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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, 1999
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 of (I.R.S. Identification No.)
incorporation or organization)
770 North Center Street, Versailles, Ohio 45380
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(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.
Yes [X] No [ ]
At March 29, 2000, 1,306,890 Class A units had been subscribed for and
issued.
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<PAGE>
INDEX
Item
No. Description
Page
PART I
1. Business 3
2. Properties 4
3. Legal Proceedings 5
4. Submission of Matters to a Vote of Security Holders 5
PART II
5. Market for Registrant's Common Equity and
Related Stockholder Matters 5
6. Selected Financial Data 6
7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
7A. Market Risk 8
8. Financial Statements and Supplementary Data 9
9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure 9
PART III
10. Directors and Executive Officers of the Registrant 9
11. Executive Compensation 9
12. Security Ownership of Certain Beneficial Owners and Management 10
13. Certain Relationships and Related Transactions 10
PART IV
14. Exhibits, Financial Statement Schedules and Reports on Form 8-K 10
<PAGE>
PART I
ITEM 1. BUSINESS
A. GENERAL DEVELOPMENT OF BUSINESS
Whiteford Partners, L.P. (the "Partnership") was formed on June 30, 1987,
as a Delaware limited partnership. The Partnership consists of a General
Partner, Gannon Group, Inc., and Limited Partners. The offering period of the
Partnership terminated on November 10, 1989, with $13,557,550 of Limited Partner
gross subscriptions received in the form of Class A Units. Pursuant to the terms
of the Prospectus, offering proceeds in the amount of $140,365 were returned to
certain Ohio residents when the Partnership's business acquisition program was
not substantially completed by December, 1989. The Partnership was organized
principally to form, acquire, own and operate businesses engaged in the
development, production, processing, marketing, distribution and sale of food
and related products (the "Food Businesses").
In the first quarter of 1990, the Partnership entered into a limited
partnership, Whiteford Foods Venture, L.P. ("Whiteford's") which was formerly
named Granada/Whiteford Foods Venture, L.P., with a wholly-owned subsidiary of
the former General Partner, G/W Foods, Inc., for the purpose of acquiring the
assets, certain liabilities and the operations of Whiteford's Inc., a further
processor and distributor of beef products to major fast food restaurants and
regional chains, which was located in Versailles, Ohio. The acquisition, which
was made with Partnership funds, was closed March 26, 1990, with the
Partnership's resultant equity interest in Whiteford's being in excess of 99%.
On April 23, 1990, all outstanding and contingent items were resolved and
completed, and the acquisition of the assets was funded on April 24, 1990.
On May 4, 1992, the outstanding shares of G/W Foods, Inc. were assigned by
the former General Partner to Gannon Group, Inc., a corporation owned by Kevin
T. Gannon, a Director and Vice President of G/W Foods, Inc. At that time, Mr.
Gannon was also a former Vice President of Granada Corporation and certain of
its affiliates. Also on May 4, 1992, Granada Management Corporation assigned its
sole general partnership interest in the Partnership to Gannon Group, Inc. The
effect of these assignments is for Gannon Group, Inc. to have general
partnership authority and responsibility with respect to the Partnership and,
through G/W Foods, Inc., of Whiteford's.
Subject to the availability of capital resources and/or financing, the
Partnership Agreement permits the acquisition of additional Food Businesses that
produce, process or distribute specialty food products including businesses that
possess technology or special processes which could increase the productivity or
processing capability of the Partnership's current Food Business or which
enhance the marketability or resale value of the Partnership's Food Business
products. At the present time, no acquisitions are contemplated.
B. FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Partnership operates principally in the food processing and
distribution business.
C. DESCRIPTION OF BUSINESS
The Partnership was organized to form, acquire, own and operate
businesses engaged in the development, production, processing, marketing,
distribution and sale of food and related products. The Partnership presently
operates further processing and meat production operations at one
location--Versailles, Ohio.
Versailles, Ohio Plant Operation
Whiteford's is a further processor and distributor of meat products to
major fast food restaurants and regional chains. It serves major metropolitan
areas such as Chicago, Cincinnati, Cleveland, Columbus, Detroit, Indianapolis,
Louisville and St. Louis. Whiteford's principal products are fresh frozen
hamburger patties; precooked and uncooked ground beef, taco meat and roast beef;
marinated beef entrees; and other items processed to customers' specifications.
Major food chains served include Burger King and Rally's.
Whiteford's purchases products principally from major domestic packers and
regional distributors. However, it also utilizes imported beef. The General
Partner believes its sources of supply are adequate for the foreseeable future.
For the years ended December 31, 1999, 1998 and 1997, Whiteford's
processed and sold 55.9 million pounds of products ($51.5 million), 70.0 million
pounds of products ($62.4 million), and 66.7 million pounds of products ($62.2
million) respectfully, through its further processing and distribution
operations.
3
<PAGE>
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, 1999: Gordon Food Service, 26.7%; Maines
Paper and Food Service, 25.3%; and Prosource 11.2%.
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 2000. 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 Foods, which could materially and adversely
affect its cost of doing business.
Whiteford Foods is subject to various other federal, state and local
regulations, none of which imposes material restrictions on its operations.
Employees
The Partnership's operations have been managed by its general partner,
Gannon Group, Inc. since May 4, 1992, and Granada Management Corporation from
inception to May 4, 1992. Directly, the Partnership has no employees. The
Partnership has utilized the services of employees of the General Partner and
the former General Partner as needed for certain administrative services.
The Whiteford's operation at Versailles, Ohio employed 171 personnel at
December 31, 1999. The General Partner believes there will be sufficient
personnel available to adequately manage the Partnership's business affairs.
ITEM 2. PROPERTIES
Properties Utilized by the Partnership
The Partnership's executive offices are those of the General Partner,
located at 770 North Center Street, Versailles, Ohio 45380.
The following table sets forth Whiteford's operational facilities and
approximate capacities as of December 31, 1999.
<TABLE>
<CAPTION>
Estimated Annual
Tons of Production
------------------
General 1999
Location Character Size Capacity Actual
-------- --------- -------------------------------------------------------- -------- ------
<S> <C> <C> <C> <C>
Versailles, Ohio Meat Two separate facilities (1) 71,400 and(1) 33,000 square 40,000 35,000
Processing feet on 20 acres of land, (8) hamburger/specialty line,
Plant (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.
4
<PAGE>
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 1999.
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 1998 and 1999.
<TABLE>
<CAPTION>
Amount Per Limited
Date Aggregate Amount Partnership Unit
---- ---------------- -----------------
<S> <C> <C>
February 25, 1998 65,344.50 0.05
May 29, 1998 65,344.50 0.05
August 25, 1998 65,344.50 0.05
November 27, 1998 65,344.50 0.05
March 2, 1999 65,344.50 0.05
May 31, 1999 65,344.50 0.05
</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 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, 1999:
Title of Class Number of Record Holders
-------------- ------------------------
Limited Partnership Units 1,410
5
<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
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
Sale of meat products ....... $ 51,549,748 $ 62,431,746 $ 62,224,110 $ 59,026,632 $ 57,667,240
Interest and other .......... 166,680 338,696 256,416 339,931 159,531
------------ ------------ ------------ ------------ ------------
Total revenues .......... 51,716,428 62,770,442 62,480,526 59,366,563 57,826,771
------------ ------------ ------------ ------------ ------------
Cost of sales ................... 48,705,602 57,551,373 57,846,006 54,188,228 53,757,014
------------ ------------ ------------ ------------ ------------
Gross Profit
Meat products ............... 2,844,146 4,880,373 4,378,104 4,838,404 3,910,226
Other ....................... 166,680 338,696 256,416 339,931 159,531
------------ ------------ ------------ ------------ ------------
Total gross profit ...... 3,010,826 5,219,069 4,634,520 5,178,335 4,069,757
------------ ------------ ------------ ------------ ------------
Selling and admin expenses ...... 2,266,593 2,575,320 2,447,303 2,211,351 2,197,506
Depreciation, amortization
and interest ................ 1,915,768 1,907,188 1,932,836 1,986,149 1,851,707
Other expense ................... -- -- -- 163,157 --
------------ ------------ ------------ ------------ ------------
4,182,361 4,482,508 4,380,139 4,360,657 4,049,213
------------ ------------ ------------ ------------ ------------
Net (Loss) Income ........... $ (1,171,535) $ 736,561 $ 254,381 $ 817,678 $ 20,544
============ ============ ============ ============ ============
(Loss) Income per unit of
Limited Partners' Capital ... $ (0.90) $ 0.56 $ 0.19 $ 0.63 $ 0.02
============ ============ ============ ============ ============
Weighted average units
outstanding ..................... 1,306,890 1,306,890 1,306,890 1,306,890 1,306,890
============ ============ ============ ============ ============
BALANCE SHEET DATA (December 31):
Working capital (deficit) ... $ (1,376,913) $ (55,756) $ (397,866) $ 156,933 $ (525,037)
Total assets ................ $ 19,620,720 $ 20,986,810 $ 21,798,022 $ 21,566,960 $ 22,280,444
Long-term debt, less current
maturities .............. $ 3,522,231 $ 4,001,939 $ 4,732,167 $ 5,704,645 $ 6,754,525
Total partners' capital ..... $ 8,901,586 $ 10,205,117 $ 9,732,547 $ 9,610,163 $ 8,792,485
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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.
Information Regarding and Factors Affecting Forward-Looking Statements:
The partnership is including the following cautionary statement in this
Annual Report on form 10-K to make applicable and take advantage of the safe
harbor provision of the Private Securities Litigation Reform Act of 1995 for any
forward looking statements made by, or on behalf of the Partnership.
Forward-looking statements include statements concerning plans, objectives,
goals, strategies, future events or performance and underlying assumptions and
other statements that are other than statements of historical facts. Certain
statements contained herein are forward-looking statements and, accordingly,
involve risk and uncertainties, which could cause actual results to differ
materially from those expressed in the forward-looking statements. The
Partnership's expectations, beliefs and projection are expressed in good faith
and are believed by the Partnership to have reasonable basis, including without
limitation, Management's examination of historical operating trends, data
contained in the Partnership's records, and other data available from third
parties, but there can be no assurance that Management's expectations, beliefs,
or projections would result or be achieved or accomplished. In addition to other
factors and matters discussed elsewhere herein, important factors that, in the
view of the Partnership, could cause actual results to differ materially from
those discussed in the forward-looking statements include
6
<PAGE>
demand for Whiteford Foods' products, the ability of Whiteford Foods to obtain
widespread market acceptance of its products, the ability of the Partnership to
obtain acceptable forms and amounts of financing, competitive factors,
regulatory approvals and developments, economic conditions, the impact of
competition and pricing, and other factors affecting the partnership and
Whiteford Foods' business that is beyond the Partnership's control. The
Partnership has no obligation to update or revise these forward-looking
statements to reflect the occurrence of future events or circumstances.
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, 1999, Compared to Year Ended December 31, 1998
Revenues for the year ended December 31, 1999 were $51,716,428 versus
$62,770,442 for the year ended December 31, 1998, a decrease of $11,054,014.
During the 1999 period, 55,948,467 pounds of meat products were sold versus
70,008,202 pounds during the 1998 period, a decrease of 14,059,735 pounds. The
decrease in pounds of meat products sold is primarily attributable to the
decrease in sales order from certain customers.
Costs of meat products sold for the year ended December 31, 1999 were
$48,705,602 versus $57,551,373 for the year ended December 31, 1998, a decrease
of $8,845,771. During the 1999 period, 55,948,467 pounds of meat products were
sold versus 70,008,202 pounds during the 1998 period. The average cost of meat
products sold for 1999 was $.871 versus $.822 in the 1998 period, an increase of
6.0%. The increase in the cost per pound is primarily attributable to general
composition of the product. The General Partner expects general commodity prices
to increase slightly during 2000.
Gross margins on meat sales were 5.5% for the year ended December 31, 1999
and 7.8% for the 1998 period. This decrease in gross margins is primarily
attributable to: i) increase in raw material costs; and ii) the semi-variable
nature of certain costs in the costs of meat products sold such as labor,
packaging, and utilities.
Selling and administrative expenses decreased to $2,266,593 during the year
ended December 31, 1999 versus $2,575,320 for the same period in 1998. The
decrease is primarily attributable to reduction in volume.
Depreciation and amortization expense for the year ended December 31, 1999
was $1,263,659 versus $1,227,791 for the same period in 1998, an increase of
2.9%.
Interest expense for the year ended December 31, 1999 was $652,109 versus
interest expense of $679,397 for the same period in 1998. This decrease of
$27,288 primarily relates to the decrease in the average debt outstanding during
1999.
The Partnership reported net loss of $1,171,535 for the year ended December
31, 1999 versus a net income of $736,561 for the 1998 period.
Year Ended December 31, 1998, Compared to Year Ended December 31, 1997
Revenues for the year ended December 31, 1998 were $62,770,442 versus
$62,480,526 for the year ended December 31, 1997, an increase of $289,916.
During the 1998 period, 70,008,202 pounds of products were sold versus
66,752,355 pounds during the 1997 period, an increase of 3,255,847 pounds. This
increase in pounds of meat products sold is primarily attributable to the
increased sales effort and the production capabilities at the Versailles plant.
Cost of meat products sold for the year ended December 31, 1998 were
$57,551,373 versus $57,846,006 for the year ended December 31, 1997, a decrease
of $294,633.
Gross margins on meat sales were 7.8% for the year ended December 31, 1998
and 7.0% for the 1997 period. This increase in gross margins is primarily
attributable to: i) decrease in raw material cost and decrease in sales price;
and ii) the semi-variable nature of certain costs of meat products sold such as
labor, packaging and utilities.
Selling and administrative expenses increased to $2,575,320 during the year
ended December 31, 1998 verses $2,447,303 for the same period in 1997. This is
primarily attributable to normal expense increases and volume.
Depreciation and amortization expense for the year ended December 31,1998
was $1,227,791 versus $1,204,975 for the same period in 1997, an increase of
1.9%.
Interest expense for the year ended December 31, 1998 was $679,397 versus
interest expense of $727,861 for the same period in 1997. The decrease of
$48,464 primarily relates to the decrease in the average debt outstanding during
1998.
The Partnership reported a net income of $736,561 for the year ended
December 31, 1998 versus $254,381 for 1997 period.
7
<PAGE>
Liquidity and Capital Resources
At December 31, 1999, the Partnership had a negative working capital
position of $1,376,913, versus a negative working capital of $55,756 at December
31, 1998.
Cash provided by operating activities was $532,143 for the year ended
December 31, 1999 reflecting net loss of $1,171,535, depreciation and
amortization of $1,263,659, offset by net decreases in other assets of $440,019.
Cash provided by operating activities for the year ended December 31, 1998 was
$1,764,155, with a net income of $736,561, depreciation and amortization of
$1,227,791,and a decrease in other net operating assets of $200,197.
Cash used in investing activities was $797,578 for 1999 versus $627,382 for
1998. Cash provided by financing activities for 1999 consisted of net increases
in bank debt of $262,504 and distributions.
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 $13,069 in 1999, $26,138 in 1998, $13,069 in 1997,$-0-
in 1996, $10,455 in 1995, $13,069 in 1994, $2,614 in 1993, and $-0- in 1992.
Suspended fees during 1999, 1998, 1997, 1996, 1995, 1994, 1993 and 1992
respectively, are $287,000, $274,000, $287,000, $300,000, $290,000, $222,000,
$229,000, and $228,000.
Whiteford's working capital and equipment requirements are primarily met by
(a) a revolving credit agreement with Whiteford's principal lender based on a
percentage of eligible accounts receivables and inventories plus an overadvance
amount of $900,000 through April 30, 2000, reduced to $800,000 through May 31,
2000 and reduced to $700,000 thereafter (with $3,547,623 outstanding at December
31, 1999), (the "Principal Revolver"); (b) a commercial mortgage note of
$4,165,000 (with $3,271,972 outstanding at December 31, 1999) (the "Principal
Mortgage Loan"); (c) an equipment note of $2,200,000 (with $793,502 outstanding
at December 31, 1999) (the "Principal Term Loan");and, (d) a credit facility of
$500,000, (with $56,312 outstanding at December 31, 1999) (the "Third Term
Loan"), (collectively, the "Loans").
The Principal Revolver bears interest at prime plus 1% on the first
$2,500,000 and prime plus 2% on amounts outstanding over $2,500,000. The
Principal Mortgage Loan and the Principal Term Loan bear interest at prime plus
1%. The Third Term Loan bears interest at 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 lenders. The Principal Revolver , Principal Mortgage Loan and the
Principal Term Loan provided by the principal lender are secured by real
property, fixed assets, equipment, inventory, receivables and intangibles of the
Partnership.
The Partnership's 2000 capital budget calls for the expenditure of
approximately $200,000 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 2000. Such amounts are
expected to be funded by internally generated cash flow. The General Partner
believes that the above credit facilities along with cash flow from operations
will be sufficient to meet the Partnerships' working capital and credit
requirements for 2000.
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.
Impact of Year 2000
Whiteford Foods has completed the changes required to ensure that all of
its software, hardware and operating equipment will function properly with
respect to dates in the Year 2000 and thereafter. The total cost of these
changes was not material and has been expensed as incurred. The majority of the
Year 2000 costs were incurred during fiscal year 1998 with substantially all of
the remaining costs expensed in fiscal year 1999. As of the date of this report,
Whiteford Foods' ability to provide services has not been adversely affected by
Year 2000 issues.
ITEM 7A. MARKET RISK
In the normal operation, the Company has market risk exposure to interest
rates. At December 31, 1999, the Company had $7,699,409 in interest bearing debt
obligations that are subject to market risk exposure to change in interest
rates. At December 31, 1999, $4,341,125 of outstanding debt is at variable rates
with a weighted average interest rate of 8.59% and $3,358,284 is at fixed rates
with a weighted-average interest rate of 9.21%. As the Company amended its bank
agreements on December 31, 1999, effective on January 1, 2000, $7,613,097 of
outstanding debt is at variable rates with a weighted-average interest rate of
10.14% and $86,312 is at fixed rates with a weighted-average interest rate of
9.42%. The interest rate on the variable rate outstanding maturing in 2000 of
$4,172,281 is primarily based on the annual rate of interest equal to the sum of
the prime rate plus one hundred (100) basis points per annum. The rate at
December 31, 1999 was 10.25%. The interest rate on the variable rate outstanding
maturing in 2001 and thereafter is 10.00%. The interest rate on the fixed rate
outstanding debt maturing in 2000 and thereafter is 9.42%. The estimated fair
value on the Company's debt at December 31, 1999 is equal to its carrying
amount.
<PAGE>
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, 1999, are as follows:
Kevin T. Gannon, age 43, 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. Mr. Gannon is a
Certified Public Accountant.
No director or officer of the General Partner was, during the last five (5)
years, the subject (directly, or indirectly as a general partner of a
partnership or as an executive officer of a corporation) of a bankruptcy or
insolvency petition, of any criminal proceeding (excluding traffic violations
and other minor offenses), or restrictive orders, judgments or decrees enjoining
him from or otherwise limiting him from acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool operator, floor
broker, leverage transaction merchant, any other person regulated by the
Commodity Futures Trading Commission, or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or dealer in
securities, or as an affiliated person, director or employee of any investment
company, bank, savings and loan association or insurance company, or engaging in
or continuing any conduct or practice in connection with such activity, engaging
in any business activity, or engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of Federal or State securities laws or Federal commodities laws, or
was the subject of any existing order of a federal or state authority barring or
suspending for more than sixty (60) days the right of such person to be engaged
in such activity.
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, 1999. 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 1999. 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.
9
<PAGE>
During calendar year 1999, the Partnership made aggregate distributions of
$130,689 to the Limited Partners. During calendar year 1998, the Partnership
made aggregate distributions of $261,378. As a result in 1999, the Partnership
paid the General Partner 10% of such amount or $13,069, and suspended payment of
approximately $287,000 of such management fee. The cumulative amount of annual
management fees that have been suspended is $2,117,000.
Other Compensation Arrangements
There is no plan provided for or contributed to by the Partnership or the
General Partner which provides annuity, pension or retirement benefits for the
General Partner or the officers and directors of the General Partner. There is
no existing plan provided for or contributed to by the General Partner which
provides annuity, pension or benefits for its officers or directors. There are
no arrangements for remuneration covering services as a director between the
Partnership and any director of the General Partner. No options to purchase any
securities of the General Partner were granted or exercised during its fiscal
year ended December 31, 1999. No options were held to purchase securities of the
Partnership as of December 31, 1999, and as of the date hereof.
After the Partnership acquired the assets of Whiteford's, Inc., Whiteford's
entered into a Services Agreement with Greenaway Consultant, Inc. ("GCI") under
which GCI managed Whiteford's. GCI is owned by one of Whiteford's, Inc.'s former
principal shareholders. This agreement has been extended to December 31, 2002.
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.
10
<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, 2000 /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, President, March 29, 2000
- -------------------- Chairman of the Board --------------
Kevin T. Gannon and Sole Director (Principal Executive Officer),
Chief Financial Officer, and Chief Accounting Officer
11
<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, 1999
WHITEFORD PARTNERS, L.P.
12
<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, 1999, and 1998.
Consolidated Statements of Operations - for the years ended December
31, 1999, 1998, and 1997.
Consolidated Statements of Changes in Partners' Capital - for the
years ended December 31, 1999, 1998, and 1997.
Consolidated Statements of Cash Flows - for the years ended December
31, 1999, 1998, and 1997.
Notes to Consolidated Financial Statements
Report of Independent Auditors
(a) 2. See Index to Exhibits immediately following the financial statement
schedules.
13
<PAGE>
Whiteford Partners, L.P.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
----------------------------
1999 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents ................................... $ 281,216 $ 416,143
Accounts Receivable - trade ................................. 2,068,428 3,332,971
Inventories ................................................. 3,378,687 2,565,555
Prepaid expenses ............................................ 91,659 409,329
------------ ------------
TOTAL CURRENT ASSETS .......................... 5,819,990 6,723,998
PROPERTY AND EQUIPMENT:
Land and improvements ....................................... 86,700 86,700
Buildings ................................................... 7,298,645 7,253,443
Machinery and equipment ..................................... 11,203,772 10,467,141
Accumulated depreciation .................................... (7,366,051) (6,249,629)
------------ ------------
TOTAL PROPERTY AND EQUIPMENT .................. 11,223,066 11,557,655
OTHER ASSETS - NET OF AMORTIZATION ................................ 2,577,664 2,705,157
------------ ------------
TOTAL ASSETS ........................... $ 19,620,720 $ 20,986,810
============ ============
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES:
Accounts payable - trade .................................... $ 2,287,987 $ 2,454,354
Notes payable and current maturities on long-term debt ...... 4,172,281 3,434,967
Accrued expenses and other liabilities ...................... 731,738 890,433
------------ ------------
TOTAL CURRENT LIABILITIES .................... 7,192,006 6,779,754
LONG-TERM DEBT - NET OF CURRENT MATURITIES ........................ 3,527,128 4,001,939
PARTNERS' CAPITAL:
General Partner:
Capital contributions ................................. 132,931 132,931
Capital transfers to Limited Partners ................. (117,800) (117,800)
Interest in net income (loss) ......................... 14,335 26,050
Distributions ......................................... (38,171) (36,864)
------------ ------------
(8,705) 4,317
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 net income (loss) ......................... 1,408,061 2,567,881
Distributions ......................................... (3,786,598) (3,655,909)
------------ ------------
8,910,291 10,200,800
------------ ------------
TOTAL PARTNERS' CAPITAL .................... 8,901,586 10,205,117
------------ ------------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $ 19,620,720 $ 20,986,810
============ ============
</TABLE>
See notes to consolidated financial statements.
F-1
<PAGE>
Whiteford Partners, L.P.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31
-------------------------------------------
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
REVENUE
Sales of meat products ......................... $ 51,549,748 $ 62,431,746 $ 62,224,110
Interest and other ............................. 166,680 338,696 256,416
51,716,428 62,770,442 62,480,526
COST AND EXPENSES
Cost of meat products sold ..................... 48,705,602 57,551,373 57,846,006
Selling and administrative ..................... 2,253,524 2,549,182 2,434,234
Administrative fee - General Partner ........... 13,069 26,138 13,069
Depreciation and amortization .................. 1,263,659 1,227,791 1,204,975
Interest ....................................... 652,109 679,397 727,861
------------ ------------ ------------
52,887,963 62,033,881 62,226,145
------------ ------------ ------------
NET (LOSS) INCOME ..................... $ (1,171,535) $ 736,561 $ 254,381
============ ============ ============
Summary of net (loss) income allocated to:
General Partner ................................ $ (11,715) $ 7,366 $ 2,544
Class A Limited Partners ....................... (1,159,820) 729,195 251,837
------------ ------------ ------------
$ (1,171,535) $ 736,561 $ 254,381
Net (loss) income per unit of Limited Partner Capital $ (0.90) $ 0.56 $ 0.19
============ ============ ============
Weighted average units issued and outstanding ....... 1,306,890 1,306,890 1,306,890
</TABLE>
See notes to consolidated financial statements.
F-2
<PAGE>
Whiteford Partners, L.P.
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Partners' Capital
General Partner Class A Limited Partners
-------------------------------------------------------------------------------------------------------
Capital
Interest in Transfers Interest in
Capital Net Income from Net Income
Capital Transfers to or Capital General or
Contributions Limited Partners (Loss) Distribution Contributions Partners (Loss) Distributions
------------- ---------------- ------- ------------ ------------- --------- ------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 $ 132,931 $ (117,800) $ 16,140 $ (32,943) $11,172,274 $116,554 $ 1,586,849 $ (3,263,842)
Net Income 2,544 251,837
Distributions (1,308) (130,689)
-----------------------------------------------------------------------------------------------------
Balance, December 31, 1997 $ 132,931 $ (117,800) $ 18,684 $ (34,251) $11,172,274 $116,554 $ 1,838,686 $ (3,394,531)
Net Income 7,366 729,195
Distributions (2,613) (261,378)
-----------------------------------------------------------------------------------------------------
Balance, December 31, 1998 $ 132,931 $ (117,800) $ 26,050 $ (36,864) $11,172,274 $116,554 $ 2,567,881 $ (3,655,909)
Net Loss (11,715) (1,159,820)
Distributions (1,307) (130,689)
-----------------------------------------------------------------------------------------------------
Balance, December 31, 1999 $ 132,931 $ (117,800) $ 14,335 $ (38,171) $11,172,274 $116,554 $ 1,408,061 $ (3,786,598)
=====================================================================================================
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
Whiteford Partners, L.P.
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
--------------------------------------------
1999 1998 1997
--------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net (loss) Income .................................... $ (1,171,535) $ 736,561 $ 254,381
Adjustments to reconcile net (loss) income to net cash
provided by operating activities:
Depreciation and amortization .................... 1,263,659 1,227,791 1,204,975
(Gain) loss on sale of fixed assets .............. (4,000) (641) (23,091)
Changes in operating assets and liabilities:
Accounts receivable - trade .................... 1,264,543 225,586 (362,181)
Inventories .................................... (813,132) 459,042 (412,082)
Prepaid expenses ............................... 317,670 (321,288) 390,990
Accounts Payable - trade ....................... (166,367) (794,767) 564,022
Accrued expenses and other liabilitites ........ (158,695) 231,871 (81,485)
------------ ------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES ............... 532,143 1,764,155 1,535,529
INVESTING ACTIVITIES:
Purchase of property and equipment ................... (801,577) (642,882) (928,913)
Proceeds from disposal of property and equipment ..... 4,000 15,500 42,324
------------ ------------ ------------
NET CASH USED IN INVESTING ACTIVITIES ................... (797,577) (627,382) (886,589)
FINANCING ACTIVITIES:
Proceeds from notes payable and long-term debt ........ 18,610,233 18,604,404 22,894,939
Payments on notes payable and long-term debt .......... (18,347,730) (19,325,290) (23,268,798)
Distributions to Limited and General Partners ......... (131,996) (263,991) (131,997)
------------ ------------ ------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES .................................. 130,507 (984,877) (505,856)
------------ ------------ ------------
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS ......................................... (134,927) 151,896 143,084
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD ................................... 416,143 264,247 121,163
------------ ------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .............. $ 281,216 $ 416,143 $ 264,247
============ ============ ============
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
WHITEFORD PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
- --------------------------------------------------------------------------------
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 and Whiteford's currently operate in The Food Business segment only.
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.
At December 31, 1999 and at December 31, 1998, 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:
1999 1998
----------- -----------
Finished products $ 1,531,532 $ 844,612
Raw materials 834,763 645,847
Packaging supplies and other 1,012,392 1,075,096
----------- -----------
$ 3,378,687 $ 2,565,555
=========== ===========
Property and Equipment. Property and equipment is stated at cost.
Depreciation, computed using the straight-line method on the basis of the
estimated useful lives of the depreciable assets, was $1,136,166, $1,100,298,
and $1,077,482 in years 1999, 1998 and 1997, respectively. The costs of ordinary
repairs and maintenance are charged to expense, while betterment and major
replacements are capitalized.
The carrying value of property and equipment and other long-lived assets is
reviewed if the facts and circumstances suggest it may be impaired. If this
review indicates the carrying value of the assets may not be recoverable, based
on estimates of their undiscounted cash flows, the carrying value will be
reduced to the asset's fair market value.
Other Assets. Goodwill associated with the acquisition of Whiteford's Inc.
is being amortized on a straight-line basis over a thirty-year period. Related
accumulated amortization at December 31, 1999 and 1998, was $1,208,576 and
$1,081,083 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 $130,689 and $261,378 to Limited Partners were recorded in 1999
and 1998 respectively.
F-5
<PAGE>
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, 1999, the book
basis of assets exceeds the tax basis of such assets by approximately $60,175
primarily due to the use of accelerated depreciation methods utilized for tax
reporting purposes.
Cash, Cash Equivalents and Cash Flows. Cash and cash equivalent amount
approximate fair value. 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
$647,953, $690,506 and $733,733 for 1999, 1998 and 1997, 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.
Concentrations. Financial instruments which potentially expose the
Partnership of credit risk, as defined by Statement of Financial Accounting
Standards No. 105, Disclosure of Information about Financial Instruments with
Off-Balance Sheet Risk and Financial with Concentrations of Credit Risk, consist
primarily of accounts receivable. The Partnership's accounts receivable are
concentrated in major fast food restaurants and regional chains.
To date, the Partnership has relied on a limited number of customers for a
substantial portion of its total sales. The Partnership expects that a
significant portion of its future revenues will continue to be generated by a
limited number of customers. The failure to obtain new customers or the
reduction in sales from existing customers could materially adversely affect the
Partnership's operating results (see Note G).
The Partnership currently buys its meats and necessary supplies from a few
vendors. Although there are a limited number of vendors capable of supplying
these items, management believes that the other suppliers could provide the
products on comparable terms. A change in suppliers, however, could cause delay
in delivery and possible loss of sales, which would adversely affect operating
results.
Use of Estimates. The preparation of the financial statements in accordance
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
results.
NOTE C - RELATED PARTY TRANSACTIONS
The Limited Partnership Agreement provides for the General Partner to
receive an annual administrative fee. The fee is equal to 2% (adjusted for
changes in the consumer price index after 1989) of net business investment
(defined as $8.50 multiplied by Partnership units outstanding). However, such
amounts payable to the General Partner are limited to 10% of aggregate
distributions to all Partners from "Cash Available for Distributions". As
defined in the Limited Partnership Agreement, that portion of the management fee
in excess of such 10% limitation is suspended, and future payment is contingent.
The Administrative Management Fees paid to the General Partner and recorded
by the Partnership were $13,069 in 1999, $26,138 in 1998 and $13,069 in 1997.
Suspended fees as of December 31, 1999, for which no accrual had been recorded,
total $2,117,000 ($1,830,000 as of December 31, 1998). This only becomes an
obligation of the Partnership upon a change of control or sale of substantially
all of the assets of the Partnership. 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 has been extended for five years expiring December
31, 2002, and provides minimum consulting fees of approximately $250,000 per
annum. During 1999, 1998 and 1997 the minimum was paid. 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
NOTE D - LONG TERM DEBT
<TABLE>
<CAPTION>
The following schedule summarizes long-term debt at December 31:
1999 1998
---------- ----------
<S> <C> <C>
Notespayable to bank with monthly payments of $20,000 through January 1, 2001
and balance due on January 31, 2001, interest at 8.99% at December 31, 1999
and 1998 and interest at prime plus
1% as of January 1, 2000 .................................................. $3,271,972 $3,495,678
Notespayable to bank with monthly payments of $27,362 through December 1, 2001
and balance due on January 2, 2002, interest 9.50% and 8.72% at December
31, 1999 and 1998, respectively and interest at
prime plus 1% as of January 1, 2000 ....................................... 793,502 988,570
Revolving credit agreement with a bank, due June 30, 2000, interest at 9.00%
at December 31, 1999 and 1998 and interest at prime plus 1% on first
$2,500,000 and prime plus 2% on amounts outstanding over $2,500,000
as of January 1, 2000 ..................................................... 3,547,623 2,752,099
Note payable to bank due May 1, 2000
interest at 9.42% at December 31, 1999 and 1998 ........................... 56,312 170,559
Other .......................................................................... 30,000 30,000
---------- ----------
$7,699,409 $7,436,906
Less portion classified as current ............................................. 4,172,281 3,434,967
---------- ----------
$3,527,128 $4,001,939
========== ==========
</TABLE>
The carrying value of the long-term debt approximates fair value. 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 borrowings based on a percentage of
eligible accounts receivables and inventories plus an overadvance amount of
$900,000 through April 30, 2000, reduced to $800,000 through May 31, 2000 and
reduced to $700,000 thereafter. 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 years subsequent to 2000 is $3,390,317 in 2001 and $136,811 in 2002.
During 1999, 1998 and 1997, the weighted average interest rate on
short-term borrowing was 8.9%, 9.1% and 9.1% respectively, while the
weighted-average month-end amount outstanding was $3,993,868, $3,504,626 and
$3,179,441 respectively. The largest outstanding month-end balance was
$4,182,868 during 1999, $3,779,814 during 1998 and $3,425,625 during 1997.
NOTE E - LEASES
Lease Commitments. The Partnership's leases, buildings and
equipment, are under various noncancelable operating lease agreements. Lease
rental expense for 1999, 1998 and 1997 was $663,423, $766,494 and $724,984,
respectively. The future minimum lease payments under the leases are as follows:
2000 $ 608,435
2001 548,183
2002 190,464
----------
$1,347,082
==========
NOTE F - EMPLOYEE BENEFIT PLAN
The Partnership has a 401(k) Plan which covers substantially all employees
who have completed one year of service. The Partnership matches a percentage up
to 25% of the participant's contributions up to 6% of employee eligible
compensation. Contributions to the Plan were $32,887 in 1999, $29,483 in 1998,
and $24,368 in 1997.
F-7
<PAGE>
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 in the Midwest of the United States. Whiteford's principal
products are fresh frozen hamburger patties; precooked and uncooked ground beef
taco meat and roast beef, marinated beef entrees; and other items processed to
the customers' specifications. Major food chains served include Burger King and
Rally's.
Sales of meat products to major customers are summarized as follows for the
fiscal years ended December 31, 1999, and 1998 and 1997.
CUSTOMER 1999 1998 1997
-------- ---- ---- ----
A $13,762,901 $12,662,467 $12,933,020
B 13,044,177 11,456,004 11,958,749
C 5,749,151 11,181,287 10,550,602
D 4,630,998 8,161,942 7,048,837
E 4,486,046 4,854,235 7,010,712
F 2,364,608 2,869,691 3,629,905
----------- ----------- -----------
$44,037,881 $51,185,626 $53,131,825
=========== =========== ===========
The total amounts receivable from these customers on December 31, 1999, 1998,
and 1997 and were $1,657,929 and $2,800,657 and $3,112,082, respectively.
F - 8
<PAGE>
Report of Independent Auditors
Limited and General Partners
Whiteford Partners, L.P.
We have audited the accompanying consolidated balance sheets of Whiteford
Partners, L.P. (a Delaware limited partnership) and subsidiary as of December
31, 1999 and 1998 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, 1999. 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 auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatements. 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, 1999 and 1998 and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31,1999, in conformity with accounting
principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Dayton, Ohio
March 24, 2000
F-9
<PAGE>
INDEX TO ATTACHED EXHIBITS
Exhibit
-----------------------------------------------------------------
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.
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.
F-10
<PAGE>
INDEX TO ATTACHED EXHIBITS (CONT.)
10.11 Loan Agreement dated May 5, 1992, between Greenaway Consultant,
Inc. and Whiteford FoodsVenture, 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 December31, 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.
10.18 Promissory note dated November 8, 1993 between Greenaway
Consultant, Inc. and Whiteford Foods Venture, L.P., incorporated
by reference to Exhibit 10.18 to the Partnership's Annual Report
on Form 10K for the year ended December 31, 1993.
10.19 Credit agreement dated June 13, 1994 between Whiteford Foods
Venture, L.P. and PNC Bank, Ohio, National Association and Fifth
Third Bank of Western Ohio, incorporated by reference to Exhibit
10.19 to the Partnership's Annual Report on Form 10K for the year
ended December 31, 1994.
10.20 Construction loan agreement dated June 13, 1994 between Whiteford
Foods Venture, L.P. and PNC Bank, Ohio, National Association,
incorporated by reference to Exhibit 10.20 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1994.
10.21 Lease agreement dated December 15, 1994 between Whiteford Foods
Venture, L.P. and Star Bank, National Association, incorporated
by reference to Exhibit 10.21 to the Partnership's Annual Report
on Form 10K for the year ended December 31, 1994.
10.22 Term note B dated April 14, 1995, between Whiteford Foods
Venture, L.P. and PNC Bank, Ohio, National Association,
incorporated by reference to Exhibit 10.22 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
F-11
<PAGE>
INDEX TO ATTACHED EXHIBITS (CONT.)
10.23 Note payable dated September 18, 1995, between Whiteford Foods
Venture, L.P. and PNC Bank, Ohio, National Association,
incorporated by reference to Exhibit 10.23 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.24 Second amendment to Revolving Note dated July 11, 1995,
incorporated by reference to Exhibit 10.24 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.25 Second amendment to Credit agreement dated July 11, 1995,
incorporated by reference to Exhibit 10.25 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.26 Third amendment to Credit agreement dated July 11, 1995,
incorporated by reference to Exhibit 10.26 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.27 Guarantee Compensation agreement dated September 18, 1995 between
Whiteford Foods Venture, L.P. and Albert D. Greenaway,
incorporated by reference to Exhibit 10.27 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1995.
10.28 Mortgage granted to Albert D. Greenaway by Whiteford Foods
Venture, L.P., incorporated by reference to Exhibit 10.28 to the
Partnership's Annual Report on Form 10K for the year ended
December 31, 1995
10.29 Mortgage granted to Albert D. Greenaway by Whiteford Foods
Venture, L.P., incorporated by reference to Exhibit 10.29 to the
Partnership's Annual Report on Form 10K for the year ended
December 31, 1995.
10.30 Security agreement dated September 18, 1995 between Whiteford
Foods Venture, L.P. and Albert D. Greenaway, incorporated by
reference to Exhibit 10.30 to the Partnership's Annual Report on
Form 10K for the year ended December 31, 1995.
10.31 Fifth Amendment to Credit Agreement dated May 9, 1996,
incorporated by reference to Exhibit 10.31 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1996.
10.32 Lease agreement dated October 8, 1996 between Whiteford Foods
Venture, L.P. and Fifth Third Leasing, incorporated by reference
to Exhibit 10.32 to the Partnership's Annual Report on Form 10K
for the year ended December 31, 1996.
10.33 Lease agreement dated November 1, 1996 between Whiteford Foods
Venture, L.P. and PNC Leasing Corporation, incorporated by
reference to Exhibit 10.33 to the Partnership's Annual Report on
Form 10K for the year ended December 31, 1996.
10.34 Second Amendment to Term Note dated March 31, 1997.
10.35 Sixth Amendment to Credit Agreement dated June 30, 1997.
10.36 Lease agreement dated December 22, 1997 between Whiteford Foods
Venture, L.P. and PNC Leasing.
10.37 Seventh Amendment to Credit Agreement dated March 26, 1998,
incorporated by reference to Exhibit 10.37 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1998.
10.38 Eighth Amendment to Credit Agreement dated July 1, 1998,
incorporated by reference to Exhibit 10.38 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1998.
10.39 Third Amendment to Revolving Note dated July 1, 1998,
incorporated by reference to Exhibit 10.39 to the Partnership's
Annual Report on Form 10K for the year ended December 31, 1998.
10.40 Fourth Amendment to Revolving Note dated May 3, 1999.
F-12
<PAGE>
INDEX TO ATTACHED EXHIBITS (CONT.)
10.41 Ninth Amendment to Credit Agreement dated May 3, 1999.
10.42 Tenth Amendment to Credit Agreement dated November 1, 1999.
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.
F-13
FOURTH AMENDMENT TO REVOLVING NOTE
THIS FOURTH AMENDMENT TO REVOLVING NOTE (this "Amendment") is made as
of May 3 1999, by and between WHITEFORD FOODS VENTURE, L. P., a Texas limited
partnership (the "Borrower") and PNC BANK, NATIONAL ASSOCIATION, a national
banking association, successor by merger to PNC Bank, Ohio, National
Association (the "Bank").
WITNESSETH:
WHEREAS, the Borrower has executed and delivered to the Bank a
Revolving Note dated June 13, 1994, in the original principal amount of One
Million One Hundred Thousand Dollars ($1,100,000.00), as amended by an
Amendment to Revolving Note dated March 31, 1995, a Second Amendment to
Revolving Note dated July 1,1995 and a Third Amendment to Revolving Note dated
July 1, 1998 (collectively, the "Note"), evidencing the Borrower's
indebtedness to the Bank for such loan (the "Loan") pursuant to the Loan
Documents;
WHEREAS, the Borrower and the Bank desire to amend the Note as provided for
below;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and intending to he legally bound hereby, the parties hereto agree
as follows:
1. The Note is amended as follows:
1.1 The amount available under the Note is hereby increased
by mending the first page of the Note by deleting "$1,650,000.00" from the
upper left-hand corner thereof and inserting "$1,925,000.00" in its place.
1.2 The first paragraph of the Note is deleted in its entirety
and the following inserted in its place:
"FOR VALUE RECEIVED, WHITEFORD FOODS VENTURE, L. P., a Texas limited
partnership (the "Borrower"), hereby promises to pay to the order of PNC
BANK, NATIONAL ASSOCIATION, a national banking association (" Bank"), in
lawful money of the United States of America in immediately available funds
at its offices located at 201 East Fifth Street, Cincinnati, Ohio 45202, or
at such other location as the Bank may designate from time to time, the
principal sum of One Million Nine Hundred Twenty-Five Thousand Dollars
($1,925,000.00) or such lesser unpaid principal amount together with
accrued and unpaid interest thereon, as may be advanced by the Bank
pursuant to the terms of the Credit Agreement dated June 13,1994 by and
among the Borrower, the Bank, The Fifth Third Bank of Western Ohio, N. A.,
and the Bank, as Agent, as same may be amended from time to time (the
Agreement). This Note shall serve as a master note to evidence all such
advances."
<PAGE>
2. Any and all references to the Note in any document, instrument or
certificate evidencing, securing or otherwise delivered in connection with the
Loan shall be deemed to refer to the Note as amended hereby. Any initially
capitalized terms used in this Amendment without definition shall have the
meanings assigned to those terms in the Note or the Loan Documents.
3. This Amendment is deemed incorporated into the Note. To the extent
that any term or provision of this Amendment is or may be deemed expressly
inconsistent with any term or provision in the Loan Documents or the Note, the
terms and provisions hereof shall control.
4. The Borrower hereby represents and warrants that (a) all of its
representations and warranties in the Loan Documents are true and correct, (b)
no default or Event of Default exists under the Note or the Loan Documents,
and (c) this Amendment has been duly authorized, executed and delivered and
constitutes the legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms.
5. The Borrower hereby confirms that any collateral for the Loan,
including but not limited to liens, security interests, mortgages, and pledges
granted by the Borrower or third parties (if applicable), shall continue
unimpaired and in full force and effect.
6. This Amendment may he signed in any number of counterpart copies
and by the parties hereto on separate counterparts, but all such copies shall
constitute one and the same instrument.
7. This Amendment will be binding upon and inure to the benefit of
the Borrower and the Bank and their respective heirs, executors,
administrators, successors and assigns.
8. Except as amended hereby, the terms and provisions of the Note
remain unchanged and in full force and effect. Except as expressly provided
herein, this Amendment shall not constitute an amendment, waiver, consent or
release with respect to any provision of the Loan Documents or the Note, a
waiver of any default or Event of Default thereunder, or a waiver or release of
any of the Bank's rights and remedies (all of which are hereby reserved). The
Borrower expressly ratifies and confirms the confession of judgment and waiver
of jury trial provisions.
-2-
<PAGE>
Executed as of the date first written above.
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
PNC BANK, NATIONAL ASSOCIATION,
a national banking association
By: /s/ Timothy E. Reilly
-------------------------
Print Name: Timothy E. Reilly
Title: Vice President
-3-
<PAGE>
FOURTH AMENDMENT TO REVOLVING NOTE
THIS FOURTH AMENDMENT TO REVOLVING NOTE (this "Amendment") is made as
of May 3, 1999, by and between WHITEFORD FOODS VENTURE, L. P., a Texas limited
partnership (the "Borrower") and THE FIFTH THIRD BANK OF WESTERN OHIO, an Ohio
state banking corporation (the "Bank").
WITNESSETH:
WHEREAS, the Borrower has executed and delivered to the Bank a
Revolving Note dated June 13,1994, in the original principal amount of Nine
Hundred Thousand Dollars ($900,000.00), as amended by an Amendment to Revolving
Note dated March 31, 1995, a Second Amendment to Revolving Note dated July
1,1995 and a Third Amendment to Revolving Note dated July 1,1998 (collectively,
the "Note"), evidencing the Borrower's indebtedness to the Bank for such loan
(the "Loan") pursuant to the Loan Documents;
WHEREAS, the Borrower and the Bank desire to amend the Note as provided
for below;
NOW, THEREFORE, in Consideration of the mutual covenants herein
contained and intending to be legally bound hereby, the parties hereto agree
as follows:
1. The Note is amended as follows:
1.1 The amount available under the Note is hereby increased by
amending the first page of the Note by deleting "$1,350,000.00" from the upper
left-hand corner thereof and inserting "$1,575,000.00" in its place.
1.2 The first paragraph of the Note is deleted in its
entirety and the following inserted in its place:
"FOR VALUE RECEIVED, WHITEFORD FOODS VENTURE, L. P., a Texas limited
partnership (the "Borrower"), hereby promises to pay to the order of
THE FIFTH THIRD BANK OF WESTERN OHIO, an Ohio state banking corporation
("Bank"), in lawful money of the United States of America in
immediately available funds at its offices located at 201 East Fifth
Street, Cincinnati, Ohio 45202, or at such other location as the Bank
may designate from time to time, the principal sum of One Million Five
Hundred Seventy-Five Thousand dollars ($1,575,000.00)or such lesser
unpaid principal amount together with accrued and unpaid interest
thereon, as may be advanced by the Bank pursuant to the terms of the
Credit Agreement dated June 13,1994 by and among the Borrower, PNC
Bank, National Association, successor by merger to PNC Bank, Ohio,
National Association, as Agent, PNC Bank, National Association, and the
Bank, as same may be amended from time to time (the "Agreement"). This
Note shall serve as a master note to evidence all such advances."
<PAGE>
2. Any and all references to the Note in any document, instrument or
certificate evidencing, securing or otherwise delivered in connection with the
Loan shall be deemed to refer to the Note as amended hereby. Any initially
capitalized terms used in this Amendment without definition shall have the
meanings assigned to those terms in the Note or the Loan Documents,
3. This Amendment is deemed incorporated into the Note. To the extent
that any term or provision of this Amendment is or may be deemed expressly
inconsistent with any term or provision in the Loan Documents or the Note, the
terms and provisions hereof shall control.
4. The Borrower hereby represents and warrants that (a) all of its
representations and warranties in the Loan Documents are true and correct, (b)
no default or Event of Default exists under the Note or the Loan Documents, and
(c) this Amendment has been duly authorized, executed and delivered and
constitutes the legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms.
5. The Borrower hereby confirms that any collateral for the Loan,
including but not limited to liens, security interests, mortgages, and pledges
granted by the Borrower or third parties (if applicable), shall continue
unimpaired and in full force and effect.
6. This Amendment may he signed in any number of counterpart copies
and by the parties hereto on separate counterparts, but all such copies shall
constitute one and the same instrument.
7. This Amendment will be binding upon and inure to the benefit of
the Borrower and the Bank and their respective heirs, executors, administrators,
successors and assigns.
8. Except as amended hereby, the terms and provisions of the Note
remain unchanged and full force and effect. Except as expressly provided herein,
this Amendment shall not constitute an amendment, waiver, consent or release
with respect to any provision of the Loan Documents or the Note, a waiver of any
default or Event of Default thereunder, or a waiver or release of any of the
Bank's rights and remedies (all of which are hereby reserved). The Borrower
expressly ratifies and confirms the confession of judgment and waiver of jury
trial provisions.
-2-
<PAGE>
Executed as of the date first written above.
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
THE FIFTH THIRD BANK OF WESTERN OHIO
An Ohio state banking corporation
By: /s/ K. Douglas Compton
--------------------------
Print Name: K. Douglas Compton
Title: Vice President
-3-
NINTH AMENDMENT TO CREDIT AGREEMENT
THIS NINTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is made as
of May 3, 1999, by and between WHITEFORD FOODS VENTURE, L. P., a Texas limited
partnership (the "Borrower"), and PNC BANK, NATIONAL ASSOCIATION, a national
banking association, successor by merger to PNC Bank, Ohio, National
Association, as Agent (the "Agent"), for the Lenders under the below-defined
Credit Agreement, THE FIFTH THIRD BANK OF WESTERN OHIO, an Ohio state banking
corporation, and PNC BANK, NATIONAL ASSOCIATION, successor by merger to PNC
Bank, Ohio, National Association, (each individually a "Lender" and
collectively, the "Lenders").
WITNESSETH:
WHERAS, the Borrower, the Agent and the Lenders entered into a Credit
Agreement dated June 13, 1994, which was subsequently amended by an Amendment to
Credit Agreement dated March 31, 1995, a Second Amendment to Credit Agreement
dated April 20, 1995, a Third Amendment to Credit Agreement dated July 11,1995,
a Fourth Amendment to Credit Agreement dated November 7, 1995, a Fifth Amendment
and Waiver Agreement dated May 9, 1996, a Sixth Amendment to Credit Agreement
dated as of June 30, 1997, a Seventh Amendment and Waiver Agreement dated as of
March 26, 1998 and an Eighth Amendment to Credit Agreement dated July 1, 1998
(collectively, the "Credit Agreement")which evidences the Borrower's obligations
for one or more loans or other extensions of credit (the "Obligations"); and
WHEREAS, the Borrower, the Agent and the Lenders desire to amend the
Credit Agreement as provided for below;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and intending to be legally bound hereby, the parties hereto agree as
follows:
1. Amendments. The Credit Agreement is amended as follows:
----------
1.1 Section 2.1(a) is amended to delete "(Three Million
Dollars ($3,000,000.00)" from the fourth line thereof and insert "Three Million
Five Hundred Thousand Dollars ($3,500,000.00)" in its place, and to delete
"$3,000,000.00" from the ninth line thereof and insert "3,500,000.00 " in its
place.
1.2 Section 2.8 is amended to delete "$l,000,000.00" from the
fifth line thereof and insert "$1,250,000.00" in its place.
1.3 The following representation and warranty is added to
the Credit Agreement as Section 3.17 thereof:
"3.17. The Borrower has reviewed the areas within its business and
operations which could be adversely affected by, and has developed or
is developing a program to address on a timely basis the risk that
certain computer applications used by the Borrower may be unable to
recognize and perform properly date-sensitive functions involving
dates prior to and after December 31, 1999 (the "Year 2000 Problem").
<PAGE>
The Year 2000 Problem will not result, and is not reasonably expected
to result, in any material adverse effect on the business,
properties, assets, financial condition, results of operations or
prospects of the Borrower, or the ability of the Borrower to duly and
punctually pay or Perform its obligations under this Agreement."
2. Any and all references to the Credit Agreement in any other Loan
Documents shall be deemed to refer to such Credit Agreement as amended hereby.
Any initially capitalized terms used in this Amendment without definition shall
have the meanings assigned to those terms in the Credit Agreement.
3. This Amendment is deemed incorporated into each of the Loan
Documents. To the extent that any term or provision of this Amendment is or may
be deemed expressly inconsistent with any term or provision in any Loan
Document, the terms and provisions hereof shall control.
4. The Borrower hereby represents and warrants that (a) all of its
representations and warranties in the Loan Documents are true and correct, (b)
no default or Event of Default exists under any Loan Document, and (c) this
Amendment has been duly authorized, executed and delivered and constitutes its
legal, valid and binding obligation, enforceable in accordance with its terms.
5. The Borrower hereby confirms that any collateral for the
Obligations, including but not limited to liens, security interests, mortgages,
and pledges granted by the Borrower or third patties (if applicable), shall
continue unimpaired and in full force and effect.
6. This Amendment will be binding upon and inure to the benefit of
the Borrower, the agent and the Lenders and their respective successors and
assigns.
7. Except as amended hereby, the terms and provisions of the Loan
Documents remain unchanged and in full force and effect. Except as expressly
provided herein, this Amendment shall not constitute an amendment, waiver,
consent or release with respect to any provision of any Loan Document, a waiver
of any default or Event of Default thereunder, or a waiver or release of any of
the Agent's or the Lenders' rights and remedies (all of which are hereby
reserved). The Borrower expressly ratifies and confirms the confession of
judgment and waiver of jury trial provisions.
Executed as of the date first written above.
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
-2-
<PAGE>
PNC BANK, NATIONAL ASSOCIATION, as Agent
a national banking association
By: /s/ Timothy E. Reilly
------------------------
Print Name: Timothy E. Reilly
Title: Vice President
THE FIFTH THIRD BANK OF
WESTERN OHIO an Ohio state
banking corporation, as a
Lender
By: /s/ K. Douglas Compton
Print Name: K. Douglas Compton
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION, as Agent
a national banking association, as a Lender
By: /s/ Timothy E. Reilly
------------------------
Print Name: Timothy E. Reilly
Title: Vice President
STATE OF Ohio )
----------------------
) SS:
COUNTY OF Darke )
----------------------
The foregoing instrument was acknowledged before me this 23rd day of June,
1999 by Albert D. Greenaway of G/W Foods, Inc. a Texas corporation, on behalf of
the corporation as general partner of Whiteford Venture, L.P., a Texas limited
partnership.
/s/ Sharon K. Henry
-------------------
Notary Public
May 10, 1999
-3-
<PAGE>
CERTIFICATE OF THE SECRETARY
----------------------------
OF
--
G/W FOODS, INC.
---------------
The undersigned, Secretary of G/W FOODS, INC., a Texas corporation (the
"Corporation"), hereby certifies to PNC BANK, NATIONAL ASSOCIATION, a national
banking association, successor by merger to PNC Bank, Ohio, National Association
("the Bank"), as follows:
1. The following Resolution was duly adopted and is a binding resolution of
the corporation:
RESOLVED, that the Corporation, as General Partner of
WHITEFORD FOODS VENTURE, L. P., a Texas limited partnership (the
"Partnership"), amend the Revolving Note by and between the Partnership
and the Bank dated June 13, 1994, in the original principal amount of
One Million One Hundred Thousand Dollars ($1,100,000.00), as
subsequently amended by an Amendment to Revolving Note dated March 31,
1995, a Second Amendment to Revolving Note dated July 1, 1995 and a
Third Amendment to Revolving Note dated July 1, 1998 (collectively, the
"Note"), to increase the amount available to the Partnership under the
Note to $1,925,000.00; and
FURTHER RESOLVED, that the Corporation, as General Partner of
the Partnership, amend the Credit Agreement by and between the
Partnership, the Bank and The Fifth Third Bank of Western Ohio, dated
June 13, 1994, as amended, to increase the credit facility available
thereunder;
FURTHER RESOLVED, that the President, any Vice President or
the Treasurer be, and they hereby are, authorized to execute, on behalf
of the Corporation as General Partner of Partnership, any and all
documents to effectuate and secure such amendment including, without
limitation, a Ninth Amendment to Loan Agreement, a Fourth Amendment to
Revolving Note, and other necessary or appropriate documents in
connection herewith.
2. The following is a compete and accurate list of the Officers of the
Corporation as of June 24, 1999.
President Albert D. Greenaway
-------------------
Vice President
-------------------
Secretary Beverly F. Shillito
-------------------
Assistant Secretary
-------------------
Chief Executive Officer Kevin T. Gannon
-------------------
/s/ Beverly F. Shillito
-----------------------
Secretary
Beverly F. Shillito
<PAGE>
May 10, 1999
CERTIFICATE OF THE SECRETARY
----------------------------
OF
--
G/W FOODS, INC.
---------------
The undersigned, Secretary of G/W FOODS, INC., a Texas corporation (the
"Corporation"), hereby certifies to THE FIFTH THIRD BANK OF WESTERN OHIO, an
Ohio state banking corporation (" the Bank"), as follows:
1. The following Resolution was duly adopted and is a binding resolution of
the Corporation:
RESOLVED, that the Corporation, as General Partner of
WHITEFORD FOODS VENTURE, L.P, a Texas limited partnership (the
"Partnership"), amend the Revolving Note by and between the Partnership
and the Bank dated June 13, 1994, in the original principal amount of
Nine Hundred Thousand Dollars ($1,100,000.00), as subsequently amended
by an Amendment to Revolving Note dated March 31, 1995, Second
Amendment to Revolving Note dated July 1, 1995 and a Third Amendment to
Revolving Note dated July 1, 1998 (collectively, the "Note"), to
increase the amount available to the Partnership under the Note to
$1,575,000.00; and
FURTHUR RESOLVED, that the Corporation, as General Partner of
the Partnership, amend the credit Agreement by and between the
Partnership, PNC Bank, National Association, and the Bank dated June
13, 1994, as amended, to increase the credit available thereunder;
FURTHER RESOLVED, that the President, any Vice President or
the Treasurer be, and they hereby are authorized to execute, on behalf
of the Corporation as General Partner of Partnership, any and all
documents to effectuate and secure such amendment including, without
limitation, a Ninth Amendment to Loan Agreement, a Fourth Amendment to
Revolving Note, and other necessary or appropriate documents in
connection herewith.
2. The following is a compete and accurate list of the Officers of the
Corporation as of June 24, 1999.
President Albert D. Greenaway
-------------------
Vice President
-------------------
Secretary Beverly F. Shillito
-------------------
Assistant Secretary
-------------------
Chief Executive Officer Kevin T. Gannon
-------------------
/s/ Beverly F. Shillito
-----------------------
Secretary
Beverly F. Shillito
May 10, 1999
<PAGE>
G/W FOODS, INC.
DIRECTORS' ACTION BY
UNANIMOUS CONSENT IN LIEU OF MEETING
------------------------------------
Pursuant to Article 9.106B of the Texas Business Corporation Act, the
undersigned, being all of the Directors of G/W Foods, Inc., a Texas corporation
(the "Corporation"), do hereby vote for, consent to, adopt and authorize the
following resolutions with respect to PNC Bank, National Association (the
"Bank"):
RESOLVED, that the Corporation, as General Partner of
WHITEFORD FOODS VENTURE, L. P., a Texas limited partnership (the
"Partnership"), amend the Revolving Note by and between the Partnership
and the Bank dated June 13, 1994, in the original principal amount of
One Million One Hundred Thousand Dollars ($1,100,000.00), as
subsequently amended by an Amendment to Revolving Note dated March 31,
1995, a Second Amendment to Revolving Note dated July 1, 1995 and a
Third Amendment to Revolving Note dated July 1, 1998 (collectively, the
"Note"), to increase the amount available to the Partnership under the
Note to $1,925,000.00;
FURTHER RESOLVED, that the Corporation, as General Partner of
the Partnership, amend the Credit Agreement by and between the
Partnership, the Bank and The Fifth Third Bank of Western Ohio, dated
June 13, 1994, as amended, to increase the credit facility available
thereunder; and
FURTHER RESOLVED, that the President, any Vice President or the
Treasurer be, and they hereby are, authorized to execute, on behalf of
the Corporation as General Partner of Partnership, any and all documents
to effectuate and secure such amendment including, without limitation, a
Ninth Amendment to Loan Agreement, a Fourth Amendment to Revolving Note,
and other necessary or appropriate documents in connection therewith.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the 24th day of June, 1999.
--------------------------------
Kevin Gannon
/s/ Albert D. Greenaway
-----------------------
Albert D. Greenaway
<PAGE>
G/W FOODS, INC.
DIRECTORS' ACTION BY
UNANIMOUS CONSENT IN LIEU OF MEETING
------------------------------------
Pursuant to Article 9.1OB of the Texas Business Corporation Act, the
Undersigned, being all of the Directors of G/W Foods, Inc., a Texas corporation
(the "Corporation"), do hereby vote for, consent to, adopt and authorize the
following resolutions with respect to The Fifth Third Bank of Western Ohio (the
"Bank"):
RESOLVED, that the Corporation, as General Partner of
WHITEFORD FOODS VENTURE, L. P., a Texas limited partnership (the
"Partnership"), amend the Revolving Note by and between the Partnership
and the Bank dated June 13, 1994, in the original principal amount of
Nine Hundred Thousand ($l,100,000.00), as subsequently amended by an
Amendment to Revolving Note dated March 31, 1995, a Second Amendment to
Revolving Note dated July 1, 1995 and a Third Amendment to Revolving
Note dated July 1, 1999 (collectively, the "Note"), to increase the
amount available to the Partnership under the Note to $1,575,000.00;
FURTHER RESOLVED, that the Corporation, as General Partner of
the Partnership, amend the Credit Agreement by and between the
Partnership, PNC Bank, National Association, and the Bank dated June
13, 1994, as amended, to increase the credit facility available
thereunder; and
FURTHER RESOLVED, that the President, any Vice President or
the Treasurer be, and they hereby are, authorized to execute, on behalf
of the Corporation as General Partner of Partnership, any and all
documents to effectuate and secure such amendment including, without
limitation, a Ninth Amendment to Loan Agreement, a Fourth Amendment to
Revolving Note, and other necessary or appropriate documents in
connection therewith.
IN WITNESS WHEREOF, the undersigned have executed this instrument as of the 24th
day of June, 1999.
------------------------
Kevin Gannon
/s/ Albert D. Greenaway
-----------------------
Albert D. Greenaway
TENTH AMENDMENT TO CREDIT AGREEMENT
THIS TENTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated
November 1, 1999, by and between WHITEFORD FOODS VENTURE,L.P., a Texas limited
partnership (the "Borrower"), and PNC BANK, NATIONAL ASSOCIATION, a national
banking association, successor by merger to PNC Bank, Ohio, National
Association, as Agent (the "Agent"), for the Lenders under the below-defined
Credit Agreement, THE FIFTH THIRD BANK OF WESTERN OHIO, an Ohio state banking
corporation, and PNC BANK, NATIONAL ASSOCIATION, a national banking association,
successor by merger to PNC Bank, Ohio, National Association, (each individually
a " Lender and collectively, the "Lenders").
WITNESSETH:
WHEREAS, the Borrower, the Agent and the lenders entered into a Credit
Agreement dated June 13, 1994, which was subsequently amended by an Amendment to
Credit Agreement dated March 31, 1995, a Second Amendment to Credit Agreement
dated April 20, 1995, a Third Amendment to Credit Agreement dated July 11, 1995,
a Fourth Amendment to Credit Agreement dated November 7, 1995, a Fifth Amendment
and Waiver Agreement dated May 9,1996, a Sixth Amendment to Credit Agreement
dated as of June 30,1997, a Seventh Amendment and Waiver Agreement dated as of
March 26,1998, an Eighth Amendment to Credit Agreement dated July. 1, 1998, and
a Ninth Amendment to Credit Agreement dated as of May 3, 1999 (collectively, the
"Credit Agreement") which evidences the Borrower's Borrower's obligations for
one or more loans or other extensions of credit (the "Obligations"); and
WHEREAS, the Borrower, the Agent and the Lenders desire to amend the
Credit Agreement as provided for below;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound hereby, the parties hereto agree as follows: .
1. Amendments. The Credit Agreement is amended as follows:
----------
1.1 Effective July 2, 1999, Section 2.1(e)is amended to delete "July 1,
1999" from the first sentence thereof and insert "December 31, 1999" in its
place.
1.2 Effective November 1, 1999, the Lenders shall extend the maturity
of the Term Loan A and Term Notes A until January 1, 2002. Section 2.2 of the
Credit Agreement is amended to provide that "Term Loan A" and "Term Notes A"
shall mean the term loans as evidenced by the Amended and Restated Term Notes A
of the Borrower to the Lenders dated November 1, 1999 in the principal sum of
$820,864.15 in total. The terms of the Amended and Restated Term Notes shall
supersede the terms of Section 2.2.
2. Any and all references to the Credit Agreement in any other Loan
Documents shall be deemed to refer to such Credit Agreement as amended hereby.
Any initially capitalized terms used in this Amendment without definition shall
have the meanings assigned to those terms in the Credit Agreement.
<PAGE>
3. This Amendment is deemed incorporated into each of the Loan
Documents. TO the extent that any term or provision of this Amendment is or may
be deemed expressly inconsistent with any term or provision in any Loan
Document, the terms and provisions hereof shall control.
4. The Borrower hereby represents and warrants that (a) all of its
representations and warranties in the Loan Documents are true and correct, and
(b)this Amendment has been duly authorized, executed and delivered and
constitutes its legal, valid and binding obligation, enforceable in accordance
with its terms, The Borrower acknowledges that Events of Default exist under
Section 4 of the Credit Agreement due to the Borrower's failure to comply with
certain financial covenants prior to the date of this Amendment. No forbearance,
delay or inaction by the Lenders in the exercise of their rights and remedies,
and no continuing performance by the Lenders or the Borrower under the Credit
Agreement: (a) shall constitute (i) a modification or an alteration of the
terms, conditions or covenants of the Credit Agreement or any other Loan
Documents, all of which remain in full force and effect; or (ii) a waiver,
release or limitation upon the Lenders' exercise of any of their rights and
remedies thereunder, all of which are hereby expressly reserved; or (b)shall
relieve or release the Borrower in any way from any of its respective duties,
obligations, covenants or agreements under the Credit Agreement or the other
Loan Documents or from the consequences of the Event of Default described above
or any other Event of Default thereunder. The Lenders are not obligated to waive
the Events of Default described above or any other Events of Default or
defaults, whether now existing or which may occur after the date of this letter.
5. The Borrower hereby confirms that any collateral for the
Obligations, including but not limited to liens, security interests, mortgages,
and pledges granted by the Borrower or third parties (if applicable), shall
continue unimpaired and in full force and effect.
6. This Amendment will be binding upon and inure to the benefit of the
Borrower, the Agent and the Lenders and their respective successors and assigns.
7. Except as amended hereby, the terms and provisions of the Loan
Documents remain unchanged and in full force and effect. The Borrower expressly
ratifies and confirms the confession of judgment and waiver of jury trial
provisions
Executed as of the date first written above.
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
2
<PAGE>
PNC BANK, NATIONAL ASSOCIATION, as agent
By: _______________________________________
Print Name: ________________________________
Title: _____________________________________
THE FIFTH THIRD BANK OF WESTERN OHIO,
as a Lender
By: ________________________________________
Print Name: ________________________________
Title: ______________________________________
PNC BANK, NATIONAL ASSOCIATION,
As a Lender
By: _______________________________________
Print Name: ______________________________
Title: ___________________________________
STATE OF Ohio )
)ss:
COUNTY OF Darke )
The foregoing instrument was acknowledged before me this 1st day of
November, 1999 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
November 1, 1999
3
<PAGE>
AMENDED AND RESTATED TERM NOTE A
$451,460.46 November 1, 1999
FOR VALUE RECEIVED, WHITEFORD FOODS VENTURE, L. P. (the "Borrower"), with an
address at 770 N. Center Street, Versailles, Ohio 45380, promises to pay to the
order of PNC BANK, NATIONAL ASSOCIATION (the Lender"), in lawful money of the
United States of America in immediately available funds at its offices located
at 201 East Fifth Street, Cincinnati, Ohio 45202, or at such other location as
the Lender may designate from time to time, the principal sum of FOUR HUNDRED
FIFTY-ONE THOUSAND FOUR HUNDRED SIXTY and 46/100 DOLLARS ($451,460.46),
together with interest accruing on the outstanding principal balance from the
date hereof, as provided below:
1. Rate of Interest. Amounts outstanding under this Note will bear interest at
the annual rate of interest equal to the sum of the Euro-Rate plus three
hundred (300) basis points (3.0%) per annum (the "Applicable Euro Rate"). The
Applicable Euro Rate shall remain in effect until adjusted by the Lender on the
first Business Day of each month, without notice to the Borrower.
For the purpose hereof, the following terms shall have the following meanings:
"Business Day" shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to
be closed for business in Cincinnati, Ohio.
"Euro-Rate" shall mean the interest rate per annum determined by the
Lender by dividing (the resulting quotient rounded upwards, if
necessary, to the nearest l/lOOth of 1%per annum) (i) the rate of
interest determined by the Lender in accordance with its usual
procedures (which determination shall be conclusive absent manifest
error) to be the eurodollar rate two (2) Business Days prior to (a)the
date of this Note and (b) thereafter, the first Business Day of each
month, for an amount comparable to the amounts outstanding under this
Note and having a borrowing date and a maturity comparable to the
Euro-Rate Interest Period by (ii)a number equal to 1.00 minus the
Euro-Rate Reserve Percentage.
"Euro-Rate Interest Period" shall mean one month.
"Euro-Rate Reserve Percentage" shall me-an the maximum effective
percentage in effect on such day as prescribed by the Board of
Governors of the Federal Reserve System (or any successor) for
determining the reserve requirements (including, without limitation,
supplemental, marginal and emergency reserve requirements) with
respect to eurocurrency funding (currently referred to as
"Eurocurrency liabilities").
1
<PAGE>
The Euro-Rate shall be adjusted on the effective date of any change in the
Euro-Rate Reserve Percentage as of such effective date. The Lender shall give
prompt notice to the Borrower of the Euro-Rate as determined or adjusted in
accordance herewith, which determination shall be conclusive absent manifest
error.
If the Lender determines (which determination shall be final and conclusive)
that, by reason of circumstances affecting the eurodollar market generally,
deposits in dollars (in the applicable amounts)are not being offered to banks
in the eurodollar market for the selected term, or adequate means do not exist
for ascertaining the Euro-Rate, then the Lender shall give notice thereof to
the Borrower. Thereafter, until the Lender notifies the Borrower that the
circumstances giving rise to such suspension no longer exist, (a) the
availability of the Applicable Euro Rate shall be suspended, and (b)the
interest rate for all advances then bearing interest under the Applicable Euro
Rate shall be converted on the first Business Day of the next calendar month to
the Applicable Base Rate. As used herein, the "Applicable Base Rate" shall mean
a rate of interest per annum which is at all times equal to the Prime Rate. For
purposes hereof, the term "Prime Rate" shall mean the rate publicly announced
by the Lender from time to time as its prime rate. The Prime Rate is determined
from time to time by the Lender as a means of pricing some loans to its
borrowers. The Prime Rate is not tied to any external rate of interest or
index, and does not necessarily reflect the lowest rate of interest actually
charged by the Lender to any particular class or category of customers. If and
when the Prime Rate changes, the rate of interest with respect to any advance
to which the Applicable Base Rate applies will change automatically without
notice to the Borrower, effective on the date of any such change.
In addition, if, after the date of this Note, the Lender shall determine (which
determination shall be final and conclusive) that any enactment, promulgation
or adoption of or any change in any applicable law, rule or regulation, or any
change in the interpretation or administration thereof by a governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Lender with any guideline, request
or directive (whether or not having the force of law)of any such authority,
central bank or comparable agency shall make it unlawful or impossible for the
Lender to make or maintain or fund loans under the Applicable Euro Rate, the
Lender shall notify the Borrower. Upon receipt of such notice, until the Lender
notifies the Borrower that the circumstances giving rise to such determination
no longer apply, (a)the availability of the Applicable Euro Rate shall be
suspended, and (b)the interest rate on all advances then bearing interest under
the Applicable Euro Rate shall be converted to the Applicable Base Bate either
(i) on the first Business Day of the next calendar month, if the Lender may
lawfully continue to maintain advances under the Applicable Euro Rate to such
day, or (ii)immediately if the Lender may not lawfully continue to maintain
advances under the Applicable Euro Rate.
Interest will be calculated on the basis of a year of 360 days for the actual
number of days in each interest period. In no event will the rate of interest
hereunder exceed the maximum rate allowed by law.
2
<PAGE>
2. Payment Terms. Principal shall be due and payable in equal consecutive
monthly installments in the amount of Fifteen Thousand Forty-Nine and 17/100
Dollars ($15,049.17) each, commencing on December 1, 1999, and continuing on the
first day of each month thereafter. Interest shall be payable at the same times
as the principal payments. Any outstanding and principal accrued interest shall
be due and payable in full on January 1,2002.
If any payment under this Note shall become due on a Saturday, Sunday or public
holiday under the laws of the State where the Bank's office indicated above is
located, such payment shall be made on the next succeeding business day and such
extension of time shall be included in computing interest in connection with
such payment. The Borrower hereby authorizes the Lender to charge the Borrower's
deposit account at the Lender for any payment when due hereunder. Payments
received will be applied to charges, fees and expenses (including attorneys'
fees), accrued interest and principal in any order the Lender may choose, in its
sole discretion.
3. Late Payments; Default Rate. If the Borrower falls to make any payment of
principal, interest or other amount coming due pursuant to the provisions of
this Note within fifteen (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 (5.0%) of the amount of such payment or Fifty Dollars ($50.00). Such
fifteen (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
Bank'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, under the other Loan Documents or under applicable laws, and
any fees and expenses of any agents or attorneys which the Lender may employ.
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 the
Default Rate (as defined in the Loan Documents), based on a year of 360 days and
actual days elapsed, but not more than the maximum rate allowed by law (the
"Default Rate"). The Default Rate shall continue to apply whether or not
judgment shall be entered on this Note.
4. Prepayment. If this Note bears interest at the Base Rate, the indebtedness
may be prepaid in whole or in part at any time without penalty. If this Note
bears interest based on the Euro-Rate, notwithstanding anything contained herein
to the contrary, upon any prepayment by or on behalf of the Borrower (whether
voluntary, on default or otherwise), the Lender may require, if it so elects,
the Borrower to pay the Lender as compensation for the cost of being prepared to
advance fixed rate funds hereunder an amount equal to the Cost of Prepayment.
"Cost of Prepayment" means an amount equal to the present value, if positive, of
the product of (a)the difference between (i)the yield, on the beginning date of
the applicable interest period, of a US. Treasury obligation with a maturity
similar to the applicable interest period minus (ii) the yield on the prepayment
date, of a U. S. Treasury obligation with a maturity similar to the remaining
maturity of the applicable interest period, and (b)the principal amount to be
prepaid, and (c)the number of years, including fractional years, from the
prepayment date to the end of the applicable interest period. The yield on any
U. S. Treasury obligation shall be determined by
3
<PAGE>
reference to Federal Reserve Statistical Release H. 15(519) "Selected Interest
Rates". For purposes of making present value calculations, the yield to maturity
of a similar maturity U. S. Treasury obligation on the prepayment date shall be
deemed the discount rate. The Cost of Prepayment shall also apply to any
payments made after acceleration of the maturity of this Note while a Euro-Rate
is in effect.
5. Amendments and Restatement. This Note amends and restates, stud is in
substitution for, that certain Term Note-Cognovit in the original principal
amount of $1,210,000.00, payable to the order of the Lender and dated June 13,
1994 (the "Existing Note"). However, without duplication, this Note shall in no
way extinguish, cancel or satisfy the Borrower's unconditional obligation to
repay all indebtedness evidenced by the Existing Note or constitute a novation
of the Existing Note. Nothing herein is intended to extinguish, cancel or impair
the lien priority or effect of any security agreement, pledge agreement or
mortgage with respect to any Obligor's
6. Other Loan Documents. This Note is issued in connection with a Credit
Agreement between the Borrower, the Lender, as Agent and Lender, and The Fifth
Third Bank of Western Ohio, as Lender, dated June 13, 1994, as amended, the
terms of which are incorporated herein by reference (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.
7. Events of Default. Immediately and automatically upon the filing by or
against the Borrower of a petition in bankruptcy, for a reorganization,
arrangement or debt adjustment, or for a receiver, trustee, or similar
creditors' representative for its property or any part thereof, or of any other
proceeding under any federal or state insolvency or similar law (and if such
petition or proceeding is an involuntary petition or proceeding filed against
the Borrower without its acquiescence therein or thereto at any time, the same
is not promptly contested and, within 30 days of the filing of such involuntary
petition or proceeding, dismissed or discharged), or the making of any general
assignment by the Borrower for the benefit of creditors, or the Borrower
dissolves or is the subject of any dissolution, winding up or liquidation or, at
the option of the Lender, immediately upon the occurrence of any other Event of
Default (as defined in the Loan Documents), in any case without demand or notice
of any kind (which are hereby expressly waived): (a)the Lender shall be under no
obligation to make advances hereunder; (b)the outstanding principal balance
hereunder, together with all accrued and unpaid interest thereon, and any
additional amounts secured by the Loan Documents will be accelerated and become
immediately due and payable, (c)the Borrower will pay to the Lender all
reasonable costs and expenses (including but not limited to attorneys'
fees)incurred by the Lender in connection with the Bank's efforts to collect the
indebtedness evidenced hereby, (d)at the Bank's option, this Note will bear
interest at the Default Rate from the date of the occurrence of the Event of
Default; and (e)the Lender may exercise from time to time any of the rights and
remedies available to the Lender under the Loan Documents or applicable law.
4
<PAGE>
8. Power to Confess Judgment. The Borrower hereby irrevocably authorizes
any attorney-at-law, including an attorney employed by or retained and paid by
the Lender, 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 Borrower 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 Borrower 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. The Borrower hereby expressly (i) waives any conflict of
interest of the attorney(s)retained by the Lender to confess judgment against
the Borrower upon this Note, and (ii) consents to the receipt by such
attorney(s)of a reasonable legal fee from the Lender for legal services rendered
for confessing judgment against the Borrower upon this Note. A copy of this
Note, certified by the Lender, may be filed in each such proceeding in place of
filing the
9. Right of Setoff. In addition to all liens upon and rights of setoff against
the money, securities or other property of the Borrower given to the Lender by
law, the Lender shall have, with respect to the Borrower's obligations to the
Lender under this Note and to the extent permitted by law, a contractual
possessory security interest in and a contractual right of setoff against, and
the Borrower hereby assigns, conveys, delivers, pledges and transfers to the
Lender all of the Borrower's right, title and interest in and to, all deposits,
moneys, securities and other property of the Borrower now or hereafter in the
possession of or on deposit with, or in transit to, the Lender whether held in a
general or special account or deposit, whether held jointly with someone else,
or whether held for safekeeping or otherwise, excluding, however, all IRA,
Keogh, and trust accounts. Every such security interest and right of setoff may
be exercised without demand upon or notice to the Borrower. Every such right of
setoff shall be deemed to have been exercised immediately upon the occurrence of
an Event of Default hereunder without any action of the Lender, although the
Lender may enter such setoff on its books and records at a later time.
10. Miscellaneous. No delay or omission of the Lender to exercise any right or
power arising hereunder shall impair any such right or power or be considered to
be a waiver of any such right or power, nor shall the Bank's action or inaction
impair any such right or power. The Borrower agrees to pay on demand, to the
extent permitted by law, all costs and expenses incurred by the Lender in the
enforcement of its rights in this Note and in any security therefore, including
without limitation reasonable fees and expenses of the Bank's counsel. 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. The Borrower and
all other makers and endorsers of this Note hereby forever waive presentment,
protest, notice of dishonor and notice of non-payment. The Borrower also waives
all defenses based on suretyship or impairment of collateral. 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 its
heirs, executors, administrators, successors and assigns, and the benefits
hereof shall inure to the benefit of the Lender and its successors and assigns.
5
<PAGE>
This Note has been delivered to and accepted by the Lender and will be deemed to
be made in the State where the Bank's office indicated above is located. THIS
NOTE WILL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE LENDER AND THE
BORROWER DETERMINEID IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE BANK'S
OFFICE INDICATED ABOVE IS LOCATED , EXCLUDING ITS CONFLICT OF LAWS RULES. The
Borrower hereby irrevocably consents to the exclusive jurisdiction of any state
or federal court for the county or judicial district where the Bank's office
indicated above is located; provided that nothing contained in this Note will
prevent the Lender from bringing any action, enforcing any award or judgment or
exercising any rights against the Borrower individually, against any security or
against any property of the Borrower within any other county, state or other
foreign or domestic jurisdiction. The Borrower acknowledges and agrees that the
venue provided above is the most convenient forum for both the Lender and the
Borrower. The Borrower waives any objection to venue and any objection based on
a more convenient forum in any action instituted under this Note.
11. WAIVER OF JURY TRIAL. THE BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS THE
BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
NOTE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
The Borrower acknowledges that it has read and understood all the provisions of
this Note, including the confession of judgment and waiver of jury trial, and
has been advised by counsel as necessary or appropriate
6
<PAGE>
Executed as of the date first written above, with the intent to be legally
bound hereby.
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 RETURNRD 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
November 01, 1999
<PAGE>
AMENDED AND RESTATED TERM NOTE A
$369,403.69 November 1, 1999
FOR VALUE RECEIVED, WFIITEFORD FOODS VENTURE, L. P. (the "Borrower"), with an
address at 770 N. Center Street, Versailles, Ohio 45380, promises to pay to the
order of THE THIRD BANK OF WESTERN OHIO, N. A. (the "Lender"), in lawful money
of the United States of America in immediately available funds at its offices
located at 123 Market Street, Piqua, Ohio 45356, or at such other location as
the Lender may designate from time to time, the principal sum of THREE HUNDRED
SIXTY-NINE THOUSAND FOUR HUNDRED THREE and 69/100 DOLLARS ($369,403.69),
together with interest accruing on the outstanding principal balance from the
date hereof, as provided below:
1. Rate of Interest. Amounts outstanding under this Note will bear interest at
the annual rate of interest equal to the sum of the Euro-Rate plus three hundred
(300)basis points (3.0%) per annum (the Applicable Euro Rate"), The Applicable
Euro Rate shall remain in effect until adjusted by the Lender on the first
Business Day of each month without notice to the Borrower.
For the purpose hereof, the following terms shall have the following meanings:
"Business Day" shall mean any day other than a Saturday or Sunday or a
legal holiday on which commercial banks are authorized or required to
be closed for business in Cincinnati, Ohio.
"Euro-Rate" shall mean the interest rate per annum determined by the
Lender by dividing (the resulting quotient rounded upwards, if
necessary, to the nearest 1/100th of 1% per annum) (i) the rate of
interest determined by the Lender in accordance with its usual
procedures (which determination shall be conclusive absent manifest
error) to be the eurodollar rate two (2) Business Days prior to (a)
the date of this Note and (b) thereafter, the first Business Day of
each month, for an amount comparable to the amounts outstanding under
this Note and having a borrowing date and a maturity comparable to the
Euro-Rate Interest Period by (ii) a number equal to 1.00 minus the
Euro-Rate Reserve Percentage.
"Euro-Rate Interest Period" shall mean one month.
"Euro-Rate Reserve Percentage" shall mean the maximum effective
percentage in effect on such day as prescribed by the Board of
Governors of the Federal Reserve System (or any successor)for
determining the reserve requirements (including, without limitation,
supplemental, marginal and emergency reserve requirements)with respect
to eurocurrency funding (currently referred to as "Eurocurrency
liabilities").
1
<PAGE>
The Euro-Rate shall be adjusted on the effective date of any change in the
Euro-Rate Reserve Percentage as of such effective date. The Lender shall give
prompt notice to the Borrower of the Euro-Rate as determined or adjusted in
accordance herewith which determination shall be conclusive absent manifest
error.
If the Lender determines (which determination shall be final and
conclusive)that, by reason of circumstances affecting the eurodollar market
generally, deposits in dollars (in the applicable amounts)are not being offered
to banks in the eurodollar market for the selected term, or adequate means do
not exist for ascertaining the Euro-Rate, then the Lender shall give notice
thereof to the Borrower. Thereafter, until the Lender notifies the Borrower
that the circumstances giving rise to such suspension no longer exist, (a)the
availability of the Applicable Euro Rate shall be suspended, and (b)the
interest rate for all advances then bearing interest under the Applicable Euro
Rate shall be converted on the first Business Day of the next calendar month to
the Applicable Base Rate. As used herein, the "Applicable Base Rate" shall mean
a rate of interest per annum which is at all times equal to the Prime Rate. For
purposes hereof, the term "Prime Rate" shall mean the rate publicly announced
by the Lender from time to time as its prime rate. The Prime Rate is determined
from time to time by the Lender as a means of pricing some loans to its
borrowers. The Prime Rate is not tied to any external rate of interest or
index, and does not necessarily reflect the lowest rate of interest actually
charged by the Lender to any particular class or category of customers. If and
when the Prime Rate changes, the rate of interest with respect to any advance
to which the Applicable Base Rate applies will change automatically without
notice to the Borrower, effective on the date of any such change.
In addition, if, after the date of this Note, the Lender shall determine (which
determination shall be final and conclusive)that any enactment, promulgation or
adoption of or any change in any applicable law, rule or regulation or any
change in the interpretation or administration thereof by a governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Lender with any guideline, request
or directive (whether or not having the force of law)of any such authority,
central bank or comparable agency shall make it unlawful or impossible for the
Lender to make or maintain or fund loans under the Applicable Euro Rate, the
Lender shall notify the Borrower. Upon receipt of such notice, until the Lender
notifies the Borrower that the circumstances giving rise to such determination
no longer apply, (a)the availability of the Applicable Euro Rate shall be
suspended, and (b)the interest rate on all advances then bearing interest under
the Applicable Euro Rate shall be converted to the Applicable Base Rate either
(i)on the first Business Day of the next calendar month, if the Lender may
lawfully continue to maintain advances under the Applicable Euro Rate to such
day, or (ii)immediately if the Lender may not lawfully continue to maintain
advances under the Applicable Euro Rate.
Interest will be calculated on the basis of a year of 360 days for the actual
number of days in each interest period. In no event will the rate of interest
hereunder exceed the maximum rate allowed by law.
2
<PAGE>
2. Payment Terms. Principal shall be due and payable in equal consecutive
monthly installments in the amount of Twelve Thousand Three Hundred Twelve and
97/100 Dollars ($12,312.97)each, commencing on December 1, 1999, and continuing
on the first day of each month thereafter. Interest shall be payable at the same
times as the principal payments. Any outstanding principal and accrued interest
shall be due and payable in full on January 1,2002.
If any payment under this Note shall become due on a Saturday, Sunday or public
holiday under the laws of the State where the Bank's office indicated above is
located, such payment shall be made on the next succeeding business day and such
extension of time shall be included in computing interest in connection with
such payment. The Borrower hereby authorizes the Lender to charge the Borrower's
deposit account at the Lender for any payment when due hereunder. Payments
received will be applied to charges, fees and expenses (including attorneys'
fees), accrued interest and principal in any order the Lender may choose, in its
sole discretion.
3. Late Payments; Default Rate. If the Borrower fails to make any payment of
principal, interest or other amount coming due pursuant to the provisions of
this Note within fifteen (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 (5.0%)of the amount of such payment or Fifty Dollars ($50.00). Such
fifteen (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
Bank'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, under the other Loan Documents or under applicable laws, and
any fees and expenses of any agents or attorneys which the Lender may employ.
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 four percentage points (4.0%) in excess of the interest rate in effect from
time to time under this Note but not more than the maximum rate allowed by law
(the "Default Rate"). The Default Rate shall continue to apply whether or not
judgment shall be entered on this Note.
4. Prepayment. If this Note bears interest at the Base Rate, the indebtedness
may be prepaid in whole or in part at any time without penalty. If this Note
bears interest based on the Euro-Rate, notwithstanding anything contained herein
to the contrary, upon any prepayment by or on behalf of the Borrower (whether
voluntary, on default or otherwise), the Lender may require, if it so elects,
the Borrower to pay the Lender as compensation for the cost of being prepared to
advance fixed rate funds hereunder an amount equal to the Cost of Prepayment.
"Cost of Prepayment" means an amount equal to the present value, if positive, of
the product of (a)the difference between (i)the yield, on the beginning date of
the applicable interest period, of a U. S. Treasury obligation with a maturity
similar to the applicable interest period minus (ii) the yield on the prepayment
date, of a U. S. Treasury obligation with a maturity similar to the remaining
maturity of the applicable interest period, and (b) the principal amount to be
prepaid, and (c) the number of years, including fractional years, from the
prepayment date to the end of
3
<PAGE>
the applicable interest period. The yield on any U.S. Treasury obligation shall
be determined by reference to Federal Reserve Statistical Release H.15(519)
"Selected Interest Rates". For purposes of making present value calculations,
the yield to maturity of a similar maturity U. S. Treasury obligation on the
prepayment date shall be deemed the discount rate. The Cost of Prepayment shall
also apply to any payments made after acceleration of the maturity of this Note
while a Euro-Rate is in effect.
5. Amendment and Restatement. This Note amends and restates, and is in
substitution for, that certain Term Note-Cognovit in the original principal
amount of $990,000.00 payable to the order of the Lender and dated June 13, 1994
(the "Existing Note"). However, without duplication, this Note shall in no way
extinguish, cancel or satisfy the Borrower's unconditional obligation to repay
all indebtedness evidenced by the Existing Note or constitute a novation of the
Existing Note. Nothing herein is intended to extinguish, cancel or impair the
lien priority or effect of any security agreement, pledge agreement or mortgage
with respect to any Obligor's obligations hereunder and under any other document
relating hereto.
6. Other Loan Documents. This Note is issued in connection with a Credit
Agreement between the Borrower, the Lender, as Lender, and PNC Bank, National
Association, as Agent and Lender, dated June 13, 1994, as amended, the terms of
which are incorporated herein by reference (the "Loan Documents"), and is
secured by the property described in the Loan Documents (if any)and by such
other collateral as previously may have been or may in the future be granted to
the Lender to secure this Note.
7. Events of Default. Immediately and automatically upon the filing by or
against the Borrower of a petition in bankruptcy, for a reorganization,
arrangement or debt adjustment, or for a receiver, trustee, or similar
creditors' representative for its property or any part thereof, or of any other
proceeding under any federal or state insolvency or similar law (and if such
petition or proceeding is an involuntary petition or proceeding filed against
the Borrower without its acquiescence therein or thereto at any time, the same
is not promptly contested and, within 30 days of the filing of such involuntary
petition or proceeding, dismissed or discharged), or the making of any general
assignment by the Borrower for the benefit of creditors, or the Borrower
dissolves or is the subject of any dissolution, winding up or liquidation or, at
the option of the Lender, immediately upon the occurrence of any other Event of
Default (as defined in the Loan Documents), in any case without demand or notice
of any kind (which are hereby expressly waived): (a)the Lender shall be under no
obligation to make advances hereunder; (b)the outstanding principal balance
hereunder, together with all accrued and unpaid interest thereon, and any
additional amounts secured by the Loan Documents will be accelerated and become
immediately due and payable, (c)the Borrower will pay to the Lender all
reasonable costs and expenses (including but not limited to attorneys'
fees)incurred by the Lender in connection with the Bank's efforts to collect the
indebtedness evidenced hereby, (d)at the Bank's option, this Note will bear
interest at the Default Rate from the date of the occurrence of the Event of
Default; and (e)the Lender may exercise from time to time any of the rights and
remedies available to the Lender under the Loan Documents or applicable law.
4
<PAGE>
8. Power to Confess Judgment. The Borrower hereby irrevocably authorizes any
attorney-at-law, including an attorney employed by or retained and paid by the
Lender, 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 Borrower 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 Borrower 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. The Borrower hereby expressly (i) waiver any conflict of
interest of the attorney(s)retained by the Lender to confess judgment against
the Borrower upon this Note, and (ii)consents to the receipt by such
attorney(s)of a reasonable legal fee from the Lender for legal services rendered
for confessing judgment against the Borrower upon this Note. A copy of this
Note, certified by the Lender, may be filed in each such proceeding in place of
filing the original as a warrant of attorney.
9. Right of Setoff. In addition to all liens upon and rights of setoff against
the money, securities or other property of the Borrower given to the Lender by
law, the Lender shall have, with respect to the Borrower's obligations to the
Lender under this Note and to the extent permitted by law, a contractual
possessory security interest in and a contractual right of setoff against, and
the Borrower hereby assigns, conveys, delivers, pledges and transfers to the
Lender all of the Borrower's right, title and interest in and to, all deposits,
moneys, securities and other property of the Borrower now or hereafter in the
possession of or on deposit with, or in transit to, the Lender whether held in a
general or special account or deposit, whether held jointly with someone else,
or whether held for safekeeping or otherwise, excluding, however, all IRA,
Keogh, and trust accounts. Every such security interest and right of setoff may
be exercised without demand upon or notice to the Borrower. Every such right of
setoff shall be deemed to have been exercised immediately upon the occurrence of
an Event of Default hereunder without any action of the Lender, although the
Lender may enter such setoff on its books and records at a later time.
10.Miscellaneous. No delay or omission of the Lender to exercise any right or
power arising hereunder shall impair any such right or power or be considered to
be a waiver of any such right or power, nor shall the Bank's action or inaction
impair any such right. The Borrower agrees to pay on demand, to the extent
permitted by law, all costs and expenses incurred by the Lender in the
enforcement of its rights in this Note and in any security therefore, including
without limitation reasonable fees and expenses of the Bank's counsel. 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. The Borrower and
all other makers and endorsers of this Note hereby forever waive presentment,
protest, notice of dishonor and notice of non-payment. The Borrower also waives
all defenses based on suretyship or impairment of collateral. 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 its
heirs, executors, administrators, successors and assigns, and the benefits
hereof shall inure to the benefit of the Lender and its successors and assigns.
This Note has been delivered to and accepted by the Lender and will be deemed to
be made in the State where the Bank's office indicated above is located. THIS
NOTE WILL BE INTERPRETED
5
<PAGE>
AND THE RIGHTS AND LIABILITIES OF THE LENDER AND BORROWER DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE BANK'S OFFICE INDICATED ABOVE IS
LOCATED, EXCLUDING ITS CONFLICT OF LAWS RULES. The Borrower hereby irrevocably
consents to the exclusive jurisdiction of any state or federal court for the
county or judicial district where the Bank's office indicated above is located;
provided that nothing contained in this Note will prevent the Lender from
bringing any action, enforcing any award or judgment or exercising any rights
against the Borrower individually, against any security or against any property
of the Borrower within any other county, state or other foreign or domestic
jurisdiction. The Borrower acknowledges and agrees that the venue provided above
is the most convenient forum for both the Lender and the Borrower. The Borrower
waives any objection to venue and any objection based on a more convenient forum
in any action instituted under this Note.
<PAGE>
11. WAIVER OF JURY TRIAL. THE BORROWER IRREVOCABLY WAIVES ANY AND ALL RIGHTS THE
BORROWER MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY
NATURE RELATING TO THIS NOTE, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS
NOTE OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. THE. BORROWER
ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
The Borrower acknowledges that it has read and understood all the provisions of
this Note, including the confession of judgment and waiver of jury trial, and
has been advised by counsel as necessary or appropriate.
6
<PAGE>
Executed as of the date first written above, with the intent to be
legally bound hereby.
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
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