereof and inserting "one percent (1.0%) plus the Prime Rate" in
its place.
2.2 Section 2.1(e) of the Credit Agreement is hereby amended by
deleting "July 1, 1995" from the first sentence thereof and inserting
"October 1, 1995" in its place.
3. REPRESENTATIONS AND WARRANTIES. To induce the Lenders and Agent
to enter into this Third Amendment to Credit Agreement (this
"Amendment"), the Borrower represents and warrants as follows:
3.1 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.
3.2 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.
3.3 The person executing this Amendment 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 on behalf of the
Borrower.
<PAGE>
4. CONDITIONS. The consent of Agent and the Lenders to this
Third Amendment is subject to the following conditions:
4.1 The Agent 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 and all other documents executed in connection herewith.
4.2 The representations and warranties of the Borrower in Section
3 of this Amendment shall be true and accurate.
5. GENERAL.
5.1 Except as expressly modified herein, the Credit Agreement, as
amended, is and remains in full force and effect.
5.2 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
Loans, the Credit Agreement, as amended, the Notes, as amended, the
Security Documents, or any agreement or instrument guaranteeing,
securing or otherwise relating to any of the Loans.
5.3 This Amendment will be binding upon and inure to the benefit
of the Borrower and the Lenders and their respective successors and assigns.
5.4 All representations, warranties and covenants made by the
Borrower herein will survive the execution and delivery of this Amendment.
5.5 This Amendment will in all respects be governed by and
construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this
Third Amendment to Credit Agreement to be executed by their respective
duly authorized representatives this 11 day of July, 1995.
BORROWER:
WHITEFORD FOODS VENTURE, L.P.,
a Texas limited partnership
By: G/W FOODS, INC.,
a Texas corporation,
as general partner
By: /s/ ALBERT D. GREENAWAY
----------------------------
Print Name: ALBERT D. GREENAWAY
-------------------
Title: PRESIDENT
-------------------------
2
<PAGE>
LENDER:
PNC BANK, OHIO, NATIONAL ASSOCIATION,
a national banking association
By: _____________________________
Timothy E. Reilly
Vice President
LENDER:
THE FIFTH THIRD BANK OF WESTERN OHIO, N.A.
a national banking association
By: ___________________________
Print Name: ___________________
Title: ________________________
AGENT:
PNC BANK, OHIO, NATIONAL ASSOCIATION,
a national banking association
By: _____________________________
Timothy E. Reilly
Vice President
STATE OF OHIO )
)SS:
COUNTY OF DARKE )
The foregoing instrument was acknowledged before me this 11 day of July,
1995 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
3
<PAGE>
CONTRIBUTION AGREEMENT
THIS AGREEMENT is made this 11th day of August, 1995 by and between
ALBERT D. GREENAWAY, an individual ("Guarantor") and KEVIN T. GANNON, an
individual (Mr. "Gannon"), under the following circumstances:
A. Whiteford Foods Venture, L.P, formerly known as Grenada / Whiteford
Foods Venture, L.P., a Texas Limited Partnership ("Whitefords")
has entered into a Credit Agreement with PNC Bank, Ohio, National
Association and The Fifth Third Bank of Western Ohio, N.A. (the
"Lenders"), dated June 13, 1994, as amended by (i) an Amendment
to Credit Agreement, dated March 31, 1995 (the "First Amendment"),
(ii) a Second Amendment to Credit Agreement, dated April 20, 1995
(the "Second Amendment"), and (iii) a Third Amendment to Credit
Agreement, dated July 11, 1995 (the "Third Amendment") (the
"Credit Agreement");
B. The Second Amendment provides for the lending of additional funds
under the Credit Agreement pursuant to additional notes;
C. Whitefords intends to finance $700,000 with the Lenders pursuant to
the Second Amendment (the "Additional Notes");
D. The Additional Notes will be evidence by two Term Notes in the
aggregate amount of $700,000 payable to the Lenders (the "Term
Notes");
E. As a condition to providing funds under the Term Notes, the Lenders
have required that Mr. Greenaway execute a Limited Guarantee of
even date herewith a copy of which is attached as Exhibit A (the
"Limited Guarantee") guaranteeing the payment of $300,000 due under
the Term Notes and certain additional amounts payable under the
Limited Guarantee, all defined as the "Guaranteed Amount" in the
Limited Guarantee;
F. In order to induce Guarantor to execute the Limited Guarantee, Mr.
Gannon desires to contribute up to fifty percent of any payments
Guarantor makes under the Limited Guarantee;
G. The Limited Guarantee is secured by (i) a Mortgage, of even date
herewith, on the real property known as 770 North Center Street,
Village of Versailles, Darke County, Ohio, (ii) a
1
<PAGE>
Mortgage, of even date herewith, on the real property known as 900
North Center Street, Village of Versailles, Darke County, Ohio, and
(iii) a Security Agreement, of even date herewith;
H. Guarantor as President of G/W Foods, Inc., the sole general partner
of Whitefords (the "Company"), and Mr. Gannon as Chief Executive
Officer of the Company both desire that Whitefords have the
necessary funds to transact business; and
I. Guarantor and Mr. Gannon desire to enter into this Agreement to
provide for the obligations and rights of the parties in the event
Guarantor makes any payment under the Limited Guarantee.
NOW, THEREFORE, based on the premises set forth above and the promises
set forth below, the parties hereto agree as follows:
1. CONSIDERATION. Mr. Gannon acknowledges that he has induced Guarantor
to execute the Limited Guarantee in consideration of Mr. Gannon's contribution
under this Agreement. Mr. Gannon further acknowledges that Guarantor's
execution of the Limited Guarantee will benefit Whitefords, the Company as
Whiteford's sole general partner and Mr. Gannon as an indirect owner of the
Company.
2. CONTRIBUTION. In the event Guarantor makes a payment pursuant to the
terms of the Limited Guarantee or pays any expenses related thereto, including
expenses related to recovering amounts from Whitefords, Guarantor shall
promptly provide Mr. Gannon written notice of such payments, and Mr. Gannon
shall reimburse Guarantor within fifteen days one-half of such payments,
together with interest at the prime rate from the date of Guarantor's payment
to the date Mr. Gannon pays Guarantor. In the event that Guarantor is
reimbursed by Whiteford's for any amounts paid by Guarantor and/or Mr Gannon in
connection with the Limited Guarantee, Guarantor shall promptly pay Mr. Gannon
such amount necessary so that Guarantor and Mr. Gannon shall each have paid
one-half of any Guaranteed Payment.
3. ANNUAL CONSIDERATION. Mr. Gannon acknowledges that he will not be
entitled to receive any of the Annual Consideration, as that term is defined in
the Guarantee Compensation Agreement between Guarantor and Whitefords, of even
date herewith (the "Guarantee Compensation Agreement").
4. EFFECT OF RETURN OF RECOVERY AMOUNT. Mr. Gannon acknowledges that his
contribution obligation hereunder will not terminate upon Guarantor's receipt
of a Recovery Amount equal to the Guarantee Payments. In the event Guarantor is
2
<PAGE>
required to return all or part of the Recovery Amount, Guarantor will have the
right to receive a Contribution Amount from Mr. Gannon.
5. NO WAIVER. No waiver of any term of this Agreement shall be valid
unless such waiver is evidence by a writing signed by the party against whom
such waiver is asserted. The waiver by any party of any breach of this
Agreement shall not be construed as, nor constitute, a continuing waiver or
consent to any subsequent breach by any party.
6. NOTICE. All notices required or permitted under this Agreement shall
be in writing and shall be sufficient in all respects if sent by certified mail
or overnight express carrier to the party to receive the notice at the address
set forth below:
If to Guarantor to:
Albert D. Greenaway
770 North Center Street
Whiteford Foods Venture, L.P.
P.O. Box 177 Versailles, Ohio 45380
If to Mr. Gannon to:
Kevin T. Gannon
c/o Robert A. Stanger & Co.
1129 Broad Street
Shrewsbury, New Jersey 07702
7. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Guarantor and Mr. Gannon and their respective legal
representatives, heirs and all permitted successors and assigns.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereto. This Agreement may only
be modified or amended by a written instrument executed by both parties hereto.
9. SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable, all other provisions shall nevertheless continue in
full force and effect.
10. GOVERNING LAW. This Agreement shall be governed by, and its
provisions construed and interpreted in accordance with the laws of the State
of Ohio.
3
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above mentioned.
/s/ Albert D. Greenaway
----------------------------
ALBERT D. GREENWAY
----------------------------
KEVIN T. GANNON
4
<PAGE>
EXHIBIT A
LIMITED GUARANTEE
5
<PAGE>
GUARANTEE COMPENSATION AGREEMENT
THIS AGREEMENT is made this 18th day of September, 1995 by and between
WHITEFORD FOODS VENTURE, L.P., formerly known as Granada / Whiteford Foods
Venture, L.P., a Texas limited partnership ("Whitefords"), and ALBERT D.
GREENAWAY, an individual (Mr. "Greenaway"), under the following circumstances:
A. Whitefords entered into a Credit Agreement with PNC Bank, Ohio,
National Association and The Fifth Third Bank of Western Ohio, N.A.
(the "Lenders"), dated June 13, 1994, as amended (the "Credit
Agreement");
B. A Second Amendment to Credit Agreement, dated April 20, 1995 (the
"Second Amendment"), provides for the lending of additional funds
under the Credit Agreement pursuant to additional notes;
C. Whitefords intends to finance $700,000 with the Lenders pursuant to
the Second Amendment (the "Additional Notes");
D. The Additional Notes shall be evidenced by two Term Notes in
the aggregate amount of $700,000 payable to the Lenders (the
"Term Notes");
E. As a condition to providing funds under the Term Notes, the Lenders
have required that Mr. Greenaway execute a Limited Guarantee of
even date herewith (the "Limited Guarantee") guaranteeing the
payment of $300,000 due under the Term Notes and certain additional
amounts payable under the Limited Guarantee, all defined as the
"Guaranteed Amount" in the Limited Guarantee;
F. In order to induce Mr. Greenaway to execute the Limited Guarantee,
Whitefords shall provide Mr. Greenaway with the consideration
identified below; and
G. Whitefords and Mr. Greenaway desire to enter into this Agreement to
provide for the obligations and rights of the parties in the event
Mr. Greenaway makes any payments under the Limited Guarantee.
<PAGE>
NOW, THEREFORE, the parties hereto agree as follows:
1. INDUCEMENT FOR LIMITED GUARANTEE. As an inducement to Mr. Greenaway
to enter into the Limited Guarantee, Whitefords shall provide Mr. Greenaway
with an annual payment equal to 2% of the Guaranteed Amount (regardless of
whether Mr. Greenaway makes any payments under the Limited Guarantee) (the
"Annual Consideration").
2. PAYMENT OF THE CONSIDERATION.
A. On December 31 of every calendar year in which the Limited
Guarantee is in effect, Whitefords will pay Mr. Greenaway the Annual
Consideration multiplied by the "Formula".
B. In the event the Limited Guarantee is not in effect because Mr.
Greenaway's obligations under the Limited Guarantee have been
extinguished or released, then within five business days after Mr.
Greenaway provides Whitefords' notice that the Limited Guarantee is no
longer in effect, Whitefords will pay Mr. Greenaway the Annual
Consideration multiplied by the Formula.
C. For purposes of this Guarantee Compensation Agreement, the
"Formula" shall be that number of days which the Limited Guarantee was
in effect during the calendar year in which such Formula is being
determined divided by 365.
3. REPAYMENT OF GUARANTEE PAYMENTS. In the event Mr. Greenaway is
required to make any payments under the Limited Guarantee, including, but not
limited to any interest, charges, expenses, fees (including attorney's fees),
indemnification obligations and other sums Mr. Greenaway is obligated to pay
under the Limited Guarantee (collectively the "Guarantee Payment"), Mr.
Greenaway shall promptly deliver to Whitefords written notice setting forth the
Guarantee Payment (the "Guarantee Payment Notice"). Whitefords shall pay Mr.
Greenaway the Guarantee Payment within five business days after the Guarantee
Payment Notice.
4. PRIORITY OF GREENAWAY CONSULTING, INC.'S CLAIM. Mr. Greenaway hereby
acknowledges that Greenaway Consulting, Inc.'s ("GCI") right of repayment from
Whitefords pursuant to a Promissory Note, dated November 8, 1993, in the
original principal amount of $420,000 (the "1993 Note"), will have priority
over Mr. Greenaway's right of repayment of Guarantee Payments from Whitefords
under this Agreement. Mr. Greenaway further acknowledges that the Security
Agreement between the Company and GCI, dated October 1, 1993 and two Mortgages
granted by the Company to GCI, dated October 1, 1993, securing Whitefords'
obligations under the 1993 Note, are senior in priority to the Security
<PAGE>
Agreement and Mortgages of even date herewith, securing Whitefords' obligations
hereunder.
5. NOTICE. All notices required or permitted under this Agreement shall
be in writing and shall be sufficient in all respects if sent by certified mail
or overnight express carrier to the party to receive the notice at the address
set forth below:
If to Whitefords to:
Whiteford Foods Venture, L.P.
770 North Center Street
P.O. Box 177
Versailles, OH 45380
Attention: Albert D. Greenaway
With a copy to:
Beverly F. Shillito
Sebaly, Shillito & Dyer
A Legal Professional Association
1300 Courthouse Plaza
Dayton, Ohio 45402-0220
If to Mr. Greenaway to:
Albert D. Greenaway
Whiteford Foods Venture, L.P.
770 North Center Street
P.O. Box 177
Versailles, OH 45380
6. NO WAIVER. No waiver of any term of this Agreement shall be valid
unless such waiver is evidence by a writing signed by the party against whom
such waiver is asserted. The waiver by any party of any breach of this
Agreement shall not be construed as, nor constitute, a continuing waiver or
consent to any subsequent breach by any party.
7. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Mr. Greenaway and their respective legal representatives, heirs
and all permitted successors and assigns.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereto. This Agreement may only
be modified or amended by a written instrument executed by both parties hereto.
<PAGE>
9. SEVERABILITY. If any provision of this Agreement is held to be
invalid or unenforceable, all other provisions shall nevertheless continue in
full force and effect.
10. GOVERNING LAW. This Agreement shall be governed by, and its
provisions construed and interpreted in accordance with the laws of the State
of Ohio.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above mentioned.
WHITEFORD FOODS VENTURE, L.P.
--------------------------------------
Kevin Gannon, Chief Executive Officer
- G/W Foods, Inc., Its General Partner
/s/ Albert D. Greenaway
--------------------------------------
ALBERT D. GREENAWAY
<PAGE>
CONSENT
This Consent is made as of this 18th day of September, 1995 by Greenaway
Consulting, Inc., an Ohio corporation ("GCI"):
WHEREAS, GCI loaned funds to Whiteford Foods Venture, L.P. (the "Company")
pursuant to a Loan Agreement, dated October 1, 1993 (the "GCI Loan");
WHEREAS, Section 4 of the GCI Loan provides that for as long as the GCI
Loan is outstanding, the Company and its general partner G/W Foods, Inc. will
not borrow any funds from any third party or secure any amounts due any third
party with a security interest, mortgages or other rights without the prior
written consent of GCI;
WHEREAS, the Company has entered into a Credit Agreement with PNC Bank,
Ohio, National Association and The Fifth Third Bank of Western Ohio, N.A. (the
"Banks"), dated June 13, 1994, as amended by (i) an Amendment to Credit
Agreement, dated March 31, 1995 (the "First Amendment"), (ii) a Second
Amendment to Credit Agreement, dated April 20, 1995 (the "Second Amendment"),
and (iii) a Third Amendment to Credit Agreement, dated July 11, 1995 (the
"Third Amendment") (the "Credit Agreement");
WHEREAS, GCI previously orally consented to the Credit Agreement, First
Amendment, Second Amendment and Third Amendment;
WHEREAS, the Second Amendment provides for the lending of additional funds
under the Credit Agreement to be secured by additional notes (the "Additional
Notes");
WHEREAS, the Company intends to finance $700,000 with the Banks pursuant
to the Second Amendment; and
WHEREAS, the Additional Notes shall be evidence by two Term Notes in the
aggregate amount of $700,000 payable to the Banks (the "Term Notes").
NOW, THEREFORE, GCI, hereby (i) acknowledges its prior oral consent to the
Credit Agreement, the First Amendment, the Second Amendment, the Third
Amendment, a Security Agreement between the Company and the Banks, dated June
13, 1994, and an Open-End Mortgage, Assignment of Rents and Leases and Security
Agreement granted by the Company to the Banks, dated June 13, 1994, and (ii)
consents to the Term Notes.
<PAGE>
IN WITNESS WHEREOF, Mr. Greenaway has executed this Consent as of the
day and year first above written.
/s/ Albert D. Greenaway
---------------------------------
Albert D. Greenaway
President
Greenaway Consultant, Inc.
<PAGE>
WAIVER
------
This Waiver is made as of this 18th day of September, 1995 by Albert D.
Greenaway (Mr. "Greenaway"):
NOW THEREFORE, Greenaway Consultant, Inc., hereby waives the payment of
$26,250 plus accrued interest due on September 31, 1995 (the "September
Payment") under the Promissory Note granted by Whiteford Foods Venture, L.P.
("Whitefords") to Greenaway Consultant, Inc., on November 8, 1993, in the
original principal amount of $420,000 (the "Promissory Note") until December
31, 1995 ("December Payment"); provided, however, interest shall accrue on
the September Payment at the rate of interest under the Promissory Note;
provided further, however, such waiver shall not otherwise affect the payment
due on December 31, 1995 under the Promissory Note.
IN WITNESS WHEREOF, Mr. Greenaway has executed this Waiver as of the day
and year first above written.
/s/ Albert D. Greenaway
----------------------------------
Albert D. Greenaway
President
Greenaway Consultant, Inc.
<PAGE>
MORTGAGE
KNOW ALL MEN BY THESE PRESENTS THAT WHITEFORD FOODS VENTURE, L.P.,
formerly known as Granada Whiteford Foods Venture, L.P., a Texas limited
partnership ("Whitefords") in consideration for the obligations incurred by
Albert D. Greenaway as Guarantor under a Limited Guarantee dated September
18, 1995 and delivered to PNC Bank, Ohio, National Association and The Fifth
Third Bank of Western Ohio, N.A. (the "Banks") (the "Greenaway Personal
Guaranty") and as security for the performance and payment of all Whitefords
obligations under the Guaranty Compensation Agreement dated September 18,
1995 between Whitefords and Albert D. Greenaway (the "Compensation
Agreement"), and other good and valuable consideration paid, grants with
mortgage covenants, to ALBERT D. GREENAWAY, an individual, the following real
property:
SEE ATTACHED EXHIBIT A
This mortgage is given, upon statutory condition, to secure the performance
and payment of all Whitefords obligations under the Compensation Agreement.
"Statutory condition" is defined in section 5302.14 of the Ohio Revised
Code and provides generally that if the mortgagor pays the principal and
interest secured by this mortgage, performs the other obligations secured
hereby and the conditions of any prior mortgage, pays all the taxes and
assessments, maintains insurance against fire and other hazards, and does not
commit or suffer waste, then this mortgage shall be void.
This mortgage is subordinated to (i) an Open-End Mortgage, Assignment of
Rents and Leases and Security Agreement granted by Whitefords to the Banks,
recorded at volume 759, page 423 of the mortgage records of Montgomery
County, Ohio, and ii) a mortgage to Greenaway Consultant, Inc. recorded at
volume 759, page 127 of the mortgage records of Montgomery County, Ohio.
<PAGE>
Witness Whiteford Foods Venture, L.P.'s, hand as of this 18th day of
September, 1995.
Signed and Acknowledged
in the Presence of: WHITEFORD FOODS VENTURE, L.P.
- ------------------------- By: G/W Foods, Inc.
(its sole general partner)
- ------------------------- By: Kevin T. Gannon
Chief Executive Officer
STATE OF NEW JERSEY )
) SS:
COUNTY OF_____________ )
Be It Remembered, that on this 18th day of September, 1995, in the
aforesaid County and State, before me, the subscriber, a Notary Public
authorized to take acknowledgements and proofs in said County and State,
personally appeared for the above named G/W Foods, Inc., General Partner of
Whiteford Foods Venture, L.P., Kevin Gannon, its Chief Executive Officer who,
I am satisfied is the Chief Executive Officer of G/W Foods, Inc., the grantor
named in and who executed the foregoing instrument and he did acknowledge
that he signed, sealed and delivered the same as his and its act and deed for
the uses and purpose therein expressed and who did acknowledge that he has
received a true copy of the foregoing instrument on behalf of the grantor.
GIVEN UNDER MY HAND AND OFFICIAL SEAL OF OFFICE at _________________,
New Jersey this 18th day of September, 1995.
______________________________
Notary Public
This Instrument Prepared By:
SEBALY, SHILLITO & DYER
A Legal Professional Association
1300 Courthouse Plaza
P.O. Box 220
Dayton, Ohio 45402
(513) 222-2500
<PAGE>
EXHIBIT A
Legal Description of Real Estate
SITUATE IN THE COUNTY OF DARKE, STATE OF OHIO, AND IN THE VILLAGE OF
VERSAILLES, AND BOUNDED AND DESCRIBED AS FOLLOWS:
TRACT III
Situate in the southwest quarter of Section 18, Town 10 North, Range 4
East, Village of Versailles, Darke County, Ohio, and being more particularly
described as follows:
Beginning at the northeast corner of the southwest quarter of said
Section 18, thence with the east line of said southwest quarter and the
centerline of Reed Road, S-0 degrees-09'-00"-W a distance of 264.00 feet to
a railroad spike and the place of beginning for the herein described tract;
thence continuing along the east line of said southwest quarter and
centerline of Reed Road, S-0 degrees-09'-00"-W a distance of 669.01 feet to a
railroad spike;
thence S-89 degrees-40'-W a distance of 500.00 feet to an iron pin;
thence N-09 degrees 00'-00"-E a distance of 666.22 feet to an iron pin;
thence S-89 degrees-59'-E a distance of 500.00 feet to the place of
beginning, containing 7.663 acres, more or less, 0.461 Acres in road right of
way, leaving 7.202 Net Acres, subject to all legal highways and easements of
record.
<PAGE>
MORTGAGE
KNOW ALL MEN BY THESE PRESENTS THAT WHITEFORD FOODS VENTURE, L.P.,
formerly known as Granada Whiteford Foods Venture, L.P., a Texas limited
partnership ("Whitefords") in consideration for the obligations incurred by
Albert D. Greenaway as Guarantor under a Limited Guarantee dated September
18, 1995 and delivered to PNC Bank, Ohio, National Association and The Fifth
Third Bank of Western Ohio, N.A. (the "Banks") (the "Greenaway Personal
Guaranty") and as security for the performance and payment of all Whitefords
obligations under the Guaranty Compensation Agreement dated September 18,
1995 between Whitefords and Albert D. Greenaway (the "Compensation
Agreement"), and other good and valuable consideration paid, grants with
mortgage covenants, to ALBERT D. GREENAWAY, an individual, the following real
property:
SEE ATTACHED EXHIBIT A
This mortgage is given, upon statutory condition, to secure the performance
and payment of all Whitefords obligations under the Compensation Agreement.
"Statutory condition" is defined in section 5302.14 of the Ohio Revised Code
and provides generally that if the mortgagor pays the principal and interest
secured by this mortgage, performs the other obligations secured hereby and
the conditions of any prior mortgage, pays all the taxes and assessments,
maintains insurance against fire and other hazards, and does not commit or
suffer waste, then this mortgage shall be void.
This mortgage is subordinated to (i) an Open-End Mortgage, Assignment of
Rents and Leases and Security Agreement granted by Whitefords to the Banks,
recorded at volume 759, page 423 of the mortgage records of Montgomery
County, Ohio, and ii) a mortgage to Greenaway Consultant, Inc. recorded at
volume 759, page 123 of the mortgage records of Montgomery County, Ohio.
<PAGE>
Witness Whiteford Foods Venture, L.P.'s, hand as of this 11th day of
September 18, 1995.
Signed and Acknowledged in the Presence of: WHITEFORD FOODS VENTURE, L.P.
_______________________________________ By: G/W Foods, Inc.
(its sole general partner)
_______________________________________ By: _________________________
Kevin T. Gannon
Chief Executive Officer
STATE OF NEW JERSEY )
) SS:
COUNTY OF ______________________________ )
Be It Remembered, that on this 18th day of September, 1995, in the
aforesaid County and State, before me, the subscriber, a Notary Public
authorized to take acknowledgements and proofs in said County and State,
personally appeared for the above named G/W Foods, Inc., General Partner of
Whiteford Foods Venture, L.P., Kevin Gannon, its Chief Executive Officer who,
I am satisfied is the Chief Executive Officer of G/W Foods, Inc., the grantor
named in and who executed the foregoing instrument and he did acknowledge
that he signed, sealed and delivered the same as his and its act and deed for
the uses and purpose therein expressed and who did acknowledge that he has
received a true copy of the foregoing instrument on behalf of the grantor.
GIVEN UNDER MY HAND AND OFFICIAL SEAL OF OFFICE at _____________________,
New Jersey this 18th day of September, 1995.
_______________________________
Notary Public
This Instrument Prepared By:
SEBALY, SHILLITO & DYER
A Legal Professional Association
1300 Courthouse Plaza
P.O. Box 220
Dayton, Ohio 45402
(513) 222-2500
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF REAL ESTATE
SITUATE IN THE COUNTY OF DARKE, STATE OF OHIO, AND IN THE VILLAGE OF
VERSAILLES, AND BOUNDED AND DESCRIBED AS FOLLOWS:
TRACT I
Situate in the Southwest Quarter of Section 18, Town 10, Range 4, Village of
Versailles, Darke County, Ohio, being the same premises conveyed to
Whiteford's Incorporated by deed recorded in Deed Volume 499, Page 204
(parcels 1 & 3), of said County records and being a tract of land more
particularly described as follows:
Starting for reference at a spike found (over a stone recovered by A. Spraley
in 1972) at the northeast corner of said Southwest Quarter of Section 18,
said spike also being at the intersection of the centerlines of Baker Road
and North Center Street:
thence from said starting point S 0 degrees 09'00" W with the east line of
said Southwest Quarter of Section 18 and the centerline of North Center
Street a distance of 933.01 feet to a spike found at the northeast corner of
said Whiteford's Inc. tract (parcel 3), said spike being the true point of
beginning for the herein described parcel:
thence from said true point of beginning continuing S 0 degrees 09'00" W with
said Quarter Section line and centerline a distance of 443.59 feet to a nail
found at the southeast corner of said Whiteford's Inc. tract (parcel 1);
thence S 89 degrees 48'00" W with the north line of Lot 345 of I. M. Reed's
Addition, recorded in Plat Book 2, Page 78, and the north end of Brandon
Street, a distance of 269.50 feet (passing an iron pin set at 25.00 feet) to
an iron pin set at the northeast corner of Lot 344 of said Plat:
thence N 0 degrees 11'00" E with the east line of the land conveyed to K. L.
& J. E. McEldowney by deed recorded in Deed Vol. 576, Pg. 7 a distance of
46.00 feet to an iron pin found:
thence S 89 degrees 48'00" W with the north line of said McEldowney tract a
distance of 214.49 feet to an iron pin set;
thence S O degrees 11'00" with the west line of said McEldowney tract a
distance of 46.00 feet to an iron pin set at the northwest corner of Lot 344
of said Plat;
thence S 89 degrees 48'00" W with the north end of Washington Street a
distance of 54.00 feet to an iron pin set at the northeast corner of Lot 343
of said Plat;
thence S 0 degrees 11'00" W with the east line of said Lot 343 a distance of
50.00 feet to an iron pin set at the southeast corner of said Lot 343;
thence S 89 degrees 50'40" W with the south line of said Lot 343 and the
south line of said Whiteford's Inc. tract (parcel 1) a distance of 311.31
feet to a concrete monument found:
<PAGE>
thence N 0 degrees 07'02" E with the west line of said Whiteford's Inc. tract
(parcels 1 & 3) a distance of 501.25 feet to an iron pin set at the southwest
corner of the land conveyed to Midmark Corp. by deed recorded in Deed Vol.
544, Pg. 17;
thence S 89 degrees 40'00" E with the south line of said Midmark Corp. tract
and the land conveyed to Gray Van Properties by deed recorded in Deed Vol.
531, Pg. 300, a distance of 849.62 feet (passing an iron pin set at 824.62
feet) the true point of beginning, containing 8.858 acres of land, more or
less, including 0.255 acres contained in the right-of-way of North Center
Street, for a net acreage of 8.603 acres, subject however, to all legal
conditions, easements and rights-of-way of record. Together with an easement
for loading dock access purposes only, across the land conveyed to K.L. and
J.E. McEldowney, recorded in Deed Book 576, Page 7, being described as
follows: Beginning at an iron pin found at the northeast corner of said
McEldowney tract; thence S 0 degrees 11'00" W with the east line of said
tract a distance of 46.00 feet to an iron pin set at the northeast corner of
said Lot 344; thence N 33 degrees 03'00" W through said McEldowney tract a
distance of 54.70 feet to the north line of said tract; thence N 89 degrees
48'00" W with the north line of said McEldowney tract a distance of 45.00
feet to the point of beginning. This description prepared by McDougall
Associates based on an actual survey made by same in January 1990. Bearings
are based on the centerline of North Center Street from Deed Volume 499, Page
204. All iron pins set are 5/8" x 30" capped "McDougall Associates".
The above description was written and surveyed by Kirk P. Diehl, Registered
Surveyor #7032 from a survey and plat made March 1st, 1990. The above survey
is recorded in Plat Book Volume 18, Page 34 in the Darke County Recorders
Office.
ENGINEERS I.D. T76-2-410-18-03-01-102-00 (8.858 Acres) Versailles Corp.
TRACT II
Situate in the County of Darke, in the State of Ohio and in the Township of
Wayne and bounded and described as follows, viz: Being a part of the
Southeast Quarter of Section 18, Town 10 North, Range 4 East, and more
particularly described as follows:
Measure North from the Northwest Corner of the premises owned by Claude
Rhoades and Norma Rhoades (formerly owned by R.E. Clark and Clara Clark) and
the East side of the Frantz Pike, a distance of 170 feet for a place of
beginning; thence continuing North on and along the East side of the said
Frantz Pike 570 feet; thence East at right angles 280 feet; thence South
parallel with the west line 570 feet; thence West parallel with the north
line 280 feet, to the place of beginning, containing 3.66 acres of land, more
or less.
The beginning point of the tract herein conveyed being located S 0 degrees
09' W 734.3' and S 89 degrees 51' E 25 feet from the Northwest corner of the
Southeast Quarter of Section 18.
<PAGE>
SECURITY AGREEMENT
September 18, 1995
WHITEFORD FOODS VENTURE, L.P., formerly known as Granada,
Whiteford Foods Venture, L.P., a Texas limited partnership (the
"Debtor"), does hereby grant, for valuable consideration, receipt of
which is hereby acknowledged, unto ALBERT D. GREENAWAY, an individual
(Mr. "Greenaway" who is sometimes referred to as "Secured Party"),
a security interest in the following described property of Debtor and
any and all accessions thereto and the proceeds and products thereof (the
"Collateral"):
All of the following, whether presently existing or hereafter created or
acquired: (1) all accounts receivable, contract rights and general
intangibles, (2) all inventory, including, but not limited to, raw
materials, work in process and finished goods, (3) insurance proceeds,
(4) all machinery and equipment and furniture, including fixtures, now
owned or hereafter acquired, together with all replacements thereof, all
attachments, accessories, parts and tools belonging thereto or for use in
connection therewith, and all proceed and products thereof.
to secure Debtor's prompt performance and payment of each and every
obligation under the Guaranty Compensation Agreement dated September 18, 1995.
Debtor hereby warrants and agrees that:
1. USE OF COLLATERAL. The Collateral is to be used by the Debtor
primarily for business use.
2. LOCATION OF COLLATERAL. The Collateral and records relating thereto
will be kept at 770 N. Center Street and/or 900 N. Center Street, Versailles,
Ohio, which is the Debtor's place of business. Debtor will promptly notify
Secured Party of any change in the location of the Collateral and Debtor
will not remove the Collateral from the above address without the written
consent of the Secured Party.
3. PRIOR LIENS. Except for the security interests and statutory liens
of record on the date hereof, Debtor is the owner of the Collateral free from
any lien, security interest or encumbrance, and Debtor will defend the
Collateral against all claims and demands of any and all persons at any
time claiming the same or any interest therein.
4. SUBORDINATION. Secured Party acknowledges that the security interest
established by this Security Agreement is subordinated to the following:
(i) a security interest granted to PNC Bank Ohio, National Association or The
Fifth Third Bank of Western Ohio, N.A. (the "Banks") under a Security
Agreement, dated
<PAGE>
June 13, 1995 (the "Senior Security Interest"), and (ii) a security
interest granted to Greenaway Consultant, Inc. ("GCI") under a Security
Agreement, dated October 1, 1993 (the "GCI Security Interest"). Secured
Party shall execute such subordination instruments and other documents as
Debtor or GCI reasonably requests to enable Debtor and/or GCI to obtain and
maintain the Senior Security Interest and the GCI Security Interest.
5. NOTICE. Debtor hereby agrees to give Secured Party not less than seven
(7) days' prior written notice of any change in Debtor's name, change in the
location of the records relating to the Collateral or of any other change in
circumstances which affects or may affect the continuing efficacy of any
financing statement filed by Debtor and Secured Party or the continuing
status of the Secured Party's security interest and its current priority.
Debtor shall give immediate notice to the Secured Party if any creditor or
other third party claims any lien or other interest in the Collateral or if
any receivable does not take the form of an "account" and is evidenced by a
note, letter of credit, lease or any similar instrument, chattel paper or
general intangible.
6. DISPOSAL OF COLLATERAL. So long as no default under this Agreement
exists, Debtor shall have the right, in the ordinary course of business, but
not otherwise, to process and sell inventory for customary prices.
Furthermore, so long as no default exists under this Agreement, Debtor shall
collect all accounts receivable in the ordinary course of business for the
benefit of Debtor and Secured Party at no cost or expense to Secured Party.
Subject to the foregoing, Debtor will not sell, exchange, lease or otherwise
dispose of any interest in the Collateral without the written consent of the
Secured Party and will not permit any lien, security interest or encumbrance
to attach to the Collateral.
7. FURTHER DOCUMENTS. Debtor will join with Secured Party in executing
one or more financing statements pursuant to the Ohio Uniform Commercial Code
in form satisfactory to the Secured Party and Debtor will pay the cost of
filing in all public offices wherever filing is deemed necessary by Secured
Party. A carbon, photographic or other reproduction of this Agreement or
a financing statement will be sufficient as a financing statement.
8. MAINTENANCE. Debtor will maintain the Collateral in good condition
and repair, will maintain insurance on the Collateral against fire, theft,
and such other hazards and in such form and amount as Secured Party may
require and for the benefit of Debtor and Secured Party as their interests
shall appear; and will pay and discharge all taxes imposed on the Collateral.
Debtor assigns to Secured Party all right to proceeds of any insurance not
exceeding the unpaid balance hereunder, and directs any insurer to pay all
proceeds directly to Secured Party and authorizes Secured Party to endorse
any draft for the proceeds. Such policy or policies shall be delivered to
the Secured Party upon request therefor and shall be with a company or
companies satisfactory to Secured Party.
<PAGE>
9. OTHER ENCUMBRANCES. At its option, Secured Party may discharge taxes,
liens or other encumbrances at any time levied or placed on the Collateral,
pay for insurance on the Collateral, and pay for the maintenance and
preservation of the Collateral, should Debtor fail to do so. Debtor agrees
to reimburse Secured Party on demand for any payment so made and until such
reimbursement, the amount so paid by Secured Party shall be added to the
principal amount of the indebtedness.
10. DEFAULT.
A. The following shall constitute a default hereunder: (i) Secured
Party's payment of any monies to the Banks under the terms of a
Limited Guarantee granted by Secured Party to the Banks, dated
September 18, 1995, (ii) Debtor's default under the Guaranty Compensation
Agreement between Debtor and Secured Party of even date herewith,
(iii) material loss, theft, destruction, sale or encumbrance of or to the
Collateral; (iv) dissolution, termination of existence, insolvency, or
business failure of Debtor; (v) appointment of a receiver of any part of
the property of Debtor or an assignment for the benefit of creditors by or
the commencement of any proceedings under any bankruptcy or insolvency laws
by or against Debtor; or (vi) any default under or failure to comply with
any of the terms of this Agreement.
B. In the event of a default, Secured Party shall have the rights and
remedies of a secured party under the Ohio Uniform Commercial Code,
including the right to enter any premises of the Debtor, without legal
process and take possession of and remove the Collateral. Debtor agrees,
upon request of the Secured Party, to assemble the Collateral and all
records relating thereto, and to make them available at the place
designated by Secured Party. Any requirement of reasonable notice of
any disposition of the Collateral shall be satisfied if such notice is
mailed to the address of the Debtor shown in this Agreement at least ten
(10) days before the time of such disposition.
C. In addition to the foregoing, upon default, Secured Party may make
a demand upon the account debtors that they thereafter shall make their
payments directly to Secured Party; whereupon, Debtor shall have no
further right to grant any waivers, consents, or enter into any compromises
with and otherwise deal with the account debtors in respect of the
receivables. Debtor irrevocably authorizes and directs each account debtor
to honor any demand by Secured Party that all payments in respect of
the receivables thereafter be paid directly to Secured Party. In each
such case, the account debtor may continue directing all such payments
to Secured Party until the
<PAGE>
account debtor shall have received written notice from Secured Party either
that Debtor's debt to Secured Party has been paid in full or that Secured
Party has released its security interest. No account debtor shall have any
responsibility whatsoever to inquire into Secured Party's right to make any
such demand or to inquire into Secured Party's disposition of any monies
paid to Secured Party by the account debtor. Secured Party shall have full
power and authority to execute and deliver such vouchers and receipts in
respect of the receivables, such endorsement of checks and such other
writings in respect of the foregoing as Secured Party may from time-to-time
deem advisable. In connection with the foregoing, Secured Party shall have
full power and authority to sign Debtor's signature to all such vouchers,
receipts, endorsements and other writings whenever Secured Party deems such
action advisable. Secured Party may enforce payment of the receivables by
suit or otherwise, but Secured Party shall have no duty to institute any
suit or to take any other action to enforce the receivables, to realize on
the receivables (or any security therefor) or having started any such suit
or attempt, thereafter to continue the same. In each case, Secured Party
may proceed with counsel of Secured Party's choosing and Debtor agrees to
reimburse Secured Party for Secured Party's out-of-pocket costs and
expenses including, without limitation, attorney fees, court costs and
costs of sale.
D. With respect to the Collateral, Debtor assents to any extension or
postponement of the time of payment thereof or any other indulgence in
connection therewith, to any substitution, exchange or release of Collateral,
to any addition or release of any party primarily or secondarily liable, to
any acceptance of any partial payment thereon and to any settlement,
compromise or adjustment thereof, all in such manner and at such time or
times as Secured Party shall deem advisable. Secured Party shall have no duty
as to the collection or protection of the Collateral or any income therefrom,
nor as to the preservation of rights against prior parties, beyond the safe
custody of Collateral in Secured Party's possession.
E. Debtor agrees to reimburse Secured Party on demand for all expenses,
including (without limitation) reasonable attorney fees, incurred by Secured
Party in protecting or enforcing its rights in the Collateral.
<PAGE>
11. MISCELLANEOUS. No waiver by Secured Party of any default shall be
effective unless in writing nor shall it operate as a waiver of any other
default or of the same default on a subsequent occasion. All rights of
Secured Party hereunder shall inure to the benefit of the heirs, executors,
administrators, successors and permitted assigns of Secured Party; and all
obligations of Debtor shall bind the heirs, executors, administrators,
successors and permitted assigns of Debtor. Debtor shall not assign any rights
or obligations under this Security Agreement. If there is more than one
Debtor, their obligations hereunder shall be joint and several. This
Agreement constitutes the entire agreement between the parties and was
executed on the day above written.
SECURED PARTY: DEBTOR:
WHITEFORD FOODS VENTURE, L.P.
/s/ Albert D. Greenaway By: G/W Foods, Inc.
- ------------------------ (its sole general partner)
ALBERT D. GREENAWAY
By:
----------------------------------
Kevin T. Gannon
Chief Executive Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 488,247
<SECURITIES> 0
<RECEIVABLES> 2,545,169
<ALLOWANCES> 0
<INVENTORY> 2,419,466
<CURRENT-ASSETS> 6,208,397
<PP&E> 16,299,675
<DEPRECIATION> 3,315,265
<TOTAL-ASSETS> 22,280,444
<CURRENT-LIABILITIES> 6,733,434
<BONDS> 9,852,504
0
0
<COMMON> 0
<OTHER-SE> 8,792,485
<TOTAL-LIABILITY-AND-EQUITY> 22,280,444
<SALES> 57,667,240
<TOTAL-REVENUES> 57,826,771
<CGS> 53,757,014
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,049,213
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 799,494
<INCOME-PRETAX> 20,544
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,544
<EPS-PRIMARY> .02
<EPS-DILUTED> 0
</TABLE>
